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Operator: Welcome, ladies and gentlemen, to the Fourth Quarter and Full Year 2025 Earnings Conference Call for Tactile Medical. [Operator Instructions] Please note that this conference call is being recorded and will be available on the company's website for replay shortly. I would now like to turn the call over to Sam Bentzinger, Investor Relations at Gilmartin Group, for a few introductory comments. Please go ahead. Sam Bentzinger: Good afternoon, and thank you for joining the call today. With me from Tactile's management team are Sheri Dodd, Chief Executive Officer; and Elaine Birkemeyer, Chief Financial Officer. Before we begin, I'd like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements that are based on the current expectations of management and involve inherent risks and uncertainties. These could cause actual results to differ materially from those indicated, including those identified in the Risk Factors section of our annual report on Form 10-K to be filed with the Securities and Exchange Commission as well as our most recent 10-Q filing. Such factors may be updated from time to time in our filings with the SEC, which are available on our website. We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise. This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles, or GAAP. We generally refer to these as non-GAAP financial measures. Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the Investor Relations portion of our website. With that, I'll now turn the call over to Sheri. Sheri Dodd: Thanks, Sam. Good afternoon, everyone, and welcome to our fourth quarter and full year 2025 earnings call. Here with me is Elaine Birkemeyer, our Chief Financial Officer. 2025 was a pivotal year for Tactile Medical as we advanced our mission of improving the lives of over 95,000 patients with lymphedema and chronic inflammatory lung disease while also strengthening the foundation of our business for scale. Through disciplined execution across our commercial and operational strategies, we delivered strong profitable revenue growth while continuing to make critical investments in people and workflow-related processes. Total revenue for the full year was $329.5 million, a 12% increase year-over-year. Beyond the top line, we expanded our full year gross margins by 190 basis points year-over-year to 75.9%. And adjusted EBITDA increased 21% year-over-year to $44.8 million. From a cash perspective, we repaid the full outstanding principal balance of $26.3 million to retire our term loan and repurchased $26.5 million of our stock. We ended 2025 with $83.4 million in cash and cash equivalents, and generated close to $43 million in operating cash flow during the year. This strong cash generation is durable and positions us to continue reinvesting in the business and drive growth in 2026 and beyond. Our focus on strategy, refinement and execution throughout 2025 culminated in a strong Q4. The commercial momentum we described during our last call persisted through the fourth quarter, and we delivered total Q4 revenue growth of 21% year-over-year, resulting in $103.6 million of revenue. By business line, lymphedema revenue increased 16% year-over-year to $89.5 million and airway clearance revenue increased 66% year-over-year to $14.1 million. For 2026, we expect total revenue to be in the range of $357 million to $365 million, representing year-over-year growth between 8% and 11%. This outlook reflects the strength of our expanded sales force, improving sales rep productivity and our market-leading positions in both lymphedema and airway clearance therapy while also incorporating a potential short-term market impact from the recently announced Medicare prior authorization requirement for pneumatic compression devices. Importantly, this outlook also reflects our proven ability to adapt and execute effectively in a dynamic reimbursement environment. Elaine will elaborate more on this guidance and new prior authorization requirements shortly. In addition to our strong Q4 and 2025 financial performance, this afternoon, we announced our acquisition of LymphaTech, a privately held medical technology company pioneering a novel approach to assessing and monitoring fluid in patients with chronic swelling such as lymphedema. This is an exciting milestone in Tactile's evolution from a product-based company to a comprehensive integrated lymphedema solutions leader, and I believe it has meaningful potential to enable more accurate identification of lymphatic dysfunction, adoption of lymphedema therapy and new capabilities to inform future product development. For the remainder of the call, I will review our strong Q4 performance by business line and then discuss our acquisition of LymphaTech in more detail. I will then provide updates on our ongoing strategic priorities, which we anticipate will continue to drive momentum through 2026. As a reminder, these priorities include improving access to care, expanding treatment options to optimize patient care and reinforce our market-leading position and enhancing the lifetime patient value with both products and services, given the chronic nature of the disease states we support. Elaine will follow with a review of our full fourth quarter results and outlook for 2026. With that, let's turn to a deeper review of our fourth quarter performance. In our lymphedema business line, we grew revenue 16% year-over-year and 24% sequentially in Q4, demonstrating sustained momentum and the strength of our recovery over the past several quarters. The drivers of performance are consistent with what we highlighted previously and reflect continued execution of our go-to-market commercial strategy, which integrates both people and technology. On the people front, as mentioned last quarter, we achieved our year-end goal for sales rep hiring and remain pleased with the caliber of our recently hired reps. This phase of our go-to-market strategy is now behind us, and we believe we have the appropriate rep coverage in place to meet and drive demand across all geographic locations. The rebalance of our sales force infrastructure and accelerated hiring have enabled us to achieve a ratio of 1 account manager to 1 product specialist, a staffing model that will support and optimize productivity based on the diversity of clinical selling and order support activities that are required in the field. With our go-to-market playbook in hand, we will strategically add field resources as needed as we continue to refine territory splits and scale over time. Sales productivity has been further aided by technology, including the introduction of our CRM in February of last year. The CRM capabilities that launched and enhanced over the past 12 months have been invaluable in supporting visibility, accountability and sales effectiveness, and we will continue to strengthen the tool with additional features and functionality enhancements, including more data and analytics, to ensure our field organization is equipped with the right resources and insights to drive referral growth and customer value. We have strong confidence and conviction in the market and our approach to commercial execution. The combination of clear territory design, intentional resource staffing, a robust and integrated CRM and detailed provider channel strategies and tactics position us well for 2026 and the years ahead. Regarding our payer mix, our Medicare channel remained particularly strong in Q4, driven by a couple of factors. In addition to continuing to lap a softer prior year comparison resulting from the documentation challenges that began in Q2 of 2024, we also began to see patients who met the new NCD unique characteristics requirement move directly to our Flexitouch advanced pump after completing conservative therapy without first undergoing a basic pump trial. This is a big win for patients, which ultimately accelerates access to the most appropriate therapy for their condition, and we are pleased to see momentum growing. Turning now to airway clearance and patients we support with chronic inflammatory lung disease. Sales of AffloVest increased 66% year-over-year and 6% sequentially in the fourth quarter to conclude an incredible year for this business line. We are thrilled with this performance, which is a testament to our focused commercial strategy as executed by our skilled airway clearance field team. As broader awareness of bronchiectasis and its available treatment options continues to expand, so does demand for AffloVest. While the claims data are lagging, we believe we have now achieved a market-leading position in the airway clearance category as our commercial momentum accelerates, supported by the strong partnerships and prioritized placement agreements we have secured within the top 10 respiratory DMEs. In 2026, we expect growth in airway clearance to normalize as compared to the elevated level achieved in 2025. From a commercial execution perspective, we will continue to focus on what has worked so well for us to date, strengthening our relationships with each of our top DME partners, penetrating deeper within these accounts, providing high-quality medical education and training for providers and DME staff and launching an enhanced AffloVest therapy to better serve patients. With that backdrop on our Q4 results, I would like now to discuss our acquisition of LymphaTech in more detail. As mentioned, this is an exciting development for Tactile that adds both breadth to our current capabilities and depth to our R&D. Specifically, with LymphaTech, we are expanding our current market-leading portfolio of lymphedema solutions with digital 3D scanning technology for chronic swelling measurement and monitoring, while broadening our R&D with new competencies and programs to extend LymphaTech's current capabilities into next-generation approaches for disease assessment and treatment. Taken wholly, this acquisition strengthens our market leadership in conditions associated with lymphatic dysfunction, and we expect it to meaningfully contribute to our ongoing strategic priorities of improving access to care, expanding treatment options and enhancing the lifetime patient value. LymphaTech's primary technology is a handheld clinically validated solution that uses proprietary algorithms and mobile scanning to deliver highly accurate fluid volume and precise circumference measurements. These elements, along with skin changes, are critical to identifying lymphedema and informing the appropriate therapy options. The LymphaTech platform immediately generates a full clinical-grade 3D model of the body and limbs, replacing traditional manual measurement methods that are time-consuming, highly variable and dependent on clinician techniques. When combined with clinician assessment of the skin, the platform delivers clinicians with a more accurate, repeatable measurement that reduces variability and streamlines clinical workflow. By introducing greater objectivity and efficiency into lymphedema assessment, the platform helps instill confidence in clinical decision-making and enables providers to focus more time on patient care. In addition to real-time measurement, the platform also supports longitudinal surveillance and monitoring, allowing clinicians to track changes over time, including disease progression and treatment response. Beyond clinical benefits, the patient experience is next level. The 3D model measurement output offers a compelling visual of the patient's chest, trunk, head, neck and/or limb, helping them to better understand their condition and keep them engaged in their disease management throughout the care journey. We expect these digital measurement capabilities to enable more accurate disease identification and thereby, accelerate therapy access for the 20 million undiagnosed symptomatic patients in the United States. This acquisition is a milestone in Tactile's evolution from a product-based company to a comprehensive integrated solutions leader for lymphatic dysfunction. By bringing Tactile and LymphaTech together, we become uniquely positioned to support patients and clinicians from early identification and intervention to innovative connected therapy with long-term support and monitoring alongside our Kylee patient engagement application. We expect this acquisition to directly support our longer-term strategy as we seek to capitalize on the growing scientific and clinical understanding of lymphatic dysfunction and lead the next wave of technological innovation. We are very excited about this announcement and for the LymphaTech team who share our combined passion for providing advanced solutions to large underserved patient populations to join Tactile. We will provide additional details regarding the integration on subsequent calls. Turning now to recent updates on each of our three strategic priorities. These priorities are designed to unlock our TAM and enable scalable, profitable growth, and they will continue to be areas of focus for us as we move through 2026. I will begin with an update on our foundational priority to improve access to care, specifically with respect to our head and neck lymphedema, RCT. First, I'm pleased to share that the 2-month results from our RCT comparing Flexitouch Plus to usual care in patients with head and neck lymphedema were published in the Journal of the Sciences and Specialties of the Head and Neck in January. These results, which were initially presented at the ASCO Annual Meeting last June, concluded that Flexitouch Plus is an effective first-line treatment for head and neck cancer survivors with lymphedema compared to receiving therapist-guided treatment without a compression device. Second, following the presentation of long-term data from our RCT at the ACRM Fall Conference in October, I'm also pleased to report that the 6-month manuscript has been submitted and is currently in review. Additional manuscripts will be submitted this year and include a deeper analysis into structural barriers associated with usual care and the role of device technology in more quickly addressing the debilitating symptoms of this population. This is truly a landmark study. Never before has there been a large RCT assessing short- and long-term outcomes of advanced pneumatic compression therapy as an evidence-supported alternative to usual care in treatment-naive head and neck cancer survivors with lymphedema. We are leveraging these data to support our ongoing discussions with commercial payers regarding their current experimental and investigational policy language for head and neck lymphedema device therapy. Clinical data and patient value examples like these strengthen our oncology channel engagement and help to increase awareness of the clinical benefits of Flexitouch Plus for patients in this therapeutic area. While extensive coverage has not yet been fully opened, we are encouraged by the growing momentum and interest, and we'll continue to work with commercial payers to influence their policies and reduce access barriers. Beyond clinical evidence, we are also focused on improving access to care by transforming each step of the order process through the implementation of new technology and more efficient workflows. A key component of this effort is the use of AI-enabled technology to improve speed, accuracy and efficiency for PCD orders. During the fourth quarter, we successfully completed the first phase of our new AI platform, implementing it across our order intake process as well as for certain parts of our medical record review, specifically for orders in our Medicare channel. With the foundation set and early learnings gleaned from the initial rollout, we will continue expanding the use of this technology across the entire order process this year, including patient eligibility and verification of benefits, full medical record review and order qualification and prior authorization. Once fully implemented, we expect this technology to accelerate speed to therapy, reduce revenue impacting errors and improve operating efficiency, each of which should contribute to enhanced operating margins moving forward. I would like now to spend a few moments discussing our product road map for 2026 and broader strategic priority of expanding treatment options. This priority spans both business lines and is centered on identifying ongoing unmet needs and addressing them through patient-centric innovation. We delivered on this in 2025 with the introduction of Nimbl for upper and lower extremity lymphedema and continue to be very pleased with patient and clinician adoption. Nearly a full year into its launch in a crowded market, we have moved into market leadership position in the basic compression pump category, and we expect to continue growing this category and serving more patients with Nimbl. Product innovation will unlock future growth opportunities. And as we look ahead to this year and beyond, there are two specific additional areas of innovation I would like to highlight. First, on the airway clearance side. In early Q4, we submitted a 510(k) to FDA for our next-generation AffloVest product. While the product remains under FDA review, we expect to commercially launch it later this year to ensure it's available for the 2026 to 2027 winter respiratory season. We are very excited about this next-generation device, which will feature further weight reduction, the addition of digital connectivity and improved sizing adjustability to allow for a more customized fit. We are confident these enhancements will support the patient experience while promoting adherence. Our second innovation area is focused on the advanced pump category. Our roadmap includes the phased introduction of incremental features and product enhancements for Flexitouch, including making the device smaller, lighter, more user-friendly and with less external hosing. These updates will support the patient experience, and we will provide additional updates as we progress through our product development cycles this year. Additional enhancements will follow and may include new features that change the way therapy is delivered. With the acquisition of LymphaTech, we now also have access to an expanded capability skill set and a separate product roadmap from their development team. Over the next few months, we will be looking for road map integration points being deliberate and strategic to ensure new therapies and product designs improve the patient experience without compromising therapy effectiveness. Our third strategic priority is aimed at enhancing the lifetime patient value by supporting lymphedema patients across the full care continuum, encompassing a more efficient and personalized engagement before, during and after the order and delivery process. In 2026, we plan to continue focusing on targeted care navigation pilots, leveraging our existing resources to further solidify patient engagement throughout the complex and drawn-out order process and reduce patient leakage. These pilots are designed to proactively reach patients at key moments in the care journey, helping set expectations, reinforce required next steps and support timely progression through the order workflow. Our initial pilots have demonstrated proof of concept, showing that patients value clearer communication and guidance earlier in the process. While we continue to evaluate longer-term technology investments, our near-term focus remains on refining these pilots optimizing communication touch points and expanding their impact in a measured and scalable way. We believe this approach will improve yield, enhance the patient experience and over time, reduce the need for sales rep involvement in the order process. As you can see, we are continuing to execute well across a diverse set of strategic priorities that are designed to unlock our TAM and drive consistent growth over the near, mid and longer term. In each of these areas, we have multiple catalysts ahead, including continued commercialization acceleration and progress across our product and clinical roadmaps, which we expect will support our momentum moving forward. With that, I will now have Elaine review our Q4 financial results in more detail and provide an update on our guidance and outlook for 2026. Elaine Birkemeyer: Thanks, Sheri. Unless noted otherwise, all references to fourth quarter financial results are on a GAAP and year-over-year basis. Total revenue in the fourth quarter increased by $80 million or 21% to $103.6 million. By product line, sales and rentals of lymphedema products, which includes our Flexitouch entree and Nimbl systems, increased $12.4 million or 16% to $89.5 million. And sales of our airway clearance products, which includes our AffloVest system, increased $5.6 million or 66% to $14.1 million. Continuing down the P&L, gross margin was 78.2% of revenue compared to 75.2% in the fourth quarter of 2024. The increase in gross margin was attributable primarily to lower manufacturing costs and stronger collections reflected in our revenue. First quarter operating expenses increased $10.4 million or 20% to $62.2 million. The change in GAAP operating expenses reflected a $4.7 million increase in sales and marketing expenses, a $0.5 million increase in research and development expenses and a $5.2 million increase in reimbursement, general and administrative expenses, including and primarily driven by strategic investments. Operating income increased $6.3 million or 50% to $18.8 million. Interest income decreased $0.3 million or 28% to $0.7 million due to our decreased cash position. Interest expense decreased $0.5 million or 98% to $11,000. Income tax expense increased $5.5 million or 169% year-over-year to $8.8 million. Net income increased $0.9 million or 9% to $10.6 million or $0.46 per diluted share compared to $9.7 million or $0.40 per diluted share. Adjusted EBITDA increased to $22 million compared to $16.2 million. With respect to our balance sheet, we had $83.4 million in cash and cash equivalents and no outstanding borrowings at quarter end. This compares to $94.4 million in cash and $26.3 million of outstanding borrowings as of December 31, 2024. Turning to a review of our 2026 outlook. For the full year 2026, we expect total revenue in the range of $357 million to $365 million, representing growth of approximately 8% to 11% year-over-year. This guidance assumes our lymphedema and airway clearance businesses will grow in a similar range, with airway clearance growing modestly faster. As typical, our guidance range reflects several factors, including expected strength in airway clearance and ongoing commercial momentum in lymphedema driven by our go-to-market strategy. This guidance contemplates a recent Medicare regulatory update related to pneumatic compression devices. Specifically in January, CMS announced a new prior authorization requirement for basic and advanced pneumatic compression device codes under traditional Medicare fee-for-service. With this update, medical device suppliers will be required to obtain prior authorization before furnishing these devices and submitting claims to Medicare beginning April 13. To step back for a minute, Medicare policy in our category is and has been a dynamic and evolving environment. The pneumatic compression device codes impacted by this recent change have been included on the DME master list for many years, meaning that they were eligible to be selected for prior authorization at any time. It is our understanding that as part of CMS' annual review and update process, certain DME categories are periodically moved to the required prior authorization list to provide additional oversight. This update reflects that broader CMS process and is not specific to Tactile or unique pneumatic compression devices. Ultimately, this new requirement will add additional administrative steps to the order process for Medicare fee-for-service patients. As the industry adjust to this requirement, we expect a temporary short-term impact across the broader lymphedema market, which we've incorporated into our guidance for 2026. Importantly, we do not expect this change to alter our ability to deliver growth in line with the overall lymphedema market during this period. As the industry leader and a DME provider with longevity in this market, we believe we are best positioned to navigate this change. We already have extensive experience operating in other prior authorization environments across Medicare Advantage and commercial plans. And the investments we made in 2025 to strengthen our back-office infrastructure, documentation workflows and payer engagement capabilities position us well to navigate this transition efficiently. Once the industry has adjusted, we expect the lymphedema market to return to its normal growth trajectory. As that occurs, we believe our scale, experience and operating discipline position us to perform at least in line with the broader market. More broadly, we believe this change can benefit patients by helping ensure therapies are clinically appropriate and supported by evidence, promoting more consistent and timely access to care with fewer coverage disruptions. As always, we will continue to work closely with clinicians, payers and patients as the industry navigates this change to support seamless access to therapy and optimize patient outcomes. Turning to quarterly shaping, we expect Q1 growth to be higher than the balance of the year, driven by the timing of last year's recovery with growth moderating as we move through 2026. With that backdrop, for modeling purposes for the full year 2026, we expect our GAAP gross margin to be approximately 76%, our GAAP operating expenses to increase 8% to 10% year-over-year as we annualize our sales organization investments and advance our tech-related investments throughout the year, net interest income of approximately $3 million, a tax rate of 28% and a fully diluted weighted average share count of approximately 22 million to 23 million shares. We expect to generate adjusted EBITDA of approximately $49 million to $51 million in 2026. This outlook reflects the annualization of 2025 investments and continued strategic initiatives in 2026, which we believe are important to support long-term growth and operating leverage. Our adjusted EBITDA expectation assumes certain noncash items, including stock compensation expense of approximately $9 million, intangible amortization of approximately $3.6 million and depreciation expense of approximately $3.2 million. With that, I'll turn the call back to Sheri for some closing remarks. Sheri? Sheri Dodd: Thank you, Elaine. Our Q4 and full year 2025 financial performance was strong, and we are very proud of our accomplishments and momentum. We are executing well against our strategic priorities, and our investments in people and various workflow processes are materializing and paying off as expected. The foundation we have built over the past year gives us confidence in our ability to continue delivering consistent performance in line with overall market growth. With multiple catalysts ahead, including continued commercial momentum and progress across our product and clinical roadmap, we believe we are entering 2026 from a position of strength. As we have seen, the lymphedema payer policy environment is adjusting. And as the industry leader, we are well prepared to react and effectively respond to any change that may arise. We have confidence in our business and look forward to sharing updates with you as we move through 2026. I'd like to thank our team here at Tactile for their combined efforts in 2025. Without them, none of what we achieved would have been possible. With that, operator, we'll now open the call for questions. Operator: [Operator Instructions] And our first question will come from Adam Maeder with Piper Sandler. Kyle Edward Winborne: This is Kyle Winborne on for Adam. Congrats on a good quarter. I guess I'd like to start with the lymphedema business. Performance was strong again in Q4 and really started to pick up momentum there in the back half of last year. Can we just drill into what drove this a little more? Did you start to see the NCD interpretation kind of fully turn into a tailwind there in Q4 as you discussed? Just seeing really good productivity and performance as a result of the increased headcount like you discussed in the prepared remarks. Can you just kind of unpack the performance there for us? Sheri Dodd: Yes. Kyle, you basically noted all the things that I was going to say. Really, what we're seeing in Q4 was multiple investments in people and processes and technology, all coming together that really enabled the company to outperform expectations. So for sure, being able to have the CRM, we talked about that, that launched a year ago about this time. By the time we got to Q4, we had really strong adoption. The data was coming through. It really was built into the workflow for our sales organization. The other part of our go-to-market strategy was just increasing the number of reps. And as you saw, we had a nice acceleration of hiring as well as onboarding reps. Many of them came in, in Q2 and Q3. So they started to show more productivity into Q4. And then I would say we did see some modest tailwind from that Medicare patients moving directly to Flexitouch under the new NCD criteria. And that was something that, as you know, we held on kind of going -- leaning into that more until we had more confidence that the policy was settled and had been defined. But we did start to see some of that come through, which was nice to see and that momentum we expect to see going through in 2026. And then, of course, our airway -- you didn't ask, but I'll just throw in our airway clearance business, just did great, again, just a result of strategy and executing those partnerships and the training and education that we did. So those were the things that brought together a really stellar year -- stellar quarter for us and an overall really stellar year. Kyle Edward Winborne: Great. That's super helpful. I guess to follow up then on the lymphedema business as we look into '26, and just kind of understanding the guidance that you gave maybe kind of around that top line growth number for the total business and I guess as we think about some of these new prior auth requirements that you discussed, along with maybe some of these tailwinds that we're just starting to kick in from the NCD; I mean, can you just kind of help us balance the two? I mean did they kind of offset? How did you piece maybe kind of some of those headwinds and tailwinds there around reimbursement for 2026? Sheri Dodd: Sure. So very consistent with our guidance philosophy, our outlook that we put forward really incorporates a very balanced and thoughtful approach based on the information we know at the time. So if I look on the momentum and the tailwinds, we have the NCD. We have a much more seasoned sales organization. They're coming in strong. We basically, at the end of Q4, have the total number of reps we need. We have that ratio of a 1:1 that we talked about. So for every account manager, we also have a product specialist. Nothing has changed in terms of that patient population. We still have this underserved population. We have very strong channel strategy. So all of those things are in place, and we anticipate continuing to drive forward. For sure, the change that the Medicare requirement is asking for in the prior auth is a change than we had seen in 2025. But the fact is that we are going to be prepared for this. We already do prior authorization in our commercial business. We have to stand it up for Medicare. Medicare has never prior authorized this category before, so they'll be learning as well. So we felt it was prudent to not get ahead of our skis on this. We are prepared, we will address this. And as we work through what it takes and what that patient flow looks like, we always have the opportunity of adjusting our guidance in Q3 as we get more experience in this area. But yes, we did a balance of headwinds and tailwinds, but this prior auth is a shorter-term headwind and one that we feel very prepared to address. Operator: Our next question comes from Ryan Zimmerman with BTIG. Iseult McMahon: This is Izzy on for Ryan. I apologize for any background noise. I also want to echo the congrats on the solid quarter as well. So just to start, I was curious if you could talk a little bit more about the LymphaTech acquisition that you guys announced today. Any color that you can provide on the expected commercialization model or high-level thoughts that we can think about for 2026 and our models with that deal coming in? Sheri Dodd: We are really excited about this acquisition to our business. I have been and leaders before and all of you as well has been asking about how can you unlock that TAM that 20 million patients in the U.S. alone that have lymphedema that have yet to be diagnosed. So it fits so nice into our overall strategy in that continuum of care. So very excited about that. What we're also really thrilled about is, one, they already have a commercialized product. And so that commercialization model right now looks like us for measurement and surveillance with compression garment manufacturers use that for digitizing fitting and ordering. And then a few centers use it as just part of their overall workflow. Longer term, we do see this opportunity to integrate LymphaTech into our commercial engine, put it into our reps' hands and look at a very strategic segmentation approach to how would we go sell this in those centers where they have large volume where workflow efficiency is really going to make a difference, plus you have this great patient experience where you don't have someone wrapping a tape measure around your limbs and it being different based on who's doing it for you that this is one where it's a no touch and then the patient gets to actually see what their fluid volume looks like in their limbs. It's very sticky for them to understand the disease that they have. So we're not putting in the bag of our reps right now. It certainly -- it's available in the market. There's also a regulatory and reimbursement strategy that's in place, and we'll be looking at how we can continue to develop that so that there's a payment mechanism in place for use of the tool with clinicians. But we're going to be doing more of the specific work as we get into the integration. And again, just super excited to now have this in the portfolio, really cementing and solidifying our strategy to really lead in this area and have that full care continuum of technologies and solutions for both patients and clinicians. Iseult McMahon: Got it. That's helpful. And then just to go back to the guidance for a second. I was curious what will get you to that 8% versus that 11%, understanding all of the headwinds and tailwinds that you called out for the year and the reimbursement dynamics as well. Sheri Dodd: Sure. I mean I think that, that bottom -- so a couple of things, especially when you look at it from a lymphedema standpoint, we said last year, and we'll say again that we believe that we're going to grow at the pace of the market. We do believe that this prior auth is likely going to pull down some of that market growth. That 10% CAGR is reflective of some years higher and some years lower. And reimbursement has been a big factor in it being higher and it being lower. So I would imagine an 8% would be the prior auth is really challenging, not necessarily on our side, but for the reviewers. It's going to be a manual review. It's not an AI review. They've got to come up to speed. If they're super conservative, don't get trained. I mean those things that could potentially drag it down, that would be what we saw as being kind of pulling down the lower. But there's nothing else that's inherently disrupting the business itself. Again, the patients are there. Our channels are here. We've got the biggest sales force we've ever had. We're operationalizing our back office. We've got CRM tools. So all of those things are kind of countering what might be a little bit of that temporary drag. Operator: And our next question comes from Brandon Vazquez with William Blair. Brandon Vazquez: I wanted to follow up on the last one on the NCD changes. Maybe you can just start, give us a little bit more color. You mentioned you've been doing prior auth on the private side already for a little while. Talk to us a little bit about what does that process look like? You have a lot of CMS and private experience now. So how much could a prior auth process lengthen that process for the CMS patients specifically? And in part because I'm trying to understand what's embedded within the '26 guidance. Does the market contract for a quarter or 2 before it returns to growth? And is that what's embedded in your guidance? Or does this remain a growth market for the next couple of quarters? Sheri Dodd: Yes. I'm going to turn over to Elaine to address some of the specifics. But you originally called out a change in the NCD. And I just want to make sure that the -- nothing is changing with the NCD. So the NCD is still in place, and that really we feel has turned into a headwind where those patients who meet the criteria for an advanced pump can get an advanced pump. This is different in that new policy specifically for Medicare in the fee-for-service on prior auth, not tied at all to NCD. But I'll let Elaine talk about the process that prior auth looks like in our commercial business. Elaine Birkemeyer: Yes. I mean really, the process is you curate a package with that is usually some type of cover document that's specific information that a payer is looking for plus all of the supporting evidence medical records. It could be the demonstration that they can do and so forth. And that is submitted could be via their portal and then we actually would find a response typically by checking the portal. Now that does elongate the process. And so we've seen that with commercial. We've got some payers that are really quick in turning around and some that take longer. As I think you know, this has been a really big attention the public space as far as getting prior auth in a much faster turnaround time. I think the focus is really getting that within a week, and so we're hopeful we start to see that same thing with Medicare. So really, when we think about, to your point, is this a short term kind of slowdown from an industry, I think that's what we're suggesting is there's nothing fundamental changes the industry and we need -- we just need to learn this new process. And it really is a combination of the technical requirements, what exactly is going to constitute all of the parts and pieces of that submission packet and how would we most efficiently get the information to and from Medicare as well as any idiosyncrasies when it comes to what they're looking for. So we're really experienced. And so we've got also the ability with our new technology to be much more nimble at implementing changes. So this is why we're acknowledging it could for a short-term period, kind of slow the growth of the industry, but we feel really well positioned to navigate this. And so we don't see this as a significant long-term headwind for us. Brandon Vazquez: Okay. Great. And maybe shifting topics a little bit, Elaine, I think -- correct me if I'm wrong, but I think this was probably the best EBITDA margin quarter in the company's history. Just talk to us a little about where you're getting the most leverage? And then where can the EBITDA margin go from here? I mean you guys obviously gave a '26 guide, but where do you see the biggest opportunities for additional leverage within the P&L.? Congrats again on a nice quarter. Elaine Birkemeyer: Yes. So yes, thank you for that. That's something that we've been excited about being able to grow profitability. And if you go back to where we started the year, this is much better than we expected. So I think a combination of really good discipline from a cost management perspective as well as starting to see benefit from those investments that we've been making. So we've talked about even some of the AI tools, and they are starting to pay off. As we move into this year, you'll see that our guide suggests an increase to a more modest one, and this is a combination of us annualizing some of the investments such as our sales force. We didn't carry the expense for the full year. We will in this coming year in 2026, as well as continuing to finish out the strategic investments that are underway now. So we're happy that we're going to be able to continue to expand margins, albeit a bit more modestly this year while we're able to continue those investments. Longer term, once we get these investments behind us, we do expect to see gross margin rate grow at a faster pace than we're suggesting for 2026. Operator: [Operator Instructions] We'll go next to Ben Haynor with Lake Street Capital Markets. Benjamin Haynor: First off for me, just for clarity's sake on the prior authorization, it doesn't sound to me like you have the specific requirements that CMS is going to be demanding. And just based upon your work with commercial insurers in the past, it doesn't sound like either that there's anything that is kind of out of the box where clinicians are not used to kind of collecting the data, and it's more of a question of how quickly CMS can turn it around. Is that the right way to think about this here? Elaine Birkemeyer: So I would say with Medicare, it's been -- we've been learning day by day. We are -- we do understand kind of what forms we need to fill in. We're pretty clear because remember, we're getting approved post the claim. So we're pretty -- we have a good understanding of what Medicare is looking for a successful claim, which should translate very well from a prior auth perspective. But there are some technical things of what's the best way to submit it. Are there going to be anything from a prior auth that's a little bit different? So that's kind of the learning there. Unfortunately, every payer is different. So there isn't something that's quite out of the box, but we are excited to be leveraging some of our newer technology that does leverage AI to help facilitate and this process up. So I think that's something that we're excited that will help not only make this more efficient for us, but hopefully make that turnaround time for the patient more quick as well. Benjamin Haynor: Okay. Great. That's helpful. And then just on the bronchiectasis drug that launched here a number of months ago, are you seeing any impact in terms of growing the market there? What's kind of any color that you have there? Sheri Dodd: Sure. I mean the patient population that's in our airway clearance business really mimics the underserved, underdiagnosed population that we see in lymphedema. So the bronchiectasis growth, I would say, or at least the awareness has been driven by, say, pharmaceutical entrants, a lot more awareness, disease awareness, brought in training and education to the pulmonology and respiratory community. And so we've seen a nice uptick from that standpoint. The other good thing here, Ben, is that there is not a -- no guidelines nor clinical decision that a drug should be used ahead of this therapy. They're meant to be used together. The drug therapy reduces inflammation, but it does not actually move the mucus, which is the big challenge for these patients when they get mucus and then they get infections. So it's going to work really nicely together. And so we appreciate the fact that there is more awareness from a disease state, and we also appreciate our position being in our top 10 DMEs and having the preferred placement and seeing the growth. So this continues to be a really attractive market for us and a lot of patients that need to be served. Operator: And there are no further questions. Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.
Operator: Good day, and thank you for standing by. Welcome to Iluka Resources FY 2025 Results. [Operator Instructions] Please be advised that this call is being recorded. I would now like to hand the conference over to your first speaker today, Tom O'Leary, Managing Director of Iluka Resources. Please go ahead. Tom O'Leary: Good morning. I have Adele Stratton and Luke Woodgate with me in Sydney this morning. Thanks for joining us. I'll keep my opening short, and then we'll go straight to questions. The full result that was published this morning was really pre-reported and discussed at our quarterly review back on 29 January a few weeks ago. While there's been some incremental progress since then the key takeaways are the same. In Mineral Sands, we expect to have greater clarity around the market outlook post Chinese New Year for zircon and the head of the North American coating season for titanium dioxide feedstocks. Since we last spoke, we've maintained prior and locked in some additional contracted zircon sales, which for the first quarter, now stand at 41,000 tonnes of sand and 11,000 tonnes of zircon in concentrate. All of the industry developments I outlined at the quarterly. Rio Tinto's review of its titanium feedstocks business, the rationalization of global pigment capacity, the impact of antidumping duties on Chinese exports and the operational settings adopted by other mineral sands producers continue to play out and remain likely to influence outcomes in 2026. Iluka is well placed to respond to a range of scenarios in the context of our $1.1 billion inventory position, diversified product suite and Australian operating base. Slide 7 in today's pack expands on the uses of funds expected during 2026. As you can see, it's a significant step down from last year being over $600 million lower. This is the result of cost reduction measures enacted late last year, including the decision to idle Cataby and SR2 the conclusion of capital investment in the Balranald development. Turning to Balranald. You'll recall, we commenced mining on 1 rig in January. The second rig will commence in February, after which we'll be mining on both. Ramp-up will occur over the first half with investment case production targeted for midyear. Heavy mineral concentrate will be transported to our Narngulu mineral separation plant for further processing. With the first finished mineral sands products from Balranald to enter the market in the second half. Balranald rare earths will be transported to Eneabba to await refinance. And that brings us to the rare earth business in the Eneabba refinery, where construction continues to progress well and will accelerate over the next year ahead of commissioning in 2027. Engineering is now over 95% complete. Equipment continues to arrive at site for early placement and SMPEI contracts will be awarded over the coming months. Not long after the quarterly, we saw some further announcements from the U.S. government and commentary from the Australian and other governments regarding international cooperation to diversify the supply chain, including in relation to potential price support. These developments are obviously of interest to Iluka, their tailwinds for our rare earth business. Nevertheless, as I said a few weeks back, we're focused on building that business to be commercially sustainable for decades. Construction, commissioning, operational performance, offtake and feedstock longevity are all vital to this endeavor, and we look forward to continue to update you on our progress. To reiterate, upon commissioning next year, Eneabba will be one of the few rare earth refineries operating outside of China, a multi-decade infrastructure asset capable of processing a diverse range of feedstocks from Australian and international projects and producing both light and heavy separated rare earth oxides. I appreciate there's been a repetition from the quarterly and what I've just covered. The materials we put out this morning included some updated visuals of Balranald and Eneabba, which we hope are helpful and give some color to the exciting times ahead. With that, over to you for questions. Operator: [Operator Instructions] First question comes from Paul Young from Goldman Sachs. Paul Young: Thanks for putting the cash flow I guess, stack chart on Slide 7, that's pretty helpful. So just a few additional questions on just cash flow and other items for this year, just to sort of step through some different scenarios. Can you firstly just talk about the working cap position. I think you've got receivables of about $300 million and also payables about $270 million, which there's a bunch of accruals and there I presume then over CapEx. But just on the receivables and the unwind, how do you see receivables unwinding over the course of the year? Adele Stratton: Yes. Great question, Paul. Look, we're already starting to see that. So our net debt position at the end of January is down to $420 million for the Mineral Sands business. So those receivables will start to unwind to more normalized levels over the next month or 2. As you've noted in the payables because of those two big capital projects, elevated levels of capital accruals, but once again, Balranald come in to the end, so you'd see that pushing through. So the purpose of the new slide that we put in is to really show that step down from 2025. We're not deploying such significant amounts of capital in '26, and that's obviously clearly very material. Paul Young: Yes. Great. And just a few smaller items. I know you've -- you always do FX hedging, and I think you have USD 200 million of hedging in place of $0.68 or so for the year. So I just wanted to your comments on that, if that's correct. And then -- and also just with anything we should think about tax rebates or anything cash tax related? I mean, and the reason for the specifics, I'm just trying to really nut down the cash flow scenarios for the year. Adele Stratton: Yes, great question. So in terms of exchange, our approach to FX hedging is normally looking at the contracted sales, so we don't do speculative hedges. So we look at what contracted sales we have and put hedging in place for that. And as you rightly have pointed out, we've got USD 200 million of hedges covering 2026 at the moment. And we've done those as collars and caps, so I think it's got a $0.63 floor $0.685 ceiling. So as we progress through '26, we'll continue to do that sort of hedging approach to ensure that you're quite conservative in terms of forecasting your cash income on your revenue. I think just on the sensitivity for any -- a lot of people ask, well, how sensitive are you to exchange. As you'd be fully aware, Paul, most resource companies price their products in U.S. dollars. So they do have exposure for every USD 100 of revenue. That's about a AUD 2 million FX impact for each $0.01 change in the exchange rate, but we've got the hedging in place. Coming -- we've got a tax refund due in the first half. So as a result of some of those accounting adjustments that we put through in December, so specifically the inventory write-down, you actually get a tax credit for that. So on the balance sheet, you'll see a current tax asset of about $52 million. So that cash will come through in H1, and depending on earnings in '26, your installments will start in the second half. Paul Young: Great. Okay. So it seems like plenty of headroom. I know some offer facilities still about $250 million of undrawn as well. So that's great. And then maybe just turning to Balranald just briefly. I know that a really good picture there of the ore/pure HMC on the ground. Tom, just to share exactly how the mining unit is performing. Any like operating data you can share with us with respect to uptime, utilization, production rates versus plan? Anything you can share with us? Tom O'Leary: It's probably a little bit early to be specific about that, Paul. We've had the one mining rig up from January. And we're experiencing the usual commissioning pickups along the way, but we're pretty pleased with the extraction rates, which have been at times at investment case levels. And we're now getting the next mining rig operating really probably in the next week or so. So pretty pleased with how it's progressing generally and really on track to be at investment case rates by the middle of the year. Operator: Next, we have Rahul Anand from Morgan Stanley. Rahul Anand: Look, for my two questions. The first one I'd like to cover on markets and then the second one on Eneabba perhaps an update on the offtake. So I guess the second one is for Adele. So for the first one, I just wanted to touch on zircon and TiO2 markets, Tom, and if there's others on the call. Firstly, on zircon, obviously, your sales for zircon this year would be a significant bit lower. Do you think that void gets filled in? And perhaps does that create any sort of tightness or improvement in demand on the zircon side? And then for the TiO2 side, I mean, obviously, we're waiting for that U.S. housing recovery. But is there perhaps a read on sort of where inventories sit on the feedstock or the downstream side for the pigment guys as well for them to be able to kind of deliver into that upswing into the housing cycle in the U.S. I'll come back with my question on Eneabba for Adele. Adele Stratton: Sure. So on zircon, I don't think our decline in zinc sales is going to have a significant tightening impact on the market. We are pleased to see the sales we're achieving in the first quarter. There's still, I think, pretty solid demand for premium zircon. And we continue to see that persist over the last couple of years. I expect it to continue. On titanium, look, we, like you, are looking forward to the recovery in the Northern Hemisphere. There seemed to be a bit of optimism about recovery. But as I said on the call a few weeks ago, it's really a bit early to be weighing into that optimism at this stage. Let's just see how it plays out. And your other question was in our inventory. Yes. Look, I think in the -- sorry, go on, Rahul. Rahul Anand: No, sorry, I was saying that's on inventory, but you already picked that up. So please go ahead. Tom O'Leary: Yes. Look, not had a lot to add on inventories to what we've said in the past, there's not a lot of inventory in the paint end of the supply chain and the pigment producers, I don't think, are holding a lot of inventory of pigment. Some are holding inventories of feedstock, but it's different among different players. So I think there's a potential for a pretty rapid uptick in demand for our products when we see that pull through in -- from construction activity in the North. Rahul Anand: Got it. Perfect. Second one is perhaps for Adele, just perhaps an update on those conversations in terms of offtakes how they're progressing? And any sort of color you can add in terms of, I guess, what you guys are looking for and what the companies you're talking to want and perhaps what are some of the topics being discussed in terms of arriving at an offtake? And then just as a second part of that question, are there any specific requirements in terms of I guess, minimum volumes or price, et cetera, in the offtakes that you require for the funding? Adele Stratton: Yes, let me deal with the second part of that question first, Rahul. So in terms of the funding that we have with the Commonwealth, the clause within the second tranche of the export finance Australia facility just says offtake sort of satisfactory to the government. So there's no more specificity than that. So no volume, no price, no duration. It really is what is satisfactory and as you can imagine, we work very closely with our strategic partnerships and the world is forever changing in this space is what I'm saying. Just coming back to the offtake question more broadly. I think we've probably touched on this before in terms of this has been -- I'd call it a marathon and not a sprint in terms of when we entered this market back in 2022, we were very clear that we'd be entering the market in a very different manner to all the other players in the market at that time and that being that everybody else price the products based on the Asian Metals Index. So a price linked to China. And from the very outset, we didn't want to tie our P&L to Chinese government policy. And hence, we've been introducing the concept of a different pricing mechanism. I think we've touched on this, that can be quite a variety of different types of contracts. So it could be fixed pricing, it could have floor prices that could have floor and in ceiling. There's a number of different ways to skin the cat. And that's really what we've probably spent the first 18 months discussing as a different approach to market. Those discussions have most definitely been helped by the deal, the MP Materials struck with the U.S. administration. Around putting in place floor prices. And that's specific to the light rare earth, so just the NdPr. I don't think that really crystallized for a lot of potential customers that there are different ways to play in this market. And we've had good traction to date, but that was probably a bit of a catalyst. So coming back to where we are now, we have a range of different conversations with a range of different customers. Rahul, they all have different strategies and methodologies that works better for them. But we are really focused around delivering sustainable returns that are commercial, so really looking at what is the cost of new feedstock into the refineries. They're not really reflecting any other stockpile because as a result of history, that sits on our balance sheet at 0 cost, but we want to create a sustainable business. So we focus on the cost of new supply into the refinery and ensuring we have achieved appropriate returns. So as I've said a couple of weeks ago, really confident that we'll have some contracts in place in 2026 and unfortunately, I can't really give a blow by blow as to with whom and for how much, et cetera, and the contract is never really done until it's signed. But yes, I have confidence that we'll get there. Operator: Next question comes from Glyn Lawcock from Barrenjoey. Glyn Lawcock: Just a couple of quick questions. Firstly, just on Balranald. I know you -- I think you made a comment in your opening remarks that you hope to have first finished products to enter the market in the first half. But -- it may be a moot question, but have you actually produced any finished product yet over in the West? Or is it still in transit? Tom O'Leary: So Glyn, I said second half that it would be in the market. Yes. So, no, we haven't got finished product in the West yet. It's still in Balranald. So those stockpiles you see in the deck still in Balranald. Glyn Lawcock: Okay. So we'll have to wait what another month before we know how it processes? Or is that the least that your worries? Tom O'Leary: Just looking at it, you can see that the material really just passing through the concentrator is kind of looking like high-quality product already. It's the grades we've seen haven't disappointed. So yes, I don't think we've got concerns about how it's going to process at all. In fact, we have process some in the past, so it's not really a risk on the register, if you like. Glyn Lawcock: Yes. No, that's great. And just Second question, just on your comments in the release about Eneabba, it would appear contingencies gone down a little bit from $270 million to $235 million. Just Two-part question. Just what's changed, like what's eaten into that extra $235 million, if I'm correct? And then secondly, you're obviously tendering for your remaining work packages will award them this half. It feels like a little bit like what's happening with South32 last week. But just any early indications should we be concerned on anything you're seeing in those tenders? Tom O'Leary: No, I don't think so, Glyn. The -- we've always said that the SMPEI arrangements were the larger but they're obviously the largest of the construction contracts and we're looking forward to getting those done this half. No, I wouldn't say I was concerned about them, but it's a -- concern is an interesting one. When we're building a refinery, it's kind of a heightened state of attention for the entire duration. And that's the way it needs to be to ensure that we remain on track. The utilization of $35 million of that amount dedicated to contingency growth and so on is really not material in the context of the overall project. So again, not alarmed by that. Operator: Next we have Austin Yun from Macquarie. Austin Yun: Just to expand into the question from Glyn. For the remaining $235 million contingency, where is the residual kind of -- for the component where is most likely to be deployed as you continue with the project? Adele Stratton: Yes, Austin. Just in terms of capital projects, you'd be very aware in terms of obviously, when you're selling your budgets, you have your input costs in terms of your materials, your labor, your schedules. And within that, you'll always allow for growth contingency and escalation, which is what the $235 million relates to in terms of where do I expect that to be consumed. I think really what people should be taking from what we've announced today is that we've now spent and committed well over, what, 60% in terms of where the projects are, and you've still got a really, really healthy contingency for the remaining spend to come. So there's no particular point whereby I think that might be consumed here or there. That's just really prudent project management. So this number will ebb and flow every day. It goes up and down depending on sort of where the contracts are at and sort of volumes of offtakes, et cetera. So I think the takeaway from what we've announced should be a real confidence around the capital range of the $1.7 billion to $1.8 billion is really what the takeaway should be. Austin Yun: Yes, totally great. Just a second quick one on the cash flow management into 2026. I can see all those efforts to reduce the cash spend and the slide was really a good one on Page 7. Just given the current net debt level, keen to understand if there has been any changes in the thinking around your stake in Deterra Royalties, given the company offers different exposure. Does that really align to pivoting to critical mineral phase company? And also, like, I believe Deterra indicated yesterday that the shareholder return will stay around 75% to sort of 100%. Just wondering how to think about that stake given you try to unlock cash to support the business to pushing towards the critical minerals space? Tom O'Leary: Yes. Thanks, Austin. Really, it's not a lot to add to our previously stated position that it's not regarded as core business, just for the avoidance of doubt, royalties and so on is for Iluka. But the key is that to divest that stake would attract pretty significant capital gains given the tax cost base there. So it's an expensive form of capital. So I think unlikely to be utilized, but it is there and provides comfort to counterparties, to lenders, to shareholders and so on. Operator: Next, we have Chen Jiang from Bank of America. Chen Jiang: Just on Eneabba project, 95% engineering down, 60% of CapEx has been spent and committed. I'm wondering when is the peak construction in 2026? And how long would it take from peak construction to code commissioning? Tom O'Leary: Yes, I mean, peak construction is very much approaching us. I think we've disclosed, we've got some 600 people on site on rotation, obviously, but some 600 people working at Eneabba, and that will increase somewhat over the second half of this year. So you should expect peak construction in the second half of this year, beginning of next, moving into commissioning later in '27. Chen Jiang: Right. So -- and then CapEx, I guess, given 60% already spent, you must be very comfortable with your CapEx outlook over the next 12 months with -- in parallel with how you construction or peak construction? Tom O'Leary: Yes. Comfortable is probably too close to complacent in the dictionary. So I wouldn't say that, Chen. I'll just go back to my earlier comment that managing a project like this, you need to have a heightened state of attention throughout to ensure that we meet our targets in terms of capital expenditure, and that's precisely what we're doing. Operator: We have a follow-up question from Paul Young from Goldman Sachs. Paul Young: Just a question on inventories and this possible drawdown of that, just starting that finished inventories of zircon rutile SR and now it's sitting around 380,000 tonnes, I think up from 320,000 or so for midyear. So it sort of makes sense based on just looking at production and sales, obviously, over the last 6 months. Just curious around, first of all, specifically the zircon component in that because I think SR probably around 150,000, just wondering where zircon inventory sit within that? And actually an extension to just overall operating parameters for the year and just how you manage costs in general. We haven't really spoken about JA and just the operating sort of strategy down there. Is the operating strategy on JA just to run at full tilt at the 10 million tonnes sort of ore throughput rate? Or have you got some flex around sort of costs and optimizing cost of JA? Adele Stratton: Yes. Paul, happy to take both of those. So in terms of inventory position, as you say, we've highlighted that on Slide 8 in terms of where we're at on finished goods. So rightly so, 379,000 tonnes. We generally try not to give breakdowns in terms of the mix of that pool just from a competition perspective. But I should say, we have guided that we've got 110,000 tonnes of sales in 2026, and we've also noted that we're not running the kiln. So one can deduce that all of that sales volumes are coming out of inventory. So we are certainly looking to draw down inventory in '26 and that obviously supports cash generation. You've already spent the money on producing this material. So it's really the next step in liberating cash. And I think we're very well positioned coming to your question around zircon and JA. Generally, when we're running our operations, we do run them at full capacity in order to optimize unit costs. Jacinth-Ambrosia coming towards the end of its life. And as you're fully aware, the team are very focused on the Typhoon project, which provides a couple of years extension to Jacinth-Ambrosia that's a big focus for the team. But yes, in 2026, our cost outlook assumes that JA is running a full tilt and a real driver of that is also to generate that zircon premium as Tom talked to earlier. We still see good strong demand in the premium market. There's not huge amounts of premium all over the place, so JA premium is very designed in the market. Paul Young: Okay. Great. Just one final question. Just on third party. You obviously got Linden agreement in place and the investment in Northern Minerals. Is there any update on Northern Minerals. There's a lot going on at the corporate level with that company, but I've got some additional funding -- government funding for their project in Northern Territory, any update on just how that project is tracking and potentially when that could be coming into production? Adele Stratton: So look, yes, Paul, as you say, Northern Minerals released the definitive feasibility study sort of, I think it was third quarter, early fourth quarter last year. And on the back of that, being very successful in achieving sort of funding through the U.S. And so really, the job of the management team there is to continue to get that project fully funded to enable us to take the FID. I think there will always be noise around the share register. This is a unique deposit globally. I know that we've talked about this in terms of just the high assemblage of heavy rare earth. And that's really quite interesting because what we're seeing in more recent times have in China as a bifurcation of heavy rare earth pricing in China, so it's much cheaper. If it works and stays in country than when it's exported. So this focus on ability to secure heavy rare earths, I can imagine that will continue to be a focus globally. Tom, anything you would like to add? Tom O'Leary: Yes. No, I think that's pretty comprehensive Adele. I think we're really pleased to see they've had the expression of support from the U.S. and Australian government, and we'll obviously do what we can to support their achievement of FID in a timely way to very attractive deposit for the West's independence in terms of supply chain for heavy rare earths and an important development. Operator: [Operator Instructions] Next question comes from Dim Ariyasinghe from UBS. Dim Ariyasinghe: Yes. Can you just refresh us really quickly on what you've said on commissioning in terms of the time line for that? And then just in terms of the offtake, has the idea of prepayments come up? Is that something that we should increasingly think about? What can we think about that? Tom O'Leary: Look, I'll hand over to Adele around prepayments and so on for offtake. We think about a lot of things, Dim, but we're pretty focused on selling the product and getting cash for the sale. But in terms of commissioning. We've talked about the mid next year, we'll be in commissioning at Eneabba. So no real change or update on that. Anything to add on offtakes, Adele? Adele Stratton: Yes. No, not really in terms of prepayments, is that a big focus? Not really, Dim. There's always trade-offs in terms of different payment terms or prepayments and all of those types of things. We're very focused, as I said at the outset in terms of putting in place commercial contracts that underpin longevity of the refinery. So yes, it's not been a particular focus at all for us. Dim Ariyasinghe: Understood. Sorry, not commissioning, a ramp-up like when -- I presume -- like what's that ramp-up period look like? And I presume that will just be the stockpile at first? Adele Stratton: Yes. In terms of the refinery and the commissioning, obviously, there's a number of stages to that commissioning of any plant, Dim, including initially wet commissioning and then introducing the product. I think when we've talked in terms of when you would start to introduce your reagents into the plant, then that can take 3 to 6 months to work its way all the way through into the separation and finishing. And then there's a ramp-up curve. We use McNulty, different curves to be perfectly frank. So I think historically, we've said to get from commissioning all the way to full ramp-up is about a 2-year period to full ramp up. But yes, very much as Tom's articulated, commissioning in mid-'27. Tom O'Leary: Yes. And Jim, just you asked on Balranald -- sorry, on Eneabba, we'll be using Eneabba monazite to be commissioning the part exclusively for that period. Well, look, I think that's all the questions we have. So thank you all for joining us. Really look forward to catching up in person over the coming days and weeks. Bye for now. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Sam Wells: Good morning, everyone, and welcome to the Lycopodium First Half FY '26 Results Call. I'm Sam Wells from NWR Communications. And joining me from the company today is Managing Director and CEO, Peter De Leo; as well as CFO, Justine Campbell. Following a brief summary of the results released to the market this morning, investors and research analysts will have an opportunity to ask questions. There will be the choice of 2 options. First, analysts and investors can either raise your hand should you wish to ask a verbal question of the management team and you can also submit a written question via the Q&A function at the bottom of your Zoom screen. We'll endeavor to get to the majority of questions asked, in some cases, combining submitted questions on the same or similar topic. And for those analysts asking verbal questions, we kindly ask that you keep your questions to no more than 2 or 3 live questions on today's call. Thank you. And over to you. Peter De Leo: Thank you, Sam, and welcome. Thank you for your attendance at our formal investor presentation for the first half of FY '26. As Sam said, I'm joined this morning by Justine, our CFO; and Rod Leonard, our Chair. This morning, I'll be -- mid-day for many of you. I'll be just running through a typical investor presentation, covering off a little bit about the company, providing an update on the financial highlights for the period, touching on operational highlights for the period, then addressing outlook and guidance. And we also provide, as part of the presentation, although I won't be running through in any detail this morning, appendix, which contains a lot of additional and hopefully, informative information. Lycopodium remains a leading global engineering and project delivery group, working across mineral resources, industrial processes and infrastructure industries with an extensive book of quality clientele and 18 offices across the world. I'd speak to our clientele. We have an amazing bunch of clients across all those industries I mentioned, through very, very large clients, mid-tiers and junior explorers and miners, and we're very grateful for that client order book. As a project-focused organization, it is of significant importance and to our benefit to have involvement with projects from the very early stage. Hence, our involvement in scoping and feasibility studies and the evaluation phase of projects through the full engineering and project delivery as a full-service provider in that phase and then also on to optimization and expansion phase works enables Lycopodium to benefit from a project's full life cycle. It's been something we've focused on over the years, both in broadening the services which we provide, but also broadening the time which we are involved in projects. We maintain a high workload with a strong current order book of studies and delivery phase activities on a broad range of quality projects. Committed contracts are valued at $415 million, that's up on last period. And also revenue opportunity pipeline is $1.3 billion, also up on last period, which really indicates -- and I'll talk more about it obviously later, the outlook for the business, but indicates that we are continuing to see busy market, enjoy a busy market and see a busy market. By way of financial highlights, Lycopodium did $174.5 million worth of revenue for the period and $18.3 million NPAT, which provided a 10.5% NPAT margin, which is in line with our expectations for achieving our NPAT target. The Board of Directors declared a $0.22 per share fully-franked dividend for the half year, again, returning to our traditional sort of dividend policy, our dividend expectations and had strong cash at bank at the half year. The company enjoys excellent diversification across a broad range of commodities, clientele and geographies. Those of you that have seen the slide previously may note that we continue to achieve more balance in support of this diversification across these metrics. And we're striving to continue to do this on an ongoing basis. We'd like to see a strong balance in terms of diversification across commodities, across geographies. In particular, it provides surety and strength moving forward. From an operational perspective, we've recently been awarded a number of FEED or front-end engineering and design briefs, which we expect to position us optimally for the next phase of each project. These include the Winu copper project for Rio Tinto, the Assafo-Dibibango gold project for Endeavour Mining, which is our next development project, development gold project for Resolute and a number of others, including most recently, Pilgangoora Plant Expansion lithium project in Western Australia. We've also started initial work on 2 material prospects being Tulu Kapi gold project and the Blackwater Expansion Phase 1A project Artemis Gold. In terms of the LatAm, we hope to be able to transition on to a larger project with our Blackwater Expansion project and awaits news on that thing, which we believe maybe imminent. Of note, however, there has been a shift to the right on these projects, particularly taking in Blackwater from a timing perspective, probably about a 3, 4 months shift from what we previously expected and forecasted, and it has impacted our financials and forecasts. However, we continue to invest in building capacity in anticipation of these and a swathe of other material opportunities and this is really important. We are in a competitive labor market across the world for our people, and we've retained our people and continue to grow our people count and also our capacity in terms of office space and just general corporate capacity, what we see is being a large number of prospects. Our study pipeline is very strong. And those that have been on our calls previously, you would have seen this slide in particular, which tries to demonstrate our early phase work, our work which is midstream in middle of its delivery and then that stuff that's being -- projects that's being completed in recent times. And you can see there is quite a number of new opportunities, new projects, which have ticked into early phase work. I spoke around the Blackwater Expansion Phase 1A, Tulu Kapi, Winu, et cetera. And there is other projects such as Diamba Sud, Iguidi and Doropo where we're doing the FEED work and we hope that those projects will go into full execution and we will be able to participate in the full delivery of those projects. We also got a really strong portfolio of projects, which are called heavy delivery, including Kon in C te d'Ivoire, Yanqul Copper in Oman and a number of other projects, which are listed there and of course, some projects which we already completed. So, we're very, very happy with the number of studies that we've got and that's traditionally the key metric for businesses. We're working on a good number of -- and quality of studies, which tends to be a good indicator for what we'll be doing next. Our focus on people continues as we seek to maintain and enhance our status as an employer of choice and a place where people can develop excellent careers, advance themselves personally and professionally and enjoy growing with the company. Our approach to keeping our people and those on our managed sites safe is demonstrated in our exceptional safety track record. So on to outlook. Demand for our services remains very high based on our excellent track record and performance on all of our most recent projects as well as market conditions, which generally sees commodity prices strong, if not historic high levels, obviously, gold being very, very strong. At the moment, we're seeing enormous number of opportunities emanating out of our traditional markets, including Africa, Australia, but also across the Americas. Silver being another commodity, which we're seeing. A number of projects we've started work on the PFS for Unico Silver in Argentina, supported obviously with our investment in SAXUM. We're also seeing, on the basis of our expansion across the Americas, lots of many new opportunities and the like being presented to us or prospects that we have identified and are pursuing. But we also continue to invest in building capacity and capabilities globally. We've, in the last 12 months, have planned for the next 12 months to increase the capacity in Perth, Toronto and Cape Town, in Lima and in Manila. And that's in preparation for the work and the prospects, which we continue to see, and we see that this will bear fruit in subsequent financial years, certainly, but we also expect to support a strong second half of this financial year. We revised guidance, primarily due to the shift rise of a number of those major prospects. I spoke about the 2 main ones, which are expected to contribute materially to our forecast. We now provide guidance of group revenue between $370 million and $410 million, and NPAT between $37 million and $41 million, in line with our target NPAT expectation of around 10%. We'll obviously continue to keep the market and shareholders updated on any material changes or any material awards. But we consider the second half will be strong to achieve those -- that guidance which we provided. We remain a secure, stable and sustainable business, doing great work globally. This is based on the deep engineering expertise and growing teams, and keeping teams of exceptional high-caliber personnel and we provide lots of, what I call, value in the services which we provide globally. We have a long track record of highly disciplined risk management. We're also focused on ensuring that we have a good portfolio of contracts and style of work, which talks to both risks and also talks to return. And again, leveraging experience over the years. We have a very strong history of execution of projects and execution of business generally, with strong alignment with management and our shareholders. We still have around 30% of the company's ownership held by Board and management. We have a very capital-light approach. We're not an organization that requires to spend a huge amount of capital to generate our returns, and we continue to pursue business in that fashion. I've touched on in the appendices, which you can go through your leisure. You can review the very strong field of blue-chip clients that we have. It's a very diverse list. Lots of clients have been with us a long time. We continue to deliver repeat business as predominant. The quantum of work that we do is in the form of repeat business for clients, new projects for existing clients and the like. Strong commodity diversification, I spoke around that earlier. I think we continue to strike a good balance there. Even in the light of a very strong gold price, we're still busy in lithium. We're still busy in uranium, copper and a bunch of other commodities. Lycopodium, certainly against our peers, appears to have an undemanding valuation. And the geographic diversification, I think, for us is key. We continue to expand geographically. The Americas has been a fantastic geographic expansion for us. The acquisition of SAXUM, the opening of the Lima office and Vancouver office, et cetera. We're seeing tremendous number of opportunities coming through. Again, it's fairly early days. So, we have got expressions of interest in and proposals in a number of new opportunities across Latin America in particular, but also our North American operations continue to see a level of inquiry, which is unprecedented. So, I think certainly the word is out about Lycopodium across the Americas and we expect to see continued sort of growth and opportunities for business activities across the next couple of years coming out of the Americas, let alone our traditional Africa and APAC regions. As I said, we also provide some additional, hopefully, informative content as an appendix to presentation to further explain and illustrate the strength and quality of our business. So, I'm not going to go through that this morning. I welcome you to talk through as ever after this presentation. If you have any questions, please feel free to reach out to us with those questions and hopefully, you can ask on the appendices. But thank you for attending our webinar and I welcome any questions that you may have now for us and we'll do our best to answer them. Thank you. Sam Wells: Thanks very much, Peter. [Operator Instructions] First question comes from Oliver Porter at Euroz. Oliver Porter: Just a quick one. You mentioned adding capacity and headcount kind of across the board globally. Can you just talk to how you're finding the labor market and perhaps if by geography, are you having any particular challenges or how that sort of is going to look over the next 6 to 12 months? Peter De Leo: Thanks, Oli. Yes, the availability of good talent is always challenging, and that sort of is a constant. We're seeing that in Australia. We're seeing that in Canada. We're seeing that in South Africa, in particular into large operational hubs. But we continue to recruit good people and bring good people in. And again, talking about -- I touched on our focus on people and the focus on careers and the focus on providing people new exciting and diverse work is something which we sell. And we don't -- we never have people come to light and think that they are joining anything other than an exceptional business, which is great. And so it makes it a little easier, but they are tough markets to find. There's a dearth of high-quality experienced personnel globally. So, we value it very much. To that point being, across the last part of the first half, we maintain capacity where if you weren't expecting to continue to see growth in demand, we may have trimmed capacity at times just to maintain utilization up, which is a key metric for our business. But we maintained it particularly in Cape Town, knowing full well it's not easy to get people. You can't just let people go and expect them to rejoin you in 2 months' time, knowing with the full knowledge that we had the amount of work and are seeing our work potentially ahead of us. We sort of were very careful to maintain our teams and to continue keeping on that capacity and growing that capacity. Oliver Porter: Great. And just with SAXUM, it's slightly slower start than you initially expected. But can you speak to how the opportunity pipeline as it stands today compares to your expectations when you made the acquisition? Peter De Leo: Yes. You're right. Their own performance in their own right as a business unit has been slower than we would have liked. Again, those you've heard us speak about the SAXUM acquisition before, for us, the acquisition of SAXUM wasn't so much about what they would contribute to the group in their own right. It was about the opportunities that they will bring to group and the [ features ] that they would provide within Latin America and the Americas, more particularly Latin America and enable us to access clientele and opportunities that we hadn't been previously. If we wind the clock back 18 months, Lycopodium wasn't bidding anything in Latin America. It was aware of lots of opportunities. And we're now sort of much more across and attuned to and enabling and aim to pitch flow opportunities. As I said, Unico Silver is one example. It's PFS, obviously, at this point in time, so relatively early days. They are Australian listed company with silver project in Argentina. SAXUM, in fact, secured the PFS, on the back of good relationship and it's part of our group. And it's supported -- in that case, supported by our Americas' officers and process teams. We're currently bidding a -- or express of interest with a view debating a large copper concentrator opportunity within Argentina, again, supported by APAC, driven by APAC hub, where a lot of [ horsepower ], a long track record of large copper concentrators only enabled by the fact that we have the SAXUM business. So in that respect, it's going exactly to plan. Integration of the business has occurred and has occurred really well. And there is no issues there and no concerns there. The traditional cement market is slower than they would like to have seen and they would like to see, of course. And have we landed a big fish or even medium-sized fish at this point in time, we are really in good stead on a number of great opportunities that we wouldn't have had before with SAXUM bought. Sam Wells: Next question comes from Stephen Scott at Veritas. Stephen Scott: Just on Slide 4, world of green dots. Just noticed that Europe and also maybe Middle East maybe presencess there. Do you have any thinking about that in perhaps the medium term? Peter De Leo: Thank you, Stephen. Europe is not on our radar per se. It's not a huge amount of minerals activities in Europe. There is obviously some mineral activity, but not a huge amount. Middle East, on the other hand, is on our radar. In fact, of course, we're currently working on the Yanqul project in Oman, where that project is being delivered at our Americas hub. But also the Americas hub is also seeing a number of inquiries from Dubai-based and Middle East based groups, some projects in the Middle East, some projects out of the Middle East and particularly into Africa. And we also -- we have an entity established in Dubai where at this point in time it's on the shelf. But acknowledging that we do need to find the level of prospectivity in that region increases to such a point that we consider to have an operation there. We can activate that. But certainly, I think Middle East from a level of prospectivity, it's certainly something that we have an eye to -- we can service out of APAC and out of Africa or out of our Americas' hub and where clientele are and where relationships exists. There's quite amount of, I guess, money coming out of Dubai in particular, Abu Dhabi, Saudi alike. So, I expect to see some opportunities coming out of there. Sam Wells: The next question -- we probably have a couple of questions on the shifting time lines. Are there any specific factors that caused the delays to Tulu Kapi and Blackwater? And are there any second order impacts on these delays? And specifically, there's a couple of questions around how much extra cost did you have to carry during the half that are associated with those delays? And is that visible in increased project expenses as a potential forward indicator? Peter De Leo: It's not indicated. It's not related to additional project expenses, let's say. What it relates to -- let's just deal with the first part of the question. And that is around timing, project delays and the like. Unfortunately, the reality of our world is that we don't control when projects start. We can influence obviously by completing our study work efficiently, effectively and well, making projects more fundable, more easily fundable and dealing with what we do with our partnering, our inputs to projects, making sure they are high quality and we do that regularly on an ongoing basis. But the timing when a project starts, when it gets funded, when it gets permitted, some of those we call nuances around when a projects has a full green light. It's not something we can control. I'll give you an example. We did a project last year, early last calendar year, polymetallic project in far north Canada. We gave a red hot crack. We were shortlisted and have caused [indiscernible] perhaps even the favored party. That project at the time was apparently going to be starting in calendar year '25. That project still got [indiscernible] and some effectively native title issues still in group. These things we can't control. We do our best to forecast and to do a likelihood and probability of a project going and then a likelihood probability of us securing to that project and then what that might mean for our business size, our capacity, our capabilities and all that business planning that we do. But unfortunately, we don't control the timing of projects. And two, that we sort of singled out in our presentation today, we singled out because they are material contracts potentially. They get fully green light and we fully secure them. They're both material contracts and have material demands on the business. And we prepared in advance for what was meant to be a kick-off in, call it, fourth quarter 2025. And you have to do that because you can't be caught flat-footed on all these things. They all have aggressive and challenging schedules. And when things don't kick off necessarily exactly as per our forecast, we have to enact contingency plans and the like. And to the second part of your question, increased project expenses that you're seeing in the financials really relate to FG Gold, Baomahun, which is a relatively soft form of half EPC. I can't give too much detail, but it's a project where you're seeing some direct costs being coming through our books, so as we've seen project improvement -- project costs. And on the equipment side, we've started a business about 18 months ago called [ pudco ] where we sell some form of OEM, products leveraging our technical capabilities and our technologies developed over the year and that's what you are seeing there. And to the last part, are we seeing -- have those project delays caused us to incur costs? Well, in one respect, yes. What happens with project delays where you start seeing a softening in utilization of our personnel because you bring on 40 people and they're not fully occupied to the level you'd like to see them occupied. That can have an adverse impact because you're carrying some of their costs. It's not flowing straight through projects. But again, it's just a reality. We tend to model our commercials, around a certain utilization level. If you're doing better than that utilization, then you make more profit, you are doing less than utilization, you start running into your target profits. Sam Wells: And maybe just as a follow-up to that. Can you comment on first-half '26 utilization, particularly in the second quarter against PCP? And what would your expectations be for the H2 balance? Peter De Leo: We expect to see utilization increase. Utilization was reasonably high through the first quarter of this financial year. It has softened across second quarter, as I said, certainly in some of our operational centers. APAC and Americas was running both fairly high utilization levels. Africa headcount lower as well as Process Industries business at this time in SAXUM. Again, though as a group, we were still running above target. Utilization levels were softer than we had seen in the first quarter. We expect those utilization levels to increase. Our forecasts are that they will increase through Q3, Q4 of this financial year. But certainly, beyond that, we expect, based on our forecast that we'll see utilization increase into FY '27 as well and not only increase, but we expect probably bigger numbers, bigger headcount in due course, obviously, evidenced by -- we're taking on more office space and the like. So, that's part of the plan. Sam Wells: And in regards to the number of studies being currently undertaken by Lycopodium, how much would that be up on perhaps a 12-month range? Peter De Leo: It's a bit of a tough question. It's been in studies. In terms of total quantum, it's probably there or thereabouts, maybe a little higher. But it's obviously also the mix of studies and what those projects look like and we are studying what the size of them are, what stage study it is, et cetera. So it's always a tough question to answer. But if you just look at -- are we got more studies on today than we had on this time last year? Probably I'd say we do. Because we're doing more studies in the Americas. There is similar amount of studies here in APAC and probably a similar number of studies out of Africa as well. So it's probably up. Sam Wells: And maybe just the last question this morning. Can you give us a sense of the conversion rates you currently see through the life cycle of project development, i.e., for each client that commences a scoping study, do they utilize Lycopodium for delivery and operations? Peter De Leo: Often, yes. Sometimes no. I'd say most of the project work, which we get involved in, we've been involved in study work. And we expect that you have an advantage if you completed the feasibility study, whether it be PFS. PFS, often when you are doing the scoping, you generally roll into PFS, DFS and so on and so forth. But what I will say is taking a project from scoping study, especially copper project, copper concentrator, for example, the scoping study level through execution might take you 10 years. So, these things take a long time. Gold projects somewhat less in this market. We've got a number of clients who haven't done a scoping study and want to be in execution, want to be pouring gold by Christmas next year, which is unrealistic, of course. But there is no shortage of sort of enthusiasm, call it, that side of fence at the moment. Sam Wells: I think that's all the time we have for live questions today. If there are any follow-ups, please feel free to e-mail me and/or Justine, and we'll endeavor to get back to you. And maybe just with that, Peter or Justine, I'll pass it back to you guys for any closing comments. Peter De Leo: Thank you very much. Look, nothing else to add other than we're very happy with the way the business is tracking at the moment. We're really working to plan. Obviously, dealing with the vagaries and the separate project timing and some of that impact that it has to the business over time. But in terms of the strength of the business, the fundamentals of the business, the balance sheet is, of course, remains strong. We're always looking for new opportunities, looking for how we can leverage our capabilities and do more and continue to do it as well as we are doing it, if not better. So, that's it for the presentation. Again, as I said earlier, if you have any questions, please feel free to reach out to myself or Justine and we'll try to help you out with answers. And thank you very much for your attendance. Sam Wells: Thank you very much for joining today's Lycopodium first half results call. Enjoy the rest of your day. Goodbye.
