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Operator: Good morning and welcome to the Futura Medical plc Investor Presentation. [Operator Instructions] Before we begin, I would like to submit the following poll. And I would now like to hand you over to Interim CEO, Alex Duggan. Good morning. Alexander James Duggan: Good morning, and welcome to the Futura Medical 2025 Interims Presentation. Many of you will have seen Board changes announced over the last 3 months, and I'm the new face to the team. I'm Alex Duggan. I'm appointed as the Interim CEO since August of this year. I've got 25 years' experience working in consumer health care and pharma businesses, taking leadership roles in both small and midsized public and private businesses. My remit as Interim CEO is to conduct a full review of the performance and the strategy and put in place strategic and leadership plans that best benefit the shareholders and all other stakeholders of Futura. Before we start today, can I just draw your attention, please, to the disclaimers shown here. These, along with the presentation and the recording today will be available on our website for you to review. H1 has been a very active time for Futura on many fronts. So our agenda today is perhaps a little longer than normal for our interims as we'd like to update you as much as possible on where we are. First, Angela will provide us with an update on the first half financial update and trading update. Then I will follow giving some reflections on what I've seen in my first 60 days and an update on our market launches and a summary of our focus to improve business performance. Ken will then talk through our NPD pipeline and an update on the status of the patents. And after the summary, we will answer any questions that may have been received during the presentation. So just before I hand over to Angela to provide the financial update, these are the key outtakes for today. First, we've seen further market launches during H1 in 7 countries but we are seeing challenges around sustaining consumer uptake. What we see in all markets is the initial trial seems strong, which is very positive. But for various reasons, repeat underlying sales are not coming through as expected. This has had a direct impact on our supply volumes and our royalty streams. And so the full year 2025 performance is likely to be significantly below market expectations. As announced on my appointment, a strategic review has commenced with initial findings coming through now and some of these findings I can share with you today. As per the recent RNS on the 19th of September, the shift in performance versus prior expectations has put the company in a challenged position. However, the Board does remain confident that there is value in the group assets. And development plans for both the Intense and WSD4000 development products will continue to progress. Although there is always a risk in any R&D project, early indications for these 2 projects are quite positive. Evidently, my job and that of the Board is to ensure that we do all we reasonably can to protect our stakeholders and shareholders to derive as much value as possible from our current products and from our new development products. I will come back to this again. But first, I'd like to hand over to Angela to cover our H1 financial update. Angela Hildreth: Thanks, Alex. So let me take you through the results for the first half of 2025. We generated just over GBP 1 million in revenues during the period. Around half came from royalties in the U.S., nearly half from sales across the EU, including the U.K. and a small contribution from LatAm and the Middle East. The lower sales this year reflect the channel fill and the stocking that took place during 2024, which our commercial partners and customers are still working through. On those sales, we delivered an initial gross profit of GBP 0.7 million. However, given the continuing lower demand, we took the prudent step of providing for potential inventory obsolescence on stock that was manufactured last year to meet minimum order quantities when we transitioned to our new supplier. This provision was GBP 0.49 million. R&D spend remained broadly in line with last year and that was focused on progressing Intense and WSD4000. And our core G&A costs were GBP 2.6 million. This is down from GBP 3.4 million last year, showing the benefit of some cost reductions we've put in place. But that said, with lower demand expected in the U.S., we reviewed our manufacturing assets and identified indicators for impairment. As a result, we have impaired the U.S. plant and equipment and provided for the final installment due later this year and this has resulted in an exceptional charge of GBP 3.6 million. After these items, the loss after tax for the period was GBP 6.6 million. On a preexceptional basis, that loss was GBP 2.6 million. If you strip out the GBP 0.64 million of noncash share-based payment charge, the adjusted loss after tax comes to around GBP 1.9 million. Cash at the end of the period was GBP 3.69 million. If we then move on to the trading update released in recent weeks, this provided further clarity on revenue expectations for the full year, which we have confirmed will fall short of market expectations. Alex will talk in more detail about market specifics later in the presentation. But in summary, we continue to see slower in-market sales of Eroxon than both Futura and our commercial partners have anticipated ahead of launch. Based on initial partner forecasts, 2025 sales were expected to reach around GBP 5 million. This included a $2.5 million milestone payment, approximately GBP 1.9 million, linked to the granting of the U.S. patent. We now expect that to be received in 2026 and Ken will cover off the U.S. patent point in more detail as well. In our recent announcement, we guided that the full year sales for 2025 are now expected to be between GBP 1.3 million and GBP 1.4 million. As part of that same update, we also disclosed that cash at the end of August stood at GBP 2.7 million. Under current plans and taking into account the cost reductions we've implemented as well as the cost of implementing those measures, this provides runway into January 2026. We are actively exploring a number of commercial and financing options to extend this runway and we will update the market when we're able to. I'll now hand you back over to Alex. Alexander James Duggan: Angela, thank you very much. I'm going to share my view now of my first 60 days at Futura and to give an update on the business as it is today. As announced on my appointment, the Board and I have initiated a strategic review, which is now in progress, covering sales and marketing strategies, product performance and efficacy, the costs associated with running the business and other potential strategies and strategic options open to the company. It's now clear to me what the key issues are, which face the company and its products and our commercial partners. The key challenge to the company today is that previous forecasts, which themselves were based on our commercial partners' forecasts are no longer realistic based on current data. Launch forecasts, of course, are notoriously hard to get right, especially for a product in a new subsector like Eroxon. Futura is a small and concentrated business. Its commercial performance is strongly geared to the in-market performance of a single product currently via our 4 current commercial partners. The downturn we've seen in forecasts versus our partners' launch expectations has had a significant impact on our business and it is this impact we are urgently navigating now. Our partners have continued to launch Eroxon into the new markets. And as you can see in the time line below, Eroxon now is present in 25 markets with 7 new markets launched in H1 of this year, 6 in Europe through Cooper and 1 in the Middle East by Labatec. Despite a shared recognition that in-market performance has not been as expected initially, we do continue to have an open dialogue with each of our commercial partners. We are currently in early-stage discussions around the launch in Brazil with our existing partner, Labatec and with new potential partners in markets, including Taiwan and China. Once there is any material certainty around new launches, of course, an announcement will be made in the usual way. Whilst we're limited in the level of information we can share for reasons of both commercial and partner confidentiality, the table here shows a summary of progress through each of our current 4 Eroxon commercial partners. First, in Europe, we've seen a decline in in-market performance driven by a comparison with a strong H2 in 2024, which itself was driven by heavy investment, particularly in France, Spain and Portugal by Cooper leading to quite a high selling in market. And although it's too early to assess true like-for-like trends, the drop is steeper than had been expected and consumer repeat sales are not yet coming through at the level required by Cooper. Cooper do, they remain engaged and expect to meet all contractual obligations. In the Middle East, selling across the region has declined compared with the previous 6 months, where high sell-in activity from the local sales force in Saudi Arabia drove strong volumes. Labatec has expanded distribution of Eroxon into Kuwait this year in May and we await initial results from that launch. In the U.S., following a high-impact launch in October '24, as previously announced, in H1 of this year, we've seen slower-than-anticipated repeat sales. While distribution levels remain strong, both in e-commerce and brick-and-mortar, market performance has not yet met initial Haleon or company forecasts due to lower repeat sales. And to minimize theft risk, which is a growing U.S. trend, brick-and-mortar stockists are increasingly using locked displays in around 1/3 of Eroxon distribution points. Haleon also remains committed to meet their contractual obligations. And lastly, in LatAm, following the August '24 launch in Mexico, H1 saw continued growth in retail distribution and a significant expansion of M8 digital campaign, albeit with consumer sales below the partner's forecast. Discussions are currently underway around a potential launch in Brazil and we expect feedback within H2 regarding their appetite to launch Eroxon in LatAm's #1 consumer market and what those time lines would look like. As I've said, global demand for Eroxon and topical treatments for mild to moderate erectile dysfunction clearly exists. So how do we access it? Data from all of our market launches is clear. Initial sales are strong. Clearly, there's an appetite for a nondrug topical product for those who do not wish to take PDE5 inhibitors due to their side effects or for other reasons. Our learnings show that the low level of repeat consumer purchases showing in the initial data is due to 4 key factors, the positioning gap with potential consumer overexpectation of Eroxon's benefits, consumers thinking it will act like a PDE5 inhibitor, usage, imperfect consumer understanding of when or how to use the product correctly and why it's important to use the product in full flow. A binary efficacy perception exists. So for many men, Eroxon either works, you get an erection or it doesn't, which is unlike many consumer health care products where usually a modest improvement would be considered a successful outcome. And fourthly, the accessibility advantage where no prescription or HCP is required in the transaction means the product is widely available. However, this does mean that Eroxon is open access to all consumers, which could lead to either misuse or unrealistic expectations. So what are we doing and what are our partners doing with these learnings? We are reviewing our product positioning so that we have a clear positioning that will set realistic expectations versus PDE5 inhibitors. We are reviewing consumer targeting strategies to focus on audiences where Eroxon is most effective, where possible, trying to filter out consumers with severe ED, where Eroxon may be less likely to help. We are enhancing consumer education through HCP engagement, either in pharmacy or other settings. A health care professional can advise both on product suitability and usage. E-com communication improvements will inform consumers better and potentially filter users and improved usage instructions to ensure proper integration into foreplay and to advise on using 3 or 4 times for longer-term successful outcomes. As you can see, we are now working on several areas to improve the underlying product performance in market. In addition, the Futura team is busy with R&D projects in 2 specific areas and Ken will now provide an update for you on our latest progress. Kenneth James: Thank you, Alex. In the field of consumer health care, it's important to fuel the categories in which you operate with innovation. And as we previously disclosed, we've got 2 exciting developments that we're working on. The first one, if you could move to the next slide, is what we -- a new variant, which we call Project Intense because it's designed to provide a more intense sensorial effect than the existing product. And the reason for this is that whilst a number of men like the sensorial effect that they get from the existing product, there are a group of men who would prefer a stronger sensorial effect from the product. And we've conducted a couple of studies already to support the concept. The first one was a fairly small study, which is depicted in the slide and the graph here. And it showed that there was a stronger sensorial effect at 15 seconds through to 10 minutes with the new variant. And that's an important period of time, obviously, because that's usually the period by which intercourse occurs. If you move on to the next slide, you can see a time line of progress that's been made. The study that I've just referred to was reported in early part of this year, 2025 in April. And we are currently in the field to conduct a larger study in 200 subjects. And that basically will support the premise that we have a really exciting product that improves the overall sensorial effect and therefore, the impressions of efficacy of the formulation in those group of men who want such an effect. We are well on the road to achieving regulatory approval for the development in both the key territories of the EU and the U.S. and we anticipate getting such approval by the end of this year. If I can move on to the other development, which is we feel very exciting, has a tremendous amount of potential and it's for the treatment of sexual response and sexual function in women who have impaired function. And the reason that we're excited about it is that no such product currently exists in the OTC category, certainly with regulatory approval and strong claims supported with clinical data and strong IP protection. So when we look at the market opportunity for WSD4000, you can see that it's a really exciting opportunity. We know that between 40% and 50% of women suffer from the problem that we're trying to treat here and at least 60% have suffered from at least one symptom of impaired sexual response and function in the last 12 months. But only 1 in 4 of the women seek professional help. And very few women experience an improvement in their symptoms. And in fact, the opposite happens that 37% say that their symptoms get worse over time. And importantly, as I've mentioned, there is currently no regulatory approved topical treatment for impaired sexual response and function in women available over the counter. So the progress that's been made, we have conducted a successful home user study and we showed that there was a significant improvement in most of the 6 symptoms affecting women, which is very encouraging data, early data. We are in the process of designing a larger study to support that premise by way of proof -- further proof of concept. Meanwhile, it's important that we bring the key regulators with us on the journey that we're undertaking. We've had 2 meetings already with the U.S. FDA who have been very supportive and given us good guidance on how to design our program to bring the product successfully to market in the key geography of the United States. We have, in the fourth quarter, a third meeting arranged with the FDA, which will hopefully guide us to the exact design of our clinical study, which we will plan to kick off from 2026 onwards. And we also, under the previous guidance of the FDA, have been encouraged to conduct an early feasibility study really to test the overall functionality of the product to make sure it does what it says on the tin but also to check out our clinical trial endpoints to make sure that they're both valid and going to give us the information that we need. So that study has now been initiated and it's due to report in the early part of next year. So exciting progress with the early feasibility study as well. If I can move now on to our patent update. And with a small company, it's important that we protect our assets with key intellectual property. And I've highlighted a number of key areas here. You can see that overall, there's a lot of activity going on in the patent area but particularly in China, we expect to get notice of allowance quite shortly for our patent in China. We already have a granted patent in Hong Kong. In Europe, we already have a granted patent covering Eroxon and Intense. And last but not least, the United States, we've received an initial patent of fairly narrow scope but we have a continuation patent where -- which we expect to be granted in the first, second quarter of next year. And as Angela has referred to, that should trigger a milestone payment from one of our key partners in the United States. So if you move on to the patent coverage of WSD, you can see that we have filed internationally with the PCT. So with our new asset coming forward, the female product, we plan to have robust patent protection for that as well. So I'll now hand you back to Alex for a summary. Alexander James Duggan: Thank you very much, Ken. As you can see, although R&D projects can never be fully guaranteed, there is genuine excitement in the company about these new developments and we're taking all the necessary steps to bring to market new efficacious products, which will resonate with consumers in this growing category of consumer sexual health. In summary, I'm clear about the issues facing the company and its products and we're working with our key partners where possible to improve underlying in-market product performance. The company is in a challenged position currently, as you have seen. And as previously announced, we initiated a cost-cutting exercise and we are exploring a number of different avenues to extend our cash runway further, including considering commercial options such as licensing or divestments and/or opportunities for financing. The Board does believe that there is significant long-term value in the group's assets and so development plans for both Eroxon Intense and WSD4000 will continue to progress. We continue to undertake a thorough review of our business and its operations