Operator: Good day, and thank you for standing by. Welcome to the Beta Bionics Inc. Q4 and Full Year 2025 Earnings Conference Call and Webcast. [Operator Instructions] I would now like to hand the conference over to your speaker today, Blake Beber, Head of Investor Relations. Blake Beber: Good afternoon, and thank you for tuning into Beta Bionics Fourth Quarter and Full Year 2025 Earnings Call. Joining me for today's call are Chief Executive Officer, Sean Saint and Chief Financial Officer, Stephen Feider. Both the replay of this call and the press release discussing our fourth quarter and full year 2025 results will be available on the Investor Relations section of our website. The replay will be available for approximately 1 year following the conclusion of this call. Information recorded on this call speaks only as of today, February 17, 2026. Therefore, if you're listening to any replay, time-sensitive information may no longer be accurate. Also on our website is our supplemental fourth quarter 2025 earnings presentation and updated corporate presentation. We encourage you to refer to those documents for a summary of key metrics and business updates. Before we begin, we would like to remind you that today's discussion will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect management's expectations about future events our product pipeline, development timelines, financial performance and operating plans. Please refer to the cautionary statements in the press release we issued earlier today for a detailed explanation of the inherent limitations of such forward-looking statements. These documents contain and identify important factors that may cause actual results to differ materially from current expectations expressed or implied by our forward-looking statements. Please note that the forward-looking statements made during this call speak only as of today's date, and we undertake no obligation to update them to reflect subsequent events or circumstances, except to the extent required by law. Today's discussion will also include references to non-GAAP financial measures with respect to our performance, namely adjusted EBITDA. Non-GAAP financial measures are provided to give our investors information that we believe is indicative of our core operating performance and reflects our ongoing business operations. We believe these non-GAAP financial measures facilitate better comparisons of operating results across reporting periods. Any non-GAAP information presented should not be considered as a substitution independently or superior to results prepared in accordance with GAAP. Please refer to our earnings release and supplemental earnings presentation on the Investor Relations section of our website for a reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measure. With that, I'd now like to turn the call over to Sean. Sean Saint: Thanks, Blake. Good afternoon, everyone, and thank you for joining. With this call, we're officially turning the page on our first full year as a public company. It's been an exciting year to say the least and I want to take a brief moment to reflect on it before we dive into the details of our Q4 and full year 2025 performance. Beta Bionics exists to deliver solutions to people with diabetes that reduce burden, expand access and ultimately improve outcomes at the population level. We believe that in doing so, we can, for the first time, begin to lower the average A1c of people living with diabetes in the U.S. Our performance over the last year is strongly indicative that we're on the right track. On our first earnings call, we shared our key targets for the full year 2025. And as we'll highlight in more detail shortly, we outperformed substantially on each of those metrics. Close to 20,000 new users adopted our technology in 2025, more than doubling our installed base entering the year, which now stands about 35,000 total users that have adopted the iLet since launch. We added those users with what we believe is a substantially smaller sales force than our competitors, which we believe on a per territory basis made our sales reps potentially the most productive in the durable pumps market in 2025. That goes to show you the power of our fully adopted algorithm, our robust ecosystem of digital tools to support our users, their caregivers and their providers and ultimately, our team's ability to execute and deliver results. We continue to lead from the front on our pharmacy channel strategy for durable pumps and established formulary agreements with all the major pharmacy benefit managers or PBMs that operate in the U.S. We were also effective by driving adoption of those formulary agreements at the individual plan level, which is a critical step in the process that ultimately enabled many of our users to access the iLet and its related consumables for significantly lower out-of-pocket costs. We also believe our gross margin profile is already the strongest in the durable pump space, as evidenced by our performance this year, especially considering the success that we've seen in the pharmacy channel, which had a short-term dilutive effect on gross margin in 2025. On the R&D side of the business, we took meaningful steps in the development of Mint, our patch pump program, which we unveiled to the world at our first Investor and Analyst Day in June. We also completed our first clinical trials as a drug company, executing a PK/PD trial for our glucagon asset and a first-in-human feasibility trial for the entirety of our bihormonal system in development. I'm proud of all we've accomplished in 2025, and I look forward to 2026 as another year of relentless execution on our key objectives that we believe will ultimately position us to revolutionize diabetes care in the years to come. We have lots of ground to cover on today's call, beginning with our fourth quarter and full year 2025 results, Stephen will then provide some additional detail on our fourth quarter performance before introducing our guidance for full year 2026. I'll wrap up the call with regulatory and pipeline updates, and then we'll take Q&A. Starting with a brief overview of full year 2025 performance, I'm proud to announce that we delivered $100.3 million in net sales, which grew 54% year-over-year. Our gross margin of 55.4% expanded slightly year-over-year, while our percentage of new patient starts through pharmacy grew to a high 20s percentage for the full year 2025 relative to a high single-digit percentage in the prior year. To put it simply, these are excellent results. The iLet is winning with its unmatched automation. Our highly transparent and inclusive real-world efficacy and safety outcomes are excellent and available for the world to see in our latest corporate presentation. Beyond the product, we're quickly innovating the business model for durable insulin pumps and we're remaining disciplined in our execution and cost control. Diving into Q4 results. Specifically, we generated $32.1 million in net sales, which represents 57% growth year-over-year. Q4 revenue growth was driven by a few items. Number one, we delivered 5,592 new patient starts in the quarter, which grew 37% year-over-year. Number 2 is our growing installed base of users accessing their monthly supplies for iLet through the pharmacy channel, whom we're retaining at a high level. Number 3 is modest favorability in stocking revenue that we saw in both the DME and pharmacy channels relative to the prior quarter year. In pharmacy, in particular, we saw a modest pull forward of about $1 million of stocking orders from Q1 into Q4 and ahead of price increases that were implemented at the end of the year in that channel. In Q4, a low 30s percentage of our new patient starts were reimbursed through the pharmacy channel, increasing slightly relative to the prior quarter and substantially relative to the low teens percentage we saw in Q4 of the prior year. Our gross margin in Q4 was 59%, expanding 179 basis points year-over-year. Gross margin expansion is being driven by the benefits of increased scale and manufacturing volume leverage, greater contribution of high margin revenue from our growing pharmacy installed base and continued cost discipline. With that, I'll hand the call over to Stephen to provide some additional color on our fourth quarter performance and introduce our full year 2026 guidance. Stephen? Stephen Feider: Thanks, Sean. Our Q4 revenue, pharmacy mix and gross margin results exceeded our guidance across the board. While we don't guide on this metric, our 5,592 new patient starts grew 5% sequentially relative to the prior quarter which was in line with the lower end of our expectation for the quarter. While Q4 remains the strongest quarter seasonally for new patient starts in the diabetes market as it has been for us since we launched the iLet, we believe its relative strength compared to the other quarters is diminishing. We believe that historically, Q4's relative strength was predicated on people with diabetes who waited to purchase an insulin pump until they met their out-of-pocket maximums for the year and before their deductibles reset in the New Year. By waiting until their out-of-pocket maximums are reached, patients could save as much as $1,000 to $2,000 on a pump they purchased later in the year through the DME channel. Since 2023, the majority of new pump users in the U.S. have acquired their device through the pharmacy channel, where the majority of users can initiate and maintain therapy for under $50 per month. Said another way, we believe that over the past few years, people with diabetes who may have previously waited until Q4 to adopt a new pump are waiting less frequently than they used to. Our pharmacy channel strategy enables us to compete for those new users and is a key reason why we've seen great adoption of the iLet throughout the year. In Q4, approximately 69% of our new patient starts came from people with diabetes that used multiple daily injections prior to starting the iLet, which is an important representation of how much the iLet is expanding the market for insulin pumps and addressing an unmet need. Moving on to gross margin. Q4 gross margin was 59%, the improvement we saw in our Q4 gross margin relative to the prior year and the prior quarter was driven by 2 primary factors. Number one, growth in the pharmacy installed base, which generates high margin recurring revenue and where we continue to see strong patient retention; and number two, lower cost per unit from higher manufacturing volumes driven by growth in patient demand. Total operating expenses in the fourth quarter were $35.1 million, an increase of 42%, compared to $24.7 million in the fourth quarter of 2024. The increase in sales and marketing expenses relative to the prior year is driven by the expansion of our field sales team, which still stands at 63 territories exiting Q4. The increase in R&D expenses relative to the prior year is driven by the Mint and bihormonal projects. The increase in G&A expenses relative to the prior year is driven by new costs related to operating as a public company. As of December 31, 2025, we have approximately $265 million in cash, cash equivalents and short and long-term investments. We are sufficiently capitalized to fund all our key initiatives and remain well positioned to begin generating free cash flow well ahead of historical diabetes peers. I'd now like to introduce our full year 2026 guidance. Starting with revenue. We expect to generate $130 million to $135 million of revenue in 2026. On our channel mix, we expect 36% to 38% of our new patient starts to be reimbursed through the pharmacy channel. Lastly, we expect gross margin to be between 55.5% and 57.5%. Our revenue guidance contemplates our expectations for the iLet to continue to expand the pump market while taking market share, stable and strong patient retention in both the DME and pharmacy channels, stable pricing in the DME channel, and a low single-digit increase in price for supplies sold through the pharmacy channel. Other key variables that may impact our revenue performance relative to our guidance include the percentage of new patient starts in the pharmacy channel, and the rate at which we expand our sales force throughout the year. Our gross margin guidance contemplates our continued cost discipline, improved leverage of manufacturing overhead at greater scale and continued contribution of high-margin revenue from growing pharmacy installed base. Another key variable that could impact our gross margin performance is our pharmacy mix of new patient starts where meaningful changes from 1 quarter to the next can have a material impact on our near-term gross margin. A quick comment on operating expenses and CapEx. For 2026, we expect OpEx and CapEx to increase as a percentage of revenue relative to the prior year. We expect both sales and marketing and R&D spend to accelerate on a year-over-year basis, driven by sales force expansions as well as Mint and bihormonal costs, respectively. We expect G&A spend to increase slightly year-over-year to support the organization as it scales. CapEx spend will accelerate predominantly related to Mint. In terms of revenue cadence, we expect Q1 to decline sequentially from Q4 2025. As I mentioned earlier, while the growth of the pharmacy channel is muting traditional seasonality in the insulin pump market, Q4 remains the strongest quarter on a relative basis even if its relative strength is diminishing. Q1 also continues to be the softest quarter on a relative basis due to annual deductible resets. While many patients do not wait for their medical deductibles to be met before purchasing an insulin pump, a portion still do. As a result, the pool of patients initiating therapy through the medical benefit is typically larger in the back half of the year, especially relative to Q1. In Q1 of 2025, we were able to partially offset this typical Q1 seasonality headwind for 2 primary reasons. Number one, we were still benefiting from momentum generated by our late 2024 product launches, including Color iLet, Bionic Circle and the Libre 3 Plus Integration. Number two, we meaningfully expanded pharmacy coverage in Q1 2025 through our agreement with Prime Therapeutics. That expansion allowed significantly more patients to access iLet earlier in the year with minimal out-of-pocket costs, driving incremental new patient starts. While we continue to view iLet as highly competitive in the market, we do not expect Q1 2026 to benefit from the same level of tailwinds. We did not have comparable product launches in late 2025. And although we anticipate incremental growth in pharmacy coverage from Q4 2025 to Q1 2026. We do not expect a similar step change in pharmacy coverage expansion as we experienced in Q1 2025. Stepping back from Q1, we expect full year 2026 revenue to be slightly more weighted towards the first half of the year compared to 2025. In the first half of 2025, we experienced a significant increase in the percentage of new patient starts flowing through the pharmacy channel. That mix shift was dilutive to revenue in the first half, but became accretive in the back half of the year. In 2026, we again expect the pharmacy mix to increase with that growth weighted towards the front half of the year. However, we expect the magnitude of the shift to be more modest than what we saw in early 2025. As a result, we expect a modestly higher revenue weighting in the first half of 2026 relative to the prior year. Beyond pharmacy mix, the other key variable that could influence revenue cadence throughout the year is the pace at which we expand our sales force. In 2026, we plan to add at least 20 new sales territories up from the 63 territories we had at the end of 2025. We expect to expand throughout the year as we identify high-quality sales reps in priority markets. Going forward, however, we will no longer provide specific quarter-end territory counts in order to better align our disclosure practices with those of our peers. With that in mind, I'd like to address our approach to the new patient starts disclosure going forward. Since our IPO, we have provided exact new patient starts figures to support the investment community and understanding the complexity of our traditional DME channel model versus our innovative pay-as-you-go model in pharmacy. We now feel at this stage that the investment community has a strong understanding of our dual channel business model. Therefore, to better align our disclosure practices with industry peers, we will no longer provide an exact quarterly new patient starts figure. That said, we remain committed to an industry-leading level of transparency, and we will continue to provide our quarterly revenue by product and channel. Our mix of new patient starts going through the pharmacy channel and quantitative trend-based commentary on new patient starts each quarter. Again, this is more disclosure and transparency than we typically see in the insulin pump space. We will continue to evaluate our disclosure strategy to align with industry practices while maintaining a leading level of transparency in line with our brand. Shifting back to our 2026 guidance. Regarding the trajectory of gross margin throughout the year, we expect Q1 gross margin to decline relative to the levels we saw in the second half of 2025 driven by 2 factors. Number 1 is Q1 demand tends to be seasonally lighter, which translates to lighter manufacturing volume. Number 2 is we expect to see an increase in our mix of new patient starts in the pharmacy channel in Q1 as discussed earlier. Beyond Q1, we expect gross margin to sequentially improve in each quarter throughout the year as we drive more leverage from greater scale, and we generate more and more high-margin revenue from our growing pharmacy installed base. Before I hand the call back to Sean, I want to say how proud I am with this team. And just our second full year on the market, we scaled past $100 million in revenue, high-need pharmacy reimbursement for a tubed insulin pump and made significant progress across our R&D programs. We did all that while operating with a level of cost discipline the industry simply hasn't seen. Energy and enthusiasm at Beta Bionics are high -- at their highest since joining the company. The team has filled with competitive people, all focused on winning and doing their very best for people living with diabetes. I'm excited. With that, I'll hand the call back to Sean. Sean Saint: Thanks, Stephen. Before I get into the innovation pipeline, I'd like to address the warning letter that we received from the FDA in late January related to observations made by the agency following the inspection of our Irvine facility in June of 2025. After that inspection, the agency issued us a Form 483, which we highlighted on our previous earnings call. We take the FDA's observations very seriously. And following issuance of the Form 43, we immediately began remediation efforts to directly address the observations. We were disappointed to receive a warning letter, but I remain proud of the incredible work our teams are doing to address the agency's concerns and confident in our ability to resolve them. We look forward to working together with the FDA to evolve and strengthen our quality systems and processes. I want to briefly highlight those key issues and discuss our remediation efforts and spirit of transparency and to instill confidence in the work we're doing to address the agency's concerns and ultimately close out the warning letter. First, the agency had several findings concerning our complaint handling system. Specifically, they found that our definitions of complaints that rose to the level of Medical Device Report or MDR, were not consistent with their expectations. This alignment is a hard thing to do without direct feedback from the FDA and many companies have had to work through the exact issue with the agency to get it resolved. I'd like to highlight an example of what I'm talking about. In the agency's view, a reportable hypoglycemia event includes those that are self-treated with glucose drinks or candies. By contrast, prior to receiving feedback from the agency, our definition of a reportable hypoglycemia event included only those requiring third-party assistance, which was aligned to the ADA's definition for severe hypoglycemia. The FDA's view that self-treated hypoglycemia should also be reported isn't codified to us without direct feedback from the agency and through our collaboration. Beta Bionics has aligned our definition of reportability with the expectations of the agency and the warning letter seem to confirm that the agency agrees with our new criteria. These criteria often vary meaningfully between different companies in the industry. So 1 of the most important things that we're staying mindful of is collaboratively establishing and implementing practices that the agency agrees with, specifically in the context of Beta Bionics. Another finding in the warning letter is that certain MDRs that were previously filed or caused to be filed by this change in definition were filed after the 30-day deadline. In many cases, these late filings were caused by the change in reportability definitions. Specifically, when we remediated old complaints that were previously not reportable and later became reportable, the 30-day time clock had already expired causing a number of late reports. Beta Bionics believes that both our new definition as well as our new complaint handling system will eliminate this problem in the future. We previously discussed that while we remediate our old complaints, an elevated MDR rate would be present and this remediation would last through Q2 of this year. We're on track with this remediation and reiterate our intention to have all of our old filings fully compliant by the end of Q2. Additionally, findings in the warning letter relate to our procedures for tracking, trending and analyzing our complaint data to ensure our product meets expectations in the field. I want to be clear on this one. We certainly had procedures and they've been previously audited as acceptable. But as with most things, the more you use them, the more you can identify areas for improvement, and that's what happened here. We've been working on those improvements since June and are confident through our collaboration with the agency that we will sufficiently address their observations. Another typical area that the agency had feedback on was our CAPA or corrective and preventative action system. Again, while we had a CAPA system, the agency found areas where we could have -- could have opened a CAPA and did not or could have done a better job with what we call VOE or verification of effectiveness. Which is the process to ensure that changes we make through the CAPA process worked. The agency's feedback was crucial to our understanding of where our CAPA process needed to evolve and this is another area that we've devoted a lot of attention towards remediating as it relates to the agency's observations. And lastly, the agency had feedback on our corrections and removals procedure. In today's day and age, companies like Beta Bionics are in the advantageous position to be able to push out software updates to our products easily with firmware over-the-air updates. This is a benefit to our users as it allows the product to get better without users having to send it to us. However, the FDA takes a broad view of what constitutes a safety change, and their feedback was that there were certain software updates that we had made where we should have filed a corrections and removal report. Beta Bionics must now file all the required reports and to be clear, these reports have to do with changes previously made to the software and no additional changes that we are currently aware of are required. We expect the agency will be satisfied with our response to their concerns here. As many of you may have noticed, there have been several warning letters recently issued in the diabetes space. From the limited public information available, these letters generally seem to have to do with this use concerning quality systems, indicating how challenging it can be to get these systems fully aligned with the FDA's expectations with our direct feedback from the agency. While these findings are serious, we also believe that they are straightforward and that our remediation of the systemic issues found is well underway. I'm proud of our team's response to both the 483 and the subsequent warning letter and as we previously stated, we do not believe this warning letter impacts any of our previously shared time lines. Now for the fun stuff. Let's start with an update on Mint, our patch pump in development. I spoke earlier about our leadership in the durable pump space, propelled by our differentiated algorithm, pharmacy channel strategy and excellent gross margin profile. We expect that Mint will enable us to extend our leadership into the broader automated insulin delivery market beyond just the durables segment. We expect Mint to be a game-changing product with an advantaged user experience from both a form factor and algorithm standpoint relative to other patch pumps on the market or in development. Our efforts in the pharmacy channel with iLet have been critical in terms of our ability to form key relationships with PBMs and payers that we'll leverage to build coverage for Mint. In many cases, we expect that existing contracts for iLet will be amended to incorporate Mint. And in other cases where we don't yet have coverage for the iLet in pharmacy, we expect to be able to generate coverage for Mint, given mechanisms for patch pump coverage already exist for the majority of payers. On gross margin, we expect Mint's design will eventually enable us to drive industry-leading gross margins for any automated insulin delivery system at scale. In Q4, we continued to make great progress on Mint just tracking well towards key internal milestones on the way to unconstrained commercial launch by the end of 2027. Our work in Q4 continued to boost our confidence in the product's merit and ultimately, our ability to potentially obtain FDA clearance and manufacture at scale. For our bihormonal system in development, in Q4, we completed our first in-human feasibility trial in New Zealand. This was our first time testing the entirety of the bihormonal system, inclusive of our glucagon asset in humans, which represents a key milestone for the program. The trial was highly informative to our go-forward development strategy and we continue to observe no safety signals for the glucagon asset. As we've progressed this development program, we've also gotten greater clarity from the agency on our regulatory path to approval for the system, which can be described in development phases. We're currently in Phase IIa for the program, meaning we are conducting feasibility trials in small groups of patients to stress test the systems capabilities and iterated accordingly. The first in-human feasibility trial was just completed as part of Phase IIa, and we'll be initiating another Phase IIa feasibility trial in the first half of this year to stress test and iterate the system further in preparation for the more advanced stages of development. Following the completion of our upcoming Phase IIa trial, we expect to progress to Phase IIb, which we anticipate will be a much more robust feasibility trial that will enable us to advance to concurrent Phase III pivotal trials. This pathway doesn't represent a change to our development program, but rather, it provides increased specificity to the expected requirements for our system to ultimately gain NDA approval for the glucagon asset and 510(k) approvals for the pump and algorithm. We continue to be extremely excited by the bihormonal system's potential to transform clinical outcomes for people with diabetes, but more importantly, the potential to transform the way people experience their diabetes and shift their mindset from diabetes being a disease that they manage to simply a disease that they have. Lastly, on our innovation pipeline, I want to cover type 2 diabetes. In Q3, we continued to see some health care providers prescribe iLet to their type 2 patients off-label. We estimate that 25% to 30% of our new patient starts in Q4 were from type 2, increasing slightly relative to the prior quarter. While we're not committing to a specific time line, we remain eager to pursue to diabetes label through the FDA. To conclude our prepared remarks, I want to highlight the key message from today's call. It's been about 2.5 years since we launched the iLet, and in that time, Beta Bionics has emerged as a leader in the durable insulin pump space. Our product is exceptional, and it's changing lives. Our real-world evidence strategy is setting the gold standard for transparency in our industry, enabled by the iLet's automation, which has been shown to improve clinical outcomes regardless of our users baseline A1c or engagement with the product. Our pharmacy channel strategy is making durable insulin pumps more accessible for our users than they've ever been. Our digital solutions are delivering users, their caregivers and their providers the information and support they need to generate the best outcomes possible on our product. Our product is breaking the mold of what has historically believed to be possible in durable pumping, and we're delivering financial results that we're proud of. But our work doesn't stop here. We're working to expand our capabilities to the broader automated insulin delivery market with Mint and with the bihormonal system, we're looking to redefine how people experience their diabetes and the outcomes they can achieve. This cohesive strategy is what defines our business and what we believe will drive our ability to succeed over the short, medium and long term. Stay tuned. With that, thank you all for joining today's call, and we'll now open the floor to Q&A. Operator: [Operator Instructions] Our first question comes from David Roman with Goldman Sachs. Philip Coover: This is Phil on for David. Want to start with the top line. Last year, you delivered north of 20% upside to your initial sales guidance for the year despite stronger pharmacy conversion than initially anticipated. As we think about the forecast for this year, given the increasingly recurring nature of the business, our model only contemplates pretty modest new patient growth to be able to hit the high end of your guidance. I guess, could you talk a bit more about the level of conservatism that's still in guidance moving forward, and any additional color you can give on the outlook for new patient starts embedded in this initial guidance? Stephen Feider: Hey, Phil, this is Stephen. I appreciate the question. Look, I don't want to call the guidance for 2026 conservative. So I'm not going to use that word. I think -- and also, I'm not going to speak to exactly the new patient starts that are embedded in the guidance. But we do, of course, have confidence in hitting the guidance that we've communicated. And then the 1 little extra color I would add as it relates to the revenue guidance is any time that we have dramatically outsized performance in the pharmacy channel, meaning the percentage of new patient starts that get reimbursed in pharmacy, it creates a short-term headwind on revenue. And so we do have to embed in our revenue guidance, knowing that we need to continue to beat -- to hit the revenue guidance that we communicate. We have to be ready for the fact that we could massively outperform on our pharmacy new patient starts percentage. And because of that revenue headwind, we do embed that in our 2026 revenue guide. Philip Coover: Fair enough. The gross margin guidance for the year came in a little bit light of what we were expecting, given the underlying leverage in the back half of the year. Wondering how much of that maybe comes from your rate of pharmacy conversion versus underlying the direction of travel for underlying gross margins would be helpful. Stephen Feider: Yes. The point you just alluded to is really the reason for the gross margin guidance being where it is, besides the fact that, again, we like to have confidence in any particular guidance that we communicate. But in the event that we outperform on the percentage of new patient starts growth from 2025 to 2026. That again creates a short-term revenue headwind, but it also creates a short-term drag on our gross margin profile because, again, in the pharmacy business model, as you know, we give away the iLet for free, and then we charge a monthly recurring revenue -- we generate monthly recurring revenue of around $450 for all patients that continue using the product in the pharmacy channel. But in the event that we massively outperformed our guidance in 2026 in terms of pharmacy new patient starts. That can, again, will create a short-term drag on gross margin and hence, we're guiding gross margin where we have. Operator: Our next question comes from Michael Polark with Wolfe Research. Michael Polark: I'm curious on the fourth quarter, just with all the focus on your starts performance of 5% sequentially. Have you developed a view as to what the pump market in the U.S. starts were up, how that performed Q-over-Q? Do you have a number of a chance, obviously, your peers are still mostly to report, I'm curious if you developed an opinion. Stephen Feider: Yes, Mike, I appreciate the question. For the reasons that you stated, because our competitors haven't really published their earnings, we don't have a particular perspective on what our market share was in the fourth quarter and how that performed relative to Q3. So I'm sorry, I don't have a take on that yet. I'll wait to see our competitors' numbers. Michael Polark: Fair enough. For the follow-up, maybe about '26, I heard 20 new sales territories to be created, invested in, that's over 30% growth in territories. I know it will be done over the course of the year. I know you're not going to be too precise, but can you maybe comment 1H-2H centric, I think I'm interested in what the formal guidance has considered for the timing of those incremental territories. Stephen Feider: Yes. Of course. The guidance is at least 20 territories, will be expanding by in 2026, and there will be a large expansion in the first half of the year. I don't want to say that there won't be an expansion at some level in the second half, but there's much of that expansion is in the first half of the year. Operator: Our next question comes from Mathew Blackman with TD Cowen. Mathew Blackman: Can you hear me okay? Sean Saint: Yes, we got you, Mat. Mathew Blackman: I just want to start, I want to make sure I [Audio Gap] so correct me if I've gotten some of this wrong, but it sounds like 1Q will be down more than, let's call it, roughly 14% quarter-over-quarter decline that you saw in 2025 versus 4Q '24. But then it sounded like first half of 2026 should be modestly higher than [Audio Gap] like 41% of the full year revenue we saw in the first half of 2025. Did I capture all of that correctly? Maybe start there. Stephen Feider: I'm sorry, Mat, can you -- you cut out a little on our end. I hope it's not us, but can you repeat the second half of your question there? Mathew Blackman: I think my headset cut out. So yes, let me do it again, I apologize. It sounded like your commentary for the first quarter was that it will be down more than I think the roughly, let's call it, 14%, you were down in the first quarter of '25 versus the fourth quarter of '24, but then you expect the first half of 2026 should be modestly higher than the first half revenue you saw in 2025? Did I capture that commentary correctly? Stephen Feider: Yes, you did directionally. So I'm going to repeat some of that back to you. What we did say is that the -- there is seasonality to the business and -- this is with regards to the step change from Q4 to Q1. So there is seasonality to the insulin pump business. The biggest step change that we see in terms of seasonality in our businesses from Q4 to Q1, and you should expect a reduction in revenue and new patient starts from Q4 '25 to Q1 '26. And that step change or that reduction should be larger than what you saw for both new patient starts and revenue than what you saw last year. So from, again, Q4 2024 to Q1 2025, that reduction, you should see a larger reduction from Q4 2025 to Q1 '26. And the reason for that is that there's product launches that were unique in Q4 2024 and notably the Color iLet, which created a lot of pent-up demand in Q4 '24 and Q1 '25 that kind of obfuscated traditional seasonality. Again, we launched a Color iLet that was smaller, massively different form factor. And then the second thing is that we did see a very large uptick in the percentage of new patient starts going through the pharmacy channel from Q4 '24 to Q1 '25, which created also this demand improvement in those comparative periods. And we won't see the same from Q4 '25 to Q1 '26. So that's the first part of your answer is yes, and for all those reasons, I think that were important to share. The second part is I was -- in the prepared remarks, I was just commenting on the weighting of revenue, and we expect the weighting of revenue to be more heavily weighted towards first half 2026 than what we saw first half 2025 weighting to be, meaning, first half '25 revenue divided by total year '25 revenue, that percentage, that will be lower in '25 than what we'll see in '26. Mathew Blackman: Okay. I appreciate that. I guess the other question I wanted to ask I don't know if you have this handy, but even if just directionally thinking about the sales territory expansion in '26, is there a way to even roughly quantify how much of the addressable market you were able to cover in 2025. How much incremental the 20 territories would give you, again, even just directionally? And I guess, maybe most important, how much of a rate limiter do you think that's been in terms of iLet adoption. Stephen Feider: Yes. All right. Well, another good question. I think that the right number of territories in the U.S. for an insulin pump company, and this is kind of a wide range because I want to reserve the right to change as we sort of grow here is somewhere between 120 to 180 sales territories. That's like when you have the level of sort of adoption that in particular, like, let's say, our patch pump competitor has, I think it's probably on the higher end of that. But the point is, I think, in order to cover all of the endocrinologists and high-prescribing primary care doctors in the country, you need somewhere between 120 to 180. And so for most of last year, as you know, we had 63 territories. So obviously, the simple math is we had 1/2 to 1/3 of the country covered. Now the reality is that our territories tended to be a little wider or a little larger. So we are probably covering actually more than 33% to 50% of the entire country, but that gives you a directional understanding of how much of the country generally we were sort of addressing and what 20 incremental territories does. Operator: Our next question comes from Jon Block with Stifel. Jonathan Block: Maybe just to pick up on that thread or to pull that thread a little bit. Maybe you guys can just talk to why are 20 reps the right number, right? It takes you to the low 80s. But Stephen, you just talked about a number 120 plus. And when I think about exiting 2026, I mean, you're that much closer to Mint, you're that much closer to type 2 label as a possibility. So maybe just talk about why the organization with the balance sheet you have wouldn't push a little bit harder and faster just when we think about the number of reps that you're onloading or plan to unload this year. Stephen Feider: Yes, good question. And Sean, I'll start here and just if you want to jump in and add a little more. Look, we, of course, have confidence in the product that we're offering. And so expansion is absolutely the intention of the company, and we are underpenetrated in terms of doctors that are aware of what the islet is and having a sales rep that's communicating to them what the great clinical outcomes are for their patients. So that absolutely is true. But I also did say that we're going to expand by at least 20. So I don't want us to just anchor on 20 is like on the low end of that and say that's the only amount that will be -- or that's the amount that we will be limited to in 2026 in terms of expansion. And then the last point I would make is that we are anticipating, as you know, from our R&D pipeline, we are anticipating future products. And Sean mentioned them in his prepared remarks. And I think embedded in sort of like our plan for the sales force expansion is being a little cagey here is sort of anticipation of future time when we have another product on the market. So there's that as well. Sean Saint: I'll just add to that, Jon, that we always believe in being deliberate, right? I mean I don't think that you can realistically launch a product, come out of the gate, hire 200 people and field 200 fully trained people and expect that your manufacturing line can produce that many -- the whole bit, right? There's so many systems, et cetera, that have to scale along with the number of reps, and there's a lot of opportunities to get it wrong. Beta Bionics is playing the long game here, and I don't think anybody needs us to take over the world on day 1. So we're going to do this deliberately and conservatively at some level, and we're going to get it right. Jonathan Block: Great. That's helpful. Maybe just a shift in I guess I'll go there. There is this hypoglycemia concerns or chatter, and it's out there. Maybe it's more Wall Street than Main Street, et cetera. But Sean, any data or metrics that you plan to share with TheStreet that might be forthcoming? And then maybe just to add on to that, I'm curious, in the real world or out in the field, what are your reps hearing or any blowback and has that evolved in the past 3 or 6 months? Sean Saint: Yes. Fair question, Jon. Well, first of all, in terms of data, I would point you to our current corporate deck on the website, which does speak to this. Look, our best information on the iLet, of course, we see all of our data in our cloud, et cetera. Yes I'll just say a few things. First of all, it's consistent with our clinical trial, right? We're seeing the same or even slightly lower rates of hypoglycemia that we saw in our clinical trial that was clearly acceptable at that time, number one. Number two, those rates of hypoglycemia seem to be roughly 1/3 -- 1/4 to 1/3 of the ADA guidelines for hypoglycemia. So we're meeting that metric by 4x. Again, I'll point you to our data on the corporate deck as well. But what I'm telling you is, to the best of our knowledge, yes, we hear the narrative. No, we don't see some outsized hypo problem with any description. It is a true statement that people with diabetes do occasionally get low. They get low on every system. And in fact, if you look at severe hypoglycemic events, it's roughly an order of magnitude worse than it is with iLet or other AID systems. But I do want to highlight a difference. And I believe I've talked about this before. And it's at this point, what we call the Tesla effect. People -- there are car crashes every day, but when a Tesla crashes, it's national news. I think the data at this point is clear. Teslas are safer than the average driver, full self-driving, of course, is what I'm referring to. And yet that's national news when something happens. We do believe that there is a version of that, that's happening with the iLet. We've provided an increased level of automation than the world has ever seen with insulin pumps. There is very, very little to do for the user of an iLet. However, lowes do still happen. When a person chooses their dose, gives that dose, goes for a walk and gets low, they think, wow, I probably shouldn't have done that. When a user utilizes the iLet, doesn't choose a dose at any level and then goes for a walk and gets low, they think, look at what this thing did to me. So I think that's where that's coming from. And I think it's somewhat natural that Beta Bionics will live that world because we are the tip of the spear in terms of automation and insulin pumps here. But again, I'll focus back on what I started my response with. All of the data that we've published, all the data we are aware of do not indicate any level of outsized hypo problem with the iLet. Operator: Our next question comes from Matthew O'Brien with Piper Sandler. Matthew O'Brien: Congrats on getting to $100 million in sales so quickly. Maybe just a follow-up on -- maybe to follow up on Phil's question to start with. Just on the guide, even if you go to the midpoint of the range, the absolute dollar number is actually lower in '26 versus '25, and you're getting the benefit of all these pharmacy patients from a revenue perspective here in '26 versus '25. So is there something else that's contemplated in here that we should be thinking about? I don't know if it's potential impact of the warning letter or competition or higher attrition because of more pharmacy, anything like that specifically to call out here in terms of this initial guide versus what you kind of did on an absolute basis last year? Stephen Feider: Matt, good question. And I appreciate the congrats. In short, no, there's no odd characteristics of the competitive landscape that we're particularly afraid of. We're not seeing any elements of our pharmacy business model where there's attrition that's trending any different than what we've seen. And by the way, we've had great retention on the product. We're just setting a guide that we have confidence in and we feel good about. Matthew O'Brien: Very fair. And then on the gross margin side, I mean, the number in Q4 is eye-popping as far as how well you did on the gross margin side for the range that you gave for the rest of -- for '26, it just implies a pretty big step down in the first half of this year. So I'm just wondering if there's something maybe even in the back half that you're contemplating, I don't know, is that a, we could start to see some Mint sales? Is that something that's -- just to be specific on Mint, do you still expect to be second to market as far as patch pumps go? Stephen Feider: I'll let you answer the question on Mint. But yes, as it relates to -- I'm sorry, I just lost my train. Can you take the Mint question, the Mint part? Sean Saint: Yes, sure. And to be clear, when he said you can take the question, I don't think you meant you, I think you meant me. All right. So on Mint, I don't recall exactly the statements we've made in the past on order of release. And I frankly, Matt, don't remember the exact details of when all of our competitors are currently saying their products will come to market. What we're doing today is reiterating our time line of an unconstrained launch by the end of '27. So that's what I'll commit to. But I'm not going to call our shot on exactly what position that puts us in because, frankly, we don't have visibility to what others are doing. And thanks for the eye-popping comment though. Stephen? Stephen Feider: Yes. And in terms of the gross margin guide for the year, yes, obviously, 59% in Q4 is a great number. I think something notable about Q4 gross margin was that we didn't see a big uptick in the percentage of pharmacy new patient starts from Q3 to Q4 2025. But remembering that, that particular metric for us is only so predictable. So obviously, we do guide to that metric in 2026. But in the event that it outperforms our expectations, which it has the possibility to do, we have to be ready for a short-term headwind on our gross margin profile. And so hence, that's embedded in the guidance. But there's nothing competitive about the product or there's no like new problem or they're not seeing an uptick in warranty rates or anything of that nature. It's just, again, simply us being careful in the event that a particular metric outperforms what we've communicated. Operator: Our next question comes from Mike Kratky with Leerink Partners. Michael Kratky: Maybe just to start, now that we're more than halfway through the first quarter, can you share any qualitative or quantitative commentary around what you've seen so far year-to-date in terms of new starts and if that's aligned with your expectations on seasonality and your outlook for the sequence from 4Q to 1Q? Stephen Feider: Yes. Yes, I guess I'm going to kind of repeat something I already had communicated. So sorry, this is just a regurgitation, Mike, although I do certainly appreciate the question. So as it relates to the first quarter, there absolutely is seasonality in the insulin pump business and -- where we see the largest step change in seasonality is from the fourth quarter to the first quarter. And so you should expect a reduction in revenue and new patient starts from Q4 2025 to Q1 2026. And you should expect that reduction in new patient starts, in particular, to be larger than what we saw -- and what we saw in the last year's reduction. So last year's reduction was [ 6% ] reduction for reasons that I've already communicated regarding new product launches and the change in pharmacy adoption, you should expect our production to be in excess of that 6%. Michael Kratky: Understood. And just a follow-up. I think 1 thing that stood out in the guidance in that 36% to 38% of expected pharmacy mix. So to get to the upper end of that range exiting this year in the low 30s, is it fair to think that you could be above 40%? And what needs to happen in order to achieve that? Stephen Feider: Yes. Look, I don't want to call it like a number above our guide. Obviously, we guide to the 36% to 38% for a reason. But what would have to happen for us to outperform that. And by the way, that is, of course, possible is well, first of all, we need PBM agreements, which we have most -- almost -- over 80% of all lives in the country covered under a PBM agreement. So for the most part, that's a green check box. And then the next, we need the underlying health plans associated with those PBMs. We need an underlying agreement with those. And that's where the lion's share of the work still is left to grow our pharmacy adoption from where it is today to be coming mostly -- mostly or all a pharmacy reimbursed product. But like in terms of specifics, I mean, we have some Medicaid contracts, some Medicaid programs where we -- or states where we're seeing Medicaid coverage, and we can continue to grow more of those -- those state adoptions for Medicaid and then underlying plan agreements, again, associated with the already existing PBM contracts that we have. But it absolutely is possible for us to outperform the guide. Sean Saint: I'll remind everybody that the -- these things do tend to be a little front half weighted. They do happen throughout the year, but it does tend to occur a little heavier in the front half of the year. Operator: Our next question comes from Richard Newitter with Truth Securities. Felipe Lamar: This is Felipe on for Rich. I guess just a follow-up on Mint, you guys are clearly guiding to a step-up of CapEx spend for the platform and investing. So I'm just wondering if you could maybe just give any update on like where are you at on the checklist before submission. Any color would be helpful. Sean Saint: Yes. Sorry, Felipe, I don't think we're going to go beyond what we've said in prepared remarks in terms of exact status on Mint at this point. I'm sorry. Felipe Lamar: No, no problem. And then just a follow-up on pharmacy. You guys have a bunch of competitors now that are durable competitors who are starting to make progress in channel. So I'm just wondering one, like how -- are you seeing any impact to your contract like conversations with PBMs? And then two, I guess, like if there are more low-cost durable pump options like how does that maybe potentially impact you competitively on the go forward? Sean Saint: I'd like to start this 1 and maybe you can provide some color, Stephen. I would say that the conversations are evolving slightly and that you're right. There's more people out there, more durable pump companies now knocking on the doors. And from my perspective, that's a positive because it's providing an expectation that this is exactly how these things are covered. Beta Bionics was the company to go out and start this conversation, and we were pretty successful doing it. But with everybody following along, it's just a bit of a tidal wave of momentum that's going to help the entire industry move there. And -- to the extent that pharmacy is a competitive advantage, we love that. But the reality is it's an improved business model to allow these companies to operate better and a better experience for our users. So we're happy to have pioneered that, and we're happy to have more momentum moving in that direction. So -- that's the color. But Stephen, anything to add to that? Stephen Feider: I think well said. Operator: Our next question comes from Jeff Johnson with Baird. Jeffrey Johnson: Coming to go back to the territory question. I know a few questions have been asked here on it. But as we track some of the metrics for you guys, it does look like you maybe -- and I'll stress the word maybe hired 40 or so new sales reps that would cover about 20 territories just in the last couple of months. And again, our visibility isn't clear on that by any means. But I guess, Sean, I'd love to hear from you, and I do have one follow-up question then, but I'd love to hear from you how much of that was maybe backfilling reps. We've actually lost 1 or 2 of your reps that we've talked to over the last year, 1.5 years. So it feels like maybe there's been a little bit of rep departure, but how much of that was backfilling reps versus hiring and expanding territories over the last couple of months? Sean Saint: Yes, Jeff, thanks for the question. I'm not going to comment on exactly how many people we've hired recently, just not going to do it. What I will say is we are always hiring backfills at some level, in any group of like I said, 63 territories, 126 people, or whatever that is, you're going to have turnover for multiple reasons, some for performance, some for other jobs that were offered what have you and you're always going to be backfilling. So there is some of that going on at all times, but I'm not going to comment on exactly how many we may have hired outside of that group or even in that group recently. Jeffrey Johnson: Yes, fair enough. Understood. Yes. No, Stephen, maybe clarifying for you. You talked about $1 million pull forward in the PBM channel or the pharmacy channel, I'm sorry, from Q1 into Q4. I think -- I can't remember it was a conversation with you or someone else over the last month or so as we kind of were trying to titrate our '26 model. It sounded like there was going to be maybe $10 million to $12 million in additional stocking in 2026, mostly in supplies, some in pumps. Is that still the right number to be thinking about as a component of your revenue guidance for '26? And how would that $10 million to $12 million, if we're ballpark accurate compare to maybe total stocking you saw in2025? Stephen Feider: Yes. I actually don't -- I don't think I've ever communicated any particular number on what the stocking dynamic would be for 2026 in terms of dollars. So the $10 million to $12 million actually isn't -- it's not -- it wouldn't be even directionally accurate. So in terms of -- yes, I guess that number is not accurate, and I don't really want to comment on it. Operator: Our next question comes from Travis Steed with Bank of America Securities. Travis Steed: I guess I just want to make sure we've got the street models in the right place. I see $27 million in street models for Q1. Taking all the comments you've given, is that kind of the right place to be? Or does that need to move one way or the other? Stephen Feider: Yes, that's directionally accurate. Travis Steed: And then gross margin, I think that 54% in Q1. Is that the right place to be roughly as well? Stephen Feider: I don't want to comment specifically on any quarterly guidance as it relates to margin. Travis Steed: And there were some comments on stepping up OpEx as a percent of sales in '26. Just wanted to try to think about how much of that's R&D, sales and marketing versus G&A? And kind of the how much of that pipeline versus kind of sales force expansion? And kind of any color on how that kind of rolls out. Stephen Feider: Yes. I don't want to -- I'm not going to give you a numeric answers for how much to expand sales of each of those particular line items. But the most notable expansions in terms of OpEx will be number one is sales and marketing for reasons that we discussed already with the sales force expansion. But we're also going to see a pretty dramatic uptick in investments in marketing, notably some direct-to-consumer advertising and some marketing branding for direct-to-patient initiatives. And then the second thing is relates -- sort of the other line item to comment on is with regards to R&D investments. And there's various projects that Sean outlined in his prepared remarks that we're working on. And as a result of those particular projects, notably the bihormonal program and Mint, you will see an uptick in R&D expense in 2026, that's pretty meaningful from 25%. And then G&A will be -- will show a very mild increase. Operator: Our next question comes from Frank Takkinen with Lake Street Capital Markets. Frank Takkinen: I have 1 follow-up on pharmacy channel starts related to the 36% to 38% guidance. How should we think about that cadencing. Is there an element of DME having more pronounced seasonality in Q1, potentially resulting in that pharmacy channel start number actually starting higher in Q1 and then kind of staying flat throughout the year? Or is that not a phenomenon that occurs? . Sean Saint: You want me to take that? Sure. Yes. That's a really good question. Unfortunately, it layers a couple of things on top of one another that make it a little bit hard to answer. So let me talk about seasonality for a quick moment. Historically, seasonality in DME was a question of early in the year, you have this big co-pay, eventually, you start meeting your co-pays and it gets cheaper to get a pump. So people were waiting to get that pump until later in the year. Now with pharmacy being available all year round with certain competitors, we think that the waiting aspect has gone away. Instead of waiting for one pump, you would just get a different pump right now. So that decreases the vast increases at the end of the year that we see. However, and this is associated with your question, Q1, you're still going to see a drop because you do still see resets of deductibles. So people who would have come to you in, let's say, December and been able to get the pump for relatively 0 out-of-pocket costs may, in January, have a higher out-of-pocket cost. So that's why the pronounced drop in January. And I'm losing my question. Stephen Feider: Yes. I guess, Frank, does that make sense? Frank Takkinen: Yes, that's sort of helpful. I think really the concept of just DME starting at a higher -- or sorry, pharmacy starting at a higher percent of total starts in Q1 and then kind of staying flat? Or like how does that -- pharmacy starts trend throughout the year? Sean Saint: All right. Thanks a reminder, Frank. So pharmacy coverage goes up earlier in the first half or more in the first half of the year than it does the second half of the year, right? So that's going to be 1 layer. Additionally, you're right, likely a higher percentage in Q1, holding everything else constant, would go through a pharmacy because of the DME decisions being made. So those 2 things layer in. But again, it's not unlike seasonality we've talked about in the past, there's more than 1 thing causing that. So I think it becomes kind of hard to predict. But directionally, yes, you should probably see a higher -- well anyway, those 2 things are on top of 1 another. Hopefully, that makes sense. Frank Takkinen: Yes. That's great. And then just 1 quick follow-up. Just can you talk about the Phase IIb a little bit more? I heard the prepared remarks, but just maybe what are you looking for exactly in that Phase IIb before kicking off the pivotal? Sean Saint: Yes. From Beta Bionics side, the Phase IIb is primarily about confidence that when we get into the pivotal, we're going to have success. Over the course of Beta Bionics history with the bihormonal trial, and this has been true all the way from, I don't know, 2007 until now, all of the trials that we've run, all of the formative trials that we run that we now call IIa trials were very, very small. And we've published a bunch of in the past, I won't rehash it now. It can be very difficult to extrapolate the results of a several hundred patient year-long clinical trial from a very short small end trial. So it's a bit of a diligence item to walk before you run and just step up and make sure we're not going to get to an enormous trial and really fail. So that's primarily what that's about. And the agency would have slightly different words for that. But I think at the end of the day, it would be similar reasoning. Operator: Our next question comes from Danielle Antalffy with UBS. Danielle Antalffy: Just a question here on type 2 and less about the time line for approval, et cetera. But just at a high level, how you guys think about that market as you already see adoption of iLet in type 2. We hear at the very pump for type 2 patients. So go-to-market strategy in that patient population probably a little bit different than type 1, particularly given where these patients are managed. So I'm just curious about how you guys are thinking about that ahead of a potential FDA approval there and sort of really getting after that. Sean Saint: Yes. Good question, Danielle. I think you just identified the right point there, which is where the patients are managed. And I think what I'll illustrate, and I think you know this from your very question, is that in the endocrinology space, the health care providers have proved to be quite mature and understanding of what the iLet is and other products are, and they know where they can be utilized. And that's exactly what we're seeing across the different devices. In the primary care space, that's probably going to be less true. And so I think it does become more important that a type 2 indication is there by the time we start to market meaningfully in the primary care space, which we've already said that we don't have a primary care sales force at this point. So -- and the way we intend to do that is a little bit different. But I do agree that a type 2 indication is going to be extremely important there because -- well, for the reasons that you implied. So we're aware of that dynamic. Unknown Executive: And Danielle, thanks for launching coverage on us. Great work. Operator: [Operator Instructions] Our next question comes from Jeffrey Cohen with Ladenburg Thalmann & Company. Jeffrey Cohen: I wonder if you could dive into R&D a little bit as far as '26 with regard to cadence throughout the year. I know you had called out just an incremental increase across the board. Stephen Feider: Yes. So I don't want to speak specifically on what timing of the investments you'll see in R&D. But generally, Jeff, you can expect consistent investments -- consistent pattern of investments throughout the year. There may be some lumpiness when we say start trials or the like, but I wouldn't model anything more heavily -- significantly heavily weighted in 1 quarter or another. Jeffrey Cohen: That's helpful. And you called out maybe taking some pricing in the pharmacy channel. Any plans for the DME channel? Or what are you expecting on pricing throughout the year? Stephen Feider: Yes. As we alluded to, we took a small -- or a low single-digit price increase in pharmacy for our supply revenue and then no change to your modeling for DME revenue price. Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.
Operator: Hello, and thank you for standing by. Welcome to Beneficient's Third Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Dan Callahan. You may begin. Dan Callahan: Thank you, operator. Good afternoon, and thank you all for joining us for Beneficient's Fiscal Third Quarter 2026 Conference Call and Webcast. In addition to the call and webcast, we issued a results press release today that was posted to the Shareholders section of our website at shareholders.trustben.com. Today's webcast, as the operator indicated, is being recorded, and a replay will be available on the company's website. On today's call, management's prepared remarks may contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ from those discussed today. Actual results and future events could materially differ from those discussed in these forward-looking statements because of factors described in our earnings press release and in the Risk Factors section of our Form 10-K and in subsequent filings we make with the Securities and Exchange Commission. Forward-looking statements represent management's current estimate and Beneficient assumes no obligation to update any forward-looking statements in the future. Today's call also contains certain non-GAAP financial measures, including adjusted operating expense. Please refer to our earnings press release, which again is available on our website for important disclosures regarding such measures, including reconciliation to the most comparable GAAP financial measures. Hosting the call today will be Beneficient's Interim CEO, James Silk. Following his remarks, Greg Ezell, Chief Financial Officer, will provide some financial highlights. I'll turn the call over to James. Take it away, James. James Silk: Thank you, Dan. Good afternoon, everyone, and thank you for joining us. Before I get into the third quarter, I'd like to address the passing in December of Tom Hicks, who has been a member of the Board since 2017. Tom was a legendary figure in American business, a pioneer in private equity and a dedicated leader who brought extraordinary vision, discipline and experience to Beneficient. We appreciate his many contributions to the company and his guidance and friendship will be missed. Pete Cangany, a Board member since 2019, was appointed Chairman of the Board effective December 15, 2025. In addition to his experience with Ben as a long-standing Board member, Pete brings deep experience from a more than 30-year career at Ernst & Young, including as a partner from 1993 until his retirement in 2017. We are fortunate to have his leadership along with all members of the Board, and they are closely engaged in setting Ben's go-forward strategy as we seek to unlock value in private assets. For the past several quarters, the Beneficient management team has been working through a number of challenges related to the separation from our former CEO. These challenges have required significant resources and management attention. But we believe executing on our plan to address these challenges is a necessary step to better position the company to realize and execute on its business strategy. The company continues to see strong market opportunity. And during our fiscal third quarter, we were able to accomplish numerous critical items to stabilize and strengthen our core business that we believe better positions the company to close additional liquidity and GP primary commitment financings in the future. In December, we closed our first new GP primary commitment financing since June of last year, signaling our dedication to our business strategy and continued market interest in company products. Our third quarter results are also indicative of our continued focus and discipline on operational and financial management. We continue to prioritize creating an efficient technology and AI-enhanced services platform. a platform designed to allow the company to operate more efficiently with a focus on delivering steady, profitable deal flow and growth. This increased focus is demonstrated by a reduction in adjusted operating expenses of 6.5% year-over-year and 18% year-to-date, excluding onetime and nonrecurring expenses. We have also worked to pay down the company's payables. To achieve this, we generated approximately $50 million in gross proceeds through asset sales and equity redemptions. That capital has, among other things, allowed us to systemically reduce debt, including approximately $27.5 million that was ultimately owed to a Texas State Bank. We believe these actions have collectively strengthened our financial position. And going forward, we will continue to focus on expense reduction as well as potential simplifications of our capital structure to deliver long-term shareholder value. In January, we received notification from NASDAQ that we have regained full compliance with NASDAQ continued listing requirements. Given the circumstances, this was no small feat as we completed an annual audit. We filed financials for multiple periods in a compressed time frame. We engaged in extensive external reviews. We improved our balance sheet equity and we increased the stock price to satisfy NASDAQ's minimum listing requirement. Throughout this process, the company maintained regular contact with the exchange, submitted plans to regain compliance and executed on those plans. We are also very pleased to have reached the final court-approved settlement related to the GWG Holdings litigation and to have done so within the limits of our existing insurance policies. Collectively, these milestones represent a turning point that allows us to focus more fully on driving growth and enhancing the value of our liquidity solutions. In addition to resolving the GWG matters, we have cooperated fully with the United States District Court for the Southern District of New York on matters relating to our previous CEO. Our former CEO's criminal trial related to his conduct is scheduled for early April 2026. We are considering all options that the company may pursue related to our former CEO's conduct, including bringing litigation against our former CEO, his entities and other parties for potential financial, equitable and/or other relief. Of specific note, the company intends to vigorously pursue claims regarding the validity of over $100 million in debt purportedly owed to an entity related to our former CEO. Looking forward, we are working on a number of initiatives that we believe will broaden our financing options, increase our capacity to grow our loan portfolio backed by alternative assets and ultimately improve the returns for our stockholders. This includes focusing on our core mission of liquidity and primary capital, implementing simpler, more streamlined approaches to providing these services and broadening our deal flow opportunities and capabilities. As we head further into 2026, we believe we will be well positioned to better leverage our infrastructure and maximize the robust and diverse markets we serve. Building a stable base for growth has been a priority of management since my return to the company. By addressing the key issues I mentioned earlier, we believe we are now able to bring more of the company's resources to growing the core business, and I look forward to providing more details on that in the coming quarters. Now I'd like to turn the call over to Greg Ezell, Beneficient's CFO, to go over some of the financial highlights. Following Greg's remarks, we'll take a few questions from the analyst community. Greg? Gregory Ezell: Thank you, James. Let's now turn to our quarterly results and financial position as of December 31, 2025. As James stated earlier, due to circumstances surrounding the resignation of our former CEO, we were unable to grow our investment portfolio through new financings other than one transaction that closed in December for approximately $3.0 million in NAV. We reported investments with a fair value of $206 million compared to $291 million at the end of the prior fiscal year. These investments serve as collateral for Ben Liquidity's net loan portfolio of $188 million and $244 million, respectively. Asset sales or equity redemptions of certain investments held by the Customer ExAlt Trusts resulted in an aggregate of $50 million in gross proceeds on a year-to-date basis, which have been used to pay down certain debt and provide working capital. As of December 31, 2025, Ben's loan portfolio was supported by a highly diversified alternative asset collateral portfolio, providing diversification across approximately 150 private market funds and approximately 430 investments across various asset classes, industry sectors and geographies, a breakdown of which is available in the accompanying earnings release as well as on our shareholder website. GAAP revenues were $18.7 million for the current quarter and $3.3 million for fiscal 2026 on a year-to-date basis. The positive GAAP revenues were driven by a $44.1 million increase in fair value of a derivative asset related to the appreciation forfeiture provision included in the conversion of preferred stock to Class A common stock by Mr. Hicks and Mr. Silk. Adjusted revenues, which excludes the derivative asset fair value adjustment, were a negative $25.4 million for the current quarter and $40.8 million negative on a year-to-date basis. This derivative asset settles in January 2028 and will be fair valued each period until then. Upon settlement, a portion of the Class A common stock issued to Mr. Hicks and Mr. Silk could be returned to the company based on the terms of the appreciation forfeiture provision. Operating expenses were approximately $15 million compared to approximately $14 million in the prior year third quarter and included a $1.7 million noncash accrual. Excluding this noncash item, operating expenses declined 6.5% period-over-period. On a year-to-date basis, excluding the noncash and related items in each period as applicable, operating expenses were approximately $44 million as compared to $53 million for the first 3 quarters of fiscal 2025, a decline of 18%. Next, we'll move on to our primary business segments, Ben Liquidity, which generates interest revenue for supplying liquidity off the balance sheet and Ben Custody, which produces fee revenue for the use of the platform and trust services. As typical, I will be focusing my discussion on these business segments as it's their operations along with corporate and other that accrues to Ben equity holders. Ben Liquidity recognized $8.2 million of interest income during the third quarter of fiscal 2026, a decrease of 3.6% sequentially, primarily due to a higher percentage of loans being placed on nonaccrual status, partially offset by the effects of compounding interest on the remaining loans. Year-to-date, Ben Liquidity recognized $25.5 million of interest income, down 25.2% compared to the prior year period, primarily driven by lower loans net of allowance for credit losses, resulting from higher level of nonaccrual loans and loan prepayments, partially offset by new loans originated. Operating loss for the fiscal third quarter was $29.2 million, a decline from an operating loss of $0.8 million sequentially. The decrease in operating performance was due to higher intersegment credit losses in the current fiscal period as compared to the quarter ended September 30, 2025, due to larger declines in NAV arising from updated financial information received from the fund's investment manager during the period and asset sales transacting generally at lower prices as a percentage of NAV during the quarter than in prior quarters, which resulted in lower relative loan paydowns. Year-to-date operating loss was $36.0 million versus operating loss of $0.5 million in the prior year period. The increase in the operating loss is partially a result of the lower revenues period-over-period plus an increase in the intersegment credit losses in the current fiscal year as compared to the same period in the prior year. Turning to Ben Custody. NAV of alternative assets and other securities held during the third fiscal quarter was $230.2 million as of December 31, 2025, compared to $338.2 million as of March 31, 2025. The decrease was driven by disposition of certain alternative assets, distributions and unrealized losses on existing assets, principally related to adjustments arising from updated financial information received from the fund investment manager during the period or the fair value of investments deemed probable to be sold at an amount that differs from NAV, offset by $14.8 million of new originations. Revenues applicable to Ben Custody were $2.9 million for the fiscal third quarter compared to $3.1 million for the quarter ended September 30, 2025. The decrease was a result of lower NAV of alternative assets and other securities held in custody at the beginning of the period when such fees are calculated, along with certain upfront intersegment fees that are amortized into revenue over time being fully amortized in the prior year period. Operating income for the third fiscal quarter decreased to $2.0 million from $2.3 million sequentially, largely attributable to the decline in revenues applicable to this operating segment as described above and slightly higher employee compensation and benefits expense. Year-to-date revenues were $10.2 million, down 36.9% compared to the prior year period, largely the result of lower NAV of alternative assets and other securities held in custody, along with certain upfront intersegment revenues that are amortized into revenues over time being fully recognized in a prior period. Operating income was $7.4 million for the 9-month period compared to operating income of $9.1 million in the prior year. While revenues declined in the current year period as compared to the same period in the prior year, operating expenses declined by $4.3 million, reflecting noncash goodwill impairment in the prior year period of $3.4 million and intersegment provision for credit loss of $1.3 million. No such impairment or credit losses were recorded in the current year period. Adjusted operating income was $7.4 million for the 9-month period compared to $13.9 million in the prior year. This decline is principally related to lower revenues in fiscal 2026 as compared to the same period in the prior year. As of December 31, 2025, the company had cash and cash equivalents of $7.9 million and total debt of $100.3 million. Distributions received from alternative assets and other securities held in custody totaled $11.3 million for the 9 months ended December 31, 2025, compared to $19.3 million for the same period of fiscal 2025. Total investments at fair value of $205.8 million at December 31, 2025, supported liquidity's loan portfolio. This concludes my prepared remarks on the financials. We will now open the call to questions from our covering research analysts. Operator, will you please give the instructions for Q&A. Operator: [Operator Instructions] Our first question comes from the line of Michael Kim with Zacks. Michael Kim: That's better. Sorry, can you hear me okay? James Silk: We've got you Michael. Giles Haycock: It's actually Giles Hock. I'm the Managing Director at Zacks Investment Research. Michael is on an airplane. I had a chat with them this morning. I wanted to ask about the core liquidity platform, particularly with the sort of high net worth and smaller institutional clients. Could you give us a quick update on how you're approaching channels like advisers, family offices, private banks and how you're thinking about marketing and awareness building there? James Silk: Well, I think the -- as we mentioned on the call, the focus has been on really stabilizing and develop that platform for sort of rollout as we move forward. I do think the -- going forward, it will be a focus on the really the family office and the adviser network as well as continuing to provide follow-up through our AltQuote product, which is on our website, which provides a sort of quick and easy access into a preliminary indication of interest on the assets. So we'll have more to, I think, announce on that as we move forward, but it's -- that's really where we're going directionally. Giles Haycock: And then on the legal side, you mentioned the litigation briefly. Was there sort of any forward momentum or anything investors should keep in mind from a sort of balance sheet or debt perspective with regards to the litigation? James Silk: We're not going to comment too much about litigation. As mentioned before on the call, the former CEO's criminal trial is set to commence on April 6. We would anticipate, again, not within our control. It's obviously the U.S. government, that to take a few weeks, 3, 4 weeks to run its course. And we will be closely monitoring that situation, and we've preparing a variety of different options as that outcome is determined. And certainly, one thing that we've mentioned before and we'll focus on as part of that is to attack the validity of the debt that is purportedly held by a party related to our former CEO of approximately $120 million or so. But we would expect to likely expand our litigation approach beyond just the debt as well. Operator: Our next question comes from the line of Brendan McCarthy with Sidoti. Brendan Michael McCarthy: Just wanted to start off looking at the results and liquidity. Obviously, the revenue line item looks pretty stable, just considering where loans receivable came in at. But can you walk us through the operating loss there? Is that just mostly driven to the asset sales? Or is that really more so from updated NAV values? Gregory Ezell: Brendan, it's Greg. Yes, a lot of it, I would attribute it to the asset sales activity that were happening during the quarter. But equally, there were some updated financial information marks that kind of a couple of larger negative ones that are attributing to it as well, right? So mainly asset sale related, but also has a flavor coming from GP reported NAV updates. Brendan Michael McCarthy: Got it. I appreciate that. And it's probably safe to assume those are probably more just kind of one-off instances just considering you run a pretty diversified portfolio. Gregory Ezell: Yes, I believe that is correct. Brendan Michael McCarthy: Okay. And then just looking at operating expenses overall, I'm sorry, I actually think within liquidity, OpEx continues to come down. I think you're at like $13 million for the quarter. Is that a fair quarterly run rate at this point? Or do you think you have much more room to continue cutting there? Gregory Ezell: Yes. I think it's getting close to fair. There's still a little bit that we're going to try to take advantage of in reducing expenses in that operating segment and not just in that operating segment, but across the board. But in particular, for Ben Liquidity, there still is a little bit of room in there. We think that we can reduce those costs a little bit further in the future. Brendan Michael McCarthy: Got it. And then just wondering -- just curious about the pipeline for liquidity transactions. It seems like you've had good momentum in the primary capital space with GPs. Can you talk about the pipeline a little bit? James Silk: Yes. We have continued to have discussions and inquiries coming in over the last few months being out of the market with the financials as we were for a significant period of time, as we discussed, put a hold on that. And really, where we are now is sort of following up on the opportunities that we have, both potentially, let's call it, larger scale transaction or 2, but also really trying to for the next quarter as we go forward, beginning to sort of act on what we have in front of us, which is a fair amount of contacts and potential opportunities. And we've had some positive experiences with some of our counterparties over the last quarter plus that have participated in these previously. So I think we do have some very solid momentum that we'll be looking forward to providing more information on, particularly as we get through that April period, I think that's going to be an important period of time for the company given the clarity that it will likely provide or potentially provide to the company on some of these other obligations. Brendan Michael McCarthy: Just last question for me on the balance sheet. I think it said you had cash of right around $8 million, total debt of $100 million. Does that $100 million debt include the amount owed to entities related to the previous CEO? Gregory Ezell: Yes. Of that $100.3 million, I believe, of debt, all of the balance relates to an entity associated with our former CEO, except $3.7 million. Brendan Michael McCarthy: Okay. Okay. Maybe one last question here. So I know you've done a great job, obviously, navigating the management transition, regaining NASDAQ compliance, cleaning up the balance sheet a little bit. What can investors really take away? What's the near-term priorities for you guys going forward? James Silk: The market opportunity is still very strong. I think the near-term priorities for the company in addition to sort of continuing to resolve some of these outstanding matters is to begin to demonstrate the validity of the business model by executing on some of the transactions that we have in front of us, perhaps not in volume, but in terms of how we are structuring them from the standpoint of potentially approaching them from a more efficient and simplified way and, let's just say, a clearer description to the market in terms of how those deals attach to the bottom line. As I said, that will still take, I think, some time to do that in volume, in particular, as you get -- but I think as you get through the spring period, I think that's where I think the opportunity really lies. But near term, it's going to be executing on a handful of deals that demonstrate that the market is still there and that the product is still viable and that the way we're thinking about doing these newer deals is a better way to do it, I guess, is the way I'd characterize it. Operator: Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Dan for closing remarks. Dan Callahan: I want to thank everybody for tuning in today. Again, you can read the press release about the third fiscal quarter and listen to the replay of this webcast on the Shareholder website at shareholders.trustben.com. Thanks again, and have a great evening. Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Hello, everyone, and welcome to SSR Mining's Fourth Quarter and Full Year 2025 Financial Results Conference Call. This call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Alex Hunchak from SSR Mining. Please go ahead. Alex Hunchak: Thank you, operator, and hello, everyone. Thank you for joining today's conference call to discuss SSR Mining's Fourth Quarter and Full Year 2025 financial results. Our consolidated financial statements have been presented in accordance with U.S. GAAP. These financial statements have been filed on EDGAR and SEDAR, and they are also available on our website. There is an online webcast accompanying this call, and you will find the information to access the webcast in this afternoon's news release and on our corporate website. Please note that all figures discussed during the call are in U.S. dollars unless otherwise indicated. Today's discussion will include forward-looking statements. So please read the disclosures in the relevant documents. Additionally, we refer to non-GAAP financial measures during our discussion and in the accompanying slides. Please see our press release for information about the comparable GAAP measures. Rod Antal, Executive Chairman; will be joined by Michael Sparks, Chief Financial Officer; and Bill MacNevin, EVP Operations and Sustainability, on today's call. I will now hand the line over to Rod. Rodney Antal: Great. Thank you, Alex, and good afternoon to you all. We closed 2025 on a high note, delivering full year production above the midpoint of our guidance range and generated more than $100 million in free cash flow in the fourth quarter. As a result, we finished the year with $535 million in cash and more than $1 billion in liquidity. Based on the operating guidance provided with today's financial results, we expect this material free cash flow generation to continue in 2026. Accordingly, and coupled with our view that our share price does not reflect the full value of our portfolio, we are pleased to announce that our Board has approved a share buyback of up to $300 million. If you remember, share buybacks have been a key component of our capital allocation framework in the past, and we are pleased to reestablish a program again. Before moving on to the next slide, I want to take a moment to highlight a number of key catalysts and milestones that we delivered since our third quarter results and also speak to some of the opportunities ahead. First, I want to note particularly strong fourth quarter results from our Cripple Creek and Victor mine and Puna operations which saw both assets exceed their full year guidance ranges and deliver exceptional free cash flow. At Puna in particular, the mine theaters production guidance for the third consecutive year and set records for tonnes processed in both the fourth quarter and over the full year, which was a terrific result. Second, we delivered two technical report summaries, both demonstrating long-term free cash flow generative assets that will bolster our portfolio. The Cripple Creek and Victor TRS, released in November, highlighted an initial 12-year life-of-mine plan with an $824 million NPV at consensus metal prices. With nearly 7 million ounces of resources in addition to the reserves, there is significant optionality here for meaningful mine life extension into the future. In January, we released a TRS for the Hod Maden development project, which highlighted a $1.7 billion NPV and a 39% internal rate of return at consensus metal prices. I will talk more on this in a moment. And thirdly, we continue to advance a compelling brownfield growth projects across the portfolio, which I'm also going to speak to in a moment. As you can see, 2025 was a very successful year, and we're well positioned to continue building on this momentum in 2026. So let's move on to Slide 4. We have a number of highly prospective growth targets across the business. These prospects represent potentially low-cost, high-return growth opportunities that can deliver significant value to our shareholders. In 2026, we have committed a substantial amount of capital investment across the business, and a large portion of that CapEx will be allocated to advancing these growth opportunities through the development pipeline. We look forward to sharing additional details on the projects, including both Marigold and Puna over the coming years. Now let's turn to Slide 5 to focus on Hod Maden. In January, we published a technical report summary for the Hod Maden development project. The TRS clearly reaffirmed Hod Maden as one of the better undeveloped copper, gold project in the sector, and we are thrilled to have a development asset of this quality in our portfolio. As a reminder, Hod Maden is an underground copper, gold project in the northeastern of Türkiye. The mine will be accessed through a single surface portal, and ore will be extracted through a combination of long-haul stoping and cut-and-fill mining methods. The process plant is designed with a nameplate capacity of approximately 2,200 tonnes per day with life of mine average head grade of 7.6 grams of gold and 1.3% of copper. The plant will produce a single high-quality concentrate with life of mine gold and copper recoveries averaging 87% and 97%, respectively. Moving on to the next slide for a few of the TRS highlights. Hod Maden is a unique project with significant scale, best-in-class grades and first quartile all-in sustaining costs that position the asset to deliver compelling free cash flow in the future. On a 100% basis, production is expected to average 240,000 gold equivalent ounces over the first 3 years and 220,000 gold equivalent ounces over the first 5 years. At consensus metal prices, Hod Maden is expected to generate average annual free cash flow of $328 million. While at $4,900 gold price, that free cash flow would jump to approximately $500 million annually. Hod Maden's execution has been meaningfully derisked as a result of the significant engineering and the work completed since our initial investment in the project as well as the benefit of early site works that are taking place. Inclusive of earn-in and milestone payments, SSR's remaining investment is expected to total $470 million, which we expect to fund from our liquidity position and free cash flow outlook. We anticipate a 2.5- to 3-year construction period once the project decision is made. We are very excited about Hod Maden and look forward to providing further updates in due course. Turn over to Slide 7, and I'll hand the call over to Michael. Michael Sparks: Thank you, Rod, and good afternoon, everyone. In 2026, we expect to produce between 450,000 and 535,000 gold equivalent ounces from our Marigold, CC&V, Seabee and Puna operations. All-in sustaining costs are expected to range between $2,360 and $2,440 per ounce or $2,180 to $2,260 per ounce, excluding the impact of care and maintenance costs at Çöpler. While Çöpler isn't in operation, we continue to guide to cash care and maintenance costs of $20 million to $25 million incurred per quarter. Total gross spend is expected to total $150 million in 2026, driven mainly by capital investments in leach pad expansions at both Marigold and CC&V as well as continued exploration and resource development spend globally. Capital expenditures at Hod Maden are expected to total up to $15 million per month as engineering access road development and site establishment activities continue ahead of a formal construction decision. Upon a positive construction decision by the joint venture, we will provide an update to our growth CapEx outlook at the project. Now let's move to our Q4 results, starting on Slide 8. In the fourth quarter, we produced 120,000 gold equivalent ounces at AISC of $22.50 per ounce or $202 per ounce, excluding costs incurred at Çöpler in the quarter. Fourth quarter sales were 117,000 gold equivalent ounces at an average realized gold price of $4,142 per ounce. Net income attributable to SSR Mining shareholders in Q4 was $181 million or $0.84 per diluted share, while adjusted net income was $190 million or $0.88 per diluted share. For the full year, production of 447,000 gold equivalent ounces exceeded the midpoint of our full-year guidance. As we discussed with our third quarter results, higher-than-forecasted royalty costs tied to higher gold prices and share-based compensation brought our full-year AISC to the top end of our consolidated guidance range. Full-year AISC, excluding costs incurred Çöpler, was $1,923 per ounce comfortably within our guidance. Now let's move to Slide 9. As highlighted in the table on this slide, free cash flow totaled $106 million in the quarter, and $252 million for the full year. Excluding the impact of changes in working capital, full year free cash flow was more than $400 million in 2025. These are excellent results, considering our investment in growth projects across the portfolio. We ended the quarter in a strong financial position with $535 million in cash and total liquidity of over $1 billion. This cash and liquidity position combined with our free cash flow outlook in 2026, supports our continued investment in growth initiatives across the portfolio while also giving us the confidence to initiate a share buyback of up to $300 million. Share buybacks have historically been a key component of our capital allocation and shareholder return approach. Between 2021 and 2024, we repurchased 20 million shares at an average price of $15.76 per share. With convertible notes issued in 2019 with a conversion price of $17.61, these share buybacks provided significant value to our shareholders. Our historical share buybacks, combined with the -- as announcement of a new share buyback program, reiterate our commitment to ensuring our shareholders realized growth on the key per share metrics going forward. Now over to Bill for an update on the Q4 results and 2026 guidance for the operations, starting on Slide 10. William MacNevin: Thanks, Michael. I'll first start with EHS&S, 2025 as a successful year of strengthening our programs and application in all areas of EHS&S. Key areas advanced were in critical controls and risk management for safety, the integration of closure work into life-of-mine plans to bring forward the work as well as to reduce costs and the upgrading of our community engagement and development application. As I will outline today, we are currently working on growing our business through both greenfield projects and brownfield growth opportunities at all the operations. Safe production and quality implementation of EHS&S standards is our focus ahead to enable an increase in activity to successfully advance all of these opportunities. Now on to Slide 11 for our year-end MRMR. We closed 2025 with 11 million ounces of gold equivalent mineral reserves, a testament to the scale and longevity of our diversified operating platform. Reserves were up nearly 40% year-over-year, driven largely by the incorporation of CC&V and Hod Maden into our consolidated totals as well as other minor impacts from drilling additions and model changes. Mineral reserve price assumptions in 2025 remain very conservative at $1,700 per ounce gold and $20.50 per ounce silver. We hold another nearly 15 million measured indicated and inferred gold equivalent ounces that can support mineral reserve growth across our portfolio in the future. More impressively, we have consistently delivered on our track record of replacing mine depletion. Since 2020, as shown on the right side of this slide, we have more than replaced depletion before incorporating any of the benefits of our accretive M&A transactions over the period. Inclusive of M&A, our mineral reserves are up approximately 40% since 2020, an impressive outcome that ensures our portfolio is poised to benefit from constructive gold and silver markets for years to come. Now on to Slide 12 for a discussion on Marigold. In the fourth quarter, Marigold produced 43,000 ounces of gold and an all-in sustaining cost of $2,089 per ounce. As expected, this is Marigold's strongest period of production in 2025. Technical work around ore body knowledge and processing planning at Marigold has now matured to where this is being integrated into the planning process. As a result of previously highlighted ore blending requirements and to ensure pad recovery performance, the Marigold mining schedule has been updated to account for the blending of durable and nondurable ore. In addition, increased gold prices have resulted in pit expansions and the relocation of a planned waste dump to avoid sterilizing ounces. While this work has changed the production schedule, the total ounces produced at Marigold at the 5-year period is materially the same, as reflected in the 2024 TRS. In 2026, Marigold is expected to produce between 170,000 to 200,000 ounces of gold and an all-in sustaining of $2,320 and $2,390 per ounce. Production is expected to be 55% to 60% weighted to the second half of the year. AISC will be highest in the first half due to both production profile and sustaining capital, which is expected by 70% weighted to the first half. Sustaining capital in 2026 is expected to total $108 million as we made significant investment in fleet and component placements and process planned improvements. These investments will help to ensure Marigold is well positioned for both additional near-term haulage requirements and to enable development of potentially significant mine life extension opportunities ahead. To that end, Buffalo Valley and New Millennium projects continue to advance and SSR Mining anticipates potentially integrating both deposits into an updated Marigold TRS over the next 18 months. Now on to Slide 13 for an update onCC&V. CC&V had another excellent quarter, producing 39,000 ounces of gold and all-in sustaining cost of $1,596 per ounce. Quarterly production benefited from better-than-expected gold recoveries and drove full year SSR Mining attributable production of 125,000 ounces, well exceeding the 110,000 ounce top-end guidance. It is also important to highlight that CC&V generated more than $200 million in mine site free cash flow to our count in 2025, an exceptional outcome when compared to the $100 million upfront transaction outlay we paid to acquire the mine last year. In November, we released a technical report summary for CC&V, showcasing an initial 12-year life of mine with an NPV of $824 million at consensus metal prices. The mine plan was based on 2.8 million ounces of reserves, and CC&V has an additional nearly 7 million ounces of measured indicated and deferred resources to support potential mine life extensions over the long term. Combined with our long-term production platform at Marigold, this TRS reiterated our position as the third largest gold mine producer in the United States. SSR now holds more than 6 million ounces of mineral reserves in U.S. along with an additional 7 million ounces of M&I resources and 2 million ounces of inferred resources, all calculated at conservative metal price assumptions well below the current spot market. In 2026, we expect CC&V's production and costs will be well aligned with figures outlined in the TRS. Full year production of 125,000 to 150,000 ounces and ASIC between 1,780 and 1,850 per ounce should position the asset well for another year of strong free cash flow. Production will be 50% to 55% weighted to the second half of the year, with costs trending above full-year guidance in the full first half. Now over to Slide 14 to discuss Seabee. As highlighted in our Q3 results, Seabee's fourth quarter reflected a continued focus on underground development in the second half and saw increased oil contributions from the lower-grade gap hanging wall. Accordingly, the production totaled approximately 9,000 ounces at an ASIC of $3,433 per ounce in the fourth quarter. In the first half of 2026, underground development will remain the focus as we look to improve stope availability going forward. Full year production of 60,000 to 70,000 ounces gold is expected to be approximately 60% weighted to the second half, with the strongest results in the fourth quarter. ASIC guidance of $2,170 to $2,240 per ounce will be higher than the first half, reflecting the aforementioned production profile and the typical cadence of spend, given the winter road season to start the year. Work at Porky continues to advance and we were able to declare a maiden 200,000 ounce mineral reserve at Porky with the year-end update. We are also excited about some of the recent drilling results at Santoy, and we'll continue advancing both near-term drilling and development at Santoy targeting high grades. Regional exploration is also expected to continue across the property in 2026. Now on to Puna to Slide 15. Puna delivered another excellent year, exceeding its production guidance for the third consecutive year. Record tonnes in both the fourth quarter and over the full year for a major factor in Puna strong results with Q4 production of 2.1 million ounces of silver and ASIC of $18.39 per ounce. Full year ASIC of $14.24 per ounce was slightly better than the guidance and drove mine site free cash flow of more than $250 million in 2025. Puna has been an exceptional contributor to our portfolio, and we see potential to extend operations of Puna well beyond 2028 through growth opportunities both at Chinchillas and Cortaderas going forward. In 2026, we expect Puna will produce 6.25 million to 7 million ounces of silver and all in sustaining costs of $20 to $22 per ounce. As noted, we are pursuing opportunities for additional pit laybacks at and chairs as well as further evaluation of the leaner target to the northeast of the current Chinchillas pit. Drilling has also been very successful at Cortaderas, an underground brownfield deposit on the [ Pirquitas ] property. And we are advancing engineering work to delineate its potential contribution to put Puna's longer-term profile. Now I'll turn back to Rod for closing remarks. Rodney Antal: Great. Thanks, everyone. We had an excellent finish to 2025. We delivered solid operating results that are well aligned with expectations and now went to 2026 in a strong financial position with a number of key catalysts on the horizon. We're well positioned to deliver year-on-year production growth and strong free cash flow and are also well advanced on a number of growth initiatives across the portfolio that we look forward to sharing over the next 12 to 18 months. So with that, I'm going to turn the call over to the operator for questions. Thank you. Operator: [Operator Instructions] Our first question comes from George Eadie with UBS. George Eadie: Can I start with Marigold, please? Just looking at the 21 million to 23 million tonnes stacked at 0.4 gram a tonne and 0.35 in Q4. My math that gets me to the top end of guidance. So maybe just a little bit more color here. Like is there a bit of conservatism baked into the guidance range of 170 to 200? Rodney Antal: I'm going hand it to Bill. William MacNevin: As we talked, we've been doing a lot of work, particularly on the technical front, and we baked that now into our updated forward schedule. And that considers how we actually have to complete our blending. So that blending and the updated plan for that is actually well outlined in the plan forward. So we believe that guidance is a good indication of what we'll deliver this year. A different stacking plan comes with that. George Eadie: Okay. But looking at the tech report, like I know it's old now, but the next 2 years, it had 0.3 gram a tonne. But given commentary before, like should we expect next year's grade incrementally higher versus this year? And then 2027 to 2028, just clarifying, like should we be looking at a stacking grade of high 0.4 to low 5s potentially, given the commentary before about keeping the sort of medium-term outlook unchanged? William MacNevin: So as always, as noted, right, across 5 years, we're basically in line. In terms of what's happening is with these metal prices, which is very exciting, we've got growth in pet sizes, we've got additional haulage. So there is a complete reschedule of the mine. So we're still delivering the same goal across the period and particularly life the mine as well, but the timing of it will be different. And that's why there's reference there, we've also got Buffalo Valley coming in, we've also got further upgrades. So the reference to completing an updated TRS port -- report comes in there as well. So there's a lot of work going on in terms of those changes ahead. George Eadie: Okay. But that referenced 5 years, what is that exactly, sorry? Like if I look at the tech report average 5 years from today, it's 235,000 ounces per annum. Like what is that reference 5 years you're speaking to? Rodney Antal: Yes. I think what he's saying -- let me answer it, Bill. George, it's Rod. Thanks for the question. Look, I think what Bill is outlining is with all the work that we have completed, I mean that's been the blending requirements that we've got for durable and nondurable law we'd actually been doing work over the last 2 years to upgrade some of the ore body knowledge. So it wasn't something that we just did in 1 quarter. It was actually in conclusion of a lot of work over a period. So that's been now built in, and that's what Bill was sort of talking about with the blending requirements in the short term and near term as well as some of these other opportunities where we've identified some shifts in the mine plan because it would have sterilized some other opportunities in the future. So we're actually wrapping all that work up. And then if you add in Buffalo Valley and New Millennium, I think what it needs is a new tech report. And then within that new tech report, we're going to outline the new profiles, not only in the 5 years, but obviously, over the life of mine as well with some of those growth opportunities. So if you just be a little bit patient with us, we'll set it out all at once for you here over the next 12 months. George Eadie: Yes. Okay. No, that's clear. And maybe just one more if I can, for Puna, what silver prices, do you sort of needed a minimum to go beyond 2028? Like it's 70 ounces or higher? Could we be talking well into the 2030s potential? Or is it a bit too early and dependent still on Cortaderas success? William MacNevin: We're excited about what we have in front of us. Cortaderas is -- be it, in the underground opportunity, there's a lot of work there to do, but it's very positive. But moving back to Chinchillas itself, we do see opportunity for it to go a lot longer with work going on both in the Chinchillas pit or potentially additional step-backs as well as the Molina pit, which is right within that area being added on as well. So let's just say that works underway at the moment, and this the silver prices more than support that. So we're doing that work as we speak now, and we see it extending into the future. Rodney Antal: Yes. I'll just -- what Bill said, George, to look at the opportunity set that at Puna has really come through a lot of hard work by the guys over a sort of extended period here. And if you sort of wanted to prioritize it as sort of Chinchillas, Molina, Cortaderas, and that's how we sort of see it sequencing out. Silver price obviously is very helpful in that regard as we look forward and look at those opportunities. But all in all, I think the future is pretty bright for Puna. We've just got to finish some of the work, particularly around Molina and Cortaderas. Operator: Next question comes from Cosmos Chiu with CIBC. Cosmos Chiu: Great to see the new TRS at Hod Maden. Maybe, Rod, can I ask, is there any kind of timeline that we can expect in terms of SSR Mining coming to a construction decision? And if you can't give us a timeline, could you maybe talk about the different factors that you will consider before making such a decision? Rodney Antal: Cosmos, it is a great tech report. It certainly outlined a terrific project for all the joint venture partners that are involved. So what's going on at side right now, the work on the ground still continues. So it's not like we've got pens down and we're waiting for approvals. It's the efforts on the ground for the early earthworks some of the creek diversions the civil works, the road access tunnels and others is underway and ongoing. So that work hasn't stopped. Post the publication of the tech report, we're now just going through the sort of review processes with our partners. And once that completed, we'll have a project decision. So I'm not going to set out a timeline on behalf of everyone. But clearly, we're maintaining some progress on the ground there as well. So don't think of it as like a pens down, then we'll pick them back up. We are maintaining some of that momentum. Cosmos Chiu: Understood. Maybe going to Puna a little bit here. I noticed that the guidance to 6.25 million to 7 million ounces, slightly lower than 7 million to 8 million ounces that you highlighted back in the August 2025 study for 2026. Could you maybe talk a little bit about that? Rodney Antal: Yes, I'll pass that one on to Bill. William MacNevin: Just the permanent timeline for the work that we're completing, was it? Rodney Antal: [ 2 5 versus ] late that we had talked about. William MacNevin: Yes. So the 6.25 to 7 as we're talking, is our guidance range. You wanted an update against that? Sorry because I missed... Cosmos Chiu: So the August 2025, your Q3 2025 update you at 2026 silver production at Puna will be between 7 million and 8 million ounces. William MacNevin: Yes. All right. Yes. No, I see. All right. quarter. Yes. So obviously, with the work we're doing at the moment, and we're continuing to do -- there's more phasing work happening with additional mining happening at Chinchillas. The timing of ounces has changed in saying that we have -- we're looking at a further depth of the production levels staying at a higher level for longer. So in other words, we saw it dropping off quicker it's come down, as you know, but we're looking at it going, maintaining a higher level for longer. We look forward to updating that as we complete some of this work going forward in future. [indiscernible] has stepped down for the year ahead, but it's going to continue for longer. That would be the best way of terming it. Cosmos Chiu: Okay. So it's a timing thing. We should take those ounces that are not produced in 2026, put into 2027 or 2028? William MacNevin: It will be, yes. It will be better. Cosmos Chiu: Perfect. And at Marigold -- sorry, going back to Marigold here, could you maybe explain to me durable versus nondurable ore and blending? I'm not fully appreciating the sort of the technical aspects behind it. William MacNevin: So to put it into a simple manner, depending on the fines content and how -- and then the height of the heap, it creates compression on the material. So the effectiveness of the solution transfer can be impacted. So if we go back in time for those that have a long history with Marigold, we've had -- we were challenged in late '22, early '23, where we had a -- where we ended up with our heap became bound up. So in other words, a lot of good work has happened to understand that ore body better. And so with that, we now have implemented different land requirements of what can be mixed with what. And then that changes the schedule of how we bring different parts of the ore body together to ensure optimum blending and optimum recovery from the -- does that make -- does that answer that sort of -- in simple terms? Cosmos Chiu: Yes. I think I got it now. When you mentioned fine, I think I remember that now. So great. And maybe one last question. I see that you're still using fairly conservative numbers for your MRMR estimate $1,700 an ounce for reserves at Marigold. So I guess my question is, I don't know how much you can answer about, but what would a higher gold price assumption due to what you can do at the ore body? It sounds like you're considering it because you're talking about not sterilizing some of the certain parts in the ore bodies or you're leaving that optionality open. And so to the point that you can share with us, what is the higher gold price assumption mean? And could that be incorporated into this new sort of technical report that could come out in 12 to 18 months' time. And you talked about Buffalo Valley and also New Millennium. Could those be part of that new study coming out as you well? Rodney Antal: Yes, that's right, Cosmos. Look, I think across the portfolio, we took a view for this year at least that given the profile that we already presented ourselves and some of these other growth opportunities that we have, we'll park any decisions on increasing the gold price kind of lowering the cutoff grade, et cetera, and maintain the margins. So -- but we really didn't see anything necessary to do that work. We do have a lot of growth studies, exclusive of gold price that are in front of us that we're looking at. And that's really the key focus at the moment to complete that technical work. So ultimately, we can start to include those into the technical reports for the future. And then obviously, we can come back to the gold price question about looking at where how sensitive some of the operations are for gold price increases as well. So that really was this year. We just got so much other work going on, we just wanted to complete that and then come back to come back to it later on. Cosmos Chiu: And then would that coincide with your timeline, say at Marigold? Because as you say, you're going to come up with a new technical study in Marigold in 12 to 18 months, could this sort of reevaluation of the gold price coincide with that timeline as well? Rodney Antal: Correct. Yes, good. And particularly New Millennium and some of those other targets as well. Operator: The next question comes from Ovais Habib with Scotia Bank. Ovais Habib: Congrats on a good quarter, especially at Puna and CC&V. A couple of questions from me and just again, going back to Marigold following up on the previous caller's questions, the fine that Marigold, looks like blending is working. And I mean, is this issue now behind us? Or are we still expecting to see this issue linger into Q1? Rodney Antal: No. In terms of the look forward -- I got this one, Bill. In terms of the look forward for the surveys, it's pretty simple. We're going to have areas where we will encounter fines in the future. It's throughout the ore body. And as Bill said, since '22, we did a lot of work, drilling et cetera, to understand at a greater level of detail, some of those pockets where the final existed. And so that's all been incorporated to the future mine plans to allow for that blending of what we call in durable and nondurable. You'll hear us say that as well in the future. So it informs the scheduling to ensure that we have the appropriate blend. So we get the right outcomes on the heap leach pads in the future. So it hasn't -- it's not a one-off. It's going to be a future feature for Marigold. And all of the work we've been doing is really just in preparation to handle that, which has been terrific work actually. And as I said to -- I think George was asking about, we'll have a new tech report, which will outline all of those requirements in the future as well as some of these other growth opportunities. Ovais Habib: Got it. And just again, I think there's a follow-up question on Puna as well. I mean drilling has been pretty successful at Cortaderas. Don't believe this deposit has been included in Puna's mine life extension. Rod, are you looking to release any sort of a new mine plan for Puna in the near term, including Cortaderas as well as Chinchillas? Rodney Antal: Look, I think what we'll probably see at Puna basin -- don't hold me to it because it depends on the work. But I think we'll see some additions to the mine life just through some of the extensions that we're going to go into encounter Chinchillas and potentially in Molina. As they start to -- the drilling programs there and also up at Cortaderas continuing some of the technical work behind those that drill program concludes, then we may consider doing a new tech report into the future. But I think at the moment, the guys have done a terrifically good job at already establishing a longer life at Puna. We see the potential for more of that. And then hopefully, in the longer-dated near term having -- sorry, in the near term for the longer-dated future some of these other larger opportunities playing our feature into Puna well into the future. So it's a pretty exciting where we've come from. If you think back, it wasn't that long ago that folks were thinking about Puna as a depleting asset that was coming towards the end of his life. And I think what we're finding there through the efforts is quite contrary to it. Ovais Habib: Excellent. And then just moving on to CC&V, which has been a real success for SSR. Currently, I mean, the project holds 4.8 million ounces in M&I. Now you already have a 12-year mine life at CC&V, but what's the plan there to accelerate these ounces into the mine plan and improve the production profile of CC&V? Is this just the permits? Is it more infrastructure that needs to be allocated? Any sort of color there? Rodney Antal: It's pretty linear from what we can tell at the moment, Ovais. The mine extension is obviously predicated on the success of the amendment for approval. That amendment for that approval allows us to continue with the pad expansions. That is already well sequenced out over sort of the next 5 to 10 years. So that's really the first sort of stage of growth, if you like, on the current reserves as you point out. Is there opportunities to optimize and do things? I mean that's our job is to try to trying to do that. But I wouldn't -- similar to Marigold, Cripple Creek has durable, nondurable ore as well, and it's really important to stay in sequence with that asset base not to put a risk the future. So we'll try. But look, I think it's fairly well set out. And then beyond it, obviously, we'll look at the opportunities for conversion of the 7-odd million ounces of resources that we also have available, which would require then another expansion permit for that regards as well. So look, I think the asset itself has done remarkably well. Since we acquired it, we're very proud of the efforts that have gone on down there and proud of the team, and they're now part of SSR and they deserve a standing ovation because I think it's been a terrific integration into the portfolio. Now our job is to optimize and to extend that asset well into the future and really demonstrate its strength in the portfolio. So we're pretty excited to have it. Ovais Habib: And just my last question then on Çöpler, Rod. I mean, any sort of progress there that we can kind of put our finger on or any sort of updates that you're looking to provide in the term future on Çöpler? Any sort of discussions going ongoing that you can talk about? Rodney Antal: Yes. Look, I think that's right, discussions are ongoing. So in terms of like activities, there really was nothing to note since the last quarter. I mean the activities at the site, as Michael sort of mentioned in his financial discussions, had sort of wound down in terms of material movements and site rehabilitation, what we're waiting for the final approvals for the e-storage facility and pad closure. The guys are obviously still very busy in that in regards of care and maintenance of the activities around the plant, in particular, to maintain integrity for a start-up. But that's really been the sort of key focus on the ground at site. And then obviously, as you note, we continue to progress the various discussions with different parts of the government and government authorities. So it's just ongoing at this stage. Operator: Next question comes from Don DeMarco with National Bank. Don DeMarco: A lot of my questions have already been answered. But Rod, I'll start off with this. For Hod Maden just continuing on as we're looking forward to this formal construction decision and I see that in the interim, you're looking at maybe spend on the order of about $15 million per month, should we pencil that into our model like beginning as of January 1, I think? Or should we wait until a construction decision? In other words, are you kind of getting ahead of yourselves a little bit here with some of that spending before the formal decision is made? Rodney Antal: No. Look, a lot of that spending was already committed, Don. On the early site works that I mentioned before, the tunneling is ongoing. We actually just had John shared actually before this meeting, the first blast of the tunnel, which is terrific for that site access tunnels, a lot of the civil works around that Creek diversion, et cetera, are all ongoing. So that was work already in progress, and that's what I was sort of saying before. I think while we're waiting for the decision, we're still very busy at side. The team is very busy on side in getting the site prepare. And then we know, obviously, once a construction decision gets going, we're well prepared to execute contracts and get moving on the bigger build as well. So it's -- I think that's fair to use that sort of number. And then obviously, we'll do a -- we'll update the guidance once we tally up what the actual cash out the door will be for the capital for the construction during 2026. Don DeMarco: Okay. Okay. That's helpful. And just my final question then, shifting to Marigold, so I see that there has been a sizable increase in sustaining CapEx in '26. And of course, the print details that there's some fleet replacements, of course, there's the plant upgrades. So is this sort of this spend to be onetime in '26? Or should we also be modeling maybe a little bit higher CapEx going forward in the next '27, '28 years? Rodney Antal: Yes. Look, I'll answer and then Bill can jump in, if you like, as well. I think we do what we always do when we look at our fleet and our mine plans in the long-term exercises around total cost of ownership. Fleets obviously have a useful life arm and particularly parts and maintenance and major component rebuilds. We completed that work for Marigold last year. And what I determined was, in some cases, that it was wise for us from a value perspective to do that work in 2026. So that's really what you're seeing there. So it's normal course. In some cases, some of them might have been accelerated by a year or 2, and some of that fleet replacement might have changed as well, but it's really just sort of an exercise in value for the fleet of understanding the optimized approach to that replacement. But nothing out of the ordinary. Bill? William MacNevin: That's correct, Rod. And a lot of work, looking at what the optimum timing, is for value. So some things are a little bit earlier than they originally planned, but that's because it gives very positive financial return to the business. That's why we're doing it. Operator: This concludes the question-and-answer session and today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Welcome to BioArctic Q4 Report 2025. [Operator Instructions] Now I will hand the conference over to CEO, Gunilla Osswald; and CFO, Anders Martin-Lof. Please go ahead. Gunilla Osswald: Good morning, and welcome to BioArctic's presentation for the fourth quarter and for the full year of 2025. It has been a fantastic year for BioArctic. In 2025, we entered into a new era that we call the growth era. And we can conclude that we have a transformative year behind us with record financial results. We are making our science accessible to more and more patients than ever before. And I think it's great and reassuring to see that more and more patients are getting access to Leqembi. We are accelerating our innovations. Our portfolio is progressing really well and has been further expanded, and our BrainTransporter technology is further evolving with new innovations. We have increased focus on business development. We are broadening our collaborations and utilizing our BrainTransporter technology, and we'll talk more about all this in today's presentation. Next slide, please. BioArctic is listed at Nasdaq Stockholm Large Cap, and this is our disclaimer. Next slide, please. I'm Gunilla Osswald, and I'm the CEO of BioArctic, and I will share today's presentation with our CFO, Anders Martin-Lof; and our Chief R&D Officer, Johanna Falting; and our Chief Commercial Officer, Anna-Kaija Gronblad. Next slide, please. I'll start our presentation by giving some key highlights. Next slide, please. I'm proud to state that BioArctic is among the world's leading innovators in precision neurology. We have 2 key platforms, where the first one is innovation and generation development of highly selective antibodies that are targeting aggregated misfolded forms of toxic proteins like lecanemab. And we also have then projects targeting alpha-synuclein, TDP-43 and Huntingtin. The second area is the BrainTransporter platform, where we have an innovative way to deliver antibodies. And I want to highlight that we are broadening the platform to enable more efficient transportation of other modalities into the brain with new innovative approaches. We'll talk more about that in today's presentation. Next slide, please. Last year, we held our first Capital Markets Day, where we presented our ambitions for 2030. And I'm so happy to see that we are already clearly delivering on our ambitions. If we start with the first one, LEQEMBI to be established treatment in Alzheimer's disease. LEQEMBI demand continues to grow to more and more patients, and we are now having global sales above USD 500 million. I think it looks bright with the blood-based biomarkers and the subcutaneous administration coming. The second aspect is balanced and broader pipeline with projects in all stages of development. And the pipeline is already broader with new projects added last year for both Parkinson-related diseases as well as Huntington's disease. The third one is additional successful global partnerships, and we are very pleased with Eisai and our 2 new collaborations since last year, Bristol Myers Squibb and Novartis. We are also really happy with the further discussions that are ongoing. The fourth one is about our finances and our aim is to be profitable and have recurring dividends in the future. And we were highly profitable 2025, and our strong financial position allows us to continue to invest heavily in our business and at the same time, give something back to our shareholders. And there is a proposal by the Board of dividends of SEK 2 per share. Next slide, please. So I just want to comment on some of the latest highlights towards delivering on our ambitions. So we start with Leqembi, and I would like to start by thanking -- thanks to our partner, Eisai's great work, Leqembi is now approved in 53 countries around the world. The subcutaneous auto-injector that is called Iqlik in the U.S. has been launched for maintenance dosing in the U.S. The next important step is approvals of subcutaneous initiation dosing. And it was great to see that both the authorities in the U.S. and in China has granted priority review. And I think this points to how important the subcutaneous opportunity is for the patients. And we are very much looking forward to the PDUFA date that FDA has set by the 24th of May this year. It's also reassuring to notice that all data being presented at congresses, including long-term data and real-world evidence data are very encouraging for Leqembi. If we then turn to the pipeline, it's progressing really well, and we are growing the pipeline and they are advancing. If we look at our alpha-synuclein portfolio and start with exidavnemab, which is our antibody, which currently is in Phase IIa. The second part of the study with both Parkinson's disease and multiple systemic atrophy patients will be finalized this year, and we are actively preparing for Phase IIb. We can also communicate that we have nominated 2 new candidate drugs, and we are preparing for INDs. And we have also further expanded our portfolio. And as you know, I'm very excited about our BrainTransporter technology platform, where we have further innovations for different modalities, including our BrainTransporter -- utilizing our BrainTransporter technology, and Johanna will talk more about this and show some nice new data. The third one is about our partnerships. And as I've said, I'm really happy with all 3 partners: Eisai, Bristol Myers Squibb and Novartis. All 3 programs looks great. And it's also happy to notice that we were very busy during JPMorgan in January this year. And it's great to see that we have continued strong interest for our projects and for our BrainTransporter technology, both for antibodies as well as other modalities. The fourth aspect is about our financials, and they are strong, and we were highly profitable in 2025 with record full year results of SEK 1.2 billion. The royalties for Leqembi are steadily increasing. And during 2025, we received several milestones also, both from Eisai and upfront payments from Bristol Myers Squibb and Novartis, and that led to that we have a strong cash position of SEK 2.2 billion, and Anders will talk more about this. Next slide, please. So by that, I will now hand over to our Chief R&D Officer, Johanna Falting, for an update on R&D. Johanna Fälting: Thank you so much, Gunilla. Next slide, please. So this slide provides an overview of our R&D portfolio, featuring the 2 main platforms that Gunilla talked about, the antibodies and the BrainTransporter platform and also the highlighted cross-program synergies. So the portfolio includes fully funded projects, partnered with major global pharmaceutical companies such as Eisai, Bristol Myers Squibb and Novartis. And we also have several in-house projects and technology platforms with substantial market and out-licensing opportunities. All collaborations involving the BrainTransporter platform are advancing well and as planned. And since the last quarterly update, we have also achieved important milestones within the portfolio, including the nomination of 2 candidate drugs, BAN2238 for alpha-synuclein disease and BAN3014 for TDP-related proteinopathies such as ALS. Additionally, you will notice a new project in the BrainTransporter portfolio, the PD-BT2278, and this is targeting the alpha-synuclein disease. So next slide, please. So both BAN2238 and BAN3014 were recently nominated as candidate drugs and have now advanced from research into preclinical development. BAN2238 is targeting toxic aggregated alpha-synuclein such as oligomers, protofibrils and aggregates, and this is combined with the BrainTransporter technology. And it offers opportunities in several different synucleinopathies such as Parkinson's disease, MSA and dementia with Lewy body. And for BAN3014, this antibody targets toxic aggregated TDP-43 proteins, such as oligomers, protofibrils and aggregates, and it offers opportunity for several of the TDP-43 proteinopathies such as ALS and frontotemporal dementia. So both of these programs, we have now initiated IND-enabling activities, and they are being prepared for clinical studies. So the next slide, please. So alpha-synuclein misfolding and aggregation is central to alpha-synuclein disease development. And our alpha-synuclein portfolio offers opportunity in several of these synucleinopathies such as Parkinson's dementia with Lewy body and multiple systemic atrophy. Exidavnemab is most advanced and is currently being tested in the EXIST study, a Phase IIa study for safety and tolerability. And in parallel to this, we are preparing for the next stage of development into Phase IIb. 2238, that I just talked about, is the newly nominated alpha-synuclein antibody combined with the BrainTransporter technology for better efficacy and better brain uptake. And BAN2238 is an alpha-synuclein antibody combined with the BrainTransporter, also representing an additional advancement in the BrainTransporter portfolio, for which further details will not be disclosed at this time. Next slide, please. I'm very excited to share some new data today on our BrainTransporter platform. So we know that the blood-brain barrier that represents a significant challenge for neuroscience. And if we can improve the delivery to the brain of our drugs, that represents an enormous opportunity for increased, of course, exposure in the brain, enhanced clinical efficacy, greater patient convenience by lowering the dose and offering other routes of administration, potentially better safety and lower manufacturing costs. So we are investing very heavily in the BrainTransporter technology to deliver different types of biopharmaceuticals beyond antibodies and enzymes that we talked about in the past. So we have developed this technology further now to enable delivery of small drug modalities to the brain. So this is a very innovative and flexible system that aims to transport various type of drugs such as genetic medicines and small molecules into the central nervous system. Next slide, please. So here, I'm very happy to show you some new data. And this image here compares the brain distribution of a standard antibody up to your upper left corner in green with a BT-coupled antibody in green below. And you can appreciate, I hope, the great increase of the green, fluorescent color, which represent the antibody present in the brain. And this is the same dose and the same time frame and the same antibodies just with and without the BrainTransporter technology. So antibodies we have worked with for quite some time, but we have also now here shown you data with the distribution in the brain of an enzyme and also a small modality. So this BT-coupled approach significantly improves the brain distribution of our -- of drug modalities. And for the BTA, the antibodies, this is a technology now that is fully implemented and validated both in mice and in nonhuman primates. And here, we have both internal and external candidates at various stage of development. And then the BTE, the enzyme platform, we have our first internal program, the BTG case for Gaucher's disease, and this is progressing very well. It's an orphan indication that offers potential -- offered market potential for BioArctic and a project that we can drive longer into the clinic. And I think that this enzyme project, it really sets the foundation for future enzyme-based projects coming along in the portfolio. And then what's new and presented here today is the BTS, the BT small modalities. And this is a novel and very flexible system that enables efficient brain delivery of genetic medicines such as ASOs or siRNA. It could be degraders. It could be small molecule approaches or anything that you want to deliver into the brain basically. And here, some key data is now being generating, showing the utility of the system. And what is shown here is then the brain distribution. And I think that there's been a really strong interest in our BrainTransporter technology at the JPMorgan Health Conference in September -- or in January in San Francisco. And we are very excited about the future further development of this platform and hope that we will be able to show you some more data in the coming year. So next slide, please. So with this, I will hand over to our Chief Commercial Officer, Anna-Kaija Gronblad, for a commercial update. Anna-Kaija Gronblad: Thank you, Johanna, and I will go back to Leqembi for a while, and I will start by just reminding everyone on the many recent and upcoming regulatory and development steps for Leqembi that really increases the treatment options for patients, but also drives the sales growth around the world. So as Gunilla mentioned, the IV formulation is now approved in 53 countries, of which the latest ones were Canada, Brazil and Malaysia. And the IV maintenance treatment once every 4 weeks is approved in 7 countries. And in the EU, the EMA accepted Eisai submission for the IV maintenance earlier this year. When it comes to the subcutaneous auto-injector, the weekly maintenance treatment was launched, as Gunilla mentioned, in the U.S. in October last year and the sBLA for the weekly induction treatment was granted priority review by the FDA, and we're looking forward to the PDUFA date set for May 24. In Japan, the application for the subcutaneous induction treatment was submitted in November last year, and Eisai expects to launch later in 2026. And then finally, Eisai also sent an application for the subcutaneous auto-injector also in China last month, where it was granted priority review and Eisai expects a launch in 2027. So many advancements, and this will drive the Leqembi growth even further, the game-changer being really the subcutaneous auto-injector, where the induction treatment is given as 2 injections of 250 milligram each, where each injection only takes 15 seconds. So next slide, please. So also with regards to the real-world evidence, Leqembi continues really to deliver more data. At the most recent Alzheimer's Congress, CTAD in December last year in San Diego, there was a lot of presentations on Leqembi. So real-world evidence coming from U.S. and Japan shows really consistent results in terms of efficacy and safety with findings from the clinical trials. Additional data presented indicated that earlier initiation may be associated with greater benefit and that continued Leqembi treatment may provide a benefit compared with stopping therapy. So finally, data also presented at CTAD verified that the subcutaneous formulation offers a convenient option with comparable exposure and safety to IV. And this can really reduce treatment burden for patients and their care partners and health care, of course. So this was really, really encouraging to see all these data in December last year. So next slide, please. So what are the trends on the key markets for Leqembi? Anders will soon show you the BioArctic royalty based on the Leqembi sales, but we can conclude that Leqembi sold for more than USD 500 million in the calendar year of 2025. That's a nice milestone. The global anti-amyloid market has more than doubled in 2025, and this is driven by mainly 3 things, I would say. First, the use of blood-based biomarkers, both for triaging and for confirmatory diagnosis is increasing. China has been really in the forefront. But also in the U.S., it is steadily increasing, and it is estimated that approximately 10% of confirmatory diagnosis in clinical practice in the U.S. are done by blood-based biomarkers. Secondly, more physicians are prescribing Leqembi. In Japan, more than 800 facilities are now starting initial treatment and 1,700 centers are focusing on the follow-up after 6 months and onwards. And in the U.S., there is an enhanced coordination between the primary care physicians and neurologists. On the slide, you can see the targeted direct-to-consumer information campaigns that Eisai has been rolling out in the U.S. and in Japan. And the second one is to address really the awareness of mild cognitive impairment. The fact that Leqembi was included in the commercial insurance innovative drug list in China in December will gradually give more physicians and patients access to Leqembi from the second half of the year, it is estimated. Thirdly, the subcutaneous auto-injector that I mentioned was launched in the U.S. for maintenance in October also drives growth. It is estimated that 80% of the patients on Leqembi want to continue treatment after 18 months. The insurance coverage through the medical exception process is increasing, and the payer approval rate is estimated to be over 80% in the U.S. And finally, in Europe, the launches in Austria and Germany are ongoing since September last year, whereas the reimbursement discussions are ongoing in other countries. And finally, the first private clinic in the Nordics started treating patients in Finland in October last year. And what we hear from the market is that there are several other private clinics that are about to start. And we also hear that there are private patients traveling to Finland also from Sweden, for example. Also since April, our team in the Nordics has gradually been out visiting memory clinics every day, educating on the Leqembi data and on the infrastructure that needs to be in place. We are active at national and regional specialist meetings, visiting regional health care decision makers, and we're increasing our digital communication on Leqembi. There is really a big interest and willingness to learn more and to make sure that all relevant staff at the clinics are educated. So next slide. So finally, this is my last slide, and I know it's a busy one, but there was a question sent to us before [ Harald ], on the progress with governments regarding Leqembi reimbursement in the Nordics. And as you probably know, Eisai is responsible for reimbursement and pricing. But this slide shows an overall picture of the different steps and the parties involved in the process and what the completed steps are for Leqembi in blue, which you can also find publicly available. It is the ambition for both Eisai and us to secure patient access to Leqembi in all Nordic countries. And as you might know, in red there, you see that in Denmark, the Danish Medicines Council came out with a negative recommendation in December. So here, Eisai is considering the next steps and will be in dialogue with the authorities regarding potential next steps. In Sweden, the TLV published their health economic evaluation in December, and the next step is to negotiate with the NT-council. And in Finland, the assessment report from Fimea has been recently published. And in Norway, the assessment is still ongoing in the Norwegian Medicines Agency. So it is -- there's no official set time lines on how long these processes are, but Eisai is working very closely in dialogue with the authorities to answer any potential questions or other requests. And clearly, the ambition is to finalize these different steps during the year. So you can go to the next slide. And by that, I leave the word to our CFO, Anders Martin-Lof. Anders Martin-Lof: Thank you, Anna-Kaija. I will then start with the Leqembi numbers where we saw solid growth globally. In Q4, the sales were JPY 20.7 billion or $134 million. That was a 15% increase from the last quarter or 55% increase year-over-year. And as Anna-Kaija mentioned, this now means that we are well above $500 million in annual sales, which is a significant milestone for a product like this. Looking at our royalties, they grew by 31% year-over-year to SEK 127 million, and this is despite the Swedish krona getting significantly stronger during the period. So if with constant exchange rates from last year, we would have seen more than 50% royalty growth. Looking then at the different markets, starting with China, the sales there are still a little bit distorted by the Q2 stockpiling effect. Sales came in at JPY 0.4 billion or roughly $3 million. That is a 100% increase from the third quarter. However, that's still on a very low level, and this is due to the fact that there was a big inventory buildup in the second quarter with sales of $53 million in the second quarter. And we have estimated roughly what our royalty would have been like if the sales in China would have been roughly in line with demand. And you see that in the pink bars in the graph that our royalty would have been roughly SEK 125 million, SEK 135 million and SEK 145 million during the second to the fourth quarters. Right now, we believe there is no more inventory to sell off, so we expect sales to return to more normal numbers for the first quarter of 2026. If we then turn to the U.S., their sales were roughly $78 million or JPY 11.9 billion. That's a 17% increase from the third quarter. And as Anna-Kaija mentioned, here, the solid growth is expected to continue, mainly driven by the introduction of Iqlik for induction and also by the introduction of blood-based biomarkers during the year. In Japan, the volumes are growing steadily. However, there was a price reduction. So the sales were JPY 6.2 billion or $40 million. That means no change from the third quarter. So the volume increase was roughly 15%, so healthy growth, but there was a one-off 15% price reduction from the Japanese reimbursement system, which is expected when volumes grow for a product. Furthermore, the EU launch has been initiated. We're well underway in Austria and Germany, but still the royalty from the European market is very, very limited and has a very small impact on our royalties. That should grow, but even in 2026, we expect the impact from Europe to be fairly small to our royalties. If we then turn to the forecast for Leqembi, Eisai has a JPY 76.5 billion forecast for their fiscal year 2025 that ends on March 31. And right now, after 9 months of that full year period, we have already reached more than 80% of the target. And you see the numbers to the right of the graph that in the U.S., they reached 78%, Japan 75% and China 87%. So what this means is that Eisai will reach the forecast even if there will be no growth in any of the larger markets, and that is not what we're seeing. So we believe they have a very good shot at reaching their forecast for the full year. If we then turn to our numbers, I think it's worth to emphasize how big of a transformation 2025 was for us when we saw an eightfold increase in revenues. I won't be able to say that often, but this time around, that actually happened. And you see our revenues on the left-hand side, you see they're very lumpy with the highest revenues in the first and second quarters, mainly driven by the agreement that we entered into with BMS in the first quarter. But even so, if you look at the fourth quarter, our net revenues were SEK 184 million. And I think it's very reassuring to see that our recurring revenue base is continuing to increase. So we had a royalty of SEK 127 million and co-promotion revenue of SEK 6 million. So all in all, SEK 133 million in the fourth quarter. And that means that we had recurring revenue of roughly SEK 520 million in 2025, and that's really starting to become a solid base for us to fund our future R&D investments. We also get some questions on the Novartis upfront. It's recognized over the initial collaboration, and we recognized SEK 51 million out of the $30 million during the fourth quarter. If we turn to our operating expenses, they actually decreased to SEK 136 million from SEK 143 million a year earlier. And if we take away currency effects that are recorded as other operating costs, the underlying operating costs were SEK 134 million. And I think it's worth to highlight that that's very, very close to the recurring revenue that was SEK 133 million. So we are actually more or less at the breakeven with our recurring revenues funding our full operations in the fourth quarter. Looking forward a little bit, our underlying costs are expected to increase in 2026, up from SEK 681 million in 2025. And this is, of course, then due to the progression of our project portfolio that Johanna mentioned. We're investing heavily into exidavnemab, where we're currently in Phase II, but we're also starting big CMC programs for our new candidate drugs, BAN2238 and BAN3014, which is really, really positive. So the higher R&D costs we have, the better it is because that means we're making progress in our portfolio. So it's hard to make a proper forecast for the cost. But if I can give, I would like to give you some guidance, and I guess or estimate that the growth will be roughly 50% to 70% in 2026. That is the cost should increase by 50% to 70% in 2026 compared to 2025. And then finally, if we turn to our operating profit on the right-hand side, it was SEK 33 million for the fourth quarter and the full year operating profit was roughly SEK 1.26 billion, more -- here, you saw a really big effect, of course, of the BMS deal that we entered into and recognized in the first quarter. If we turn to the next slide, we're looking at the net result. It was then a loss for the period that is explained by a significant accrued tax of SEK 48 million due to the big profit for the full year. The operating cash flow was significantly stronger than the result, and that is explained by the fact that the SEK 30 million upfront payment from Novartis was received during the quarter. So SEK 313 million in positive cash flow during the fourth quarter. And we ended the year with a cash balance of SEK 2.2 billion, a very solid position. And the Board decided based on that very, very solid position and our growing recurring revenues that we should pay a dividend of SEK 2 per share, which is, of course, a significant milestone for a biotech company like ours. With that, I hand the word back to Gunilla. Gunilla Osswald: Thank you so much, Anders. So we are coming towards the end of today's presentation with some upcoming news flow and some closing remarks. Next slide, please. I think it's great to see that more and more patients are getting access to Leqembi around the globe and also that in the Nordics that we have a private clinic in Finland so far, and we hope to get more and more patients in the Nordics, too. Eisai is driving continued regulatory processes on Leqembi in a very good way, and we hope to get more approvals in the future now. The Iqlik subcutaneous administration with auto-injector recently was approved for maintenance dosing in the U.S., and we are now awaiting the response for the induction treatment with a PDUFA date 24th of May. Later this year, we also expect response from Japan, and there it is both regarding initiation and maintenance dosing with the subcutaneous auto-injector. We are very much looking forward to the next big Alzheimer's Congress and Parkinson's Congress, which is in Copenhagen in March, where we will see several presentations. And then we see more things happening with exidavnemab, for example, where we expect to have the Phase IIa study readout later this year, and we are preparing for Phase IIb. So a lot of exciting times ahead of us. Next slide, please. So some key takeaways from today's presentation. I think that it's great to see how BioArctic has entered into the new era, the growth era, and we see great progress both of Leqembi as well as the rest of the portfolio, including the BrainTransporter technology. We have started really well to deliver on our 2030 ambitions, where Leqembi is well on track to become an established treatment in Alzheimer's disease. Sales continue to show increasing demand globally. And we have now had global sales of more than USD 500 million, and we are then halfway to becoming a blockbuster. Our portfolio has increased and progressed well and our BrainTransporter technology as well as our 2 CD nominations that Johanna spoke about have taken exciting development steps. Our brain -- our business development efforts continue to deliver, and we see continued strong interest. We have a strong financial position, and we can then both invest in our programs and projects, and we can also pay some dividends that the Board has recommended, SEK 2 per share. So all in all, I think we are exceptionally well positioned for the next phase of our growth journey. The future looks very bright for BioArctic, and we are bringing hope for many patients. Next slide, please. So by that, we say thank you for your attention, and we're happy to take some questions. Operator: [Operator Instructions] The next question comes from Viktor Sundberg from Nordea. Viktor Sundberg: So one first here, maybe on your effort to launch lecanemab in the Nordics. I just wanted to get a feel for how much of your operating expenses are allocated to building up an organization around this launch? And what could potentially happen to those costs in 2026 if the rest of the Nordic countries follow Denmark and deem lecanemab not cost effective, at least for the IV administration in the Nordics? Yes, I think I'll start with that question. Anders Martin-Lof: So if you look at the cost, most of our organization is already there. So we're not seeing any significant increases or in costs or even if there wouldn't be any change in Denmark and that decision would stand. I don't think we'll see any significant decreases either. We expect to fight with Denmark, and we're not planning any layoffs anytime soon despite the initial response there. So a small increase, I would say, on the cost side for marketing and sales. Viktor Sundberg: Okay. And maybe if you could speak a bit about what kind of indications outside of neurology that have sparked some interest at, for example, JPMorgan around your BrainTransporter technology? Is that mainly oncology indications? If you could elaborate on, yes, where you see interest outside of neurology for this platform? Gunilla Osswald: No, I think we -- as you know, we are not commenting about details when we talk about business development. We can just notice that there is great interest. And we see it on a broad level, and we see it on antibodies, but we also see it on other modalities, which we also know, Johanna showed some really nice data on today. So I think that there is a lot of different utilizations. But I think I also want to say with regard to business development, these things take time. It's not that it's quick things that you should expect from day to day. This is long processes. It takes time. It's really important for selecting a partner because it's a long-term commitment. So it looks really good. We are having a lot of fun, but it will take some time. Operator: The next question comes from Suzanne van Voorthuizen from Kempen. Suzanne van Voorthuizen: This is Suzanne. One on the BrainTransporter. Could you elaborate a bit more on the ALS and next-gen exidavnemab programs in particular? What preclinical activities are undertaken at this moment? And how does the road look and time line for these programs to be ready for the clinic? And perhaps still, you mentioned the interest in the platform is broad. Could you speak a bit to the relative focus of this interest between your existing programs versus interest to apply the technique to a pharma program? Just some extra color would be nice. Gunilla Osswald: So would you like to start, Johanna? Johanna Fälting: Absolutely. So thank you for that question. So we have now nominated, as I said, our alpha-synuclein antibody coupled to the PD program, coupled to the BT platform. And the activities that we are now embarking on in terms of moving the project from a research arena to the preclinical arena is the CMC activities that takes a lot of time to manufacture drug to be able to do toxicology studies. So this is the IND-enabling activities. It's mainly CMC toxicology to prepare for the clinic. And with regard to the BT-coupled ALS program, I mean, the one that we have nominated now is the standard antibody against TDP-43, but we, of course, also have a BT-coupled program going along, and there is no difference in the priority of these 2 antibodies. It's just that the BT-coupled antibody is a bit behind. So therefore, we have nominated now the antibody, the standard antibody. But we are definitely progressing both of these programs and have a lot of belief in them. And in terms of the time lines, I mean, depending on how everything is going, it takes approximately 2 years for us from a decision to first time in man. Gunilla Osswald: And I will continue with your second question about business development. I think that it's great to see that we have interest in both our internal programs and the BrainTransporter technology like a platform company that I've said previously that we also are. So I think that we see both interest also in the BrainTransporter together with antibodies, but we also see interest in BrainTransporter together with, for example, the new things that Johanna showed with small modalities. So I think it's -- that's what I mean with broad interest. But we are coming from a position of strength. As I've said before, we have fantastic, exciting own programs, and we have the luxury situation that we can invest in them. So we can drive things forward ourselves or we could partner if we find the right partner. So I think it's a really position of strength, and we have a great organization that are driving the programs further. And then I think that it's also good to see that we can utilize the company as a platform company and do things like the Novartis deal, where they come with their antibody, we reengineer the antibody. We check it and to see that it works as it should with regard to the transferrin receptor and so forth and then hand it back. So I think you will see more deals like that in the future. But if we find the right partner also for internal programs, that could also happen. But we don't have to partner, but we will partner if we find the right proposal and collaborator. Operator: The next question comes from the Natalia Webster from RBC. Natalia Webster: First one is just on Leqembi in Europe. I appreciate that you expect a small contribution here. But are you able to talk a bit more about what you expect is required to improve the slow adoption and how important you see both the longer-term data and the less frequent maintenance dosing in Europe? And then if you see potential for subcutaneous treatment here in the future? My second question is on the BrainTransporter platform. Just in terms of time lines around BAN2803. You previously had plans to go into Phase I in 2026. Appreciate this is now up to BMS, but are you able to share any details around expected time lines there? Then just finally, on overall OpEx. It looks like Q4 OpEx was lower than consensus is expecting, both on R&D and SG&A. I see that you're expecting an increase in cost in 2026. But are you able to touch on any key considerations for the cost phasing there next year? Gunilla Osswald: So Anna-Kaija, would you like to take the question about Europe? Anna-Kaija Gronblad: Yes. I heard the question was on the IV maintenance and the subcutaneous formulation. Is that correct? Yes. So I mean, as we just said, I mean, Eisai had submitted the application for the IV maintenance, and hopefully, this will be an approval on this during the year. And obviously, this will help, I mean, also in the different reimbursement processes across Europe. I mean, each country has their own reimbursement processes, and they usually, unfortunately, take a little bit more time than in the U.S. and the rest of the world. So I mean, globally, it's proceeding very well, but Europe is a bit slower. And hopefully, we will also see subcutaneous also coming to Europe in the future. Gunilla Osswald: And then continue with your next question, 2803. I mean it's now up to our partner, Bristol Myers Squibb, to comment about when and how that is progressing with more details. I can just say that I think Bristol Myers Squibb is a fantastic partner who are driving the program forward in a great way. But I will not comment about when it will go into man. And then the OpEx is an Anders' question. Anders Martin-Lof: Yes. So yes, you should not draw any trend conclusions based on the Q4 costs coming in lower than expected. It is a little bit lumpy in our R&D programs. As for the phasing in 2026, I think we will grow steadily as the year goes by. But then again, it's really hard to give you any sort of hard forecast for how much it will grow quarter-by-quarter. You should expect that it will be a growing trend. It will probably not be a huge impact in the first quarter and then will be larger and larger as the quarters go by. I think that's the right way to model it for 2026. Operator: The next question comes from Max Da from Goldman Sachs. [Operator Instructions] There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions or closing comments. Unknown Executive: Thank you so much. So we have a couple of written questions that we'll address now, I guess. The first one comes from Erik Hultgard, Carnegie. And he's wondering when the 2 drug candidates that we just nominated when we can expect those to be in the clinic? Maybe a question for Johanna. Johanna Fälting: Yes. As I mentioned on the question earlier is that we expect it to take approximately 2 years from our nomination to entering into clinic if everything goes according to plan, of course. That is the guidance I can give you. Unknown Executive: Yes. Super. Thank you. Then we have a couple of questions from Joseph Hedden, Rx Securities. I guess the first one, Gunilla, is for you. Anything that you can say on the BAN2802 project that we are running with Eisai and the progression of that program? Gunilla Osswald: I'm happy to see that BAN2802 program is progressing well and really nice data. Everything with the data looks really, really good. And we are now discussing with Eisai regarding potential next steps. Unknown Executive: Great. I see that we have Max Da back online. We'll take the written question first, Max, and then we'll come back to you. So then second question for Anders maybe is a question on, is there a commercial milestone, can we expect that during the course of this year for Leqembi? Anders Martin-Lof: Yes, I think it's fair to assume that we will reach a commercial milestone during the year. I cannot really comment on the timing of that. The last one we received was EUR 10 million. And as sales grow, it's normal that milestones grow, too. So I think it's fair to assume that it would be bigger than the EUR 10 million. But as for more details, I cannot really provide that at this point. Unknown Executive: We can remind everybody that we still have outstanding milestones from Eisai of EUR 54 million, I believe. Anders Martin-Lof: In total. Unknown Executive: In total, yes. Okay. And I think the last one here from Joseph is, R&D costs in Q4 '25 were lower than model, that we already discussed. Considering the Phase IIa, what do you think is a phasing? That question we already had, sorry about that. It's the same question that Natalia had at the end, right... Anders Martin-Lof: Yes. So yes, we already commented on the R&D cost phasing, so I hope that answer was enough for Joseph as well. Unknown Executive: Okay. And then I think we can go back to Max's question online in the telephone queue. Operator: [Operator Instructions] The next question comes from Max Da from Goldman Sachs. Chenxiao Da: So this is Max Da for Rajan Sharma. A couple of questions. What is your progress on finding a partner for exidavnemab? And do you require Parkinson's disease to be included in the deal or the partner has the option to license only the MSA indication? That's the first one. And could you speak to the difference between PD-BT2278 and 2238 because I couldn't tell the difference? Yes, I'll start with these 2. Gunilla Osswald: Okay. So the first question was with regard to exidavnemab and partnering. And as I said before, I mean, exidavnemab continues to progress really, really well. We are expecting the Phase IIa results later this year, and we are preparing for Phase IIb. We have interest for potential partners, and we might partner or we might not partner right now. It depends on if we get the right kind of proposal from the right kind of partner. Otherwise, we are very strong and can drive programs like this ourselves. We have the competence and so forth. And I will not comment upon details on this at all at this stage. I mean we're open. We have the open door philosophy like we do all the time. And if the right partner comes, then we will make a partnering. But we are coming from a position of strength, and we can drive things forward ourselves also a bit longer. And then there are different opportunities. I mean we have opportunities for Parkinson's disease with dementia, for example, or Lewy body dementia or other parts of Parkinson's disease or multiple systemic atrophy. And we have now 3 different programs in our portfolio, where exidavnemab is the most advanced, and we have 2238, which was just nominated and got the BAN number. So BAN2238 is the one with BrainTransporter. It's not exidavnemab, it's a slightly different antibody and it's combined with our BrainTransporter. And then as Johanna said, I will make it easy for you now, Johanna, I'll just answer that question, too. And that is 2278, which is slightly different from 2238, but we will not, at this stage, talk about what difference we have. But we have one further new invention that has been added to this program, but we are not revealing any more details at the moment. Chenxiao Da: Got it. Sorry, one more question, if you have time? Gunilla Osswald: Yes. Chenxiao Da: Could you talk about the dividend payout going forward and how we should model that? Anders Martin-Lof: So yes, this is Anders here. So yes, the Board has now proposed a dividend for SEK 2 per year. We cannot give you a forecast for what it will be in the future. However, I think it's fair to assume that the Board is expecting us to be able to pay a dividend going forward for the foreseeable future. The size of that or how certain I am of that, I cannot really comment. But I think it's fair to assume that they are hoping to pay -- hoping to be able to pay a dividend in the forthcoming years. Operator: There are no more phone questions at this time, so I hand the conference back to the speakers for any written questions or closing comments. Unknown Executive: And we have no additional written questions. So I'll hand it over to Gunilla to end the call. Gunilla Osswald: So I'll just say, thank you very much for your attention and a lot of great questions, and I wish you all a great rest of the day. Thank you so much.
Operator: Thank you for standing by, and welcome to Vicinity Centres FY '26 Interim Results. [Operator Instructions] I'd now like to hand the conference over to Mr. Peter Huddle, CEO and Managing Director. Peter Huddle: Good morning, and thank you for joining us for Vicinity Centres results call for the 6 months ended 31st of December 2025. Joining me on today's call is Adrian Chye, our Chief Financial Officer. Before we begin, I'd like to acknowledge the traditional custodians on the land on which we meet today and pay my respects to their elders past and present. I extend that respect to the Aboriginal and Torres Strait Islander peoples on the call today. I will start today's presentation on Slide 5, owing to the continued success of our strategic execution, disciplined focus on delivering our immediate, medium and long-term growth priorities and amid a supportive retail property sector fundamentals, I'm pleased to report that we have had a strong start to FY '26. Touching on the results themselves. Vicinity delivered a net profit after tax of $805.6 million for the 6 months, up by more than 60%, reflecting growth from funds from operation, or FFO, and a meaningful uplift in portfolio valuations. At 3.7%, comparable net property income growth reflects the continued strength of our portfolio metrics having increased portfolio occupancy and achieved a leasing spread of positive 4.6%, representing the highest leasing spread reported since Vicinity's inception in 2015. And of note, strong cash flows generated by our retail assets were augmented by a lowering of cap rates, which resulted in a $407 million or 2.6% net valuation uplift. And consequently, our net tangible asset per security increased to $2.52, up 4.8% in the half. I'm particularly pleased to announce that we have irrevocably accepted IFM's offer to sell the residual 75% interest in Uptown to us for $212 million. I'll share more on why we believe this is an exciting, strategically aligned and compelling business decision shortly. We also exchanged contracts to sell Whitsunday Plaza and Gympie Central in Queensland, Armidale Central in New South Wales, Victoria Park Central in Western Australia and several ancillary land parcels. Totaling $327 million, these most recent divestments were executed at a blended 18.2% premium to June 2025 book values. We completed and opened successfully the first stage of the reimagined Chatswood Chase on October 23 with the unveiling of this truly unique retail asset. Adding to this, just last month, we were delighted to welcome Kmart's headquarters to the One Middle Road office tower at Chadstone. Having joined Adairs' head office team at One Middle Road, Chadstone is now home to an additional 2,000 office workers in weekday trading. Our investment strategy is clear. We are confident it remains fit for purpose, and we are executing it with precision, consistency and importantly, with discipline. Showcased by our strategic and financial highlights today, we continue to actively reposition our asset mix, curating a more resilient and higher-growth portfolio that is well positioned to deliver sustained income and value growth today and for the long term. We are driving this via accretive acquisitions, important developments at our premium assets and by divesting nonstrategic assets at attractive pricing, where we are maintaining, if not strengthening our strong balance sheet and preserving our sector-leading credit ratings. What's more, we are executing this strategy in an environment of favorable retail sector fundamentals. As we've highlighted for some time now, population growth and increased household spending together with limited incremental retail floor space are collectively driving a growing shortage of quality retail gross lettable area per capita. This is increasing the fight for space in the best-performing retail assets that are owned and managed by retail property experts, which is, in turn, creating greater price tension and opportunity for superior rent growth. At 3.8%, comparable NPI growth delivered by our premium asset portfolio was modestly above the portfolio average but was disproportionately impacted by burdensome taxes and levies on a like-for-like basis, our premium asset portfolio delivered an impressive 4.6% NPI growth. At a solid 9.7% premium leasing spreads achieved were more than double the portfolio average. Our outlets were a standout, achieving a 14% leasing spread as retailers continue to expand their stores and increase sales productivity. The appeal of our outlet assets is reinforced by occupancy at 99.8%. We're near full capacity and retailer demand is creating strong leasing tension. And perhaps of most significance, our premium assets are now generating retail sales of around $17,000 per square meter, 26% higher than the portfolio average, once again reinforcing our view that we can sustain positive leasing spreads and rent growth. Since embarking on this strategy in late 2022, our focus on delivering leasing outcomes that drive real income growth from a more premium, high-growth asset portfolio has underpinned a $1.8 billion uplift in total value of our assets. Noting the uplift incorporates our developments on a stabilized basis. And this is despite a net reduction of 12 assets and a 20 basis point expansion in capitalization rates and as a strategically located CBD asset with immense growth potential, the acquisition of Uptown is strongly aligned with this investment strategy. Located on Queen Street Mall in Brisbane striving CBD, Uptown is a landmark retail asset with a long history and deep connection with Brisbane's retail identity. Today, Uptown acts as a primary gateway to the Queen Street bus interchange, Adding to this, the asset is expected to be a major beneficiary of sizable state-led infrastructure projects intended to enhance the connectivity of Brisbane CBD, notably in preparation for the 2032 Olympics. What's more? Brisbane CBD sits in a large and growing total trade area but currently lacks a large-scale full-line retail offering. We are confident we have the blueprint to fill this gap. Securing full ownership enables us to mobilize and leverage our core competencies across development execution and project leasing and accelerate the rejuvenation of the asset and importantly, unlock its latent value. Our vision for Uptown is to introduce a retail, dining and entertainment offer that in many aspects is akin to Emporium in Melbourne CBD. Naturally, this vision would complement the luxury offer we have curated at Queens Plaza, also located on Queen Street Mall. Commencing in calendar year 2027, we are anticipating a total project spend of between $300 million and $350 million. Funded by a mix of asset sales and debt, development returns are expected to be in line with our hurdle rate being a stabilized yield on cost of greater than 6% and and an unlevered internal rate of return of greater than 10%. Furthermore, the net impact of the acquisition of Uptown and the asset sales announced today is largely neutral to FY '26 FFO. The acquisition bolsters Vicinity's already unrivaled CBD retail portfolio and allows us to deploy our proven playbook, delivering superior and sustained asset performance and an outstanding retail destination for the broader Brisbane catchment. And speaking of asset performance, on an annual basis, our assets welcome more than 384 million visitors and generated in excess of $18 billion in annual sales. After a strong second half of FY '25, where portfolio sales were up 3.8%, we are pleased to observe a continuation of shopper confidence and capacity to spend in our centers with total sales up 4.2% in the first half of FY '26. Specialty and mini majors delivered 5.1% sales growth for the half, reflecting both solid growth in specialty sales as well as the value created by remixing strong-performing specialties into larger format flagship stores, notably across our premium assets. Our portfolio-wide approach to ensuring the retail offering each center is contemporary and satisfies ever-evolving shopper needs is showcased by the positive sales growth delivered by both our premium and core asset portfolios up 5.3% and 4.9%, respectively. The combination of which strengthened specialty sales productivity to over $13,400 per square meter. Every retail category and every state enjoyed positive sales growth for the half. Jewelery outperformed, growing an impressive 11% on the prior period spanning all price points. Jewelery was closely followed by leisure at 10.3% growth, which was driven by the popular athleisure category recording growth of 10.8% as shoppers continue to show a strong and enduring affinity for on-brand retailers in these segments. The luxury category delivered positive sales growth for 4 of the 6 months with luxury jewelry the standout performer, growing at 8.1%. The Black Friday sales event, which we increasingly consider as Black November, was strong as retailer participation in the promotional event grows and as shoppers increasingly take advantage of pre-Christmas discounts. As such, we are increasingly of the view that November and December trading should be assessed together. On a blended basis, November and December achieved 4.5% sales growth in the first half of FY '26, which compares to 4.9% growth reported in the first half of FY '25. As we look ahead, we maintain a cautiously optimistic outlook for the retail sector, premised on persistent strong employment but somewhat tempered by the recent shift in the RBA's monetary policy settings on lifting interest rates and the ongoing prevalence of geopolitical uncertainty. Turning now to leasing, where our portfolio metrics showcase our disciplined approach to negotiating new leases where the structure, tenure and value of rent written strengthens our current and future income growth profile. We finished the half with occupancy at 99.6%, representing a 10 basis point improvement on June 2025. And at 76%, we maintained strong tenant retention, and we lengthened the average tenure on deals completed to 4.6 years, all of which reinforces the sustained demand for our quality assets in a market where retail floor space continues to tighten. We also achieved the strongest leasing spread since Vicinity's inception in 2015 at positive 4.6%, driven by exceptional performance across the premium asset portfolio. Also supporting income growth, we maintained the average annual escalators on deals completed at a healthy 4.7%. The confluence of our strategic leasing activity, maintaining occupancy and delivering positive leasing spreads amid a robust retail sales environment has enabled us to grow rent while maintaining our specialty occupancy cost ratio. At 14.1%, our OCR continues to provide sufficient headroom for further rent growth. With that, I'll hand the call to Adrian to talk through the financial results in more detail. Adrian Chye: Thanks, Peter, and good morning. I'll begin on Slide 11. Statutory net profit for the half was $806 million. This comprised $351 million of FFO and $455 million of statutory and other items, of which the net property valuation gain was the largest contributor. While FFO per security was up 1.3% when adjusted for lower loss of rent from developments as well as one-off items, FFO per security was up 4.1%. Underpinning this robust result was comparable NPI growth of 3.7%. And excluding new and increased taxes and levies, comparable NPI was up 4.1%. Moving to external management fees. Due to the transition of a third-party leasing mandate and the divestment of co-owned assets, management fee income was $2.5 million below the prior year. That said, our disciplined approach to cost management provided a partial offset, delivering a $1.4 million or 3.3% reduction in net corporate overheads. Our net interest expense reduced by $2.7 million, largely driven by lower debt volume arising from asset sales and proceeds from the DRP. Turning now to valuations on Slide 12. The net portfolio valuation growth was $407 million or 2.6% for the 6-month period. This represented the fourth consecutive half year period our portfolio realized net valuation gains. Pleasingly, the net valuation gain was supported by both income growth and a meaningful compression in capitalization rates. Income growth was again a key driver of valuation growth, particularly for Chadstone, the outlet centers and the CBD portfolio. Cap rate tightening was a main contributor to valuation growth in the core portfolio on the back of heightened demand for higher-yielding retail assets. Overall, the weighted average portfolio cap rate tightened by 11 basis points to 5.5% in the period. Looking forward, we continue to expect that with resilient income growth Vicinity's portfolio will continue to be well positioned for future growth. Turning to capital management. Preserving our strong balance sheet and sector-leading credit ratings remains a guiding principle for Vicinity when managing and deploying capital. In a period of elevated development expenditure, the combination of asset valuation growth and proceeds from the DRP have ensured gearing remained at the lower end of our 25% to 35% target range at 26.3%. When adjusted for the acquisition of the residual 75% interest in Uptown for $212 million and the $327 million of proceeds from asset sales announced today, pro forma gearing sits at a healthy 25.8%. We maintained our investment-grade credit ratings of A stable and A2 stable with S&P and Moody's, respectively, and we continue to actively manage our funding risk. Our debt book is well diversified with a mix of debt sources and maturities. And with undrawn bank facilities of $1 billion, we have sufficient liquidity to fund all debt expires this calendar year and committed developments and acquisitions. Our debt maturities for FY '27 of $300 million is relatively modest. That said, we are always monitoring debt capital markets for opportunities that support a lengthening of our weighted average maturity profile and a lowering of our weighted average cost of debt. Consistent with our disciplined capital management approach, our average hedge ratio on drawn debt is expected to be 89% for FY '26 and 85% for FY '27. Consequently, we are able to maintain our previous guidance of a 5% weighted average cost of debt for FY '26. Our balance sheet remains a source of competitive advantage and strength and is a crucial enabler of our current and potential growth agenda. Thank you. I'll now hand back to Peter. Peter Huddle: Thanks, Adrian. FY '26 is an important year for development projects, both completions and new commencements. We have always held the view that investing in our assets is a critical driver of sustained earnings and value accretion. And we have consistently demonstrated our willingness to invest in accretive developments both large and small. In fact, since 2019, we have actively allocated strategic investment capital to reposition assets through large, medium and smaller projects across 70% of our assets. We have embedded this discipline, committed our own balance sheet and successfully delivered development projects in arguably one of the most challenged construction sectors in memory. We have achieved this because we have the requisite organizational capability where our expertise in development leasing and development property management integrate with our purposely assembled team of development specialists and deliver real income and valuation upside. This is not easily replicated, which brings me to our major transformation of Chatswood Chase. The opening of Stage 1 in October last year marked the beginning of a new era for this landmark asset. Stage 1 introduced 65 new retailers spanning leading local and international brands across fashion, beauty, lifestyle and dining. Among the prize list of retailers who have opened are David Jones newest department store, flagship Apple, Mecca and Sephoras as well as an Australian designer fashion precinct featuring Zimmerman, Camilla and Scanlan and Theodore, alongside international brands such as Ralph Lauren, Hugo Boss, Armani Exchange and Max Mara. Our Level 2 precinct features on-trend athleisure brands such as Nike, LSKD and 2XU, which are complemented by Australian fashion staples, the likes of a Country Road, Seed, Witchery and R.M. Williams. Between the opening of Stage 1 on the 23rd of October and December, Chatswood welcomed 2.4 million visitors who in the December quarter, spent a total of $119 million and on a same-store basis, delivered 34% sales growth. The success of Stage 1 provides a powerful foundation for the highly anticipated launch of the second stage opening, being now eagerly-anticipated luxury precinct which I'm pleased to report remains on track to open from the fourth quarter of FY '26. Anchored by over 20 luxury brands, the Stage 2 opening will see us complete the retail reimagination of Chatswood Chase and solidify the asset status as the most prominent, compelling and differentiated retail destination on Sydney's affluent North Shore. And at $625 million, our investment in this project remains unchanged, and the return profile also remains compelling with a stabilized yield of greater than 6% and and an unlevered internal rate of return of circa 10%. As I'll come to shortly, our vision for Chatswood Chase extends beyond the completion of this project as we progress our plans to augment the asset's patronage with the construction of 2 highly bespoke luxury residential towers on separate sites adjacent but connected to this iconic asset, much like what we have done at Chadstone. Since 2019, we have progressively enhanced Chadstone's patronage and therefore, sales and income growth potential with the construction of more than 50,000 square meters of A-grade office space now home to more than 6,500 office workers as well as a 250-bedroom 5-star hotel that welcomes close to 110,000 visitors a year. What's more? With the likes of Kmart, Adairs' and Officeworks selecting Chadstone as the location for their new headquarters, the caliber of office tenants the asset is attracting is testament to both the quality of the office space and the overall appeal of Chadstone as a highly sought-after one-of-a-kind retail-led mixed-use destination. Together with the retail offer that places Chadstone amongst the world's best, Chadstone continues its evolution as a city within a center where people come to shop, stay, work, dine and be entertain. In partnership with our co-owner, Gandel Group, close to $900 million has been invested in the current and future growth potential of Chadstone, spanning the opening of the hotel Chadstone in 2019, the construction and opening of the Social Quarter in 2023, the refurbishment and opening of Chadstone Place office tower in 2024, now home to Officeworks headquarters and the construction of the One Middle Road office tower opened in 2025 and now home to headquarters of Adairs' and Kmart and which seamlessly integrates into a first-of-its-kind, truly unique fresh food and dining precinct, the market pavilion as well as a significantly elevated and bespoke laneway dining offer. In fact, every development, both large and small, has reinforced Chadstone as an all-day, everyday retail-led destination. And while we are never done, our multiyear strategic investments has consistently added to the scale, significance and leadership of this remarkable asset. Turning now to the redevelopment of Galleria in Morley, Western Australia, comprising a new and immersive entertainment, leisure and dining precinct as well as a significantly elevated and contemporary fashion offer. This important redevelopment will deliver a completely refreshed customer experience for Galleria's large and loyal customer base in and around Central Perth. Importantly, construction and leasing are progressing well and we remain on track to complete the project in time for Christmas this year, and deliver on our previously stated project costs and development return targets. While the larger, more transformational developments continue to shape our retail destinations, I've always believed that what's inside the box creates the most enduring value. In this context, we have maintained our commitment to consistently refreshing and contemporizing our retail offers across all of our assets and in doing so, creating growth opportunities for our highest-performing retail partners. At Emporium Melbourne, we recently expanded, refurbished and opened UNIQLO's flagship store at more than 4,500 square meters and having opened in November 2025, this store has reclaimed its position as the most productive UNICLO's store in their Australian stable. And at Mandurah Forum, we've recently refurbished a former David Jones department store space with the introduction of Rebel and Timezone. Opening in September 2025, the combined 3,300 square meter Rebel and Timezone introduced 2 market-leading sporting and family entertainment offers to the center and a new and exciting proposition for the trade area. This reconfiguration of former major space has delivered a 20% uplift in sales productivity across the October to December quarter with an almost equivalent level of rental uplift, thereby demonstrating the value that can be unlocked when retail space is strategically repositioned. While only 2 examples of many, UNIQLO at Emporium and Timezone and Rebel at Mandurah provide a powerful example of the mutual value that can be delivered when we invest in and cultivate strategic long-term partnerships with retail category leaders in Australia. Turning now to a brief update on our mixed-use development opportunities. As we have shared previously, we continue to advance our mixed-use strategy with a particular focus on residential opportunities that are strongly aligned with state government housing priorities that importantly have the potential to deliver meaningful long-term value creation for Vicinity. Two opportunities are now firmly in the spotlight. Chatswood Chase and Bankstown Central. Both assets have been identified as ideal sites for higher-density residential development. And both assets have secured support of an accelerated state planning pathway by the New South Wales Housing Development Authority, which is ultimately intended to streamline and expedite approval processes. Our early plans for Chatswood Chase contemplate around 480 luxury apartments across 2 separate towers. Relative to Bankstown Central and other assets in our portfolio earmarked for potential mixed-use development at this stage, Chatswood Chase likely represents the most near-term opportunity for us. And just on Bankstown in Sydney's West, our initial plans envision more than 1,500 apartments across 7 towers on a sizable 23,700 square meter site immediately adjacent to the retail center. Of significant benefit is that Bankstown Central sits in the heart of the city of Bankstown directly connected to the new metro station and proximate to major tertiary and medical precincts. As I've said before, while approvals create the potential to unlock significant value at our assets, we will continue to retain complete optionality in terms of how and when value is unlocked. Before I provide an update to our FY '26 earnings guidance, let me reinforce that delivering predictable and growing income for our security holders while simultaneously driving capital growth over time remain at the core of our business decisions and investments. For the past 3 years, we have been focused on increasing the momentum of execution across the organization and ensuring that every action we take supports earnings resilience and sustain value accretion over time. And I think our results to date demonstrate our investment strategy is working as intended. Closing now with a positive update on FY '26 earnings guidance. As Adrian and I have outlined in some detail, we've had a stronger-than-anticipated start to FY '26. And pleasingly, the upside to our expectations is entirely driven by the continued strength of our leasing outcomes and portfolio metrics, including an increase in percentage rent. The confluence of which underpin an uplift in our expectation for FY '26 comparable NPI growth to 3.5%, which has, in turn, enabled us to guide to around the top end of our FFO and AFFO per security guidance ranges of $0.15 to $0.152 and $0.128 to $0.13, respectively. Meanwhile, we continue to expect our full year distribution payout ratio to be within the target range of 95% to 100% of adjusted FFO. And finally, I know I speak on behalf of Adrian, our Board and our executive leadership team when I say that it is a privilege to lead the team at Vicinity and to share our strategic operational and financial progress with the market. We'd like to acknowledge and thank everyone who works for, partners with and is associated with Vicinity for their ongoing contribution and support. Thank you. Operator, I'll hand the call over for Q&A. Operator: [Operator Instructions] Your first question comes from Solomon Zhang from UBS. Solomon Zhang: First question was just on Chatswood. Just wanted to hone in on the December '25 passing yield and maybe just the proportion of the asset that's income generating at this point in time? And maybe just an update on the expected path to get to the 6% stabilized yield on cost, please. Peter Huddle: Solomon, Peter here. Yes, if I got the three questions, right, there's just a bit of noise coming over the top. So yes, the stabilized yield is about -- is 6%. What we do is we run that stabilized yield over a 3-year period. So essentially, by the end of FY '26, we anticipate around about roughly about a 4% return that leads into a 5% return next year, then stabilizes in early FY '28. That all depends, Solomon, really on how much potential assistance that we may need to provide or also in terms of the lease-up. In terms of the lease-up by June of this year, we'll be 95% opened and operating in terms of Chatswood. So we mentioned in these results that we'll commence opening the second stage, which is really the luxury opening from the start of FY '26, and we expect that to be majoritively complete by the time we have a chat again in August. So again, around 95% of it will be open. In terms of income, it represents broadly about the same amount of income by the end of this fiscal year. So I might have missed another question. Solomon Zhang: Second question is just on your premium portfolio. So obviously printing very strong productivity numbers circa 20% higher than the rest of the portfolio. But just looking at Slide 26, when you look at the occupancy costs, they're only marginally above the portfolio average. So I mean is that the appropriate spread do you think? Or what sort of, I guess, occupancy cost do you think is appropriate given the productivity of that premium portfolio? Peter Huddle: Yes, Solomon, we can potentially provide you a number that separates it out. The key differential is we put all of our outlet business in the premium portfolio, that typically works on an occupancy cost of around 12%. So just the nature of that business model, the retailers operate on a lower occupancy cost ratio. We're driving significant dollar per square meter sales through that. And in terms of revenue, we've driven revenue through that outlet business substantially higher in the last 5 years. But the occupancy cost ratio for that business right now is around about 12.8%. If you exit that out, the occupancy cost ratio for the premiums would be higher than our average. Solomon Zhang: And do you see, I guess, headwind to getting back to your pre-COVID occupancy costs? Peter Huddle: Look, we're confident we've been -- the pleasing thing, I would say, Solomon, is we've been growing our leasing spreads and growing our rent, growing our NPI through the course of the last few years, and the occupancy cost ratio has also been maintaining broadly similar. So ultimately, that essentially means that retailers have had sustainable growth through that period of time as well, all but we don't know their current profits through their current reporting season. So ultimately, it gives us confidence we're able to continue to grow our revenues through the portfolio. Operator: Your next question comes from Daniel Lees from Jarden. Daniel Lees: Just a question on your Uptown development. I appreciate it doesn't start until 2027, but construction costs remain pretty elevated in Queensland. Just wondering how you're getting comfortable on your underwrite there and if you have any provisions within that underwrite. Peter Huddle: Yes, Daniel, it's Peter here. It's a fairly broad range that we gave at $300 million to $350 million. We've obviously in the process of concluding that transaction to have 100% ownership, not too dissimilar to what we did at Chatswood, to be honest. In terms of the underwrite, we've spent a lot of time with at least 3 of the key contractors within the Brisbane market to really understand the capacity within that market in the trade -- in the subcontracts or the trades that we need to execute that job. In the next update, we will provide even further comfort to the market in terms of how we've derisked that project and give them confidence within that range. We've done a lot of work on this project previously as well. So at this particular point in time, there's a window that we want to hit. That's what we've guided to here is really to commence that project in calendar year 2027, finish it before the end of 2028. And at this point in time, we're comfortable with the ranges that we provide the market. Daniel Lees: And just on corporate overhead, it looks like they were down 3.3%. Maybe if you could just give us some color as to what the drivers were there and how you want us to think about corporate overhead growth moving forward? Adrian Chye: Yes. Thanks, Daniel, Adrian here. Yes, corporate overheads, a key driver of that was probably some cost discipline that we have tried to stay focused on in the business. We also do have the benefit of some capitalized costs or capitalized overheads in relation to development personnel given the elevated development expenditure at this point in time. We do expect the second half to increase a little bit. So I guess from an overall full year perspective, we're probably expecting corporate overheads to be in the high 80s. And into next year, as we continue to reduce our development spend in FY '27, we probably expect a little bit of an unwind into FY '27 as well. Of course, we'll continue to maintain our cost discipline. So hopefully, there shouldn't be a significant increase into FY '27. Operator: Your next question comes from Simon Chan from Morgan Stanley. Simon Chan: It looks like Chatswood Chase resi has jumped the queue in terms of mixed use. I think over the last few years, you've been promoting Bankstown, Buranda and all that stuff. In your prepared remarks, Pete, you talked about how you want to leave optionality, et cetera. Can you just talk to what's the realistic timing for Chatswood Chase resi? And if it's not imminent, what are some of the things that actually need to happen for it to take effect? Peter Huddle: Simon, it's Peter here. I know it's a dear to you being a local to Chatswood as well. So the likely -- so we are in the government facilitation process via the what acronym known as the HDA process, which is a fast track process for rezoning and to be DA to be then shovel ready. Our expectation, even going through a fast-track facilitation process from where we are today, we anticipate that it's still towards the end of next calendar year for a DA to be actually approved through that process. And then you have, even on best case in our scenario, predevelopment activity around design documentation to get you ready for construction. So the best case to know from our point of view is 2 to 2.5 years away from being an ability to shove a shovel in the ground, so to speak. That said, we still think it's a tremendous opportunity. Why did it jump ahead of others? Primarily, and we haven't fully baked this out. But on our numbers today, just given the level of potential sales that can be achieved through a suburb like Chatswood, it's the most valuable opportunity that we're looking at across our fleet of residential projects. But again, it's a couple of years away from commencing and that's why we're giving ourselves time to ensure the approvals that we get add the most value. And I think I've mentioned before, Simon, we will be looking for partners to execute our residential platform as well. Simon Chan: That's very clear, Pete. I just got one more. Chatswood Chase, the yield. I think in your answer to one of the previous Chap's question, F '26 at 4%, leading to 5% next year and 6% the year after. It is effectively fully leased anyway, and you start collecting rent from day 1. I get it, and you also said it depends on how much potential assistance you may need to provide, right? So that's why there's a glide path. But Level 1 is essentially open now. Do you have a better picture of how much potential assistance you actually need to hand out? Or the other way to word my question is, is your 4% going to 5% going to 6% over 3 years, a little bit too conservative? Peter Huddle: I'd like to think so, Simon. We always -- and same with Chadstone. So we always put a stabilization number in. There's not a huge amount of science that go around that stabilization number. It's a provision that's a percentage of total specialty rent that is a decline in percentage over a number of years. But in terms of Chatswood, yes, the ground -- lower levels open, ground levels, open, Level 2 is open. There is some step rent in those openings until the Level 1 opens, which is the luxury precinct. And there's also annualization of the rents that have opened through FY '26. So to your point, we're confident we're happy with the way that Chatswood's performing at the moment, particularly since our opening on October 23. And if luxury hits the market like we think it's going to, we'd expect to have less stabilization moving into FY '27 and in particular FY '28. I don't have those specific numbers for you. I mean, if required, we can catch up and give you a bit of a heads up what they may be, but I don't have them off the top of my head here. Simon Chan: That's right. But have you had to provide a lot of assistance to the tenants that have opened so far in Level 2 or ground level, et cetera? Or it's actually tracking okay? Peter Huddle: No, it's tracking as per our expectation. We always knew Level 2 there because the Level 1 is still to open. There would be some assistance, whether it's to the tenants or additional marketing activities. And we're very, very comfortable with the lower level and the ground level trading very well. Operator: Your next question comes from Howard Penny from Citi. Howard Penny: Just understanding the earnings impact of commencing Uptown and finalizing the developments that have just completed. Could you just give some detail on potential loss of rents in Uptown and of course, the capitalized interest and capitalized other costs as far as possible. I know that's more a next year story. But just giving us a feel for that loss of rent versus the capitalized costs that will be reduced off the current income statement? Adrian Chye: Howard, Adrian here. I think with Uptown, I think as we mentioned, it's probably going to be really a calendar year FY '27 development story by the time we, I guess, get our plans in place, and we kick off the development and where loss of rent would impact. At this stage, we're very confident around our FY '27 guidance for loss of rent, which is $15 million. We don't see that changing with commencing up down in calendar year '27. We'll probably have more to say in August around what that future loss of rent profile looks like beyond that. Probably one thing to, I guess, emphasize with Uptown is we do have a very strong performing car park, which delivers actually most of the income to that asset today. We're not expecting as part of the development that a large part of that income from the car park is going to be disrupted. So probably unlike Chadstone or Chatswood, the loss of rent impact from uptown is expected to be a lot less than those developments. So that's probably just one thing to keep in mind. In relation to overheads capitalized overheads, capitalized interest, we'll probably give more an update as we get closer to firming up those development plans. Peter Huddle: I'll just add a bit to that, Howard. I mean you know our business very well. we're not giving guidance, obviously, into FY '27 at this particular point. But clearly, we've concluded Chadstone, Kmart, moved into their office in January. Chatswood will be 95% opening by June. They were the key developments that had significant loss of rent as we concluded those developments. You will see an uptick in revenues going into FY '27. And then the smaller even though there's still important developments, you'll start to see Galleria then start to annualize going into FY '27, FY '28 and then Uptown will then follow into that. So if it's helpful, we'll provide you a bit more insight into that. But our anticipation, you'll start to see some real strong revenue growth. Howard Penny: And then just talking a little bit about residential. You make a good point to say that you are -- at this stage, it's the optionality that you've unlocked. But do you have any sense on whether you would fund this through third-party funds or development partners or any -- do you have any views on how best you would develop those residential opportunities? Peter Huddle: Look, we'll look at each residential opportunity on a side-by-side basis as well as other options. But Howard, our plan is to be capital light in terms of those opportunities. We're not known in the market as a residential developer. Our core capability and skills is retail development, leasing management and all things associated with that. We like to ensure that we control master planning in terms of our sites. But in terms of execution and capital, we'd be looking for other partnerships to come in to help us execute and unlock the value of those. Operator: Your next question comes from Andrew Dodds from Jefferies. Andrew Dodds: Just a couple of quick ones. Firstly, just around some of the comments you made in the guidance and the assumptions, comp NPI growth expectations have been upgraded from, I think, 3% to 3.5% half. Just interested to hear what sort of drove this movement. Peter Huddle: It's Peter, Andrew. I'll be as simple as I can. We've got increased rent, increased occupancy, hence, less vacancy and increased percentage rent. So it's all business fundamentals heading in the right direction. Andrew Dodds: All right. That's clear. And then just picking up on some of the comments around the Uptown development. Is it fair to assume that the -- or I guess, the underwriter is sort of assuming that [indiscernible] it's got a similar stabilization period to that of Chatswood. So maybe 4% trading to 6% over the 3-year period. Peter Huddle: No, good question. If I backtrack when I first came to the company, we never used stabilization. So typically, we do now, we think the -- and across all of our projects, we are typically conservative and hopefully, it trades better than our stabilization assumptions. In terms of Uptown, it will be a different style of development than what Chatswood or what Chatswood is, is it's planned to be a phased development. So we're not intending to shut the shopping center broadly down and then reopen it. It will be phased over a period of 18 months to 2 years. But yes, there will be stabilization. If you're looking for a modeling type of scenario as a working assumption, I put in the assumptions that you suggested, 4, 5 and 6 as working assumptions, we would hope that in the essence of doing what we're doing for Uptown, that would be a conservative assumption. Andrew Dodds: All right. And then just finally, on retail sales. I mean, the momentum heading into December is clearly very strong. I'd just be interested into if you can sort of speak to any anecdotes or sort sales data that you've already picked up on throughout January and early Feb post RBA rate hikes? Peter Huddle: Yes. Andrew, we don't have any roll up of January and part of our technology doesn't give real-time sales updates. In discussion with some of the retailers, and we're obviously very keen on seeing their results. It is a little choppy from -- in terms of January moving into February. And part of January and February will need to seasonalize because Lunar New Year, which is such an important sales period was in January in '25 was last -- this week, essentially for February. So at this point, we're as keen as you are to really understand what the trend is post the direction that the RBA went in terms of interest rates. At this point in time, all I could say is traffic still remains strong at our centers. So we'll see how that converts into sales over January and February, and we'll come back and report that in the Q3 update. Operator: Your next question comes from James Druce from CLSA. James Druce: One very quick one. What was the yield on the $327 million of divested assets? Peter Huddle: Slightly over 6%. James Druce: Okay. And can you just talk to the NTA growth was pretty pleasing at almost 5% for the 6 months. Part of that, I think, was coming from the [ subregional ] portfolio, but can you just talk through the contributions of sort of market rents versus value assumptions and sort of the different movements across the categories, please? Peter Huddle: I'll kick off, and I'm sure Adrian will -- so of the 2.6% growth, about 68% of that was really in cap rate compression. The rest of it was in income growth. Some of it was related to we -- the assets that we're selling. We mentioned that they were 18% below our June book values. So we've rebook it at the sales price as part of market validity of those sales price. That also led to market evidence for the valuers for similar type of assets within the portfolio. Adrian Chye: Probably the only thing I'd add is, typically, what we do for development is we'll -- as the project goes through development, we'll change the valuation methodology to an as of complete basis, and we'll put a profit and risk allowance. For Chatswood, we released $50 million of that profit and risk allowance. There's still over $100 million of profit and risk to come through in the next period. So that should aid further valuation growth and NTA growth in the future, but that was a contributing factor as well to the 2.6% gain. James Druce: Okay, fantastic. And just on the tax drag from property expenses, does that -- is that sort of stabilized in the second half or not? Peter Huddle: We'll have -- it will be annualized. It will stabilize in FY '27. So to be specific, the taxes are predominantly congestion levies that have occurred in Victoria. It's the fire services levy, which was transferred from insurance to property taxes. I don't mean to beat them up, but again in Victoria. And some incremental taxes associated with our land leases on airports that are in our premium property. So they will get back to normal growth from -- to the degree that we can control them in FY '27. Operator: Thank you. Your next question comes from David Pobucky from Macquarie Group. David Pobucky: Just around the balance sheet gearing sits towards the low end of that range with potentially more divestments to come, are you seeing any further opportunities to acquire in this market? Or is the focus now on development around Uptown and the resi opportunity? Peter Huddle: David, it's Peter, and thank you for the question. Look, we're acquisitive at the moment. We have a very strict network plan across the country. We know we're underweight in Greater Sydney, and we know we're underweight in Greater Brisbane that led to our decision around the acquisition and then subsequent development of Uptown. So if good opportunities come on to the marketplace, and we do anticipate some that will come on to the marketplace, then we'll assess them on their merits and see if we can add value to those as long as they are at attractive pricing. Similar to that, we constantly review our own portfolio. And whilst we don't disclose divestments, it's not as if that we already have them, we typically use assets that are not carrying their weight within our portfolio or don't have a strategic benefit for us to divest those assets to fund our growth opportunities. And that divestment may be at 100% or 50%. It also helps us moving up the premium scale of our portfolio, which generally, for us, moving into the larger more fortified, so to speak, assets allows us to deliver greater growth, which we've tried to highlight in the presentation as well. David Pobucky: Maybe one for Adrian, just around debt. I know you're monitoring debt capital market opportunities. You just talked to any kind of refinancing that you've undertaken or expected to undertake and the margin improvement there? And where does your weighted average margins sit at the moment? Adrian Chye: Yes. Thanks, David, for the question. Weighted average margin for us is about 155 basis points. Bank debt margins around 115. So we've actually done quite a lot of renegotiation of bank debt and cancellations as well as we've been selling assets to bring that weighted average margin down on bank debt. With the DCM margin, it's probably closer to 170, 180. Some of that is with some of the nearer-term expiries. So you'll notice there's a GBP 655 that's expiring in April this year. That does provide us an opportunity to look at reducing our margin. We are looking at a very liquid debt capital markets at the moment. And based on some of the secondary trading of our previous bonds and also looking at the market comps, we think that there's very attractive margins out there as well. So in terms of opportunities in the future, we are looking probably in that market, refinancing some of the expiring DCM to reduce our margins. As we said, we're pretty highly hedged in the future. So we shouldn't expect too much from a floating rate impact. So hopefully, we'll just get some margin compression going forward. Operator: Your next question comes from Richard Jones from JPMorgan. Richard Jones: Pete, just wondering if you could tell us what the estimated end value is of the luxury retail at Chatswood Chase? Peter Huddle: Just the luxury, the end value, Richard? Richard Jones: Yes. Peter Huddle: I'm not -- yes, Rich, not quite sure of the question. But ultimately, luxury represents about -- in broad numbers, it's about 25% of the income of Chatswood Chase. So we'll have to come -- we'll come back to you and let you know what component of the valuation the luxury may represent in terms of that, but that's basically what it is. Richard Jones: Sorry. So my question was in relation to the luxury residential, sorry. Peter Huddle: Residential. Sorry. Yes. We're just -- we're finalizing the numbers as we speak. And I know that's like I'll push your question down the road, but literally, we're in the process of commencing the presales with appointment of agents, we're just validating what they anticipate to be the income levels on a BTS, which is likely to be Chatswood. And then it will depend on the final yield coming from the development approvals that we're achieving through the Housing Development Authority process. So a little bit too early. We anticipate it to be a reasonable amount of residual land value coming from the 2 sites from Chatswood, but we're not releasing a number until we have those two things just locked in, Rich. Sorry, mate. Richard Jones: Okay. That's fine. Just in terms of, I guess, your strategic thinking around acquiring full stakes in assets and undertaking major developments. You've obviously done at Chatswood Chase, planning at Uptown. Just do you think these are a long-term 100% hold assets? Or will you look to introduce capital post hopefully extracting value out of the projects? Peter Huddle: Well, we're happy to keep it 100% at this point in time and take a situation like Chatswood, Rich. We want to prove the full cash flow potential of that asset to really realize the valuation that we think it should be, which is not the valuation that's in our numbers today because we still hold profit and risk in that valuation until we deliver, and at that point in time, if there were opportunities, and if we needed the capital and if Chatswood, for example, was an opportunity for us to transact in the market then it's probably, I would say, it's an attractive one to bring in a partner at that particular point in time. But with the balance sheet currently at 25.8% on a pro forma basis, there's no pressing need for us to bring partners into either of those assets. And if they perform above, if they deliver better returns above -- well above the portfolio average, then why not just hold on to them at 100%. Operator: Your next question comes from Adam Calvetti from Bank of America. Adam Calvetti: Look, the first one is on NPI growth is 3.7% first half, we're guiding to 3.5% full year. I mean, occupancy is at the highest on record, leasing spreads are strong. What's going to be dragging it down in the second half? Peter Huddle: Adam, there's a couple of things that are in there. We are putting some additional security provisions into our assets. We've been planning on this for a significant period of time. It's clearly a consequence of the nature of what's occurring across the country, highly publicized by the Bondi coronial inquiry. So we have upped our security provisions and they haven't been annualized at this particular point in time. There might be a point associated with that. And then there's also annualization of the glorious congestion levies that were implemented by the Victorian government, and a few other items, which are essentially just second half items, to be honest, that are coming in. They would be the main things. We are anticipating that -- for context, we're still rolling into a full year leasing spread of around about 3%, hitting the first half at 4.6%. If we do better than that, then there will be some upside. Adam Calvetti: Okay. That makes sense. And just sticking with leasing spreads, I mean, I think Andrew Dodds touched on this, just the pathway back to pre-COVID occupancy levels, I mean, the 7% expiring, how do you really drive rents in some of these assets? There's really no supply coming online. They're quality assets. I appreciate you've got to manage relationship with the tenants. But I mean, I don't know how much power they have to really push back. Peter Huddle: Yes, Adam. Look, for us, it's got to be sustainable growth as well. Ultimately, Australia is still a fairly small market in terms of the number of retailers that's getting consolidated as well. It's got to be a sustainable relationship with all of us. If you look at our premium asset portfolio, you're essentially driving spreads at 9.7%, and you've got the outlets growing at double digits, and that's been the last few reporting periods. So for us, it's about managing appropriate growth through the course of the cycle, not only on income growth, but also on capital value. And if -- and what -- the other thing that we've done, you'll see that there's a 76% retention rate. Obviously, there's a 24% retention rate, which is essentially introducing new product or new tenants into our portfolio, which also helps to drive rents. I get your question, but we're actually quite happy that we have the capacity to grow rents based on where the fundamentals of the portfolio are on OCR. We just have to do it in a very managed way. Adam Calvetti: Maybe just really quickly following on, how many more options do tenants usually have in terms of boxes and other sites to go into when they're looking at either renewing or moving on? Peter Huddle: Well, it's another good question. I mean, it's part of the reason why we're really focused on the premiumization of our portfolio, CBD's outlets, the Chadstone, Chatswood Joondalups of the world is because they are assets that tenants need to be in, period, in our view. So there are other options there, of course, but there's more limited options for those assets than there would be in the neighborhood, subregional or even the regional space. Operator: Your next question comes from Claire McHugh from [ Green Street. ] Unknown Analyst: Just a quick one on Uptown's yield cost. Appreciating your IRR framework too. So Brisbane is firing on all cylinders, is the 6% yield on cost more of a sort of a bear-case scenario? Just when I run some of the numbers at the top end at the $350 million and just look at relative rent, it just seems like even a mid to sort of high 6% is still a conservative estimate. Just wondering how you're thinking about the underwriting there. Peter Huddle: Claire, and you come in and speak to our leasing team. They would love that. It's an early stage. We've done an early stage sort of feasibility associated with it. There's still some work to do between now and probably year-end. At that particular point in time, we would hope that we're formalized in terms of the development approval that we would have lodged with the city. We know the city is very supportive, fantastic Lord Mayor there and -- but we also know that there's heightened construction costs within that marketplace. Now we found a window and we understand the construction capacity, but you're still building into quite a heated construction market at the moment. So we're leaving contingency associated with the construction cost side as well. We understand that there is no full line -- full-scale, full-line priced offer within the Brisbane CBD. For us, being prominent in Sydney CBD, Melbourne CBD and Brisbane CBD is essential. And we see -- to your point, we see that the demand for the space will be strong. Unknown Analyst: Yes. No, I take your point on construction costs. I understand with union activity, productivity of construction workers is low in a national context. But anyway, in terms of just generally speaking, just touching on underwriting hurdles. So clearly, real interest rates are edging up, which is weighing on cost of debt, but your cost of equity capital has improved and growth is stronger. So I'm just curious as to in your internal IC committee meetings, how you're evaluating your underwriting hurdles? How have they changed over the last 6 months against that backdrop? Adrian Chye: Claire, Adrian here. You're right. Obviously, in the last few periods, there has been a slight increase in expectation around interest rates. What we try to do is take a through-the-cycle, longer-term view on our hurdle rates. We are conscious that sentiment changes around interest rates and cost of capital, so we try to look over a 5- to 10-year period to say, what is our underlying weighted average cost of capital. We've therefore then said, well, how do we also compensate for risk, particularly on developments, less so for acquisitions where you've got known cash flows. And typically, that drives that yield on cost of 6% threshold and the greater than 10% unlevered IRR. So I wouldn't say that's materially changed in the last 6 months, given that we've taken that through-the-cycle approach. Obviously, if volatility were to increase significantly or rates were to rise in a more material way, then we would look at changing those. But we do review them every 6 months as a matter, of course. Unknown Analyst: Okay. That's helpful. And then maybe just a final one, if I can bring it in. Just in terms of sources of capital. So is it fair to assume that this will -- the capital rotation will remain front of mind in terms of disposing noncore assets? Or I know the DRP is on -- your cost of equity now is now pretty solid. How are you thinking about your various sources of capital to fund the development? Peter Huddle: Yes, Claire, in terms of whether it's acquisition or development activity in the future, it probably still revolves around some divestment strategy. That said, we've been very active and leading into that space, to be honest, over the last 3 years. And so the portfolio that we have at the moment is we're quite happy with. But ultimately, there's other opportunities that come along, whether it's the Uptown development or an acquisition that on a risk-adjusted basis delivers us higher returns, there is a small section of the portfolio that we potentially may unlock some value and might even be bringing in a joint venture partner to fund those developments. That's something that we assess basically biannually just in terms of the forward return of each asset within our portfolio, just making sure that they're pulling their weight. The DRP, as you mentioned, it provides us just with an extra funding source opportunities, an extra lever to look for opportunities. And in terms of gearing at the moment, we're obviously very comfortable with where we sit, particularly on a pro forma basis. Okay. I don't think there's any further questions. So look, on behalf of Adrian and myself, a big thank you, firstly, to the Vicinity team for putting these results together or delivering these results to be quite frank. And then secondly, to all the analysts and investors on the call today, look, a big thank you for your interest in our company, and we will continue to do our best to continue with a positive performance for you and for us, to be honest, into the future. I look forward to having a chat to you as a follow-up from this results call. Thank you again.