to deliver a clear view on how best to take the Futura business forward and you can expect a full update by the end of quarter 1, 2026. Now I fully appreciate that some of the messages today are difficult to hear for our long-standing, supportive and patient shareholders. It's regrettable that this patience is going to be further tested. But I can assure you that the company will do all it can do to get the best value from both our current and our new products. Clearly, there is an appetite for products like Futura's and the data all supports this. We will continue to press for a return from these innovative products. As and when there are any further updates, we will, of course, announce in the usual way. But for now, I'd like to thank you all for your time today and thank you for your continuing support. Operator: [Operator Instructions] Alex, Angela, Ken, we have received a lot of questions throughout today's meeting. And if I may just get started with the first one, which reads as follows. Are you reviewing the relationships with all partners? Alexander James Duggan: Good morning, everybody. So we -- as part of our review, obviously, we are considering all options. My view in life is very much that any business relationship has to benefit both parties. And it's evident that some of the results are not as expected so far by our partners or by us and we're doing all we can to remedy that with the strategies that we've talked about a few minutes ago. So as part of a wider review, then yes, we are considering all options right now. But we remain confident in our current partners. And obviously, all of our partners are committing to their contractual obligations. Operator: The next question is, what marketing is Haleon currently doing? Alexander James Duggan: So I can take that. They -- so Haleon has done, as you would imagine, from a company like Haleon, they have had an excellent launch. They put a lot of pressure, particularly in the early phase of the launch at the end of 2024. And they've had a fully integrated campaign using TV, social media, digital influencers, HCP support and they've invested heavily into the product. So -- and that's continued through into 2025. So we are hopeful, obviously, that, that will continue and they have certainly done a great job so far in the initial launch phase. Operator: How much stock do partners have? How long will this last at current sell-through rates? Alexander James Duggan: So I think that is an area that we can't go into too much detail on. But we, as part of the ongoing review, it's one of the areas we need to consider because obviously, we need to provide at some point some guidance for next year. But the -- it's under review very much at the moment. Operator: Moving on to the next one. What launches are planned for the second half? Alexander James Duggan: So we don't have any -- our partners don't have any launches in H2 of this year. As we alluded to earlier, we are in discussion in LatAm for a potential launch in Brazil. That does require some regulatory agreement and a suitable commercial plan agreed with our partner there. Beyond that, we are in discussion, in early stage discussion in a number of markets, Taiwan and China, for example. And that's where my focus will be going forward on the larger markets, which can move the needle. Operator: Outside the U.S., which territories are the next in importance for scale of opportunity? Alexander James Duggan: I think as I just mentioned, I mean, obviously, the U.S. is the #1 consumer health care market in the world. So it's important that we get that market right. And the second largest consumer health care market globally is China. And I'm confident that if we can get through the regulatory hurdles in China and we can find a partner that is suitable and we launch in the right way, then this has a -- the Eroxon and potentially the WSD4000 products going forward would have great opportunity in that market. Operator: Next question with 2 parts. What are the next steps for each of the new products? How quickly can you launch them and generate revenue? Alexander James Duggan: Ken, would you like to pick up on that? Kenneth James: Good morning, everyone. So if I start with Project Intense, as I showed on the slide, regulatory approval in the EU and the U.S. is scheduled to occur by the end of this year. That's an important and necessary step on the journey. But you will appreciate that post approval, there are a couple of areas where we have to get things in place before we can consider launching. The first of that is to ensure that we've got an adequate shelf life. And the minimum, generally speaking, for a consumer health care product is a 24-month shelf life. And the data for that will be available towards the middle, third quarter of next year. The second area is manufacturing logistics. You have to ensure that you have the supply chain all geared up and a critical part of that is ensuring that you've got labeling, which is consistent with the regulatory approval. So you can't initiate the construct of that labeling until after you've got regulatory approval. So the manufacturing supply chain is another critical factor. So we anticipate the earliest that we could launch the Project Intense would be third, fourth quarter of next year. Insofar as WSD4000 is concerned, it's a longer time frame. The reason for that, as I explained, is we think the only viable way to success with the product is to have very strong claims, which are clinically supported with strong IP and regulatory approval. Any potential shortcuts to market would compromise any of those 3 things and the company decided that we won't do that because it will lead to failure. So when you look at the critical path there, the clinical study is definitely on that critical path, as is regulatory approval. And therefore, we anticipate launch of WSD4000 being in the latter half of 2028. Operator: Next one here. Will the cost cutting extend your cash runway past January 2026? Angela Hildreth: So it is unlikely that the cost reduction plans that have been implemented already and are underway to further implement will materially extend the runway beyond January '26. Some of them have already been factored into that runway and some of them we won't receive the benefit from until beyond January. There's also a balance in terms of the cost reductions that we are making versus retaining value in the business. So the runway is likely to -- the extension of runway is likely to come more from commercial or from financing options, which we're currently exploring. Operator: And the next one for Alex. Will you not be staying as CEO? Alexander James Duggan: Thank you. So I've watched Futura's development from the sidelines for a number of years and I've always been impressed by the R&D capability of the team. And I do genuinely believe that there is a terrific market for products like those of Futura and despite the first challenging results from the market, I do believe there is a strong future. I stepped in as the Interim CEO in August to help with an urgent short-term leadership gap. And the basis for me joining was to conduct an immediate review and assessment of the strategic plan for the company. So as you might imagine, part of that review and that strategic plan will be to put in place a leadership team that is appropriate for the company going forward, however we deem that should look. So I don't want to avoid the question but actually, between the Board and myself, we need to determine who is the best person to lead the company forward and that absolutely forms part of that review. Operator: And next one here. I note that you are in discussions with M8 regarding a H2 launch. Can you please confirm whether you have now received approval from ANVISA or the expected approval? Alexander James Duggan: Ken, would you take that up? Kenneth James: Yes. We're making good progress with ANVISA. They've conducted inspection of contracted manufacturing plant. That audit has gone very well. And it's our belief that we will be getting approval from ANVISA in the not-too-distant future. Operator: Have you considered -- explored a partial percentage sale of the company? Alexander James Duggan: So I think we can't really get drawn into too much detail on questions like that but I appreciate where the question is coming from. What we've said and we have announced is that we will consider all options as part of our review. So there's nothing off the table. But at all times, first and foremost in our minds is how do we deliver best value to all stakeholders and to our shareholders. Operator: Can the company survive long enough to gain potential benefits from the new products? Alexander James Duggan: That is absolutely our ambition. Operator: Should you have launched Eroxon Intense and not Eroxon given its issues and the adverse impact this will have on Eroxon launch with commercial partners and customers? Alexander James Duggan: So I think in a launch like this, hindsight is wonderful. What we've shown clearly is that there's absolutely an appetite for this type of product. We have seen in the market that the real-world performance does differ slightly from the clinical results that we achieved and our partners achieved prior to launch. So our expectation -- but it is obviously tests are underway at the moment. Our expectation and hope is that the Intense product will be slightly better in terms of sensorial effect than our original first Eroxon product but that is yet to be determined. So we've listened to the market. We have developed the Intense formulation and strategy on the basis of feedback from the market. In consumer health care, continual development is essential. And so we will continue to do that. And no doubt there will be other products beyond the Intense as well. So I think -- watch this space. We've said that we're expecting results during quarter 4 for that Intense product. And when there's any material information to release and update the market, we will do that. Operator: Another question on partners. Are your partners asserting that Futura has failed to meet any of its obligations? Alexander James Duggan: So that's not the case, no. And obviously, I can't divulge confidential information between us and our partners. But evidently and clearly, Futura will meet its contractual obligations. Operator: Moving on, has Futura considered adding a QR code that links to a detailed instructional video on how to use it? Alexander James Duggan: Interesting idea. One of the areas that we have picked up on is that we need to provide clearer guidance, I think, to consumers to try to help them get best effect from the current products and we will take that forward to our -- those learnings forward to how we apply to our new products as well. So whether tactically we use a QR code or other means, the intent very much is there to ensure that consumers have got best knowledge and understanding of how to use the product to get best outcomes from it. Operator: A couple more questions here. The next one on U.S. tariffs. Are you impacted by the new U.S. tariffs? And if so, how are you adjusting to the situation? Alexander James Duggan: So at the moment, the production for the U.S. market is done in the U.S. but it's done under license and so Haleon manufacture that themselves and pay us a royalty. And we're not importing products from the U.S. Operator: Are your partners revising their marketing campaigns to convey the proper ways to use Eroxon and to have realistic expectations for results? Are you working with them on this? Alexander James Duggan: So I think we've covered that off. We are -- we continue to have a very open dialogue with all of our partners. And I have seen over the last few months, the messaging through our partners have adapted a little bit, as you would expect in a launch phase with learnings from the market. And I expect that will continue. Operator: And will you increase the dosage per volume of Eroxon Intense? Alexander James Duggan: Again, the clinical data supports very much the doses that we currently use. Ken, you might have a view on this from a technical point of view. Kenneth James: Yes, I do. The short answer is no because you then would run into potential safety issues. It's a very fine balance between achieving high consumer acceptability in terms of safety and achieving efficacy. And we think we've got the dose right. As we've explained with Project Intense, we think the way forward is with a new variant, which creates a stronger sensorial effect through the same dose as previous. Operator: And perhaps one last question here. What do Futura believe went wrong with the U.S. launch to downgrade expectation significantly within 5 months? How will launch of Eroxon Intense, WSD4000 be different? Alexander James Duggan: So that's quite an involved question. I think that in the U.S., what we've seen is a large company, Haleon going out and doing a great job of launching the product in a high-intensity way. They've managed to achieve terrific distribution across the U.S., across all brick-and-mortar accounts and very strong on Amazon. And they have pressed hard on the launch to make it as effective as possible. The mismatch that we see between the clinical results -- the studies done by Futura but also prelaunch studies done by our partners, including in the U.S., we believe that's really down to a number of factors. It could be the product itself a little bit but it's also down to the positioning and the usage, which we've touched on. And so we continue to work with Haleon in the U.S. as with our other partners to try to make sure that, that positioning is adapted and the usage is adapted so that we can get best results in the market. Operator: Fantastic. Well, look, Alex, Angela, Ken, thank you for addressing all those questions from investors today. And of course, the company can view all questions submitted today and we'll publish those responses on the Investor Meet Company platform. But Alex, before I redirect investors to provide you with their feedback, which I know is particularly important to the company, could I just please ask you for a few closing comments to wrap up? Alexander James Duggan: Thank you. I think I just want to just repeat my thanks to you all for joining today and for your interesting questions. I hope that we've been able to clarify at least some of the questions and the points that you may have. I appreciate that they are quite uncertain terms -- uncertain times. But I do want you to be assured that the Board and the company is doing all it possibly can to get the best return possible for all of our stakeholders, including our shareholders who have -- many of you who have been very patient for many years and we do appreciate that. So we're looking at a number of angles in our review, our strategic review. And as soon as we have an update, we will announce that to the market in the usual way. So thank you again for your continued support and I hope you have a good rest of your day. Operator: Thank you very much, Alex, Angela, Ken, for updating investors today. Could I please ask investors not to close this session as you now be automatically redirected to provide your feedback in order that the Board can better understand your views and expectations. This will only take a few moments to complete and I'm sure will be greatly valued by the company. On behalf of the management team of Futura Medical plc, we would like to thank you for attending today's presentation and good morning to you.
Unknown Attendee: [Presentation] Please put your hands together for our group CEO, Graham Lee. Graham Lee: Sure. Thank you. Good morning, everyone. It is a pleasure to be here with you to share the results of our last 6 months. It -- is I mean this is quite something for me to be standing here. It's been 2.5 months since I've had the privilege of being CEO, and I have loved every single minute of it. And the reason for that is all of you, every single one of you. All of the 17,000 people in the branches -- from the branches to the [ BSE ]. From the newest consultant through to our Board of Directors, thank you very much for your support for me. Thank you for the excellent work that you've done. And thank you for continuing to strive to be better for our clients. It is more than 20 years since I joined Capitec. And in that time, there's a couple of things which have always been true. We've stayed true to our fundamentals, and we've always put our clients first. So in the spirit of that, we are now up to 25 million clients. It comes from our personal banking, that's 24.4 million. All of our merchants and core businesses as part of Business Banking and the 0.25 million clients contributed by AvaFin, but together, we're now at 25 million clients. Now despite the huge denominator, we've still grown that by 8%. But there were a few exciting segments, which have grown even more steeply, and they give me great optimism for the future. They include young clients. So we're doing very well in youth and also in our clients who are higher income owners, earning more than ZAR 50,000, that's up by 24%. Even more importantly are those clients who use us the most. So our app clients who go on to our app every single month, every single day even who buy our digital products. And most importantly, our fully banked clients, up by 11%. Now that's a really important number because that 38% of our clients contributes roughly 3/4 of all of our income. And then there are two areas which I'm particularly excited about. And that are -- those are Capitec Connect and our core business offering, our business solutions to help grow South Africa. And if you look at Capitec Connect, that's grown by 76%. Now I just need to clarify something here. We've changed our definition of an active client from a 6-month active definition to a 3-month active definition, but both of them grew by pretty much the same rate. We did that to simply be more comparable with the rest of the market. And then in GlobalBiz, our GlobalBiz clients are up by 57%, which is fantastic growth. Our innovation for our clients has resulted in headline earnings of 26% increase, ZAR 8 billion. Now, this is balanced through all parts of the business. If you take a very traditional view of a bank's income statement, you look at the net interest income, and that's gone up by 27%. Strong growth in book, strong growth in a healthy book. And that is at a credit loss ratio of 7.9%. Now that's including AvaFin. AvaFin we're comparing 6 months this year to 4 months last year. So the sales of them has gone up more steeply. If you take AvaFin out, Capitec is at 6.8% credit loss ratio, which is down from 7% this time last year. Then if you look at our noncredit part of the business, all of our transactions connect, VAS all put together as noninterest revenue that's grown by 19%. And that means that of all of our income from operations, 65% is -- comes from business other than credit. Those Fintech businesses, what we're -- what I'm now referring to, strategic initiatives is very much an internal term for ourselves. But looking out there in the world, the businesses that are largely fintech are fintech, our value-added services, the digital experiences that our clients love so much in news daily as well as Capitec Connect, that's gone up by 40%. It's incredible growth. Our net insurance income is up by 45%. Now there are some adjustments that need to be made in order to get a like-for-like growth. And the reason for that is since the transfer of business from ourselves and taking on all of the funeral business onto our own license, there are some movements in the income statement. Where once the interest tax and so forth was netted off in the sale, we now gross them up both in the -- above the line of the income as well as in the tax. But I'll be unpacking that for you a little bit later on. OpEx for the entire group is up by 16%. And again, excluding AvaFin, it's down, it's a little bit lower, it's at 14%. And all of that means that we grew our return on equity to 31%. Now during the year, beginning of the financial year, we simplified and reduced our fees. So one of the things I'd like you to keep in mind is when considering results, remember that despite the fact that we gave back, not only did we not increase our fees and charges by inflation, we actually reduced them. And the net result of that was giving back ZAR 203 million in fees to our clients. So our financial results, the growth is on top of that. Looking at the income statement in detail, there are a few things that I'd like to highlight on income statement, excluding AvaFin. So what you see up on screen right now are the bits just without AvaFin. So looking at the South African credit business, we grew our net interest income by 23%, and that's on the back, like I said, of growth in a really healthy book. Our total net insurance income of 45%, you need to adjust for the sale, tax, you need to adjust for the profit sharing from Sanlam and you need to adjust for the finance charges. So that is actually at a normalized rate of 20%. OpEx of South Africa alone is 14%, and that taxation line goes up. The reason that goes up is because of that gross out from the sale in the insurance business. So the tax comes down there. And for the next year or 2, it will look a little bit higher. Overall, growth for South Africa is at 25%, and AvaFin contributes nicely and lifts our overall earnings to 26% growth. And you can see that in the changes to the earnings contribution. If you look back a year, to August 2024, our Personal Banking contributed 49% of the overall income. AvaFin was only 1%. Business Bank 3%, and you can see that Insurance is 24% and all of our Fintech was around about 23%. In the last year, AvaFin has more than doubled to 2% contribution. Our business banking is also nearly doubled to 5% of the group contribution now, which is fantastic, Insurance at 26% and Fintech, 26%. But the other point that I'd like to make is we continue to grow our physical network. We continue to grow the physical number of branches and our cash distribution, the physical number of our cash devices because our personal bank, all of the clients and distribution and data from that personal bank, they are the launchpad for all of our opportunities. If you take a step back and look from our data, take a view of the South African economy, it is -- well, there are some mixed signals in the broader economy, okay? There are some concerns about rising retrenchment, particularly in some of those industries that are more affected by international trade policy, but this is balanced by optimism. It's balanced by optimism in some of the green shoots that we're seeing in the cooperation between business and government, which is having positive outcomes. However, I'd actually like to stress something far more interesting, which is that with our 24.4 million Personal Bank clients and the more than 300,000 GlobalBiz and merchants, we have very rich data about South Africa, about the entire economy. Economic growth for the whole country is not where we want it to be. Some of the indicators are negative, but we have the data to be able to see and take advantage of the opportunities. And one that I'd like to share is people earning in the emerging market. So what you see in the graph on the top right is the growth in people. This is our fully banked clients who earn a salary, and we've grown them by 7% compared to those people who are entrepreneurs, who have multiple income, who are hustling. And the number of those clients has grown by 15%. Then on top of that, if you take a like-for-like sample; August last year, and August this year, that same set of clients and look at the growth in their income. Salary earners, their income has grown on average by 6% and that's to be expected. But those same entrepreneurs and hustlers, their income, the inflows into their accounts has grown by 15%, more than double, almost triple. And that really is good news. Card machine flows alone to those people has gone up by 26%. Moving on to our launchpad, Personal banking. There's continued diversification in our income streams. There was a time 15 years ago when we were largely a credit business. Now we are so much more than that. Credit income, though, continues to contribute strongly. That's up 24% in the last year. Net transaction income is up 6%. Now this is net transaction income if you strip out all of the new innovative types of transactions that we're doing through VAS and Capitec Connect, and they've grown by 40%. Now that 6% number might seem subdued, but there are a few things that you need to take into account. So the first is we reduced fees. So that's 6% growth, the first adjustment you need to make in order to get a real understanding of what our true growth rate is, is to add back the fees that we reduced it by. Then we continue to encourage our clients to move from getting their notifications on SMS, which is a fee-bearing transaction to an in-app message. It's safer. It's faster. It saves them money. It's good. It's good for our clients, and they have continued to migrate. And then more and more clients are using the send cash functionality because it's slick and useful and cool to do cash transactions for themselves. So you see a reduction in the number of clients using their card and more clients using the digital mechanism for getting the cash withdrawal. When you account for all 3 of those things, our growth in net transaction income is actually 12% and the growth in volumes is 20%. And now all of those things are positive for our clients and intended. They're part of our strategy. Digital volumes continue to grow really strongly. So cash overall, pure cash at the ATM with a card has grown only by 3%. Now if you consider that relative to how fast our clients have grown, you can see clearly that cash per client continues to come down, and that shift us towards all form of digital electronic payments and cards. Digital payments, including Capitec Pay is up by 28%, and card payments have also grown strongly from a big base by 23%. Now unpacking that just a little bit more. If you look at physical card alone, that's up by 19%, but the dramatic change has come in the use of pay wallets. So Apple Pay, Garmin Pay, Samsung Pay, that's gone up by 131% in the last year, really strong client uptake of a form factor, which we know they like very much. If you look at e-commerce, so that's all of the transactions made to buy something online, including and led by Capitec Pay, that's gone up by 35%. Our pure VAS transactions, buying airtime, electricity, our new advances, vouchers, all manner of those digital transactions, including buying new license, they've gone up by 20%. And pure electronic payments were up by 23%. Strong growth across all types of digital payments. And then I would like to take just a minute to do some marketing. If you are traveling internationally, and you do not have a Capitec card, you should get one. We have recently, and recently means from this morning, dropped our international card payment fee for physical card overseas, down to 0. We have never charged an FX margin. And given that our clients in the last 6 months have done more than ZAR 1 billion of physical transactions overseas. It means that compared to what we would have charged them if we acted the same as all of the other card providers, we've saved our clients ZAR 25 million. Focusing on credit for a little bit. Many of you who've known me for a long time, know that I spent a large part of my career at Capitec in credit. And I did come back into my office a month or 2 back, and there was a chocolate on my desk with a small sign saying, my first love is credit. And you're right. Okay. Credit sales growth. So in the Personal Bank, we've had really strong growth in our loan disbursements. That red line, you can see a clear step change. So we are hitting record levels, but we're doing so without taking on additional risk. And what I mean by that is we have not changed our risk appetite. That does not come from us being willing to take on any form of less healthy or worse book, rather it comes from excelling in our credit operations, in using our data and our algorithms to better create personalized offers for our clients and messaging for the clients, and that's increasing the volume of applications. The actual approval rate has remained stable as our risk appetite has remained stable, but bringing our clients in more through the right messages, serving them in more locations, greater distribution and doing so more efficiently, that's what's creating the lift. Particularly, if you look at clients earning more than ZAR 50,000, really strong growth in that as well. 20% of total sales now, more than ZAR 6 billion to those higher income -- higher earning clients. As I've said now several times, it's a healthy book that we're growing at. So we've grown our Personal Bank lending book by ZAR 7.8 billion. And in doing so, we've done it in such a way that we've reduced the roles to default. And we've reduced the roles to debt review which means that both our coverage ratio, our ECL, and as well as the credit loss ratio have both come down exactly as per our plan. Looking at where that credit is coming from, first of all, we've grown really strongly in credit cards. Now you may have heard in my voice earlier that we are proud of the value that our credit card gives to clients. In addition to that 0 currency conversion fee, we don't charge a margin. Every single credit card client gets a gigabyte every month as well as 1% back on all of their spend. And because of that, we're now attracting more and more clients, including more higher income clients. Purpose lending is contributing beautifully as well. We have improved our distribution. We have signed up more partners and working closely with those partners, embedding a better experience of providing credit where the clients need it at the point where they need that solution and then working with them to improve the experience. We have dramatically increased our purpose lending. And this is lending for a good purpose. It has a lower cost to the client. It is a lower risk to us. And all in all, it's a very good part of the business for us. And then clients continue to operate more remotely. They continue to use the app and they continue to use Capitec Direct, and we've seen really good strong growth there largely through data-driven messaging, the appropriate message to the client at the appropriate time. We are adding on more credit solutions. So I mentioned earlier that we've had a really big take-up in our credit card from people earning above ZAR 50,000. But those are not the only clients who want to give those fantastic offers too. The free data and the interest back and the no charges, we want to make as accessible as possible to everybody. And so we have added on additional credit card to make our Capitec credit card more accessible to a much broader set of the population. It is lower exposure, and it's fast to repayment. And what that does is it instills discipline and helps people to build a credit score for the future. More than 65,000 of those cards were given in the 6 months till August. We're also working more closely with our partner SA Home Loans to provide better home loan for our clients. Since February, we granted ZAR 720 million. And we are going to extend that partnership into a new special purpose vehicle to give a better offer to our clients in the coming months. And then, all of those entrepreneurs around the country, they don't just transact. They also need credit to grow their businesses. And we've been enabling that through our multiple income offer, which has grown very strongly, ZAR 984 million, as well as our new repairs you earn. So understanding the variation in flows that entrepreneurs have throughout a month and being able to provide a collection mechanism suitable for them opens up accessibility to far more clients. Moving on to Capitec Connect. So it's very exciting. We are now at 1.1 million clients. And there's a really strong net income contribution of ZAR 165 million. But Capitec Connect is not only about contributing to the bottom line. It's not only about generating revenue. It is to create value for our clients. So as we scale, we will continue to drive down prices and give more data as givebacks to reward our clients for good banking behavior. We gave 449 terabytes back over the course of the last 6 months, and we have just recently started with a new giveback, which is that if your Capitec Connect SIM is the SIM for your verified number, for your banking, with every single purchase, we'll give you 20% extra free. Because of that, we have tripled, more than tripled our usage of data. So it's now at 14.9 terabytes, and you can see on the slide, just for fun, that's 4.3 billion songs. Something else just to be proud of. There was a recent survey done, the South African Telecom Sentiment Index, and we came on top. I think that is a fantastic tribute to the team. That really is a testament to the fantastic work done by all of the Capitec Connect team. Well done. We've also launched devices. So if you go into app right now, you can order any one of 22 devices, and that range will get wider. With that purchase, we will give you free data, and our finance offering is the best in the market, 0% deposits and the lowest finance charge. So we are going to change how our people get access to smartphones. And through that increase the number of people who have them who use our app who use our other digital services, there's a virtuous cycle here. Looking at savings. Now savings continues to be an important barometer of trust in Capitec. So I am very pleased that we've continued to increase our market share strongly, particularly in the access anytime, fixed deposits and notice accounts. So we changed the structure of our interest rates. We changed from a tiered main account to a single flat rate for everybody. And then we strongly increased our interest on our call and notice and fixed deposits to be much more competitive and to encourage people to be much more deliberate in their savings. Because of that, and you can see on this slide, we are up 31% in those strong long-term purpose accounts. And overall, between our access any time call, notice deposits and fixed term plans, at now 68% of our entire deposit book. This is what we intended. We look forward to growing it even more strongly, and encouraging clients to be more purposeful in their savings and earn even higher interest rates. If you look just at notice, our notice accounts are very popular. The 7-day notice deposits, it bridges the gap between those who are not able to save at all and those able to save a little. And there's been phenomenal growth. It is really enabling a savings culture amongst our clients. Moving on to insurance. We've had 19% growth in the sum assured. Now a recent survey done by Swiss Re tells us that, that is 39% of the whole of the South African market. It's ZAR 481 billion in sum assured. And that's 15.8 million lives covered. And since November, 100% of the business is on our own license. We've got a strong focus in insurance on making sure that the 3 products we have are exceptional, that the client experience the entire way through is the best that it can possibly be, and that's what our focus will remain for the short while. If you move on to life. So our new Life Cover, that's new, and there's already ZAR 72 billion in sum assured covered. Now you add those two together, that means the total sum assured for lives covered in South Africa is now over ZAR 0.5 trillion. One of the things that I like most about our life insurance is the way that we enable the clients, empower the clients to choose how that cover will be used. And we allow them to choose between a lump sum payout, between a monthly income to your dependence to help them manage their monthly needs and then specifically, to be paid out into a trust, to take care of your children's education and their other needs. And what you can see up on that pie chart is the extent, the proportions which our clients are choosing to use those 3. So lump sum remains the biggest, but almost half go to that monthly income choice or children's needs. And that's very positive. Now I mentioned at the beginning that you need to normalize growth, so there's very strong growth in our financial statements, and that is the true result. However, to compare with last year, to compare like-for-like, you need to account for the fact that some of the business, some of the book is transferring out of the cell, and to Capitec's own license and all of the new businesses on own license. And as that's happening, there is a taxation effect. In the cell, the tax was netted off. And so now we gross up the income and we gross up the tax. We also do the same thing essentially with the investment income that comes out. It becomes more clear. And then there is the additional profit that we earn because prior to the first November, we were sharing 30% of the profit with Sanlam. And since the first of November, 100% of the profit accrues to us. When you take those three things into account, the adjusted result for insurance is a 20% growth, which is excellent. That was for the insurance team, not me. Moving on to Business banking. I am excited by everything at Capitec. I really am. But what excites me the most is Business banking. And the reason for that is not just because it's such a big opportunity for growth for us, and it is. It's because this is how we contribute to the growth in South Africa. So because of that, I'm really pleased that a number of our clients has grown so strongly. So our core business banking clients, GlobalBiz, they're up by 57% to 182,000 now. Now they've come to us for a couple of reasons. They come to us because of better service. They come to us for better credits, and they come to us for simpler, lower fees. So on the better credit side, our gross loans have gone up by 23%. That's a loan book now of ZAR 26 billion, catching up with the personal bank fast. And in terms of fees, we've simplified and aligned. So no business bank client pays different fees to a retail client. If you do a real-time transaction, they cost you exactly the same