Wayne Pickup: Okay. Good morning, and thank you for joining. I'm Wayne Pickup, the CEO of The Lottery Corporation. With me today are our CFO, Adam Newman; and Chief Commercial Officer, Callum Mulvihill. We'll run through the investor presentation lodged with the ASX and take any questions you have. I've now been with the business just under 3 months after relocating from Chicago. Let me firstly share with you some of the observations I've had so far on Slide 4. Many of these are the same things that attracted me to join the company in the first place. The Lottery Corporation is a global leader. We have exceptional assets, household brands, millions of Australians engage with our unmatched license portfolio. The balance sheet is strong. That gives us options and it supported -- and it has supported consistent shareholder returns. The culture is also strong. There's great people here, and that's not always a given. This is supported by capable leadership and teams that understand their business and their customers. I've spent time with our technology teams, our commercial teams and our contact center, listening to how we serve and interact with customers. I've spent time with our technology teams, our commercial teams, and our contact center, listening to how we serve and interact with customers. I've spent time in the lottery outlets across the Eastern Seaboard from news agents in Central Melbourne to pubs and clubs in regional Queensland. It's clear we have an engaged workforce and a strong retail network. So I'm starting from a position of strength, but there is upside ahead, and that's what energizes me about the opportunity. Our strategy has served the company well, but we can unlock more value. And going forward, we have 3 focus areas as outlined on Slide 5. The first is accelerating our evolution as a digital entertainment company. This is evolution, not revolution. It's about embedding technology across the enterprise, modernizing platforms, and creating seamless customer experiences. I want to be clear, this is not at the expense of retail. It's about choice and integration. In fact, online store syndicates show how retailers can engage with this digital shift. Many of our retailers, in fact, about 80%, sell shares in their store syndicates through our online store syndicates platform. This is enabling lottery agents to earn revenue around the clock, extending well beyond the traditional shop front. We've just rolled out a major digital signage upgrade across 3,300 lottery outlets that enables more dynamic in-store advertising. It also unlocks the next phase of delivering data-driven, automated, and API-enabled content into stores. This will improve our speed to market, promotional effectiveness, and consistency across our network. Ultimately, we want customers to choose us for entertainment, not just for big jackpots. Technology enables personalized experiences at scale. That's what keeps customers coming back and engaged. The second theme is concentrating on our local, highly regulated markets. The Australian market is attractive. The license structure is unique, generally decades long with staggered maturities. We've got a long history of growth through jackpot and economic cycles, underpinned by population growth and one of the highest spends per capita globally. There's broad acceptance of lotteries. Typically, 1 in 2 Australian adults participate each year, but only half of them have registered and there's upside there. So the focus will be on existing business and adjacent lottery opportunities. The third theme rather is focused execution. The fundamentals we'll maintain are straightforward: continued innovation and active management of our game portfolio. We will make strategic technology investments to maximize the digital opportunity and oversee disciplined capital and cost allocation to deliver strong returns on our shareholders' capital. We intend to detail more about our strategy at an Investor Day in the middle of this year. Now let me turn to the results on Slide 6, which demonstrates the business' underlying strength. Firstly, jackpot activity was well below statistical averages. In fact, it was the leanest jackpot environment we have seen since listing. Despite this, we delivered solid financial outcomes. Strong free cash flow enabled us to maintain the dividend in line with the prior period. More than half our lotteries turnover typically comes from Powerball and Oz Lotto, so a lean jackpot run has impact. That flowed through to participation levels and also impacted digital share growth. Saturday Lotto game changes delivered with high early retention of the recent price increase, albeit in a low jackpot environment. Keno continued its strength in retail, capitalizing on pub and club foot traffic. Our balance sheet gives us strategic flexibility few lottery businesses have globally. We remain mindful of balancing investment with generating returns to shareholders. I'll now hand over to Adam for the group financial overview. Adam Newman: Thanks, Wayne. Hi, everyone. Thanks for taking the time to join us here this morning. Let's move to Slide #8. As Wayne has covered, our first half '26 was a period of lean jackpot activity with Division 1 offers for jackpot games down 14% on the PCP. Despite this, the group delivered a resilient financial performance, reaffirming the strength of our business model. Group revenue was $1.8 billion, demonstrating the value of our diversified portfolio and helping to cushion jackpot variability. OpEx growth remained tightly controlled at 2.9%, consistent with our disciplined approach to managing costs. EBITDA was $367 million, down just 0.7% with Keno's record performance partly offsetting jackpot-related impacts. Interest expense rose 2% due to both lower average cash balances and lower average rates. We remain materially insulated from movements in interest rates given around 85% of our debt is fixed or hedged against foreign exchange movements, and we earn significant income on our cash balances. And while net profit after tax declined 1.4%, the directors determined to pay an $0.08 per share fully franked interim dividend in line with the first half of 2025, and this represents 103% of net profit for the half. If we turn now to Slide #9. Our performance reflects the underlying strength of the portfolio despite the jackpot headwinds that adversely impacted EBITDA by approximately $26 million versus the prior period. Several drivers demonstrate the business resilience. Base games performed strongly with Saturday Lotto and Lucky Lotteries being the standouts. Instant Scratch-Its continued their momentum, supported by new products and pricing, where Keno delivered another record half with strong retail visitation and venue partner initiatives sustaining growth and mirroring the themes that we saw in FY '25. Importantly, digital turnover continued to grow, reinforcing what we highlighted at the full year results that digital penetration is a structural margin driver, which represents significant long-term opportunity for us. In summary, these elements enabled the business to manage short-term jackpot volatility with diversification across our portfolio of games, channels, and customer segments continuing to provide stability. If we can now move to Slide #10. And as we have stressed previously, we manage our business for the long term with the strong fundamentals in mind and our cost and capital discipline is not unduly influenced by short-term jackpot outcomes. OpEx for the half was $146 million, and this was an increase of $4 million or 2.9% and reflected the timing of Powerball product changes and increased employee costs. FY '26 OpEx target is $310 million to $320 million. And consistent with prior periods, our OpEx is expected to skew to the second half, and this is predominantly due to advertising and promotion expenditure, technology, and project-related costs. We'll continue to seek to manage costs tightly, maintaining the aim of keeping annual OpEx growth below normalized revenue growth over time. CapEx for the half was $34 million and is expected to ramp up through the second half with digital and core transformation and retail terminal upgrades continuing. We are targeting FY '26 CapEx between $90 million and $100 million, consistent with the investment profile for the next 3 years that we described at the full year results release. This is a resilient business that generates strong and predictable cash flows with low CapEx and a highly variable cost base. We allocate capital in order to drive long-term shareholder value, and our balance sheet provides us with flexibility to maximize shareholder returns. Net debt-to-EBITDA is at the bottom end of our targeted leverage range at 3x. We have $560 million of available liquidity and a 4.5-year average debt tenor, preserving flexibility for disciplined investment and returns. The Board remains committed to the 3 to 4x leverage target, and we continue to explore opportunities to deploy capital to deliver long-term growth that's in line with our strategy, which includes license enhancements. We'll always exercise discretion and make pragmatic risk-based assessments of any near-term investment requirements and ultimately, we'll seek to return any excess funds to shareholders in the most tax-efficient manner. So in conclusion, with strong cash flows, a robust balance sheet, and continued focus on our costs as well as digital transformation that's driving both margin expansion and improving the customer experience. We remain well placed to deliver long-term value to our shareholders. Thank you, and I'll now hand back to Wayne. Wayne Pickup: Yes. Thanks, Adam. Turning to the business results, starting with lotteries on Slide 12. A strong underlying performance given jackpots were well short of statistical norms, making it the least favorable half for jackpots since our ASX listing in 2022. The net result being a circa $400 million unfavorable impact on turnover versus circa $200 million unfavorable impact in the first half of '25. That said, the changes to our 2 largest games, Powerball and Saturday Lotto are resonating. Saturday Lotto's $6 million core offer is generating good incremental revenue every draw. Early signs on Powerball pricing are positive. If we turn to Slide 13, it shows digital share of turnover grew to 41.2% of lottery's turnover in the half. Big jackpots stimulate participation. You can see the impact their absence had on active customer numbers during the half. If we go to Slide 14, it shows our portfolio diversification at work. Base game growth largely offset the unusually low jackpot games with Saturday Lotto being the standout. Instant Scratch-Its were also particularly successful, a refreshed range and the use of higher price points such as $30 sold through well, especially in key gifting periods such as Christmas, where we had sales up 8.5% over last year. Lucky Lotteries was up over 60%, driven by the Mega jackpot, which reached $21 million at period end and now sits at just over $24 million. If we turn to Slide 16, it shows our success refreshing the game portfolio. The new $6 million Division 1 offer and price increase for Saturday Lotto in May won immediate acceptance. The early price retention of 103% is well above expectations. For context, that surpasses the retention of prior Saturday Lotto price increases, including during COVID when the Division 1 offer went to $5 million. The full effects of the Powerball price change introduced in November are expected to become evident with a return to statistically normalized jackpot levels over time. Set for Life will be our next game refresh, which we want to implement in September 2026, subject to the necessary regulatory approvals. The changes are backed by research. Customers are saying they'd like more upfront prices and promotional draws. So with that in mind, we'll introduce an extra $200,000 upfront for Division 1 winners and a subscription price increase from $0.60 to $0.70 is going to enable more promotional offers. Moving to Slide 17 and 18 on Keno, which continued its strong performance. Turnover was up 7%, growing above historical trend. This performance was valuable given the softness in jackpot games and a reminder of why Keno in the portfolio matters. Promotional initiatives and venues and the clear positioning of Keno as a fun social game as part of the growth story amid strong visitation in pubs and clubs. We have prioritized making sure our in-venue assets, terminal screens, marketing collateral are set up for maximum impact. The online channel returned to growth post the introduction of spend limits in FY '25 with turnover up 3.5% in the half. That's positive as we look to build the online Keno opportunity going forward. Slide 20 sets out our priority areas for the next 12 months. First, the digital experience. We're growing digital, but we can capture growth faster. Digital-first customers expect seamless experiences, instant gratification, and personalization. There's an opportunity to better embed data and AI across the enterprise, so we use technology to understand what each customer enjoys and just simply show them more of it. On short-term initiatives to drive registered customer sign-ups, check and collect will let customers scan their ticket and claim their prize immediately via our app. We're rolling out QR codes in our retail outlets to simplify customer registration and help acquire customers. These are practical steps that remove friction. On product, Set for Life is next for refresh. But as we think about the portfolio, we'll increasingly test opportunities beyond traditional lotteries. The focus is on customer entertainment, not just jackpot anticipation. We're reviewing how we position and market our products. The evidence tells us customers choose by game first. They play Powerball or Saturday Lotto or Oz Lotto, not lottery as a category. There's an opportunity to lean into that insight, making our hero products the stars and building stronger entertainment experiences around them. This is about amplifying what already works. We have strong product brands, and we will make them more central about how we go to market. Keno also fits into this evolution. It's entertainment beyond the jackpot cycle, and we'll continue to invest in it. There's more Keno growth to capture, including online where we are underrepresented. On the operating model, we'll structure for the speed and agility required in a competitive digital market. Finally, we'll prioritize protecting and enhancing our license portfolio. We hold incredibly valuable and unique licenses. These carry rigorous regulatory obligations and in return, generate material lottery duty revenue that funds state services and community programs as well as supporting thousands of small businesses. This is a social compact we take very seriously. But the competitive landscape is evolving. Operators licensed in the Northern Territory offer foreign matched lottery products that sit outside the broader established state-based regulatory frameworks. They contribute no lottery duty to Australian governments other than the NT and operate under lighter regulatory obligations than we do. The federal government continues to review these products. The issue should be more fully addressed. We'll continue to advocate for consistent regulation that upholds the integrity of Australian lotteries and preserves the value of our licenses. Where opportunity exists to extend or enhance our licenses, we'll do so prudently deploying shareholders' capital. Now let me wrap up with Slide 21. The first half shows the core business remains resilient and the fundamentals are sound. The changes to games like Saturday Lotto are delivering as intended. Looking forward, there's upside. We have the assets, market position, and financial strength to unlock more value, be more relevant, and position the business around digital entertainment. That's the business we'll be building, not just a steward of licenses, but a company that earns its market position every day. We intend to detail the strategy further at an Investor Day in the middle of the year. I look forward to taking you through our plans in more depth then. We'll now open up for questions, and Adam and Callum will join me. Operator: [Operator Instructions] Your first question comes from Rohan Sundram from MST Financial. Rohan Sundram: Just one from me. Thanks for the summary, and thanks for the strategic insight. In light of that, Wayne, and with regards to the slides in the pack, where -- which opportunities excite you the most? And where do you perceive the best uses of capital for the group? Wayne Pickup: Thanks for the question. I'm not sure I want to rank opportunities, and we're still sort of actively evaluating. But there's -- look, I think there's a lot of upside on digital that we can deliver in the business and simply make the games more engaging to customers, whether that's through retail or whether that's through app or online. But I think I wouldn't go as far to say it's low-hanging fruit, but it's certainly where a lot of short-term focus will be applied. Operator: Your next question comes from Justin Barratt from CLSA. Justin Barratt: I also wanted to sort of look at the strategic opportunities -- or sorry, priorities for '26. And Wayne, your comment in the presentation around exploring new product opportunities and I guess expanding on that in your prepared remarks, increasingly test opportunities beyond the traditional lotteries. I was just wondering if you could share any more details around those opportunities and what you've potentially seen in other markets that you think could work here in Australia? Wayne Pickup: Sure. I mean, at the moment, we're sort of actively evaluating those. I think there's opportunities in terms of just the way we present the product and the front end and making that more engaging and it's almost like a product in front of a product in some regards. So making the user journey just far more engaging and fun. Then there's certainly room in the portfolio for new product, but that takes time. It takes time to build. It takes time to gain regulatory approvals. So these are all under active consideration. And I'm not able to get into specifics today, but certainly at the Investor Day that we will schedule around middle of the year, I'll be able to sort of get into more details then. Justin Barratt: Great. My follow-up question, just on Saturday Lotto, clearly had very strong retention to that game change last year. But I just wanted to get your expectations on how much that retention has benefited from the weaker Powerball and Oz Lotto jackpot run recently. And I guess whether you still -- or do you think that it will -- that retention will normalize to that sort of 50% to 75% range in time? Wayne Pickup: It's a good question. I'll pass over to Callum, who can provide more historical reference than I can. Callum Mulvihill: Yes. Thanks, Wayne. Thanks, Justin. I think probably a good frame of reference is the last change, which was during a COVID period, which I think we experienced about an 80% retention early on sort of from 8 weeks pre and 8 weeks post. And then we had a real COVID environment that sort of clouded that one. This one is probably surprised on the upside to be holding 103% after 29 weeks is impressive to say the least. It's probably surpassed expectations. And I think we settled -- I think that one back in 2000, we settled at about 50%. So sort of early days, it was 80% and settled at 50%. So this is certainly surprised on the upside. And I think back in that jackpot environment, it was highly varied back in 2000 as well. Operator: Your next question comes from Kai Erman from Jefferies. Kai Erman: You've obviously shown pretty strong pricing momentum across the last 2 Powerball increases, the most recent Saturday increases. And how are you guys thinking about pricing going forward? Do you still think it's a sort of every 2- to 3-year cadence? Or do you think you can sort of get into an annual price rise kind of cadence given the momentum that you've shown to date? Wayne Pickup: Wayne here, I can take that. It's something that the business has done extremely well over time, and it will be -- it will certainly continue to be one of our levers, but not the only lever that we look to pull. So I won't go much further than that just now other than, again, like I don't want this to be my stock answer, but it's under active consideration. It will certainly be one of the levers that we have in the toolkit going forward. And as you probably know, with these lottery products, that price increase correlates through to bigger jackpots, bigger prices. So there's an immediate upside for customers, for our retail partners as well through commissions. So it's certainly something that we'll continue to look at or continue to utilize. And we're also -- the frequency of those is under active consideration. Kai Erman: Understood. And just a follow-up, you mentioned in your sort of earlier remarks around balance sheet optionality given you are sort of at 3x leverage. Would you be able to give any clarity on what some of those options might be? Wayne Pickup: Adam, do you want to take that? Adam Newman: I'll have that, Kai. Kai, I'll just go back to my earlier prepared comments. I think in my speech at the end of the day is we can't get overly specific. The Board remains committed to that 3 to 4x leverage target. And obviously, we're looking at things on a risk-adjusted basis within our strategy of which license enhancements form an important part of that. And to the extent that the Board determines that we've got excess funds, then we'll seek to return them back to shareholders in the most tax-efficient manner. Operator: Your next question comes from David Fabris from Macquarie. David Fabris: Just with my first question, you made some comments around the ability to maybe extend existing licenses. Can we talk through that big license, which expires in '28? I mean if we think about Victoria, they did open up the Keno license to multiple operators back in 2022. Should we be worried about what Victoria might do with this lottery license? Adam Newman: Yes. So David, Adam, I'll take that again. It's a hard question for us to answer. Obviously, we're in discussions with governments on a number of different jurisdictions across the time. But ultimately, you need scale in these lottery businesses at the end of the day. So opening up to multiple participants is not necessarily readily easy to do. And I think you'll just have to see how that process opens up. Obviously, '28 is a couple of years away yet. And we'll just have to see how it plans out at the end of the day. David Fabris: Yes. Got it. Understood. And the next question, look, just appreciate the prepared remarks around operating costs. But can you clarify whether first half '26 benefited from the low jackpot activity on marketing spend? And to kind of dovetail that, if we look at where OpEx has tracked in the first half over the last couple of years and at the midpoint of guidance, it kind of suggests a 46% first half weighting. I know you haven't provided FY '27 guidance, but under the premise of normalized jackpot activity, the fact you're launching new games in the first half or innovation, call it Set for Life in September, which probably requires increased spend. Will that phasing change? Or should we really think about cost for your business agnostic to volumes and it kind of tracks around or below inflation? Adam Newman: Yes, you covered a lot of topics there. So maybe I'll just step back a little bit and say the first half, second half split that we're seeing this year is pretty consistent with what we've seen pretty much every year since we've demerged to start with. So -- and I think we've talked about it in the past that 50% of our costs are people. We do have some ebb and flow in relation to advertising and promotion spend subject to jackpot outcomes. And it would probably be fair to say that the first half maybe benefited from sort of low to mid-single digits from an advertising and promotion spend. I say benefited, but spend that wasn't forthcoming because we didn't have the revenue opportunity. And so if you look forward to the second half, a large proportion of that second half step-up that you're seeing does relate to advertising and promotion spend, of which some of that relates to an expectation that you'll get some potential mean reversion in the second half. Not all because it does -- we've got an Oz Lotto brand refresh going on at the end of the day. So it does depend upon certain timing of different campaigns and programs, but it's not completely dependent upon that. We haven't given guidance to look forward for FY '27. Obviously, we've given it for FY '26. All I can say is we spend a lot of time on our OpEx cost base come through separation at the end of the day. And as I mentioned in the prepared remarks, we're continuing to focus to keep our OpEx at or below normalized revenue growth over time. David Fabris: Yes. Okay. But I guess under the premise of normalized volumes in first half '27, which is how we forecast, you'd expect a pretty significant step-up in OpEx commensurate with jackpot activity and marketing. Adam Newman: I don't want to get and predict into FY '27. I'm not sure that necessarily holds what you just said. Operator: Your next question comes from Sam Bradshaw from Evans & Partners. Sam Bradshaw: Wayne, you mentioned that you believe you're underrepresented in online Keno and there's currently an ongoing review of online Keno and foreign match lotteries. Are you able to give us any color on the status of the review and how it translates to your strategy? Wayne Pickup: No, I can't give you much more color than probably what you already are aware of. It's coming into this market from the U.S., it's -- frankly, it's a bit of an anomaly as it relates to the foreign match lotteries out of the ANZ, I know. Again, coming out of the U.S., the U.S. regulators and lotteries don't particularly like it. The fact that we have these sort of curious services operating through the U.S. and then reselling into international markets. But we -- what I'll say is that we are strongly in favor of fair regulated markets with transparent revenue arrangements with governments, and we'll continue to lobby for those arrangements vigorously. Operator: Your next question comes from Andre Fromyhr from UBS. Andre Fromyhr: Just wanted to ask first question about the health of the Powerball game and the underlying demand there. I guess you've called out a negative like-for-like year-on-year for Powerball, but at the same time, 61% retention of the 17% price increase. So I'm wondering, firstly, how you can reconcile that 10% growth that you call out in the retention calc with the like-for-like environment. But also, is it just too hard to judge in a period where you haven't seen major jackpots? Wayne Pickup: Maybe I'll kick off and then hand over to Adam and Callum to sort of put more -- sort of being the new guy on the block, I can only sort of contribute so much. But -- it's always challenging when you sort of bookend a period with a game like Powerball. And I see the same thing with the Powerball product in the U.S. coming in still somewhat of an outside-in view, it is a very healthy product. It has millions of customers. It's a brand that Aussies love. And so if you look at it sort of big picture, it's gone through -- as these things do from time to time, it's gone through a statistically lean time, but that will regress to the mean. But it's certainly one of our hero products and one that we'll continue to invest in, continue to do more with and has a very, very strong loyal customer following. I don't know, Callum or Adam, if you want to add to that? Callum Mulvihill: Yes. Look, if I can build off that, Andre, I mean, it's incredibly -- echo what Wayne said, incredibly strong product. It is our leading product. We've priced that product on its strength. It's now the premium-priced product in the portfolio. Yes, it's had a leaner run, statistically driven. But I think the retention is bang on where we would have expected it to be. It's far too short a period. Retention jumps around quite a bit from the low end to the high end. I think sitting in that 60% range at this point is exactly where we'd like it to see -- like to see it, and it's an incredibly strong product, and it is our leading product in the portfolio. Wayne Pickup: And it performs extremely well on digital as well. Callum Mulvihill: And the portfolio, as you would have seen previously, it feeds off its momentum. And obviously, the momentum that's had in the last half has been lower, but we know the customer recovers. And in the meantime, people have pivoted and we've seen people play in Saturday Lotto and that change be really well accepted. So it's a pretty dynamic environment, but there's no issues with the health -- with Powerball. Andre Fromyhr: Great. My other question is specifically on the digital mix. We've seen it up year-on-year for the half but down a bit on the second half of '25. So how much of that is also relating to the lack of major jackpots? Or is there some seasonality there? And I guess the question is how much of a -- there's several mentions of digital as a strategic priority in the presentation today. But is that something because of the margin benefits that we're going to see more actively pushed up over the next few years? Wayne Pickup: Yes. Wayne here, I can start again and if Callum or Adam want to contribute. We'll -- I mean, I guess, firstly, we'll sort of follow where the consumer goes. And the large jackpots certainly bring in -- yes, they're a strong acquisition tool for us in digital channels. So when you get an event like a $200 million or a powerful jackpot, you're getting -- I mean, it's just common sense, right? You're getting a whole lot of customers that come in that will play once in 1 or 2 years and then drop out again. What we want to do is obviously retain them. So the job isn't just around sort of acquisition. It's around giving them reasons to come back. And as I said at the start, this is why we sort of look there is opportunity in the portfolio. So overall, I look at it, and I think digital has plateaued a bit largely because of -- as a derivative of the Powerball -- particularly the Powerball jackpot environment. But there's opportunity there, a lot of opportunity there to do more with it. I don't know, Callum or Adam, if you want to add anything. Callum Mulvihill: Look, the only thing that I would add to that it is a long-term structural trend that sustains many, many periods, and it has some short-term volatile sort of fluctuations around the macro factors like jackpots. But we're also investing in, as Wayne said, we bring them into the funnel and how do you make them stick and how do you make people register and give them reasons to register with us and convert them through the digital funnel. So there's investment in that space, but it does rely on some of those bigger macro factors like the game offers. Operator: Your next question comes from Matt Ryan from Barrenjoey. Matthew Ryan: I just wanted to ask a question around Slide 27, where you've sort of shown a pretty long-term chart of how resilient the lottery sector is. And I guess just more specifically the past years post 2020, where it looks like the growth rate is a bit elevated relative to history. Just curious on your thoughts on what's driven that? Obviously, the jackpots have been there. And as a result of that, just trying to get, I guess, some color on where to from here? I know you've talked about a $400 million headwind in the half, which is pretty elevated. But I guess we're all just looking for confidence that the reversal of that comes out rather than perhaps, I guess, an unwind of those years, which look to have grown quite a lot more than normal after that 2020 period. Any thoughts would be good. Wayne Pickup: Yes. Well, maybe -- again I'll start and Wayne here. Matt, the look, I'm not going to predict what comes out of the Powerball machine. But these are just simple probabilities. So if we run those, we've got to assume that we're going to revert back to a mean and have jackpots throughout the year of $100 million plus on a relatively regular basis, right? So -- but again, I can't predict what -- unfortunately, sort of what balls get drawn on a Thursday evening or Tuesday evening. What we -- part of the strategy, and we'll sort of get into this more into the Investor Day middle of the year, but we also want to give -- when I look at the portfolio, we want to give people more reason to engage with us beyond that jackpot anticipation. So it's -- I haven't sort of quite looked at the chart the same way as you have, but I understand where you're going. But I'm certainly not concerned that we can't continue to drive sort of more growth, more engagement with what we have and with more innovation and product going forward. Adam Newman: Sorry, Matt, I was just going to add one other thing. It's Adam here that we look at that chart from another lens is that we saw a lot of acceleration into the category as a consequence of COVID because everyone is sitting at home with nothing else to do. One pleasing thing that we've often referred to internally is that we've been able to lock in those benefits. So there was a new high watermark that came out of the COVID period for us in addition to the game changes that we were able to make during that period as well. Callum Mulvihill: Yes. And thanks, Adam. I'll pick up. Probably on Slide 31, Matt, I mean, what we can control in that environment. I mean, clearly, we couldn't control COVID. We really couldn't control the $200 million event in '24. But what are the activities that we're putting in market to continue to capture the market as it evolves. I've always liked this chart because it does show an underlying long-term CAGR. We have been able to accelerate it even if you back out the noise of COVID and statistical one-offs. We've got activity to capture the market and keep growing the market. Keno sits on top there and just continues to grow steadily to add some diversification as well. So for me, this chart shows the resilience of this business. And then what can we control within that market is really Page 31 and beyond. Matthew Ryan: Yes. I guess that's all really helpful. I'm just also curious as a follow-up, whether the volatility in earnings and cash flow poses any negatives for you guys? And I guess the context is that you're clearly showing what is a very defensive long-term chart. The share price appears to me at least to be trading more like a cyclical industrial around shorter-term events. But taking that out of it, are there ways, I guess, to reduce that volatility over time? Or is it something that isn't a real priority for you guys? Adam Newman: Yes. I mean 50% of our turnover comes from jackpot games. So there is going to always be a period of volatility depending upon where those balls come out of the barrel, I don't think we can get away from that. The extent of how maybe you can smooth some of the volatility or grow, we've seen with Saturday Lotto game change, for example, which is the second largest game, we've been able to grow that game from a base game perspective. I don't think from -- we take -- I mean, it was interesting that you raised that chart on [ 27 ] because we do try to take a medium- to long-term view of the business and the decisions that we make. So I don't think -- one of your questions was does the volatility cause us concerns? I don't think it does internally in the way we manage the business and the way we look at run and make decisions. And then I think our balance sheet strength just gives us the overall flexibility to deal with some of this volatility as well. Callum Mulvihill: And so Matt, I'll pick up that as well, less about cash flow volatility, but more about the volatility in the portfolio and a slight correction. My Page 31 is your Page 16, just on the product actions that we've taken over the period. But we do sequence the investment in our portfolio around the core base offers. And Saturday is an incredibly important investment. The fact that, that's stuck after 29 weeks, I mean, I can't overemphasize that provides stability in that core repeat behavior. And to Adam's point, you really can't do much about the noise and the volatility in those jackpot games. When they deliver, it's fantastic. But in short periods, they can go away a little bit. Operator: Your next question comes from Adrian Lemme from Citi. Adrian Lemme: Just in terms of the simplification of the org structure, do you expect this to lead to any material savings in FY '27? Or do you expect any savings to be reinvested into digital or other areas, please? Wayne Pickup: The -- I mean, we're actively looking at the org structure at the moment. It's more around sort of getting clear lines of accountability. And I think we're underinvested in some areas and maybe the counter is true. But it's too early to tell whether we expect any material savings and it's -- but we do anticipate some changes. Adam Newman: Maybe I'll just add, as you heard us talk a bit before about keeping our OpEx growth below our normalized revenue growth over time. And the benefit that you get in this business in terms of a high degree of our costs are variable and the ability to grow your top line is very beneficial in terms of the way we've levered to the bottom line at the end of the day as well. So reinvesting some of those OpEx savings back into growing the top line is something that we actively seek to do as well. Operator: Your next question comes from Liam Robertson from Jarden. Liam Robertson: Just two for me. First one, just on active customers. I appreciate the jackpot weakness, but with that number falling to 8.6 million, is there anything you can tell us about genuine churn versus jackpot-driven lapses? Like anything you can quantify for us there? Wayne Pickup: Would you mind sort of just asking the question again or maybe just slightly rephrasing it? I'm not sure I follow. Liam Robertson: Okay. Sorry, I've just jumped on the call on a conflicting call. So I'm just interested in -- I mean, half-on-half looks like customer numbers in total or active customers have fallen to 8.6 million. I'm just interested if there's anything maybe in the digital cohort that you can tell us about actual underlying genuine churn in active customers as opposed to what has just been driven by that jackpot weakness? Wayne Pickup: It's predominantly driven by jackpot. We've got the loyal sort of registered, particularly the registered customer base. There's a very strong registered customer base that is omnichannel that sort of play both in digital and retail. I mean what you find is when you get these sort of big spikes, these one-off jackpots, people just come in for those -- just those one-time events and then back out. The job to be done is for us to retain them. But there's -- in terms of the data that I see coming into the business, there's no structural issues in terms of the core player base. Liam Robertson: Okay. Perfect. Makes sense. And then I mean, conscious of the comments you just made to the previous question around OpEx, you've given out -- you pointed to looking to automate a bunch of your processes. Conscious that 50% of your OpEx base is currently labor. So I'm just conscious how we should potentially think about composition moving forward, conscious that you might need to invest short term, but long term, if there's sort of anything that might change in the composition of your OpEx base? Wayne Pickup: Adam, if you want to add to that. But I don't see any sort of major deviations from -- we will continue to be prudent in terms of the way we operate the business. We're probably underinvested in some areas around AI at the moment, but -- and we can find savings elsewhere to sort of offset those. But it's -- this is sort of an active analysis at the moment. But what I would say, it's a balancing act. We're definitely not going to see OpEx go up outside of target ranges, that's for sure. Operator: There are no further questions at this time. I'll now hand back to Mr. Pickup for closing remarks. Wayne Pickup: Look, well, just thanks for joining my first earnings call at TLC, and I appreciate you all following the business. This -- just to finish on, this is an incredibly healthy business. We've got millions of loyal customers throughout Australia, brands Australians love. And I'm looking forward to contributing and there's opportunity to do more. So thanks for further engagements, and you can get on to your next call now. Thank you, guys. Bye.
Operator: Greetings, and welcome to the Nano Nuclear First Quarter 2026 Financial Results and Business Update Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host. Matthew Barry: Thank you, and good afternoon, everyone. Joining me on the call today are Jay Yu. Nano Nuclear's Founder, Chairman and President; James Walker, our CEO, and Jaisun Garcha, our CFO. Please note that today's press release and slide presentation to accompany this webcast are available on our website. Before moving ahead, I'll quickly address forward-looking statements made on this call. As reflected in more detail on Slide 2, today's presentation contains forward-looking statements about Nano's future that are made under the safe harbor provisions of the applicable federal securities laws. You are cautioned that actual results including, without limitation, the results of Nano's microreactor development activities, strategies, time lines and other operational plans may differ materially and adversely from those expressed or implied by the forward-looking statements. Important risks and other factors that could cause actual results to differ from those in our forward-looking statements are contained in our filings with the SEC including our annual report on Form 10-K filed this past December, which you are encouraged to review. The forward-looking information provided today is accurate only as of today, and Nano disclaims any obligation to update any information provided except as required by law. With that, I'll turn the call over to Jay Yu, Nano's Founder, Chairman and President. Jiang Yu: Thank you, Matt, and thank you, everyone, joining the call today. Nano Nuclear continues to differentiate itself as a microreactor developer with a focus on vertical integration across the nuclear fuel supply chain. We are advancing our K MMR, KRONOS MMR, a high TRL, high temperature gas-cooled reactor design backed by decades of operating history and meaningful prior capital investments, which we believe can significantly derisk future construction, licensing and deployment. We expect the compact modular design of our KRONOS MMR system to support factory fabrication, repeatable construction and learnings that can accelerate deployment time lines and drive cost efficiencies over time. Importantly, we believe the inherent safety profile of our KRONOS MMR and can enable a smaller footprint, co-location and off-grid deployment, unlocking high-value applications previously unavailable to traditional nuclear reactors. We paired this foundation with a focus on vertical integration across critical aspects of the nuclear fuel supply chain, which we believe will give us an advantage over our competitors, uniquely positioning us to expedite reactor deployment, benefit from growing nuclear renaissance and enhance long-term economics of our reactors. Turning to our Q1 highlights. We continue to make meaningful progress across business during this quarter. Our KRONOS MMR continues to advance towards licensing and construction. We completed site characterization and drilling at the University of Illinois and are incorporating those results into our planned construction permit application to the U.S. Nuclear Regulatory Commission. We also signed a formal MOU with the Board of Trustees at the University of Illinois, detailing the next steps as we advance the project. The State of Illinois announced that we will receive $6.8 million in incentive awards, underscoring growing support for advanced nuclear technology. In Canada, we continue to make progress towards initiating formal licensing following our acquisition of Global First Power, now rebranded as True North Nuclear. And lastly, we're advancing discussions with numerous supply chain partners for key components and long lead items as well as discussions with commercial enrichment provider and TRISO manufacturers to procure fuel for our first KRONOS MMR prototypes. On the commercial side, we signed a feasibility study agreement with BaRupOn to evaluate the potential deployment of many KRONOS MMR systems to provide up to 1 gigawatt of power for their AI data center and manufacturing campus under development. We believe this announcement highlights the potential scalability of our platform for customers with significant energy needs. Nano is also expanding its pipeline of potential data center, industrial and military customers interested in KRONOS for a range of power needs. Nano saw a growing interest from potential strategic partners, highlighted by a recent MOU with DS Dansuk to explore localization, manufacturing and deployment opportunities for KRONOS reactors in South Korea and the broader Asian region. DS Dansuk is a leading South Korean industrial enterprise with extensive capabilities in energy, chemical processing and advanced manufacturing, providing a strong platform to support commercialization of our technology. We also signed an MOU with Ameresco to explore integration of their EPC capabilities for deployments for our KRONOS MMR systems on federal and commercial sites. These announcements reflect a broader trend of interest from strategic partners, including established companies with decades of experience with large-scale energy and industrial infrastructure projects who recognize the value proposition of KRONOS. As it relates to our strategic focus of vertical integration, we also made progress towards expanding our conversion and transportation capabilities through active exploration partnerships and acquisitions. In addition, our strategic affiliate LIS Technologies received a key radioactive material license for Tennessee's demonstration facility while also announcing plans to invest $1.38 billion over time to build a commercial enrichment facility in Oak Ridge, Tennessee supported by its patented laser enrichment technology. Each of these announcements reinforce our progress in securing our nuclear fuel supply chain. From a financial perspective, we raised gross proceeds of $400 million through an October private placement, significantly strengthening our balance sheet and extending our operational runway. This capital raise included participation from a growing base of institutional investors, reflecting increased confidence in our strategy and execution. We were also added to the Morgan Stanley National Security index, further expanding our visibility among institutional investors. Our Q1 progress reflects our continued execution, advancing KRONOS towards licensing, construction, expanding commercial traction, working to expand our vertical integration across the nuclear fuel supply chain and maintaining our strong financial position to support execution of our long-term strategy. We believe our progress to date differentiates technology and strategy have positioned us to be a key benefactor of the global nuclear renaissance driven by several durable secular growth trends. These include growth in demand and reliable baseload energy for AI data centers, industrial reshoring and the broader electrification, energy, sustainability, independence and climate mandates and unprecedented policy support. Recent developments in the U.S. power markets are bringing increased focus on each of these trends. Electricity demand tied to AI data centers and other power-intensive applications is expanding faster than the new generation and transmission can be delivered creating rising concerns around power availability, grid expansion and energy affordability. In January, the administration supported an emergency auction organized by the largest regional grid operator aimed at driving 15-year power purchase agreements to fund an estimated $15 billion of new generation. The same grid operator is also considering co-location generation policies to help large energy users bring supply closer to demand. While these actions are important and reflect a growing recognition of current power bottlenecks, they alone are unlikely to close the structural gap between demand growth and reliable supply. Against that backdrop, we believe assets capable of delivering high uptime, long-term cost certainty and operational resilience independent of constrained grid infrastructure are likely to command a meaningful premium in the future. We view our KRONOS MMR as an ideal feature solution to address these challenges, which are expected to intensify in the years ahead. By offering the potential to provide behind-the-meter or off-grid baseload power directly to the end users and customers, we can meet expected demand growth without driving higher costs for everyday Americans. In short, the recent actions across the country are reinforcing the need for global nuclear renaissance and highlighting what we have long believed. Reliable, clean baseload energy is a strategic necessity, and we are building our KRONOS MMR as a next-generation solution aligned with national priorities, customer needs and long-term economics of the AI-driven energy future. Before handing the call over to our CEO, James, I'll briefly highlight why we view 2026 as an important year with multiple potential catalysts offering the opportunity to create shareholder value. First, we expect progress towards regulatory licensing of KRONOS in the U.S. and Canada. We are targeting submission of a construction permit application to the NRC in the coming months to formally begin the U.S. lysis process. This submission will represent a key milestone that could set the stage for initial construction at the University of Illinois in mid- to late 2020. Second, we see potential for several commercial announcements this year, reflecting growing interest in our KRONOS MMR from customers in several markets. Third, we're advancing discussions on commercial partnerships and acquisition opportunities across nuclear fuel supply chain, providing the potential to address key bottlenecks in areas like conversion and field transportation. And lastly, we expect additional progress to our strategic partnerships that could accelerate and derisk large-scale deployment of our reactors while also significantly expanding commercial opportunities globally. With that, I'll turn the call over to James. James Walker: Thank you, Jay. Let me start with a brief update of our University of Illinois prototype project, which will be essential to advancing our KRONOS MMR towards commercial deployment. As Jay mentioned, we've completed site characterization and drilling and also signed an MOU with U. of I's Board of Trustees to outline the next steps for the design, construction, ownership and operation of our KRONOS MMR system on campus. We remain on track to submit our construction permit application to the NRC in the coming months under the Part 50 licensing pathway. Our team is working on the application closely with AECOM and other partners and have begun engaging with the NRC for several months to ensure alignment on scope and technical requirements. In parallel, we're advancing discussions to procure key long lead components, including discussions around reactive pressure vessel capacity, fuel enrichment application, graphite supply and other key components. Based on our progress to date, we aim to begin construction in mid- to late 2027 and see a realizable road map to a full-scale prototype online in or around 2030. Our team is also evaluating opportunities to accelerate this schedule and secure additional project funding to reduce overall capital costs. Turning to our growing pipeline of commercial opportunities. We believe growing commercial interest has been driven by KRONOS' compelling value proposition. KRONOS has a strong safety profile that we expect to enable colocation directly at the customer site and provides the option for off-grid power. KRONOS is also particularly well suited for large-scale multiunit deployments where reactors can be connected and scaled over time to match customer demand. Its modular architecture and compatibility with factory fabrication and standardized production create the opportunity to capture meaningful economies of scale as we deploy at larger scales. We believe manufacturing efficiencies combined with operational learning curves can position us to achieve highly competitive economics over time, while still delivering the 24/7 reliability and uptime that data centers, industrial customers and other mission-critical users require. Moreover, KRONOS' patented flexible design also provides the ability to serve projects with smaller power needs requiring only one or several units, expanding our served available market to new applications previously unavailable to nuclear energy. During the quarter, we announced a feasibility study with BaRupOn to evaluate the potential deployment of up to 1 gigawatt of power to support their AI data center and manufacturing campus. We are actively advancing the study, which includes the site evaluation, project scoping and time line development. Following completion, we'll aim to perform EPC cost estimates, begin early project development activities and work towards finalizing a formal agreement to sell our reactors. Beyond BaRupOn, we continue to build a growing pipeline of prospective customers across data center, industrial and military applications. A consistent theme across these discussions is the need for reliable baseload power, particularly solutions with favorable footprints that can be deployed behind the meter to reduce grid dependence and accelerate deployment time lines. Notably, power requirements for these projects range from below 50 megawatts up to 1 gigawatt plus. We also see meaningful opportunities in additional markets where KRONOS is well suited, including remote communities, mining operations and other energy-intensive applications requiring reliable off-grid solutions. And as Jay highlighted, we're making progress towards several strategic partnerships we believe can further expand our commercial reach and accelerate deployment, beginning with our recent MOU with DS Dansuk. We recently announced a collaboration with DS Dansuk, a leading South Korean industrial company to accelerate deployment of our KRONOS MMR in South Korea. DS Dansuk brings deep capabilities and operational experience across energy, chemical processing and advanced manufacturing, along with long-standing relationships across key industrial and government stakeholders in South Korea. We're confident their credibility within the Korean industrial ecosystem can facilitate engagement with state-owned entities as well as potential Korean industrial customers seeking reliable carbon-free baseload energy. As such, our collaboration with DS Dansuk has the potential to meaningfully derisk regulatory licensing as well as accelerate site identification and project development, facilitate introductions to prospective customers and support localization of manufacturing and component production within South Korea. Moreover, we also see this collaboration as a pathway to strengthen project financing opportunities and establish broader strategic partnerships that can accelerate commercialization and deployment in South Korea, one of the world's most sophisticated nuclear and industrial markets as well as the broader Asia region. Now that we've touched upon KRONOS' growing commercial momentum and value proposition, I'd now like to elaborate on KRONOS' technical differentiation. KRONOS is supported by a proven and well-understood foundation with nearly a decade of development and an estimated $120 million invested into its design by its prior owner. We believe this materially derisks the platform and provides a strong technical basis as we advance towards licensing and deployment. KRONOS' 15-megawatt electric design builds on high-temperature gas-cooled reactor technology that has been deployed and validated across multiple countries for more than 5 decades. Core elements of the design, including TRISO fuel, helium coolant and graphite moderation are mature technologies supported by extensive real-world operating data. Beyond the reactor itself, our balance of plant strategy prioritizes commercially proven systems, including steam generators, turbines and thermal energy storage technologies already in use in today's concentrated solar plants. We also expect to operate within conservative temperature and pressure parameters that align with successful deployments. As a result, our focus is not on developing new or experimental reactor technology, but on integrating well-understood components into a compact modular microreactor platform that can be licensed, manufactured and deployed efficiently. With that operating history in mind, I'll now outline the key advantages of KRONOS as a prismatic high-temperature gas-cooled reactor. First, on technology readiness, prismatic high-temperature gas-cooled reactors utilize well-characterized materials with established commercial supply chains and the performance data from prior deployments provides a high TR level foundation for our design. Second, the safety profile is fundamentally different from other reactor types. TRISO fuel retains vision products at extreme temperatures. Helium is an inert coolant and the design relies on passive heat removal. As such, we don't expect a credible meltdown pathway, and the core can shut itself down without reliance on active safety systems. Third, prismatic high-temperature gas-cooled reactors are inherently simple. There are few active systems and high-stress components, and many elements can be commercially off-the-shelf rather than safety grade. The core configuration itself has no moving parts other than the control rods and the materials are inert and well understood, contrasting with the complexity of certain other advanced designs. Fourth, prismatic high-temperature gas reactors like KRONOS are especially well suited for export. The use of TRISO fuel presents minimal proliferation risk compared with other fuel technologies and a superior safety case potentially offers streamlined licensing with international regulators. Fifth, we believe this architecture is uniquely flexible. In particular, the standard design can be deployed for smaller capacities by simply decreasing operating pressure. This flexibility allows KRONOS' output to be scaled without redesign to meet the needs of a wide array of customers. And lastly, we believe these characteristics could enable lower long-term maintenance and stronger economies of scale. And inert coolant, passive safety and advanced fuel reduce the need for complex chemistry controls and high maintenance systems. Combined with a simpler design and greater use of nonspecialized commercial components, we see opportunity for reduced operating costs, lower maintenance costs and favorable cost scaling over time. Our focus on vertical integration stems from our belief that one of the largest constraints to deploying advanced reactors at scale isn't the reactor technology, but fuel availability. We're working to gain exposure to several critical stages of the fuel cycle, starting with enrichment through our collaboration with our affiliate, LIS Technologies. LIS owns the only U.S. origin patented laser enrichment technology and our relationship with List has the potential to provide Nano with a differentiated uranium enrichment solution. In parallel, we're exploring opportunities to build our capabilities in conversion and fuel transportation through strategic commercial partnerships and acquisitions. Further progress in each of these areas can not only derisk future reactor deployments, but also positions Nano to generate revenue across the nuclear fuel cycle while remaining aligned with federal funding opportunities and national energy security needs. With that, I'll turn the call over to our CFO, Jaisun, to provide financial highlights. Jaisun Garcha: Thank you, James. I'll now provide a summary of our Q1 financial performance. Our overall cash position increased significantly during the quarter, ending the period with cash and cash equivalents of $577.5 million. This was an approximate $374 million increase during the quarter ended December 31, driven by the net proceeds of our successful October 2025 private placement. We're confident our substantial cash balance and proven ability to raise capital at scale position us well to accelerate development and commercialization of the KRONOS MMR. Our strong financial position also provides flexibility to pursue value-accretive opportunities via M&A and strategic partnerships to enhance our vertical integration. Turning to the income statement. Q1 loss from operations was $11.6 million. The higher year-over-year loss resulted from an approximate $8 million increase in operating expenses. A substantial majority of these expenses focused on advancement of our KRONOS MMR and other strategic growth opportunities. Q1 net loss totaled $6.5 million, up approximately $3 million from the comparable prior year period. The net loss was lower than the loss from operations as we earned approximately $5 million of interest income on our larger cash balance. Net cash used in operating activities increased by approximately $1 million from the prior year period to $4 million. This resulted from the aforementioned increase in G&A and R&D expenses. Net cash used in investing activities totaled $3.1 million and included payments for our Oak Brook, Illinois engineering facility. Before turning the call over to the operator for Q&A, I'd like to reiterate that our strong balance sheet places us in a great position to execute our strategy of advancing our KRONOS MMR and enhancing our vertical integration. As we look ahead, we will continue to generate value for shareholders by allocating our time and capital prudently toward opportunities offering compelling return on investment. With that, I'll now turn the call over to the operator to open up the call for Q&A. Operator: [Operator Instructions] Our first question comes from the line of Sameer Joshi with H.C. Wainright. Sameer Joshi: So the 1 strategic alliance you announced with the DS Dansuk group, are there any sort of milestones or catalysts over the next 12 to 18 months that we should be watching out for? James Walker: So yes, I'm quite pleased to answer the question about this actually because the plan with DS Dansuk is actually a pretty large one. So what they actually wanted was that they envision massive bottlenecks with regard power for their industry. And so when we went over there and me and the technical team, we were talking to them about how we actually create a manufacturing facility there. And we've been working with them in the interim months to break down the reactor into sections and how we would manufacture those sections and what can be done in Korea, what cannot be. So what's been happening over the last few months is we've been looking at what can be fabricated in Korea, what can be sourced there, where materials would going to be come from because one major thing that companies are looking at is that great, you build a reactor and it gets licensed. How are you going to mass manufacture that reactor? So we are obviously turning our attention to that in the U.S., but DS Dansuk wants to do the same thing with our reactor in Korea. So what we're likely going to see over the coming year is just more development in that direction. We are going to put together a plan about how we arrive at a centralized local core manufacturing facility to take the South Korean market initially, but it's really the whole East Asia region where there's a huge demand for the product. So in terms of what you are going to see, you're going to see more engagement with us and DS Dansuk. You're going to see that MOU advancing into more critical planning stages. At some point, you're going to start seeing -- it's difficult to say exactly the time lines now. You're going to see [indiscernible] factories that are going to be built for the purposes of mass manufacturing reactor. And you're going to see additional partnerships between us and them regarding certain key strategic things like partnerships on graphite acquisitions and fuel supply and things like that to get things into place. The other part is what you're going to see is that there's a big demand for this. So you're probably going to see some related news about our interaction with the government, with KHNP, with big vendors in South Korea. And ultimately, over the years, you'll see increasing contracts between ourselves and customers in the region regarding offtake agreements for power, PPA agreements, those kind of things, as we look to actually ourselves so that when we hit that period when we have the reactor fully constructed and licensed, we're then ready able to start manufacturing the reactor immediately, achieve economies of scale and then start installing those reactors en masse. Sameer Joshi: Understood. So should we -- I mean we also talk about strategic partnerships worldwide, but also within the U.S. and North America. Should we also include like an EPC kind of a strong partnership signed in this region? James Walker: Yes. So this is a very good point actually because [indiscernible] now is that we are on the verge of submitting our construction permit. We're very close to finishing that submission. Now when that goes in, that means that we can pivot the technical team to be able to refocus on what the next big stages are. And one of the big next stages is going to have to be how we mass manufacture these things. Now beyond that, there becomes a larger question. Say we have 10 sites, a dozen sites, whatever it is, that we need to surface. Now that is a lot of local construction crews that need to be coordinated. And so the EPC element to this becomes quite important because when you are doing that kind of digging that well for the reactor to go into because [indiscernible] concrete, that's all stuff that Nano doesn't have to be involved and it can locally contract out. But that's still a huge amount of coordination. So you might have seen partnerships between ourselves and Ameresco and Hatch. And previously, actually even Hyundai, I think, we were involved in looking at how we deploy this reactor around the world. So the EPCM part of this is going to be a fairly large component of how we deploy here. So we have made a few announcements as we begin to look at how we deploy these things, how it gets coordinated. That is obviously a very separate thing to DS Dansuk where they are going to be an industrial factory partner. So they wouldn't be doing EPC. But those EPC contractors in the U.S. are going to be very important. In South Korea, they're going to be just as important as well. Sameer Joshi: Understood. And then just one last one. The construction permit, should we see any like news prior to your -- like submitting the application, which also is it on track for like first half of this year? James Walker: It is on track for the first half of this year. It's actually going very well at the moment. We've been quite aggressive about it. So we worked the team pretty hard on this one because it is a very big differentiator. There's actually not many companies -- there might be a lot of reactor companies that are sprouting up because it's a hot market, but there's nobody putting in for a construction permit because it is a big difference between a paper reactor that you can make in your bedroom and an application to actually build. There's a lot of technical data that need to go into it. I wouldn't say we're going to announce anything prior to the submission specifically on this, but we will announce when it gets submitted because it is important to let the industry know where we are. And it is as well a very good indicator for the market that this is a very credible thing that's being taken forward at a time when there's not a lot of reactors being constructed. And if we stick to our time lines, we should still be the first company in the U.S. to build a full-scale licensed microreactor system. Operator: Our next question comes from the line of Nate Pendleton with Texas Capital Bank. Nate Pendleton: Congrats on the continued progress. Staying on the same topic, James, in your prepared remarks, you mentioned looking at ways to accelerate the 2030 time line for the UIUC project. Can you elaborate on the potential pathways there? James Walker: Sure. So it's a very good question. So obviously, there's -- what's happened very recently is that there's been a huge amount of government pressure that's come on to the NRC to try and expedite time lines. And you've seen that manifest in things like the formal licensing period being firstly reduced to 18 months and then subsequently 12 months. So there's a possibility there that the licensing process is expedited for us. Now I would say with our 2030 time line, we've not factored into consideration these adjustments because we want to be as conservative as possible, but there's also a reality to the assessment of a reactor system for any regulator anywhere in the world. And their principal focus is safety. And to do -- to interrogate that properly for any design, it is still very difficult to expedite that even if you throw people at the problem. So the 2030 time line could be expedited. It's certainly possible. But it's prudent, I think, for us to stick to that because there is a -- there's been a tendency in recent years of companies to make very ambitious date targets. And I think all of those are going to be missed now or they're just going to keep evaluating and moving things right. We don't really want to be in that situation. If we say 2030 and maybe gets delivered earlier, great. If there are expedited time lines that benefit us as well, fantastic. I would say that aside from those sort of things, obviously, we will work on the construction, get all that expedited. We've got a lot of resources already that we can pay to the full construction of this. A lot of it will depend on industry and supply chains and those kind of things. But those things we're already identifying now and working on. So a lot of it is already derisked. The other thing I would say, too, is that what's missed a bit in the industry is that a lot of companies might be focused in the near term on getting their first reactor constructed and licensed. And obviously, that's a very important milestone. But when you hit that period and you have a reactor that can be commercially sold, how do you actually get economies of scale? You need to be able to mass manufacture it. So when we talk about expediting the time lines, it would be very nice to hit 2030 and be in a position where we are actually able to start mass selling the reactor. And that's going to mean that over the next few years, while the reactor is being constructed, we do actually refocus a lot of our attention on reactor for manufacturing facilities, how these things are going to be mass produced, how the EPCM contractors are going to get into place for coordinating localization. So there's 2 answers to the question is, one, there's a lot of initiatives that can benefit us and can move our time line forward. And the other part is that if we really want to expedite ourselves as a business, we need to attack this problem now. So once the construction permit goes in, we really want to focus people's energy on getting these -- what can actually be manufactured in the U.S., how much can we centralize them. All of these different considerations will come into it. Which partners do we need to bring in to make certain components that centralize their production capacities within this facility as well? All of this is going to be very important so that we hit the ground running when it gets to 2030, hopefully earlier. But again, the reason why we haven't adjusted those time lines is that we -- myself and a lot of others in Nano, we've done a lot of licensing before. And we're very familiar with what's typically involved. And even though there are pressures on the NRC to expedite things, it still seems prudent to us to keep the longer time lines because the evaluation process, it is difficult to see how it could be shortened substantially from what it currently is. Nate Pendleton: Got it. That makes complete sense. And then shifting gears a little bit for my follow-up. Can you talk a bit about your decision to announce the request for information for the LOKI MMR? Specifically, what options are your team looking at for that reactor design? And have you received any notable feedback? James Walker: So we did. So the interesting part about this was that the LOKI design can be thought of a bit like a scaled-down KRONOS reactor. So as we work on KRONOS, it has immediate benefits for the advancement of the LOKI reactor. But the LOKI reactor was originally envisaged as being a solution for space power. Now when we began looking at actually attributing more resources towards LOKI, we looked at who the previous interest came from, and that was predominantly things like Blue Origin, NASA. These kind of groups were interested in it because it was a very advanced space reactor type. And there was this kind of examination of additional resources being allocated into LOKI was coming at the same time when there was an emerging bigger push into space. And we realized actually we're in a very advantageous position to produce a working system that could actually supply power for a lot of these initiatives. So whether it was zero gravity or low gravity because it was a base. And this could be for a variety of different applications in the space program. But we are not a space industry either. We're not -- we don't have space engineers and people who are involved in that space. So if we are going to pursue this, it needs to be done in partnership with groups that are involved in that space and know what they're doing. So when we put out the RFI, effectively, we were looking for partners already involved in that and they were looking for power. So what we can say is that there are a number of companies that were looking for power that were not involved in that space, launch companies, people like that. So we did receive a large number of RFIs. And I believe we just completed a submission with one at the moment. Obviously, it's -- these are very early days, and we're just putting our toe in the water of the space industry. It's not to say that LOKI couldn't be applied in terrestrial environments either. But certainly, we wanted to take advantage of the interest in the space industry. LOKI had a big head start on a lot of other space reactor types, years and years and millions and millions of investment. And so that's what precipitated the -- our interest to partner with people in the existing space industry because nuclear, we know very well. Space industry build is foreign to us. Operator: Our next question comes from the line of Jeff Grampp with Northland Capital Markets. Jeffrey Grampp: James, I'm curious, with respect to the supply chain and some of the work you guys are doing to engage various partners and strategics there, what's your all kind of assessment on the longest lead times or most challenging parts of that puzzle that need to get solved sooner rather than later? And is there any imminent need from your standpoint to solve any of these, say, in calendar '26? Or would you say you have a little bit of time given the timing with engaging with the NRC, getting the permit, that sort of thing? James Walker: So this is actually a very good question. I think it's pertinent to anybody involved in the nuclear space at the moment. So what I would say the advantage we have with KRONOS is the vast majority of components are not that specialized. So the complete adjacent plant that converts the thermal output of the reactor into electricity as an example, basic turbine systems, even things like heat exchangers, control rod mechanisms, the citadel thing. These are all things that can be built independently of any NRC involvement. Obviously, they need to be up to a certain standard, which we can ensure. But the vast majority of components, we don't need to worry about the long lead times. These are things that can be readily manufactured now or there are immediate solutions that are very obvious that could be put together in short order. Now there are actually components though that are the longer lead items. So there's a number -- like our reactor and a number of other reactors use like nuclear-grade graphite. And I would say that's an item that needs special consideration because there's only, as far as I know, 3 nuclear-grade graphite producers in the world. I think 2 are in China and 1 is in Japan. Now what that means is that, obviously, there's going to be a lot of demand for these things, but it's also -- it's too much to expect more nuclear-grade graphite to come online anytime soon. The reason why is that principally, a lot of these manufacturers of the substance are located at the mine site. So first of all, you need the graphite mine. And then to get yourself to a point where you reach that sort of certification level where you're at an acceptable level of quality, that can take a substantial amount of time. So the time to bring a mine online to get producing and then get it certified, you could be looking at more than 10 years. So I expect at some point in the future, North America will bring on some nuclear-grade graphite line. But for the next few years, what we expect to do is just buy or even -- maybe even co-build production lines to make our graphite blocks with these manufacturers. So that's probably going to take us some investment that goes into that. We're obviously talking with them. We know what their prices are, and we're arranging for the first-of-a-kind and second-of-a-kind cause with these suppliers now. So that's obviously an important part of it. The other major part for the U.S. is the fuel supply. Now the U.S. is obviously throwing money back at the problem. The DOE has put billions of dollars back into things like enrichment. But there's bigger bottlenecks beyond that. There's conversion considerations to provide the feed grade. Now it is actually investing a substantial amount of labor and [indiscernible] involve itself in that [indiscernible] can have its own uranium hexafluoride that it can then provide to enrichment companies. So it keeps ownership of that fuel. But the -- but for everybody involved in this, that enrichment capacity to come online, whether it's Centrus or Arano or LIS Technologies or General Matter or even Urenco increasing their capacity, the time lines on that are a little bit uncertain. So that's principally also why Nano has opted to use -- to make a reactor that can utilize LEU because that's fuel that can be manufactured today. Now there's going to be -- that's fine because most [indiscernible] use HALEU fuel. So that means that even they might even have much longer wait times to get towards that fuel than we do because, one, they're going to need several things. They're going to need a Category 3 site to be upgraded to a Cat 2 site. That could take some time by [indiscernible] the facility to be licensed up to a level so it can handle Cat 2 material, so 10% to 20% material. That could be a long lead time, too. We don't have to wait for that, which is fortunate. We could benefit from HALEU fuel and the reactor will have the ability to switch out the LEU for HALEU in the future, but we can -- we want to get going as soon as possible. But the fuel supply thing needs a lot of consideration. And then related to that also is the fabrication of the TRISO. Now there are several companies that are really leading in this space. I would say Standard Nuclear in partnership with Framatome. Framatome obviously has a huge experience with fuel. And BWXT, again, very experienced company, very competent. So there's no -- I don't think there's any risk that these big companies don't know how to do this kind of thing. What could happen with them is that there could be a bit of a bottleneck on fuel supply just because of the demand. So getting in now and putting in the orders is going to be very important. And then two, what we're weighing up at the moment is the right contracts because even though we understand the first-of-a-kind reactor might be expensive, we need to have a sustainable fabrication toll fee applied to the material that we supply the fabricators so they can make the TRISO. Well -- and this is principally our strategy, too. We're going to invest very heavily into the fuel supply so we can own our own fuel and supply it to the fabricators, so we don't get stuck, but they will still have to increase their capacity probably to meet the market expectations. And I would say those are principally the main issues -- not issues exactly, but longer lead items that need consideration. But beyond those, even the reactor vessel, the capability exists to do that in North America. It's those longer lead items, the fuel and the graphite, I think, which need more consideration and earlier engagement to derisk. Jeffrey Grampp: Great. I really appreciate that answer, James. You kind of hit on the follow-up that I was hoping to ask on the fuel side of things. You guys have been seemingly increasingly vocal about some acquisition or strategic opportunities to put some capital to work there. So I was just hoping to get a little bit of an update on, I guess, level of maturity or intensity of conversations with different companies in that endeavor or just any kind of, I guess, update on what we could see from you guys in that avenue of the cycle. James Walker: Sure. So I'm going to be a little bit careful because obviously, it's not public information at the moment. But I don't think it's any great secret that we've been very concerned about the fuel supply chain. And because we're obviously very focused now as we get on in advancement about mass manufacturing reactor, we want to make sure the fuel supply is in place. And part of that over the last few years has involved us looking at fuel supply options. And that involves, obviously, we had a related party transaction called LIS Technologies that we were behind the creation of. And that was obviously -- that is a separate entity that we have a partnership with for enrichment. It's old chemical tech. It had very good results in the '90s. So that has reasonable levels of confidence that we'll get that to a place where it can eventually enrich. But the lead time on that is still going to be after when we want to get going with the mass manufacture reactors. So that means that we need to be working with companies like Urenco that are enriching now. They can enrich your LEU, which is the fuel that we need for a reactor. But even then, if you look at enrichment and you look at all the build back of enrichment, that actually creates the next bottleneck, which is the uranium hexafluoride. So we identified this, I think, back as early as 2023. And for a while, we were in discussions with countries like Namibia, which were large uranium producers about potentially building facilities in the country to take yellow cake and make it into that uranium hexafluoride product for export. I don't mind saying that we have found better options than that, and we've made substantial progress with the governments, the national governments on the acquisition of some of these facilities. I can't give a lot more details at the moment, but I would expect you will see sometime this year some big announcements in that space as we complete some of those discussions and acquisitions. Operator: Next question comes from the line of Sherif Elmaghrabi with BTIG. Sherif Elmaghrabi: I missed a little bit of your response on LEU versus HALEU fuel, but I thought it was pretty interesting. So a couple more on that. From a regulatory point of view, are we talking about a separate regulatory process at NRC or CNSC to use one versus the other? Or is it kind of one approval to run at any enrichment level? James Walker: It's a good question because when we do get the reactor licensed, we'll almost certainly get it licensed so we can demonstrate that it could operate with HALEU fuel. We're in a nice position to be able to do that. And the reason why is the operating parameters that we use for our reactors are enormous. So for instance, if we're operating at like 600 degrees centigrade, the melting temperature is 1,800. Now when you've got that kind of margin, then the safety case that you submit to the NRC for a higher enriched fuel is fairly straightforward. I don't think a lot of companies are in that kind of advantage position. So when they are licensing their reactors, they will do it at HALEU level directly, whereas our safety parameters basically allow us to do it simultaneously. The main challenge, I think, with the HALEU is that it's not that it can't be done. Like it's -- we've been enriched much higher up to HEU levels for decades. It's really the fact that in the U.S. at the moment, there's no commercial Cat 2 site. I think BWXT does have a Cat 1 site, but obviously, that's very centered towards military and would make everything very expensive if you manufacture through there. So it's a question of the NRC will need to upgrade sites to Cat 2. They will need to upgrade fuel facilities to be able to handle HALEU fuel and the proliferation -- the increased proliferation concerns that attribute to that fuel. Now those proliferation concerns go away once it's fabricated, but it's still a process the NRC will need to go through for that enrichment of fuel. So it's an interesting thing. We want to take advantage of HALEU fuel as much as everybody else. But like having that option to license the reactor immediately so it can be deployed with LEU. And then once the HALEU is available, immediately switch it out without further licensing engagement is going to be a very important part of the strategy here. Sherif Elmaghrabi: Yes, that's interesting. It sounds like it's not as binary as for other operators. So just one more on University of Illinois. You guys signed that MOU kind of lengthening your relationship. It looks like Illinois will lend a hand designing the reactor. So do they retain a commercial stake when you look to commercialize your design down the road? James Walker: No. So they will be the owners and operators of the first-of-a-kind reactor system. And they will supply a huge amount of labor and resources into this project to make sure the first-of-a-kind reactor is built. But beyond that, we own and operate the design of this reactor and the commercial venture [indiscernible] UIUC will be Nano's exclusively. Now the University of Illinois, the big benefit to them is obviously a reactor system that provides them clean energy for their campus system. And -- and also it's obviously, they have got a big nuclear engineering department that they all benefit from involved in this. So it's obviously a big draw if you're training nuclear engineers to say we're building this next-generation Gen 4 reactor system. So they get immediate benefits from this first-of-a-kind. But beyond this, once we have a commercial venture, that will be a strictly Nano endeavor. Operator: Our next question comes from the line of Subhash Chandra with StoneX. Subhasish Chandra: A couple of, I guess, NRC questions. So first, the licensing, so you got on the reactor. To what degree is the balance of plant in that process? And as you sort of address these various use cases, does that again go through the NRC? So just sort of confused there on where that distinction is between the reactor and balance of plant. James Walker: No, it's actually a very good question because, for instance, ironically, most of the KRONOS MMR system is not a nuclear system. So for instance, even though your reactor vessel is -- it needs to be nuclear qualified up to a certain level so it can house the reactor itself. It can still be manufactured in a facility that the NRC does not need to oversee that facility. So if you're fabricating that reactor vessel, that facility does not need inspection. Now the component does need to meet a certain standard. So there's still -- when you even get to those sort of parts that are instrumentally important in a reactor deployment, there's still that nuance. I think when -- the NRC mostly care about safety systems, how safe a reactor is. And so their assessment only becomes relevant when it is a nuclear device. So okay, the balance of plants, so you could say things like the entire adjacent plant. So you've got the secondary cooling loop that stores power that creates essentially a battery, so you can ramp up and ramp down very quickly. It's a nonnuclear device that is a heat sync device. That sits outside the NRC. The adjacent plant where you have the turbine systems that convert heat to electric. Again, that would be roughly the same sort of contraction you would find for a gas operation as you would for a nuclear operation. Again, that sits outside of the NRC. Now as you get closer to the reactor, then it becomes a bit more blurry because say, for instance, the citadel, which is the cavity that the reactor sits in, so you dig that into the ground. Now obviously, that can be built by local contractors, that can be concreted and the steel can be put in. Now the standard has to be up to scratch, and you need to be able to demonstrate that it has met those requirements. But the construction itself is not as relevant as the operation of the reactor system. Because what's likely going to happen here is that I think it's Part 52 subpart F. It allows for the -- once the reactor is licensed at the NRC, like KRONOS will be in, say, 2030, all the subsequent reactors that will inherently be licensed to be deployed. So you wouldn't need much more regulatory engagement, and you're going to have a big cost saving as a result of that. Now there's some nuance to that because you still need to be able to supply the NRC with information that they would need at any one time if they wanted to inspect a reactor. So you're still going to have to do the geotechnical drilling, make sure you have all that data that you can demonstrate the ground meets the criteria the NRC allocated. There might have to be inspections of the cores that are being mass produced. Those might need to be inspected to make sure they're up to grade. But provided you are meeting all of those criteria, you could still deploy dozens of those reactors across the country without further regulatory engagement. But yes, the majority of the system can be -- what we anticipate doing is a centralized manufacturing facility where we do a lot of things like the reactor protection and control mechanism, the helium service systems, the mold and salt loops, the instrumentation, the electrical systems, operator training, those kind of aspects, those are still mostly mechanical engineering items. And the majority of the reactor comes under that. And that -- a lot of that stuff can be done under, say, ISO standards rather than NQA1 nuclear-grade standards. It does break down, but it gets a lot easier after that first reactor is licensed because then you have your template and your standards that you need to meet. And provided you meet those, the actual necessity for further regulatory engagement drops off quite dramatically. Subhasish Chandra: Yes. Thank you. Then I guess, to the AI question, I think initially AI was about looking to the vast trove documents and perhaps making it a little bit easier and less repetitive and things like that. But I think lately in the last few weeks or so, they're talking about bringing in digital twins for simulation of these. Do you see -- I mean we see that having a real-time effect in other sectors, of course. And given how lengthy the licensing process is, do you see some of this having a very material effect on the licensing process? Sorry, go ahead. James Walker: No, no, I was going to say like that is my actual big hope because I've been involved in licensing before. And it is an enormously complicated thing. So just -- I'm not trying to throw Vogtle under the bus. But for instance, Vogtle is being built, being built very competently. But say, for instance, the regulator suddenly says, well, what about this component of this reactor that was installed 2 years ago? Well, that's already buried in concrete. Well, how do we know it's safe? Did it meet -- where's the checklist with regard the inspection of this component before it was installed and it was encased in concrete? Well, we don't have that. Well, that means we need to dig it up. That means there's going to be a delay to the reactor. That means there's going to be an additional cost component that's going to -- that's why Vogtle is so expensive because you get these things. Now ultimately, that example there is human error. Either someone missed that, that component needed to be qualified or it got installed without anyone realizing that they had to submit it for qualification or something like that. If you have an AI system, my hope here is that it would actually be able to identify very quickly what needs to be qualified, what needs to be identified and you actually will reduce the human error of it down substantially because it will creep into it. If you're thinking just -- it's difficult to even put into -- to explain how complicated a licensing process can be. But if you think about a warehouse and you were to fill it with A4 sheets of paper that contain the licensing documentation, you would fill a warehouse. It would be that much paper, millions and millions of documents. It's a crazy process. Now for a human, that's -- it's -- even if you are 99.99% perfect, that still means thousands and thousands of errors just because of the size of the undertaking that you're going through. So my hope here is that AI can substantially reduce the risk of things being missed. And there's no reason why a computer that's operating like that, that's very familiar with the process that's been exposed to recent licensing data documentation couldn't immediately identify what needs to be focused on, what does need to be done at certain stages. I think that could be a big step forward for nuclear to reduce times of licensing, errors in terms of components get missed, they get very inconrete like the example I gave. There definitely -- that will definitely help us enormously. It will help the whole industry. And I can't see why that won't happen. And that's my big hope for AI. It's not so much reading through all of our submissions and making sure things. It's what needs to be done and when, what has been missed, what could potentially be missed and that kind of thing. I think that looks very plausible. And if that is plausible, then that makes our life a lot easier, and it will make reactors a lot cheaper in the long run. Operator: There are no further questions at this time. I would like to turn the floor back over to Jay Yu for any closing remarks. Jiang Yu: I want to thank everyone again for joining us on today's call. The interest and enthusiasm of our investors and market participants is important to us, and we're very grateful for your support. We look forward to providing additional updates in the future. Have a great evening. Operator: Thank you. And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Sam Wells: Good morning, everyone, and welcome to the Lycopodium First Half FY '26 Results Call. I'm Sam Wells from NWR Communications. And joining me from the company today is Managing Director and CEO, Peter De Leo; as well as CFO, Justine Campbell. Following a brief summary of the results released to the market this morning, investors and research analysts will have an opportunity to ask questions. There will be the choice of 2 options. First, analysts and investors can either raise your hand should you wish to ask a verbal question of the management team and you can also submit a written question via the Q&A function at the bottom of your Zoom screen. We'll endeavor to get to the majority of questions asked, in some cases, combining submitted questions on the same or similar topic. And for those analysts asking verbal questions, we kindly ask that you keep your questions to no more than 2 or 3 live questions on today's call. Thank you. And over to you. Peter De Leo: Thank you, Sam, and welcome. Thank you for your attendance at our formal investor presentation for the first half of FY '26. As Sam said, I'm joined this morning by Justine, our CFO; and Rod Leonard, our Chair. This morning, I'll be -- mid-day for many of you. I'll be just running through a typical investor presentation, covering off a little bit about the company, providing an update on the financial highlights for the period, touching on operational highlights for the period, then addressing outlook and guidance. And we also provide, as part of the presentation, although I won't be running through in any detail this morning, appendix, which contains a lot of additional and hopefully, informative information. Lycopodium remains a leading global engineering and project delivery group, working across mineral resources, industrial processes and infrastructure industries with an extensive book of quality clientele and 18 offices across the world. I'd speak to our clientele. We have an amazing bunch of clients across all those industries I mentioned, through very, very large clients, mid-tiers and junior explorers and miners, and we're very grateful for that client order book. As a project-focused organization, it is of significant importance and to our benefit to have involvement with projects from the very early stage. Hence, our involvement in scoping and feasibility studies and the evaluation phase of projects through the full engineering and project delivery as a full-service provider in that phase and then also on to optimization and expansion phase works enables Lycopodium to benefit from a project's full life cycle. It's been something we've focused on over the years, both in broadening the services which we provide, but also broadening the time which we are involved in projects. We maintain a high workload with a strong current order book of studies and delivery phase activities on a broad range of quality projects. Committed contracts are valued at $415 million, that's up on last period. And also revenue opportunity pipeline is $1.3 billion, also up on last period, which really indicates -- and I'll talk more about it obviously later, the outlook for the business, but indicates that we are continuing to see busy market, enjoy a busy market and see a busy market. By way of financial highlights, Lycopodium did $174.5 million worth of revenue for the period and $18.3 million NPAT, which provided a 10.5% NPAT margin, which is in line with our expectations for achieving our NPAT target. The Board of Directors declared a $0.22 per share fully-franked dividend for the half year, again, returning to our traditional sort of dividend policy, our dividend expectations and had strong cash at bank at the half year. The company enjoys excellent diversification across a broad range of commodities, clientele and geographies. Those of you that have seen the slide previously may note that we continue to achieve more balance in support of this diversification across these metrics. And we're striving to continue to do this on an ongoing basis. We'd like to see a strong balance in terms of diversification across commodities, across geographies. In particular, it provides surety and strength moving forward. From an operational perspective, we've recently been awarded a number of FEED or front-end engineering and design briefs, which we expect to position us optimally for the next phase of each project. These include the Winu copper project for Rio Tinto, the Assafo-Dibibango gold project for Endeavour Mining, which is our next development project, development gold project for Resolute and a number of others, including most recently, Pilgangoora Plant Expansion lithium project in Western Australia. We've also started initial work on 2 material prospects being Tulu Kapi gold project and the Blackwater Expansion Phase 1A project Artemis Gold. In terms of the LatAm, we hope to be able to transition on to a larger project with our Blackwater Expansion project and awaits news on that thing, which we believe maybe imminent. Of note, however, there has been a shift to the right on these projects, particularly taking in Blackwater from a timing perspective, probably about a 3, 4 months shift from what we previously expected and forecasted, and it has impacted our financials and forecasts. However, we continue to invest in building capacity in anticipation of these and a swathe of other material opportunities and this is really important. We are in a competitive labor market across the world for our people, and we've retained our people and continue to grow our people count and also our capacity in terms of office space and just general corporate capacity, what we see is being a large number of prospects. Our study pipeline is very strong. And those that have been on our calls previously, you would have seen this slide in particular, which tries to demonstrate our early phase work, our work which is midstream in middle of its delivery and then that stuff that's being -- projects that's being completed in recent times. And you can see there is quite a number of new opportunities, new projects, which have ticked into early phase work. I spoke around the Blackwater Expansion Phase 1A, Tulu Kapi, Winu, et cetera. And there is other projects such as Diamba Sud, Iguidi and Doropo where we're doing the FEED work and we hope that those projects will go into full execution and we will be able to participate in the full delivery of those projects. We also got a really strong portfolio of projects, which are called heavy delivery, including Kon in C te d'Ivoire, Yanqul Copper in Oman and a number of other projects, which are listed there and of course, some projects which we already completed. So, we're very, very happy with the number of studies that we've got and that's traditionally the key metric for businesses. We're working on a good number of -- and quality of studies, which tends to be a good indicator for what we'll be doing next. Our focus on people continues as we seek to maintain and enhance our status as an employer of choice and a place where people can develop excellent careers, advance themselves personally and professionally and enjoy growing with the company. Our approach to keeping our people and those on our managed sites safe is demonstrated in our exceptional safety track record. So on to outlook. Demand for our services remains very high based on our excellent track record and performance on all of our most recent projects as well as market conditions, which generally sees commodity prices strong, if not historic high levels, obviously, gold being very, very strong. At the moment, we're seeing enormous number of opportunities emanating out of our traditional markets, including Africa, Australia, but also across the Americas. Silver being another commodity, which we're seeing. A number of projects we've started work on the PFS for Unico Silver in Argentina, supported obviously with our investment in SAXUM. We're also seeing, on the basis of our expansion across the Americas, lots of many new opportunities and the like being presented to us or prospects that we have identified and are pursuing. But we also continue to invest in building capacity and capabilities globally. We've, in the last 12 months, have planned for the next 12 months to increase the capacity in Perth, Toronto and Cape Town, in Lima and in Manila. And that's in preparation for the work and the prospects, which we continue to see, and we see that this will bear fruit in subsequent financial years, certainly, but we also expect to support a strong second half of this financial year. We revised guidance, primarily due to the shift rise of a number of those major prospects. I spoke about the 2 main ones, which are expected to contribute materially to our forecast. We now provide guidance of group revenue between $370 million and $410 million, and NPAT between $37 million and $41 million, in line with our target NPAT expectation of around 10%. We'll obviously continue to keep the market and shareholders updated on any material changes or any material awards. But we consider the second half will be strong to achieve those -- that guidance which we provided. We remain a secure, stable and sustainable business, doing great work globally. This is based on the deep engineering expertise and growing teams, and keeping teams of exceptional high-caliber personnel and we provide lots of, what I call, value in the services which we provide globally. We have a long track record of highly disciplined risk management. We're also focused on ensuring that we have a good portfolio of contracts and style of work, which talks to both risks and also talks to return. And again, leveraging experience over the years. We have a very strong history of execution of projects and execution of business generally, with strong alignment with management and our shareholders. We still have around 30% of the company's ownership held by Board and management. We have a very capital-light approach. We're not an organization that requires to spend a huge amount of capital to generate our returns, and we continue to pursue business in that fashion. I've touched on in the appendices, which you can go through your leisure. You can review the very strong field of blue-chip clients that we have. It's a very diverse list. Lots of clients have been with us a long time. We continue to deliver repeat business as predominant. The quantum of work that we do is in the form of repeat business for clients, new projects for existing clients and the like. Strong commodity diversification, I spoke around that earlier. I think we continue to strike a good balance there. Even in the light of a very strong gold price, we're still busy in lithium. We're still busy in uranium, copper and a bunch of other commodities. Lycopodium, certainly against our peers, appears to have an undemanding valuation. And the geographic diversification, I think, for us is key. We continue to expand geographically. The Americas has been a fantastic geographic expansion for us. The acquisition of SAXUM, the opening of the Lima office and Vancouver office, et cetera. We're seeing tremendous number of opportunities coming through. Again, it's fairly early days. So, we have got expressions of interest in and proposals in a number of new opportunities across Latin America in particular, but also our North American operations continue to see a level of inquiry, which is unprecedented. So, I think certainly the word is out about Lycopodium across the Americas and we expect to see continued sort of growth and opportunities for business activities across the next couple of years coming out of the Americas, let alone our traditional Africa and APAC regions. As I said, we also provide some additional, hopefully, informative content as an appendix to presentation to further explain and illustrate the strength and quality of our business. So, I'm not going to go through that this morning. I welcome you to talk through as ever after this presentation. If you have any questions, please feel free to reach out to us with those questions and hopefully, you can ask on the appendices. But thank you for attending our webinar and I welcome any questions that you may have now for us and we'll do our best to answer them. Thank you. Sam Wells: Thanks very much, Peter. [Operator Instructions] First question comes from Oliver Porter at Euroz. Oliver Porter: Just a quick one. You mentioned adding capacity and headcount kind of across the board globally. Can you just talk to how you're finding the labor market and perhaps if by geography, are you having any particular challenges or how that sort of is going to look over the next 6 to 12 months? Peter De Leo: Thanks, Oli. Yes, the availability of good talent is always challenging, and that sort of is a constant. We're seeing that in Australia. We're seeing that in Canada. We're seeing that in South Africa, in particular into large operational hubs. But we continue to recruit good people and bring good people in. And again, talking about -- I touched on our focus on people and the focus on careers and the focus on providing people new exciting and diverse work is something which we sell. And we don't -- we never have people come to light and think that they are joining anything other than an exceptional business, which is great. And so it makes it a little easier, but they are tough markets to find. There's a dearth of high-quality experienced personnel globally. So, we value it very much. To that point being, across the last part of the first half, we maintain capacity where if you weren't expecting to continue to see growth in demand, we may have trimmed capacity at times just to maintain utilization up, which is a key metric for our business. But we maintained it particularly in Cape Town, knowing full well it's not easy to get people. You can't just let people go and expect them to rejoin you in 2 months' time, knowing with the full knowledge that we had the amount of work and are seeing our work potentially ahead of us. We sort of were very careful to maintain our teams and to continue keeping on that capacity and growing that capacity. Oliver Porter: Great. And just with SAXUM, it's slightly slower start than you initially expected. But can you speak to how the opportunity pipeline as it stands today compares to your expectations when you made the acquisition? Peter De Leo: Yes. You're right. Their own performance in their own right as a business unit has been slower than we would have liked. Again, those you've heard us speak about the SAXUM acquisition before, for us, the acquisition of SAXUM wasn't so much about what they would contribute to the group in their own right. It was about the opportunities that they will bring to group and the [ features ] that they would provide within Latin America and the Americas, more particularly Latin America and enable us to access clientele and opportunities that we hadn't been previously. If we wind the clock back 18 months, Lycopodium wasn't bidding anything in Latin America. It was aware of lots of opportunities. And we're now sort of much more across and attuned to and enabling and aim to pitch flow opportunities. As I said, Unico Silver is one example. It's PFS, obviously, at this point in time, so relatively early days. They are Australian listed company with silver project in Argentina. SAXUM, in fact, secured the PFS, on the back of good relationship and it's part of our group. And it's supported -- in that case, supported by our Americas' officers and process teams. We're currently bidding a -- or express of interest with a view debating a large copper concentrator opportunity within Argentina, again, supported by APAC, driven by APAC hub, where a lot of [ horsepower ], a long track record of large copper concentrators only enabled by the fact that we have the SAXUM business. So in that respect, it's going exactly to plan. Integration of the business has occurred and has occurred really well. And there is no issues there and no concerns there. The traditional cement market is slower than they would like to have seen and they would like to see, of course. And have we landed a big fish or even medium-sized fish at this point in time, we are really in good stead on a number of great opportunities that we wouldn't have had before with SAXUM bought. Sam Wells: Next question comes from Stephen Scott at Veritas. Stephen Scott: Just on Slide 4, world of green dots. Just noticed that Europe and also maybe Middle East maybe presencess there. Do you have any thinking about that in perhaps the medium term? Peter De Leo: Thank you, Stephen. Europe is not on our radar per se. It's not a huge amount of minerals activities in Europe. There is obviously some mineral activity, but not a huge amount. Middle East, on the other hand, is on our radar. In fact, of course, we're currently working on the Yanqul project in Oman, where that project is being delivered at our Americas hub. But also the Americas hub is also seeing a number of inquiries from Dubai-based and Middle East based groups, some projects in the Middle East, some projects out of the Middle East and particularly into Africa. And we also -- we have an entity established in Dubai where at this point in time it's on the shelf. But acknowledging that we do need to find the level of prospectivity in that region increases to such a point that we consider to have an operation there. We can activate that. But certainly, I think Middle East from a level of prospectivity, it's certainly something that we have an eye to -- we can service out of APAC and out of Africa or out of our Americas' hub and where clientele are and where relationships exists. There's quite amount of, I guess, money coming out of Dubai in particular, Abu Dhabi, Saudi alike. So, I expect to see some opportunities coming out of there. Sam Wells: The next question -- we probably have a couple of questions on the shifting time lines. Are there any specific factors that caused the delays to Tulu Kapi and Blackwater? And are there any second order impacts on these delays? And specifically, there's a couple of questions around how much extra cost did you have to carry during the half that are associated with those delays? And is that visible in increased project expenses as a potential forward indicator? Peter De Leo: It's not indicated. It's not related to additional project expenses, let's say. What it relates to -- let's just deal with the first part of the question. And that is around timing, project delays and the like. Unfortunately, the reality of our world is that we don't control when projects start. We can influence obviously by completing our study work efficiently, effectively and well, making projects more fundable, more easily fundable and dealing with what we do with our partnering, our inputs to projects, making sure they are high quality and we do that regularly on an ongoing basis. But the timing when a project starts, when it gets funded, when it gets permitted, some of those we call nuances around when a projects has a full green light. It's not something we can control. I'll give you an example. We did a project last year, early last calendar year, polymetallic project in far north Canada. We gave a red hot crack. We were shortlisted and have caused [indiscernible] perhaps even the favored party. That project at the time was apparently going to be starting in calendar year '25. That project still got [indiscernible] and some effectively native title issues still in group. These things we can't control. We do our best to forecast and to do a likelihood and probability of a project going and then a likelihood probability of us securing to that project and then what that might mean for our business size, our capacity, our capabilities and all that business planning that we do. But unfortunately, we don't control the timing of projects. And two, that we sort of singled out in our presentation today, we singled out because they are material contracts potentially. They get fully green light and we fully secure them. They're both material contracts and have material demands on the business. And we prepared in advance for what was meant to be a kick-off in, call it, fourth quarter 2025. And you have to do that because you can't be caught flat-footed on all these things. They all have aggressive and challenging schedules. And when things don't kick off necessarily exactly as per our forecast, we have to enact contingency plans and the like. And to the second part of your question, increased project expenses that you're seeing in the financials really relate to FG Gold, Baomahun, which is a relatively soft form of half EPC. I can't give too much detail, but it's a project where you're seeing some direct costs being coming through our books, so as we've seen project improvement -- project costs. And on the equipment side, we've started a business about 18 months ago called [ pudco ] where we sell some form of OEM, products leveraging our technical capabilities and our technologies developed over the year and that's what you are seeing there. And to the last part, are we seeing -- have those project delays caused us to incur costs? Well, in one respect, yes. What happens with project delays where you start seeing a softening in utilization of our personnel because you bring on 40 people and they're not fully occupied to the level you'd like to see them occupied. That can have an adverse impact because you're carrying some of their costs. It's not flowing straight through projects. But again, it's just a reality. We tend to model our commercials, around a certain utilization level. If you're doing better than that utilization, then you make more profit, you are doing less than utilization, you start running into your target profits. Sam Wells: And maybe just as a follow-up to that. Can you comment on first-half '26 utilization, particularly in the second quarter against PCP? And what would your expectations be for the H2 balance? Peter De Leo: We expect to see utilization increase. Utilization was reasonably high through the first quarter of this financial year. It has softened across second quarter, as I said, certainly in some of our operational centers. APAC and Americas was running both fairly high utilization levels. Africa headcount lower as well as Process Industries business at this time in SAXUM. Again, though as a group, we were still running above target. Utilization levels were softer than we had seen in the first quarter. We expect those utilization levels to increase. Our forecasts are that they will increase through Q3, Q4 of this financial year. But certainly, beyond that, we expect, based on our forecast that we'll see utilization increase into FY '27 as well and not only increase, but we expect probably bigger numbers, bigger headcount in due course, obviously, evidenced by -- we're taking on more office space and the like. So, that's part of the plan. Sam Wells: And in regards to the number of studies being currently undertaken by Lycopodium, how much would that be up on perhaps a 12-month range? Peter De Leo: It's a bit of a tough question. It's been in studies. In terms of total quantum, it's probably there or thereabouts, maybe a little higher. But it's obviously also the mix of studies and what those projects look like and we are studying what the size of them are, what stage study it is, et cetera. So it's always a tough question to answer. But if you just look at -- are we got more studies on today than we had on this time last year? Probably I'd say we do. Because we're doing more studies in the Americas. There is similar amount of studies here in APAC and probably a similar number of studies out of Africa as well. So it's probably up. Sam Wells: And maybe just the last question this morning. Can you give us a sense of the conversion rates you currently see through the life cycle of project development, i.e., for each client that commences a scoping study, do they utilize Lycopodium for delivery and operations? Peter De Leo: Often, yes. Sometimes no. I'd say most of the project work, which we get involved in, we've been involved in study work. And we expect that you have an advantage if you completed the feasibility study, whether it be PFS. PFS, often when you are doing the scoping, you generally roll into PFS, DFS and so on and so forth. But what I will say is taking a project from scoping study, especially copper project, copper concentrator, for example, the scoping study level through execution might take you 10 years. So, these things take a long time. Gold projects somewhat less in this market. We've got a number of clients who haven't done a scoping study and want to be in execution, want to be pouring gold by Christmas next year, which is unrealistic, of course. But there is no shortage of sort of enthusiasm, call it, that side of fence at the moment. Sam Wells: I think that's all the time we have for live questions today. If there are any follow-ups, please feel free to e-mail me and/or Justine, and we'll endeavor to get back to you. And maybe just with that, Peter or Justine, I'll pass it back to you guys for any closing comments. Peter De Leo: Thank you very much. Look, nothing else to add other than we're very happy with the way the business is tracking at the moment. We're really working to plan. Obviously, dealing with the vagaries and the separate project timing and some of that impact that it has to the business over time. But in terms of the strength of the business, the fundamentals of the business, the balance sheet is, of course, remains strong. We're always looking for new opportunities, looking for how we can leverage our capabilities and do more and continue to do it as well as we are doing it, if not better. So, that's it for the presentation. Again, as I said earlier, if you have any questions, please feel free to reach out to myself or Justine and we'll try to help you out with answers. And thank you very much for your attendance. Sam Wells: Thank you very much for joining today's Lycopodium first half results call. Enjoy the rest of your day. Goodbye.