as they should. And because of that, ZAR 93 million of the fee giveback has gone to business bank clients in the year. One of the other changes that you'll see is we become much more efficient in credit across the board. Our intuitive processes are better. But in addition to that, our scored credit is getting stronger. So our scored credit is up 109%, and that enables us to serve our clients faster, give them an answer quicker so that they can carry on running their business. Very recently, we've just landed overdrafts on the app. So our clients can apply, conclude for an overdraft entirely by themselves, self-service on our app. And that's going to change things for them, saving them time. Looking ahead, one of the most important parts of our business going forward is enterprise payments. So we recognize that this is one of the key enablers for business because collection success is critical to business growth. So because of that, we took all of our businesses in which we help other businesses take a payment, debit order collections, merchant services, the e-commerce pieces, and we put to get them together into a single division called Enterprise payments. If you look at the debit order business, Capitec Payment Services, we grew by 19% in the year. And Capitec Pay e-com, that's grown by 36%. Moving on to payment taking via card machines. We're up 165% to 85,000 trading merchants. If you look at the turnover from August this year of ZAR 42.4 billion to ZAR 27.1 billion, you can see just how strong that growth is. And this is well spread. This is not a small number of merchants, 85,000 is a broad cross-section of all of the businesses in South Africa that need to take payment by this mechanism. And we're winning that business because we have a fantastic machine but also the lowest merchant commission rates in the country. ZAR 95 million of the reduced fees has gone in lower merchant commissions and a lower price for those point-of-sale devices. One of the things that you can expect us in the future to spend a lot more time on and invest a lot more in is our enterprise payments business. It's key to our success. Then AvaFin, I mentioned up-front that AvaFin has contributed really nicely, they have contributed ZAR 121 million to our group earnings in the first 6 months of this year. And they continue to focus on making the credit offer exceptional in the 5 markets in which we operate. So we're staying focused on those 5 markets, staying focused on online consumer lending but improving the credit offer and improving the processes to serve those clients. And because of that, we're now up to 250,000 clients and advance EUR 303 million worth of credit to those clients in Europe and Mexico. Group OpEx, our strong financial position allows us to accelerate investment in new technologies. So looking at the middle, our investment in technologies and the people required to implement those technologies has gone up by 30%. And we brought that forward. We can see all of the value that we create for ourselves and our clients in investing faster there. In addition to that, by tapping into the world's best, and I'm talking here of the world's best providers of cloud technology of all forms of AI, including Gen AI. We have partnered with the best, and we're able to benefit. Now because of that, there's a natural shift from CapEx to OpEx, and you see that in those result. If you look at the increase in salaries, that's gone up by 12% as we continue to invest in our people. And all of the other expenses are a pretty muted growth of only 9%. Our continued focus. So what are we looking forward to? Well, we're going to continue innovating. Some of those recent innovations include what you see up on screen here. So it's in-app calling. Now in-app calling is the ability from a client from within their app, when they're making the transaction, when they see the item that they need to ask a question on pressing a button and being connected with the human being. It is safer for the clients. The client knows for sure that they are talking to us, and we know for sure that they're talking to the client. But in addition to that, it saves them money. It saves them airtime. And just in the last 6 months, we've saved our clients ZAR 5 million worth in airtime, and it's also a better experience. Calls don't drop. The quality of the call is better. So we're able to serve our clients better. Our self-service terminals continue to take load off our service consultants in the branches. When clients come in and they only need a very quick transaction, they can do it at a self-service terminal, leaving more time for our very important people to serve our clients because that humanist, that's serving humans with humans is actually an advantage. It's a superpower. We're also saving them time with our branch chatbots. So we have put available all of the questions that a person normally asks through calling help desk. And the person in the branch can now ask those questions to have them answered by a branch chatbot. And what this does again is save some time. It saves some time they would have otherwise spent on the phone and that's the time that the client is with them. So in saving our clients' time, we're also serving our customers better. Then Generative AI, we have done so much here. Ahead of fantastic demonstration 2 days ago on [ Neo ], our fantastic new tool for faster first-time resolution of all client queries, anything that a client needs to ask, and we're enabling our -- we will be enabling our branch and our call center staff to use that tool to be able to answer those questions more thoroughly and more quickly. We also have a solution which we use to automate the verification of trustees. For those of you who watch Suits, it's called Mike Ross, and more and more. And through that and the huge uptake of Copilot, we've seen ZAR 95 million in savings. And we're saving our people's time. We're not saving our time so that we can reduce the number of people. We're reducing the time so that we can do even more with those people. One of those things is reducing the needs -- some of the need for automated testing. I said that wrongly. We still have a very strong need for automated testing. Some of the demand on a person to accomplish automated testing. So very roughly speaking, the time it would have taken to put a used test case together and to implement it, would have been 4.5 hours and now using our new home build tool that takes less than an hour, massive saving there, and allows us to focus on what human genius is better for. And one of the things that that's better for is protecting our clients. The most important application of all of the new technologies is always going to be protecting our clients. We have over 400 people now working in different parts of the bank in a task force to make sure we're doing everything that we can to protect our clients. And that includes implementing new technologies like graph database. And what this has done is, it has enabled us to identify more and more of the unreported fraud and make connections between the bad actors to shut them down more quickly and more thoroughly. Because of this, we've reduced client losses significantly faster than the rest of the industry, and that's according to SABRIC. We are contributing to the prosecution of many crime syndicates stealing from people in South Africa. We blocked more than 70,000 mule accounts and saved more than ZAR 200 million for clients that would otherwise have been lost. Some of the innovations include AI warnings that have stopped scan payments, where the client felt sure that they wanted to do that thing, but we help them understand that we're making a mistake. And Feature Locks, which stop people doing them -- stop people doing things they don't want to do. And we have been first in market with a variety of different innovations, including active call identification and real-time contextual warnings. So the specific client sees the message that's relevant to them to help them understand how to protect themselves. Looking forward to the future, what I'm going to show you on this slide is something you'll have seen before. And that's important because this is a reminder of the key focus areas that we shared with you in February. We will reinforce our culture. Our client-first, highly energized ownership taking culture because it's one of getting things done. All bank strategies, largely speaking, look the same. We win because we actually execute, because we get things done, and we do so by working together. And that is something that we're going to reinforce. We will continue with the virtuous cycle of developing the ecosystem, bringing the power of our 24 million Personal Banking clients together with our businesses and creating a virtuous cycle between them that helps both grow. We will become the leading payment provider in South Africa. And as I said earlier, you can expect to see a lot from us on that. We will grow Business banking and growing Business banking, we will grow the country around us and grow employment. In order to do that well, we need to be able to serve all of our clients everywhere. And that's why we have such a strong focus on our single service platform, which will enable a business client, retail client to move on to any app, any channel, move and walk into a branch, call any number and be served in the same way. We will continue to invest heavily in making sure that we have the most data but also that we're best using that data, actually implementing it for creating value for our clients. And then finally, AvaFin is fantastic, but it's a small step. We are just starting now to craft the strategy to take Capitec global. That is our future. Thank you very much, everybody. Thank you. Thank you to all the 17,000 people who made this happen. Thank you to our clients. Everything starts with you. And thank you to our excellent Board of Directors and all of the shareholders that they represent. I appreciate your support. Thank you, everyone. So now I'm going to ask Grant Hardy to come and join me on the stage, and we will take some questions from our investors. Grant Hardy: Thank you. Unknown Attendee: We've got a few questions. The first one is from Sean. He's asking, when will Capitec be launching VAS on its card machines? Grant Hardy: Okay. Thank you for the question, Sean. It's something we're actively working on and are progressing on. We haven't yet confirmed the exact date, but it is something that we are working very hard on delivering as soon as we possibly can. Graham Lee: Yes. Our clients can expect to see it early next year. Unknown Attendee: Then we've got 2 questions from Charles Russell. First one, can you elaborate on the lower capital adequacy ratio and more specifically the impact on ROE? Grant Hardy: Okay. So as we've communicated to the market, Basel IV became effective on the 1st of July, and that impacted our capital adequacy ratio. We expected the decrease to be between 3% and 5%, and it's come in within that range. Secondly, we also had to deconsolidate Capitec [ ins ]. This is also required by regulation. From an ROE impact, we still have more than sufficient capital, so it won't change the ultimate dividend policy. So it won't have an impact ultimately on ROE. The dividend payout ratio is as communicated to the market, 55% for the full year. Unknown Attendee: The second question from Charles Russell. Can you expand on the strategy to reduce interest expense which was down 8% despite an 11% increase in deposits? Grant Hardy: Thanks, Charles. It was an interesting one because when we actually made the call, we actually expected to pay clients more interest. We actually increased the interest rates across our anytime access accounts. So a client can open up to 10 of those and increased on the notice side. So we became market leaders in those areas. So the thinking behind it was to actually provide more value, let's say, drive more deliberate savings, but the migration from the main accounts into these savings pockets has been slower than what we expected. We are still paying 2% on the main accounts, which is 2% more than the market. But we'll continue trying to educate clients and really show them the extra interest and value that they can create by moving funds into the anytime access and notice savings deposits. Unknown Attendee: Two questions from Ross Krige from Investec. First one, do you expect to maintain a stable Personal banking credit loss ratio for the full year relative to H1? Grant Hardy: Yes. It's well within our range, and that's what we expect to see, let's say, going into the second half of the financial year. It does all depend on how the economy plays out, just given that the unsecured lending on the Personal Banking side is very much determined by what we see and how the economy performs. Unknown Attendee: Second question from Ross. With regards to client givebacks in the business banking, do you expect this pricing activity to be fully in the base now? Or will H2 '26 also be impacted relative to the prior year? Grant Hardy: This is now fully in the base in terms of the big part coming from the merchant commission rates. So those were changed from the 1st of September 2024. So it's now in the base from last year. So yes, it Is fully in. Unknown Attendee: Then a question from Harry Botha from Merrill Lynch. In Business banking, what has cross-selling been like to merchant customers that Capitec has acquired? Grant Hardy: Yes. So for a lot of clients from a Business bank perspective, your first entry into Business bank would be, let's say, a point-of-sale device. And from there, we deposit, let's say, the funds that you put through, the device, into a Capitec business bank account. And from there, they do start using other services. So it's a good entry point for us. They start seeing the value we can provide, the level of service, so it is a good cross-selling opportunity and something that we continue to grow and work on. Unknown Attendee: We've got 2 questions from [ Nitin Sehgal ] from Cora Management. First one, this is a question about your first love, Graham, credit? Grant, what is a good range of through-the-cycle credit loss ratio relative to where you are today? Grant Hardy: So I think you've got to look at it by business unit. So if we go look at retail, we've communicated that we expect retail to run 8% to 8.5%, we're coming in just below there. From a Business banking perspective, we're within where we expect to be at 2.1%. And AvaFin is much higher, but we price for that. So AvaFin is also where we expect to be, given the current loan mix. As we've started to fund AvaFin, what we do want to do is reduce the interest rates and extend the term, so you can expect over time that credit loss ratio to come down. Also important, on the AvaFin side, we have 6 months' worth of results in for this year versus 4 months last year. So that does increase the credit loss ratio because you have a 6-month charge as, let's say, opposed to a 4. Graham Lee: Can I just add to that? In addition, in business banking, you can expect that longer term, the unsecured lending to small businesses, the CLR will approach that of the personal bank. So as the mix changes, the Business bank overall will go up. But if you -- as Grant says, if you split it out in the different types of businesses, they will remain consistent. Unknown Attendee: Then one last question from Nitin. Congratulations on your return on equity. How do you think about this champagne problem? Are there any newer areas you are considering investing in? Or are you thinking about changing the payout policy in the future? Graham Lee: Okay. It gives us optionality. At this point in time, we're not looking at changing the payout policy. There is so many opportunities to still grow our business to deploy our capital and to grow. One of the ways that we will do back, we will do that is by using our economies of scale and sharing the benefits of that back to our clients, and that will bring the ROE down a little. Grant Hardy: Yes. Just to add on to that, I mean you already see some of the givebacks we've given to clients this year. We'll continue to challenge ourselves to make sure that we're providing true value to our clients. And as Graham says, we've always had the principle of giving back the benefit of scale, so we'll continue to focus on that, but it just gives us optionality to make sure we can continue to provide value to our clients. Unknown Attendee: Thank you, Graham. Thank you, Grant. No further questions. Grant Hardy: Thank you. Graham Lee: Thank you very much, everyone.
Operator: Thank you for standing by. This is the conference operator. Welcome to the NovaGold 2025 Third Quarter Report and Donlin Gold Update Conference Call and Webcast. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Melanie Hennessey, Vice President, Corporate Communications. Please go ahead. Melanie Hennessey: Thank you, Ashiya. Good morning, everyone. We are pleased that you have joined us for NovaGold's 2025 Third Quarter Webcast and Conference Call and for an update on the Donlin Gold project. On today's call, we have NovaGold's Chairman, Dr. Thomas Kaplan; President and CEO, Greg Lang; and Peter Adamek, NovaGold's Vice President and CFO. At the end of the webcast, we will take questions by phone. Additionally, we will respond to questions received by e-mail. I would like to remind you as stated on Slide 3, any statements made today may contain forward-looking information, such as projections and goals, which are likely to involve risk detailed in our various EDGAR and SEDAR filings and forward-looking disclaimers included in this presentation. With that, I will now turn the presentation over to Dr. Thomas Kaplan. Thomas Kaplan: Thank you very much, Melanie, and thank you to all of those who are joining our call today. Obviously, we have quite a bit to discuss with you. But I'm happy to say that it's really all very, very good news. And what I expect will be the beginning of a consistent pattern of progress that is going to amply [indiscernible] and our stakeholders. As you can see, we are building the path to what will be quite literally the largest single gold mine in the United States. This comes at a time when we're not only in the foothills of a historic gold bull market, but also comes at a time when both the concept of money as well as jurisdictional safety are more important than ever before. Many years ago, when I spoke about jurisdictional safety, people thought I was being a little bit alarmist. But they couldn't avoid the fact that I had standing in South Africa, in Zimbabwe and Congo. So I knew whereof I spoke before I went into the energy business in the United States and ultimately went back into gold and silver mining. Building what will be America's largest gold mine makes it a strategic asset with potential sources of funding from nations that is really the best that we've ever seen in our lifetimes. Let me take you now to Slide 5. We refer to this as the catalytic transaction. And the reason for that is, as many of you know, since 2021, when we announced to the world with our partner, Barrick, that we were going to feasibility. To put it simply, we were held back. If we had managed to proceed as pledged, we'd already be through the feasibility, through financing and very possibly breaking ground on construction. So we have some time to catch up. But very importantly, we also have the opportunity to catch up with our share price. Earlier this year, we touched a low of $2 and change. We are now close to double digits. And when I said that I do believe that the stock would go from $3 or $3.50 back to the $12 to $15 area, just as our first stop, in fact, essentially, going back to where we were before we were paused in our progress, it may have come across as rather bold. Well, what you can see here, and this chart is clearly out of date because it should extend up on the right-hand side considerably more over the last few days. What you see is that a fire was ignited when we swapped a partner with whom we were not aligned with a partner with whom we are perfectly aligned. So essentially, what you're seeing is a revaluation of NovaGold. For those of you who have been with us for a very long time, all I can say is I wish this had happened earlier, but it really was outside of our control. But I can assure you, the first opportunity that we had to put it back into our control, we took it. And as we can see from this price chart, our investors haven't really had to look back. And as far as we can see, this is just the beginning. On Slide #6, you see [indiscernible] just getting where we were in '21 takes us to the $12 to $15 area. And I believe that from there, we double again. Historically, we outperformed the GDXJ. In fact, we've always been, until the last few years, one of the go-to stocks in the gold development space because when an investor, if there were an investor is interested in that space, would ask the question of a broker, where can we get access to a great asset that's well managed, responsibly managed, but also in a jurisdiction where we might actually want to visit, we were able to get some of that flow. I think that, that flow, which is now turning into a torrent is going to benefit NovaGold as much as, if not more than any other large-scale development story for reasons which I will be explaining. But with this chart, you see 2 things. Number one, our historic outperformance versus the GDXJ, but also I don't want to be distortive. If you look at where we went from peak to trough earlier this year, that was entirely the product of not having the right partner with us in this story. And the reversal, the beginning of the reversal, Phase 1 to take us back to the $12 to $15 area is because we have a perfectly aligned partner with gold at our backs. Slide #7. When we talk about that Phase 2, which takes us from $12 to $15 to $30, which in full transparency is the target price that both John Paulson and I have set for where the stock really should be now and would have been if we weren't set back over the last few years, this is classic. We are now on the path to re-rating across the development phases of our progress to America's largest gold mine. This isn't actually rocket science. And if anything, the gold price and the revaluation and reappreciation of gold as a monetary asset that you want to own and if it's in the ground, you want to own it in a place where the rule of law is not a novelty has only grown in our favor. This advantage has been [indiscernible] can see on Slide #8 by having the Paulson team with us. John is someone that I've known, worked with and loved as a partner and as a friend for well over 15 years. He is the archetype, a paradigm of a mensch, of somebody whose word is their bond. And we've had nothing but a great business experience. And in fact, the negotiation of this deal reflected that. He always put himself into the other side's shoes in order to be able to make a deal a true win-win. I don't have to say much about John Paulson other than if there's anyone who is famous for identifying the big trade and finding the vehicle with which [indiscernible] to multiply his and his shareholders' money, it's John Paulson. He did so very famously during the subprime crisis, but he's also done that in a way that is maybe even unique among big generalist investors in the gold space with specific stocks that he has served as a catalyst for being able to recharge them and remultiply their value. If you look at Slide 9, you have a great case study with the turnaround of Detour Gold, where it was the nomination and the putting in of John's director slate that led to the optimization of the mine plan. And ultimately, Detour acquiring Kirkland Lake and Agnico acquiring Detour. And anybody who has stayed in over that time is probably up about 500% during a period that we know is not characterized by such outsized wins. If you look at Slide 10, more recently, you have a case study of what the Paulson team has done to be able to take Perpetua from what was a year or so ago a $3 stock now well into the $20s on the back of its gold and its being a critical mineral provider for the United States. When you look at the different tranches along the way, you can clearly see a thoughtful as well as a successfully impactful value creation model for both Detour and Perpetua. Now for something a little bit different. If we go to Slide 11, this is not as egotistical as it seems. It's -- in order to be able to underscore certain points which I would like to make to shareholders of NovaGold, many of whom over the years have become very close personal friends and there are a few things that really aren't spoken about as much at this time as I think perhaps should be. Fortunately, they are, for better or worse, all pointing to NovaGold as being the Holy Grail in the gold space. For many, many years, and this is just simply to validate the statement, I have argued, going back to $550 gold that the first equilibrium price for gold would be between $3,000 and $5,000. Why $3,000 and $5,000, I was asked and I said because I easily see it when it breaks out going to $5,000. And as things get more volatile, perhaps correcting to $3,000 before it goes to another area. In some of the interviews I gave to David Rubenstein, some in writing, I made mention of my view that $3,000 to $5,000 was the first equilibrium level based on the fundamentals that I saw at the time, and I must pause to say that this is before the global financial crisis. I knew when this happened that, that forecast would be superseded by another one. But as gold was staying in a trading range, I saw no reason to ruin whatever credibility I'd lost by saying publicly when gold was $550 that I saw it multiplying tenfold to just basically keep my mouth shut and maybe allude to it. Well, I'd like to take you to Slide 12 and revisit some of the important fundamentals for gold. Gold is in a major, major, major bull market. And for years, I have said when asked what can go wrong in my thesis. The one thing that has made me nervous is that I couldn't find a reason. This goes back now to 2007, 2008. And if anything, everything that has transpired since then has only affirmed in my mind that there's a reason why the prudent man rule was devised in order to measure the risk of all assets against what was viewed as the safest asset, gold. Now gold is definitely money. People have definitions of what money is, what a currency is. But the reality is that nothing has had a longer pedigree as a historic safe haven. Certainly, those who said that, that no longer exists have missed out on the early stages, the early innings of what I see is gold being in a much bigger bull market than what we've seen. It's proven to be a fabulous asset diversifier. It's been a protection against deflation. It's been a protection against inflation. The emerging market demand has been exquisite. I've said for so many years, whenever you see the Indians and the Chinese competing over who can be the biggest buyer of a scarce asset, you just want to own some of it. Every Indian, every Chinese since the dawn of mankind who has placed faith in gold is making a killing. We call that in psychology positive reinforcement. More importantly, every investment banker who had the guts to say we shouldn't sell our gold or even was willing to bet a body part that they should be buying gold has probably been issued the order of the Fatherland for their prescience. They have seen the revaluation of gold which is so critical for central banks. Meanwhile, on the demand side, you've got all of these tailwinds, but look at what you have on the supply side. Discoveries in gold are so few and far between. Anything of size is rarer than a hen's tooth. And the fact is to be able to take a mine, well, to be able to take a prospect to what ultimately is a producing mine has been variously estimated at between 1,000 to [ 10,000:1 ] against the explorer. Meanwhile, if you are lucky enough, on average, it takes 20 years plus to be able to take that project from a discovery through to a mine. In other words, in terms of supply coming out into the market from gold companies, number one, the horse has already left the barn. Number two, we won't have to see the results of that for 20 years. And unlike hydrocarbons, you have no large trapped spaces where you have the hydrocarbons, but you have to figure out how to get it out. It just doesn't exist in gold. In other words, depending on your point of view, it's either the perfect alignment of stars or it's the perfect storm. One way or the other, I have no doubt that every portfolio manager is going to end up having an allocation to gold. Do I think they're going to go back to 10% to 15% as was the norm through the 1970s? Well, if we even approached a few percent, gold will already probably be 5 digits. So let's discuss what a real bull market looks like and why someone who does have spending can explain his view, I could be completely wrong. It's a forward-looking statement, probably should say, you know, don't listen to what I'm saying, but let's look at the next slide. Let's look at Slide 13. Slide 13 is the Dow Jones since the 1970s. And what you see in that bull market is almost imperceptibly the Dow breaking out of what was a 30-year trading range between $800 and $1,000, breaking above $1,000. Now the old-timers who knew that you go short when that happens, we're blown away by the young people with red braces or suspenders who thought, this time is different. And here's the thing about this time is different. A lot of us will say, yes, when you hear to that, you think of people drinking Kool-Aid except for one simple fact, every reversal is characterized by that time indeed being different. And that's what happened to the Dow in the 1980s. As a curiosity, I want you to go back and look towards the mid-1980s. And maybe you need glasses, but look at that blip, that blip, which fairly is noticeable. That is the crash of 1987, that a lot of us thought was going to be the harbinger of the Four Horsemen of the Apocalypse. That you can't even see it as the Dow marched from 1,000 to a 45-plus LEAP in value over the decades. Now I don't think this is a spoiler alert. It's entirely possible that we will see something similar happening in gold. I think it was announced yesterday that for the first time the gold in Fort Knox is worth over $1 trillion. That's interesting. But what's fascinating is that gold has now surpassed the euro as the second largest global reserve asset. Now many of you will say, well, that's because of the price appreciation. And my answer to that would be, yes, no kidding. However, we really do have to understand that this is a major, major statement about the reappraisal of gold as a monetary asset at a time when we are in the world in unchartered waters, not just in terms of the financial markets and debt, trade and, of course, geopolitical trends, which are unlike anything that we've seen since the end of the second world war. But I'd like to quote Ray Dalio, who I think is really probably the best applied historian of those who are in the financial world. Gold is now the second largest reserve currency behind the U.S. dollar. To understand why, you need to look at the history of fiat currencies like the dollar and hard currencies like gold. The way I see it, we're currently facing a classic currency devaluation similar to what we saw in the 1970s or in the 1930s. In both of those cases, fiat currencies around the world all went down together and also went down in relationship to hard currencies like gold. Now what does that mean? Years ago, when gold still supported a 1,000 handle, Ray Dalio said that "anyone who doesn't own gold either doesn't understand economics or the history of gold." And not wanting to be cast as a gold bug, he put it in a very sober way and just said, "you should own some gold" which, of course, was echoing things that I said, and of course, other great proponents of gold as well. We were hardly unique, but we probably could have fit into a relatively small restaurant or a dining table. But in any event, what we're seeing now is an epic reversal in the same way as the Dow going to $3,000 and having a correction that took it down and anyone who held and just basically said that's a correction, some had the perspicacity to say, I'm going to buy more. But those who understood that this is the natural cycle and held it, have had one of the great generational trades in world history. I believe that the same is taking place in gold itself now. I don't believe that we're in nosebleed territory, of course, we can have a correction. We will, at some point along the continuum. And I would argue people should keep some powder dry and when that correction comes, have the guts, don't freak out, have the guts to add to that position because the next wave up is going to be very, very sweet. This is going to be a very, very long wave in gold. I didn't want to -- I thought about that for years, alluded to it, didn't want to say it until I thought, at least I have the credibility for my first phase to be in place. Now what does that mean for NovaGold shareholders? Well, the great news is that it has the potential to give NovaGold and the very, very few large-scale, well-managed, high-grade, high-volume assets to be able to get by far the premium rating in the space. I do believe that we will see U.S. assets be valued. If they have exploration potential for sure, with 0% discount rates because of jurisdictional safety. The flip side of that as one who did really well in Latin America and Africa is that I do believe that in most countries, certainly those where the rule of law is more of a novelty like in West Africa, which we're seeing, but it's also happening in other places, gold mines are going to be nationalized. And this would be extremely sad. There is nothing worse than all of you who are bullish on gold may even have bought into a great asset. I'm not saying that there aren't really excellent assets in unsafe jurisdictions. But then have it taken away from you because they were great assets in places where the government basically said, wait a minute, you're minting money. You're really minting money. It's not a slogan. We want that. It's force majeure. It's a choice between your shareholders and our shareholders, which is our population. And I tell you there won't be any governments which will have any sway with these governments when they pull off that trip. We've seen it. And no matter what your relationships are in that country, it won't mean anything. Mark Bristow did more to put Mali on the map than any other human. They rewarded him with his fidelity and his charisma, by basically stealing the asset. Mongolia tried to do the same with Bob Friedland. We saw what's happened to companies with assets in Panama, in Guatemala. This is a contagion, it's a disease because when governments, whether they're autocrats or democracies, see someone else being able to get a better deal, they have to be able to respond by giving at least as good a deal to their own shareholders or have the risk of being accused of being in the mining company's pocket or simply not attending to the needs of their people. So again, this is a public service announcement from someone who's been there and seen what these countries are like and managed to get out with 100x returns in silver, in Latin America, in platinum and palladium in Africa. And gold, I sold Kibali to Mark Bristow, wonderful mine. I hope and wish for the best for Barrick in Congo. Also in Pakistan, these are different philosophies, but my attitude is I have adopted Woody Allen's famous line. I'm not afraid of death, I just don't want to be there when it happens. And why would I want to when for all the reasons that Greg Lang is going to be laying out, you have everything that you could possibly want for a high-octane, high-volume, high-grade, low-cost producer in the safest jurisdiction in the world or as we'll see on the next slide, Slide 14, what we call maximum leverage to gold, but in a jurisdiction that will allow you to keep the fruits of that leverage. Now what you see here is with gold at $3,500, you have at 0% discount rate, $50 billion, and that makes no allowance for the extraordinary inevitable exploration upside that we have at Donlin, so much so that I contend that it's entirely possible, forward-looking statement, disregard everything I'm about to say that the next Donlin will be found at Donlin. Only 5% of that district has been explored. Only 3 kilometers of 8-kilometer mineralized belt, the 5% has the 40-plus million ounces of gold that we already believe can add tens of millions of ounces. So when you think that 95% is unexplored, now you understand between that and being based in the United States in one of the safest jurisdictions, you can see why I do believe a 0% discount rate will be justified. But even so, we're nearly $20 billion at an NPV 5 for Donlin. The $12 to $15 target that we set as Phase 1 for the doubling of NovaGold is not unreasonable by any stretch. I hope it will prove to be cautious. One thing that I would say is for us, as investors in this space for over 30 years, you want to seek great assets in great places with management that knows how to build things and shareholders, I must say, who are aligned. And you have all of that in NovaGold. So before Greg goes more granular, this is why you're going to see what we hope to be a steady stream of good news that will more than make up for lost time, but take us on the path to building America's largest gold mine. We are already working with top-tier firms to be able to position us for the bankable feasibility study. The bankable feasibility study will be coinciding with advanced engineering. We hope to begin construction in 2027, 2030 being our target for production. I also have to point out that in the first 10 years, we'll be producing roughly 1.4 million ounces a year. That's why we'll be the largest in the country. But it's entirely possible that we would be able to sustain that production. We start with a 28-year mine life. So for all of the reasons that you see, we are very, very comfortable that this project will be able to be financed sovereign