Steve Johnston: Good morning, everyone. Standing room only for the external participants in the Sydney office here and many, many people, I'm sure, online and listening in. So welcome, everyone. Let me begin, of course, by acknowledging the traditional owners of the lands on which we meet and pay our respects to elders past and present. As usual, I'm joined by our CFO, Jeremy Robson, and we'll present the financial results for the first half of financial year '26. We'll, as usual, run through the presentation. And of course, we have other members of the leadership team here who can join us and support us for the Q&A session that follows. As always, I'll start with a brief recap of how we believe long-term value is created at Suncorp. This is a slide I put up every time. It's our purpose slides where our purpose delivered through our people, supporting our customers and the community, but in that order, will always result in a sustainable and growing business for our shareholders. So to the headline result. And at the outset, I would acknowledge that this has been a challenging half for the whole insurance industry as we've responded to the extreme weather. The group's net profit after tax of $263 million and cash earnings of $270 million were well down when you compare it to the prior period as we managed 9 separate weather events at a net cost of $1.32 billion, which is $453 million above our allowance for the half year. Of course, I'd also make the point that the NPAT in the prior period included the one-off gain on sale of Suncorp Bank, which was $252 million. Net investment income of $259 million was also down on the prior period. And of course, it was impacted by the negative mark-to-market movements in the bond portfolio. However, of course, the flip side of this is that investment -- the investment portfolio is currently yielding 5%, and that creates a tailwind for future earnings and future margin. As you know, insurance profits are subject to the vagaries of weather and investment markets with favorable periods driving higher profits. But as we've said consistently, there are also times when the reverse occurs. And consistent with that purpose of ours, our focus as a general insurer is on creating long-term value. And while we've experienced significant natural hazard activity in this half year, the way we show up to support our customers during these events is what ultimately drives and underpins long-term value creation. So while the headline results have been impacted by those 2 factors, the underlying business continues to perform strongly, and that's reflected in the solid growth of our consumer business and our underlying insurance trading ratio, which has remained at the top end of our guidance range at 11.7%. We've also further consolidated our market-leading expense ratios. As you'll hear later in the presentation, our key strategic initiatives, the Digital Insurer program of work and our AI program are on track to deliver material value. And as Jeremy will point out, we have maximum flexibility when it comes to the structure of our reinsurance program. Balance sheet and capital position remained very strong, and the board has determined an interim fully franked dividend of $0.17 per share, representing a payout ratio of 68%. Our disciplined approach to capital management enabled us to complete $168 million of our on-market share buyback program over the half year. And we'll recommence the buyback post the results and continue to target around $400 million by the end of FY '26. So on this slide, I've focused on growth, which I know is going to be a key topic of interest, growth right across the business. And at an aggregate level, our business has delivered premium growth of 2.7%. Below the headline number in consumer, strong premium growth was driven by both rate and unit count. Home written premium grew 7% with unit growth of 0.4%. Now pleasingly, in Home, we continue to grow our share of low and medium natural hazard risk and we shrink that which we classify as high or extreme. Our Motor portfolio grew by 5.8% with unit growth of 2%. Again, that's a very satisfying outcome in the context of a highly competitive market. In Commercial and Personal Injury, GWP growth was achieved across most portfolios, but is, of course, moderated from its prior levels. In CTP, portfolio growth was driven by the pricing increases that were implemented across New South Wales and most recently, in Queensland. Now our New Zealand business tells a slightly different story. Growth contracted over the half and was impacted by challenging market conditions, particularly in commercial due to the softer market environment and, of course, heightened competition. Jeremy will go through all the GWP moves, adds and changes in more detail in just a moment. Now given the significance of weather events over the half, I've included this slide, which provides a deeper insight into the profile of the first half natural hazard events. As I mentioned earlier, we dealt with 9 declared natural hazard events through the half and we managed more than 71,000 natural hazard claims at that net cost of $1.3 billion. On the bottom left-hand side of the slide, you can see the top loss causes. Hail was by far the most significant contributor, accounting for approximately 3/4 of event-related claims and driving claims costs of more than $700 million from hail. The majority of those events arose in the October and November event periods. Now the financial cost of these events seriously underestimates their true impact on the communities. I've been on the ground across many of the affected areas, and I've seen the great work our teams are doing to support our customers in the aftermath of the events. Our meteorological and our disaster management capabilities, which many of you have seen and are housed in our event management center in Brisbane have accelerated our response while our mobile disaster response hubs have been active across 27 affected communities, engaging with customers on the ground approximate to the events that they've just experienced. Our scale in motor insurance repair meant we could quickly stand up a pop-up motor assessment center, where more than 4,000 vehicles were assessed over the course of 2 weeks, significantly speeding up the repair process. Now it's in moments like this, long-term value is either created or eroded. And while the impact on profits will be felt in this half year, I'm very confident that the way we have mobilized to support our customers will be rewarded over the medium to longer term. So with that, I'll hand back to Jeremy -- hand over to Jeremy to go through the result in more detail. Jeremy Robson: All right. Thanks very much, Steve, and good morning, everyone. I'd like to start off by reinforcing a few key points on the group results before we get into the details. Now whilst as Steve said, our reported NPAT was impacted by elevated natural hazard losses and mark-to-market losses, our underlying insurance result was up 6%. I just want to emphasize a couple of key points about the result. We delivered good unit growth in both home and motor, demonstrating the organic strength of our brand portfolio. Whilst the Suncorp business has elements that are exposed to the global insurance pricing cycle, these are a smaller subset of our business. Most of our portfolios are driven by input costs and upward supply chain pressures and natural hazard costs remain a feature. We expect acceleration in GWP growth in the second half including the impact of higher pricing already implemented across a number of portfolios. The higher yields that gave rise to the first half mark-to-market losses were a positive going forward, and give us an exit yield of nearly 5%. Our expense ratio reduced a further 40 basis points this half, reflecting our ongoing control of costs at the same time as investing in the business. Our capital position is strong. and we have reaffirmed our target for the buyback of $400 million for FY '26. We have optionality on reinsurance as markets continue to soften, which we're going to explore further. And we remain confident that our natural hazard allowance is set at an appropriate level. I also note the strong prior year reserve releases of $65 million, 90 basis points. We saw releases ahead of expectations in commercial and workers but with some offset in consumer. Okay. So now let's get into the results in a bit more detail, and we'll start with underlying ITR. The underlying ITR remained in the top half of the 10% to 12% range at 11.7%. Dynamics included the earn-through of pricing, continued improvements in the expense ratio and lower reinsurance costs, partially offset by the increased resilience built into the natural hazard allowance. On a portfolio basis, consumer benefited from the earn-through of pricing with margin remediation in home. For New Zealand, while the portfolio increased 150 basis points, the group contribution was impacted by the relatively lower growth and the weaker New Zealand dollar. The commercial portfolio was impacted by pricing pressure in property and claims repair costs in Fleet with margin expansion in the CTP portfolios following our disciplined pricing actions. Looking forward, we expect the second half margin to continue to be in the top half of the target range with the earn through of CTP price increases and platforms remediation but we do expect some headwind from New Zealand with ongoing moderating prices. On to the next slide then, and I'm going to quickly touch on overall growth before moving to the divisions. Growth in the first half was particularly strong in the consumer portfolios with unit growth across home, motor and AA in New Zealand. GWP growth was good in CTP and Fleet but workers was impacted in the first half by lower prior year adjustments. And whilst more muted than the overall market, the commercial portfolios in both Australia and New Zealand were impacted by the current cycle. We expect to see acceleration in GWP growth in the second half, and you can see that on the chart, to deliver full year '26 growth around the bottom of the mid-single-digit guidance range. In motor, inflation in parts and labor is ongoing and pricing has been adjusted to reflect this. We expect commercial growth to pick up with further product launches in Vero Specialty Lines and rate remediation in platforms. Significant pricing has gone through the Queensland and New South Wales CTP portfolios, and this will continue into the second half, and workers will also benefit from ongoing additional rate. And then we see price decreases are expected to moderate in our New Zealand commercial portfolios. I do note, of course, that the outlook is subject to the competitive environment, particularly in the commercial portfolios. Now in the context of growth, I'd like to remind you of how we see insurance pricing cycles work at Suncorp. On the chart, I've divided our portfolio into 2 broad categories, those where pricing is primarily driven by input costs. and those that are more exposed or directly exposed to global capital flows. In the first group, our portfolios that require important capabilities. So that's things like established supply chains such as motor repair networks and brands and brand presence. This portfolios are subject to cycles that are driven by input costs, such as supply chain inflation, natural hazard events and reinsurance costs. In the second group is business with direct exposure to global capital flows. Now less than 10% of our book is in this group and includes some of the property and professional indemnity portfolios in Australia as well as much of the New Zealand commercial business. The 2 key points I'd like to leave you with here are: firstly, insurance input costs tend to differ to CPI, and they continue to be elevated with ongoing inflation in motor and home repair chains as well as natural hazard costs. And then secondly, while Suncorp does have exposure to the global capital insurance cycle and our commercial portfolios, we have a good degree of portfolio diversification across the group. I also note, we benefit from this softer cycle in our reinsurance program for the whole of our business. Okay. So I'm now going to move to divisional results and start with Consumer. In Motor, GWP increased 6% with good unit growth and moderating AWP albeit with further pricing put through late in the half in response to ongoing repair cost inflation. In Home, GWP grew by 7% as we continued to price for higher natural hazard allowance and underlying claims inflation. Unit growth was positive but reflected the continued low system growth. Now pleasingly, you can see on the chart on the bottom left, we saw an improved portfolio mix with a higher proportion of low-risk homes. Underlying ITR for Consumer improved from 9.4% to 9.9%, with margin remediation ongoing in Home and Motor at the top end of its range. Looking forward to the second half, we expect consumer margins to expand modestly as pricing earned through Motor but with some moderation in Home due to the phasing of the natural hazard resilience allowance into the second half. Next then to Commercial and Personal Injury. GWP performance was mixed, reflective of our diversified portfolio. Fleet growth was strong in the double digits, reflecting our market-leading capability in this segment. CTP growth was good, reflecting the results of our disciplined approach to pricing. In Queensland, GWP was up 9%, and we continue to engage constructively with the Queensland government on reform, including a premium equalization mechanism. The Vero Specialty Lines continues to grow with 4 new lines now launched and live in market. But then the property and Profin portfolios reflected the softer cycle, albeit to a lesser extent than overall market, and workers, as I said before, was lower with the impact of prior year adjustments on premiums. Underlying ITR was a little lower with improved margins on CTP being offset by competitive pressures on property and claims inflation in Fleet. Importantly, property and Profin margins remain at the top end of the range and provide important flexibility as we manage the portfolio through this current pricing cycle. Turning then to New Zealand. The business continues to perform strongly from a profit perspective with an underlying ITR comfortably above the top end of the range, and that's as claims inflation and reinsurance costs have moderated rapidly. Whilst the business is well diversified, GWP contracted due to varying pressures across the portfolio. In consumer, unit growth continued in our Direct AA business in both Home and Motor, whilst the intermediated channel was impacted by the exit of a brokered book of business. GWP growth for commercial continues to be impacted by the softer market conditions as well as the impact of a New Zealand -- a weaker New Zealand economy. But we are seeing some signs of a bottoming of the commercial pricing market as well as an improved outlook for the New Zealand economy. Going forward, we expect margins to remain attractive, albeit to normalize down towards the top end of the New Zealand target range as moderating prices earned through the book. Okay. Now to natural hazards, and it's evident, as Steve said, the half was significantly impacted by elevated natural hazard events. The experience of $1.319 billion was $453 million above the allowance. Now just to put this into context, first half '26 for us was the highest retention ever in the half, one of the most severe halves this century, and it was significantly impacted by hail events, and those are relatively random in terms of weather patterns and less clear connection to climate change dynamics. The first half result also included an increase in attritional natural hazard claims costs, and that was primarily driven by the higher rainfall and wetter weather conditions that were prevalent over the half. Now whilst this is a disappointing result, it should be taken in the context of a natural hazard allowance that is sufficient in 7 out of the last 11 years, including this half and 4 over the last 6 years, and that's based on the current reinsurance program and current exposures and costs. Over that 11-year period, we would have cumulatively been below the allowance by over $1 billion, again, including this first half result. So we remain confident that our natural hazard allowance with the additional resilience flagged at the full year '26 results is appropriate. And we note that short-term variability is expected, and it's the long-term performance that drives value. Looking forward, the second half allowance remained the best guide for expected natural hazard experience in the second half of this year. And I do note that the January performance, and that's with the bushfires in Victoria and the storms and floods we saw in Sydney earlier in the month was in line with the allowance. Next, the related topic of reinsurance. As previously flagged, we continue to review our program against our reinsurance framework and our key objectives are optimizing capital efficiency relative to our cost of equity and managing volatility, all with the overarching goal of maximizing long-term shareholder value creation. Our FY '26 program, best met these objectives when placed in July last year, but a softening market may provide the opportunity to reassess additional cover. In the meantime, our program provides robust protection, limiting exposure to the need for reinstatements as well as drop-down cover against large events in the second half now enlivened. That means our maximum retention for further events will be limited to $260 million for our next large event and further limited for any subsequent large events. And of course, we'll continue to review our options on reinsurance leading up to the July renewal, and we'll update the market accordingly. On then to investment performance. The average underlying yield on insurance funds was lower than the PCP, reflecting lower risk-free returns and lower inflation-linked bond carry I do note our tech reserve investment managers, again performed strongly with good alpha. The higher yield environment continues to support an attractive exit yield, which is currently around the 5% mark. Now we've made some changes to our investment allocations in line with our strategic asset allocation. We've reallocated from inflation-linked bonds to structured credit and insurance funds and rebalanced from cash into property in shareholders' funds. Going forward, we'll continue with this rebalancing, but being mindful of the market outlook for inflation in particular and as suitable opportunities arise. Turning then to expenses. Operating expenses increased by 4%, and that's whilst our total expense ratio reduced by a further 40 basis points. Expense growth was largely in our growth-related costs. That's driven by investment in the digital insurer policy admin system and investment in AI capability. We also increased our spend in marketing in response to elevated competitor activity and then run the business expenses increased modestly as productivity improvements continue to help offset wage and technology inflation. Going forward, we aim to keep our run costs as low as possible through operational efficiencies as we continue to invest in our key strategic priorities of platform modernization and operational transformation, including AI. And so finally for me then to capital. Our capital position remains strong with $700 million of CET1 above the midpoint of our target range. And I'll just make a couple of points on the usual capital waterfall. The final dividend of $0.17 per share represents a payout ratio of 68%. It's around the midpoint of our target range and is fully franked. The GI capital usage you see on the waterfall was largely from the higher natural hazard experience in the half, some business growth and then some of that investment portfolio rebalancing that I referenced. The other category you see largely relates to the weaker New Zealand dollar. And then the completion of the $168 million of on-market buybacks in the first half was largely in line with our expectations. Importantly, the buyback is expected to resume after the first half results. And again, reaffirm that we continue to target $400 million for FY '26. Going forward, capital access to our needs is expected to be returned to shareholders using on-market buybacks, as we've previously flagged. I do note that we have a preference for managing capital in the top half of the range as opposed to hard on the midpoint in order to optimize ongoing capital flexibility. And with that, I'll hand you back to Steve. Steve Johnston: Okay. Thank you, Jeremy. And moving to the next slide. And here, we provide a quick update on our progress in delivering our digital insurer platform modernization program of work. Now at the bottom of the slide, I remind you of the progress that we have made in replatforming both our contact center and our pricing environment in Australia and in New Zealand. As we touched on in our investor update last November, our first release of our new policy administration system went live in April last year for new home and motor portfolios in our AA Insurance New Zealand joint venture. The system has started to deliver more simplified underwriting and greater automation, and we remain confident the expected benefits that are baked into the AI business plan, but also into the whole digital insurer business plan will be realized over time. We're now well into the delivery of our second release in our AAMI brand, which is, of course, our flagship national consumer brand. Now we're targeting this release for AAMI Home and Motor new business around the middle of this year and migration of existing policies at renewal, which will follow soon thereafter. But before I move to the outlook, I wanted to update you on our approach to AI, which as you all know, is a topic of key global interest, particularly as it relates to insurance. Now we spent a lot of time on this at our Investor Day back in November, but as usual, with these technology-based disruptions, a lot has happened in the past 4 months. On this slide, I've recapped the Suncorp AI story so far. It describes how we are well placed to leverage AI to improve customer outcomes and importantly, to support long-term returns. We believe we are uniquely placed to be towards the front of the AI adoption curve. We have market-leading AI capability within our Suncorp team, and we have established partnerships with leading AI technology companies and BPO partners. With these, partners know us, know our processes and know how AI can be redeployed -- can be deployed alongside automation and process redesign. Our agentic AI program of work that we showcased at Investor Day is now in full-scale delivery. We are on track with initial deployments across our claims and customer services processes, though we see opportunities right across the value chain of insurance to enhance the customer experience and to transform end-to-end processes. Additionally, as I outlined on the previous slide, we continue to progress our broader technology road map, which is replatforming our business with SaaS-based cloud-enabled core systems, where importantly, AI is embedded into the core. We already have AI enabled across our enterprise-wide telephony platform and our earning pricing engine. And on this slide, I provided a snapshot of just some of the AI capabilities that are embedded into the core replatforming program of work, some of which is already in place and more to come. As a manufacturer of insurance, we see material opportunities for AI to improve product design in a hyper personalized insurance future and to transform claims processes from a customer perspective, all along reducing our loss and expense ratios and importantly, addressing insurance affordability. As a distributor, we see opportunities for AI to both strengthen the effectiveness and deepen the customer engagement across our market-leading brand portfolio. This will equally apply to consumer and commercial or as premium pools move between those portfolios over time. In summary, AI will significantly improve our capabilities and efficiency in both manufacturing and distribution but over time, it will allow us to carefully and selectively assess other opportunities across the insurance value chain. So to the outlook, and I'd like to summarize a few of the key points for the full year. GWP growth is expected to be around the bottom of the mid-single-digit range given the current cycle in commercial in Australia and New Zealand. The underlying ITR is expected to remain in the top half of the 10% to 12% range. The operating expense ratio is expected to be approximately 50 basis points below FY '25, but with an increasing proportion of expenses allocated to growing the business. We maintained our disciplined approach to the balance sheet, targeting a payout ratio around the midpoint of that 60% to 80% range of cash earnings. And finally, as we've covered off, we'll be restarting the buyback as soon as possible with the target of around $400 million over the course of the year, the full year. So in summary, our team continues to rally around that purpose. We are focused at this point in time on the needs of our customers, supporting them with best-in-class event response capability. Our brands remain well supported, and our multi-brand strategy allows us to reach a broader customer base. We are investing in modern technology, which alongside AI transformation will deliver leading customer experience and competitive pricing. We ended the second half with a strong capital position, active capital management, all of which will deliver improved shareholder returns. And as Jeremy has covered off, we have optionality on reinsurance as markets continue to soften. So with that, let's move to questions. Why don't we just work our way along the front panel here, Nigel? Nigel Pittaway: It's Nigel Pittaway here from Citi. First question, just I mean, can we just clarify exactly what we mean by bottom of mid-single-digit range? Does that mean 4% to 6% is the range and 4% is the bottom. Is that a correct interpretation? Steve Johnston: It's pretty sensible arithmetic to me, Nigel, yes, mid-single digits. We would suggest would be 4% to 6% and bottom is 4%. Nigel Pittaway: Okay. Fair enough. Moving on to Motor then. I was wondering whether you can sort of elaborate on what actually surprised you in terms of Motor inflation in the period. You've obviously made some comments there about pressures across repair and total claims, but I was wondering for a bit more color there. And also whilst we're still on Motor, I think you mentioned that you put through price increases towards the end of the half, which seems to have gone the opposite direction to one of your key competitors. So I was wondering whether you've seen any change in competitive dynamics in the first 6 weeks of this half? Steve Johnston: Quickly, just -- and Jeremy can top up on lease potentially as well around what we're seeing in inflation. At the highest level, the discipline that we apply is that we monitor inflation very carefully across the whole insurance portfolio. And we've often said that you can't look at insurance inflation through a proxy of CPI. Some of the work we've done over the past 6 months to try and understand the differential between CPI and insurance inflation would put insurance inflation running at between 3% and 4% higher than CPI across our portfolio. So in Motor, let's start with Motor. Obviously, some of the dynamics might have been masked by the significant reduction in inflation as the repair chains became more accessible post COVID. So a big, big disruption in Motor. Those repair chains have broadly settled out, but labor rates remain high. That's the first point to make. The second point to make is when you think about motor, often we tend to look right over the horizon to an automated vehicle world. But what's going on in motor at the moment, there is a very significant short-term dislocation with electric vehicles coming into the market, hybrid vehicles coming into the market, particularly with Chinese origin. We've seen a lot of that happen. And that will disrupt supply chains for a period of time. We saw that with the introduction of the first round of electric vehicles, where it took periods of time to get supply chains working and get repair capability where it needed to be, and we're seeing a little bit of that in the network at the moment. We're also seeing elevated costs continuing in labor, labor rates across repair. Not to the extent they were post COVID, but certainly still elevated relative to what they might have been pre COVID. And we're seeing some impact of parts supply, some parts inflation, a bias to replace parts now with the technology that's embedded in them versus repair them as might have happened again 5 or 6 years ago. They're all the factors that we monitor very carefully. And again, to the overarching methodology for the group, we believe we need to focus on covering inflation in our pricing, and that's what we tend to do, and that's what we saw towards the back end of last calendar year and into this year. So those pricing increases have gone in, and we're very confident that they will be sustained. On the Home side, just to jump forward to probably your next question, the underlying dynamics in Home are not dissimilar to what we've seen before. So on the hazard book, we've obviously had a pretty challenging half, with a high predominance of hail-related events and we will go back through our modeling to understand the allocations of hazard premium to hail and whether the loadings that we put across the whole portfolio continue to be relevant. And I expect that there will be some adjustments to pricing, particularly in some geographies off the back of that. And also in New Zealand, where we tend to see the New Zealand numbers as small numbers in relation to the group. But relative to the size of the New Zealand market, there are quite material events that have been going through in New Zealand now for the past couple of years, had some changes in pricing there. On the Home side, the underlying factors continue to be the case and they relate largely to large loss fire severity of large loss fire. We've talked about lithium batteries that continues to be a dynamic, stabilized a bit in the portfolio, not so much frequency but more severity. And similar trends in escape of liquids, where frequency is moderated or stabilized and severity continues to be reasonably well elevated. The biggest dynamic in Home, and we'll talk about this, I'm sure, for the next 5 years will be the supply chain and the pressures that are on trade availability, particularly in some geographies, but that will flow through nationally. And so when we think about inflation in the portfolio, we think about that dynamic that elevates relative to CPI, and I think we'll continue to have it elevated for some period of time. and our overarching sort of methodology within our group and discipline within the group. And you saw it when we stood out of the market previously and we're prepared to do that from time to time when we don't have the confidence around the trajectory of inflation. But when we do have confidence around it, we will price to it in a disciplined way. And I think that's been evident in our previous performance and continues to be the case. Do you want to? Jeremy Robson: Steve, I'll just add just back to Motor and Home for that matter. I'm not sure any of those inflation signals that we're seeing, particularly idiosyncratic to Suncorp. I'll just add another 2. One is total loss, which is sort of nearly 50% of the motor loss claims, motor claims. And that's -- what we've seen there is we've seen not an increase in frequency and theft, but an increase in the average cost of theft. So we're seeing more modern vehicles getting stolen. So that's been a bit of a trend. Victoria seems to have stabilized a bit, but still at a higher level. And then the other one is third-party claims, which were a reasonable component of claims as well, and we've seen elevation in third-party claims, particularly from credit hire, which I think others have called out as well. Nigel Pittaway: Okay. And no comment on units in first 6 weeks? Steve Johnston: Look, I think put the hierarchy of decision-making inside the organization, make that clear. I mean we will price to inflation. Our preferred target is to have units land somewhere between 1.5% and 2.5%. So that we're tracking with market. In Home, it's a little bit more nuanced because the home system rate is negative. So 0.4% in an absolute sense, doesn't sound spectacular, but relative to the system, it's good. And importantly, in our Home book, it's the distribution of units and customer growth relative to the risk characteristics. And so our target for the portfolios will be to cover inflation and grow units in motor at 1.5% to 2.5%, thereabouts. But if we're above that or below that in any period of time, and we're covering inflation. Our primary objective is to cover inflation on a book that's got 26%, 27% market share. I think that's the right way and disciplined way to look at the portfolio. Nigel Pittaway: All right. And then maybe just a question on the reinsurance. I mean just aside from obviously softer pricing, has the sort of experience that you've had in the first half of this year in any way changed your approach to when you come to buy your reinsurance cover? And is it really the case that aggregate covers are likely to be more available? Steve Johnston: Well, I think they've edged closer to availability every year. And by definition, that's usually the case. We would like an aggregate cover in our arsenal. Since we divested the bank, obviously, that's amplified volatility across the group. And so an aggregate cover would be something that we would have always aspired to. 12 months ago when we went through the process of pricing it and seeing whether it was a commercially available product, sensible product in the market, we couldn't make it work. Our anticipation is that the continued softening of those markets and the profitability of the reinsurers across the broader catastrophe covers that we're offering, will put us proximate to that availability. Now we've got to go through that process. We firmly believe that as a primary insurer, we don't have the opportunity to pick and choose what markets we play in, in this country. And so we have a fantastic reinsurance panel with great partners, and we'd like to see some support to provide that volatility protection, which we think is the last part of our story. Kieren Chidgey: Okay. Kieren Chidgey, UBS. I might just start on a similar area, the GWP growth on Slide 12 that you put up, you're flagging better growth in second half across each of the portfolios. But the commentary seems to suggest most of it's coming from price. A couple of questions. Interested in if you can give us sort of, I guess, a feel for the types of level of pricing you're talking across each of those segments. And then secondly, sort of your view around the competitive backdrop in each of those and volume implications if you do have to push above market on price? Steve Johnston: Yes. I mean it's fair to say we've emphasized price. And we've emphasized pricing that's already been put into the book. Now some of that, obviously, CTP, their filings that have occurred, they're scheduled, they will come in. We know what pricing we put through New South Wales CTP. But ahead of price is inflation. And so when you think about price, think about us at that overarching level, looking to price to inflation, but... Jeremy Robson: Yes, I think if we go through it, so motor, we see a little bit more rate going through motor in the second half. As we said, we've already started to put that through in the back half of the first half. In Home, maybe a little bit more rate, but Home is pretty reasonable from a margin perspective at the moment. So a lot of the price is around margin remediation relative to where inflation is. So we think a little bit more in motor. CTP, as Steve said, it's pretty much already in. So we've got another $25-ish on New South Wales CTP this month. We've got another $6, I think, in April or so in Queensland. So we can see that price is already in situ. Workers' pricing in Western Australia and Tasmania needs to lift, probably towards the top end of the single digits. So you've got price going through those portfolios. Then as a set of elements like in Vero Specialty Lines, we expect to see continued growth there and continuing growth from the first half rollout and then there's some sort of like non-repeats, if you like. So in New Zealand, we expect the rate deterioration to start to bottom, but also the rate deterioration started in first half -- in second half '25. And so the first half -- second half '25 as a base is already in that second half '26 growth number. We expect to see some rate growth in motor in New Zealand, particularly in the AA portfolio. So that will support that. And then in workers, I flagged that we had these prior year adjustments, that's burner adjustments on claims, wage adjustments. We haven't seen the same favorability this year that we saw last year. Of course, the corollary on that is you're doing better on claims, so it sort of net P&L neutral, but it does come through the GWP line. We wouldn't expect that to occur in the second half as well. So that's the range -- there's a range of pricing that's in relative to margin remediation. There's some new business that's coming through and then there's some one-offs, if you like, baseline adjustments that aren't recurring. Kieren Chidgey: And sort of specifically on commercial, I think it's sort of your Investor Day late last year, you continue to flag, desire to grow market share to a natural level in that part of the business. I think the growth this period is suggesting that strategy is on hold in the current cycle. Can you just give us a refresh for how you're thinking about commercial over this calendar year? Steve Johnston: Yes. Obviously, as Jeremy pointed out, there is some exposure to the commercial cycle, particularly at the top end, and we have to be conscious of that. Again, back to the overarching concept of discipline, we are going to maintain our discipline in those markets. We've got good margin sufficiency, particularly in property and Profin. And our strategy there will be to very -- to be very cautious around growth, maintaining ourselves within that margin range. And as the cycle starts to change, be in a position to capitalize on that as others are potentially remediating portfolios that they've driven below the bottom end of their targets. So if we can grow sensibly and conservatively, but with good margin sufficiency and the margins are in the top end of that range, then we feel we'll be extremely well placed when that cycle starts to change and others start to remediate to go harder. But now it's not the right time to do that in our view, particularly with the discipline that we need to display around the margin performance. Jeremy Robson: I'd also just add, Steve, that when you talk about commercial, it's a broad church. And certainly, the growth in top end commercial property and to some extent, Profin has been weak. But we've had very strong growth in Fleet, which is a big part of our commercial business. We've had growth in other parts of commercial as well. We had a relatively weak growth number on packages in the first half. We need to get more rates through that portfolio. It was the other one which I had mentioned before, we need break-through packages. And so I think the key point there is commercial is a broad church, and parts of it are doing well and sensible and good margin, makes sense for us to continue Vero Specialty Lines, et cetera. But it's the top end commercial property and propene where there's a bit more pressure. Steve Johnston: Kieren, just to add to your first question. I mean, the other way of looking at Home and Motor, but particularly Motor is geographically because there's a lot going on geographically in insurance. Kieren Chidgey: That's my next question. Steve Johnston: Right. Okay. I'll answer it. So obviously, there's a Queensland activity with RACQ and the work that's going on there. And again, Home and Motor are different portfolios for us in Queensland. We're more comfortable growing in Motor, obviously, particularly in Southeast Queensland, and we'll be targeting some of that potential disruption that occurs as those portfolios, RACQ and their acquirers start to merge. New South Wales, it's been a softer spot for us historically. We feel significantly more comfortable with the performance of GIO now than we might have a couple of years ago. And AAMI is obviously very strong in that market. And we think there's a big opportunity in New South Wales for us now. And if you look at the market share leader in New South Wales, some of their performance might be an opportunity there -- there is an opportunity there for us growing in New South Wales. And then South Australia and Western Australia, where the unit volume count performance in both those markets is better than the average of the 2% that we talked about. And again, to varying degrees, there will be opportunities for us to capitalize on some of the dislocation in those markets. So if you look at it macro nationally opportunity, you look at it geographically opportunity. And then in New Zealand, with AI, we're getting 3% unit count growth there. Not all of it is attributed to the new policy administration system. But we have an embedded benefit that we believe in both -- at the written premium level, but particularly in volume through the implementation of that new portfolio. Kieren Chidgey: Steve, just a quick follow-up, and then I'll hand over. But the Victoria Motor picture is kind of skipped over Victoria. How have you seen experience there? Steve Johnston: Look, I just don't see the same material dislocation opportunity in Victoria, as I talked about in those other states. We are pricing to the higher inflation in Victoria, which is largely so much frequency, accident frequency or otherwise theft. But in the aggregate of the whole portfolio, Victoria would be a market where we'd be looking to grow with system in both Home and Motor, maybe a bit more in Home than Motor but grow at system but price to the inflationary environment. And there is a delta on theft to the rest of the country, both in terms of frequency, but particularly severity. Jeremy Robson: Steve, just to add in terms of that sort of geographic per se, but brand reach, one we don't talk about often, sort of refers as Bingle. Bingle as growing 15% GWP on the same time last year, but half of that is rates and half is units. That is an example for us of a brand that's got further reach and further stretch as we continue to roll that out. Andrew? Andrew Buncombe: Andrew Buncombe from Macquarie Securities. Just 2 from me, please. The first one is on the catastrophe experience in the month of January and rolling forward the last couple of weeks as well. You've said in the slides that, that experience was in line with the allowance. This time around, you've put slightly more of a skew on the second half for the allowance. My question is, is the January experience in line with a straight line average or some sort of shape? Steve Johnston: Very conservatively, I think you said in line with the allowance, I would call it within the allowance. So we might have been a little bit better than the allowance. What are we, touching wood, with sort of 18 days into February, and we had some weather in Queensland last weekend, which is very material and some weather ongoing in New Zealand, which will be a big reasonable event in the New Zealand, but not well within our means at the allowance level. So I think it's there or thereabouts. So nothing happened in the first 6 weeks of this calendar year that sort of says that we're anything sort of a skewed to the allowances that we would track. Jeremy Robson: Yes, we said that the second half allowance is probably the best guide for the second half experience, which holds true. But the second half allowance theoretically, we should improve a little bit because of now the enlivenment of the drop-down covers in the second half. So there's probably a conservatism in that statement a little bit. And the January experience was actually slightly better than that outcome. Andrew Buncombe: And then the other question from me was in relation to reserve releases. So 90 basis point impact from a release in the first half, correct me if I'm wrong, but my understanding is the full year guide is still 30 basis points. How should we be thinking about the second half? Should we expect a strengthening? Jeremy Robson: I think the expectation outlook is more around the underlying business performance. So we achieved, I think it was probably 40 basis points, 30, 40 basis points on CTP in the first half. And so we continue to expect to deliver that for the full year. When it comes to the other portfolios, they're sort of plus margin, obviously, in the first half with some bigger plus minuses around them. I don't think we expect all of that to reverse necessarily in the second half, but really just calling out what we expect to see on the CDP because that's where we expect to get the reserve releases. The other portfolios we will see strengthening and releases, but we would expect those to net to a neutral-ish number. Andrei? Andrei Stadnik: Andrei Stadnik from Morgan Stanley. Can I ask around the OpEx ratio? So OpEx ratio fell nicely in this half. Do you think the OpEx ratio can continue to fall into FY '27? And can it continue to fall into FY '27 even if premium growth were to slow? Jeremy Robson: Yes. I think -- I mean, we have to have opportunity from our operational transformation agenda with the AI in it. Obviously, a key determinant to the OpEx ratio is where premiums go but I mean we still see a reasonable premium outlook. So the chart I put up around that insurance pricing cycle. What we're saying is for that 90% of our portfolio, there's still a fair bit of premium growth to run through the portfolio. That obviously helps an expense ratio. So that's one part of the equation. And the other one then is the absolute expense number. I think the key thing is for us is thinking about the mix of that expense though. And so one of the things that we are fixated on is trying to keep that run the cost business as flat as possible. And it's not always possible to keep it absolutely flat, but as flat as possible. And then to reinvest back into the grow the business expenditure. That's expenditure on things like the digital insurer policy admin platform modernization and operational transformation, and we see value in that. So to the extent we can do that and achieve our overall margin outcomes, then that's a good outcome. Andrei Stadnik: And for my second question, can I -- just coming back to the catastrophe budget. Based on the internal modeling we received from the insurers, your catastrophe budget is sufficient 7 out of 10 years. QBE based on their modeling is 8 out of 10 and IAG is over 9 out of 10, right? So at the moment, the catastrophe budget is at the bottom end block of Australian listed peers. How are you thinking about catastrophe budget increase in the next year? And if there is an aggregate reinsurance cover, would that help limit the increase? Jeremy Robson: Yes. Look, I think at some point, for Australian consumers, it becomes difficult to price, for example, 100% adequacy on the catastrophe losses because it just doesn't make sense from a consumer perspective, and it doesn't make sense in terms of what insurance is there for. Now we have -- and we have all extensively lifted over the last few years from what was a 50% type number modeled. Actually, in practice, it was probably much less than 50%. So we've all lifted from there. I think there will undoubtedly be variations in modeling. So our modeling won't be the same as other people's modeling. We all use different models. And so one thing to have to think about is what might be the variability in some of that modeling. I think we feel pretty comfortable with our natural hazard allowance where it is at the moment. But having said that, as we've always said, if there was opportunity to try and strengthen it a bit further or within the realms of delivering that margin outcome, then that could be a possibility for us. But we don't feel uncomfortable with the way it's set at the moment. And yes, an aggregate cover. I don't think an aggregate cover would change the natural hazard allowance per se. It would sit on top of the natural hazard allowance wherever we set that. Freya Kong: Okay. Freya Kong from Bank of America. Just a question on margin progression in the walk there. Correct me if I'm wrong, but last year, you said you were tracking above the top end of the 10% to 12% underlying ITR ratio, some of that which you'd reinvested into a higher hazard allowance? I'm just trying to understand the moving parts here. Have you reinvested some of the additional excess margin into growth? Jeremy Robson: Yes. If we go through the portfolios on the margin walk, we have seen a little bit of margin expansion in consumer, and that has predominantly come through Home where we have -- that portfolio has been in remediation. It was below where the target range was. We're now actually up towards, if not above the top end of the range in Home. And then in Motor, we were above the top end of the range. We're now back towards the top end of the range in Motor. And then in Commercial, we are sort of around the -- around, if not a little bit above the range across the aggregate portfolio there. And obviously, in New Zealand, we're above the target range. And so when we think about are we reinvesting in growth, et cetera, what we're trying to do, as Steve said, is manage the business to that return, to that margin and then make sure we're optimizing our growth relative to other brand assets, et cetera, relative to that margin outcome. Steve Johnston: I mean we mentioned many times, I mean, you can take a complex business and simplify it quite materially through our targeted returns on incremental capital back to our book capital return, back to an ITR for the group or the Suncorp business in its entirety and then back down into the portfolios. That's a target margin that we would aspire to. We cover the cost of inflation, and we'd like to get some level of market levels growth in some portfolios, particularly Motor where we've got scale. Home, the story is more about improving the quality of the home book and going and in aggregate, delivering at system growth. Commercial, we think there's an opportunity at the other end of the cycle to grow ahead of system and get back to that natural market share. And CTP, because we've got an overweight position in Queensland, we're prepared to seed some share. So you can take a very complex business and reduce it down to something that's a little bit more simple in terms of how we sort of intellectually seek to run the business. Freya Kong: Okay. And just some capital questions. There was some drag in excess capital in the period from higher insurance liabilities, I'm presuming because of the cat claims. Will these get unwound as the claims get settled in the coming months? Jeremy Robson: Some of them do get -- I mean, theoretically, eventually, it gets unwound, but some of these events have a fair tail on them. So I would expect some of that to get unwound. I think the largest driver was that natural hazard impact on claims. You also see some impact on things like mix. So New Zealand growth was lower than the rest of the group. And so the excess tech is higher in New Zealand relative to the group because it's relatively high profitability. So you get a mix impact from that. And then there's always a bit of seasonality in that capital movement in the first half as well. So those are a couple of other moves in there as well as the rebalancing of investments. Freya Kong: Great. And just last one on capital management. Given the strength of the capital position, can I ask why the buyback was paused so early into the end of last year? Steve Johnston: Yes. I mean it's less about the capital position per se, but more about the confluence of events that we were dealing with at that particular time. So we were right up against sort of getting towards the end of the half year period. So obviously, that Christmas period is a period where you probably don't do much trading anyway. So the timing sort of was reasonably proximate and I think just with the nature of the events unfolding through October and November, we thought it best to pause. But we'll restart as soon as possible after this result. Richard Amland: Richard Amland from CLSA. Just would like to ask a little bit about risks to your pricing aspirations. There were some political sensitivities last year around sort of prices. You guys are acknowledging the input cost discussion that you've had, trying to push ahead of CPI by a magnitude, might be somewhat challenging. Can you just give a flavor of any regulatory or political engagement that you've had that gives you comfort that you're not going to get hard pushback from any unforeseen corners? Steve Johnston: Yes. I think it's never good to deliver a profit outcome that's significantly down on the PCP and probably driving returns on capital at that actual level and an aggregate level below our targeted returns. But I think what we've done as an industry and particularly at Suncorp over many years, is educate policymakers and regulators that we have got a cyclical business. So when we do generate returns that are above our cost of capital, through benign weather or favorable investment markets that we need that to deal with events like we've seen in the last 6 months or so. Yes, there's an ongoing dialogue. Affordability is a huge challenge for Australia more broadly and for New Zealand, but particularly Australia and the incoming of the new Minister for the Assistant Treasurer, Dr. Mulino is very focused on that agenda, particularly for the sort of 2% of the population or 3% or 4% or whatever it is that they can't obtain affordable insurance. And so as an industry, I think we're working constructively with the government, constructively with Treasury about how we might find an industry-wide solution for that problem. But in the industry-wide solution, has to, by definition, be industry-wide. It can't be 1 or 2 players that solve this problem. And it also needs to come with support from the government in terms of resilience and mitigation. So there's an ongoing dialogue. There's no answers to that just yet, but it is an active part of the minister's agenda and at the individual company level, at the ICA level, we're working constructively with the government around that. Beyond that, I think the factors that drive insurance inflation, and I've talked about, don't use CPI as a proxy are reasonably well understood now, I think. But we are very conscious as a business that while we might talk about inflation, while we might talk about pricing to inflation, there's a consumer with the cost of living challenge sitting off the back of that. And over time, with the things we're doing with AI and digital insurer. We need to get better at designing new policies, new premium, new product for that subset of consumers who are really challenged to continue with their insurance. Unknown Analyst: A couple of questions, if I may. In your analyst pack, you talked about the reallocation of Strata premiums from Home into Commercial. Does that reflect the pressure on them from the commercial property cycle or you've got a sign of further strata growth insurance plans? Steve Johnston: Michael, do you want to? Michael J. Miller: Thank you. It's a clear strategic move. So with VSL, Vero Specialty Lines, one of the products we do want to enter into is strata. And so we have a small Strata book in our personal lines business. It's about $120 million a year. Thought process is bring that across and then run that direct book right next to the intermediated book, and grow it as one from a pricing point of view, distribution, knowledge. It makes a lot of sense. So it's probably just the foundations of building out that Strata opportunity. Unknown Analyst: Great. Then in terms of your internal reinsurance, there was a big drop in the premiums you are booking in terms of internal reinsurance, presumably because of the fall in reinsurance costs. Should we expect further falls in that looking forward, like possibly a similar level in the second half and then if the reinsurance -- the cycle continues to fall, maybe a further reduction next year? Jeremy Robson: The key driver was retention. So that's internal reinsurance between the Australian business and New Zealand. And the key driver was an increase in the retention in the New Zealand business. So the Australian business just provided less reinsurance to the Australian business, which was then funded through Tier -- effectively through Tier 2 diversification. So it didn't have an impact on capital. So I think the level we're at now is probably a more appropriate level. That's the baseline. But yes, I mean as markets soften a bit, might move down a little bit, but the key one was just the retention levels. Unknown Analyst: Great. And then with the improvement in your underlying margins, principally the improvement due to claims costs, how much of that was due to reinsurance or alternatively, if you don't want to answer that, how much was due to the earn-through of rate? Jeremy Robson: Yes, most of it would have been -- a chunk of it would have been earned though rate. I think if you look at the accounts, you can probably see where reinsurance costs are year-on-year, and you can see a reasonable reduction in reinsurance rates. But we don't split it out between those 2 categories. But you can see reasonably chunky reduction in reinsurance year-on-year, particularly relative to some others. And you can see in the pack where our price positions are on AWP. So you probably have a stab on the back of the envelope on it. Unknown Analyst: Yes. Okay. And finally, how much of the expected drop in the expense administration ratio is due to roll-off in bank transitional costs? Jeremy Robson: Nothing. So with the bank transitional costs, they're all provided for as part of the bank sale process, and they were baked within the profit that we recorded on the sale of the bank last year. So that's all the P&L of the insurance business immunized from that bank sale process. Okay. I think we've got a couple of calls on the phone. Operator: [Operator Instructions] Your first phone question is from Julian Braganza with Goldman Sachs. Julian Braganza: Just a first question on underlying margin. Just to be super clear, in terms of the guidance where we now have expense ratio like 50 basis points as well as yields holding up better than expected into the second half compared to initial expectations. So typically, what is offsetting those 2 impact in the margin and commercial rate? Steve Johnston: Well, I'll get Jeremy to go through it in more sophistication than this, but the answer is pretty much New Zealand is the answer. So pretty much all New Zealand, Julian. Obviously, we had a period of time where the underlying margin in New Zealand is significantly elevated above its usual guide rails. We expect that, that will come back within the guide rails maybe towards the top end of the guide rails through premium adjustments that have already been made and starting to -- it's a reverse of what we've talked about in Home and Motor to some extent. Jeremy Robson: There was a little bit related to the natural hazard allowance phasing. So we put -- loaded more the resilience that $100 million into the second half than the first half. So there's a little bit there. But the key one is that margin fall in New Zealand. Julian Braganza: So just to be clear, so you have the New Zealand underlying margins coming back to 16% in the second half, just to be super clear? Jeremy Robson: Well, we've never really explicitly called out what it is, but it's something ahead of 15%. Julian Braganza: Got it. Just on second question, you mentioned growing in low risk properties as an opportunity to growth over medium term, so trying to understand how you're thinking about that from the perspective of a drag on your GWP going forward? And also secondly, what does it mean for how competitive you're being versus peers here on pricing? And then what is the strategy? And what makes you think you'll be successful in growing this part of the market? Steve Johnston: Sorry, you might have to repeat, Julian. Which portfolio are you talking about? Julian Braganza: So just in our Home portfolio, you mentioned growing in low-risk properties. There's an opportunity for growth. Just want to understand what gives you confidence that you'll be able to achieve that growth, just in terms of pricing and how competitive you will be versus peers? And will that be a drag on your GWP going forward as well? Steve Johnston: Low-risk portfolio, in Home. Yes. Look, I think -- I mean the first point I'd make is that this doesn't happen overnight. And you can see, I think, from a period of time where we started to reset ourselves around the apportionment of growth between low, medium and high from 2021 to 2026. First half '26, it's about 4% in aggregate. So this doesn't happen immediately. The 3 -- the composition of it all and go to the margin drag story is -- the components of it are to better risk select, better focus on that low and medium natural hazard area, but most importantly, to price at the technical level, close to the technical level for high and extreme. And so when we talk about that in its totality, yes, we're improving the quality of the book, but we're also focused on making sure that the cross subsidy that potentially set in those 3 categories historically has being unwound, and we're getting closer at an aggregate home portfolio level to pricing actual and technical at the same rate. And so that has an impact on the distribution of risk between the 3 areas, but also improves the margin. And when we talk about remediation of the home book, remediation is probably not the right word, but you can see 2 things. One is we're now growing at system or ahead of system. We're growing in a better quality way with a focus on low and medium. But importantly, we've also got the margin back to the top end of the range or slightly above the top end of the range. And so that's the way we think about it. Again, it's more about making sure that the cross subsidy that might have sat there previously is adjusted to reflect the fact that we need to price closer to technical because as you know, if we are providing any cross subsidy there of any significant magnitude than others in the market who don't focus on those higher end risk areas will target only the higher risk parts of the portfolio -- the lower risk parts of the portfolio. Julian Braganza: Okay. Got it. Now that's clear. And just the last question in terms of your AI transformation agenda. Can you just comment on some of the risks you see more broadly just around pricing competition and disruption to some of the risk that we have had in that area. You've talked a lot about [indiscernible]. Steve Johnston: Yes. So I think if I heard correctly, it's AI and the risks of AI, particularly around various other domains. Yes. Look, I think one of the key elements that everyone is looking at, at the moment is the risk profile of AI relative to where you sit in the adoption curve. Now you can quite easily sit sort of in the fast follower or follow a territory and sort of watch others make mistakes and potentially benefit from that, or you can be more at the leading end. So our risk settings are very much approximate to the position and the leading position that we seek to take in AI. So we're very conscious of making sure that when we implement AI initiatives right across the value chain, but particularly in the customer area that we're focused on and making sure that we don't disrupt the customer experience. And you saw a bit of that when digital started to flow through insurance and particularly banking and other industries. Those that adopted it early, obviously, made some mistakes in the early adoption of it. We're going to adjust our risk settings to make sure we can reduce or have a risk appetite to reduce those errors, but also to make sure that we're not falling behind the market. So that's the sort of aggregate risk view. Clearly, we also need to make sure that as we go through this evolution like all major corporate players that we're investing in our people to reskill and retrain them and set them up for that AI world. So yes, the risk profile. We're doing a lot of work on risk profile at the moment to make sure that when we implement the programs of work we do, that we're not disrupting the customer experience, that we're continuing to deliver what customers expect us to deliver, but we can do it in a more efficient way. Jeremy Robson: And Steve, just to add that net-net, we see AI as an opportunity. I mean, yes, there a risk around it, but we see it as a net opportunity, an opportunity in terms of within the business and how we run the business, how we can run it more efficiently, more effectively, better client experiences, et cetera. Insurance is readymade for that sort of opportunity. And then from an outside-in perspective, there's been market chatter around how AI may impact on distribution. Again, we feel well positioned around that from a consumer perspective, from a commercial perspective, with our brand portfolio and our expertise in how we, over a long period of time have dealt with that distribution channel. Steve Johnston: And I mean, obviously, there's distribution potential benefits for us if we're early adopters, and we focus on it. But at the end of the day, you have to manufacture a product and manufacturing a product in insurance is about pricing and risk selection, and it's about claims management. And that's where we see material benefits as a manufacturer of insurance products to make our products better, more personalized to make our claims processes better and to continue to improve the quality of our risk selection and underwriting. If you've got all of those things working, you're going to drive material benefits for customers and for shareholders. If you just sit there, think it's a distribution opportunity and you don't focus on risk selection, pricing and claims management, then you're going to end up with a book that's skewed to areas that you might not want it to be skewed to. Operator: The next question on the phone is from Siddharth Parameswaran with JPMorgan. Siddharth Parameswaran: A few questions, if I can. Firstly, just Queensland CTP. Steve, it has been a drag on your margins. I think 6 months or 12 months ago, quite a sharp drag from where we were with commercial margins previously. With the price increases that you're pushing through, does that get CTP back to target and where are you at with your discussions with the regulators on change particularly in Queensland CTP? Steve Johnston: Yes. Thanks, Sid. I think it's well known that sort of 12 to 18 months ago, we had a very challenging CTP portfolio, very much reflective of, what we believe it wasn't a sustainable scheme going into the future. You saw the exit of RACQ and bringing it back to 3 insurers with us holding around 60% market share. The discussions with the Queensland government and the regulator have been very constructive. We've had, I think, 4 consecutive premium increases in that portfolio of different magnitudes. From the start of the journey, we would have said those 4 in the quantum that's included in them would probably be sufficient, but there has been some deterioration in the scheme. So we still believe there's more pricing that needs to go through the scheme, but it is on a trajectory to return to the target margin that we would have in the portfolio. In terms of the broader scheme reform, there's a couple of components there. There's proposals around the premium equalization mechanism. We think that's supported by the government, supported by the regulator, but now in a process of having it legislated and system changes and all those sort of things. So that doesn't happen overnight, but we think that there's support for it. And the wheels of government are stepping in that direction. So we think that's occurring. And there is new scheme -- a new scheme regulator, not yet appointed but the old scheme regulator has moved on, and there's a new scheme regulator coming in, and we think that, that's -- we're having some constructive discussions around that at the moment. Sid? Siddharth Parameswaran: Thank you for that color. Just the second question, just on the difference between underlying and reported margin. I just wanted to check on 2 components. So the ongoing reserve release assumption of 0.3% of NEP that you expect. Is there any thought about changing that going forward? I know there was a favorable release this period, but you had previously indicated that, that might start to drift towards 0. So just on that -- just that question. And the second question was just around the risk margin strain. I think there's a risk margin strain of $35 million in the half. And I think that should be an ongoing component of the difference between reported and underlying. I just want to confirm that, that would be a consistent difference between the 2 per half. Jeremy Robson: Yes. So the reserve releases, what we've said with those is that we expected 30 basis points this year. And as I said before, that's around the CTP portfolios. The others will move a little bit, but we sort of expect those to be net-net. What we've said is that, that was 150 basis points a few years ago. It's now 30 basis points. I expect over time, it may come down to a lower number. But what we have committed to reasonably clearly and demonstrated delivery on, I think, is that -- to the extent that comes down, we will manage our underlying ITR still within the guidance ranges that we're giving. So I think it's come down to a small number. It may come down to a smaller number. It's becoming less significant, and we will manage that within the within the underlying ITR. And then the risk margin question, the elevation in risk margin adjustment that we saw this half was really off the back of the natural hazards. And so yes, to some extent, that's really part of that natural hazards adjustment because obviously, with the experience we got, we get the claims on it, we put more risk margin on. So I don't know that we would ordinarily expect a risk margin of that same quantum because it was connected to that event pattern we had in the first half. Siddharth Parameswaran: But there should be something in there, I presume, some... Jeremy Robson: There will be something. Yes, there will always be something there, yes. Siddharth Parameswaran: Okay. Great. Okay. Just a final question for me just on the -- you do have some drop-down covers, you would have done some modeling on the expectation of reinsurance recoveries and maybe things which may help your allowance in the second half versus what you're allowed for. Just wondering if you could help us understand if you are expecting anything at all given the quantum of the claims that you had in the first half, what should we expect as a possible set of recoveries in the second half? Jeremy Robson: Yes. So I mean, it is fair that on most of those drop-downs that the deductible erodables, erosions have pretty much been taken care of in the first half. So they are now, as I said, enlivened, give or take a couple of million dollars. They're now pretty much enlivened. And as I referenced, technically, we have done the modeling it, technically, when you model that through the allowance you get a slightly lower allowance in the second half than the budget, the original budget for the second half, but it's not material, but it is -- you're correct, it's a little bit lower than the budget allowance because there is expectation now of recovery against those programs. Operator: There are no further questions on the phones at this time. I'll now hand the conference back over. Steve Johnston: Okay. Anything more in the room here in Sydney? Nothing more. One more question over here. Freya Kong: Just a quick question on the Vero Specialty Line launches. How much of these new products compete with global Capital? And are the launches dependent on what happens with the cycle more broadly? Steve Johnston: Michael? Michael J. Miller: I think there's 2 parts to answer that. So firstly, strategically, VSL is around getting product breadth. We're a big believer in specialization. And so when you do these smaller products, you do them very, very well. You get the right underwriters in there. You can make some really good margin to support your brokers and your clients. And they're also not by themselves. I think it just -- when you have the breadth, you can use the specialty products and the more general products together and in multiline opportunities. So that's the reason why we do them. We look for premium pools where there is opportunity, where there is a size and where we can get the talent to do it. And the second part of that question is how we tactically actually funded. Look, we do use global reinsurers. We look at our own capital, we look at overseas as well. And if we can find the capital that is cost effective to us and they want to back us, then we will use quota shares and the like. So that's quite fluid though. We don't have to. But quite frankly, if it makes sense economically to use that capital, we will. So that's sort of the thought process there. Jeremy Robson: And just to add, Michael, I think some of the specialization that sits in there, through the underwriting, through the broker relationships, through the industry relationships, some of that helps immunize some of that global capital pressure. Steve Johnston: Okay, nothing else in the room. If not, thank you, everyone, for coming down or being on the phones, and we'll look forward to catching up over the next couple of weeks.