wealth funds. It's entirely possible that governments closer to home may take a very great interest in this strategic asset. They're offtake providers. And of course, we believe that the equity will be a multiple of where it is today when we have the construction decision and that we will be comfortably positioned to be able to pull the trigger and really enjoy the fruits of what we and our native corporation partners and Alaska have been waiting for so long. And with that, I will pass the baton to my brother in arms, Greg Lang. Greg Lang: All right. Thank you, Tom. Next, I'd like to introduce Peter Adamek, our Chief Financial Officer, to cover the third quarter highlights. Peter Adamek: Thank you, Greg. Turning to our operating performance on Slide 17. NovaGold reported a net loss of $15.6 million in the third quarter of 2025. This represents an increase of $4.9 million from the comparable prior year period primarily due to higher field expenses at Donlin Gold and higher general and administrative expenses. NovaGold's third quarter results reflect the company's 60% interest in Donlin Gold following the closing of the acquisition of an additional 10% of Donlin Gold at the beginning of the quarter on June 03, 2025. Donlin Gold expenses in the third quarter and the first 9 months of 2025 were higher with increased site activity in 2025 compared to the prior year when field activities were minimal. General and administrative expenses increased in the third quarter from the comparable prior year primarily due to higher share-based compensation, partially offset by lower professional fees. Turning to Slide 18. Our treasury decreased by $193.5 million to $125.2 million at the end of the third quarter primarily due to the closing of the acquisition of an additional 10% of Donlin Gold. This was partially offset by the exercise of an over-allotment option from our May equity offering providing an additional $25.5 million to the company in the third quarter. Consideration paid and transaction costs incurred totaling $210.1 million for the 10% acquisition of Donlin Gold were capitalized to the company's investment in Donlin Gold. Excluding the Donlin acquisition and over-allotment exercise, corporate G&A costs during the third quarter declined by $0.3 million, and our share of Donlin Gold funding increased by $5.2 million due to the company's increased Donlin Gold funding obligation and increased site activity in 2025. Moving to Slide 19. As discussed on the previous slide, our treasury decreased to $125 million at the end of the third quarter. Following the acquisition of an additional 10% of Donlin Gold on June 3, a reexamination of the Donlin Gold budget was completed by the current owners of the project. Some activities that were originally planned for 2025 were redirected to support work on the bankable feasibility study with no material impact expected on Donlin Gold's previously announced $43 million budget for 2025. As such, NovaGold's pro rata share of Donlin Gold's $43 million budget has increased to $24 million in light of the company's incremental 10% funding obligation starting in the third quarter. Our share of funding for Donlin Gold in the first 9 months of 2025 was $18.5 million, which is in line with the revised 2025 guidance. Also, as a result of the closing of the Donlin Gold transaction, we expect to incur higher professional fees for the year, resulting in an increase of NovaGold's 2025 corporate G&A costs to $18 million from our previous guidance of $16 million. I will now turn the presentation over to Greg to discuss third quarter highlights. Greg Lang: It was a very active quarter for NovaGold and Donlin. In September, we completed the 18,000-plus meter drill program. This program employed over 80 people, including locals from 22 villages in the region that supported drilling, logistics, environmental monitoring and other site activities. We hosted numerous visits during the quarter. We had 5 separate visits. These included tours with investors and analysts. We had an owner's tour with our partners, Calista and TKC, and we've met with people that can provide infrastructure support to advance the project. In addition, Donlin welcomed the Crooked Creek Traditional Tribal Council to visit the site. This is the closest community to the project. Other tourists included representatives from the State of Alaska, the Congressional delegation as well as representatives from Senator Murkowski, Sullivan and Senator Begich offices. Additionally, we finalized more shared value statements with communities in the region, increasing this total to 19. We continue to build on the progress in our aquatic habitat restoration project and improved access for the local resident fish areas impacted by historic placer mining. And lastly, Donlin continued to be active in a variety of community events that celebrated cultural preservation, strengthened stakeholder relationships and promoted the economic and social well-being of the people in the region. Turning to Slide 22. The completion of the drill program, which was expanded to support the new resource model and advancement of the bankable feasibility study reinforces our project's long-term development strategy. This year's program with initial results confirming consistent mineralization across multiple zones including the top 5 intervals with grades ranging from about 4 grams up to 23 grams per tonne. The drilling focused on 3 principal activities: grid drilling to further assist the mine planning efforts; in-pit exploration drilling focused on enhancing the geologic modeling and supporting resource conversion; and finally, geotechnical drilling for pit wall stability and mine design material sites for the access road from the port to the Donlin Gold site. Reclamation of all of the excavations from this program have been completed. Turning to permitting and litigation-related activities. We have submitted the preliminary design package to the state agencies and the process is underway. This will complete the submission for the tailings dam and related water retention structures. In the state litigation, we continue to support the agencies in defending their issuance of the Donlin's water rights, pipeline and 401 Certification. The case is challenging. These aspects of the project have been fully briefed and argued before the Alaska Supreme Court with decisions anticipated in 2026. In the federal litigation, the District Court issued an order on remedy denying the request to vacate the permits and remanding the case to the agencies to supplement the NEPA analysis. The court retained jurisdiction over the case during this remand and ordered the agencies to file updates within the court. We understand the regulatory aspect, Donlin Gold and its partners are committed to supporting the state and federal agencies in the defense of our permits. My next few slides really touch on the highlights of Donlin Gold and its key attributes that make the project unique. Turning to Slide 25. Donlin will be a big mine. It will average over 1 million ounces a year throughout its 27-year mine life with cash costs well below industry averages. Not only is it big, but it's great grade at 2.25 grams, is one of the highest grade undeveloped open pit deposits in the industry. As our Chairman articulated, we had tremendous exploration potential, both at depth along strike and within a district, which is substantially underexplored. Alaska is a great place to do business. It's a state that understands and supports a well-established tradition of responsible mining. Our project is on private land owned by 2 Alaska Native Corporations. We have life of mine agreements in place with both of them. Our federal permits are in hand and state permitting, what little remains is well on track. We're committed to environmental storage ship and the well-being of our people and our communities. We've long enjoyed strong support from our dedicated long-term institutional investors. Donlin is a strategic asset. As envisioned today, it would be America's largest gold mine. Of all the developing projects out in the industry, none have a production profile approaching that of Donlin. Its first 10 years will average 1.4 million ounces a year followed by many decades over 1 million ounces per year. Turning to the next slide. Grade really separates Donlin from the other development gold projects. At grades of 2.25 grams, it's better than double the global industry average grade, which is just barely over 1 gram. It's this high grade that contributes to the low cash cost. This slide depicts the mineralized trend at Donlin. The 40 million ounces are contained in and around the ACMA and Lewis ore bodies. The remaining 5 kilometers of the 8-kilometer trend has gold-bearing intercepts already in place. When the time is right, we will resume drilling a long trend, and we will continue to explore the remaining areas of the property. Yes. Alaska is a great place to do business. While we were up in Alaska with the new owners, the Paulson team, we met with the governor and he reiterated the importance of Donlin to the State of Alaska. Alaska is already the second largest gold producing state in the U.S. with the well-supported and well-served mining industry. It's one of the top jurisdictions globally where it ranks third out of over 8 jurisdictions. The Donlin project is on private land, which is owned by 2 Alaska Native Corporations. Calista owns mineral rights and TKC owns the surface rights. This land was transferred to the native corporations for their economic self-determination and it was designated for mining-related activities. In essence, they have a treaty with the U.S. government that permits mining to occur on what is now their land. Permitting is an arduous process in the United States, one we know very well. Our key federal permits are in hand and the final state permits related to the tailings dam and water retention structures are well advanced, and we anticipate receiving these remaining permits well in advance of completing the bankable feasibility study. Our environmental, social and governance track record is impeccable. We have a well-diversified Board. The Donlin site has worked over a decade without a lost time accident. We value our people and we value the environment and that's reflected in all of our activities. NovaGold has always enjoyed strong institutional shareholder support. And this is true to this day. Over 60% of our shares are held within the top 10. And you can see on the list very well-informed well-seasoned gold investors who understand the depth of the opportunity that NovaGold brings to our shareholders. Upcoming catalysts for the company now that we have the new ownership structure in place, and the project's future is in focus. We are building on this momentum as we enter the next phase of development to maximize the value proposition of Donlin Gold and the exceptional leverage we bring. Our near-term catalysts include awarding a contract for the bankable feasibility study by year-end. The selection process for this is well advanced. We also anticipate releasing the drill results that remain from the program we completed in September. We are gearing up discussions to evaluate potential financing sources. To support these activities, we are building out the project team for Donlin. And finally, we continue to support the state and federal agencies as they defend the permits they issued following a very rigorous process. We continue to engage with stakeholders throughout the state of Alaska, and we remain committed to being transparent in addressing the issues that are important to them. Thank you. We will now open the lines for questions. Operator: [Operator Instructions] The first question comes from Soundarya Iyer with B. Riley Securities. Soundarya Iyer: Congratulations on the quarter. I'm Soundarya on behalf of Nick Giles from B. Riley Securities. Just touching on the exploration drill results, so I mean all of the top 5 drill results are like impressive and above the current resource grade with high-grade intervals up to 23 grams a tonne. Could you provide more color on how these results compare to your resource model expectations and the continuity of the ore body? Greg Lang: Sure. Yes, thank you for joining the call this morning. We are very pleased with the results. A couple of things to point out with them. We were drilling under-explored areas of the pit and we encountered mineralization in areas that were previously modeled as waste. So it demonstrates the potential that still exists in and around the known ore bodies. The best place to look for gold is in a gold mine, and we're certainly demonstrating that. The other important aspect to point out about the drilling is one of the analysts took all of the intercepts and added them up and averaged them and they came out just under 4 grams. And I think when you look at that random sampling of 4 grams over 18,000 meters and you compare that to the average grade of Donlin at 2.25 grams, just random drill results really demonstrate that there's still upside potential at the Donlin ore bodies and that we're further drilling, which we anticipate doing over time, and we expect to continue to increase and enhance our knowledge of the ore body. Soundarya Iyer: Just to follow on that one. So are we planning to update the resource and incorporate these drill results before we put out a bankable feasibility study? Greg Lang: Well, we are -- we've released the results of about half of the assays from this year's drill program. And probably within the next month, as the assays come in, we will release the balance of them. This -- the results from this year's drill program will be incorporated into the geologic model that we use to support the bankable feasibility study. Operator: The next question comes from [ David Lasinski ] with Accurate. Unknown Analyst: My question is to Tom Kaplan. To me, it seems like common sense that if I was a royalty company that I would approach NovaGold prematurely to get the best deal. So I guess my question is, can you elaborate on the interest in royalty companies as far as financing the project? Thomas Kaplan: Well, first of all, thank you for the question. And typically speaking, I would cite Voltaire who said that common sense is not so common. However, the royalty companies do possess common sense. And I think it's very fair to say that should we wish to enter into a royalty or stream or any other instrument of that kind, we are pretty assured that, that would be forthcoming. The royalty companies do exhibit common sense. It's part of our business model. Unknown Analyst: And the second question is, have you contemplated these mini nuclear reactors instead of natural gas for power for Donlin? Have you explored that? Greg Lang: Sure. We've -- when we looked at powering the Donlin project, we've considered all options. And nuclear reactors, that's curiosity, but I think it's still many, many years out into the future. And natural gas remains really the best way of powering the Donlin site. There's a development that we're following with great interest up in Alaska. Next, the President has a keen interest in seeing a pipeline built to deliver natural gas from the North Slope into the Cook Inlet. And the Cook Inlet is where Donlin plans to import their natural gas. So this pipeline, if built, could certainly be very beneficial to the project to have a cheap Alaska-based source of natural gas. So we're following that very closely, and we will continue to monitor developments with the small-scale reactors. But like I said, I think that's many, many years away. Unknown Analyst: Okay. And congratulations on all the work you guys have been doing, and I really appreciate it. Melanie Hennessey: Yes, we have some questions coming in from the line, from the webcast. The first coming in from [indiscernible]. I am so happy that John Paulson has joined. I know that this will accelerate the process. Is there any new projected date for construction to take place? Greg Lang: I think as outlined in our presentation today, our immediate focus is getting the bankable feasibility study contract awarded and taking that work off in 2026. We will complete that work in about 18 to 24 months, positioning us to make a construction decision. Once that decision is made, it would take about 4 years construction to build the site. So that puts commercial production somewhere around the year 2031. Melanie Hennessey: We have a few questions coming in from Chris Gates. Any updates on the tailings dam permit? Do you expect any opposition? Greg Lang: The tailings dam permit, just for background, that's the last remaining state permit. The federal permit authorizes us to disturb land, and that includes the tailings dam. But in Alaska, structures like that are administered by the state and require final engineered drawings before the state will issue the permits for operation. So we always knew it was an expensive permit to obtain because of the geotechnical drilling and the engineering to support the design. So we waited until that was later in the project line. Several years ago, we completed the geotechnical drilling. And we've submitted the preliminary design packages to the state and they're under review. So we anticipate we'll have these permits in hand well before the bankable feasibility study in done. And the state is very familiar with large-scale mining operations, and we expect these permits will be in hand in the normal course of the process. Melanie Hennessey: And then the final question also from the line of Chris Gates. Any updates on the Alaska Supreme Court decision? Greg Lang: No. The cases before the Supreme Court are fully briefed, and we are awaiting decisions. And we are optimistic that we will continue to prevail in the courts as we have every step of the way. But we are awaiting the decisions that could come at any time or it could be 6, 8 months into the future. So we're just anxiously awaiting that. I think that concludes our webcast for the third quarter. Thank you for taking the time to join us. Thomas Kaplan: Thank you, everyone. Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Good morning, and welcome to the Regional REIT Limited Investor Presentation. [Operator Instructions] I'd like to submit the following poll. I'd now like to hand you over to Chief Executive Officer, Stephen Inglis. Good morning, sir. Stephen Inglis: Good morning, everyone, and thank you for attending. Very much appreciated. This is a presentation of the half year results for Regional REIT for the period ending 30th of June 2025. I will run through in a few seconds the half year results and then spend just a bit of time updating you on the progress that is being made towards our strategic goals, which to remind you are increasing net income and growing the NTA by adding value to the portfolio, also continuing to pay a strong and covered dividend and finally, further debt reduction. The business has, in my opinion, a great opportunity ahead as we strategically reposition our portfolio to drive long-term value. As mentioned just a few seconds ago, there will be time for Q&A at the end of this presentation, and therefore, questions will be at the end. If I can introduce those on from the company. I'm Stephen Inglis, CEO. Alongside me this morning, Simon Marriott, the Property Fund Manager; Alistair Hewitt, you can also see on screen the Finance Fund Manager; and Adam Dickinson, our Investor Relations Manager, who will deal with all questions submitted. There has been a huge amount of work undertaken by the team. And as I will demonstrate, a great deal of progress has been made, which will produce increased returns for the company in the short- to medium-term. I'm encouraged that our occupational market seems to have reached an inflection point with yields having been stable during the past half year period. Unfortunately, we have experienced some unexpected tenant breaks, which shall act as a headwind for our income and which directly caused the 1.03% like-for-like net asset value decline at property level at these half year results. Excluding these specific assets, our portfolio saw asset value stability for the first time since before COVID. Because of these tenant breaks, the company has been prudent and guided down market consensus for this year's income. However, we will still hold our dividend in absolute terms, expecting to be 10p per share, which unfortunately shall remain covered. I am, however, confident on the income side, looking just a little further out as we are making strong progress on a pipeline of material new letting opportunities even if their contributions are expected to benefit our next financial year. Further, we are making good progress on the Capex Programme, an essential part of our strategy to improve the quality of the estate and capture the increase in occupier interest we are witnessing. We're also making good progress on sales in a little bit more detail in a few minutes, and we'll be repaying debt. Finally, progress is also being made with our lending partners on our August 2026 debt maturity, which Alistair will discuss later. Okay. So let me take you through the salient points for the half year to 30th of June, following which, as I said, I will spend a little time looking at the key initiatives and providing some insight on what we are seeing in the markets, both occupational and investment and what we might expect to see moving forward. H1 2025 has been about working towards repositioning the portfolio. This includes continuing and increasing the number of Capex projects, increasing sales to reduce debt and selling noncore assets, underperforming assets and assets at the end of their business plan to reduce the void costs of the portfolio. There does, however, remain huge uncertainty created by in part geopolitical conditions and closer to home the perceived shambles of the current U.K. government. And this has played out in the real estate markets and delays the decision-making and little improvement in the investment markets as the number of sellers continues to outweigh the number of investors actively buying. So in terms of the portfolio, we have invested GBP 6 million in Capex in the first 6 months, this compares to GBP 8.2 million in the entire year 2024. There are currently 5 projects on site and a further 18 in transition, and we will commence on as many projects as practical in the coming months. We've sold 5 projects and a further -- we've sold 5 assets rather for a total of GBP 7.3 million. Undoubtedly, the pace of sales completing has been slower than we anticipated. However, there's an element of timing as we have sold a further 5 assets for a further GBP 15.6 million. And there are further 10 assets either contracted or in legals that we should complete between now and the year-end. We had planned at the beginning of the year to sell a total of GBP 40 million to GBP 50 million of assets in this year, and we're already trying to achieve this. New lettings have continued. And while there has been a slow market, we have achieved 20 new lettings in H1. Encouragingly, we are still achieving rentals in excess of ERV. The level of interest from prospective tenants has increased considerably across the portfolio, and this increase in requirements and inspections will flow through to an increase in leasing activity in H2. But as I stated back in March, we do not expect this to be reflected in our numbers until 2026. While EPRA occupancy is marginally up, this is not reflective of true occupancy, which owing to some unexpected breaks and expiries, we have lost tenants and this has impacted gross rental. The reason that EPRA occupancy is up is because of our increased Capex activity to provide better quality space and to reduce void costs. So this is the reason that rental income is down while EPRA occupancy is showing an improvement is the core of the EPRA system. As you can see, earnings per share on an EPRA basis is 5.2p per share, so the dividend of 5p per share in the first half of the year is fully covered. The company will pay a dividend of 10p per share in the year, which we would fully anticipate will be covered by earnings. Net LTV is slightly up, reflective of the drop in value linked to the loss in income and a couple of additional breaks being exercised that will impact H2. Valuation was like-for-like 1.03% down, but 2% down when you include the Capex not yet reflected in the values as projects are midway to completion. I suggested at the full year results announcement that we were at or very near the bottom of the market. If you analyze yields of individual assets and yields have not moved, suggesting the market and the values view at least has bottomed out. I concur with that. It's the income difference that has reduced our total valuation number. Otherwise, we would have been flat as I had suggested in the full year results in March. Gross borrowings have reduced by a further GBP 6.7 million as we continue to repay debt and the company has produced a total return for the period as at the half year of 9.6%, so very slightly ahead of the index. Okay. So looking at the chart on the left, you can see the average rent has been slowly increasing with average office rents now GBP 15.25 per square foot. This will increase further as new lettings are undertaken on better quality space and with the majority of renewals and lettings now achieving in excess of GBP 20 per square foot. Just next to that, you'll see the yields column and the bar chart there. You'll notice that yields from the December '24 and June '25 are almost identical. As I mentioned, these haven't moved, suggesting yields have stabilized and indeed that we have now seen the bottom of the market. Each market is different, but we are seeing a number of larger requirements and interest on some of our larger spaces and that's a slight change from last year when the majority of interest was in smaller spaces. We're not yet convinced this is a trend and may well be disappoint in time, but it is something we will monitor closely as it does influence decisions whether to create smaller or larger spaces for the occupier market when undertaking refurbishment projects. We also remain an office-focused business with offices accounting for 90.4% of the value of the portfolio. And as mentioned previously, 20 new lettings undertaken, which will create a GBP 1.4 million rent roll and importantly, reduces void on these assets, again, achieving in excess of ERV as rental growth, which has -- we have witnessed over the last 3 periods continues. It's a [indiscernible] slide, but you'll see from the slide the activity over the period, and you'll see this is literally from Glasgow to Bristol and many places in between. There is an increase in activity across all of the major conurbations. Just looking at some of the office rents achieved, Milton Keynes at GBP 21 per square foot; Bristol at GBP 20 per square foot; Capitol, Leeds at GBP 24 per square foot; Coach Works, Leeds GBP 30 per square foot. And you can see for that better quality space that we're creating, we're achieving rents well over GBP 20 a foot, and we expect that to continue and continue to improve. Let's now take a moment to look at what's happening in the marketplace from an occupational viewpoint. On the demand side, we are seeing demand improving. You will note the top left, the Big Nine markets have shown the strongest take-up in terms of numbers since 2019 and an average rental growth across the market of 3%. This is in line with what we have achieved on average 4.2% ahead of ERV. Looking at the top right graph, you'll see rental growth in U.K. regional markets, again, outperforming London after a short-term reversal in 2024. Of course, much lower base rents, therefore, any improvement has a bigger impact. On the supply side, we continue to see a contraction both in new developments and the bottom right graph shows this in stark numbers, but also total stock repurposing as many office buildings are repurposed for alternative uses. And when combined, this will lead to a supply issue. So little in the way of new development coming on, you'll see the numbers falling dramatically in terms of deliveries for '26, '27, '28 and literally nothing coming out '29, '30. And if you think that from start to finish on a new development, it's probably in the order of 36 months, we will see a period with little or no new space in regional markets being delivered. That combined, as I say, with continuing repurposing of buildings that have reached the end of their economic life, and we will see further contraction in the supply. I think it's highly unlikely we'll see any new development in the short term of any scale, just given the fundamentals of that market, increasing costs, a lack of available finance and the relatively thin investment market, all makes it extremely difficult to make financially viable developments. My development colleagues tell me that we need to achieve somewhere between GBP 55 and GBP 60 a square foot for it to be a financially viable market. This will lead to an increase in rental growth on existing good quality stock. And this will accelerate further when combined with EPC requirements, the closer we get to the next requirement in 2027 and more specifically, the requirement for EPC A or B by a deadline in 2030. As part of the asset strategic review, we undertook a segmentation exercise, looking at the assets we want to retain, referred to here as Core and Capex to Core. And those assets we will dispose of being the right-hand 2 columns comprising of assets at the end of the business plan, nonperforming and sales post value-add initiatives, which we hope to achieve increased pricing based on suitability for alternative uses. So in effect, we draw a line down the middle. Everything on the left, we want to retain for longer-term rental growth. Everything on the right, we want to sell in terms of both current sales and value add, which will be longer term. And that splits quite nearly to 75% we want to retain, 25% we want to sell by value. If we then look at the occupancy levels of the various tranches, you know the core portfolio on an EPRA basis just under 88%. Capex to Core just under 80%, but that's obviously excluding those under refurbishment, the number is closer to 65% in terms of true occupancy. And then as you'd expect, much lower occupancy numbers in terms of the value added 65% and the assets in the current sales at 55%. So these are assets not contributing in a positive way to income. Part of the strategy clearly is to reduce gearing and undertake sales to reduce overall debt and to sell more noncore assets to reduce void costs. As mentioned earlier in the period, we sold 5 assets for GBP 7.8 million. This slide was produced obviously for the half year, so there's a further 4 at GBP 6.8 million. You have read that we sold a further asset last week at GBP 8.8 million. So as mentioned earlier, we have sold now in the order of GBP 23.2 million or thereabouts of assets. A further 10 assets totaling over GBP 40 million either contracted, agreed or in advanced negotiation and could well complete before the year-end. Certainly, we would anticipate reaching our GBP 40 million of sales in the year and somewhere between GBP 40 million and GBP 50 million, which was the intention at the beginning of the year. Now looking at Operational Capex, we continue to make progress. In 2025, we've completed 9 projects, a further 5 on site and a further 18 that are various stages of advancement. We're committed to bringing forward as many projects as practical as soon as we can to ensure that we give ourselves the best chance of increasing occupancy given the improving leasing market and move to quality that we're witnessing. Just a reminder of our strategy in respect of the assets identified as potentially suitable for value-add alternative uses. Just running through the stages, obviously, feasibility studies in the first stage, looking at the financial feasibility of each site. Then assuming they are financially feasible, we undertake planning initiatives for change of use. That could be pre-planning inquiry level or planning in principle or indeed a full planning consent. Each stage of that produces an increase in value. And of course, we're looking to dispose of these. We are not intending developing directly, therefore, we will be looking to dispose of these once we have achieved some form of planning uplift and therefore, valuation uplift. Just having a quick review of these 2 projects. The one on the left, we announced last week as a sale, sold to one of the French SCPIs. This is a refurbishment project that we refurbished around the sitting tenants. So we have obviously increased EPC from D to B and the tenant on the basis of our refurbishment works agreed to sign a new long-term lease. So the reason for the sale was twofold. One, it generated a profit that wasn't being realized in terms of valuation, values and the markets quite often have different views. Secondly, achieved part of our strategic goal to sell at the end of business plan and the need to reduce debt, and Alistair will talk more about the debt facility this is in a few seconds. On the right-hand side, again, this was in our full year results. You see the works have been completed and again, taking improvement to EPC and obviously, increasing the value by undertaking the Capex. So GBP 700,000 turned into a value improvement of GBP 1.6 million. Look at the next one. This is, again, just a refurbishment project we undertook increasing rents from GBP 17 to GBP 23 per square foot, EPC improvement D to B, and this was led during the improvement works to Harron Homes on new 10-year lease. And again, you'll see the improvement in value. One more Thorpe Park, Leeds, very strong business park. Again, we've improved the rents here from GBP 22 to GBP 24 per square foot. We've taken it from a D to an A grade, and you'll see the likely value uplift of GBP 1.35 million. At the moment, we've been attributed GBP 1 million by the valuers as the final space is under offer, not quite signed in the half year, we'll see the additional improvement in value once that lease is signed. One more on the Ipswich, again, EPC D to A. And by undertaking these works, we have then been successful in leasing up 1 of the 2 buildings we have in Ipswich. The other building is likely to go for alternative use just given limited demand in terms of the Ipswich office market. And one of the Value Add assets, this is the largest urban development site that we have in the portfolio, [indiscernible] in the middle of Leeds and lots of redevelopment ongoing around. This has been identified as suitable for beds and likely to be residential of up to 1,000 additional units. So a very large-scale site at the moment is a distribution facility for Asda, although they use it as a Asda training center for the supermarkets. And we have 5 office buildings surrounding that. So the entire island site. The bottom right-hand thumbnail is a building we bought in. So the only acquisition we've made, which was to complete the development site, so only part of the development site we didn't own, and therefore, it was prudent for us to buy that. ESG remains a very, very important part of the overall business, specifically EPC ratings. And despite the sentiment in some parts of the U.S., it does continue to be very important in the U.K., both for occupiers and investors. You may well be aware of the EPC targets and deadlines, but the entire market is continuing to focus on EPC A or B by 2030. We previously reported estimates that in terms of the regional U.K. office market, only 20% to 25% of assets conform to those standards. You'll see there in the slide, the latest research from the British Property Federation estimates that on an overall basis, only 17% of commercial buildings currently comply with the 2030 target. So only 17%, 83% of existing buildings in the commercial world do not comply to that standard. I mean, regardless of the various parties' estimates, this remains a massive issue for the industry. I'm pleased to say we continue to make progress and currently have just under 60% of our portfolio complying with those EPC A or B and obviously, with our continuing Capex and refurbishment programme have plans in place to improve this. And then with what I've just commented on, we continue with new initiatives and some further improvement in sustainability goals. In terms of the solar, we announced this some time ago that we'd enter into a joint venture. That's now done, and I'm pleased to announce that Phase 1 has been completed with Phase 2 now commenced. None of these actions on solar have yet been included in upgrading our EPC. That will be done when buildings are reassessed. Also, I would add the refurbishment projects we've completed are also not part of the current EPC numbers. Again, those buildings required to be reassessed. And once they are reassessed, they will have an upgraded EPC rating. Our 4D installation programme, as you'll see, is so far installed at 41 locations with the next phase about to commence. From our very initial monitoring, the efficiencies identified on just 3 properties are in the region of GBP 123,000 per annum. This is very substantial when you look at it in context of only 3 assets. The benefit is for the asset. So in some instances, this will be shared between the occupying tenants and the landlord, but nonetheless, is a step in the right direction and also improves our EPC and ESG credentials. 