Operator: Hello, everyone, and welcome to SSR Mining's Fourth Quarter and Full Year 2025 Financial Results Conference Call. This call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Alex Hunchak from SSR Mining. Please go ahead. Alex Hunchak: Thank you, operator, and hello, everyone. Thank you for joining today's conference call to discuss SSR Mining's Fourth Quarter and Full Year 2025 financial results. Our consolidated financial statements have been presented in accordance with U.S. GAAP. These financial statements have been filed on EDGAR and SEDAR, and they are also available on our website. There is an online webcast accompanying this call, and you will find the information to access the webcast in this afternoon's news release and on our corporate website. Please note that all figures discussed during the call are in U.S. dollars unless otherwise indicated. Today's discussion will include forward-looking statements. So please read the disclosures in the relevant documents. Additionally, we refer to non-GAAP financial measures during our discussion and in the accompanying slides. Please see our press release for information about the comparable GAAP measures. Rod Antal, Executive Chairman; will be joined by Michael Sparks, Chief Financial Officer; and Bill MacNevin, EVP Operations and Sustainability, on today's call. I will now hand the line over to Rod. Rodney Antal: Great. Thank you, Alex, and good afternoon to you all. We closed 2025 on a high note, delivering full year production above the midpoint of our guidance range and generated more than $100 million in free cash flow in the fourth quarter. As a result, we finished the year with $535 million in cash and more than $1 billion in liquidity. Based on the operating guidance provided with today's financial results, we expect this material free cash flow generation to continue in 2026. Accordingly, and coupled with our view that our share price does not reflect the full value of our portfolio, we are pleased to announce that our Board has approved a share buyback of up to $300 million. If you remember, share buybacks have been a key component of our capital allocation framework in the past, and we are pleased to reestablish a program again. Before moving on to the next slide, I want to take a moment to highlight a number of key catalysts and milestones that we delivered since our third quarter results and also speak to some of the opportunities ahead. First, I want to note particularly strong fourth quarter results from our Cripple Creek and Victor mine and Puna operations which saw both assets exceed their full year guidance ranges and deliver exceptional free cash flow. At Puna in particular, the mine theaters production guidance for the third consecutive year and set records for tonnes processed in both the fourth quarter and over the full year, which was a terrific result. Second, we delivered two technical report summaries, both demonstrating long-term free cash flow generative assets that will bolster our portfolio. The Cripple Creek and Victor TRS, released in November, highlighted an initial 12-year life-of-mine plan with an $824 million NPV at consensus metal prices. With nearly 7 million ounces of resources in addition to the reserves, there is significant optionality here for meaningful mine life extension into the future. In January, we released a TRS for the Hod Maden development project, which highlighted a $1.7 billion NPV and a 39% internal rate of return at consensus metal prices. I will talk more on this in a moment. And thirdly, we continue to advance a compelling brownfield growth projects across the portfolio, which I'm also going to speak to in a moment. As you can see, 2025 was a very successful year, and we're well positioned to continue building on this momentum in 2026. So let's move on to Slide 4. We have a number of highly prospective growth targets across the business. These prospects represent potentially low-cost, high-return growth opportunities that can deliver significant value to our shareholders. In 2026, we have committed a substantial amount of capital investment across the business, and a large portion of that CapEx will be allocated to advancing these growth opportunities through the development pipeline. We look forward to sharing additional details on the projects, including both Marigold and Puna over the coming years. Now let's turn to Slide 5 to focus on Hod Maden. In January, we published a technical report summary for the Hod Maden development project. The TRS clearly reaffirmed Hod Maden as one of the better undeveloped copper, gold project in the sector, and we are thrilled to have a development asset of this quality in our portfolio. As a reminder, Hod Maden is an underground copper, gold project in the northeastern of Türkiye. The mine will be accessed through a single surface portal, and ore will be extracted through a combination of long-haul stoping and cut-and-fill mining methods. The process plant is designed with a nameplate capacity of approximately 2,200 tonnes per day with life of mine average head grade of 7.6 grams of gold and 1.3% of copper. The plant will produce a single high-quality concentrate with life of mine gold and copper recoveries averaging 87% and 97%, respectively. Moving on to the next slide for a few of the TRS highlights. Hod Maden is a unique project with significant scale, best-in-class grades and first quartile all-in sustaining costs that position the asset to deliver compelling free cash flow in the future. On a 100% basis, production is expected to average 240,000 gold equivalent ounces over the first 3 years and 220,000 gold equivalent ounces over the first 5 years. At consensus metal prices, Hod Maden is expected to generate average annual free cash flow of $328 million. While at $4,900 gold price, that free cash flow would jump to approximately $500 million annually. Hod Maden's execution has been meaningfully derisked as a result of the significant engineering and the work completed since our initial investment in the project as well as the benefit of early site works that are taking place. Inclusive of earn-in and milestone payments, SSR's remaining investment is expected to total $470 million, which we expect to fund from our liquidity position and free cash flow outlook. We anticipate a 2.5- to 3-year construction period once the project decision is made. We are very excited about Hod Maden and look forward to providing further updates in due course. Turn over to Slide 7, and I'll hand the call over to Michael. Michael Sparks: Thank you, Rod, and good afternoon, everyone. In 2026, we expect to produce between 450,000 and 535,000 gold equivalent ounces from our Marigold, CC&V, Seabee and Puna operations. All-in sustaining costs are expected to range between $2,360 and $2,440 per ounce or $2,180 to $2,260 per ounce, excluding the impact of care and maintenance costs at Çöpler. While Çöpler isn't in operation, we continue to guide to cash care and maintenance costs of $20 million to $25 million incurred per quarter. Total gross spend is expected to total $150 million in 2026, driven mainly by capital investments in leach pad expansions at both Marigold and CC&V as well as continued exploration and resource development spend globally. Capital expenditures at Hod Maden are expected to total up to $15 million per month as engineering access road development and site establishment activities continue ahead of a formal construction decision. Upon a positive construction decision by the joint venture, we will provide an update to our growth CapEx outlook at the project. Now let's move to our Q4 results, starting on Slide 8. In the fourth quarter, we produced 120,000 gold equivalent ounces at AISC of $22.50 per ounce or $202 per ounce, excluding costs incurred at Çöpler in the quarter. Fourth quarter sales were 117,000 gold equivalent ounces at an average realized gold price of $4,142 per ounce. Net income attributable to SSR Mining shareholders in Q4 was $181 million or $0.84 per diluted share, while adjusted net income was $190 million or $0.88 per diluted share. For the full year, production of 447,000 gold equivalent ounces exceeded the midpoint of our full-year guidance. As we discussed with our third quarter results, higher-than-forecasted royalty costs tied to higher gold prices and share-based compensation brought our full-year AISC to the top end of our consolidated guidance range. Full-year AISC, excluding costs incurred Çöpler, was $1,923 per ounce comfortably within our guidance. Now let's move to Slide 9. As highlighted in the table on this slide, free cash flow totaled $106 million in the quarter, and $252 million for the full year. Excluding the impact of changes in working capital, full year free cash flow was more than $400 million in 2025. These are excellent results, considering our investment in growth projects across the portfolio. We ended the quarter in a strong financial position with $535 million in cash and total liquidity of over $1 billion. This cash and liquidity position combined with our free cash flow outlook in 2026, supports our continued investment in growth initiatives across the portfolio while also giving us the confidence to initiate a share buyback of up to $300 million. Share buybacks have historically been a key component of our capital allocation and shareholder return approach. Between 2021 and 2024, we repurchased 20 million shares at an average price of $15.76 per share. With convertible notes issued in 2019 with a conversion price of $17.61, these share buybacks provided significant value to our shareholders. Our historical share buybacks, combined with the -- as announcement of a new share buyback program, reiterate our commitment to ensuring our shareholders realized growth on the key per share metrics going forward. Now over to Bill for an update on the Q4 results and 2026 guidance for the operations, starting on Slide 10. William MacNevin: Thanks, Michael. I'll first start with EHS&S, 2025 as a successful year of strengthening our programs and application in all areas of EHS&S. Key areas advanced were in critical controls and risk management for safety, the integration of closure work into life-of-mine plans to bring forward the work as well as to reduce costs and the upgrading of our community engagement and development application. As I will outline today, we are currently working on growing our business through both greenfield projects and brownfield growth opportunities at all the operations. Safe production and quality implementation of EHS&S standards is our focus ahead to enable an increase in activity to successfully advance all of these opportunities. Now on to Slide 11 for our year-end MRMR. We closed 2025 with 11 million ounces of gold equivalent mineral reserves, a testament to the scale and longevity of our diversified operating platform. Reserves were up nearly 40% year-over-year, driven largely by the incorporation of CC&V and Hod Maden into our consolidated totals as well as other minor impacts from drilling additions and model changes. Mineral reserve price assumptions in 2025 remain very conservative at $1,700 per ounce gold and $20.50 per ounce silver. We hold another nearly 15 million measured indicated and inferred gold equivalent ounces that can support mineral reserve growth across our portfolio in the future. More impressively, we have consistently delivered on our track record of replacing mine depletion. Since 2020, as shown on the right side of this slide, we have more than replaced depletion before incorporating any of the benefits of our accretive M&A transactions over the period. Inclusive of M&A, our mineral reserves are up approximately 40% since 2020, an impressive outcome that ensures our portfolio is poised to benefit from constructive gold and silver markets for years to come. Now on to Slide 12 for a discussion on Marigold. In the fourth quarter, Marigold produced 43,000 ounces of gold and an all-in sustaining cost of $2,089 per ounce. As expected, this is Marigold's strongest period of production in 2025. Technical work around ore body knowledge and processing planning at Marigold has now matured to where this is being integrated into the planning process. As a result of previously highlighted ore blending requirements and to ensure pad recovery performance, the Marigold mining schedule has been updated to account for the blending of durable and nondurable ore. In addition, increased gold prices have resulted in pit expansions and the relocation of a planned waste dump to avoid sterilizing ounces. While this work has changed the production schedule, the total ounces produced at Marigold at the 5-year period is materially the same, as reflected in the 2024 TRS. In 2026, Marigold is expected to produce between 170,000 to 200,000 ounces of gold and an all-in sustaining of $2,320 and $2,390 per ounce. Production is expected to be 55% to 60% weighted to the second half of the year. AISC will be highest in the first half due to both production profile and sustaining capital, which is expected by 70% weighted to the first half. Sustaining capital in 2026 is expected to total $108 million as we made significant investment in fleet and component placements and process planned improvements. These investments will help to ensure Marigold is well positioned for both additional near-term haulage requirements and to enable development of potentially significant mine life extension opportunities ahead. To that end, Buffalo Valley and New Millennium projects continue to advance and SSR Mining anticipates potentially integrating both deposits into an updated Marigold TRS over the next 18 months. Now on to Slide 13 for an update onCC&V. CC&V had another excellent quarter, producing 39,000 ounces of gold and all-in sustaining cost of $1,596 per ounce. Quarterly production benefited from better-than-expected gold recoveries and drove full year SSR Mining attributable production of 125,000 ounces, well exceeding the 110,000 ounce top-end guidance. It is also important to highlight that CC&V generated more than $200 million in mine site free cash flow to our count in 2025, an exceptional outcome when compared to the $100 million upfront transaction outlay we paid to acquire the mine last year. In November, we released a technical report summary for CC&V, showcasing an initial 12-year life of mine with an NPV of $824 million at consensus metal prices. The mine plan was based on 2.8 million ounces of reserves, and CC&V has an additional nearly 7 million ounces of measured indicated and deferred resources to support potential mine life extensions over the long term. Combined with our long-term production platform at Marigold, this TRS reiterated our position as the third largest gold mine producer in the United States. SSR now holds more than 6 million ounces of mineral reserves in U.S. along with an additional 7 million ounces of M&I resources and 2 million ounces of inferred resources, all calculated at conservative metal price assumptions well below the current spot market. In 2026, we expect CC&V's production and costs will be well aligned with figures outlined in the TRS. Full year production of 125,000 to 150,000 ounces and ASIC between 1,780 and 1,850 per ounce should position the asset well for another year of strong free cash flow. Production will be 50% to 55% weighted to the second half of the year, with costs trending above full-year guidance in the full first half. Now over to Slide 14 to discuss Seabee. As highlighted in our Q3 results, Seabee's fourth quarter reflected a continued focus on underground development in the second half and saw increased oil contributions from the lower-grade gap hanging wall. Accordingly, the production totaled approximately 9,000 ounces at an ASIC of $3,433 per ounce in the fourth quarter. In the first half of 2026, underground development will remain the focus as we look to improve stope availability going forward. Full year production of 60,000 to 70,000 ounces gold is expected to be approximately 60% weighted to the second half, with the strongest results in the fourth quarter. ASIC guidance of $2,170 to $2,240 per ounce will be higher than the first half, reflecting the aforementioned production profile and the typical cadence of spend, given the winter road season to start the year. Work at Porky continues to advance and we were able to declare a maiden 200,000 ounce mineral reserve at Porky with the year-end update. We are also excited about some of the recent drilling results at Santoy, and we'll continue advancing both near-term drilling and development at Santoy targeting high grades. Regional exploration is also expected to continue across the property in 2026. Now on to Puna to Slide 15. Puna delivered another excellent year, exceeding its production guidance for the third consecutive year. Record tonnes in both the fourth quarter and over the full year for a major factor in Puna strong results with Q4 production of 2.1 million ounces of silver and ASIC of $18.39 per ounce. Full year ASIC of $14.24 per ounce was slightly better than the guidance and drove mine site free cash flow of more than $250 million in 2025. Puna has been an exceptional contributor to our portfolio, and we see potential to extend operations of Puna well beyond 2028 through growth opportunities both at Chinchillas and Cortaderas going forward. In 2026, we expect Puna will produce 6.25 million to 7 million ounces of silver and all in sustaining costs of $20 to $22 per ounce. As noted, we are pursuing opportunities for additional pit laybacks at and chairs as well as further evaluation of the leaner target to the northeast of the current Chinchillas pit. Drilling has also been very successful at Cortaderas, an underground brownfield deposit on the [ Pirquitas ] property. And we are advancing engineering work to delineate its potential contribution to put Puna's longer-term profile. Now I'll turn back to Rod for closing remarks. Rodney Antal: Great. Thanks, everyone. We had an excellent finish to 2025. We delivered solid operating results that are well aligned with expectations and now went to 2026 in a strong financial position with a number of key catalysts on the horizon. We're well positioned to deliver year-on-year production growth and strong free cash flow and are also well advanced on a number of growth initiatives across the portfolio that we look forward to sharing over the next 12 to 18 months. So with that, I'm going to turn the call over to the operator for questions. Thank you. Operator: [Operator Instructions] Our first question comes from George Eadie with UBS. George Eadie: Can I start with Marigold, please? Just looking at the 21 million to 23 million tonnes stacked at 0.4 gram a tonne and 0.35 in Q4. My math that gets me to the top end of guidance. So maybe just a little bit more color here. Like is there a bit of conservatism baked into the guidance range of 170 to 200? Rodney Antal: I'm going hand it to Bill. William MacNevin: As we talked, we've been doing a lot of work, particularly on the technical front, and we baked that now into our updated forward schedule. And that considers how we actually have to complete our blending. So that blending and the updated plan for that is actually well outlined in the plan forward. So we believe that guidance is a good indication of what we'll deliver this year. A different stacking plan comes with that. George Eadie: Okay. But looking at the tech report, like I know it's old now, but the next 2 years, it had 0.3 gram a tonne. But given commentary before, like should we expect next year's grade incrementally higher versus this year? And then 2027 to 2028, just clarifying, like should we be looking at a stacking grade of high 0.4 to low 5s potentially, given the commentary before about keeping the sort of medium-term outlook unchanged? William MacNevin: So as always, as noted, right, across 5 years, we're basically in line. In terms of what's happening is with these metal prices, which is very exciting, we've got growth in pet sizes, we've got additional haulage. So there is a complete reschedule of the mine. So we're still delivering the same goal across the period and particularly life the mine as well, but the timing of it will be different. And that's why there's reference there, we've also got Buffalo Valley coming in, we've also got further upgrades. So the reference to completing an updated TRS port -- report comes in there as well. So there's a lot of work going on in terms of those changes ahead. George Eadie: Okay. But that referenced 5 years, what is that exactly, sorry? Like if I look at the tech report average 5 years from today, it's 235,000 ounces per annum. Like what is that reference 5 years you're speaking to? Rodney Antal: Yes. I think what he's saying -- let me answer it, Bill. George, it's Rod. Thanks for the question. Look, I think what Bill is outlining is with all the work that we have completed, I mean that's been the blending requirements that we've got for durable and nondurable law we'd actually been doing work over the last 2 years to upgrade some of the ore body knowledge. So it wasn't something that we just did in 1 quarter. It was actually in conclusion of a lot of work over a period. So that's been now built in, and that's what Bill was sort of talking about with the blending requirements in the short term and near term as well as some of these other opportunities where we've identified some shifts in the mine plan because it would have sterilized some other opportunities in the future. So we're actually wrapping all that work up. And then if you add in Buffalo Valley and New Millennium, I think what it needs is a new tech report. And then within that new tech report, we're going to outline the new profiles, not only in the 5 years, but obviously, over the life of mine as well with some of those growth opportunities. So if you just be a little bit patient with us, we'll set it out all at once for you here over the next 12 months. George Eadie: Yes. Okay. No, that's clear. And maybe just one more if I can, for Puna, what silver prices, do you sort of needed a minimum to go beyond 2028? Like it's 70 ounces or higher? Could we be talking well into the 2030s potential? Or is it a bit too early and dependent still on Cortaderas success? William MacNevin: We're excited about what we have in front of us. Cortaderas is -- be it, in the underground opportunity, there's a lot of work there to do, but it's very positive. But moving back to Chinchillas itself, we do see opportunity for it to go a lot longer with work going on both in the Chinchillas pit or potentially additional step-backs as well as the Molina pit, which is right within that area being added on as well. So let's just say that works underway at the moment, and this the silver prices more than support that. So we're doing that work as we speak now, and we see it extending into the future. Rodney Antal: Yes. I'll just -- what Bill said, George, to look at the opportunity set that at Puna has really come through a lot of hard work by the guys over a sort of extended period here. And if you sort of wanted to prioritize it as sort of Chinchillas, Molina, Cortaderas, and that's how we sort of see it sequencing out. Silver price obviously is very helpful in that regard as we look forward and look at those opportunities. But all in all, I think the future is pretty bright for Puna. We've just got to finish some of the work, particularly around Molina and Cortaderas. Operator: Next question comes from Cosmos Chiu with CIBC. Cosmos Chiu: Great to see the new TRS at Hod Maden. Maybe, Rod, can I ask, is there any kind of timeline that we can expect in terms of SSR Mining coming to a construction decision? And if you can't give us a timeline, could you maybe talk about the different factors that you will consider before making such a decision? Rodney Antal: Cosmos, it is a great tech report. It certainly outlined a terrific project for all the joint venture partners that are involved. So what's going on at side right now, the work on the ground still continues. So it's not like we've got pens down and we're waiting for approvals. It's the efforts on the ground for the early earthworks some of the creek diversions the civil works, the road access tunnels and others is underway and ongoing. So that work hasn't stopped. Post the publication of the tech report, we're now just going through the sort of review processes with our partners. And once that completed, we'll have a project decision. So I'm not going to set out a timeline on behalf of everyone. But clearly, we're maintaining some progress on the ground there as well. So don't think of it as like a pens down, then we'll pick them back up. We are maintaining some of that momentum. Cosmos Chiu: Understood. Maybe going to Puna a little bit here. I noticed that the guidance to 6.25 million to 7 million ounces, slightly lower than 7 million to 8 million ounces that you highlighted back in the August 2025 study for 2026. Could you maybe talk a little bit about that? Rodney Antal: Yes, I'll pass that one on to Bill. William MacNevin: Just the permanent timeline for the work that we're completing, was it? Rodney Antal: [ 2 5 versus ] late that we had talked about. William MacNevin: Yes. So the 6.25 to 7 as we're talking, is our guidance range. You wanted an update against that? Sorry because I missed... Cosmos Chiu: So the August 2025, your Q3 2025 update you at 2026 silver production at Puna will be between 7 million and 8 million ounces. William MacNevin: Yes. All right. Yes. No, I see. All right. quarter. Yes. So obviously, with the work we're doing at the moment, and we're continuing to do -- there's more phasing work happening with additional mining happening at Chinchillas. The timing of ounces has changed in saying that we have -- we're looking at a further depth of the production levels staying at a higher level for longer. So in other words, we saw it dropping off quicker it's come down, as you know, but we're looking at it going, maintaining a higher level for longer. We look forward to updating that as we complete some of this work going forward in future. [indiscernible] has stepped down for the year ahead, but it's going to continue for longer. That would be the best way of terming it. Cosmos Chiu: Okay. So it's a timing thing. We should take those ounces that are not produced in 2026, put into 2027 or 2028? William MacNevin: It will be, yes. It will be better. Cosmos Chiu: Perfect. And at Marigold -- sorry, going back to Marigold here, could you maybe explain to me durable versus nondurable ore and blending? I'm not fully appreciating the sort of the technical aspects behind it. William MacNevin: So to put it into a simple manner, depending on the fines content and how -- and then the height of the heap, it creates compression on the material. So the effectiveness of the solution transfer can be impacted. So if we go back in time for those that have a long history with Marigold, we've had -- we were challenged in late '22, early '23, where we had a -- where we ended up with our heap became bound up. So in other words, a lot of good work has happened to understand that ore body better. And so with that, we now have implemented different land requirements of what can be mixed with what. And then that changes the schedule of how we bring different parts of the ore body together to ensure optimum blending and optimum recovery from the -- does that make -- does that answer that sort of -- in simple terms? Cosmos Chiu: Yes. I think I got it now. When you mentioned fine, I think I remember that now. So great. And maybe one last question. I see that you're still using fairly conservative numbers for your MRMR estimate $1,700 an ounce for reserves at Marigold. So I guess my question is, I don't know how much you can answer about, but what would a higher gold price assumption due to what you can do at the ore body? It sounds like you're considering it because you're talking about not sterilizing some of the certain parts in the ore bodies or you're leaving that optionality open. And so to the point that you can share with us, what is the higher gold price assumption mean? And could that be incorporated into this new sort of technical report that could come out in 12 to 18 months' time. And you talked about Buffalo Valley and also New Millennium. Could those be part of that new study coming out as you well? Rodney Antal: Yes, that's right, Cosmos. Look, I think across the portfolio, we took a view for this year at least that given the profile that we already presented ourselves and some of these other growth opportunities that we have, we'll park any decisions on increasing the gold price kind of lowering the cutoff grade, et cetera, and maintain the margins. So -- but we really didn't see anything necessary to do that work. We do have a lot of growth studies, exclusive of gold price that are in front of us that we're looking at. And that's really the key focus at the moment to complete that technical work. So ultimately, we can start to include those into the technical reports for the future. And then obviously, we can come back to the gold price question about looking at where how sensitive some of the operations are for gold price increases as well. So that really was this year. We just got so much other work going on, we just wanted to complete that and then come back to come back to it later on. Cosmos Chiu: And then would that coincide with your timeline, say at Marigold? Because as you say, you're going to come up with a new technical study in Marigold in 12 to 18 months, could this sort of reevaluation of the gold price coincide with that timeline as well? Rodney Antal: Correct. Yes, good. And particularly New Millennium and some of those other targets as well. Operator: The next question comes from Ovais Habib with Scotia Bank. Ovais Habib: Congrats on a good quarter, especially at Puna and CC&V. A couple of questions from me and just again, going back to Marigold following up on the previous caller's questions, the fine that Marigold, looks like blending is working. And I mean, is this issue now behind us? Or are we still expecting to see this issue linger into Q1? Rodney Antal: No. In terms of the look forward -- I got this one, Bill. In terms of the look forward for the surveys, it's pretty simple. We're going to have areas where we will encounter fines in the future. It's throughout the ore body. And as Bill said, since '22, we did a lot of work, drilling et cetera, to understand at a greater level of detail, some of those pockets where the final existed. And so that's all been incorporated to the future mine plans to allow for that blending of what we call in durable and nondurable. You'll hear us say that as well in the future. So it informs the scheduling to ensure that we have the appropriate blend. So we get the right outcomes on the heap leach pads in the future. So it hasn't -- it's not a one-off. It's going to be a future feature for Marigold. And all of the work we've been doing is really just in preparation to handle that, which has been terrific work actually. And as I said to -- I think George was asking about, we'll have a new tech report, which will outline all of those requirements in the future as well as some of these other growth opportunities. Ovais Habib: Got it. And just again, I think there's a follow-up question on Puna as well. I mean drilling has been pretty successful at Cortaderas. Don't believe this deposit has been included in Puna's mine life extension. Rod, are you looking to release any sort of a new mine plan for Puna in the near term, including Cortaderas as well as Chinchillas? Rodney Antal: Look, I think what we'll probably see at Puna basin -- don't hold me to it because it depends on the work. But I think we'll see some additions to the mine life just through some of the extensions that we're going to go into encounter Chinchillas and potentially in Molina. As they start to -- the drilling programs there and also up at Cortaderas continuing some of the technical work behind those that drill program concludes, then we may consider doing a new tech report into the future. But I think at the moment, the guys have done a terrifically good job at already establishing a longer life at Puna. We see the potential for more of that. And then hopefully, in the longer-dated near term having -- sorry, in the near term for the longer-dated future some of these other larger opportunities playing our feature into Puna well into the future. So it's a pretty exciting where we've come from. If you think back, it wasn't that long ago that folks were thinking about Puna as a depleting asset that was coming towards the end of his life. And I think what we're finding there through the efforts is quite contrary to it. Ovais Habib: Excellent. And then just moving on to CC&V, which has been a real success for SSR. Currently, I mean, the project holds 4.8 million ounces in M&I. Now you already have a 12-year mine life at CC&V, but what's the plan there to accelerate these ounces into the mine plan and improve the production profile of CC&V? Is this just the permits? Is it more infrastructure that needs to be allocated? Any sort of color there? Rodney Antal: It's pretty linear from what we can tell at the moment, Ovais. The mine extension is obviously predicated on the success of the amendment for approval. That amendment for that approval allows us to continue with the pad expansions. That is already well sequenced out over sort of the next 5 to 10 years. So that's really the first sort of stage of growth, if you like, on the current reserves as you point out. Is there opportunities to optimize and do things? I mean that's our job is to try to trying to do that. But I wouldn't -- similar to Marigold, Cripple Creek has durable, nondurable ore as well, and it's really important to stay in sequence with that asset base not to put a risk the future. So we'll try. But look, I think it's fairly well set out. And then beyond it, obviously, we'll look at the opportunities for conversion of the 7-odd million ounces of resources that we also have available, which would require then another expansion permit for that regards as well. So look, I think the asset itself has done remarkably well. Since we acquired it, we're very proud of the efforts that have gone on down there and proud of the team, and they're now part of SSR and they deserve a standing ovation because I think it's been a terrific integration into the portfolio. Now our job is to optimize and to extend that asset well into the future and really demonstrate its strength in the portfolio. So we're pretty excited to have it. Ovais Habib: And just my last question then on Çöpler, Rod. I mean, any sort of progress there that we can kind of put our finger on or any sort of updates that you're looking to provide in the term future on Çöpler? Any sort of discussions going ongoing that you can talk about? Rodney Antal: Yes. Look, I think that's right, discussions are ongoing. So in terms of like activities, there really was nothing to note since the last quarter. I mean the activities at the site, as Michael sort of mentioned in his financial discussions, had sort of wound down in terms of material movements and site rehabilitation, what we're waiting for the final approvals for the e-storage facility and pad closure. The guys are obviously still very busy in that in regards of care and maintenance of the activities around the plant, in particular, to maintain integrity for a start-up. But that's really been the sort of key focus on the ground at site. And then obviously, as you note, we continue to progress the various discussions with different parts of the government and government authorities. So it's just ongoing at this stage. Operator: Next question comes from Don DeMarco with National Bank. Don DeMarco: A lot of my questions have already been answered. But Rod, I'll start off with this. For Hod Maden just continuing on as we're looking forward to this formal construction decision and I see that in the interim, you're looking at maybe spend on the order of about $15 million per month, should we pencil that into our model like beginning as of January 1, I think? Or should we wait until a construction decision? In other words, are you kind of getting ahead of yourselves a little bit here with some of that spending before the formal decision is made? Rodney Antal: No. Look, a lot of that spending was already committed, Don. On the early site works that I mentioned before, the tunneling is ongoing. We actually just had John shared actually before this meeting, the first blast of the tunnel, which is terrific for that site access tunnels, a lot of the civil works around that Creek diversion, et cetera, are all ongoing. So that was work already in progress, and that's what I was sort of saying before. I think while we're waiting for the decision, we're still very busy at side. The team is very busy on side in getting the site prepare. And then we know, obviously, once a construction decision gets going, we're well prepared to execute contracts and get moving on the bigger build as well. So it's -- I think that's fair to use that sort of number. And then obviously, we'll do a -- we'll update the guidance once we tally up what the actual cash out the door will be for the capital for the construction during 2026. Don DeMarco: Okay. Okay. That's helpful. And just my final question then, shifting to Marigold, so I see that there has been a sizable increase in sustaining CapEx in '26. And of course, the print details that there's some fleet replacements, of course, there's the plant upgrades. So is this sort of this spend to be onetime in '26? Or should we also be modeling maybe a little bit higher CapEx going forward in the next '27, '28 years? Rodney Antal: Yes. Look, I'll answer and then Bill can jump in, if you like, as well. I think we do what we always do when we look at our fleet and our mine plans in the long-term exercises around total cost of ownership. Fleets obviously have a useful life arm and particularly parts and maintenance and major component rebuilds. We completed that work for Marigold last year. And what I determined was, in some cases, that it was wise for us from a value perspective to do that work in 2026. So that's really what you're seeing there. So it's normal course. In some cases, some of them might have been accelerated by a year or 2, and some of that fleet replacement might have changed as well, but it's really just sort of an exercise in value for the fleet of understanding the optimized approach to that replacement. But nothing out of the ordinary. Bill? William MacNevin: That's correct, Rod. And a lot of work, looking at what the optimum timing, is for value. So some things are a little bit earlier than they originally planned, but that's because it gives very positive financial return to the business. That's why we're doing it. Operator: This concludes the question-and-answer session and today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Welcome to BioArctic Q4 Report 2025. [Operator Instructions] Now I will hand the conference over to CEO, Gunilla Osswald; and CFO, Anders Martin-Lof. Please go ahead. Gunilla Osswald: Good morning, and welcome to BioArctic's presentation for the fourth quarter and for the full year of 2025. It has been a fantastic year for BioArctic. In 2025, we entered into a new era that we call the growth era. And we can conclude that we have a transformative year behind us with record financial results. We are making our science accessible to more and more patients than ever before. And I think it's great and reassuring to see that more and more patients are getting access to Leqembi. We are accelerating our innovations. Our portfolio is progressing really well and has been further expanded, and our BrainTransporter technology is further evolving with new innovations. We have increased focus on business development. We are broadening our collaborations and utilizing our BrainTransporter technology, and we'll talk more about all this in today's presentation. Next slide, please. BioArctic is listed at Nasdaq Stockholm Large Cap, and this is our disclaimer. Next slide, please. I'm Gunilla Osswald, and I'm the CEO of BioArctic, and I will share today's presentation with our CFO, Anders Martin-Lof; and our Chief R&D Officer, Johanna Falting; and our Chief Commercial Officer, Anna-Kaija Gronblad. Next slide, please. I'll start our presentation by giving some key highlights. Next slide, please. I'm proud to state that BioArctic is among the world's leading innovators in precision neurology. We have 2 key platforms, where the first one is innovation and generation development of highly selective antibodies that are targeting aggregated misfolded forms of toxic proteins like lecanemab. And we also have then projects targeting alpha-synuclein, TDP-43 and Huntingtin. The second area is the BrainTransporter platform, where we have an innovative way to deliver antibodies. And I want to highlight that we are broadening the platform to enable more efficient transportation of other modalities into the brain with new innovative approaches. We'll talk more about that in today's presentation. Next slide, please. Last year, we held our first Capital Markets Day, where we presented our ambitions for 2030. And I'm so happy to see that we are already clearly delivering on our ambitions. If we start with the first one, LEQEMBI to be established treatment in Alzheimer's disease. LEQEMBI demand continues to grow to more and more patients, and we are now having global sales above USD 500 million. I think it looks bright with the blood-based biomarkers and the subcutaneous administration coming. The second aspect is balanced and broader pipeline with projects in all stages of development. And the pipeline is already broader with new projects added last year for both Parkinson-related diseases as well as Huntington's disease. The third one is additional successful global partnerships, and we are very pleased with Eisai and our 2 new collaborations since last year, Bristol Myers Squibb and Novartis. We are also really happy with the further discussions that are ongoing. The fourth one is about our finances and our aim is to be profitable and have recurring dividends in the future. And we were highly profitable 2025, and our strong financial position allows us to continue to invest heavily in our business and at the same time, give something back to our shareholders. And there is a proposal by the Board of dividends of SEK 2 per share. Next slide, please. So I just want to comment on some of the latest highlights towards delivering on our ambitions. So we start with Leqembi, and I would like to start by thanking -- thanks to our partner, Eisai's great work, Leqembi is now approved in 53 countries around the world. The subcutaneous auto-injector that is called Iqlik in the U.S. has been launched for maintenance dosing in the U.S. The next important step is approvals of subcutaneous initiation dosing. And it was great to see that both the authorities in the U.S. and in China has granted priority review. And I think this points to how important the subcutaneous opportunity is for the patients. And we are very much looking forward to the PDUFA date that FDA has set by the 24th of May this year. It's also reassuring to notice that all data being presented at congresses, including long-term data and real-world evidence data are very encouraging for Leqembi. If we then turn to the pipeline, it's progressing really well, and we are growing the pipeline and they are advancing. If we look at our alpha-synuclein portfolio and start with exidavnemab, which is our antibody, which currently is in Phase IIa. The second part of the study with both Parkinson's disease and multiple systemic atrophy patients will be finalized this year, and we are actively preparing for Phase IIb. We can also communicate that we have nominated 2 new candidate drugs, and we are preparing for INDs. And we have also further expanded our portfolio. And as you know, I'm very excited about our BrainTransporter technology platform, where we have further innovations for different modalities, including our BrainTransporter -- utilizing our BrainTransporter technology, and Johanna will talk more about this and show some nice new data. The third one is about our partnerships. And as I've said, I'm really happy with all 3 partners: Eisai, Bristol Myers Squibb and Novartis. All 3 programs looks great. And it's also happy to notice that we were very busy during JPMorgan in January this year. And it's great to see that we have continued strong interest for our projects and for our BrainTransporter technology, both for antibodies as well as other modalities. The fourth aspect is about our financials, and they are strong, and we were highly profitable in 2025 with record full year results of SEK 1.2 billion. The royalties for Leqembi are steadily increasing. And during 2025, we received several milestones also, both from Eisai and upfront payments from Bristol Myers Squibb and Novartis, and that led to that we have a strong cash position of SEK 2.2 billion, and Anders will talk more about this. Next slide, please. So by that, I will now hand over to our Chief R&D Officer, Johanna Falting, for an update on R&D. Johanna Fälting: Thank you so much, Gunilla. Next slide, please. So this slide provides an overview of our R&D portfolio, featuring the 2 main platforms that Gunilla talked about, the antibodies and the BrainTransporter platform and also the highlighted cross-program synergies. So the portfolio includes fully funded projects, partnered with major global pharmaceutical companies such as Eisai, Bristol Myers Squibb and Novartis. And we also have several in-house projects and technology platforms with substantial market and out-licensing opportunities. All collaborations involving the BrainTransporter platform are advancing well and as planned. And since the last quarterly update, we have also achieved important milestones within the portfolio, including the nomination of 2 candidate drugs, BAN2238 for alpha-synuclein disease and BAN3014 for TDP-related proteinopathies such as ALS. Additionally, you will notice a new project in the BrainTransporter portfolio, the PD-BT2278, and this is targeting the alpha-synuclein disease. So next slide, please. So both BAN2238 and BAN3014 were recently nominated as candidate drugs and have now advanced from research into preclinical development. BAN2238 is targeting toxic aggregated alpha-synuclein such as oligomers, protofibrils and aggregates, and this is combined with the BrainTransporter technology. And it offers opportunities in several different synucleinopathies such as Parkinson's disease, MSA and dementia with Lewy body. And for BAN3014, this antibody targets toxic aggregated TDP-43 proteins, such as oligomers, protofibrils and aggregates, and it offers opportunity for several of the TDP-43 proteinopathies such as ALS and frontotemporal dementia. So both of these programs, we have now initiated IND-enabling activities, and they are being prepared for clinical studies. So the next slide, please. So alpha-synuclein misfolding and aggregation is central to alpha-synuclein disease development. And our alpha-synuclein portfolio offers opportunity in several of these synucleinopathies such as Parkinson's dementia with Lewy body and multiple systemic atrophy. Exidavnemab is most advanced and is currently being tested in the EXIST study, a Phase IIa study for safety and tolerability. And in parallel to this, we are preparing for the next stage of development into Phase IIb. 2238, that I just talked about, is the newly nominated alpha-synuclein antibody combined with the BrainTransporter technology for better efficacy and better brain uptake. And BAN2238 is an alpha-synuclein antibody combined with the BrainTransporter, also representing an additional advancement in the BrainTransporter portfolio, for which further details will not be disclosed at this time. Next slide, please. I'm very excited to share some new data today on our BrainTransporter platform. So we know that the blood-brain barrier that represents a significant challenge for neuroscience. And if we can improve the delivery to the brain of our drugs, that represents an enormous opportunity for increased, of course, exposure in the brain, enhanced clinical efficacy, greater patient convenience by lowering the dose and offering other routes of administration, potentially better safety and lower manufacturing costs. So we are investing very heavily in the BrainTransporter technology to deliver different types of biopharmaceuticals beyond antibodies and enzymes that we talked about in the past. So we have developed this technology further now to enable delivery of small drug modalities to the brain. So this is a very innovative and flexible system that aims to transport various type of drugs such as genetic medicines and small molecules into the central nervous system. Next slide, please. So here, I'm very happy to show you some new data. And this image here compares the brain distribution of a standard antibody up to your upper left corner in green with a BT-coupled antibody in green below. And you can appreciate, I hope, the great increase of the green, fluorescent color, which represent the antibody present in the brain. And this is the same dose and the same time frame and the same antibodies just with and without the BrainTransporter technology. So antibodies we have worked with for quite some time, but we have also now here shown you data with the distribution in the brain of an enzyme and also a small modality. So this BT-coupled approach significantly improves the brain distribution of our -- of drug modalities. And for the BTA, the antibodies, this is a technology now that is fully implemented and validated both in mice and in nonhuman primates. And here, we have both internal and external candidates at various stage of development. And then the BTE, the enzyme platform, we have our first internal program, the BTG case for Gaucher's disease, and this is progressing very well. It's an orphan indication that offers potential -- offered market potential for BioArctic and a project that we can drive longer into the clinic. And I think that this enzyme project, it really sets the foundation for future enzyme-based projects coming along in the portfolio. And then what's new and presented here today is the BTS, the BT small modalities. And this is a novel and very flexible system that enables efficient brain delivery of genetic medicines such as ASOs or siRNA. It could be degraders. It could be small molecule approaches or anything that you want to deliver into the brain basically. And here, some key data is now being generating, showing the utility of the system. And what is shown here is then the brain distribution. And I think that there's been a really strong interest in our BrainTransporter technology at the JPMorgan Health Conference in September -- or in January in San Francisco. And we are very excited about the future further development of this platform and hope that we will be able to show you some more data in the coming year. So next slide, please. So with this, I will hand over to our Chief Commercial Officer, Anna-Kaija Gronblad, for a commercial update. Anna-Kaija Gronblad: Thank you, Johanna, and I will go back to Leqembi for a while, and I will start by just reminding everyone on the many recent and upcoming regulatory and development steps for Leqembi that really increases the treatment options for patients, but also drives the sales growth around the world. So as Gunilla mentioned, the IV formulation is now approved in 53 countries, of which the latest ones were Canada, Brazil and Malaysia. And the IV maintenance treatment once every 4 weeks is approved in 7 countries. And in the EU, the EMA accepted Eisai submission for the IV maintenance earlier this year. When it comes to the subcutaneous auto-injector, the weekly maintenance treatment was launched, as Gunilla mentioned, in the U.S. in October last year and the sBLA for the weekly induction treatment was granted priority review by the FDA, and we're looking forward to the PDUFA date set for May 24. In Japan, the application for the subcutaneous induction treatment was submitted in November last year, and Eisai expects to launch later in 2026. And then finally, Eisai also sent an application for the subcutaneous auto-injector also in China last month, where it was granted priority review and Eisai expects a launch in 2027. So many advancements, and this will drive the Leqembi growth even further, the game-changer being really the subcutaneous auto-injector, where the induction treatment is given as 2 injections of 250 milligram each, where each injection only takes 15 seconds. So next slide, please. So also with regards to the real-world evidence, Leqembi continues really to deliver more data. At the most recent Alzheimer's Congress, CTAD in December last year in San Diego, there was a lot of presentations on Leqembi. So real-world evidence coming from U.S. and Japan shows really consistent results in terms of efficacy and safety with findings from the clinical trials. Additional data presented indicated that earlier initiation may be associated with greater benefit and that continued Leqembi treatment may provide a benefit compared with stopping therapy. So finally, data also presented at CTAD verified that the subcutaneous formulation offers a convenient option with comparable exposure and safety to IV. And this can really reduce treatment burden for patients and their care partners and health care, of course. So this was really, really encouraging to see all these data in December last year. So next slide, please. So what are the trends on the key markets for Leqembi? Anders will soon show you the BioArctic royalty based on the Leqembi sales, but we can conclude that Leqembi sold for more than USD 500 million in the calendar year of 2025. That's a nice milestone. The global anti-amyloid market has more than doubled in 2025, and this is driven by mainly 3 things, I would say. First, the use of blood-based biomarkers, both for triaging and for confirmatory diagnosis is increasing. China has been really in the forefront. But also in the U.S., it is steadily increasing, and it is estimated that approximately 10% of confirmatory diagnosis in clinical practice in the U.S. are done by blood-based biomarkers. Secondly, more physicians are prescribing Leqembi. In Japan, more than 800 facilities are now starting initial treatment and 1,700 centers are focusing on the follow-up after 6 months and onwards. And in the U.S., there is an enhanced coordination between the primary care physicians and neurologists. On the slide, you can see the targeted direct-to-consumer information campaigns that Eisai has been rolling out in the U.S. and in Japan. And the second one is to address really the awareness of mild cognitive impairment. The fact that Leqembi was included in the commercial insurance innovative drug list in China in December will gradually give more physicians and patients access to Leqembi from the second half of the year, it is estimated. Thirdly, the subcutaneous auto-injector that I mentioned was launched in the U.S. for maintenance in October also drives growth. It is estimated that 80% of the patients on Leqembi want to continue treatment after 18 months. The insurance coverage through the medical exception process is increasing, and the payer approval rate is estimated to be over 80% in the U.S. And finally, in Europe, the launches in Austria and Germany are ongoing since September last year, whereas the reimbursement discussions are ongoing in other countries. And finally, the first private clinic in the Nordics started treating patients in Finland in October last year. And what we hear from the market is that there are several other private clinics that are about to start. And we also hear that there are private patients traveling to Finland also from Sweden, for example. Also since April, our team in the Nordics has gradually been out visiting memory clinics every day, educating on the Leqembi data and on the infrastructure that needs to be in place. We are active at national and regional specialist meetings, visiting regional health care decision makers, and we're increasing our digital communication on Leqembi. There is really a big interest and willingness to learn more and to make sure that all relevant staff at the clinics are educated. So next slide. So finally, this is my last slide, and I know it's a busy one, but there was a question sent to us before [ Harald ], on the progress with governments regarding Leqembi reimbursement in the Nordics. And as you probably know, Eisai is responsible for reimbursement and pricing. But this slide shows an overall picture of the different steps and the parties involved in the process and what the completed steps are for Leqembi in blue, which you can also find publicly available. It is the ambition for both Eisai and us to secure patient access to Leqembi in all Nordic countries. And as you might know, in red there, you see that in Denmark, the Danish Medicines Council came out with a negative recommendation in December. So here, Eisai is considering the next steps and will be in dialogue with the authorities regarding potential next steps. In Sweden, the TLV published their health economic evaluation in December, and the next step is to negotiate with the NT-council. And in Finland, the assessment report from Fimea has been recently published. And in Norway, the assessment is still ongoing in the Norwegian Medicines Agency. So it is -- there's no official set time lines on how long these processes are, but Eisai is working very closely in dialogue with the authorities to answer any potential questions or other requests. And clearly, the ambition is to finalize these different steps during the year. So you can go to the next slide. And by that, I leave the word to our CFO, Anders Martin-Lof. Anders Martin-Lof: Thank you, Anna-Kaija. I will then start with the Leqembi numbers where we saw solid growth globally. In Q4, the sales were JPY 20.7 billion or $134 million. That was a 15% increase from the last quarter or 55% increase year-over-year. And as Anna-Kaija mentioned, this now means that we are well above $500 million in annual sales, which is a significant milestone for a product like this. Looking at our royalties, they grew by 31% year-over-year to SEK 127 million, and this is despite the Swedish krona getting significantly stronger during the period. So if with constant exchange rates from last year, we would have seen more than 50% royalty growth. Looking then at the different markets, starting with China, the sales there are still a little bit distorted by the Q2 stockpiling effect. Sales came in at JPY 0.4 billion or roughly $3 million. That is a 100% increase from the third quarter. However, that's still on a very low level, and this is due to the fact that there was a big inventory buildup in the second quarter with sales of $53 million in the second quarter. And we have estimated roughly what our royalty would have been like if the sales in China would have been roughly in line with demand. And you see that in the pink bars in the graph that our royalty would have been roughly SEK 125 million, SEK 135 million and SEK 145 million during the second to the fourth quarters. Right now, we believe there is no more inventory to sell off, so we expect sales to return to more normal numbers for the first quarter of 2026. If we then turn to the U.S., their sales were roughly $78 million or JPY 11.9 billion. That's a 17% increase from the third quarter. And as Anna-Kaija mentioned, here, the solid growth is expected to continue, mainly driven by the introduction of Iqlik for induction and also by the introduction of blood-based biomarkers during the year. In Japan, the volumes are growing steadily. However, there was a price reduction. So the sales were JPY 6.2 billion or $40 million. That means no change from the third quarter. So the volume increase was roughly 15%, so healthy growth, but there was a one-off 15% price reduction from the Japanese reimbursement system, which is expected when volumes grow for a product. Furthermore, the EU launch has been initiated. We're well underway in Austria and Germany, but still the royalty from the European market is very, very limited and has a very small impact on our royalties. That should grow, but even in 2026, we expect the impact from Europe to be fairly small to our royalties. If we then turn to the forecast for Leqembi, Eisai has a JPY 76.5 billion forecast for their fiscal year 2025 that ends on March 31. And right now, after 9 months of that full year period, we have already reached more than 80% of the target. And you see the numbers to the right of the graph that in the U.S., they reached 78%, Japan 75% and China 87%. So what this means is that Eisai will reach the forecast even if there will be no growth in any of the larger markets, and that is not what we're seeing. So we believe they have a very good shot at reaching their forecast for the full year. If we then turn to our numbers, I think it's worth to emphasize how big of a transformation 2025 was for us when we saw an eightfold increase in revenues. I won't be able to say that often, but this time around, that actually happened. And you see our revenues on the left-hand side, you see they're very lumpy with the highest revenues in the first and second quarters, mainly driven by the agreement that we entered into with BMS in the first quarter. But even so, if you look at the fourth quarter, our net revenues were SEK 184 million. And I think it's very reassuring to see that our recurring revenue base is continuing to increase. So we had a royalty of SEK 127 million and co-promotion revenue of SEK 6 million. So all in all, SEK 133 million in the fourth quarter. And that means that we had recurring revenue of roughly SEK 520 million in 2025, and that's really starting to become a solid base for us to fund our future R&D investments. We also get some questions on the Novartis upfront. It's recognized over the initial collaboration, and we recognized SEK 51 million out of the $30 million during the fourth quarter. If we turn to our operating expenses, they actually decreased to SEK 136 million from SEK 143 million a year earlier. And if we take away currency effects that are recorded as other operating costs, the underlying operating costs were SEK 134 million. And I think it's worth to highlight that that's very, very close to the recurring revenue that was SEK 133 million. So we are actually more or less at the breakeven with our recurring revenues funding our full operations in the fourth quarter. Looking forward a little bit, our underlying costs are expected to increase in 2026, up from SEK 681 million in 2025. And this is, of course, then due to the progression of our project portfolio that Johanna mentioned. We're investing heavily into exidavnemab, where we're currently in Phase II, but we're also starting big CMC programs for our new candidate drugs, BAN2238 and BAN3014, which is really, really positive. So the higher R&D costs we have, the better it is because that means we're making progress in our portfolio. So it's hard to make a proper forecast for the cost. But if I can give, I would like to give you some guidance, and I guess or estimate that the growth will be roughly 50% to 70% in 2026. That is the cost should increase by 50% to 70% in 2026 compared to 2025. And then finally, if we turn to our operating profit on the right-hand side, it was SEK 33 million for the fourth quarter and the full year operating profit was roughly SEK 1.26 billion, more -- here, you saw a really big effect, of course, of the BMS deal that we entered into and recognized in the first quarter. If we turn to the next slide, we're looking at the net result. It was then a loss for the period that is explained by a significant accrued tax of SEK 48 million due to the big profit for the full year. The operating cash flow was significantly stronger than the result, and that is explained by the fact that the SEK 30 million upfront payment from Novartis was received during the quarter. So SEK 313 million in positive cash flow during the fourth quarter. And we ended the year with a cash balance of SEK 2.2 billion, a very solid position. And the Board decided based on that very, very solid position and our growing recurring revenues that we should pay a dividend of SEK 2 per share, which is, of course, a significant milestone for a biotech company like ours. With that, I hand the word back to Gunilla. Gunilla Osswald: Thank you so much, Anders. So we are coming towards the end of today's presentation with some upcoming news flow and some closing remarks. Next slide, please. I think it's great to see that more and more patients are getting access to Leqembi around the globe and also that in the Nordics that we have a private clinic in Finland so far, and we hope to get more and more patients in the Nordics, too. Eisai is driving continued regulatory processes on Leqembi in a very good way, and we hope to get more approvals in the future now. The Iqlik subcutaneous administration with auto-injector recently was approved for maintenance dosing in the U.S., and we are now awaiting the response for the induction treatment with a PDUFA date 24th of May. Later this year, we also expect response from Japan, and there it is both regarding initiation and maintenance dosing with the subcutaneous auto-injector. We are very much looking forward to the next big Alzheimer's Congress and Parkinson's Congress, which is in Copenhagen in March, where we will see several presentations. And then we see more things happening with exidavnemab, for example, where we expect to have the Phase IIa study readout later this year, and we are preparing for Phase IIb. So a lot of exciting times ahead of us. Next slide, please. So some key takeaways from today's presentation. I think that it's great to see how BioArctic has entered into the new era, the growth era, and we see great progress both of Leqembi as well as the rest of the portfolio, including the BrainTransporter technology. We have started really well to deliver on our 2030 ambitions, where Leqembi is well on track to become an established treatment in Alzheimer's disease. Sales continue to show increasing demand globally. And we have now had global sales of more than USD 500 million, and we are then halfway to becoming a blockbuster. Our portfolio has increased and progressed well and our BrainTransporter technology as well as our 2 CD nominations that Johanna spoke about have taken exciting development steps. Our brain -- our business development efforts continue to deliver, and we see continued strong interest. We have a strong financial position, and we can then both invest in our programs and projects, and we can also pay some dividends that the Board has recommended, SEK 2 per share. So all in all, I think we are exceptionally well positioned for the next phase of our growth journey. The future looks very bright for BioArctic, and we are bringing hope for many patients. Next slide, please. So by that, we say thank you for your attention, and we're happy to take some questions. Operator: [Operator Instructions] The next question comes from Viktor Sundberg from Nordea. Viktor Sundberg: So one first here, maybe on your effort to launch lecanemab in the Nordics. I just wanted to get a feel for how much of your operating expenses are allocated to building up an organization around this launch? And what could potentially happen to those costs in 2026 if the rest of the Nordic countries follow Denmark and deem lecanemab not cost effective, at least for the IV administration in the Nordics? Yes, I think I'll start with that question. Anders Martin-Lof: So if you look at the cost, most of our organization is already there. So we're not seeing any significant increases or in costs or even if there wouldn't be any change in Denmark and that decision would stand. I don't think we'll see any significant decreases either. We expect to fight with Denmark, and we're not planning any layoffs anytime soon despite the initial response there. So a small increase, I would say, on the cost side for marketing and sales. Viktor Sundberg: Okay. And maybe if you could speak a bit about what kind of indications outside of neurology that have sparked some interest at, for example, JPMorgan around your BrainTransporter technology? Is that mainly oncology indications? If you could elaborate on, yes, where you see interest outside of neurology for this platform? Gunilla Osswald: No, I think we -- as you know, we are not commenting about details when we talk about business development. We can just notice that there is great interest. And we see it on a broad level, and we see it on antibodies, but we also see it on other modalities, which we also know, Johanna showed some really nice data on today. So I think that there is a lot of different utilizations. But I think I also want to say with regard to business development, these things take time. It's not that it's quick things that you should expect from day to day. This is long processes. It takes time. It's really important for selecting a partner because it's a long-term commitment. So it looks really good. We are having a lot of fun, but it will take some time. Operator: The next question comes from Suzanne van Voorthuizen from Kempen. Suzanne van Voorthuizen: This is Suzanne. One on the BrainTransporter. Could you elaborate a bit more on the ALS and next-gen exidavnemab programs in particular? What preclinical activities are undertaken at this moment? And how does the road look and time line for these programs to be ready for the clinic? And perhaps still, you mentioned the interest in the platform is broad. Could you speak a bit to the relative focus of this interest between your existing programs versus interest to apply the technique to a pharma program? Just some extra color would be nice. Gunilla Osswald: So would you like to start, Johanna? Johanna Fälting: Absolutely. So thank you for that question. So we have now nominated, as I said, our alpha-synuclein antibody coupled to the PD program, coupled to the BT platform. And the activities that we are now embarking on in terms of moving the project from a research arena to the preclinical arena is the CMC activities that takes a lot of time to manufacture drug to be able to do toxicology studies. So this is the IND-enabling activities. It's mainly CMC toxicology to prepare for the clinic. And with regard to the BT-coupled ALS program, I mean, the one that we have nominated now is the standard antibody against TDP-43, but we, of course, also have a BT-coupled program going along, and there is no difference in the priority of these 2 antibodies. It's just that the BT-coupled antibody is a bit behind. So therefore, we have nominated now the antibody, the standard antibody. But we are definitely progressing both of these programs and have a lot of belief in them. And in terms of the time lines, I mean, depending on how everything is going, it takes approximately 2 years for us from a decision to first time in man. Gunilla Osswald: And I will continue with your second question about business development. I think that it's great to see that we have interest in both our internal programs and the BrainTransporter technology like a platform company that I've said previously that we also are. So I think that we see both interest also in the BrainTransporter together with antibodies, but we also see interest in BrainTransporter together with, for example, the new things that Johanna showed with small modalities. So I think it's -- that's what I mean with broad interest. But we are coming from a position of strength. As I've said before, we have fantastic, exciting own programs, and we have the luxury situation that we can invest in them. So we can drive things forward ourselves or we could partner if we find the right partner. So I think it's a really position of strength, and we have a great organization that are driving the programs further. And then I think that it's also good to see that we can utilize the company as a platform company and do things like the Novartis deal, where they come with their antibody, we reengineer the antibody. We check it and to see that it works as it should with regard to the transferrin receptor and so forth and then hand it back. So I think you will see more deals like that in the future. But if we find the right partner also for internal programs, that could also happen. But we don't have to partner, but we will partner if we find the right proposal and collaborator. Operator: The next question comes from the Natalia Webster from RBC. Natalia Webster: First one is just on Leqembi in Europe. I appreciate that you expect a small contribution here. But are you able to talk a bit more about what you expect is required to improve the slow adoption and how important you see both the longer-term data and the less frequent maintenance dosing in Europe? And then if you see potential for subcutaneous treatment here in the future? My second question is on the BrainTransporter platform. Just in terms of time lines around BAN2803. You previously had plans to go into Phase I in 2026. Appreciate this is now up to BMS, but are you able to share any details around expected time lines there? Then just finally, on overall OpEx. It looks like Q4 OpEx was lower than consensus is expecting, both on R&D and SG&A. I see that you're expecting an increase in cost in 2026. But are you able to touch on any key considerations for the cost phasing there next year? Gunilla Osswald: So Anna-Kaija, would you like to take the question about Europe? Anna-Kaija Gronblad: Yes. I heard the question was on the IV maintenance and the subcutaneous formulation. Is that correct? Yes. So I mean, as we just said, I mean, Eisai had submitted the application for the IV maintenance, and hopefully, this will be an approval on this during the year. And obviously, this will help, I mean, also in the different reimbursement processes across Europe. I mean, each country has their own reimbursement processes, and they usually, unfortunately, take a little bit more time than in the U.S. and the rest of the world. So I mean, globally, it's proceeding very well, but Europe is a bit slower. And hopefully, we will also see subcutaneous also coming to Europe in the future. Gunilla Osswald: And then continue with your next question, 2803. I mean it's now up to our partner, Bristol Myers Squibb, to comment about when and how that is progressing with more details. I can just say that I think Bristol Myers Squibb is a fantastic partner who are driving the program forward in a great way. But I will not comment about when it will go into man. And then the OpEx is an Anders' question. Anders Martin-Lof: Yes. So yes, you should not draw any trend conclusions based on the Q4 costs coming in lower than expected. It is a little bit lumpy in our R&D programs. As for the phasing in 2026, I think we will grow steadily as the year goes by. But then again, it's really hard to give you any sort of hard forecast for how much it will grow quarter-by-quarter. You should expect that it will be a growing trend. It will probably not be a huge impact in the first quarter and then will be larger and larger as the quarters go by. I think that's the right way to model it for 2026. Operator: The next question comes from Max Da from Goldman Sachs. [Operator Instructions] There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions or closing comments. Unknown Executive: Thank you so much. So we have a couple of written questions that we'll address now, I guess. The first one comes from Erik Hultgard, Carnegie. And he's wondering when the 2 drug candidates that we just nominated when we can expect those to be in the clinic? Maybe a question for Johanna. Johanna Fälting: Yes. As I mentioned on the question earlier is that we expect it to take approximately 2 years from our nomination to entering into clinic if everything goes according to plan, of course. That is the guidance I can give you. Unknown Executive: Yes. Super. Thank you. Then we have a couple of questions from Joseph Hedden, Rx Securities. I guess the first one, Gunilla, is for you. Anything that you can say on the BAN2802 project that we are running with Eisai and the progression of that program? Gunilla Osswald: I'm happy to see that BAN2802 program is progressing well and really nice data. Everything with the data looks really, really good. And we are now discussing with Eisai regarding potential next steps. Unknown Executive: Great. I see that we have Max Da back online. We'll take the written question first, Max, and then we'll come back to you. So then second question for Anders maybe is a question on, is there a commercial milestone, can we expect that during the course of this year for Leqembi? Anders Martin-Lof: Yes, I think it's fair to assume that we will reach a commercial milestone during the year. I cannot really comment on the timing of that. The last one we received was EUR 10 million. And as sales grow, it's normal that milestones grow, too. So I think it's fair to assume that it would be bigger than the EUR 10 million. But as for more details, I cannot really provide that at this point. Unknown Executive: We can remind everybody that we still have outstanding milestones from Eisai of EUR 54 million, I believe. Anders Martin-Lof: In total. Unknown Executive: In total, yes. Okay. And I think the last one here from Joseph is, R&D costs in Q4 '25 were lower than model, that we already discussed. Considering the Phase IIa, what do you think is a phasing? That question we already had, sorry about that. It's the same question that Natalia had at the end, right... Anders Martin-Lof: Yes. So yes, we already commented on the R&D cost phasing, so I hope that answer was enough for Joseph as well. Unknown Executive: Okay. And then I think we can go back to Max's question online in the telephone queue. Operator: [Operator Instructions] The next question comes from Max Da from Goldman Sachs. Chenxiao Da: So this is Max Da for Rajan Sharma. A couple of questions. What is your progress on finding a partner for exidavnemab? And do you require Parkinson's disease to be included in the deal or the partner has the option to license only the MSA indication? That's the first one. And could you speak to the difference between PD-BT2278 and 2238 because I couldn't tell the difference? Yes, I'll start with these 2. Gunilla Osswald: Okay. So the first question was with regard to exidavnemab and partnering. And as I said before, I mean, exidavnemab continues to progress really, really well. We are expecting the Phase IIa results later this year, and we are preparing for Phase IIb. We have interest for potential partners, and we might partner or we might not partner right now. It depends on if we get the right kind of proposal from the right kind of partner. Otherwise, we are very strong and can drive programs like this ourselves. We have the competence and so forth. And I will not comment upon details on this at all at this stage. I mean we're open. We have the open door philosophy like we do all the time. And if the right partner comes, then we will make a partnering. But we are coming from a position of strength, and we can drive things forward ourselves also a bit longer. And then there are different opportunities. I mean we have opportunities for Parkinson's disease with dementia, for example, or Lewy body dementia or other parts of Parkinson's disease or multiple systemic atrophy. And we have now 3 different programs in our portfolio, where exidavnemab is the most advanced, and we have 2238, which was just nominated and got the BAN number. So BAN2238 is the one with BrainTransporter. It's not exidavnemab, it's a slightly different antibody and it's combined with our BrainTransporter. And then as Johanna said, I will make it easy for you now, Johanna, I'll just answer that question, too. And that is 2278, which is slightly different from 2238, but we will not, at this stage, talk about what difference we have. But we have one further new invention that has been added to this program, but we are not revealing any more details at the moment. Chenxiao Da: Got it. Sorry, one more question, if you have time? Gunilla Osswald: Yes. Chenxiao Da: Could you talk about the dividend payout going forward and how we should model that? Anders Martin-Lof: So yes, this is Anders here. So yes, the Board has now proposed a dividend for SEK 2 per year. We cannot give you a forecast for what it will be in the future. However, I think it's fair to assume that the Board is expecting us to be able to pay a dividend going forward for the foreseeable future. The size of that or how certain I am of that, I cannot really comment. But I think it's fair to assume that they are hoping to pay -- hoping to be able to pay a dividend in the forthcoming years. Operator: There are no more phone questions at this time, so I hand the conference back to the speakers for any written questions or closing comments. Unknown Executive: And we have no additional written questions. So I'll hand it over to Gunilla to end the call. Gunilla Osswald: So I'll just say, thank you very much for your attention and a lot of great questions, and I wish you all a great rest of the day. Thank you so much.
Operator: Welcome to BICO Q4 2025 Report Presentation. [Operator Instructions] Now I will hand the conference over to the speakers, CEO, Maria Forss; and CFO, Jacob Thordenberg. Please go ahead. Maria Forss: Hello and welcome to BICO Group's Quarter 4 2025 Earnings Call. I'm Maria Forss, President and CEO; and I will together with BICO's CFO, Jacob Thordenberg, present this year's end report. Here's today's agenda. I will open today's session by summarizing 2025 and also describe how BICO serves the world's leading pharma and biotech companies with solutions that transform how labs operate, innovate and solve our customers' challenges. Following that, I will summarize the full year 2025 as well as quarter 4 '25 and Jacob will then present the group's financial performance. We will then proceed and comment on our performance in the 2 business areas, Life Science Solutions and Lab Automation. I will also comment on our R&D pipeline with our ongoing product development efforts. Additionally, I will highlight product launches made at SLAS, the Society of Lab Automation and Screening Congress, that took place last week in Boston. The session will conclude by highlighting our focus for 2026 before we open up for Q&A. When summarizing 2025, we can conclude that we finished the year on a strong note with double-digit organic sales growth in Lab Automation and a strengthened cash position. After the quarter in January '26, we successfully raised new capital, enabling investments to support further growth. 2025 has been a year of strategy execution. We have delivered on all key strategic initiatives and the impact is clear; a portfolio focused on lab automation, significantly reduced debt and a strong cash position, we have leaner operations and a more focused and customer-centric product portfolio, providing a strong foundation for 2026. Before commenting on our performance, I will present how BICO serves the world's leading pharma and biotech companies with solutions that transform how labs operate and innovate. Our customers share 1 ambition, reducing time to market and increasing the probability of success. With Biosero's leading software suite, Green Button Go, together with their off-the-shelf automation products as well as bioprinting, our portfolio is in the sweet spot of meeting that ambition and solve the core challenges with long and costly development cycles. Our solutions enable smarter, faster and more efficient labs and here lies an underlying strong demand. Pharma and biotech companies all face the same fundamental challenge, long costly development cycles for new therapies. The development of a new therapy often takes more than 10 years and costs between USD 2 billion and USD 4 billion with probability of approval after Phase I at just 10%. To overcome this, our pharma and biotech customers are investing heavily in automation to increase efficiency, speed and quality; to bring innovations to market faster and at a lower cost. Our products and services enable our customers to connect data across systems and apply AI tools to plan, run and optimize experiments in real time. And already today, we're enabling AI-driven drug discovery workflows through our Green Button Go platform. We are at the core of this transformation, connecting workflows and data streams and enabling AI-powered experimentation, and this is what our vision and mission is all about. Our vision is to enable and automate the life science lab of the future. And our mission is to be the first choice lab automation partner and provider of selected workflows to pharma and biotech. During the fourth quarter, I visited several pharma customers who use BICO lab automation solutions and they consistently reported measurable gains in productivity and reliability, including reduced hands-on time, faster turnaround times and higher instrument utilization. And hearing this directly from the scientists using our system every day was both energizing and validating. Let me show you 1 example that emphasizes our mission, our strategic direction and the value that we deliver to our customers. The data shown here are from 1 of the Top 20 pharma customers we are serving. They kindly share their efficiency improvements by using our Lab Automation Solutions. Downstream process and assay development time was reduced by 75%. The capacity with the existing equipment they already had was revved up by 400% because parallel processing and variable-driven robotic processes just allow for more uptime to be squeezed out of each piece of equipment in the lab. And ultimately, these productivity increases means that their scientists are able to achieve 200% of their original productivity. This is because automation was coming alongside them, supporting them and taking over the manual steps and running concurrently in ways that a person just can't manage alone. And this is just 1 example of a lab leveraging Green Button Go and every lab we work with is looking to see numbers like this. The interest in integration services is strong and it's because we're taking technology and using it to augment the work of humans. And we're using technology to get to innovation faster. So to summarize, we lead the way in solving the challenges in life science with speed, accuracy and efficiency. All in all, our customers can run their process faster, improve the quality of the data and ultimately make better decisions. I will now move on to the next section and summarize the fourth quarter as well as the full year 2025. 2025 has been a turnaround year for BICO, building a strong foundation for 2026. Across the industry, 2025 was marked by a challenging market environment. Geopolitical developments, including tariffs, created uncertainty and led customers to take a more cautious approach to CapEx investments. The U.S. academia segment was hit hard by significant NIH funding cuts. FX headwinds with a weaker dollar and euro also weighed on the margins. The diagnostic market normalized, consumables continued to grow and the instrument sales remain muted, but recovered increasingly over the course of the year. I will now present key metrics for the full year and the fourth quarter and Jacob will later in the presentation give more details about the financial development. Sales for 2025 amounted to SEK 1.497 billion corresponding to negative organic sales growth of 8%. Adjusted EBITDA amounted to SEK 5 million corresponding to a margin of 0.3%. And cash flow from operating activities amounted to SEK 68 million. And let's turn over to the fourth quarter where sales amounted to SEK 451 million corresponding to a negative sales growth of 4%. Adjusted EBITDA amounted to SEK 56 million corresponding to a margin of 13%. Cash flow from operating activities amounted to SEK 52 million and net working capital in relation to the last 12-month sales was 13%. In late January 26, we issued senior secured bonds and I will now hand over to Jacob to comment further on this. Jacob Thordenberg: Thank you, Maria. As just mentioned, we issued senior secured bonds on January 28 with a total nominal value of EUR 40 million. The bonds have a tenure of 4 years and carrying a floating interest of 3 months Euribor plus a margin of 5.9%. The bonds were issued at 96.81% of par and were placed with a consortium of Swedish institutional investors. The new capital puts us in a position to support further growth and capture market recovery while navigating ongoing macroeconomic uncertainty. The transaction also serves as a clear testament to the capital markets' continued confidence in BICO. I will later in the presentation describe what this means for BICO in terms of cash reserves post settlement of our current convertible bonds. I will now give some more details to the numbers just presented by Maria. Sales amounted to SEK 1.497 billion, which corresponds to an organic sales growth of negative 8%. With most of the portfolio being instruments and the industry-wide CapEx restraints as well as a muted academia market, the weak first half of the year could not be fully compensated by a stronger second half of the year despite increased demand. Improvements in Scienion and CELLINK strengthened the results while the very weak H1 for Biosero and challenges in the U.S. academic segment impacted the full year results substantially. Biosero has gained positive momentum with new ways of working, new management in place and finished the year with double-digit growth in the fourth quarter. The adjusted EBITDA was SEK 5 million corresponding to a margin of 0.3%. The updated cost estimates in ongoing projects in business area Lab Automation and declined gross profit were the main factors impacting the adjusted EBITDA margin compared to prior year while continued cost control had some positive effects. Operational cash flow amounted to SEK 68 million. In Q4, our seasonally strongest quarter, sales amounted to SEK 451 million corresponding to a negative sales growth of 12% and a negative organic sales growth in constant currency of negative 3.7%. The 9 percentage points difference can be explained by FX headwinds with a weaker U.S. dollar and euro against a stronger Swedish krona. It is also worth mentioning that the corresponding quarter last year was strong in Lab Automation. And in Life Science Solutions, we saw, especially in the U.S., significant budget release prior to the installment of the new U.S. administration. Adjusted EBITDA amounted to SEK 56 million corresponding to a margin of 13%. During the year, we have continued to be very cost conscious to mitigate the adverse effects of lower sales. When looking at the margin development, it is also worth mentioning that we have had a more conservative approach on which R&D costs we capitalized due to a more comprehensive R&D governance with the implementation of a gate stage project model. BICO will continue our clear focus on structural cost reductions and tight expense management in 2026. And if we move on to cash flow in Q4. Cash flow from operating activities amounted to SEK 52 million impacted by working capital changes of negative SEK 12 million. Total cash flow during the fourth quarter amounted to SEK 36 million. Cash reserves by end of the year was SEK 1.282 billion. These cash reserves will be used to settle the remaining balance of our current convertible debt of SEK 1.008 billion. The original debt amount of SEK 1.50 billion have over the years been reduced by early bond buybacks to a nominal amount of SEK 482 million resulting in savings of more than SEK 50 million. Following the settlement of the existing bonds based on Q4's cash reserves and all else equal, BICO will have a strong cash position of around SEK 670 million. Maria will later in the presentation describe how we plan to allocate this capital. As mentioned on the previous slide, the effects of changes in working capital amounted to negative SEK 12 million for the quarter and out of this, operating receivables increased by SEK 62 million, inventories decreased by SEK 26 million, operating liabilities increased by SEK 24 million. In percentage of last 12 months sales, net working capital in the quarter corresponded to 13% confirming that the continued operational excellence actions have been successful. The quite low levels of net working capital is primarily an effect of less net working capital by 0 due to decreases in receivables. Long term we expect working capital in relation to sales to be in line with industry standards of closer to 20% of sales. I will now hand over to Maria to present the results in our 2 business areas. Maria Forss: Thank you, Jacob. Let's now turn to our largest business area, Life Science Solutions. Sales in 2025 amounted to SEK 1.108 billion with an organic sales growth of 1%, which is an improvement year-over-year with 11%. Adjusted EBITDA amounted to SEK 83 million corresponding to an adjusted EBITDA margin of 8%. When looking at our peers, we can conclude that peers with a significant amount of instrument business, which is comparable with Life Science Solutions, reported negative sales growth for the year. The flat sales development which we have seen over the year was primarily driven by a weaker demand in the U.S. academic segment. U.S. academic customers have reduced instrument purchases following funding-related constraints primarily in the U.S. and biotech activity has also remained soft amid longer investment cycles. In contrast, the diagnostics segment continued to perform comparatively well supported by a normalization of the diagnostic market and adoption of automation-linked solutions. Consumables continued to show healthy demand in quarter 4, in line with previous quarter during the year. We have also spent a lot of effort together with the management teams of Scienion and CELLINK, respectively, to sharpen the commercial offering and strengthen the operational excellence during 2025. This work has paid off and both companies have adapted into a new way of working, a more rightsized cost and clear focus on profitable growth. And if we move to quarter 4 results for Life Science Solutions business area. Given the continued tough market, the year ended on a strong note excluding U.S. academia dependent business units, which continued to struggle as mentioned previously. The corresponding quarter 2024 was also very strong due to a lot of U.S. academic sales before the new U.S. administration when they were to cut NIH funding, which results in a tough comparison that Jacob mentioned earlier. The Life Science Solutions delivered in a seasonally strongest quarter SEK 326 million in sales meaning a negative 9% organic sales growth. The adjusted EBITDA amounted to SEK 49 million corresponding to a 15% adjusted EBITDA margin. The profitability was pressured by softer sales, less favorable product mix and tariffs and cost related impacts. And if we move on to our business area, Lab Automation. Revenue for the full year '25 amounted to SEK 391 million, an organic growth of negative 26%. Adjusted EBITDA amounted to negative SEK 31 million corresponding to an adjusted EBITDA margin of negative 8%. The very weak first half for Biosero, including a revision of estimated hours in quarter 2 with a negative effect of SEK 40 million, impacted the full year results substantially. Transformative actions to scale up Biosero have been executed since quarter 2 and the focus has been to significantly enhance processes, leadership and operational capabilities. As Jacob mentioned earlier, Biosero has gained positive momentum with new ways of working, new management in place and we finished the year with double-digit growth. New operational capacities in Biosero are hence paying off and when legacy projects are finalized, the operations will be able to scale and operate in a more sustainable and profitable way. The Lab Automation business area finished the year on a strong note. Sales for the quarter amounted to SEK 125 million, which equals an organic sales growth of 15%. This sales growth was mainly driven by hardware revenue from the large orders won in quarter 3 and accelerated project completions, sales or service contract and software business. The adjusted EBITDA was SEK 18 million corresponding to an adjusted EBITDA margin of 15%. The profitability was supported by higher volumes and increased hardware contribution from the large orders, but also partially offset by continued substantial investments in operational resources for the benefit of our customers to accelerate the closing of legacy projects that have been delayed. I will now move on to the next section where I will comment on the R&D portfolio. One area for growth for BICO is continuous product innovation and we have a solid R&D pipeline and road map in place and this is based on the portfolio strategy which is part of BICO 2.0. And before I comment on some of our recent launches coming from our R&D efforts, it's worth repeating that our current product portfolio covers the full spectrum of lab automation solutions and selected workflows. It's important to emphasize that we have lab automation products and solutions in both our business areas and this is illustrated on this slide where you can see instruments from various BICO business units positioned along different stages of the lab automation continuum. Products in the business area Life Science Solutions are also automation-ready and can be powered by Green Button Go. Here are some examples. C.STATION is a unique product. It's a standardized integrated work cell for pharmaceutical cell line development. This is also an example of synergies in the group as the product includes products from CYTENA [Audio Gap] Instruments and Biosero. To the right, you can see the benefits of automation and how this off-the-shelf lab automation solution saves both time and money to the customers through lower staff requirements as well as lower CapEx investments. The optimized workflow shortens cell line development by 4 weeks accelerating product delivery. And if we move on to another solution, G. PREP combining products from CYTENA and Dispendix. G. PREP is a miniaturized NGS workflow enabled by noncontact liquid handling. It reduces reagent consumption with up to 90% as well as pipette usage and plastic waste, delivering return on investment within 12 months to the customers. Now these are just 2 examples of technology and solutions delivering customer value. And if we take a look at our R&D pipeline and road map. On this slide, you can see our comprehensive product development pipeline within BICO's prioritized focus areas. The majority of the R&D investments are made in software development and the use of AI while there are several upgrades of instrument portfolio as well, meeting customer needs. Multiple product launches are planned for this year and these include both software, instruments and consumables. We have already launched a few products last week during the SLES, the Society of Lab Automation and Screening Congress, in Boston. And for those of you who is not familiar with this congress, it's the most important congress within lab automation in the year generating a lot of sales opportunities. At SLES, one of the products launched was GoSimple by Biosero, which is designed to simplify workflows, reduce hands-off time, increase sample throughput and enable extended lab operations. GoSimple is initially launched with commercial partnerships covering selected instruments from Sartorius and Becton, Dickinson & Company. And this product is an example of how we are introducing new commercial concepts in lab automation with shorter lead times to balance the product portfolio. And given the high interest we saw at SLAS, there might be additional collaborations added over time, including expanded work with existing partners as well as new partnerships and the partners will promote GoSimple alongside their instruments. And this approach strengthens market adoption with the aim of positioning GoSimple as a preferred automation-ready solution across multiple worksites. Biosero has also made an early access release for the new assistive AI tool set during SLAS where our software suite Green Button Go enables workflow creation, review and troubleshooting using natural language instead of code. The assistive AI solution is designed to improve speed, usability and error resolution in lab automation while maintaining full human oversight and validation. It also uses AI responsibly by augmenting workflow development and not by introducing autonomy. This early access program is available to a limited group of customers through a controlled access program and this approach allows us at Biosero to learn alongside the users and evolve the capabilities based on real-world needs. Before the Q&A, I will repeat our strategy and give some concluding remarks and highlight our focus for 2026. Here you can see our strategy BICO 2.0 on a page. Our 5 strategic focus areas; to drive our top line and profitable growth are enabling end-to-end lab automation and scientific workflow solutions coupled with further development of integrated data, AI and software solutions; to enable increased sales to pharma, we need to ensure regulatory compliance readiness; and we also want to expand strategic partnerships such as the one with Sartorius and Becton Dickinson as well as increasing the recurring revenue. In 2026 we will continue to execute our strategy with focus on commercial excellence, an R&D pipeline that delivers clear customer value and financial discipline for profitable growth. And with this strengthened cash position, we can accelerate commercial as well as R&D initiatives and also more seriously engage in dialogs for bolt-on acquisitions, strengthening our portfolio further. The new capital puts us in a position to support further growth and capture a market recovery. We will strengthen our innovation efforts, including software solutions and the use of AI. And above all, we remain committed to supporting our customers' research and enabling the lab of the future. For us, automation isn't just about efficiency. It's about empowering scientists to accelerate innovations that shapes healthier societies. Before the Q&A, I want to sincerely thank our customers, business partners and shareholders for your continued trust throughout 2025. And I also want to extend my appreciation to all BICO colleagues around the world. Thanks for your dedication and meaningful contributions this year. This was our final slide before the Q&A. I will now hand over to the earnings call host for further instructions. Operator: [Operator Instructions] The next question comes from Ludvig Lundgren from Nordea. Ludvig Lundgren: So I have 3 and I take them one by one. So starting off on Life Science Solutions. You highlighted a slow academic spending here and it has been rather slow throughout 2025. But outside of this end market, it seems as if demand has been rather good actually lately. So I know you don't provide any guidance, but given that you have started talking about the slowdown in academic spending already I think in Q1 '25, is it fair to assume organic growth to improve from here looking into H1? Maria Forss: As you say, Ludvig, there has been slow academic spending throughout 2025 and I think we as well as our peers, there are difficulties to make predictions about what's happening in 2026. The assumption from peers in the market is that the NIH budget cuts will not be further cut, but there will likely be a more stable situation during 2026, but it's still unsecured. So I think we will have to just see what the future has in its -- and see where things are going. But remember that we have normally a seasonally variation when it comes to Life Science Solutions where quarter 1 is usually our weakest quarter and quarter 4 is our strongest quarter. Ludvig Lundgren: Okay. Very clear. And just a follow-up to that. Would you say that like looking this far into Q1, is the market, so to say, worse than what it was in Q1 last year when you like initially saw this slowdown in academic or is it -- it sounds like it's somewhat of the same market basically. Maria Forss: I would say that this is the new normality and the market has adapted to that and there is -- there are no news that is making any more insecurities than before. So if anything, it's more stable than last year. Ludvig Lundgren: Okay. And then I want to jump over to lab automation and you mentioned SLAS here and we saw a lot of like pharmaceutical companies announcing new AI drug discovery initiatives with Eli Lilly I think being the largest one that I saw at least. So I just wanted to hear like are you already seeing an effect from this on Biosero in terms of new project proposals and so on or is this more of a long-term growth driver for Biosero? Maria Forss: I think we have -- if we split AI in machine learning that has been around for decades and the use of large language models, those are 2 different things. And overall, AI is something that supports our business model that we work with Biosero. So initially what we do with AI is to ensure that we can help our customers make more efficiencies by reducing their time that they are using for managing large amounts of information and complexity so they can easier reach their potential on automation. And for AI to work, you need a lot of data. Without data -- you cannot contextualize data; without that, you cannot make any good algorithms that help makes AI help you. And since we have been around for such a long time with Biosero and have so much data, we can then utilize that in advancing our different solutions forward. So AI coupled -- AI and data and software coupled with end-to-end lab automation, that is the large demand from our pharma customers when they are trying to get products to market faster and with a higher probability of success. Ludvig Lundgren: Okay. Very clear. And then a final question from my side is on the OpEx side. I think excluding the one-offs here in the quarter, it seems to be down quite a bit both sequentially and year-over-year and that's despite of course Q4 being a high sales quarter so to say. So I just wanted to set some reasonable expectations here for '26. Is it fair to view this OpEx level here in Q4 as a new base or how should we look at the current OpEx level? Jacob Thordenberg: Ludvig, I would say yes. I would say that the OpEx levels in Q4 are indeed sort of a good proxy and where we hope to stabilize. Some of the decrease that you see between 2024 and 2025 I believe is also related to impairments in R&D in 2024. So that's driving some of the decline in OpEx because that's included in OpEx. But in addition to that, we have also been cost conscious and made savings in 2025 and we are quite happy with the current cost base. We believe that we perhaps could do a little bit more, but not from sort of the elevated levels that we saw in terms of reductions in 2024. And the ambition going into 2026 is of course that we should be able and are able to scale on our current cost base. Operator: The next question comes from Filip Einarsson from Redeye. Filip Einarsson: I'll actually start with some of the recent news relating to the launch of GoSimple. Can you give some color or any immediate impressions on the launch? Maria Forss: Filip, it's a very bad line. Can you please repeat the question? Filip Einarsson: So my question relates to the recent news flow on maybe the launch of GoSimple. I'm curious if you could share some like immediate impressions on the launch and maybe provide some color on that. Maria Forss: Yes, sure. So at SLAS in Boston where we launched GoSimple, both with instruments from Becton, Dickinson & Company and also Sartorius, there was a huge interest from customers, but also other potential collaboration partners. So we have quite a long list of other potential collaboration partners that want to do the same that we have now done with Sartorius and Becton Dickinson. When it comes to what the different sales leads will generate in terms of actual sales, that is something that is being followed up as we speak. So that I will know in a few weeks' time. But by just looking at the flow in the booth and the immediate feedback, it was a successful launch. Filip Einarsson: Okay. Good. And just a short follow-up. Sort of from our point of view, when should we expect this to become a material part of the sales mix? Could you provide any sort of guidance there? Maria Forss: I think overall in terms of the business case for GoSimple, it's a complement to balancing the portfolio with large and more complex projects. And I mean it takes some time before you can see effect of the sales given the sales cycles, but you should still think about the large complex projects being the largest revenue stream for Biosero and GoSimple is a complement to it for now. Filip Einarsson: Okay. And I'm curious also, look, you talked about academia being headwinds obviously. But I'm also curious on sort of other customer segments. I hear from other actors in the industry that activity among biotech customers for example is improving. Is it your view as well? And could you comment on how that has progressed? Maria Forss: I would say that the second half of last year, we saw increased demand in all different segments in essence as we commented: diagnostic increased, the consumables market continued to go well in terms of growth and so did lab instruments. So it's really the academia U.S. segment that has been muted while we see positive development in all the other areas. Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Maria Forss: Thank you for the questions received and thank you for your continued interest and support in BICO Group. Together with Jacob, I wish you all a great Wednesday. Thank you and goodbye.
Steve Johnston: Good morning, everyone. Standing room only for the external participants in the Sydney office here and many, many people, I'm sure, online and listening in. So welcome, everyone. Let me begin, of course, by acknowledging the traditional owners of the lands on which we meet and pay our respects to elders past and present. As usual, I'm joined by our CFO, Jeremy Robson, and we'll present the financial results for the first half of financial year '26. We'll, as usual, run through the presentation. And of course, we have other members of the leadership team here who can join us and support us for the Q&A session that follows. As always, I'll start with a brief recap of how we believe long-term value is created at Suncorp. This is a slide I put up every time. It's our purpose slides where our purpose delivered through our people, supporting our customers and the community, but in that order, will always result in a sustainable and growing business for our shareholders. So to the headline result. And at the outset, I would acknowledge that this has been a challenging half for the whole insurance industry as we've responded to the extreme weather. The group's net profit after tax of $263 million and cash earnings of $270 million were well down when you compare it to the prior period as we managed 9 separate weather events at a net cost of $1.32 billion, which is $453 million above our allowance for the half year. Of course, I'd also make the point that the NPAT in the prior period included the one-off gain on sale of Suncorp Bank, which was $252 million. Net investment income of $259 million was also down on the prior period. And of course, it was impacted by the negative mark-to-market movements in the bond portfolio. However, of course, the flip side of this is that investment -- the investment portfolio is currently yielding 5%, and that creates a tailwind for future earnings and future margin. As you know, insurance profits are subject to the vagaries of weather and investment markets with favorable periods driving higher profits. But as we've said consistently, there are also times when the reverse occurs. And consistent with that purpose of ours, our focus as a general insurer is on creating long-term value. And while we've experienced significant natural hazard activity in this half year, the way we show up to support our customers during these events is what ultimately drives and underpins long-term value creation. So while the headline results have been impacted by those 2 factors, the underlying business continues to perform strongly, and that's reflected in the solid growth of our consumer business and our underlying insurance trading ratio, which has remained at the top end of our guidance range at 11.7%. We've also further consolidated our market-leading expense ratios. As you'll hear later in the presentation, our key strategic initiatives, the Digital Insurer program of work and our AI program are on track to deliver material value. And as Jeremy will point out, we have maximum flexibility when it comes to the structure of our reinsurance program. Balance sheet and capital position remained very strong, and the board has determined an interim fully franked dividend of $0.17 per share, representing a payout ratio of 68%. Our disciplined approach to capital management enabled us to complete $168 million of our on-market share buyback program over the half year. And we'll recommence the buyback post the results and continue to target around $400 million by the end of FY '26. So on this slide, I've focused on growth, which I know is going to be a key topic of interest, growth right across the business. And at an aggregate level, our business has delivered premium growth of 2.7%. Below the headline number in consumer, strong premium growth was driven by both rate and unit count. Home written premium grew 7% with unit growth of 0.4%. Now pleasingly, in Home, we continue to grow our share of low and medium natural hazard risk and we shrink that which we classify as high or extreme. Our Motor portfolio grew by 5.8% with unit growth of 2%. Again, that's a very satisfying outcome in the context of a highly competitive market. In Commercial and Personal Injury, GWP growth was achieved across most portfolios, but is, of course, moderated from its prior levels. In CTP, portfolio growth was driven by the pricing increases that were implemented across New South Wales and most recently, in Queensland. Now our New Zealand business tells a slightly different story. Growth contracted over the half and was impacted by challenging market conditions, particularly in commercial due to the softer market environment and, of course, heightened competition. Jeremy will go through all the GWP moves, adds and changes in more detail in just a moment. Now given the significance of weather events over the half, I've included this slide, which provides a deeper insight into the profile of the first half natural hazard events. As I mentioned earlier, we dealt with 9 declared natural hazard events through the half and we managed more than 71,000 natural hazard claims at that net cost of $1.3 billion. On the bottom left-hand side of the slide, you can see the top loss causes. Hail was by far the most significant contributor, accounting for approximately 3/4 of event-related claims and driving claims costs of more than $700 million from hail. The majority of those events arose in the October and November event periods. Now the financial cost of these events seriously underestimates their true impact on the communities. I've been on the ground across many of the affected areas, and I've seen the great work our teams are doing to support our customers in the aftermath of the events. Our meteorological and our disaster management capabilities, which many of you have seen and are housed in our event management center in Brisbane have accelerated our response while our mobile disaster response hubs have been active across 27 affected communities, engaging with customers on the ground approximate to the events that they've just experienced. Our scale in motor insurance repair meant we could quickly stand up a pop-up motor assessment center, where more than 4,000 vehicles were assessed over the course of 2 weeks, significantly speeding up the repair process. Now it's in moments like this, long-term value is either created or eroded. And while the impact on profits will be felt in this half year, I'm very confident that the way we have mobilized to support our customers will be rewarded over the medium to longer term. So with that, I'll hand back to Jeremy -- hand over to Jeremy to go through the result in more detail. Jeremy Robson: All right. Thanks very much, Steve, and good morning, everyone. I'd like to start off by reinforcing a few key points on the group results before we get into the details. Now whilst as Steve said, our reported NPAT was impacted by elevated natural hazard losses and mark-to-market losses, our underlying insurance result was up 6%. I just want to emphasize a couple of key points about the result. We delivered good unit growth in both home and motor, demonstrating the organic strength of our brand portfolio. Whilst the Suncorp business has elements that are exposed to the global insurance pricing cycle, these are a smaller subset of our business. Most of our portfolios are driven by input costs and upward supply chain pressures and natural hazard costs remain a feature. We expect acceleration in GWP growth in the second half including the impact of higher pricing already implemented across a number of portfolios. The higher yields that gave rise to the first half mark-to-market losses were a positive going forward, and give us an exit yield of nearly 5%. Our expense ratio reduced a further 40 basis points this half, reflecting our ongoing control of costs at the same time as investing in the business. Our capital position is strong. and we have reaffirmed our target for the buyback of $400 million for FY '26. We have optionality on reinsurance as markets continue to soften, which we're going to explore further. And we remain confident that our natural hazard allowance is set at an appropriate level. I also note the strong prior year reserve releases of $65 million, 90 basis points. We saw releases ahead of expectations in commercial and workers but with some offset in consumer. Okay. So now let's get into the results in a bit more detail, and we'll start with underlying ITR. The underlying ITR remained in the top half of the 10% to 12% range at 11.7%. Dynamics included the earn-through of pricing, continued improvements in the expense ratio and lower reinsurance costs, partially offset by the increased resilience built into the natural hazard allowance. On a portfolio basis, consumer benefited from the earn-through of pricing with margin remediation in home. For New Zealand, while the portfolio increased 150 basis points, the group contribution was impacted by the relatively lower growth and the weaker New Zealand dollar. The commercial portfolio was impacted by pricing pressure in property and claims repair costs in Fleet with margin expansion in the CTP portfolios following our disciplined pricing actions. Looking forward, we expect the second half margin to continue to be in the top half of the target range with the earn through of CTP price increases and platforms remediation but we do expect some headwind from New Zealand with ongoing moderating prices. On to the next slide then, and I'm going to quickly touch on overall growth before moving to the divisions. Growth in the first half was particularly strong in the consumer portfolios with unit growth across home, motor and AA in New Zealand. GWP growth was good in CTP and Fleet but workers was impacted in the first half by lower prior year adjustments. And whilst more muted than the overall market, the commercial portfolios in both Australia and New Zealand were impacted by the current cycle. We expect to see acceleration in GWP growth in the second half, and you can see that on the chart, to deliver full year '26 growth around the bottom of the mid-single-digit guidance range. In motor, inflation in parts and labor is ongoing and pricing has been adjusted to reflect this. We expect commercial growth to pick up with further product launches in Vero Specialty Lines and rate remediation in platforms. Significant pricing has gone through the Queensland and New South Wales CTP portfolios, and this will continue into the second half, and workers will also benefit from ongoing additional rate. And then we see price decreases are expected to moderate in our New Zealand commercial portfolios. I do note, of course, that the outlook is subject to the competitive environment, particularly in the commercial portfolios. Now in the context of growth, I'd like to remind you of how we see insurance pricing cycles work at Suncorp. On the chart, I've divided our portfolio into 2 broad categories, those where pricing is primarily driven by input costs. and those that are more exposed or directly exposed to global capital flows. In the first group, our portfolios that require important capabilities. So that's things like established supply chains such as motor repair networks and brands and brand presence. This portfolios are subject to cycles that are driven by input costs, such as supply chain inflation, natural hazard events and reinsurance costs. In the second group is business with direct exposure to global capital flows. Now less than 10% of our book is in this group and includes some of the property and professional indemnity portfolios in Australia as well as much of the New Zealand commercial business. The 2 key points I'd like to leave you with here are: firstly, insurance input costs tend to differ to CPI, and they continue to be elevated with ongoing inflation in motor and home repair chains as well as natural hazard costs. And then secondly, while Suncorp does have exposure to the global capital insurance cycle and our commercial portfolios, we have a good degree of portfolio diversification across the group. I also note, we benefit from this softer cycle in our reinsurance program for the whole of our business. Okay. So I'm now going to move to divisional results and start with Consumer. In Motor, GWP increased 6% with good unit growth and moderating AWP albeit with further pricing put through late in the half in response to ongoing repair cost inflation. In Home, GWP grew by 7% as we continued to price for higher natural hazard allowance and underlying claims inflation. Unit growth was positive but reflected the continued low system growth. Now pleasingly, you can see on the chart on the bottom left, we saw an improved portfolio mix with a higher proportion of low-risk homes. Underlying ITR for Consumer improved from 9.4% to 9.9%, with margin remediation ongoing in Home and Motor at the top end of its range. Looking forward to the second half, we expect consumer margins to expand modestly as pricing earned through Motor but with some moderation in Home due to the phasing of the natural hazard resilience allowance into the second half. Next then to Commercial and Personal Injury. GWP performance was mixed, reflective of our diversified portfolio. Fleet growth was strong in the double digits, reflecting our market-leading capability in this segment. CTP growth was good, reflecting the results of our disciplined approach to pricing. In Queensland, GWP was up 9%, and we continue to engage constructively with the Queensland government on reform, including a premium equalization mechanism. The Vero Specialty Lines continues to grow with 4 new lines now launched and live in market. But then the property and Profin portfolios reflected the softer cycle, albeit to a lesser extent than overall market, and workers, as I said before, was lower with the impact of prior year adjustments on premiums. Underlying ITR was a little lower with improved margins on CTP being offset by competitive pressures on property and claims inflation in Fleet. Importantly, property and Profin margins remain at the top end of the range and provide important flexibility as we manage the portfolio through this current pricing cycle. Turning then to New Zealand. The business continues to perform strongly from a profit perspective with an underlying ITR comfortably above the top end of the range, and that's as claims inflation and reinsurance costs have moderated rapidly. Whilst the business is well diversified, GWP contracted due to varying pressures across the portfolio. In consumer, unit growth continued in our Direct AA business in both Home and Motor, whilst the intermediated channel was impacted by the exit of a brokered book of business. GWP growth for commercial continues to be impacted by the softer market conditions as well as the impact of a New Zealand -- a weaker New Zealand economy. But we are seeing some signs of a bottoming of the commercial pricing market as well as an improved outlook for the New Zealand economy. Going forward, we expect margins to remain attractive, albeit to normalize down towards the top end of the New Zealand target range as moderating prices earned through the book. Okay. Now to natural hazards, and it's evident, as Steve said, the half was significantly impacted by elevated natural hazard events. The experience of $1.319 billion was $453 million above the allowance. Now just to put this into context, first half '26 for us was the highest retention ever in the half, one of the most severe halves this century, and it was significantly impacted by hail events, and those are relatively random in terms of weather patterns and less clear connection to climate change dynamics. The first half result also included an increase in attritional natural hazard claims costs, and that was primarily driven by the higher rainfall and wetter weather conditions that were prevalent over the half. Now whilst this is a disappointing result, it should be taken in the context of a natural hazard allowance that is sufficient in 7 out of the last 11 years, including this half and 4 over the last 6 years, and that's based on the current reinsurance program and current exposures and costs. Over that 11-year period, we would have cumulatively been below the allowance by over $1 billion, again, including this first half result. So we remain confident that our natural hazard allowance with the additional resilience flagged at the full year '26 results is appropriate. And we note that short-term variability is expected, and it's the long-term performance that drives value. Looking forward, the second half allowance remained the best guide for expected natural hazard experience in the second half of this year. And I do note that the January performance, and that's with the bushfires in Victoria and the storms and floods we saw in Sydney earlier in the month was in line with the allowance. Next, the related topic of reinsurance. As previously flagged, we continue to review our program against our reinsurance framework and our key objectives are optimizing capital efficiency relative to our cost of equity and managing volatility, all with the overarching goal of maximizing long-term shareholder value creation. Our FY '26 program, best met these objectives when placed in July last year, but a softening market may provide the opportunity to reassess additional cover. In the meantime, our program provides robust protection, limiting exposure to the need for reinstatements as well as drop-down cover against large events in the second half now enlivened. That means our maximum retention for further events will be limited to $260 million for our next large event and further limited for any subsequent large events. And of course, we'll continue to review our options on reinsurance leading up to the July renewal, and we'll update the market accordingly. On then to investment performance. The average underlying yield on insurance funds was lower than the PCP, reflecting lower risk-free returns and lower inflation-linked bond carry I do note our tech reserve investment managers, again performed strongly with good alpha. The higher yield environment continues to support an attractive exit yield, which is currently around the 5% mark. Now we've made some changes to our investment allocations in line with our strategic asset allocation. We've reallocated from inflation-linked bonds to structured credit and insurance funds and rebalanced from cash into property in shareholders' funds. Going forward, we'll continue with this rebalancing, but being mindful of the market outlook for inflation in particular and as suitable opportunities arise. Turning then to expenses. Operating expenses increased by 4%, and that's whilst our total expense ratio reduced by a further 40 basis points. Expense growth was largely in our growth-related costs. That's driven by investment in the digital insurer policy admin system and investment in AI capability. We also increased our spend in marketing in response to elevated competitor activity and then run the business expenses increased modestly as productivity improvements continue to help offset wage and technology inflation. Going forward, we aim to keep our run costs as low as possible through operational efficiencies as we continue to invest in our key strategic priorities of platform modernization and operational transformation, including AI. And so finally for me then to capital. Our capital position remains strong with $700 million of CET1 above the midpoint of our target range. And I'll just make a couple of points on the usual capital waterfall. The final dividend of $0.17 per share represents a payout ratio of 68%. It's around the midpoint of our target range and is fully franked. The GI capital usage you see on the waterfall was largely from the higher natural hazard experience in the half, some business growth and then some of that investment portfolio rebalancing that I referenced. The other category you see largely relates to the weaker New Zealand dollar. And then the completion of the $168 million of on-market buybacks in the first half was largely in line with our expectations. Importantly, the buyback is expected to resume after the first half results. And again, reaffirm that we continue to target $400 million for FY '26. Going forward, capital access to our needs is expected to be returned to shareholders using on-market buybacks, as we've previously flagged. I do note that we have a preference for managing capital in the top half of the range as opposed to hard on the midpoint in order to optimize ongoing capital flexibility. And with that, I'll hand you back to Steve. Steve Johnston: Okay. Thank you, Jeremy. And moving to the next slide. And here, we provide a quick update on our progress in delivering our digital insurer platform modernization program of work. Now at the bottom of the slide, I remind you of the progress that we have made in replatforming both our contact center and our pricing environment in Australia and in New Zealand. As we touched on in our investor update last November, our first release of our new policy administration system went live in April last year for new home and motor portfolios in our AA Insurance New Zealand joint venture. The system has started to deliver more simplified underwriting and greater automation, and we remain confident the expected benefits that are baked into the AI business plan, but also into the whole digital insurer business plan will be realized over time. We're now well into the delivery of our second release in our AAMI brand, which is, of course, our flagship national consumer brand. Now we're targeting this release for AAMI Home and Motor new business around the middle of this year and migration of existing policies at renewal, which will follow soon thereafter. But before I move to the outlook, I wanted to update you on our approach to AI, which as you all know, is a topic of key global interest, particularly as it relates to insurance. Now we spent a lot of time on this at our Investor Day back in November, but as usual, with these technology-based disruptions, a lot has happened in the past 4 months. On this slide, I've recapped the Suncorp AI story so far. It describes how we are well placed to leverage AI to improve customer outcomes and importantly, to support long-term returns. We believe we are uniquely placed to be towards the front of the AI adoption curve. We have market-leading AI capability within our Suncorp team, and we have established partnerships with leading AI technology companies and BPO partners. With these, partners know us, know our processes and know how AI can be redeployed -- can be deployed alongside automation and process redesign. Our agentic AI program of work that we showcased at Investor Day is now in full-scale delivery. We are on track with initial deployments across our claims and customer services processes, though we see opportunities right across the value chain of insurance to enhance the customer experience and to transform end-to-end processes. Additionally, as I outlined on the previous slide, we continue to progress our broader technology road map, which is replatforming our business with SaaS-based cloud-enabled core systems, where importantly, AI is embedded into the core. We already have AI enabled across our enterprise-wide telephony platform and our earning pricing engine. And on this slide, I provided a snapshot of just some of the AI capabilities that are embedded into the core replatforming program of work, some of which is already in place and more to come. As a manufacturer of insurance, we see material opportunities for AI to improve product design in a hyper personalized insurance future and to transform claims processes from a customer perspective, all along reducing our loss and expense ratios and importantly, addressing insurance affordability. As a distributor, we see opportunities for AI to both strengthen the effectiveness and deepen the customer engagement across our market-leading brand portfolio. This will equally apply to consumer and commercial or as premium pools move between those portfolios over time. In summary, AI will significantly improve our capabilities and efficiency in both manufacturing and distribution but over time, it will allow us to carefully and selectively assess other opportunities across the insurance value chain. So to the outlook, and I'd like to summarize a few of the key points for the full year. GWP growth is expected to be around the bottom of the mid-single-digit range given the current cycle in commercial in Australia and New Zealand. The underlying ITR is expected to remain in the top half of the 10% to 12% range. The operating expense ratio is expected to be approximately 50 basis points below FY '25, but with an increasing proportion of expenses allocated to growing the business. We maintained our disciplined approach to the balance sheet, targeting a payout ratio around the midpoint of that 60% to 80% range of cash earnings. And finally, as we've covered off, we'll be restarting the buyback as soon as possible with the target of around $400 million over the course of the year, the full year. So in summary, our team continues to rally around that purpose. We are focused at this point in time on the needs of our customers, supporting them with best-in-class event response capability. Our brands remain well supported, and our multi-brand strategy allows us to reach a broader customer base. We are investing in modern technology, which alongside AI transformation will deliver leading customer experience and competitive pricing. We ended the second half with a strong capital position, active capital management, all of which will deliver improved shareholder returns. And as Jeremy has covered off, we have optionality on reinsurance as markets continue to soften. So with that, let's move to questions. Why don't we just work our way along the front panel here, Nigel? Nigel Pittaway: It's Nigel Pittaway here from Citi. First question, just I mean, can we just clarify exactly what we mean by bottom of mid-single-digit range? Does that mean 4% to 6% is the range and 4% is the bottom. Is that a correct interpretation? Steve Johnston: It's pretty sensible arithmetic to me, Nigel, yes, mid-single digits. We would suggest would be 4% to 6% and bottom is 4%. Nigel Pittaway: Okay. Fair enough. Moving on to Motor then. I was wondering whether you can sort of elaborate on what actually surprised you in terms of Motor inflation in the period. You've obviously made some comments there about pressures across repair and total claims, but I was wondering for a bit more color there. And also whilst we're still on Motor, I think you mentioned that you put through price increases towards the end of the half, which seems to have gone the opposite direction to one of your key competitors. So I was wondering whether you've seen any change in competitive dynamics in the first 6 weeks of this half? Steve Johnston: Quickly, just -- and Jeremy can top up on lease potentially as well around what we're seeing in inflation. At the highest level, the discipline that we apply is that we monitor inflation very carefully across the whole insurance portfolio. And we've often said that you can't look at insurance inflation through a proxy of CPI. Some of the work we've done over the past 6 months to try and understand the differential between CPI and insurance inflation would put insurance inflation running at between 3% and 4% higher than CPI across our portfolio. So in Motor, let's start with Motor. Obviously, some of the dynamics might have been masked by the significant reduction in inflation as the repair chains became more accessible post COVID. So a big, big disruption in Motor. Those repair chains have broadly settled out, but labor rates remain high. That's the first point to make. The second point to make is when you think about motor, often we tend to look right over the horizon to an automated vehicle world. But what's going on in motor at the moment, there is a very significant short-term dislocation with electric vehicles coming into the market, hybrid vehicles coming into the market, particularly with Chinese origin. We've seen a lot of that happen. And that will disrupt supply chains for a period of time. We saw that with the introduction of the first round of electric vehicles, where it took periods of time to get supply chains working and get repair capability where it needed to be, and we're seeing a little bit of that in the network at the moment. We're also seeing elevated costs continuing in labor, labor rates across repair. Not to the extent they were post COVID, but certainly still elevated relative to what they might have been pre COVID. And we're seeing some impact of parts supply, some parts inflation, a bias to replace parts now with the technology that's embedded in them versus repair them as might have happened again 5 or 6 years ago. They're all the factors that we monitor very carefully. And again, to the overarching methodology for the group, we believe we need to focus on covering inflation in our pricing, and that's what we tend to do, and that's what we saw towards the back end of last calendar year and into this year. So those pricing increases have gone in, and we're very confident that they will be sustained. On the Home side, just to jump forward to probably your next question, the underlying dynamics in Home are not dissimilar to what we've seen before. So on the hazard book, we've obviously had a pretty challenging half, with a high predominance of hail-related events and we will go back through our modeling to understand the allocations of hazard premium to hail and whether the loadings that we put across the whole portfolio continue to be relevant. And I expect that there will be some adjustments to pricing, particularly in some geographies off the back of that. And also in New Zealand, where we tend to see the New Zealand numbers as small numbers in relation to the group. But relative to the size of the New Zealand market, there are quite material events that have been going through in New Zealand now for the past couple of years, had some changes in pricing there. On the Home side, the underlying factors continue to be the case and they relate largely to large loss fire severity of large loss fire. We've talked about lithium batteries that continues to be a dynamic, stabilized a bit in the portfolio, not so much frequency but more severity. And similar trends in escape of liquids, where frequency is moderated or stabilized and severity continues to be reasonably well elevated. The biggest dynamic in Home, and we'll talk about this, I'm sure, for the next 5 years will be the supply chain and the pressures that are on trade availability, particularly in some geographies, but that will flow through nationally. And so when we think about inflation in the portfolio, we think about that dynamic that elevates relative to CPI, and I think we'll continue to have it elevated for some period of time. and our overarching sort of methodology within our group and discipline within the group. And you saw it when we stood out of the market previously and we're prepared to do that from time to time when we don't have the confidence around the trajectory of inflation. But when we do have confidence around it, we will price to it in a disciplined way. And I think that's been evident in our previous performance and continues to be the case. Do you want to? Jeremy Robson: Steve, I'll just add just back to Motor and Home for that matter. I'm not sure any of those inflation signals that we're seeing, particularly idiosyncratic to Suncorp. I'll just add another 2. One is total loss, which is sort of nearly 50% of the motor loss claims, motor claims. And that's -- what we've seen there is we've seen not an increase in frequency and theft, but an increase in the average cost of theft. So we're seeing more modern vehicles getting stolen. So that's been a bit of a trend. Victoria seems to have stabilized a bit, but still at a higher level. And then the other one is third-party claims, which were a reasonable component of claims as well, and we've seen elevation in third-party claims, particularly from credit hire, which I think others have called out as well. Nigel Pittaway: Okay. And no comment on units in first 6 weeks? Steve Johnston: Look, I think put the hierarchy of decision-making inside the organization, make that clear. I mean we will price to inflation. Our preferred target is to have units land somewhere between 1.5% and 2.5%. So that we're tracking with market. In Home, it's a little bit more nuanced because the home system rate is negative. So 0.4% in an absolute sense, doesn't sound spectacular, but relative to the system, it's good. And importantly, in our Home book, it's the distribution of units and customer growth relative to the risk characteristics. And so our target for the portfolios will be to cover inflation and grow units in motor at 1.5% to 2.5%, thereabouts. But if we're above that or below that in any period of time, and we're covering inflation. Our primary objective is to cover inflation on a book that's got 26%, 27% market share. I think that's the right way and disciplined way to look at the portfolio. Nigel Pittaway: All right. And then maybe just a question on the reinsurance. I mean just aside from obviously softer pricing, has the sort of experience that you've had in the first half of this year in any way changed your approach to when you come to buy your reinsurance cover? And is it really the case that aggregate covers are likely to be more available? Steve Johnston: Well, I think they've edged closer to availability every year. And by definition, that's usually the case. We would like an aggregate cover in our arsenal. Since we divested the bank, obviously, that's amplified volatility across the group. And so an aggregate cover would be something that we would have always aspired to. 12 months ago when we went through the process of pricing it and seeing whether it was a commercially available product, sensible product in the market, we couldn't make it work. Our anticipation is that the continued softening of those markets and the profitability of the reinsurers across the broader catastrophe covers that we're offering, will put us proximate to that availability. Now we've got to go through that process. We firmly believe that as a primary insurer, we don't have the opportunity to pick and choose what markets we play in, in this country. And so we have a fantastic reinsurance panel with great partners, and we'd like to see some support to provide that volatility protection, which we think is the last part of our story. Kieren Chidgey: Okay. Kieren Chidgey, UBS. I might just start on a similar area, the GWP growth on Slide 12 that you put up, you're flagging better growth in second half across each of the portfolios. But the commentary seems to suggest most of it's coming from price. A couple of questions. Interested in if you can give us sort of, I guess, a feel for the types of level of pricing you're talking across each of those segments. And then secondly, sort of your view around the competitive backdrop in each of those and volume implications if you do have to push above market on price? Steve Johnston: Yes. I mean it's fair to say we've emphasized price. And we've emphasized pricing that's already been put into the book. Now some of that, obviously, CTP, their filings that have occurred, they're scheduled, they will come in. We know what pricing we put through New South Wales CTP. But ahead of price is inflation. And so when you think about price, think about us at that overarching level, looking to price to inflation, but... Jeremy Robson: Yes, I think if we go through it, so motor, we see a little bit more rate going through motor in the second half. As we said, we've already started to put that through in the back half of the first half. In Home, maybe a little bit more rate, but Home is pretty reasonable from a margin perspective at the moment. So a lot of the price is around margin remediation relative to where inflation is. So we think a little bit more in motor. CTP, as Steve said, it's pretty much already in. So we've got another $25-ish on New South Wales CTP this month. We've got another $6, I think, in April or so in Queensland. So we can see that price is already in situ. Workers' pricing in Western Australia and Tasmania needs to lift, probably towards the top end of the single digits. So you've got price going through those portfolios. Then as a set of elements like in Vero Specialty Lines, we expect to see continued growth there and continuing growth from the first half rollout and then there's some sort of like non-repeats, if you like. So in New Zealand, we expect the rate deterioration to start to bottom, but also the rate deterioration started in first half -- in second half '25. And so the first half -- second half '25 as a base is already in that second half '26 growth number. We expect to see some rate growth in motor in New Zealand, particularly in the AA portfolio. So that will support that. And then in workers, I flagged that we had these prior year adjustments, that's burner adjustments on claims, wage adjustments. We haven't seen the same favorability this year that we saw last year. Of course, the corollary on that is you're doing better on claims, so it sort of net P&L neutral, but it does come through the GWP line. We wouldn't expect that to occur in the second half as well. So that's the range -- there's a range of pricing that's in relative to margin remediation. There's some new business that's coming through and then there's some one-offs, if you like, baseline adjustments that aren't recurring. Kieren Chidgey: And sort of specifically on commercial, I think it's sort of your Investor Day late last year, you continue to flag, desire to grow market share to a natural level in that part of the business. I think the growth this period is suggesting that strategy is on hold in the current cycle. Can you just give us a refresh for how you're thinking about commercial over this calendar year? Steve Johnston: Yes. Obviously, as Jeremy pointed out, there is some exposure to the commercial cycle, particularly at the top end, and we have to be conscious of that. Again, back to the overarching concept of discipline, we are going to maintain our discipline in those markets. We've got good margin sufficiency, particularly in property and Profin. And our strategy there will be to very -- to be very cautious around growth, maintaining ourselves within that margin range. And as the cycle starts to change, be in a position to capitalize on that as others are potentially remediating portfolios that they've driven below the bottom end of their targets. So if we can grow sensibly and conservatively, but with good margin sufficiency and the margins are in the top end of that range, then we feel we'll be extremely well placed when that cycle starts to change and others start to remediate to go harder. But now it's not the right time to do that in our view, particularly with the discipline that we need to display around the margin performance. Jeremy Robson: I'd also just add, Steve, that when you talk about commercial, it's a broad church. And certainly, the growth in top end commercial property and to some extent, Profin has been weak. But we've had very strong growth in Fleet, which is a big part of our commercial business. We've had growth in other parts of commercial as well. We had a relatively weak growth number on packages in the first half. We need to get more rates through that portfolio. It was the other one which I had mentioned before, we need break-through packages. And so I think the key point there is commercial is a broad church, and parts of it are doing well and sensible and good margin, makes sense for us to continue Vero Specialty Lines, et cetera. But it's the top end commercial property and propene where there's a bit more pressure. Steve Johnston: Kieren, just to add to your first question. I mean, the other way of looking at Home and Motor, but particularly Motor is geographically because there's a lot going on geographically in insurance. Kieren Chidgey: That's my next question. Steve Johnston: Right. Okay. I'll answer it. So obviously, there's a Queensland activity with RACQ and the work that's going on there. And again, Home and Motor are different portfolios for us in Queensland. We're more comfortable growing in Motor, obviously, particularly in Southeast Queensland, and we'll be targeting some of that potential disruption that occurs as those portfolios, RACQ and their acquirers start to merge. New South Wales, it's been a softer spot for us historically. We feel significantly more comfortable with the performance of GIO now than we might have a couple of years ago. And AAMI is obviously very strong in that market. And we think there's a big opportunity in New South Wales for us now. And if you look at the market share leader in New South Wales, some of their performance might be an opportunity there -- there is an opportunity there for us growing in New South Wales. And then South Australia and Western Australia, where the unit volume count performance in both those markets is better than the average of the 2% that we talked about. And again, to varying degrees, there will be opportunities for us to capitalize on some of the dislocation in those markets. So if you look at it macro nationally opportunity, you look at it geographically opportunity. And then in New Zealand, with AI, we're getting 3% unit count growth there. Not all of it is attributed to the new policy administration system. But we have an embedded benefit that we believe in both -- at the written premium level, but particularly in volume through the implementation of that new portfolio. Kieren Chidgey: Steve, just a quick follow-up, and then I'll hand over. But the Victoria Motor picture is kind of skipped over Victoria. How have you seen experience there? Steve Johnston: Look, I just don't see the same material dislocation opportunity in Victoria, as I talked about in those other states. We are pricing to the higher inflation in Victoria, which is largely so much frequency, accident frequency or otherwise theft. But in the aggregate of the whole portfolio, Victoria would be a market where we'd be looking to grow with system in both Home and Motor, maybe a bit more in Home than Motor but grow at system but price to the inflationary environment. And there is a delta on theft to the rest of the country, both in terms of frequency, but particularly severity. Jeremy Robson: Steve, just to add in terms of that sort of geographic per se, but brand reach, one we don't talk about often, sort of refers as Bingle. Bingle as growing 15% GWP on the same time last year, but half of that is rates and half is units. That is an example for us of a brand that's got further reach and further stretch as we continue to roll that out. Andrew? Andrew Buncombe: Andrew Buncombe from Macquarie Securities. Just 2 from me, please. The first one is on the catastrophe experience in the month of January and rolling forward the last couple of weeks as well. You've said in the slides that, that experience was in line with the allowance. This time around, you've put slightly more of a skew on the second half for the allowance. My question is, is the January experience in line with a straight line average or some sort of shape? Steve Johnston: Very conservatively, I think you said in line with the allowance, I would call it within the allowance. So we might have been a little bit better than the allowance. What are we, touching wood, with sort of 18 days into February, and we had some weather in Queensland last weekend, which is very material and some weather ongoing in New Zealand, which will be a big reasonable event in the New Zealand, but not well within our means at the allowance level. So I think it's there or thereabouts. So nothing happened in the first 6 weeks of this calendar year that sort of says that we're anything sort of a skewed to the allowances that we would track. Jeremy Robson: Yes, we said that the second half allowance is probably the best guide for the second half experience, which holds true. But the second half allowance theoretically, we should improve a little bit because of now the enlivenment of the drop-down covers in the second half. So there's probably a conservatism in that statement a little bit. And the January experience was actually slightly better than that outcome. Andrew Buncombe: And then the other question from me was in relation to reserve releases. So 90 basis point impact from a release in the first half, correct me if I'm wrong, but my understanding is the full year guide is still 30 basis points. How should we be thinking about the second half? Should we expect a strengthening? Jeremy Robson: I think the expectation outlook is more around the underlying business performance. So we achieved, I think it was probably 40 basis points, 30, 40 basis points on CTP in the first half. And so we continue to expect to deliver that for the full year. When it comes to the other portfolios, they're sort of plus margin, obviously, in the first half with some bigger plus minuses around them. I don't think we expect all of that to reverse necessarily in the second half, but really just calling out what we expect to see on the CDP because that's where we expect to get the reserve releases. The other portfolios we will see strengthening and releases, but we would expect those to net to a neutral-ish number. Andrei? Andrei Stadnik: Andrei Stadnik from Morgan Stanley. Can I ask around the OpEx ratio? So OpEx ratio fell nicely in this half. Do you think the OpEx ratio can continue to fall into FY '27? And can it continue to fall into FY '27 even if premium growth were to slow? Jeremy Robson: Yes. I think -- I mean, we have to have opportunity from our operational transformation agenda with the AI in it. Obviously, a key determinant to the OpEx ratio is where premiums go but I mean we still see a reasonable premium outlook. So the chart I put up around that insurance pricing cycle. What we're saying is for that 90% of our portfolio, there's still a fair bit of premium growth to run through the portfolio. That obviously helps an expense ratio. So that's one part of the equation. And the other one then is the absolute expense number. I think the key thing is for us is thinking about the mix of that expense though. And so one of the things that we are fixated on is trying to keep that run the cost business as flat as possible. And it's not always possible to keep it absolutely flat, but as flat as possible. And then to reinvest back into the grow the business expenditure. That's expenditure on things like the digital insurer policy admin platform modernization and operational transformation, and we see value in that. So to the extent we can do that and achieve our overall margin outcomes, then that's a good outcome. Andrei Stadnik: And for my second question, can I -- just coming back to the catastrophe budget. Based on the internal modeling we received from the insurers, your catastrophe budget is sufficient 7 out of 10 years. QBE based on their modeling is 8 out of 10 and IAG is over 9 out of 10, right? So at the moment, the catastrophe budget is at the bottom end block of Australian listed peers. How are you thinking about catastrophe budget increase in the next year? And if there is an aggregate reinsurance cover, would that help limit the increase? Jeremy Robson: Yes. Look, I think at some point, for Australian consumers, it becomes difficult to price, for example, 100% adequacy on the catastrophe losses because it just doesn't make sense from a consumer perspective, and it doesn't make sense in terms of what insurance is there for. Now we have -- and we have all extensively lifted over the last few years from what was a 50% type number modeled. Actually, in practice, it was probably much less than 50%. So we've all lifted from there. I think there will undoubtedly be variations in modeling. So our modeling won't be the same as other people's modeling. We all use different models. And so one thing to have to think about is what might be the variability in some of that modeling. I think we feel pretty comfortable with our natural hazard allowance where it is at the moment. But having said that, as we've always said, if there was opportunity to try and strengthen it a bit further or within the realms of delivering that margin outcome, then that could be a possibility for us. But we don't feel uncomfortable with the way it's set at the moment. And yes, an aggregate cover. I don't think an aggregate cover would change the natural hazard allowance per se. It would sit on top of the natural hazard allowance wherever we set that. Freya Kong: Okay. Freya Kong from Bank of America. Just a question on margin progression in the walk there. Correct me if I'm wrong, but last year, you said you were tracking above the top end of the 10% to 12% underlying ITR ratio, some of that which you'd reinvested into a higher hazard allowance? I'm just trying to understand the moving parts here. Have you reinvested some of the additional excess margin into growth? Jeremy Robson: Yes. If we go through the portfolios on the margin walk, we have seen a little bit of margin expansion in consumer, and that has predominantly come through Home where we have -- that portfolio has been in remediation. It was below where the target range was. We're now actually up towards, if not above the top end of the range in Home. And then in Motor, we were above the top end of the range. We're now back towards the top end of the range in Motor. And then in Commercial, we are sort of around the -- around, if not a little bit above the range across the aggregate portfolio there. And obviously, in New Zealand, we're above the target range. And so when we think about are we reinvesting in growth, et cetera, what we're trying to do, as Steve said, is manage the business to that return, to that margin and then make sure we're optimizing our growth relative to other brand assets, et cetera, relative to that margin outcome. Steve Johnston: I mean we mentioned many times, I mean, you can take a complex business and simplify it quite materially through our targeted returns on incremental capital back to our book capital return, back to an ITR for the group or the Suncorp business in its entirety and then back down into the portfolios. That's a target margin that we would aspire to. We cover the cost of inflation, and we'd like to get some level of market levels growth in some portfolios, particularly Motor where we've got scale. Home, the story is more about improving the quality of the home book and going and in aggregate, delivering at system growth. Commercial, we think there's an opportunity at the other end of the cycle to grow ahead of system and get back to that natural market share. And CTP, because we've got an overweight position in Queensland, we're prepared to seed some share. So you can take a very complex business and reduce it down to something that's a little bit more simple in terms of how we sort of intellectually seek to run the business. Freya Kong: Okay. And just some capital questions. There was some drag in excess capital in the period from higher insurance liabilities, I'm presuming because of the cat claims. Will these get unwound as the claims get settled in the coming months? Jeremy Robson: Some of them do get -- I mean, theoretically, eventually, it gets unwound, but some of these events have a fair tail on them. So I would expect some of that to get unwound. I think the largest driver was that natural hazard impact on claims. You also see some impact on things like mix. So New Zealand growth was lower than the rest of the group. And so the excess tech is higher in New Zealand relative to the group because it's relatively high profitability. So you get a mix impact from that. And then there's always a bit of seasonality in that capital movement in the first half as well. So those are a couple of other moves in there as well as the rebalancing of investments. Freya Kong: Great. And just last one on capital management. Given the strength of the capital position, can I ask why the buyback was paused so early into the end of last year? Steve Johnston: Yes. I mean it's less about the capital position per se, but more about the confluence of events that we were dealing with at that particular time. So we were right up against sort of getting towards the end of the half year period. So obviously, that Christmas period is a period where you probably don't do much trading anyway. So the timing sort of was reasonably proximate and I think just with the nature of the events unfolding through October and November, we thought it best to pause. But we'll restart as soon as possible after this result. Richard Amland: Richard Amland from CLSA. Just would like to ask a little bit about risks to your pricing aspirations. There were some political sensitivities last year around sort of prices. You guys are acknowledging the input cost discussion that you've had, trying to push ahead of CPI by a magnitude, might be somewhat challenging. Can you just give a flavor of any regulatory or political engagement that you've had that gives you comfort that you're not going to get hard pushback from any unforeseen corners? Steve Johnston: Yes. I think it's never good to deliver a profit outcome that's significantly down on the PCP and probably driving returns on capital at that actual level and an aggregate level below our targeted returns. But I think what we've done as an industry and particularly at Suncorp over many years, is educate policymakers and regulators that we have got a cyclical business. So when we do generate returns that are above our cost of capital, through benign weather or favorable investment markets that we need that to deal with events like we've seen in the last 6 months or so. Yes, there's an ongoing dialogue. Affordability is a huge challenge for Australia more broadly and for New Zealand, but particularly Australia and the incoming of the new Minister for the Assistant Treasurer, Dr. Mulino is very focused on that agenda, particularly for the sort of 2% of the population or 3% or 4% or whatever it is that they can't obtain affordable insurance. And so as an industry, I think we're working constructively with the government, constructively with Treasury about how we might find an industry-wide solution for that problem. But in the industry-wide solution, has to, by definition, be industry-wide. It can't be 1 or 2 players that solve this problem. And it also needs to come with support from the government in terms of resilience and mitigation. So there's an ongoing dialogue. There's no answers to that just yet, but it is an active part of the minister's agenda and at the individual company level, at the ICA level, we're working constructively with the government around that. Beyond that, I think the factors that drive insurance inflation, and I've talked about, don't use CPI as a proxy are reasonably well understood now, I think. But we are very conscious as a business that while we might talk about inflation, while we might talk about pricing to inflation, there's a consumer with the cost of living challenge sitting off the back of that. And over time, with the things we're doing with AI and digital insurer. We need to get better at designing new policies, new premium, new product for that subset of consumers who are really challenged to continue with their insurance. Unknown Analyst: A couple of questions, if I may. In your analyst pack, you talked about the reallocation of Strata premiums from Home into Commercial. Does that reflect the pressure on them from the commercial property cycle or you've got a sign of further strata growth insurance plans? Steve Johnston: Michael, do you want to? Michael J. Miller: Thank you. It's a clear strategic move. So with VSL, Vero Specialty Lines, one of the products we do want to enter into is strata. And so we have a small Strata book in our personal lines business. It's about $120 million a year. Thought process is bring that across and then run that direct book right next to the intermediated book, and grow it as one from a pricing point of view, distribution, knowledge. It makes a lot of sense. So it's probably just the foundations of building out that Strata opportunity. Unknown Analyst: Great. Then in terms of your internal reinsurance, there was a big drop in the premiums you are booking in terms of internal reinsurance, presumably because of the fall in reinsurance costs. Should we expect further falls in that looking forward, like possibly a similar level in the second half and then if the reinsurance -- the cycle continues to fall, maybe a further reduction next year? Jeremy Robson: The key driver was retention. So that's internal reinsurance between the Australian business and New Zealand. And the key driver was an increase in the retention in the New Zealand business. So the Australian business just provided less reinsurance to the Australian business, which was then funded through Tier -- effectively through Tier 2 diversification. So it didn't have an impact on capital. So I think the level we're at now is probably a more appropriate level. That's the baseline. But yes, I mean as markets soften a bit, might move down a little bit, but the key one was just the retention levels. Unknown Analyst: Great. And then with the improvement in your underlying margins, principally the improvement due to claims costs, how much of that was due to reinsurance or alternatively, if you don't want to answer that, how much was due to the earn-through of rate? Jeremy Robson: Yes, most of it would have been -- a chunk of it would have been earned though rate. I think if you look at the accounts, you can probably see where reinsurance costs are year-on-year, and you can see a reasonable reduction in reinsurance rates. But we don't split it out between those 2 categories. But you can see reasonably chunky reduction in reinsurance year-on-year, particularly relative to some others. And you can see in the pack where our price positions are on AWP. So you probably have a stab on the back of the envelope on it. Unknown Analyst: Yes. Okay. And finally, how much of the expected drop in the expense administration ratio is due to roll-off in bank transitional costs? Jeremy Robson: Nothing. So with the bank transitional costs, they're all provided for as part of the bank sale process, and they were baked within the profit that we recorded on the sale of the bank last year. So that's all the P&L of the insurance business immunized from that bank sale process. Okay. I think we've got a couple of calls on the phone. Operator: [Operator Instructions] Your first phone question is from Julian Braganza with Goldman Sachs. Julian Braganza: Just a first question on underlying margin. Just to be super clear, in terms of the guidance where we now have expense ratio like 50 basis points as well as yields holding up better than expected into the second half compared to initial expectations. So typically, what is offsetting those 2 impact in the margin and commercial rate? Steve Johnston: Well, I'll get Jeremy to go through it in more sophistication than this, but the answer is pretty much New Zealand is the answer. So pretty much all New Zealand, Julian. Obviously, we had a period of time where the underlying margin in New Zealand is significantly elevated above its usual guide rails. We expect that, that will come back within the guide rails maybe towards the top end of the guide rails through premium adjustments that have already been made and starting to -- it's a reverse of what we've talked about in Home and Motor to some extent. Jeremy Robson: There was a little bit related to the natural hazard allowance phasing. So we put -- loaded more the resilience that $100 million into the second half than the first half. So there's a little bit there. But the key one is that margin fall in New Zealand. Julian Braganza: So just to be clear, so you have the New Zealand underlying margins coming back to 16% in the second half, just to be super clear? Jeremy Robson: Well, we've never really explicitly called out what it is, but it's something ahead of 15%. Julian Braganza: Got it. Just on second question, you mentioned growing in low risk properties as an opportunity to growth over medium term, so trying to understand how you're thinking about that from the perspective of a drag on your GWP going forward? And also secondly, what does it mean for how competitive you're being versus peers here on pricing? And then what is the strategy? And what makes you think you'll be successful in growing this part of the market? Steve Johnston: Sorry, you might have to repeat, Julian. Which portfolio are you talking about? Julian Braganza: So just in our Home portfolio, you mentioned growing in low-risk properties. There's an opportunity for growth. Just want to understand what gives you confidence that you'll be able to achieve that growth, just in terms of pricing and how competitive you will be versus peers? And will that be a drag on your GWP going forward as well? Steve Johnston: Low-risk portfolio, in Home. Yes. Look, I think -- I mean the first point I'd make is that this doesn't happen overnight. And you can see, I think, from a period of time where we started to reset ourselves around the apportionment of growth between low, medium and high from 2021 to 2026. First half '26, it's about 4% in aggregate. So this doesn't happen immediately. The 3 -- the composition of it all and go to the margin drag story is -- the components of it are to better risk select, better focus on that low and medium natural hazard area, but most importantly, to price at the technical level, close to the technical level for high and extreme. And so when we talk about that in its totality, yes, we're improving the quality of the book, but we're also focused on making sure that the cross subsidy that potentially set in those 3 categories historically has being unwound, and we're getting closer at an aggregate home portfolio level to pricing actual and technical at the same rate. And so that has an impact on the distribution of risk between the 3 areas, but also improves the margin. And when we talk about remediation of the home book, remediation is probably not the right word, but you can see 2 things. One is we're now growing at system or ahead of system. We're growing in a better quality way with a focus on low and medium. But importantly, we've also got the margin back to the top end of the range or slightly above the top end of the range. And so that's the way we think about it. Again, it's more about making sure that the cross subsidy that might have sat there previously is adjusted to reflect the fact that we need to price closer to technical because as you know, if we are providing any cross subsidy there of any significant magnitude than others in the market who don't focus on those higher end risk areas will target only the higher risk parts of the portfolio -- the lower risk parts of the portfolio. Julian Braganza: Okay. Got it. Now that's clear. And just the last question in terms of your AI transformation agenda. Can you just comment on some of the risks you see more broadly just around pricing competition and disruption to some of the risk that we have had in that area. You've talked a lot about [indiscernible]. Steve Johnston: Yes. So I think if I heard correctly, it's AI and the risks of AI, particularly around various other domains. Yes. Look, I think one of the key elements that everyone is looking at, at the moment is the risk profile of AI relative to where you sit in the adoption curve. Now you can quite easily sit sort of in the fast follower or follow a territory and sort of watch others make mistakes and potentially benefit from that, or you can be more at the leading end. So our risk settings are very much approximate to the position and the leading position that we seek to take in AI. So we're very conscious of making sure that when we implement AI initiatives right across the value chain, but particularly in the customer area that we're focused on and making sure that we don't disrupt the customer experience. And you saw a bit of that when digital started to flow through insurance and particularly banking and other industries. Those that adopted it early, obviously, made some mistakes in the early adoption of it. We're going to adjust our risk settings to make sure we can reduce or have a risk appetite to reduce those errors, but also to make sure that we're not falling behind the market. So that's the sort of aggregate risk view. Clearly, we also need to make sure that as we go through this evolution like all major corporate players that we're investing in our people to reskill and retrain them and set them up for that AI world. So yes, the risk profile. We're doing a lot of work on risk profile at the moment to make sure that when we implement the programs of work we do, that we're not disrupting the customer experience, that we're continuing to deliver what customers expect us to deliver, but we can do it in a more efficient way. Jeremy Robson: And Steve, just to add that net-net, we see AI as an opportunity. I mean, yes, there a risk around it, but we see it as a net opportunity, an opportunity in terms of within the business and how we run the business, how we can run it more efficiently, more effectively, better client experiences, et cetera. Insurance is readymade for that sort of opportunity. And then from an outside-in perspective, there's been market chatter around how AI may impact on distribution. Again, we feel well positioned around that from a consumer perspective, from a commercial perspective, with our brand portfolio and our expertise in how we, over a long period of time have dealt with that distribution channel. Steve Johnston: And I mean, obviously, there's distribution potential benefits for us if we're early adopters, and we focus on it. But at the end of the day, you have to manufacture a product and manufacturing a product in insurance is about pricing and risk selection, and it's about claims management. And that's where we see material benefits as a manufacturer of insurance products to make our products better, more personalized to make our claims processes better and to continue to improve the quality of our risk selection and underwriting. If you've got all of those things working, you're going to drive material benefits for customers and for shareholders. If you just sit there, think it's a distribution opportunity and you don't focus on risk selection, pricing and claims management, then you're going to end up with a book that's skewed to areas that you might not want it to be skewed to. Operator: The next question on the phone is from Siddharth Parameswaran with JPMorgan. Siddharth Parameswaran: A few questions, if I can. Firstly, just Queensland CTP. Steve, it has been a drag on your margins. I think 6 months or 12 months ago, quite a sharp drag from where we were with commercial margins previously. With the price increases that you're pushing through, does that get CTP back to target and where are you at with your discussions with the regulators on change particularly in Queensland CTP? Steve Johnston: Yes. Thanks, Sid. I think it's well known that sort of 12 to 18 months ago, we had a very challenging CTP portfolio, very much reflective of, what we believe it wasn't a sustainable scheme going into the future. You saw the exit of RACQ and bringing it back to 3 insurers with us holding around 60% market share. The discussions with the Queensland government and the regulator have been very constructive. We've had, I think, 4 consecutive premium increases in that portfolio of different magnitudes. From the start of the journey, we would have said those 4 in the quantum that's included in them would probably be sufficient, but there has been some deterioration in the scheme. So we still believe there's more pricing that needs to go through the scheme, but it is on a trajectory to return to the target margin that we would have in the portfolio. In terms of the broader scheme reform, there's a couple of components there. There's proposals around the premium equalization mechanism. We think that's supported by the government, supported by the regulator, but now in a process of having it legislated and system changes and all those sort of things. So that doesn't happen overnight, but we think that there's support for it. And the wheels of government are stepping in that direction. So we think that's occurring. And there is new scheme -- a new scheme regulator, not yet appointed but the old scheme regulator has moved on, and there's a new scheme regulator coming in, and we think that, that's -- we're having some constructive discussions around that at the moment. Sid? Siddharth Parameswaran: Thank you for that color. Just the second question, just on the difference between underlying and reported margin. I just wanted to check on 2 components. So the ongoing reserve release assumption of 0.3% of NEP that you expect. Is there any thought about changing that going forward? I know there was a favorable release this period, but you had previously indicated that, that might start to drift towards 0. So just on that -- just that question. And the second question was just around the risk margin strain. I think there's a risk margin strain of $35 million in the half. And I think that should be an ongoing component of the difference between reported and underlying. I just want to confirm that, that would be a consistent difference between the 2 per half. Jeremy Robson: Yes. So the reserve releases, what we've said with those is that we expected 30 basis points this year. And as I said before, that's around the CTP portfolios. The others will move a little bit, but we sort of expect those to be net-net. What we've said is that, that was 150 basis points a few years ago. It's now 30 basis points. I expect over time, it may come down to a lower number. But what we have committed to reasonably clearly and demonstrated delivery on, I think, is that -- to the extent that comes down, we will manage our underlying ITR still within the guidance ranges that we're giving. So I think it's come down to a small number. It may come down to a smaller number. It's becoming less significant, and we will manage that within the within the underlying ITR. And then the risk margin question, the elevation in risk margin adjustment that we saw this half was really off the back of the natural hazards. And so yes, to some extent, that's really part of that natural hazards adjustment because obviously, with the experience we got, we get the claims on it, we put more risk margin on. So I don't know that we would ordinarily expect a risk margin of that same quantum because it was connected to that event pattern we had in the first half. Siddharth Parameswaran: But there should be something in there, I presume, some... Jeremy Robson: There will be something. Yes, there will always be something there, yes. Siddharth Parameswaran: Okay. Great. Okay. Just a final question for me just on the -- you do have some drop-down covers, you would have done some modeling on the expectation of reinsurance recoveries and maybe things which may help your allowance in the second half versus what you're allowed for. Just wondering if you could help us understand if you are expecting anything at all given the quantum of the claims that you had in the first half, what should we expect as a possible set of recoveries in the second half? Jeremy Robson: Yes. So I mean, it is fair that on most of those drop-downs that the deductible erodables, erosions have pretty much been taken care of in the first half. So they are now, as I said, enlivened, give or take a couple of million dollars. They're now pretty much enlivened. And as I referenced, technically, we have done the modeling it, technically, when you model that through the allowance you get a slightly lower allowance in the second half than the budget, the original budget for the second half, but it's not material, but it is -- you're correct, it's a little bit lower than the budget allowance because there is expectation now of recovery against those programs. Operator: There are no further questions on the phones at this time. I'll now hand the conference back over. Steve Johnston: Okay. Anything more in the room here in Sydney? Nothing more. One more question over here. Freya Kong: Just a quick question on the Vero Specialty Line launches. How much of these new products compete with global Capital? And are the launches dependent on what happens with the cycle more broadly? Steve Johnston: Michael? Michael J. Miller: I think there's 2 parts to answer that. So firstly, strategically, VSL is around getting product breadth. We're a big believer in specialization. And so when you do these smaller products, you do them very, very well. You get the right underwriters in there. You can make some really good margin to support your brokers and your clients. And they're also not by themselves. I think it just -- when you have the breadth, you can use the specialty products and the more general products together and in multiline opportunities. So that's the reason why we do them. We look for premium pools where there is opportunity, where there is a size and where we can get the talent to do it. And the second part of that question is how we tactically actually funded. Look, we do use global reinsurers. We look at our own capital, we look at overseas as well. And if we can find the capital that is cost effective to us and they want to back us, then we will use quota shares and the like. So that's quite fluid though. We don't have to. But quite frankly, if it makes sense economically to use that capital, we will. So that's sort of the thought process there. Jeremy Robson: And just to add, Michael, I think some of the specialization that sits in there, through the underwriting, through the broker relationships, through the industry relationships, some of that helps immunize some of that global capital pressure. Steve Johnston: Okay, nothing else in the room. If not, thank you, everyone, for coming down or being on the phones, and we'll look forward to catching up over the next couple of weeks.
Operator: Welcome to BICO Q4 2025 Report Presentation. [Operator Instructions] Now I will hand the conference over to the speakers, CEO, Maria Forss; and CFO, Jacob Thordenberg. Please go ahead. Maria Forss: Hello and welcome to BICO Group's Quarter 4 2025 Earnings Call. I'm Maria Forss, President and CEO; and I will together with BICO's CFO, Jacob Thordenberg, present this year's end report. Here's today's agenda. I will open today's session by summarizing 2025 and also describe how BICO serves the world's leading pharma and biotech companies with solutions that transform how labs operate, innovate and solve our customers' challenges. Following that, I will summarize the full year 2025 as well as quarter 4 '25 and Jacob will then present the group's financial performance. We will then proceed and comment on our performance in the 2 business areas, Life Science Solutions and Lab Automation. I will also comment on our R&D pipeline with our ongoing product development efforts. Additionally, I will highlight product launches made at SLAS, the Society of Lab Automation and Screening Congress, that took place last week in Boston. The session will conclude by highlighting our focus for 2026 before we open up for Q&A. When summarizing 2025, we can conclude that we finished the year on a strong note with double-digit organic sales growth in Lab Automation and a strengthened cash position. After the quarter in January '26, we successfully raised new capital, enabling investments to support further growth. 2025 has been a year of strategy execution. We have delivered on all key strategic initiatives and the impact is clear; a portfolio focused on lab automation, significantly reduced debt and a strong cash position, we have leaner operations and a more focused and customer-centric product portfolio, providing a strong foundation for 2026. Before commenting on our performance, I will present how BICO serves the world's leading pharma and biotech companies with solutions that transform how labs operate and innovate. Our customers share 1 ambition, reducing time to market and increasing the probability of success. With Biosero's leading software suite, Green Button Go, together with their off-the-shelf automation products as well as bioprinting, our portfolio is in the sweet spot of meeting that ambition and solve the core challenges with long and costly development cycles. Our solutions enable smarter, faster and more efficient labs and here lies an underlying strong demand. Pharma and biotech companies all face the same fundamental challenge, long costly development cycles for new therapies. The development of a new therapy often takes more than 10 years and costs between USD 2 billion and USD 4 billion with probability of approval after Phase I at just 10%. To overcome this, our pharma and biotech customers are investing heavily in automation to increase efficiency, speed and quality; to bring innovations to market faster and at a lower cost. Our products and services enable our customers to connect data across systems and apply AI tools to plan, run and optimize experiments in real time. And already today, we're enabling AI-driven drug discovery workflows through our Green Button Go platform. We are at the core of this transformation, connecting workflows and data streams and enabling AI-powered experimentation, and this is what our vision and mission is all about. Our vision is to enable and automate the life science lab of the future. And our mission is to be the first choice lab automation partner and provider of selected workflows to pharma and biotech. During the fourth quarter, I visited several pharma customers who use BICO lab automation solutions and they consistently reported measurable gains in productivity and reliability, including reduced hands-on time, faster turnaround times and higher instrument utilization. And hearing this directly from the scientists using our system every day was both energizing and validating. Let me show you 1 example that emphasizes our mission, our strategic direction and the value that we deliver to our customers. The data shown here are from 1 of the Top 20 pharma customers we are serving. They kindly share their efficiency improvements by using our Lab Automation Solutions. Downstream process and assay development time was reduced by 75%. The capacity with the existing equipment they already had was revved up by 400% because parallel processing and variable-driven robotic processes just allow for more uptime to be squeezed out of each piece of equipment in the lab. And ultimately, these productivity increases means that their scientists are able to achieve 200% of their original productivity. This is because automation was coming alongside them, supporting them and taking over the manual steps and running concurrently in ways that a person just can't manage alone. And this is just 1 example of a lab leveraging Green Button Go and every lab we work with is looking to see numbers like this. The interest in integration services is strong and it's because we're taking technology and using it to augment the work of humans. And we're using technology to get to innovation faster. So to summarize, we lead the way in solving the challenges in life science with speed, accuracy and efficiency. All in all, our customers can run their process faster, improve the quality of the data and ultimately make better decisions. I will now move on to the next section and summarize the fourth quarter as well as the full year 2025. 2025 has been a turnaround year for BICO, building a strong foundation for 2026. Across the industry, 2025 was marked by a challenging market environment. Geopolitical developments, including tariffs, created uncertainty and led customers to take a more cautious approach to CapEx investments. The U.S. academia segment was hit hard by significant NIH funding cuts. FX headwinds with a weaker dollar and euro also weighed on the margins. The diagnostic market normalized, consumables continued to grow and the instrument sales remain muted, but recovered increasingly over the course of the year. I will now present key metrics for the full year and the fourth quarter and Jacob will later in the presentation give more details about the financial development. Sales for 2025 amounted to SEK 1.497 billion corresponding to negative organic sales growth of 8%. Adjusted EBITDA amounted to SEK 5 million corresponding to a margin of 0.3%. And cash flow from operating activities amounted to SEK 68 million. And let's turn over to the fourth quarter where sales amounted to SEK 451 million corresponding to a negative sales growth of 4%. Adjusted EBITDA amounted to SEK 56 million corresponding to a margin of 13%. Cash flow from operating activities amounted to SEK 52 million and net working capital in relation to the last 12-month sales was 13%. In late January 26, we issued senior secured bonds and I will now hand over to Jacob to comment further on this. Jacob Thordenberg: Thank you, Maria. As just mentioned, we issued senior secured bonds on January 28 with a total nominal value of EUR 40 million. The bonds have a tenure of 4 years and carrying a floating interest of 3 months Euribor plus a margin of 5.9%. The bonds were issued at 96.81% of par and were placed with a consortium of Swedish institutional investors. The new capital puts us in a position to support further growth and capture market recovery while navigating ongoing macroeconomic uncertainty. The transaction also serves as a clear testament to the capital markets' continued confidence in BICO. I will later in the presentation describe what this means for BICO in terms of cash reserves post settlement of our current convertible bonds. I will now give some more details to the numbers just presented by Maria. Sales amounted to SEK 1.497 billion, which corresponds to an organic sales growth of negative 8%. With most of the portfolio being instruments and the industry-wide CapEx restraints as well as a muted academia market, the weak first half of the year could not be fully compensated by a stronger second half of the year despite increased demand. Improvements in Scienion and CELLINK strengthened the results while the very weak H1 for Biosero and challenges in the U.S. academic segment impacted the full year results substantially. Biosero has gained positive momentum with new ways of working, new management in place and finished the year with double-digit growth in the fourth quarter. The adjusted EBITDA was SEK 5 million corresponding to a margin of 0.3%. The updated cost estimates in ongoing projects in business area Lab Automation and declined gross profit were the main factors impacting the adjusted EBITDA margin compared to prior year while continued cost control had some positive effects. Operational cash flow amounted to SEK 68 million. In Q4, our seasonally strongest quarter, sales amounted to SEK 451 million corresponding to a negative sales growth of 12% and a negative organic sales growth in constant currency of negative 3.7%. The 9 percentage points difference can be explained by FX headwinds with a weaker U.S. dollar and euro against a stronger Swedish krona. It is also worth mentioning that the corresponding quarter last year was strong in Lab Automation. And in Life Science Solutions, we saw, especially in the U.S., significant budget release prior to the installment of the new U.S. administration. Adjusted EBITDA amounted to SEK 56 million corresponding to a margin of 13%. During the year, we have continued to be very cost conscious to mitigate the adverse effects of lower sales. When looking at the margin development, it is also worth mentioning that we have had a more conservative approach on which R&D costs we capitalized due to a more comprehensive R&D governance with the implementation of a gate stage project model. BICO will continue our clear focus on structural cost reductions and tight expense management in 2026. And if we move on to cash flow in Q4. Cash flow from operating activities amounted to SEK 52 million impacted by working capital changes of negative SEK 12 million. Total cash flow during the fourth quarter amounted to SEK 36 million. Cash reserves by end of the year was SEK 1.282 billion. These cash reserves will be used to settle the remaining balance of our current convertible debt of SEK 1.008 billion. The original debt amount of SEK 1.50 billion have over the years been reduced by early bond buybacks to a nominal amount of SEK 482 million resulting in savings of more than SEK 50 million. Following the settlement of the existing bonds based on Q4's cash reserves and all else equal, BICO will have a strong cash position of around SEK 670 million. Maria will later in the presentation describe how we plan to allocate this capital. As mentioned on the previous slide, the effects of changes in working capital amounted to negative SEK 12 million for the quarter and out of this, operating receivables increased by SEK 62 million, inventories decreased by SEK 26 million, operating liabilities increased by SEK 24 million. In percentage of last 12 months sales, net working capital in the quarter corresponded to 13% confirming that the continued operational excellence actions have been successful. The quite low levels of net working capital is primarily an effect of less net working capital by 0 due to decreases in receivables. Long term we expect working capital in relation to sales to be in line with industry standards of closer to 20% of sales. I will now hand over to Maria to present the results in our 2 business areas. Maria Forss: Thank you, Jacob. Let's now turn to our largest business area, Life Science Solutions. Sales in 2025 amounted to SEK 1.108 billion with an organic sales growth of 1%, which is an improvement year-over-year with 11%. Adjusted EBITDA amounted to SEK 83 million corresponding to an adjusted EBITDA margin of 8%. When looking at our peers, we can conclude that peers with a significant amount of instrument business, which is comparable with Life Science Solutions, reported negative sales growth for the year. The flat sales development which we have seen over the year was primarily driven by a weaker demand in the U.S. academic segment. U.S. academic customers have reduced instrument purchases following funding-related constraints primarily in the U.S. and biotech activity has also remained soft amid longer investment cycles. In contrast, the diagnostics segment continued to perform comparatively well supported by a normalization of the diagnostic market and adoption of automation-linked solutions. Consumables continued to show healthy demand in quarter 4, in line with previous quarter during the year. We have also spent a lot of effort together with the management teams of Scienion and CELLINK, respectively, to sharpen the commercial offering and strengthen the operational excellence during 2025. This work has paid off and both companies have adapted into a new way of working, a more rightsized cost and clear focus on profitable growth. And if we move to quarter 4 results for Life Science Solutions business area. Given the continued tough market, the year ended on a strong note excluding U.S. academia dependent business units, which continued to struggle as mentioned previously. The corresponding quarter 2024 was also very strong due to a lot of U.S. academic sales before the new U.S. administration when they were to cut NIH funding, which results in a tough comparison that Jacob mentioned earlier. The Life Science Solutions delivered in a seasonally strongest quarter SEK 326 million in sales meaning a negative 9% organic sales growth. The adjusted EBITDA amounted to SEK 49 million corresponding to a 15% adjusted EBITDA margin. The profitability was pressured by softer sales, less favorable product mix and tariffs and cost related impacts. And if we move on to our business area, Lab Automation. Revenue for the full year '25 amounted to SEK 391 million, an organic growth of negative 26%. Adjusted EBITDA amounted to negative SEK 31 million corresponding to an adjusted EBITDA margin of negative 8%. The very weak first half for Biosero, including a revision of estimated hours in quarter 2 with a negative effect of SEK 40 million, impacted the full year results substantially. Transformative actions to scale up Biosero have been executed since quarter 2 and the focus has been to significantly enhance processes, leadership and operational capabilities. As Jacob mentioned earlier, Biosero has gained positive momentum with new ways of working, new management in place and we finished the year with double-digit growth. New operational capacities in Biosero are hence paying off and when legacy projects are finalized, the operations will be able to scale and operate in a more sustainable and profitable way. The Lab Automation business area finished the year on a strong note. Sales for the quarter amounted to SEK 125 million, which equals an organic sales growth of 15%. This sales growth was mainly driven by hardware revenue from the large orders won in quarter 3 and accelerated project completions, sales or service contract and software business. The adjusted EBITDA was SEK 18 million corresponding to an adjusted EBITDA margin of 15%. The profitability was supported by higher volumes and increased hardware contribution from the large orders, but also partially offset by continued substantial investments in operational resources for the benefit of our customers to accelerate the closing of legacy projects that have been delayed. I will now move on to the next section where I will comment on the R&D portfolio. One area for growth for BICO is continuous product innovation and we have a solid R&D pipeline and road map in place and this is based on the portfolio strategy which is part of BICO 2.0. And before I comment on some of our recent launches coming from our R&D efforts, it's worth repeating that our current product portfolio covers the full spectrum of lab automation solutions and selected workflows. It's important to emphasize that we have lab automation products and solutions in both our business areas and this is illustrated on this slide where you can see instruments from various BICO business units positioned along different stages of the lab automation continuum. Products in the business area Life Science Solutions are also automation-ready and can be powered by Green Button Go. Here are some examples. C.STATION is a unique product. It's a standardized integrated work cell for pharmaceutical cell line development. This is also an example of synergies in the group as the product includes products from CYTENA [Audio Gap] Instruments and Biosero. To the right, you can see the benefits of automation and how this off-the-shelf lab automation solution saves both time and money to the customers through lower staff requirements as well as lower CapEx investments. The optimized workflow shortens cell line development by 4 weeks accelerating product delivery. And if we move on to another solution, G. PREP combining products from CYTENA and Dispendix. G. PREP is a miniaturized NGS workflow enabled by noncontact liquid handling. It reduces reagent consumption with up to 90% as well as pipette usage and plastic waste, delivering return on investment within 12 months to the customers. Now these are just 2 examples of technology and solutions delivering customer value. And if we take a look at our R&D pipeline and road map. On this slide, you can see our comprehensive product development pipeline within BICO's prioritized focus areas. The majority of the R&D investments are made in software development and the use of AI while there are several upgrades of instrument portfolio as well, meeting customer needs. Multiple product launches are planned for this year and these include both software, instruments and consumables. We have already launched a few products last week during the SLES, the Society of Lab Automation and Screening Congress, in Boston. And for those of you who is not familiar with this congress, it's the most important congress within lab automation in the year generating a lot of sales opportunities. At SLES, one of the products launched was GoSimple by Biosero, which is designed to simplify workflows, reduce hands-off time, increase sample throughput and enable extended lab operations. GoSimple is initially launched with commercial partnerships covering selected instruments from Sartorius and Becton, Dickinson & Company. And this product is an example of how we are introducing new commercial concepts in lab automation with shorter lead times to balance the product portfolio. And given the high interest we saw at SLAS, there might be additional collaborations added over time, including expanded work with existing partners as well as new partnerships and the partners will promote GoSimple alongside their instruments. And this approach strengthens market adoption with the aim of positioning GoSimple as a preferred automation-ready solution across multiple worksites. Biosero has also made an early access release for the new assistive AI tool set during SLAS where our software suite Green Button Go enables workflow creation, review and troubleshooting using natural language instead of code. The assistive AI solution is designed to improve speed, usability and error resolution in lab automation while maintaining full human oversight and validation. It also uses AI responsibly by augmenting workflow development and not by introducing autonomy. This early access program is available to a limited group of customers through a controlled access program and this approach allows us at Biosero to learn alongside the users and evolve the capabilities based on real-world needs. Before the Q&A, I will repeat our strategy and give some concluding remarks and highlight our focus for 2026. Here you can see our strategy BICO 2.0 on a page. Our 5 strategic focus areas; to drive our top line and profitable growth are enabling end-to-end lab automation and scientific workflow solutions coupled with further development of integrated data, AI and software solutions; to enable increased sales to pharma, we need to ensure regulatory compliance readiness; and we also want to expand strategic partnerships such as the one with Sartorius and Becton Dickinson as well as increasing the recurring revenue. In 2026 we will continue to execute our strategy with focus on commercial excellence, an R&D pipeline that delivers clear customer value and financial discipline for profitable growth. And with this strengthened cash position, we can accelerate commercial as well as R&D initiatives and also more seriously engage in dialogs for bolt-on acquisitions, strengthening our portfolio further. The new capital puts us in a position to support further growth and capture a market recovery. We will strengthen our innovation efforts, including software solutions and the use of AI. And above all, we remain committed to supporting our customers' research and enabling the lab of the future. For us, automation isn't just about efficiency. It's about empowering scientists to accelerate innovations that shapes healthier societies. Before the Q&A, I want to sincerely thank our customers, business partners and shareholders for your continued trust throughout 2025. And I also want to extend my appreciation to all BICO colleagues around the world. Thanks for your dedication and meaningful contributions this year. This was our final slide before the Q&A. I will now hand over to the earnings call host for further instructions. Operator: [Operator Instructions] The next question comes from Ludvig Lundgren from Nordea. Ludvig Lundgren: So I have 3 and I take them one by one. So starting off on Life Science Solutions. You highlighted a slow academic spending here and it has been rather slow throughout 2025. But outside of this end market, it seems as if demand has been rather good actually lately. So I know you don't provide any guidance, but given that you have started talking about the slowdown in academic spending already I think in Q1 '25, is it fair to assume organic growth to improve from here looking into H1? Maria Forss: As you say, Ludvig, there has been slow academic spending throughout 2025 and I think we as well as our peers, there are difficulties to make predictions about what's happening in 2026. The assumption from peers in the market is that the NIH budget cuts will not be further cut, but there will likely be a more stable situation during 2026, but it's still unsecured. So I think we will have to just see what the future has in its -- and see where things are going. But remember that we have normally a seasonally variation when it comes to Life Science Solutions where quarter 1 is usually our weakest quarter and quarter 4 is our strongest quarter. Ludvig Lundgren: Okay. Very clear. And just a follow-up to that. Would you say that like looking this far into Q1, is the market, so to say, worse than what it was in Q1 last year when you like initially saw this slowdown in academic or is it -- it sounds like it's somewhat of the same market basically. Maria Forss: I would say that this is the new normality and the market has adapted to that and there is -- there are no news that is making any more insecurities than before. So if anything, it's more stable than last year. Ludvig Lundgren: Okay. And then I want to jump over to lab automation and you mentioned SLAS here and we saw a lot of like pharmaceutical companies announcing new AI drug discovery initiatives with Eli Lilly I think being the largest one that I saw at least. So I just wanted to hear like are you already seeing an effect from this on Biosero in terms of new project proposals and so on or is this more of a long-term growth driver for Biosero? Maria Forss: I think we have -- if we split AI in machine learning that has been around for decades and the use of large language models, those are 2 different things. And overall, AI is something that supports our business model that we work with Biosero. So initially what we do with AI is to ensure that we can help our customers make more efficiencies by reducing their time that they are using for managing large amounts of information and complexity so they can easier reach their potential on automation. And for AI to work, you need a lot of data. Without data -- you cannot contextualize data; without that, you cannot make any good algorithms that help makes AI help you. And since we have been around for such a long time with Biosero and have so much data, we can then utilize that in advancing our different solutions forward. So AI coupled -- AI and data and software coupled with end-to-end lab automation, that is the large demand from our pharma customers when they are trying to get products to market faster and with a higher probability of success. Ludvig Lundgren: Okay. Very clear. And then a final question from my side is on the OpEx side. I think excluding the one-offs here in the quarter, it seems to be down quite a bit both sequentially and year-over-year and that's despite of course Q4 being a high sales quarter so to say. So I just wanted to set some reasonable expectations here for '26. Is it fair to view this OpEx level here in Q4 as a new base or how should we look at the current OpEx level? Jacob Thordenberg: Ludvig, I would say yes. I would say that the OpEx levels in Q4 are indeed sort of a good proxy and where we hope to stabilize. Some of the decrease that you see between 2024 and 2025 I believe is also related to impairments in R&D in 2024. So that's driving some of the decline in OpEx because that's included in OpEx. But in addition to that, we have also been cost conscious and made savings in 2025 and we are quite happy with the current cost base. We believe that we perhaps could do a little bit more, but not from sort of the elevated levels that we saw in terms of reductions in 2024. And the ambition going into 2026 is of course that we should be able and are able to scale on our current cost base. Operator: The next question comes from Filip Einarsson from Redeye. Filip Einarsson: I'll actually start with some of the recent news relating to the launch of GoSimple. Can you give some color or any immediate impressions on the launch? Maria Forss: Filip, it's a very bad line. Can you please repeat the question? Filip Einarsson: So my question relates to the recent news flow on maybe the launch of GoSimple. I'm curious if you could share some like immediate impressions on the launch and maybe provide some color on that. Maria Forss: Yes, sure. So at SLAS in Boston where we launched GoSimple, both with instruments from Becton, Dickinson & Company and also Sartorius, there was a huge interest from customers, but also other potential collaboration partners. So we have quite a long list of other potential collaboration partners that want to do the same that we have now done with Sartorius and Becton Dickinson. When it comes to what the different sales leads will generate in terms of actual sales, that is something that is being followed up as we speak. So that I will know in a few weeks' time. But by just looking at the flow in the booth and the immediate feedback, it was a successful launch. Filip Einarsson: Okay. Good. And just a short follow-up. Sort of from our point of view, when should we expect this to become a material part of the sales mix? Could you provide any sort of guidance there? Maria Forss: I think overall in terms of the business case for GoSimple, it's a complement to balancing the portfolio with large and more complex projects. And I mean it takes some time before you can see effect of the sales given the sales cycles, but you should still think about the large complex projects being the largest revenue stream for Biosero and GoSimple is a complement to it for now. Filip Einarsson: Okay. And I'm curious also, look, you talked about academia being headwinds obviously. But I'm also curious on sort of other customer segments. I hear from other actors in the industry that activity among biotech customers for example is improving. Is it your view as well? And could you comment on how that has progressed? Maria Forss: I would say that the second half of last year, we saw increased demand in all different segments in essence as we commented: diagnostic increased, the consumables market continued to go well in terms of growth and so did lab instruments. So it's really the academia U.S. segment that has been muted while we see positive development in all the other areas. Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Maria Forss: Thank you for the questions received and thank you for your continued interest and support in BICO Group. Together with Jacob, I wish you all a great Wednesday. Thank you and goodbye.
Operator: Thank you for standing by, and welcome to Vicinity Centres FY '26 Interim Results. [Operator Instructions] I'd now like to hand the conference over to Mr. Peter Huddle, CEO and Managing Director. Peter Huddle: Good morning, and thank you for joining us for Vicinity Centres results call for the 6 months ended 31st of December 2025. Joining me on today's call is Adrian Chye, our Chief Financial Officer. Before we begin, I'd like to acknowledge the traditional custodians on the land on which we meet today and pay my respects to their elders past and present. I extend that respect to the Aboriginal and Torres Strait Islander peoples on the call today. I will start today's presentation on Slide 5, owing to the continued success of our strategic execution, disciplined focus on delivering our immediate, medium and long-term growth priorities and amid a supportive retail property sector fundamentals, I'm pleased to report that we have had a strong start to FY '26. Touching on the results themselves. Vicinity delivered a net profit after tax of $805.6 million for the 6 months, up by more than 60%, reflecting growth from funds from operation, or FFO, and a meaningful uplift in portfolio valuations. At 3.7%, comparable net property income growth reflects the continued strength of our portfolio metrics having increased portfolio occupancy and achieved a leasing spread of positive 4.6%, representing the highest leasing spread reported since Vicinity's inception in 2015. And of note, strong cash flows generated by our retail assets were augmented by a lowering of cap rates, which resulted in a $407 million or 2.6% net valuation uplift. And consequently, our net tangible asset per security increased to $2.52, up 4.8% in the half. I'm particularly pleased to announce that we have irrevocably accepted IFM's offer to sell the residual 75% interest in Uptown to us for $212 million. I'll share more on why we believe this is an exciting, strategically aligned and compelling business decision shortly. We also exchanged contracts to sell Whitsunday Plaza and Gympie Central in Queensland, Armidale Central in New South Wales, Victoria Park Central in Western Australia and several ancillary land parcels. Totaling $327 million, these most recent divestments were executed at a blended 18.2% premium to June 2025 book values. We completed and opened successfully the first stage of the reimagined Chatswood Chase on October 23 with the unveiling of this truly unique retail asset. Adding to this, just last month, we were delighted to welcome Kmart's headquarters to the One Middle Road office tower at Chadstone. Having joined Adairs' head office team at One Middle Road, Chadstone is now home to an additional 2,000 office workers in weekday trading. Our investment strategy is clear. We are confident it remains fit for purpose, and we are executing it with precision, consistency and importantly, with discipline. Showcased by our strategic and financial highlights today, we continue to actively reposition our asset mix, curating a more resilient and higher-growth portfolio that is well positioned to deliver sustained income and value growth today and for the long term. We are driving this via accretive acquisitions, important developments at our premium assets and by divesting nonstrategic assets at attractive pricing, where we are maintaining, if not strengthening our strong balance sheet and preserving our sector-leading credit ratings. What's more, we are executing this strategy in an environment of favorable retail sector fundamentals. As we've highlighted for some time now, population growth and increased household spending together with limited incremental retail floor space are collectively driving a growing shortage of quality retail gross lettable area per capita. This is increasing the fight for space in the best-performing retail assets that are owned and managed by retail property experts, which is, in turn, creating greater price tension and opportunity for superior rent growth. At 3.8%, comparable NPI growth delivered by our premium asset portfolio was modestly above the portfolio average but was disproportionately impacted by burdensome taxes and levies on a like-for-like basis, our premium asset portfolio delivered an impressive 4.6% NPI growth. At a solid 9.7% premium leasing spreads achieved were more than double the portfolio average. Our outlets were a standout, achieving a 14% leasing spread as retailers continue to expand their stores and increase sales productivity. The appeal of our outlet assets is reinforced by occupancy at 99.8%. We're near full capacity and retailer demand is creating strong leasing tension. And perhaps of most significance, our premium assets are now generating retail sales of around $17,000 per square meter, 26% higher than the portfolio average, once again reinforcing our view that we can sustain positive leasing spreads and rent growth. Since embarking on this strategy in late 2022, our focus on delivering leasing outcomes that drive real income growth from a more premium, high-growth asset portfolio has underpinned a $1.8 billion uplift in total value of our assets. Noting the uplift incorporates our developments on a stabilized basis. And this is despite a net reduction of 12 assets and a 20 basis point expansion in capitalization rates and as a strategically located CBD asset with immense growth potential, the acquisition of Uptown is strongly aligned with this investment strategy. Located on Queen Street Mall in Brisbane striving CBD, Uptown is a landmark retail asset with a long history and deep connection with Brisbane's retail identity. Today, Uptown acts as a primary gateway to the Queen Street bus interchange, Adding to this, the asset is expected to be a major beneficiary of sizable state-led infrastructure projects intended to enhance the connectivity of Brisbane CBD, notably in preparation for the 2032 Olympics. What's more? Brisbane CBD sits in a large and growing total trade area but currently lacks a large-scale full-line retail offering. We are confident we have the blueprint to fill this gap. Securing full ownership enables us to mobilize and leverage our core competencies across development execution and project leasing and accelerate the rejuvenation of the asset and importantly, unlock its latent value. Our vision for Uptown is to introduce a retail, dining and entertainment offer that in many aspects is akin to Emporium in Melbourne CBD. Naturally, this vision would complement the luxury offer we have curated at Queens Plaza, also located on Queen Street Mall. Commencing in calendar year 2027, we are anticipating a total project spend of between $300 million and $350 million. Funded by a mix of asset sales and debt, development returns are expected to be in line with our hurdle rate being a stabilized yield on cost of greater than 6% and and an unlevered internal rate of return of greater than 10%. Furthermore, the net impact of the acquisition of Uptown and the asset sales announced today is largely neutral to FY '26 FFO. The acquisition bolsters Vicinity's already unrivaled CBD retail portfolio and allows us to deploy our proven playbook, delivering superior and sustained asset performance and an outstanding retail destination for the broader Brisbane catchment. And speaking of asset performance, on an annual basis, our assets welcome more than 384 million visitors and generated in excess of $18 billion in annual sales. After a strong second half of FY '25, where portfolio sales were up 3.8%, we are pleased to observe a continuation of shopper confidence and capacity to spend in our centers with total sales up 4.2% in the first half of FY '26. Specialty and mini majors delivered 5.1% sales growth for the half, reflecting both solid growth in specialty sales as well as the value created by remixing strong-performing specialties into larger format flagship stores, notably across our premium assets. Our portfolio-wide approach to ensuring the retail offering each center is contemporary and satisfies ever-evolving shopper needs is showcased by the positive sales growth delivered by both our premium and core asset portfolios up 5.3% and 4.9%, respectively. The combination of which strengthened specialty sales productivity to over $13,400 per square meter. Every retail category and every state enjoyed positive sales growth for the half. Jewelery outperformed, growing an impressive 11% on the prior period spanning all price points. Jewelery was closely followed by leisure at 10.3% growth, which was driven by the popular athleisure category recording growth of 10.8% as shoppers continue to show a strong and enduring affinity for on-brand retailers in these segments. The luxury category delivered positive sales growth for 4 of the 6 months with luxury jewelry the standout performer, growing at 8.1%. The Black Friday sales event, which we increasingly consider as Black November, was strong as retailer participation in the promotional event grows and as shoppers increasingly take advantage of pre-Christmas discounts. As such, we are increasingly of the view that November and December trading should be assessed together. On a blended basis, November and December achieved 4.5% sales growth in the first half of FY '26, which compares to 4.9% growth reported in the first half of FY '25. As we look ahead, we maintain a cautiously optimistic outlook for the retail sector, premised on persistent strong employment but somewhat tempered by the recent shift in the RBA's monetary policy settings on lifting interest rates and the ongoing prevalence of geopolitical uncertainty. Turning now to leasing, where our portfolio metrics showcase our disciplined approach to negotiating new leases where the structure, tenure and value of rent written strengthens our current and future income growth profile. We finished the half with occupancy at 99.6%, representing a 10 basis point improvement on June 2025. And at 76%, we maintained strong tenant retention, and we lengthened the average tenure on deals completed to 4.6 years, all of which reinforces the sustained demand for our quality assets in a market where retail floor space continues to tighten. We also achieved the strongest leasing spread since Vicinity's inception in 2015 at positive 4.6%, driven by exceptional performance across the premium asset portfolio. Also supporting income growth, we maintained the average annual escalators on deals completed at a healthy 4.7%. The confluence of our strategic leasing activity, maintaining occupancy and delivering positive leasing spreads amid a robust retail sales environment has enabled us to grow rent while maintaining our specialty occupancy cost ratio. At 14.1%, our OCR continues to provide sufficient headroom for further rent growth. With that, I'll hand the call to Adrian to talk through the financial results in more detail. Adrian Chye: Thanks, Peter, and good morning. I'll begin on Slide 11. Statutory net profit for the half was $806 million. This comprised $351 million of FFO and $455 million of statutory and other items, of which the net property valuation gain was the largest contributor. While FFO per security was up 1.3% when adjusted for lower loss of rent from developments as well as one-off items, FFO per security was up 4.1%. Underpinning this robust result was comparable NPI growth of 3.7%. And excluding new and increased taxes and levies, comparable NPI was up 4.1%. Moving to external management fees. Due to the transition of a third-party leasing mandate and the divestment of co-owned assets, management fee income was $2.5 million below the prior year. That said, our disciplined approach to cost management provided a partial offset, delivering a $1.4 million or 3.3% reduction in net corporate overheads. Our net interest expense reduced by $2.7 million, largely driven by lower debt volume arising from asset sales and proceeds from the DRP. Turning now to valuations on Slide 12. The net portfolio valuation growth was $407 million or 2.6% for the 6-month period. This represented the fourth consecutive half year period our portfolio realized net valuation gains. Pleasingly, the net valuation gain was supported by both income growth and a meaningful compression in capitalization rates. Income growth was again a key driver of valuation growth, particularly for Chadstone, the outlet centers and the CBD portfolio. Cap rate tightening was a main contributor to valuation growth in the core portfolio on the back of heightened demand for higher-yielding retail assets. Overall, the weighted average portfolio cap rate tightened by 11 basis points to 5.5% in the period. Looking forward, we continue to expect that with resilient income growth Vicinity's portfolio will continue to be well positioned for future growth. Turning to capital management. Preserving our strong balance sheet and sector-leading credit ratings remains a guiding principle for Vicinity when managing and deploying capital. In a period of elevated development expenditure, the combination of asset valuation growth and proceeds from the DRP have ensured gearing remained at the lower end of our 25% to 35% target range at 26.3%. When adjusted for the acquisition of the residual 75% interest in Uptown for $212 million and the $327 million of proceeds from asset sales announced today, pro forma gearing sits at a healthy 25.8%. We maintained our investment-grade credit ratings of A stable and A2 stable with S&P and Moody's, respectively, and we continue to actively manage our funding risk. Our debt book is well diversified with a mix of debt sources and maturities. And with undrawn bank facilities of $1 billion, we have sufficient liquidity to fund all debt expires this calendar year and committed developments and acquisitions. Our debt maturities for FY '27 of $300 million is relatively modest. That said, we are always monitoring debt capital markets for opportunities that support a lengthening of our weighted average maturity profile and a lowering of our weighted average cost of debt. Consistent with our disciplined capital management approach, our average hedge ratio on drawn debt is expected to be 89% for FY '26 and 85% for FY '27. Consequently, we are able to maintain our previous guidance of a 5% weighted average cost of debt for FY '26. Our balance sheet remains a source of competitive advantage and strength and is a crucial enabler of our current and potential growth agenda. Thank you. I'll now hand back to Peter. Peter Huddle: Thanks, Adrian. FY '26 is an important year for development projects, both completions and new commencements. We have always held the view that investing in our assets is a critical driver of sustained earnings and value accretion. And we have consistently demonstrated our willingness to invest in accretive developments both large and small. In fact, since 2019, we have actively allocated strategic investment capital to reposition assets through large, medium and smaller projects across 70% of our assets. We have embedded this discipline, committed our own balance sheet and successfully delivered development projects in arguably one of the most challenged construction sectors in memory. We have achieved this because we have the requisite organizational capability where our expertise in development leasing and development property management integrate with our purposely assembled team of development specialists and deliver real income and valuation upside. This is not easily replicated, which brings me to our major transformation of Chatswood Chase. The opening of Stage 1 in October last year marked the beginning of a new era for this landmark asset. Stage 1 introduced 65 new retailers spanning leading local and international brands across fashion, beauty, lifestyle and dining. Among the prize list of retailers who have opened are David Jones newest department store, flagship Apple, Mecca and Sephoras as well as an Australian designer fashion precinct featuring Zimmerman, Camilla and Scanlan and Theodore, alongside international brands such as Ralph Lauren, Hugo Boss, Armani Exchange and Max Mara. Our Level 2 precinct features on-trend athleisure brands such as Nike, LSKD and 2XU, which are complemented by Australian fashion staples, the likes of a Country Road, Seed, Witchery and R.M. Williams. Between the opening of Stage 1 on the 23rd of October and December, Chatswood welcomed 2.4 million visitors who in the December quarter, spent a total of $119 million and on a same-store basis, delivered 34% sales growth. The success of Stage 1 provides a powerful foundation for the highly anticipated launch of the second stage opening, being now eagerly-anticipated luxury precinct which I'm pleased to report remains on track to open from the fourth quarter of FY '26. Anchored by over 20 luxury brands, the Stage 2 opening will see us complete the retail reimagination of Chatswood Chase and solidify the asset status as the most prominent, compelling and differentiated retail destination on Sydney's affluent North Shore. And at $625 million, our investment in this project remains unchanged, and the return profile also remains compelling with a stabilized yield of greater than 6% and and an unlevered internal rate of return of circa 10%. As I'll come to shortly, our vision for Chatswood Chase extends beyond the completion of this project as we progress our plans to augment the asset's patronage with the construction of 2 highly bespoke luxury residential towers on separate sites adjacent but connected to this iconic asset, much like what we have done at Chadstone. Since 2019, we have progressively enhanced Chadstone's patronage and therefore, sales and income growth potential with the construction of more than 50,000 square meters of A-grade office space now home to more than 6,500 office workers as well as a 250-bedroom 5-star hotel that welcomes close to 110,000 visitors a year. What's more? With the likes of Kmart, Adairs' and Officeworks selecting Chadstone as the location for their new headquarters, the caliber of office tenants the asset is attracting is testament to both the quality of the office space and the overall appeal of Chadstone as a highly sought-after one-of-a-kind retail-led mixed-use destination. Together with the retail offer that places Chadstone amongst the world's best, Chadstone continues its evolution as a city within a center where people come to shop, stay, work, dine and be entertain. In partnership with our co-owner, Gandel Group, close to $900 million has been invested in the current and future growth potential of Chadstone, spanning the opening of the hotel Chadstone in 2019, the construction and opening of the Social Quarter in 2023, the refurbishment and opening of Chadstone Place office tower in 2024, now home to Officeworks headquarters and the construction of the One Middle Road office tower opened in 2025 and now home to headquarters of Adairs' and Kmart and which seamlessly integrates into a first-of-its-kind, truly unique fresh food and dining precinct, the market pavilion as well as a significantly elevated and bespoke laneway dining offer. In fact, every development, both large and small, has reinforced Chadstone as an all-day, everyday retail-led destination. And while we are never done, our multiyear strategic investments has consistently added to the scale, significance and leadership of this remarkable asset. Turning now to the redevelopment of Galleria in Morley, Western Australia, comprising a new and immersive entertainment, leisure and dining precinct as well as a significantly elevated and contemporary fashion offer. This important redevelopment will deliver a completely refreshed customer experience for Galleria's large and loyal customer base in and around Central Perth. Importantly, construction and leasing are progressing well and we remain on track to complete the project in time for Christmas this year, and deliver on our previously stated project costs and development return targets. While the larger, more transformational developments continue to shape our retail destinations, I've always believed that what's inside the box creates the most enduring value. In this context, we have maintained our commitment to consistently refreshing and contemporizing our retail offers across all of our assets and in doing so, creating growth opportunities for our highest-performing retail partners. At Emporium Melbourne, we recently expanded, refurbished and opened UNIQLO's flagship store at more than 4,500 square meters and having opened in November 2025, this store has reclaimed its position as the most productive UNICLO's store in their Australian stable. And at Mandurah Forum, we've recently refurbished a former David Jones department store space with the introduction of Rebel and Timezone. Opening in September 2025, the combined 3,300 square meter Rebel and Timezone introduced 2 market-leading sporting and family entertainment offers to the center and a new and exciting proposition for the trade area. This reconfiguration of former major space has delivered a 20% uplift in sales productivity across the October to December quarter with an almost equivalent level of rental uplift, thereby demonstrating the value that can be unlocked when retail space is strategically repositioned. While only 2 examples of many, UNIQLO at Emporium and Timezone and Rebel at Mandurah provide a powerful example of the mutual value that can be delivered when we invest in and cultivate strategic long-term partnerships with retail category leaders in Australia. Turning now to a brief update on our mixed-use development opportunities. As we have shared previously, we continue to advance our mixed-use strategy with a particular focus on residential opportunities that are strongly aligned with state government housing priorities that importantly have the potential to deliver meaningful long-term value creation for Vicinity. Two opportunities are now firmly in the spotlight. Chatswood Chase and Bankstown Central. Both assets have been identified as ideal sites for higher-density residential development. And both assets have secured support of an accelerated state planning pathway by the New South Wales Housing Development Authority, which is ultimately intended to streamline and expedite approval processes. Our early plans for Chatswood Chase contemplate around 480 luxury apartments across 2 separate towers. Relative to Bankstown Central and other assets in our portfolio earmarked for potential mixed-use development at this stage, Chatswood Chase likely represents the most near-term opportunity for us. And just on Bankstown in Sydney's West, our initial plans envision more than 1,500 apartments across 7 towers on a sizable 23,700 square meter site immediately adjacent to the retail center. Of significant benefit is that Bankstown Central sits in the heart of the city of Bankstown directly connected to the new metro station and proximate to major tertiary and medical precincts. As I've said before, while approvals create the potential to unlock significant value at our assets, we will continue to retain complete optionality in terms of how and when value is unlocked. Before I provide an update to our FY '26 earnings guidance, let me reinforce that delivering predictable and growing income for our security holders while simultaneously driving capital growth over time remain at the core of our business decisions and investments. For the past 3 years, we have been focused on increasing the momentum of execution across the organization and ensuring that every action we take supports earnings resilience and sustain value accretion over time. And I think our results to date demonstrate our investment strategy is working as intended. Closing now with a positive update on FY '26 earnings guidance. As Adrian and I have outlined in some detail, we've had a stronger-than-anticipated start to FY '26. And pleasingly, the upside to our expectations is entirely driven by the continued strength of our leasing outcomes and portfolio metrics, including an increase in percentage rent. The confluence of which underpin an uplift in our expectation for FY '26 comparable NPI growth to 3.5%, which has, in turn, enabled us to guide to around the top end of our FFO and AFFO per security guidance ranges of $0.15 to $0.152 and $0.128 to $0.13, respectively. Meanwhile, we continue to expect our full year distribution payout ratio to be within the target range of 95% to 100% of adjusted FFO. And finally, I know I speak on behalf of Adrian, our Board and our executive leadership team when I say that it is a privilege to lead the team at Vicinity and to share our strategic operational and financial progress with the market. We'd like to acknowledge and thank everyone who works for, partners with and is associated with Vicinity for their ongoing contribution and support. Thank you. Operator, I'll hand the call over for Q&A. Operator: [Operator Instructions] Your first question comes from Solomon Zhang from UBS. Solomon Zhang: First question was just on Chatswood. Just wanted to hone in on the December '25 passing yield and maybe just the proportion of the asset that's income generating at this point in time? And maybe just an update on the expected path to get to the 6% stabilized yield on cost, please. Peter Huddle: Solomon, Peter here. Yes, if I got the three questions, right, there's just a bit of noise coming over the top. So yes, the stabilized yield is about -- is 6%. What we do is we run that stabilized yield over a 3-year period. So essentially, by the end of FY '26, we anticipate around about roughly about a 4% return that leads into a 5% return next year, then stabilizes in early FY '28. That all depends, Solomon, really on how much potential assistance that we may need to provide or also in terms of the lease-up. In terms of the lease-up by June of this year, we'll be 95% opened and operating in terms of Chatswood. So we mentioned in these results that we'll commence opening the second stage, which is really the luxury opening from the start of FY '26, and we expect that to be majoritively complete by the time we have a chat again in August. So again, around 95% of it will be open. In terms of income, it represents broadly about the same amount of income by the end of this fiscal year. So I might have missed another question. Solomon Zhang: Second question is just on your premium portfolio. So obviously printing very strong productivity numbers circa 20% higher than the rest of the portfolio. But just looking at Slide 26, when you look at the occupancy costs, they're only marginally above the portfolio average. So I mean is that the appropriate spread do you think? Or what sort of, I guess, occupancy cost do you think is appropriate given the productivity of that premium portfolio? Peter Huddle: Yes, Solomon, we can potentially provide you a number that separates it out. The key differential is we put all of our outlet business in the premium portfolio, that typically works on an occupancy cost of around 12%. So just the nature of that business model, the retailers operate on a lower occupancy cost ratio. We're driving significant dollar per square meter sales through that. And in terms of revenue, we've driven revenue through that outlet business substantially higher in the last 5 years. But the occupancy cost ratio for that business right now is around about 12.8%. If you exit that out, the occupancy cost ratio for the premiums would be higher than our average. Solomon Zhang: And do you see, I guess, headwind to getting back to your pre-COVID occupancy costs? Peter Huddle: Look, we're confident we've been -- the pleasing thing, I would say, Solomon, is we've been growing our leasing spreads and growing our rent, growing our NPI through the course of the last few years, and the occupancy cost ratio has also been maintaining broadly similar. So ultimately, that essentially means that retailers have had sustainable growth through that period of time as well, all but we don't know their current profits through their current reporting season. So ultimately, it gives us confidence we're able to continue to grow our revenues through the portfolio. Operator: Your next question comes from Daniel Lees from Jarden. Daniel Lees: Just a question on your Uptown development. I appreciate it doesn't start until 2027, but construction costs remain pretty elevated in Queensland. Just wondering how you're getting comfortable on your underwrite there and if you have any provisions within that underwrite. Peter Huddle: Yes, Daniel, it's Peter here. It's a fairly broad range that we gave at $300 million to $350 million. We've obviously in the process of concluding that transaction to have 100% ownership, not too dissimilar to what we did at Chatswood, to be honest. In terms of the underwrite, we've spent a lot of time with at least 3 of the key contractors within the Brisbane market to really understand the capacity within that market in the trade -- in the subcontracts or the trades that we need to execute that job. In the next update, we will provide even further comfort to the market in terms of how we've derisked that project and give them confidence within that range. We've done a lot of work on this project previously as well. So at this particular point in time, there's a window that we want to hit. That's what we've guided to here is really to commence that project in calendar year 2027, finish it before the end of 2028. And at this point in time, we're comfortable with the ranges that we provide the market. Daniel Lees: And just on corporate overhead, it looks like they were down 3.3%. Maybe if you could just give us some color as to what the drivers were there and how you want us to think about corporate overhead growth moving forward? Adrian Chye: Yes. Thanks, Daniel, Adrian here. Yes, corporate overheads, a key driver of that was probably some cost discipline that we have tried to stay focused on in the business. We also do have the benefit of some capitalized costs or capitalized overheads in relation to development personnel given the elevated development expenditure at this point in time. We do expect the second half to increase a little bit. So I guess from an overall full year perspective, we're probably expecting corporate overheads to be in the high 80s. And into next year, as we continue to reduce our development spend in FY '27, we probably expect a little bit of an unwind into FY '27 as well. Of course, we'll continue to maintain our cost discipline. So hopefully, there shouldn't be a significant increase into FY '27. Operator: Your next question comes from Simon Chan from Morgan Stanley. Simon Chan: It looks like Chatswood Chase resi has jumped the queue in terms of mixed use. I think over the last few years, you've been promoting Bankstown, Buranda and all that stuff. In your prepared remarks, Pete, you talked about how you want to leave optionality, et cetera. Can you just talk to what's the realistic timing for Chatswood Chase resi? And if it's not imminent, what are some of the things that actually need to happen for it to take effect? Peter Huddle: Simon, it's Peter here. I know it's a dear to you being a local to Chatswood as well. So the likely -- so we are in the government facilitation process via the what acronym known as the HDA process, which is a fast track process for rezoning and to be DA to be then shovel ready. Our expectation, even going through a fast-track facilitation process from where we are today, we anticipate that it's still towards the end of next calendar year for a DA to be actually approved through that process. And then you have, even on best case in our scenario, predevelopment activity around design documentation to get you ready for construction. So the best case to know from our point of view is 2 to 2.5 years away from being an ability to shove a shovel in the ground, so to speak. That said, we still think it's a tremendous opportunity. Why did it jump ahead of others? Primarily, and we haven't fully baked this out. But on our numbers today, just given the level of potential sales that can be achieved through a suburb like Chatswood, it's the most valuable opportunity that we're looking at across our fleet of residential projects. But again, it's a couple of years away from commencing and that's why we're giving ourselves time to ensure the approvals that we get add the most value. And I think I've mentioned before, Simon, we will be looking for partners to execute our residential platform as well. Simon Chan: That's very clear, Pete. I just got one more. Chatswood Chase, the yield. I think in your answer to one of the previous Chap's question, F '26 at 4%, leading to 5% next year and 6% the year after. It is effectively fully leased anyway, and you start collecting rent from day 1. I get it, and you also said it depends on how much potential assistance you may need to provide, right? So that's why there's a glide path. But Level 1 is essentially open now. Do you have a better picture of how much potential assistance you actually need to hand out? Or the other way to word my question is, is your 4% going to 5% going to 6% over 3 years, a little bit too conservative? Peter Huddle: I'd like to think so, Simon. We always -- and same with Chadstone. So we always put a stabilization number in. There's not a huge amount of science that go around that stabilization number. It's a provision that's a percentage of total specialty rent that is a decline in percentage over a number of years. But in terms of Chatswood, yes, the ground -- lower levels open, ground levels, open, Level 2 is open. There is some step rent in those openings until the Level 1 opens, which is the luxury precinct. And there's also annualization of the rents that have opened through FY '26. So to your point, we're confident we're happy with the way that Chatswood's performing at the moment, particularly since our opening on October 23. And if luxury hits the market like we think it's going to, we'd expect to have less stabilization moving into FY '27 and in particular FY '28. I don't have those specific numbers for you. I mean, if required, we can catch up and give you a bit of a heads up what they may be, but I don't have them off the top of my head here. Simon Chan: That's right. But have you had to provide a lot of assistance to the tenants that have opened so far in Level 2 or ground level, et cetera? Or it's actually tracking okay? Peter Huddle: No, it's tracking as per our expectation. We always knew Level 2 there because the Level 1 is still to open. There would be some assistance, whether it's to the tenants or additional marketing activities. And we're very, very comfortable with the lower level and the ground level trading very well. Operator: Your next question comes from Howard Penny from Citi. Howard Penny: Just understanding the earnings impact of commencing Uptown and finalizing the developments that have just completed. Could you just give some detail on potential loss of rents in Uptown and of course, the capitalized interest and capitalized other costs as far as possible. I know that's more a next year story. But just giving us a feel for that loss of rent versus the capitalized costs that will be reduced off the current income statement? Adrian Chye: Howard, Adrian here. I think with Uptown, I think as we mentioned, it's probably going to be really a calendar year FY '27 development story by the time we, I guess, get our plans in place, and we kick off the development and where loss of rent would impact. At this stage, we're very confident around our FY '27 guidance for loss of rent, which is $15 million. We don't see that changing with commencing up down in calendar year '27. We'll probably have more to say in August around what that future loss of rent profile looks like beyond that. Probably one thing to, I guess, emphasize with Uptown is we do have a very strong performing car park, which delivers actually most of the income to that asset today. We're not expecting as part of the development that a large part of that income from the car park is going to be disrupted. So probably unlike Chadstone or Chatswood, the loss of rent impact from uptown is expected to be a lot less than those developments. So that's probably just one thing to keep in mind. In relation to overheads capitalized overheads, capitalized interest, we'll probably give more an update as we get closer to firming up those development plans. Peter Huddle: I'll just add a bit to that, Howard. I mean you know our business very well. we're not giving guidance, obviously, into FY '27 at this particular point. But clearly, we've concluded Chadstone, Kmart, moved into their office in January. Chatswood will be 95% opening by June. They were the key developments that had significant loss of rent as we concluded those developments. You will see an uptick in revenues going into FY '27. And then the smaller even though there's still important developments, you'll start to see Galleria then start to annualize going into FY '27, FY '28 and then Uptown will then follow into that. So if it's helpful, we'll provide you a bit more insight into that. But our anticipation, you'll start to see some real strong revenue growth. Howard Penny: And then just talking a little bit about residential. You make a good point to say that you are -- at this stage, it's the optionality that you've unlocked. But do you have any sense on whether you would fund this through third-party funds or development partners or any -- do you have any views on how best you would develop those residential opportunities? Peter Huddle: Look, we'll look at each residential opportunity on a side-by-side basis as well as other options. But Howard, our plan is to be capital light in terms of those opportunities. We're not known in the market as a residential developer. Our core capability and skills is retail development, leasing management and all things associated with that. We like to ensure that we control master planning in terms of our sites. But in terms of execution and capital, we'd be looking for other partnerships to come in to help us execute and unlock the value of those. Operator: Your next question comes from Andrew Dodds from Jefferies. Andrew Dodds: Just a couple of quick ones. Firstly, just around some of the comments you made in the guidance and the assumptions, comp NPI growth expectations have been upgraded from, I think, 3% to 3.5% half. Just interested to hear what sort of drove this movement. Peter Huddle: It's Peter, Andrew. I'll be as simple as I can. We've got increased rent, increased occupancy, hence, less vacancy and increased percentage rent. So it's all business fundamentals heading in the right direction. Andrew Dodds: All right. That's clear. And then just picking up on some of the comments around the Uptown development. Is it fair to assume that the -- or I guess, the underwriter is sort of assuming that [indiscernible] it's got a similar stabilization period to that of Chatswood. So maybe 4% trading to 6% over the 3-year period. Peter Huddle: No, good question. If I backtrack when I first came to the company, we never used stabilization. So typically, we do now, we think the -- and across all of our projects, we are typically conservative and hopefully, it trades better than our stabilization assumptions. In terms of Uptown, it will be a different style of development than what Chatswood or what Chatswood is, is it's planned to be a phased development. So we're not intending to shut the shopping center broadly down and then reopen it. It will be phased over a period of 18 months to 2 years. But yes, there will be stabilization. If you're looking for a modeling type of scenario as a working assumption, I put in the assumptions that you suggested, 4, 5 and 6 as working assumptions, we would hope that in the essence of doing what we're doing for Uptown, that would be a conservative assumption. Andrew Dodds: All right. And then just finally, on retail sales. I mean, the momentum heading into December is clearly very strong. I'd just be interested into if you can sort of speak to any anecdotes or sort sales data that you've already picked up on throughout January and early Feb post RBA rate hikes? Peter Huddle: Yes. Andrew, we don't have any roll up of January and part of our technology doesn't give real-time sales updates. In discussion with some of the retailers, and we're obviously very keen on seeing their results. It is a little choppy from -- in terms of January moving into February. And part of January and February will need to seasonalize because Lunar New Year, which is such an important sales period was in January in '25 was last -- this week, essentially for February. So at this point, we're as keen as you are to really understand what the trend is post the direction that the RBA went in terms of interest rates. At this point in time, all I could say is traffic still remains strong at our centers. So we'll see how that converts into sales over January and February, and we'll come back and report that in the Q3 update. Operator: Your next question comes from James Druce from CLSA. James Druce: One very quick one. What was the yield on the $327 million of divested assets? Peter Huddle: Slightly over 6%. James Druce: Okay. And can you just talk to the NTA growth was pretty pleasing at almost 5% for the 6 months. Part of that, I think, was coming from the [ subregional ] portfolio, but can you just talk through the contributions of sort of market rents versus value assumptions and sort of the different movements across the categories, please? Peter Huddle: I'll kick off, and I'm sure Adrian will -- so of the 2.6% growth, about 68% of that was really in cap rate compression. The rest of it was in income growth. Some of it was related to we -- the assets that we're selling. We mentioned that they were 18% below our June book values. So we've rebook it at the sales price as part of market validity of those sales price. That also led to market evidence for the valuers for similar type of assets within the portfolio. Adrian Chye: Probably the only thing I'd add is, typically, what we do for development is we'll -- as the project goes through development, we'll change the valuation methodology to an as of complete basis, and we'll put a profit and risk allowance. For Chatswood, we released $50 million of that profit and risk allowance. There's still over $100 million of profit and risk to come through in the next period. So that should aid further valuation growth and NTA growth in the future, but that was a contributing factor as well to the 2.6% gain. James Druce: Okay, fantastic. And just on the tax drag from property expenses, does that -- is that sort of stabilized in the second half or not? Peter Huddle: We'll have -- it will be annualized. It will stabilize in FY '27. So to be specific, the taxes are predominantly congestion levies that have occurred in Victoria. It's the fire services levy, which was transferred from insurance to property taxes. I don't mean to beat them up, but again in Victoria. And some incremental taxes associated with our land leases on airports that are in our premium property. So they will get back to normal growth from -- to the degree that we can control them in FY '27. Operator: Thank you. Your next question comes from David Pobucky from Macquarie Group. David Pobucky: Just around the balance sheet gearing sits towards the low end of that range with potentially more divestments to come, are you seeing any further opportunities to acquire in this market? Or is the focus now on development around Uptown and the resi opportunity? Peter Huddle: David, it's Peter, and thank you for the question. Look, we're acquisitive at the moment. We have a very strict network plan across the country. We know we're underweight in Greater Sydney, and we know we're underweight in Greater Brisbane that led to our decision around the acquisition and then subsequent development of Uptown. So if good opportunities come on to the marketplace, and we do anticipate some that will come on to the marketplace, then we'll assess them on their merits and see if we can add value to those as long as they are at attractive pricing. Similar to that, we constantly review our own portfolio. And whilst we don't disclose divestments, it's not as if that we already have them, we typically use assets that are not carrying their weight within our portfolio or don't have a strategic benefit for us to divest those assets to fund our growth opportunities. And that divestment may be at 100% or 50%. It also helps us moving up the premium scale of our portfolio, which generally, for us, moving into the larger more fortified, so to speak, assets allows us to deliver greater growth, which we've tried to highlight in the presentation as well. David Pobucky: Maybe one for Adrian, just around debt. I know you're monitoring debt capital market opportunities. You just talked to any kind of refinancing that you've undertaken or expected to undertake and the margin improvement there? And where does your weighted average margins sit at the moment? Adrian Chye: Yes. Thanks, David, for the question. Weighted average margin for us is about 155 basis points. Bank debt margins around 115. So we've actually done quite a lot of renegotiation of bank debt and cancellations as well as we've been selling assets to bring that weighted average margin down on bank debt. With the DCM margin, it's probably closer to 170, 180. Some of that is with some of the nearer-term expiries. So you'll notice there's a GBP 655 that's expiring in April this year. That does provide us an opportunity to look at reducing our margin. We are looking at a very liquid debt capital markets at the moment. And based on some of the secondary trading of our previous bonds and also looking at the market comps, we think that there's very attractive margins out there as well. So in terms of opportunities in the future, we are looking probably in that market, refinancing some of the expiring DCM to reduce our margins. As we said, we're pretty highly hedged in the future. So we shouldn't expect too much from a floating rate impact. So hopefully, we'll just get some margin compression going forward. Operator: Your next question comes from Richard Jones from JPMorgan. Richard Jones: Pete, just wondering if you could tell us what the estimated end value is of the luxury retail at Chatswood Chase? Peter Huddle: Just the luxury, the end value, Richard? Richard Jones: Yes. Peter Huddle: I'm not -- yes, Rich, not quite sure of the question. But ultimately, luxury represents about -- in broad numbers, it's about 25% of the income of Chatswood Chase. So we'll have to come -- we'll come back to you and let you know what component of the valuation the luxury may represent in terms of that, but that's basically what it is. Richard Jones: Sorry. So my question was in relation to the luxury residential, sorry. Peter Huddle: Residential. Sorry. Yes. We're just -- we're finalizing the numbers as we speak. And I know that's like I'll push your question down the road, but literally, we're in the process of commencing the presales with appointment of agents, we're just validating what they anticipate to be the income levels on a BTS, which is likely to be Chatswood. And then it will depend on the final yield coming from the development approvals that we're achieving through the Housing Development Authority process. So a little bit too early. We anticipate it to be a reasonable amount of residual land value coming from the 2 sites from Chatswood, but we're not releasing a number until we have those two things just locked in, Rich. Sorry, mate. Richard Jones: Okay. That's fine. Just in terms of, I guess, your strategic thinking around acquiring full stakes in assets and undertaking major developments. You've obviously done at Chatswood Chase, planning at Uptown. Just do you think these are a long-term 100% hold assets? Or will you look to introduce capital post hopefully extracting value out of the projects? Peter Huddle: Well, we're happy to keep it 100% at this point in time and take a situation like Chatswood, Rich. We want to prove the full cash flow potential of that asset to really realize the valuation that we think it should be, which is not the valuation that's in our numbers today because we still hold profit and risk in that valuation until we deliver, and at that point in time, if there were opportunities, and if we needed the capital and if Chatswood, for example, was an opportunity for us to transact in the market then it's probably, I would say, it's an attractive one to bring in a partner at that particular point in time. But with the balance sheet currently at 25.8% on a pro forma basis, there's no pressing need for us to bring partners into either of those assets. And if they perform above, if they deliver better returns above -- well above the portfolio average, then why not just hold on to them at 100%. Operator: Your next question comes from Adam Calvetti from Bank of America. Adam Calvetti: Look, the first one is on NPI growth is 3.7% first half, we're guiding to 3.5% full year. I mean, occupancy is at the highest on record, leasing spreads are strong. What's going to be dragging it down in the second half? Peter Huddle: Adam, there's a couple of things that are in there. We are putting some additional security provisions into our assets. We've been planning on this for a significant period of time. It's clearly a consequence of the nature of what's occurring across the country, highly publicized by the Bondi coronial inquiry. So we have upped our security provisions and they haven't been annualized at this particular point in time. There might be a point associated with that. And then there's also annualization of the glorious congestion levies that were implemented by the Victorian government, and a few other items, which are essentially just second half items, to be honest, that are coming in. They would be the main things. We are anticipating that -- for context, we're still rolling into a full year leasing spread of around about 3%, hitting the first half at 4.6%. If we do better than that, then there will be some upside. Adam Calvetti: Okay. That makes sense. And just sticking with leasing spreads, I mean, I think Andrew Dodds touched on this, just the pathway back to pre-COVID occupancy levels, I mean, the 7% expiring, how do you really drive rents in some of these assets? There's really no supply coming online. They're quality assets. I appreciate you've got to manage relationship with the tenants. But I mean, I don't know how much power they have to really push back. Peter Huddle: Yes, Adam. Look, for us, it's got to be sustainable growth as well. Ultimately, Australia is still a fairly small market in terms of the number of retailers that's getting consolidated as well. It's got to be a sustainable relationship with all of us. If you look at our premium asset portfolio, you're essentially driving spreads at 9.7%, and you've got the outlets growing at double digits, and that's been the last few reporting periods. So for us, it's about managing appropriate growth through the course of the cycle, not only on income growth, but also on capital value. And if -- and what -- the other thing that we've done, you'll see that there's a 76% retention rate. Obviously, there's a 24% retention rate, which is essentially introducing new product or new tenants into our portfolio, which also helps to drive rents. I get your question, but we're actually quite happy that we have the capacity to grow rents based on where the fundamentals of the portfolio are on OCR. We just have to do it in a very managed way. Adam Calvetti: Maybe just really quickly following on, how many more options do tenants usually have in terms of boxes and other sites to go into when they're looking at either renewing or moving on? Peter Huddle: Well, it's another good question. I mean, it's part of the reason why we're really focused on the premiumization of our portfolio, CBD's outlets, the Chadstone, Chatswood Joondalups of the world is because they are assets that tenants need to be in, period, in our view. So there are other options there, of course, but there's more limited options for those assets than there would be in the neighborhood, subregional or even the regional space. Operator: Your next question comes from Claire McHugh from [ Green Street. ] Unknown Analyst: Just a quick one on Uptown's yield cost. Appreciating your IRR framework too. So Brisbane is firing on all cylinders, is the 6% yield on cost more of a sort of a bear-case scenario? Just when I run some of the numbers at the top end at the $350 million and just look at relative rent, it just seems like even a mid to sort of high 6% is still a conservative estimate. Just wondering how you're thinking about the underwriting there. Peter Huddle: Claire, and you come in and speak to our leasing team. They would love that. It's an early stage. We've done an early stage sort of feasibility associated with it. There's still some work to do between now and probably year-end. At that particular point in time, we would hope that we're formalized in terms of the development approval that we would have lodged with the city. We know the city is very supportive, fantastic Lord Mayor there and -- but we also know that there's heightened construction costs within that marketplace. Now we found a window and we understand the construction capacity, but you're still building into quite a heated construction market at the moment. So we're leaving contingency associated with the construction cost side as well. We understand that there is no full line -- full-scale, full-line priced offer within the Brisbane CBD. For us, being prominent in Sydney CBD, Melbourne CBD and Brisbane CBD is essential. And we see -- to your point, we see that the demand for the space will be strong. Unknown Analyst: Yes. No, I take your point on construction costs. I understand with union activity, productivity of construction workers is low in a national context. But anyway, in terms of just generally speaking, just touching on underwriting hurdles. So clearly, real interest rates are edging up, which is weighing on cost of debt, but your cost of equity capital has improved and growth is stronger. So I'm just curious as to in your internal IC committee meetings, how you're evaluating your underwriting hurdles? How have they changed over the last 6 months against that backdrop? Adrian Chye: Claire, Adrian here. You're right. Obviously, in the last few periods, there has been a slight increase in expectation around interest rates. What we try to do is take a through-the-cycle, longer-term view on our hurdle rates. We are conscious that sentiment changes around interest rates and cost of capital, so we try to look over a 5- to 10-year period to say, what is our underlying weighted average cost of capital. We've therefore then said, well, how do we also compensate for risk, particularly on developments, less so for acquisitions where you've got known cash flows. And typically, that drives that yield on cost of 6% threshold and the greater than 10% unlevered IRR. So I wouldn't say that's materially changed in the last 6 months, given that we've taken that through-the-cycle approach. Obviously, if volatility were to increase significantly or rates were to rise in a more material way, then we would look at changing those. But we do review them every 6 months as a matter, of course. Unknown Analyst: Okay. That's helpful. And then maybe just a final one, if I can bring it in. Just in terms of sources of capital. So is it fair to assume that this will -- the capital rotation will remain front of mind in terms of disposing noncore assets? Or I know the DRP is on -- your cost of equity now is now pretty solid. How are you thinking about your various sources of capital to fund the development? Peter Huddle: Yes, Claire, in terms of whether it's acquisition or development activity in the future, it probably still revolves around some divestment strategy. That said, we've been very active and leading into that space, to be honest, over the last 3 years. And so the portfolio that we have at the moment is we're quite happy with. But ultimately, there's other opportunities that come along, whether it's the Uptown development or an acquisition that on a risk-adjusted basis delivers us higher returns, there is a small section of the portfolio that we potentially may unlock some value and might even be bringing in a joint venture partner to fund those developments. That's something that we assess basically biannually just in terms of the forward return of each asset within our portfolio, just making sure that they're pulling their weight. The DRP, as you mentioned, it provides us just with an extra funding source opportunities, an extra lever to look for opportunities. And in terms of gearing at the moment, we're obviously very comfortable with where we sit, particularly on a pro forma basis. Okay. I don't think there's any further questions. So look, on behalf of Adrian and myself, a big thank you, firstly, to the Vicinity team for putting these results together or delivering these results to be quite frank. And then secondly, to all the analysts and investors on the call today, look, a big thank you for your interest in our company, and we will continue to do our best to continue with a positive performance for you and for us, to be honest, into the future. I look forward to having a chat to you as a follow-up from this results call. Thank you again.
Operator: Good day, and thank you for standing by. Welcome to Iluka Resources FY 2025 Results. [Operator Instructions] Please be advised that this call is being recorded. I would now like to hand the conference over to your first speaker today, Tom O'Leary, Managing Director of Iluka Resources. Please go ahead. Tom O'Leary: Good morning. I have Adele Stratton and Luke Woodgate with me in Sydney this morning. Thanks for joining us. I'll keep my opening short, and then we'll go straight to questions. The full result that was published this morning was really pre-reported and discussed at our quarterly review back on 29 January a few weeks ago. While there's been some incremental progress since then the key takeaways are the same. In Mineral Sands, we expect to have greater clarity around the market outlook post Chinese New Year for zircon and the head of the North American coating season for titanium dioxide feedstocks. Since we last spoke, we've maintained prior and locked in some additional contracted zircon sales, which for the first quarter, now stand at 41,000 tonnes of sand and 11,000 tonnes of zircon in concentrate. All of the industry developments I outlined at the quarterly. Rio Tinto's review of its titanium feedstocks business, the rationalization of global pigment capacity, the impact of antidumping duties on Chinese exports and the operational settings adopted by other mineral sands producers continue to play out and remain likely to influence outcomes in 2026. Iluka is well placed to respond to a range of scenarios in the context of our $1.1 billion inventory position, diversified product suite and Australian operating base. Slide 7 in today's pack expands on the uses of funds expected during 2026. As you can see, it's a significant step down from last year being over $600 million lower. This is the result of cost reduction measures enacted late last year, including the decision to idle Cataby and SR2 the conclusion of capital investment in the Balranald development. Turning to Balranald. You'll recall, we commenced mining on 1 rig in January. The second rig will commence in February, after which we'll be mining on both. Ramp-up will occur over the first half with investment case production targeted for midyear. Heavy mineral concentrate will be transported to our Narngulu mineral separation plant for further processing. With the first finished mineral sands products from Balranald to enter the market in the second half. Balranald rare earths will be transported to Eneabba to await refinance. And that brings us to the rare earth business in the Eneabba refinery, where construction continues to progress well and will accelerate over the next year ahead of commissioning in 2027. Engineering is now over 95% complete. Equipment continues to arrive at site for early placement and SMPEI contracts will be awarded over the coming months. Not long after the quarterly, we saw some further announcements from the U.S. government and commentary from the Australian and other governments regarding international cooperation to diversify the supply chain, including in relation to potential price support. These developments are obviously of interest to Iluka, their tailwinds for our rare earth business. Nevertheless, as I said a few weeks back, we're focused on building that business to be commercially sustainable for decades. Construction, commissioning, operational performance, offtake and feedstock longevity are all vital to this endeavor, and we look forward to continue to update you on our progress. To reiterate, upon commissioning next year, Eneabba will be one of the few rare earth refineries operating outside of China, a multi-decade infrastructure asset capable of processing a diverse range of feedstocks from Australian and international projects and producing both light and heavy separated rare earth oxides. I appreciate there's been a repetition from the quarterly and what I've just covered. The materials we put out this morning included some updated visuals of Balranald and Eneabba, which we hope are helpful and give some color to the exciting times ahead. With that, over to you for questions. Operator: [Operator Instructions] First question comes from Paul Young from Goldman Sachs. Paul Young: Thanks for putting the cash flow I guess, stack chart on Slide 7, that's pretty helpful. So just a few additional questions on just cash flow and other items for this year, just to sort of step through some different scenarios. Can you firstly just talk about the working cap position. I think you've got receivables of about $300 million and also payables about $270 million, which there's a bunch of accruals and there I presume then over CapEx. But just on the receivables and the unwind, how do you see receivables unwinding over the course of the year? Adele Stratton: Yes. Great question, Paul. Look, we're already starting to see that. So our net debt position at the end of January is down to $420 million for the Mineral Sands business. So those receivables will start to unwind to more normalized levels over the next month or 2. As you've noted in the payables because of those two big capital projects, elevated levels of capital accruals, but once again, Balranald come in to the end, so you'd see that pushing through. So the purpose of the new slide that we put in is to really show that step down from 2025. We're not deploying such significant amounts of capital in '26, and that's obviously clearly very material. Paul Young: Yes. Great. And just a few smaller items. I know you've -- you always do FX hedging, and I think you have USD 200 million of hedging in place of $0.68 or so for the year. So I just wanted to your comments on that, if that's correct. And then -- and also just with anything we should think about tax rebates or anything cash tax related? I mean, and the reason for the specifics, I'm just trying to really nut down the cash flow scenarios for the year. Adele Stratton: Yes, great question. So in terms of exchange, our approach to FX hedging is normally looking at the contracted sales, so we don't do speculative hedges. So we look at what contracted sales we have and put hedging in place for that. And as you rightly have pointed out, we've got USD 200 million of hedges covering 2026 at the moment. And we've done those as collars and caps, so I think it's got a $0.63 floor $0.685 ceiling. So as we progress through '26, we'll continue to do that sort of hedging approach to ensure that you're quite conservative in terms of forecasting your cash income on your revenue. I think just on the sensitivity for any -- a lot of people ask, well, how sensitive are you to exchange. As you'd be fully aware, Paul, most resource companies price their products in U.S. dollars. So they do have exposure for every USD 100 of revenue. That's about a AUD 2 million FX impact for each $0.01 change in the exchange rate, but we've got the hedging in place. Coming -- we've got a tax refund due in the first half. So as a result of some of those accounting adjustments that we put through in December, so specifically the inventory write-down, you actually get a tax credit for that. So on the balance sheet, you'll see a current tax asset of about $52 million. So that cash will come through in H1, and depending on earnings in '26, your installments will start in the second half. Paul Young: Great. Okay. So it seems like plenty of headroom. I know some offer facilities still about $250 million of undrawn as well. So that's great. And then maybe just turning to Balranald just briefly. I know that a really good picture there of the ore/pure HMC on the ground. Tom, just to share exactly how the mining unit is performing. Any like operating data you can share with us with respect to uptime, utilization, production rates versus plan? Anything you can share with us? Tom O'Leary: It's probably a little bit early to be specific about that, Paul. We've had the one mining rig up from January. And we're experiencing the usual commissioning pickups along the way, but we're pretty pleased with the extraction rates, which have been at times at investment case levels. And we're now getting the next mining rig operating really probably in the next week or so. So pretty pleased with how it's progressing generally and really on track to be at investment case rates by the middle of the year. Operator: Next, we have Rahul Anand from Morgan Stanley. Rahul Anand: Look, for my two questions. The first one I'd like to cover on markets and then the second one on Eneabba perhaps an update on the offtake. So I guess the second one is for Adele. So for the first one, I just wanted to touch on zircon and TiO2 markets, Tom, and if there's others on the call. Firstly, on zircon, obviously, your sales for zircon this year would be a significant bit lower. Do you think that void gets filled in? And perhaps does that create any sort of tightness or improvement in demand on the zircon side? And then for the TiO2 side, I mean, obviously, we're waiting for that U.S. housing recovery. But is there perhaps a read on sort of where inventories sit on the feedstock or the downstream side for the pigment guys as well for them to be able to kind of deliver into that upswing into the housing cycle in the U.S. I'll come back with my question on Eneabba for Adele. Adele Stratton: Sure. So on zircon, I don't think our decline in zinc sales is going to have a significant tightening impact on the market. We are pleased to see the sales we're achieving in the first quarter. There's still, I think, pretty solid demand for premium zircon. And we continue to see that persist over the last couple of years. I expect it to continue. On titanium, look, we, like you, are looking forward to the recovery in the Northern Hemisphere. There seemed to be a bit of optimism about recovery. But as I said on the call a few weeks ago, it's really a bit early to be weighing into that optimism at this stage. Let's just see how it plays out. And your other question was in our inventory. Yes. Look, I think in the -- sorry, go on, Rahul. Rahul Anand: No, sorry, I was saying that's on inventory, but you already picked that up. So please go ahead. Tom O'Leary: Yes. Look, not had a lot to add on inventories to what we've said in the past, there's not a lot of inventory in the paint end of the supply chain and the pigment producers, I don't think, are holding a lot of inventory of pigment. Some are holding inventories of feedstock, but it's different among different players. So I think there's a potential for a pretty rapid uptick in demand for our products when we see that pull through in -- from construction activity in the North. Rahul Anand: Got it. Perfect. Second one is perhaps for Adele, just perhaps an update on those conversations in terms of offtakes how they're progressing? And any sort of color you can add in terms of, I guess, what you guys are looking for and what the companies you're talking to want and perhaps what are some of the topics being discussed in terms of arriving at an offtake? And then just as a second part of that question, are there any specific requirements in terms of I guess, minimum volumes or price, et cetera, in the offtakes that you require for the funding? Adele Stratton: Yes, let me deal with the second part of that question first, Rahul. So in terms of the funding that we have with the Commonwealth, the clause within the second tranche of the export finance Australia facility just says offtake sort of satisfactory to the government. So there's no more specificity than that. So no volume, no price, no duration. It really is what is satisfactory and as you can imagine, we work very closely with our strategic partnerships and the world is forever changing in this space is what I'm saying. Just coming back to the offtake question more broadly. I think we've probably touched on this before in terms of this has been -- I'd call it a marathon and not a sprint in terms of when we entered this market back in 2022, we were very clear that we'd be entering the market in a very different manner to all the other players in the market at that time and that being that everybody else price the products based on the Asian Metals Index. So a price linked to China. And from the very outset, we didn't want to tie our P&L to Chinese government policy. And hence, we've been introducing the concept of a different pricing mechanism. I think we've touched on this, that can be quite a variety of different types of contracts. So it could be fixed pricing, it could have floor prices that could have floor and in ceiling. There's a number of different ways to skin the cat. And that's really what we've probably spent the first 18 months discussing as a different approach to market. Those discussions have most definitely been helped by the deal, the MP Materials struck with the U.S. administration. Around putting in place floor prices. And that's specific to the light rare earth, so just the NdPr. I don't think that really crystallized for a lot of potential customers that there are different ways to play in this market. And we've had good traction to date, but that was probably a bit of a catalyst. So coming back to where we are now, we have a range of different conversations with a range of different customers. Rahul, they all have different strategies and methodologies that works better for them. But we are really focused around delivering sustainable returns that are commercial, so really looking at what is the cost of new feedstock into the refineries. They're not really reflecting any other stockpile because as a result of history, that sits on our balance sheet at 0 cost, but we want to create a sustainable business. So we focus on the cost of new supply into the refinery and ensuring we have achieved appropriate returns. So as I've said a couple of weeks ago, really confident that we'll have some contracts in place in 2026 and unfortunately, I can't really give a blow by blow as to with whom and for how much, et cetera, and the contract is never really done until it's signed. But yes, I have confidence that we'll get there. Operator: Next question comes from Glyn Lawcock from Barrenjoey. Glyn Lawcock: Just a couple of quick questions. Firstly, just on Balranald. I know you -- I think you made a comment in your opening remarks that you hope to have first finished products to enter the market in the first half. But -- it may be a moot question, but have you actually produced any finished product yet over in the West? Or is it still in transit? Tom O'Leary: So Glyn, I said second half that it would be in the market. Yes. So, no, we haven't got finished product in the West yet. It's still in Balranald. So those stockpiles you see in the deck still in Balranald. Glyn Lawcock: Okay. So we'll have to wait what another month before we know how it processes? Or is that the least that your worries? Tom O'Leary: Just looking at it, you can see that the material really just passing through the concentrator is kind of looking like high-quality product already. It's the grades we've seen haven't disappointed. So yes, I don't think we've got concerns about how it's going to process at all. In fact, we have process some in the past, so it's not really a risk on the register, if you like. Glyn Lawcock: Yes. No, that's great. And just Second question, just on your comments in the release about Eneabba, it would appear contingencies gone down a little bit from $270 million to $235 million. Just Two-part question. Just what's changed, like what's eaten into that extra $235 million, if I'm correct? And then secondly, you're obviously tendering for your remaining work packages will award them this half. It feels like a little bit like what's happening with South32 last week. But just any early indications should we be concerned on anything you're seeing in those tenders? Tom O'Leary: No, I don't think so, Glyn. The -- we've always said that the SMPEI arrangements were the larger but they're obviously the largest of the construction contracts and we're looking forward to getting those done this half. No, I wouldn't say I was concerned about them, but it's a -- concern is an interesting one. When we're building a refinery, it's kind of a heightened state of attention for the entire duration. And that's the way it needs to be to ensure that we remain on track. The utilization of $35 million of that amount dedicated to contingency growth and so on is really not material in the context of the overall project. So again, not alarmed by that. Operator: Next we have Austin Yun from Macquarie. Austin Yun: Just to expand into the question from Glyn. For the remaining $235 million contingency, where is the residual kind of -- for the component where is most likely to be deployed as you continue with the project? Adele Stratton: Yes, Austin. Just in terms of capital projects, you'd be very aware in terms of obviously, when you're selling your budgets, you have your input costs in terms of your materials, your labor, your schedules. And within that, you'll always allow for growth contingency and escalation, which is what the $235 million relates to in terms of where do I expect that to be consumed. I think really what people should be taking from what we've announced today is that we've now spent and committed well over, what, 60% in terms of where the projects are, and you've still got a really, really healthy contingency for the remaining spend to come. So there's no particular point whereby I think that might be consumed here or there. That's just really prudent project management. So this number will ebb and flow every day. It goes up and down depending on sort of where the contracts are at and sort of volumes of offtakes, et cetera. So I think the takeaway from what we've announced should be a real confidence around the capital range of the $1.7 billion to $1.8 billion is really what the takeaway should be. Austin Yun: Yes, totally great. Just a second quick one on the cash flow management into 2026. I can see all those efforts to reduce the cash spend and the slide was really a good one on Page 7. Just given the current net debt level, keen to understand if there has been any changes in the thinking around your stake in Deterra Royalties, given the company offers different exposure. Does that really align to pivoting to critical mineral phase company? And also, like, I believe Deterra indicated yesterday that the shareholder return will stay around 75% to sort of 100%. Just wondering how to think about that stake given you try to unlock cash to support the business to pushing towards the critical minerals space? Tom O'Leary: Yes. Thanks, Austin. Really, it's not a lot to add to our previously stated position that it's not regarded as core business, just for the avoidance of doubt, royalties and so on is for Iluka. But the key is that to divest that stake would attract pretty significant capital gains given the tax cost base there. So it's an expensive form of capital. So I think unlikely to be utilized, but it is there and provides comfort to counterparties, to lenders, to shareholders and so on. Operator: Next, we have Chen Jiang from Bank of America. Chen Jiang: Just on Eneabba project, 95% engineering down, 60% of CapEx has been spent and committed. I'm wondering when is the peak construction in 2026? And how long would it take from peak construction to code commissioning? Tom O'Leary: Yes, I mean, peak construction is very much approaching us. I think we've disclosed, we've got some 600 people on site on rotation, obviously, but some 600 people working at Eneabba, and that will increase somewhat over the second half of this year. So you should expect peak construction in the second half of this year, beginning of next, moving into commissioning later in '27. Chen Jiang: Right. So -- and then CapEx, I guess, given 60% already spent, you must be very comfortable with your CapEx outlook over the next 12 months with -- in parallel with how you construction or peak construction? Tom O'Leary: Yes. Comfortable is probably too close to complacent in the dictionary. So I wouldn't say that, Chen. I'll just go back to my earlier comment that managing a project like this, you need to have a heightened state of attention throughout to ensure that we meet our targets in terms of capital expenditure, and that's precisely what we're doing. Operator: We have a follow-up question from Paul Young from Goldman Sachs. Paul Young: Just a question on inventories and this possible drawdown of that, just starting that finished inventories of zircon rutile SR and now it's sitting around 380,000 tonnes, I think up from 320,000 or so for midyear. So it sort of makes sense based on just looking at production and sales, obviously, over the last 6 months. Just curious around, first of all, specifically the zircon component in that because I think SR probably around 150,000, just wondering where zircon inventory sit within that? And actually an extension to just overall operating parameters for the year and just how you manage costs in general. We haven't really spoken about JA and just the operating sort of strategy down there. Is the operating strategy on JA just to run at full tilt at the 10 million tonnes sort of ore throughput rate? Or have you got some flex around sort of costs and optimizing cost of JA? Adele Stratton: Yes. Paul, happy to take both of those. So in terms of inventory position, as you say, we've highlighted that on Slide 8 in terms of where we're at on finished goods. So rightly so, 379,000 tonnes. We generally try not to give breakdowns in terms of the mix of that pool just from a competition perspective. But I should say, we have guided that we've got 110,000 tonnes of sales in 2026, and we've also noted that we're not running the kiln. So one can deduce that all of that sales volumes are coming out of inventory. So we are certainly looking to draw down inventory in '26 and that obviously supports cash generation. You've already spent the money on producing this material. So it's really the next step in liberating cash. And I think we're very well positioned coming to your question around zircon and JA. Generally, when we're running our operations, we do run them at full capacity in order to optimize unit costs. Jacinth-Ambrosia coming towards the end of its life. And as you're fully aware, the team are very focused on the Typhoon project, which provides a couple of years extension to Jacinth-Ambrosia that's a big focus for the team. But yes, in 2026, our cost outlook assumes that JA is running a full tilt and a real driver of that is also to generate that zircon premium as Tom talked to earlier. We still see good strong demand in the premium market. There's not huge amounts of premium all over the place, so JA premium is very designed in the market. Paul Young: Okay. Great. Just one final question. Just on third party. You obviously got Linden agreement in place and the investment in Northern Minerals. Is there any update on Northern Minerals. There's a lot going on at the corporate level with that company, but I've got some additional funding -- government funding for their project in Northern Territory, any update on just how that project is tracking and potentially when that could be coming into production? Adele Stratton: So look, yes, Paul, as you say, Northern Minerals released the definitive feasibility study sort of, I think it was third quarter, early fourth quarter last year. And on the back of that, being very successful in achieving sort of funding through the U.S. And so really, the job of the management team there is to continue to get that project fully funded to enable us to take the FID. I think there will always be noise around the share register. This is a unique deposit globally. I know that we've talked about this in terms of just the high assemblage of heavy rare earth. And that's really quite interesting because what we're seeing in more recent times have in China as a bifurcation of heavy rare earth pricing in China, so it's much cheaper. If it works and stays in country than when it's exported. So this focus on ability to secure heavy rare earths, I can imagine that will continue to be a focus globally. Tom, anything you would like to add? Tom O'Leary: Yes. No, I think that's pretty comprehensive Adele. I think we're really pleased to see they've had the expression of support from the U.S. and Australian government, and we'll obviously do what we can to support their achievement of FID in a timely way to very attractive deposit for the West's independence in terms of supply chain for heavy rare earths and an important development. Operator: [Operator Instructions] Next question comes from Dim Ariyasinghe from UBS. Dim Ariyasinghe: Yes. Can you just refresh us really quickly on what you've said on commissioning in terms of the time line for that? And then just in terms of the offtake, has the idea of prepayments come up? Is that something that we should increasingly think about? What can we think about that? Tom O'Leary: Look, I'll hand over to Adele around prepayments and so on for offtake. We think about a lot of things, Dim, but we're pretty focused on selling the product and getting cash for the sale. But in terms of commissioning. We've talked about the mid next year, we'll be in commissioning at Eneabba. So no real change or update on that. Anything to add on offtakes, Adele? Adele Stratton: Yes. No, not really in terms of prepayments, is that a big focus? Not really, Dim. There's always trade-offs in terms of different payment terms or prepayments and all of those types of things. We're very focused, as I said at the outset in terms of putting in place commercial contracts that underpin longevity of the refinery. So yes, it's not been a particular focus at all for us. Dim Ariyasinghe: Understood. Sorry, not commissioning, a ramp-up like when -- I presume -- like what's that ramp-up period look like? And I presume that will just be the stockpile at first? Adele Stratton: Yes. In terms of the refinery and the commissioning, obviously, there's a number of stages to that commissioning of any plant, Dim, including initially wet commissioning and then introducing the product. I think when we've talked in terms of when you would start to introduce your reagents into the plant, then that can take 3 to 6 months to work its way all the way through into the separation and finishing. And then there's a ramp-up curve. We use McNulty, different curves to be perfectly frank. So I think historically, we've said to get from commissioning all the way to full ramp-up is about a 2-year period to full ramp up. But yes, very much as Tom's articulated, commissioning in mid-'27. Tom O'Leary: Yes. And Jim, just you asked on Balranald -- sorry, on Eneabba, we'll be using Eneabba monazite to be commissioning the part exclusively for that period. Well, look, I think that's all the questions we have. So thank you all for joining us. Really look forward to catching up in person over the coming days and weeks. Bye for now. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. I am Yotis, your Chorus Call operator. Welcome, and thank you for joining the Bank of Cyprus conference call to present and discuss the preliminary full year 2025 financial results. [Operator Instructions] And the conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Panicos Nicolaou, Chief Executive Officer. Mr. Nicolaou, you may now proceed. Panicos Nicolaou: Good morning, everyone. Thank you for joining our financial results conference call for the year ended 31st of December 2025. As always, I am joined by Eliza Livadiotou, Executive Director, Finance; and Annita Pavlou, Manager, Strategy, IR and ESG. After my introductory remarks, Eliza will go into more detail on our financial performance for the year, and then we will be very happy to take your questions both during this conference call and afterwards. Note that this set of financial results does not include any guidance or financial targets for the coming years as we are planning to outline our strategy and priorities at the investor update presentation scheduled on March 3, 2026, and I appreciate your patience until then. Let me take the opportunity now to invite you to this presentation, which you may attend in person in Athens or join via hybrid format with details on the event disclosed on our website. This event will start at 3 p.m. local time. I would like to start now with Slide #3. Our investment case drivers are well known: a strong economy, our dominant position in a profitable banking market and diversified, highly profitable business model and strong distribution, supported by high capital ratios. Slides 6 and 7 give a brief overview of the macroeconomic environment. We operate in a strong, diversified, mainly service-based economy that is growing faster than Europe. During 2025, economic growth was 3.8% in real terms, exceeding significantly the Eurozone average. This economic growth was the outcome of strong fundamentals with low unemployment, a strong fiscal position, low inflation and record tourist activity. Let's turn to Slide 8 and a summary of our key highlights for what was another exceptional year. This includes strong volume growth with EUR 3 billion of new lending translating to 8% increase in the loan book year-on-year; 8% growth in deposits, well exceeding our expectations; strong profitability of EUR 481 million, corresponding to a return of tangible equity of 18.6%, supported by resilient revenues and maintained high efficiency with a cost-to-income ratio of 37%. Our asset quality remains solid, demonstrated with an NPE ratio of 1.2% and a cost of risk of 33 basis points. We've had a very healthy organic capital generation in excess of 400 basis points. We are declaring a 70% dividend distribution,, while seeing continued strength in capital ratios with CET1 at 21%. On Slide 9, we discuss shareholder distributions, a key focus area for us. During the course of the year, we targeted to deliver a 70% payout ratio of 2025 earnings, at the top end of our distribution policy. And today, we are delivering on that promise, proposing a final cash dividend of EUR 0.50 per share. Together with an interim dividend of EUR 0.20 per share already paid in October 2025, the total dividend amounts to EUR 0.70 per share or EUR 305 million for 2025, a significant increase in both the total payout ratio and the total quantum compared to prior year. We have built a strong track record execution and continue to provide attractive returns to our shareholder base. Moving on Slide 10. Clearly, the last 3 years have been exceptional. We have averaged close to EUR 0.5 billion of annual profits and we maintained very competitive ROTE despite increasing capital base. Of course, the high rates helped us historically. But I would like to highlight that during 2025, we delivered a very strong result while absorbing the normalization in interest rates. We have built a strong track record of shareholder returns with cumulative distributions of almost EUR 550 million over the last 2 years. And despite the growing distributions given our exceptional current generation, we have been strengthening both of our equity and our capital base. Finally on Slide 11, you can see how our performance for 2025 compares to the targets we set ourselves. On every metric, we met or exceeded our expectations, giving us confidence that we will remain a very profitable bank in a normalized interest rate environment. I will now hand over to Eliza, who will run through our full year results in more detail. Eliza Livadiotou: Thank you, Panicos, and good morning from me, too. Let's start with a snapshot of the quarter on Slide 13. You can see the key trends for our quarterly results. We are seeing NII approaching stabilization as rates stabilize. We have maintained a very strong cost efficiency ratio despite bringing forward some restructuring costs into Q4, which I will elaborate on later, whilst our asset quality remains strong and cost of risk continues to be low. The fourth quarter net profit includes a number of exceptional items. So whilst we are pleased with the EUR 128 million quarterly result, this is not the run rate to be included in your model. Moving now to Slide 14. As mentioned, there are a number of noteworthy items that I want to unpack to help you with your modeling. First, I want to draw your attention to the latest tax reform. Effective from January 1, 2026, the corporate tax rate in Cyprus has increased to 15% from 12.5% previously. The group's tax charge in Q4 of EUR 4 million included a regular charge on profit, but was largely offset by a one-off positive impact primarily from the remeasurement of the deferred tax assets from the change in the corporate income tax rate to 15%. This is noncash and is expected to be reversed in the next year through the higher corporation tax liability. So the impact is purely technical. In addition, as i mentioned earlier, we brought forward staffing decisions into Q4. Specifically in Q4, we completed the voluntary staff exit plan where around 110 employees were approved to leave the group, which led to a relatively higher charge of EUR 14 million in the quarter and totaled EUR 19 million for the year. While such expenses are part of the normal running of the business and we include them in the efficiency guidance we give, this quarter, the number was double the normal run rate. Furthermore, there were a number of small positive items adding to just over EUR 10 million that we want to flag: a EUR 5 million in insurance on the release of the premium tax; EUR 2 million on the insurance reinvestment; and finally, we benefited by a net credit of EUR 4 million in other provisions litigation. These should be considered one-offs and will not be repeated in future quarters. Lastly, as a reminder of the calculation of our dividend payout ratio, we use the group's adjusted recurring profitability adjusted for the AT1 coupon, which we show in the table to be EUR 434 million in 2025. Moving on to Slide 15. We have a simple balance sheet characterized by high liquidity with our deposit base twice the size of our loan portfolio. Our balance sheet has grown by 8% since the beginning of the year, mainly as a result of higher customer deposits, while our strong liquidity is gradually being deployed to our loan and fixed income portfolio. Slide 16 and net interest income now. In Q4, we saw our NII increase by 2% to EUR 183 million, reflecting primarily very strong growth in our deposit base, which rose by 3% on the prior quarter, equivalent to an annualized growth of over 12%. Although we are pleased with this development, we would not necessarily expect this pace of growth to continue due to the seasonal timing and behavior of the deposits we collected in the quarter. We estimate that this unusually large increase has contributed around EUR 3 million for our noninterest income. Overall, we are pleased with NII development during the year. Increased hedging activity, dynamic volumes and depositor behavior allowed us to absorb the brunt of the rate reductions. Moving now to our hedging activity on Slide 17. Our significant hedging efforts undertaken over the last couple of years have reduced our NII sensitivity to a 25 basis point parallel shift in interest rates by EUR 15 million since December '22. We added around EUR 3.1 billion of hedging during '25, taking the total to EUR 12.1 billion, covering almost half of the group's interest-earning assets. On Slide 18, you can see more details of our deposit trends, where I previously mentioned the base of EUR 22.2 billion grew 8% year-on-year. And the breakdown of our deposit base on the bottom-left chart shows that more than 80% of our deposits are from Cypriot residents. We have seen deposit costs declining from the peak in '24 and now stand at 27 basis points for the fourth quarter of the year, whilst the share of term deposits remains broadly unchanged on the prior quarter to 30%. The well-managed deposit costs and mix mainly reflects a very liquid Cypriot banking sector as well as our strong franchise and market position. Now turning to Slide 19 and new lending. During '25, we have granted a record level of new loans of EUR 3 billion, up 23% on a full year basis. We observed growth across all business lines with the largest contribution coming from our international portfolio, primarily driven by effective pipeline execution. Looking now to Slide 20. We are pleased to see our loan book growing by 8% in 2025, well ahead of our initial expectations. Our domestic loan book, representing nearly 90% of our loan book, experienced steady growth of around 4%, broadly aligned with the economic growth in Cyprus. Half of this year's growth came from the continuing buildup of our international book, where we added around EUR 400 million of net lending. As this is a younger book, it has lower redemptions during the buildup period. Yields on loans continue to drift downwards from down 6 basis points on the previous quarter, reflecting large repricing to lower rates. Of course, we have and we will continue to ensure prudent underwriting standards and we will not sacrifice the quality of our loan book for growth. As a reminder, 99% of new exposures written since 2016 remains performing. Slide 21 shows our progress on the fixed income portfolio. Our fixed income portfolio stood at EUR 5.1 billion, representing 18% of the group's total assets, growing in line with guidance. The portfolio comprises of high-quality assets with average maturity of 3 to 4 years and is highly diversified. Moving now to noninterest income on Slide 22. Non-NII has increased by 14% on the prior year. Let me try to unpack and share how we look at this important source of revenue that underlines our diversified business model. We have what we consider high-quality revenues, which is our area of focus. This includes the fee and commission income, net insurance results and the FX customer-related fees. Altogether, this grew by 4% year-on-year. During '25, we had EUR 15 million of nonrecurring items, which included EUR 10 million insurance reinvestment and EUR 5 million of release of the premium tax on the life insurance business. These are not expected to be repeated. Additionally, each year, we have revenue, FX and gains on financial instruments, which we consider to be more volatile profit contributors. In 2025, this totaled EUR 44 million, up from EUR 32 million the previous year. Overall, noninterest income remains an important contributor to group profitability and covered 76% of 2025 operating expenses. Our insurance businesses are a valuable and recurring revenue stream for the group, as presented on Slide 23. In summary, our net insurance result amounts to EUR 54 million in 2025, up 11% year-on-year, reflecting mainly the first time contribution by Ethniki Insurance Cyprus. Overall, net insurance results contributed 18% of total noninterest income, and insurance businesses remain highly profitable, contributing almost 10% of the group's total profitability. Slide 26 provides an overview of operating expenses. As mentioned earlier, in Q4, we completed a voluntary staff exit plan, which led to a relatively higher charge of EUR 14 million in the quarter and totaled EUR 19 million for the year. While such expenses are part of the normal running of the business, at EUR 14 million, the Q4 charge was around double the usual run rate. Staff costs were up 4% on a yearly basis due to the step-up adjustment, which typically take place in the first quarter of the year, including salary increments and cost of living adjustments. On the other hand, other OpEx was well contained, reflecting an annual reduction by 2%. As expected, our cost-to-income ratio of 37% for 2025 was higher than last year, reflecting the impact of falling net interest income as rates normalize. Turning now to Slide 27 and asset quality. Our underlying credit quality is strong, evidenced by the low NPE ratio at 1.2% and a coverage ratio exceeding 100% at year-end. As a result of these strong fundamentals, our cost of risk continues to trend below our normalized 40 to 50 basis points level at 33 basis points for 2025. REMU is our engine to manage the stock of properties acquired from defaulted borrowers. REMU repossessed revenue stock continues to demonstrate significant progress with the stock decreasing further to EUR 377 million as at December 31, exceeding original plans to reach EUR 0.5 billion by the end of 2025. And we continue to manage our REMU stock prudently as it is carried on the balance sheet at below 70% of the current open market value. Now let's move to capital on Slide 28. The bank's capital position remains strong. We continue to build organic capital, generating 436 basis points this year, well ahead of our full year 2025 target of around 300 basis points. During the year, we had a positive CRR benefit of 100 basis points, absorbed around 15 basis points for the acquisition of Ethniki Insurance Cyprus, and had modest RWA growth. As at December 31, our CET1 ratio and total capital ratios were at 21.0% and 25.9%, respectively. Let me remind you that the capital ratios are after distribution accrual at 70% payout ratio, at the top of our distribution policy, and hence, the proposed dividend for 2025 has no impact in these capital ratios. I will now hand back to Panicos for his closing remarks. Panicos Nicolaou: Thank you, Eliza. As I have mentioned at the beginning of our call, we will host our investor update on the 3rd of March 2026, in which we will outline our strategic priorities share our new financial targets for the years to come. We look forward to having you all present, either physically or virtually. This concludes our presentation. Let us open the floor for your questions. I will kindly ask you to focus on the results, and please keep outlook and strategic questions for the 3rd of March. Operator: [Operator Instructions] The first question comes from the line of Boulougouris, Alexandros with Euroxx Securities. Alexandros Boulougouris: Would it be possible to elaborate a bit more on the deposits and the seasonal increase? Does it reflect mostly corporate deposits? Is it retail? Could you give a bit more background on why we saw this increase? And the second question is regarding the VRS plan you took in Q4. Maybe if you could elaborate a bit further on that, how many employees it included and what cost savings we might expect from these. Panicos Nicolaou: Okay. Thank you, Alex. The deposits increases across all the lines. So it's partly because of the general liquidity in Cyprus, a very high liquid market, plus the strong franchise and market position of Bank of Cyprus. So it's not something coming from a specific sector. It's generally coming from the economic activity in Cyprus. So regarding the VRS, yes, there was a bigger plan in 2025 versus what we had in 2024, I mean, double of size, more than 100 people exiting the bank versus 50 in 2024. And this was reflected on the Q4 results. And going forward, this will be annually assessed, but you should expect something similar most probably with the one that happened in 2024. But this would be annually assessed. You should expect small exit plans throughout the years. Operator: The next question comes from the line Cruz, Hugo with KBW. Hugo Moniz Marques Da Cruz: I have a series of questions. So first of all, the loan growth was also quite strong. So if you could comment on whether the current level of growth is sustainable or could improve even, given the strong economy. Second, I've seen you increased materially the amount of interest rate swaps on nonmaturity deposits. So is there any more room to grow this further? And what's the duration on the front book? Then a question. I think you didn't give guidance, perhaps I missed it, on the tax rate going forward, recurring tax rate. If you could clarify that, please. And then RWA density improved significantly Q-on-Q. So what drove that? Is there any capital optimization measures you've taken there? And are there any plans for the future? I think that's it for me. Panicos Nicolaou: Thank you. Let me start from the loan growth. Obviously, it's better than was expected. This is partly coming from domestic economic activity in line with our strategy. Around 4% of the 8% comes from domestic activity. International growth moved faster than what was initially anticipated and contributed another 4% to the growth. Going forward, you should expect the international growth pace to reduce a little bit. But we will tell you more on the 3rd of March in Athens how we see loan growth going forward. Eliza, on swaps? Eliza Livadiotou: Okay. So on hedging, we did increase our hedging volume, you can see it on Slide 17, during the quarter. That was the result of our volume growth. You mentioned the deposit and the loan, and especially the deposit book which grew in the year and especially in Q4, so that was the driver. As you know, hedging has been a very useful tool for us in managing our rate sensitivity through the various cycles of the interest rates. And we continue to view it as a very useful tool in this respect. We have around 47% of average interest-earning assets as being hedged. And that's probably or broadly the level at which we expect to stay going forward. Again, we'll give more color on the 3rd of March. But this 47% is not far off where we would like it to be on, let's say, a steady state going forward. Let me just remind you, I said this before, we don't have cliff effect hedges in the book. We manage them throughout the year in the period. And you asked about the duration of the front book hedges. The average is 3 years. We optimize on each specific instrument, but on average, it's a 3-year duration. So you should assume, on average, 3-year forward rate levels for the front book. I think that's all on the hedging. On the tax rate, there was some noise going through P&L because of the tax reform in Q4 from various components of the tax reform. You should view that as a nonrecurring noise in the P&L. But going forward, the guidance we are giving is that from an effective rate of around 14% on profit before tax, you should increase that to 16% or 16.5% of PBT. That's the way we think about the tax reform going forward. And lastly, on the RWA density. Actually, RWA stayed flat broadly Q-on-Q between September and December. And the reason was that the increase in the loan book risk-weighted assets was largely offset by the revenue stock reductions as well as some changes in the instrument our treasury team was using for the placement of the liquid assets and the hedging. So this was specific to this quarter, the treasury element. You should not assume that this will continue. Operator: The next question comes from the line of Alonso, Alfredo with Deutsche Bank. Alfredo Alonso Estudillo: I have a couple of questions and one follow-up. On the NIM compression, it seems that it's pretty limited. It should be close to -- or are you expecting some further pressure, especially on the beginning of '26? I'm not asking for the numbers. I'm not pushing you. For the Capital Markets Day, for sure. And there is also something on the insurance line. After all the one-offs and so on and the inclusion of Ethniki, what could be considered the run rate? Which is the run rate that we should be expecting if there is some recovery versus quite mild activity during the year? And finally, my follow-up on the tax impact, on the one-off. Could you provide the exact impact from the DTA recognition in the quarter, please? Panicos Nicolaou: Okay. Thanks, Alfredo. On NIM compression, I can only say that we're approaching sustainable levels. I will say more during our Investor Day in March. On insurance line, I would say that, again, more on the future, I will say, in March. Sorry about that. But you should expect, I mean, Q-on-Q, we have this kind of one-off coming from the effect of the contribution of Ethniki Insurance, plus a one-off positive impact from premium tax reform on life insurance policy. But more on how we see insurance business growing organically, plus the full year contribution of Ethniki Insurance, we will be letting you know on March 3. Eliza Livadiotou: And on tax, the DTA impact on its own, in isolation, was around EUR 25 million, but there were other moving parts because of the tax reform. So the net impact was around EUR 15 million in the P&L, all-in, the tax reform. And remember, these are noncash primarily. They will unwind, in essence, through the higher tax rate in the next few years. Operator: The next question comes from the line of David, Daniel with Autonomous. Daniel David: Congratulations on your results. A couple of quick ones for me. Can we assume that the low point in NII has now passed? Clearly, I'm not asking about guidance. But just a high-level comment would be good. The second one is just on CET1. Are there any regulatory headwinds coming? Anything that you'd call out going ahead? And looking forward, would you expect the CET1 to trend lower over time from here on? And then finally, just on insurance plans. Can you maybe just talk us through what you think you'll be potentially printing in primary debt markets this year? Eliza Livadiotou: Okay. So in NII, again, we will guide in March 3 on the details. We should be approaching the low rates. We did have a seasonally higher quarter on deposits which helped by around EUR 3 million the NII impact. But we'll give a lot more color on all the moving parts, because there's a few of them, in a couple of weeks' time. On CET1 headwinds, no, we are not aware of any. There was an increase in the O-SII buffer for us starting January 1, that's in the slide in the back, of 25 basis points. But other than that -- which is not actually a headwind. It's a minimum regulatory requirement point. We don't expect anything else. On the capital trending lower or not, again, this is one of the big topics we do want to cover on the March event. So you will need to bear with us on that one. And finally, on issuance, we have 2 call dates coming up this year: the Tier 2s, which we did a liability management exercise back in Q4. So that's in April. And we also have a senior call date in June. So we are reviewing our issuance plans. Our MREL buffer is significant, but we do want to maintain flexibility. So we haven't got firm plans to announce. Everything will be assessed. But we do have call dates coming up, which are natural decision points for what we do. Operator: The next question is from Memisoglu, Osman with Ambrosia Capital. Osman Memisoglu: Just a few on my side. On the yield on performing loans, we see that the reduction is getting smaller and smaller in the quarter. Has the repricing gone through the system? Shall we assume the rates, of course, if ECB stays the same, if this is going to be flattening out? On the capital side, just a top line comment, if possible. And going back to the history, in the presentation as well, you've noted your ROTE on 15% CET1. Can we assume this 15% CET1 is the minimum target? Has it been the... [Technical Difficulty] Eliza Livadiotou: Osman, apologies. It's very hard to hear you. Would you mind repeating that questions? Osman Memisoglu: Sorry. Is this better by any chance? Apologies. Eliza Livadiotou: Yes, yes. Panicos Nicolaou: Now it's much better, thank you. Osman Memisoglu: Sorry about that. So shall I repeat the first question? Eliza Livadiotou: Yes. NPLs, but I didn't get it. Osman Memisoglu: On the yields on performing loans, we're seeing smaller reductions every quarter. Can we now assume this is going to flatten out, assuming ECB stays here? Just wondering about repricing of your loan book. And that's the first question. Then on CET1 and ROTE, you mentioned 15% CET1 for your adjusted ROTE. You've done this in the past as well. Shall we assume this 15% is your management target internally? And finally, over the last few months, ahead of elections, there have been some proposals by political parties on tax temporary -- or actually not temporary, for the system. Just wondering if you have any comments, color on that front. Panicos Nicolaou: Okay. Thank you, Osman. I will start from the last question. Okay. There's always an anti-PAT sentiment usually before elections, specifically with, let's say, the publications and about taxing the windfall profits for banks. The discussion in the parliament has not been started yet. It has not also been scheduled to be started. What I know is that the government and Ministry of Finance are strongly against that. And legislation to be effective in Cyprus needs to be signed by the President as well. It may also be a constitutional, but this is a different story. On the yield, I will say that we usually assume that we are approaching, let's say, a steady level, considering that the ECB rate will stay around 2%. But we will talk about that a little bit in more detail in our Investor Day. On the CET1, on ROTE, on capital, 15%, capital allocation, payout ratios and all of that stuff, it's the main point of discussion on March 3. So please allow me to defer answering the question for another, let's say, 2 weeks. Operator: [Operator Instructions] We have a question from the line of Mr. Kantarovich, Alexander with Roemer Capital. Alexander Kantarovich: Could I please get clarity on NPE coverage? It seems like the level of 120% is excessive. So my question is, theoretically at least, does this create a scope for provision releases in the coming years? Panicos Nicolaou: You see, this NPE coverage is the total provision coverage for NPEs. Basically, our coverage is approaching, I think, it's 70%, Alexander, right? Okay? So it's well provided versus peers, but these are the numbers. Alexander Kantarovich: Okay. Clear on that. And just to clarify on the taxation because the tax rate was artificially low in Q4, and I understand there are some accounting aspects at play. So should we just go ahead with your effective tax rate on pretax of 16% as indicated? Or there will be kind of a bulky one-off in Q1 increase in taxes? Eliza Livadiotou: No. You should assume away what happened in Q4 as a one-off, I mean, as a nonrecurring event. All of the various components of the tax reform legislation were accounted for in Q4 because the legislation was enacted in December. So we don't expect one-offs in Q1 based on what we know at the moment, just the effective tax rate, as we discussed before, the 16% on PBT, yes. Operator: [Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Nicolaou for any closing comments. Thank you. Panicos Nicolaou: Okay. Thank you all for your participation. As always, we will be very glad to take off-line any questions on 2025 results. And most importantly, hoping to see you all during the Investor Day early March for the outlook of Bank of Cyprus performance. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good day.