4D is effectively a sophisticated monitoring system of energy systems that improves EPC rating, but does, as you will see from above, the GBP 123,000 produce financial benefits too. We're rolling out car charging points across the portfolio as required in some instances by tenants looking to occupy. But generally, across the portfolio, we will be increasing the number of car charging points as EVs become more and more popular. Introducing reflex, I mean we have had an element of flexible offices in our portfolio for some time, some managed by third parties and various different guys within the portfolio managed by ourselves. We were keen to identify the best way for us to be in the flexible market. Certainly, when we have used third parties, it works for the third parties, but not for us as a landlord as all costs are passed on effectively to the landlords. So overall rentals always underperform what the original business plans have suggested. But we 18 months ago, brought in a consultant, formerly a Chief Executive, NewFlex to look at the portfolio -- our own portfolio, what would best suits our portfolio. And I'm pleased to say that having run various trials, we have identified reflex, the pilot at Glasgow as being the best option for us. The main difference is that we are still providing high-quality flexible space and all of the niceties you would expect an office from fresh fruit, breakfast, coffees, et cetera, but staff-free. So asset-light allows us to create smaller spaces as well as larger spaces. The problem with having fully staffed offices is the cost of those staff, and therefore, you have to have larger spaces. Our idea is that we can have this as a flexible approach to smaller and larger spaces. And effectively, it works exactly as you would expect in a normal office where things are key coded. We can use technology for the booking of meeting rooms, technology for turning on and off of lights and heating, and other services. And this is a far more efficient way of running flexible office space. With our intention of creating all things to all people, we want to be able to create one desk for 1 day or 100,000 square feet for 10 years. But you'll see the interesting numbers in the bottom right-hand corner, pilot rent there. We're achieving GBP 45.50 net against our traditional rent of GBP 17.50. Now the pilot site was 100% let and therefore, has gone very, very well. But clearly, this model works on anything of 60% occupancy and above with a market rate of 85% occupancy. So it could be very profitable for us. We've identified the first nine sites 28.53 and will be rolling this programme out over the course of the next 24 months. Some key metrics. I mean this is a summary of what we've discussed earlier just there in a simplified form for [indiscernible] a look at. Okay. Alistair, can I hand over to you to talk about the debt and specifically the August '26 expiring. Alistair Hewitt: Yes. Okay. So this slide shows the breakdown of facilities as at the 30th of June, 4 facilities with total debt of GBP 310 million. Stephen mentioned, we repaid GBP 6.7 million in H1. To date, we've repaid [GBP 6.4 million] in H2 from sales with another GBP 8 million to come from the sale that was published last week and further repayments to come from sales that will happen over the next 2-3 months. If all the sales complete that we anticipate completing this year, the LTV should move below 40% by the year-end. The key focus just now is on the refinancing of the facility we have with RBS, Bank of Scotland & Barclays, which is the first one in that row table -- sorry, first row of that table. Current balance is about GBP 96 million. This facility has been the focus of a lot of sales activities, and we anticipate the balance on refinance to be near GBP 80 million, and we're targeting refinancing that by the end of this year. We're not anticipating a big move in the margin. You'll see the margin there is the 2.4%, but we will see an increase in the net cost of funds because that facility at the moment is fully hedged until August 2026. The cost of funds, the hedged cost of funds is shown on the table there just under 1%, but that will move to near 4% on the refinancing. So that will increase the cost of funds in that facility by 3%. And that would increase our weighted average cost of debt from 3.4%, which is shown in the bullet points at the top of that table to 4.2%. As I said, it is hedged until August ’26, so when we refinance it, we have the option of the opportunity to keep that hedging in place to retain lower interest costs for the next 10 months or so or we can break that existing hedging, which will generate just under GBP 3 million of value for us, and we can use that value to either buy down the rate for the refinance term or just pay on market rate from day 1 and retain those funds for further Capex investment and working capital. I think that's all I have to say, Stephen. Stephen Inglis: [indiscernible] some questions on this later, but thank you for this now. Okay. So just a reminder of our strategic priorities and repositioning of portfolio and as such, reposition the attractiveness of the company. We remain committed to reducing debt, as Alistair just said, and aim to have debt below 40% in the near term, hopefully, by the end of this year. We continue to focus on driving income at headline level by creating better quality spaces and driving leasing, but also on a net basis by reducing void costs by a combination of new lettings and sale of lower occupancy nonperforming assets. We continue to improve our EPC numbers and our overall ESG rating. We are pursuing opportunities to add value in some of the assets by fully investigating change of use options. And we are, of course, committed to paying an attractive fully covered and sustainable dividend, so they are the key strategic priorities. Okay. So now I have provided you with where we are currently. Hopefully, some insight as to the immediate outlook and longer-term outlook. What I would also like to say is that I am for the first time in a long time, feeling far more optimistic about the outlook for the office market generally and specifically for regional REIT. And that optimism has come really because of the improvement in the occupational markets and my strong belief that we will have an issue in terms of the supply-demand dynamics for regional offices coming down the track given current requirements of occupiers. And that requirement is for grade A space conforming to EPC A and B. And that's exactly the type of space that we are providing for occupiers. Second part of that optimism is we have seen stability in the valuation market. So while you are seem to have settled on the basis of yield, so we are at the bottom of the market, in my opinion. We did see, of course, consistent falls and increasing yields on asset values right away from 2020 COVID until December '24. June '25 being the first time that we saw stability. So that, again, gives me a little bit of optimism for the future. And some of the key components to that optimism also previously predicted are now becoming a reality. I would say that we're seeing the majority of people back in the office for the majority of time. That's now beginning to be more widely seen. We have, for some time, looked at our own numbers, and we're back to pre-pandemic occupancy numbers on average 4 days out of 5 in the office a week across our regional portfolio. I know there's various differences in the Southeast, specifically London. But I think we are seeing more and more people coming back. A move to better quality space. I've used this many times, but why would we expect people to work in an environment worse than their own home. So the majority of demand is, as I just mentioned, for Grade A space conforming to those EPC ratings. And that will continue, that flight to quality will continue. And that quality doesn't mean ivory towers. It doesn't mean brand new glass buildings in the city of London. Just bear in mind that, that is only a small percentage of occupiers who require or prepared to pay for that and likewise in the regional markets. The supply would reduce given the slowdown in development and demolition repurposing of existing buildings for alternative uses. I've touched on this earlier, but this is happening and has been happening for some time. If you have no new supply coming into the market and supply being repurposed, then clearly, total market reduces in size. Therefore, it's all down to demand. And therefore, what is going to happen with demand? Well, we're seeing upsizing in many instances of companies who had previously downsized, so that's encouraging. And we're seeing lots of new requirements come from specific industries, technology industries, defense, a big one, where we're seeing a number of inquiries, energy, number of inquiries. So we are seeing demand from certain sectors in the market increasing. I thought there would be a demand-supply imbalance going forward, and that will increase, I think, as we get closer to 2030. And that increase in that supply-demand imbalance will create increasing rental growth. I do suspect that we will see -- we've seen rental growth over the last 3 periods. In any event, I think that will increase in scale as 2 things happen. One, we'll have more demand for less space and just the quality of space will not be available to occupiers. Refurbishment and development stripping back to shell would become more prevalent. I think that is going to be the case going forward. I think there will be restrictions both in terms of financial restrictions and making things financially viable and in terms of planning, trying to get carbon footprints to a sensible level. And therefore, I think refurbishments will be the way forward rather than new builds in many instances. And then it would take some time for investors to show interest again in offices and we need to see sustained improvement in the occupier demand to attract more investment. I think that remains my position. I don't see -- while I'm seeing good strides and encouraging signs on the occupational market, I don't anticipate a huge improvement in the investment market until such time as we've seen periods of sustained improvement from the occupational side. I think that's what we'll have to see to attract in any substantial investment. We are seeing slightly more interest from investors, but these are not sustained. These are one-off purchases in many instances, not people coming in wholescale to our sector. But I do anticipate that will happen, just it will take some time to come through. So I think that's the end of what I'd like to say this morning in terms of presentation and obviously very happy to take any questions. Operator: [Operator Instructions] Recording of this presentation along with a copy of slides and the published Q&A can be accessed via investor dashboards. As you can see, we have received a number of questions, both pre-submitted and throughout today's live presentation. And Adam, if I could hand over to you to chair the Q&A, that would be great, and then I'll pick up from you at the end. Adam Dickinson: Thanks Alexander, thanks Stephen, for that comprehensive presentation. We see quite a few questions. I just kind of group them together if I may. The first one, so the sale of Clearblue, which was announced last week, was at 11% premium. And should we expect similar pricing across the pipeline? And what does that mean for the debt reduction? Stephen Inglis: Yes, I think we can deal with 2 questions here at the same time. So selling prime assets with good rent, but presumably is also reflective of the Clearblue deal. I think I mentioned in the presentation, that asset was at the end of business plan, which was to improve the quality of the building we took it from EPC D to B and sign a new 10-year lease. That clearly, at this point in time, add value to the market, and we're obviously looking to reduce our debt ahead of the refinance [indiscernible] 40.28 mentioned earlier. So 2 reasons for selling, one, end of business plan; second, to reduce debt. On the 11% premium, should we expect similar pricing across the pipeline? Well, the vast majority of assets we're selling just now are the poor-quality assets, those assets with less income. And as far as I'd like to think so, we have been able to achieve at least value. And indeed, of the GBP 50 million of assets that we are likely to sell, if not by the end of this year, early part of next year, they will be slightly ahead of value on current pricing. So we're hoping to achieve just ahead of value on the poorer quality assets. And of course, the intention is to retain as many of our higher growth assets, better quality assets as we can. Adam Dickinson: Thank you. Another question just in terms of disposals -- most of the assets seems to be -- disposal seem to be in Scotland. What has changed fundamentally in Scotland since you initially built the portfolio? Stephen Inglis: Yes, that's not deliberate. It's just coincidental, so there's no real political change in Scotland, as you have noted. The market in Scotland behaves very, very similarly to those in England. These just happen to be coincidence that we have a number of small assets in Scotland that we want to sell, so it's the numbers rather than the scale. So the numbers of assets are higher rather than necessarily the value -- total value, so no changes to speak of just coincident. Adam Dickinson: In terms of the assets that have been disposed of, the size of the assets is that having any bearing on the disposal? Stephen Inglis: Yes. I think the more liquid assets are smaller or assets with income. So Clearblue sale, we had some decent interest and obviously achieved a decent price. Most of the assets we're trying to dispose of are at the smaller end in terms of by value, sub [GBP 5 million]. And that market has a bit more liquidity given that it's not as reliant on debt. A lot of private individuals, small property companies, small-scale developers buying from us at that end and [indiscernible] occupiers. So I think you'll continue to see the majority of sales being of small lot sizes. Adam Dickinson: And in terms of the current discount to NAV, what do you think is causing that at the current time? Stephen Inglis: I think we've got 2 discounts. I think we have a REIT discount. And if you look across the REIT sector, the vast majority of REITs are trading at a discount. That in part is down to the generous investment market looking for different types of investment. A lot of money has come out on the stocks and that has created that reduction and size and scale of the discount. And then for us, we've got a second discount because we're in the office sector. I think part of it definitely is sector driven. I think the first thing in my opinion that will happen is that sector discount will disappear. I think as the office market continues its strides forward from a very low base, I would add, I mean, it has been the [indiscernible] of the marketplace since COVID, but there's definitely signs of improvement. I think a lot of people are now taking note of the office market and all of the doomsday scenarios that were muted at COVID are one by one disappearing in terms of return to office and indeed office space being required. So I think that second discount will disappear first, in my opinion. And then we have a general improvement in market sentiment for the REIT discount to improve. I think part of it is that investors don't truly believe the values. And I think in our particular case, I think our values are understated. They've been hit very, very hard. But nonetheless, I can understand investors looking at stocks that have intrinsic value such as real estate stocks and saying, are these values actually true values. In the absence of any real investment market, that's difficult. As investment markets begin to improve and as those values are demonstrated to be real, then you should see a discount closing towards NTA. Adam Dickinson: And in terms of -- we recently saw you acquire some shares in your own name, and we've seen in the past that David Hunter, the Chairman acquire shares in his name. Is this a confidence in Regional REIT. Stephen Inglis: Yes. It's as simple as that. I wouldn't -- I mean I already -- I'm a decent shareholder of my family; therefore, we took the view that as a family they offered a very, very healthy dividend and that the discount is far too large. So from a total return point of view, you've got a great running income return and you would hope a capital upside to come as the discount begins to close. So yes, I think it's exactly that confidence in what we're managing. Adam Dickinson: And more on the occupational side questions. When do you think occupancy will start to increase again across the portfolio? Stephen Inglis: As soon as possible, I think we -- I mentioned and alluded to in my presentation there that we are in discussions with a number of decent sized occupiers ranging from 20,000 square feet to 150,000 square feet. One or two of those landing makes a substantial difference to the occupancy of the portfolio. Added to which we are selling down those assets, which are on the whole, the smaller assets, which are poorly occupied. So the combination of those sales and hopefully more letting activity, particularly of the bigger spaces will make a substantial difference to our occupancy. And that increased income will go quite some way to offset the increased interest costs that we're going to have on the refi. And that's a key part. It's fine getting rid of void costs that get rid of half of your issue. But if we can let space, it's almost double and let me explain that. So for every pound of income, we receive roughly GBP 1.85 to the bottom line because we're then getting rid of the void costs that we incur as a landlord on vacant space being insurance service charges and all other costs, so we have substantial cost of landlord making up about 85p. And actually, the building I'm in just now, we undertook a 14,000 square foot letting earlier this year, and that was almost pound per pound. So GBP 22 a square foot rent, GBP 20 additional income to us on the void cost. So that's worth GBP 42 to us in terms of letting. So that's -- if we can lease up space, it has a double effect. If we sell space, obviously, we get rid of the void costs, so combination of both will improve the overall occupancy of the portfolio. I can't hear you, Adam are you on mute? Adam Dickinson: Thank you, Stephen. That covers the questions. Alexandra, if I may hand back to you. Operator: Yes, of course. Well, thank you very much for answering those questions. Of course, the company can review questions submitted today and publish responses on the Investor Meet Company platform. Just before redirecting, investors provide you with their feedback, which is particularly important to the company, Stephen, can I just ask you for a few closing comments? Stephen Inglis: Yes. Thank you very much everybody for attending this morning. It's very much appreciated. We obviously underwent a restructuring of the business last summer with REITs, which has put us in a position now to go forward with our strategic priorities, and we're making good progress against those, so the priority for this year was sales and reduce debt, look at an increased net income and those void costs will come down hopefully before the end of this year and get LTV to sub 40%, all of which we would hope to be able to do prior to the end of this year. So I think we've made good steps forward, but we've got to improve upon that. The benefits of the Capex programme, I think I said in March, I did say in March, will not really be seen until 2026. And the reason for that is by the time you go on site, undertake the works and then let the space, there's just a time frame there and therefore, any new income really will benefit us in 2026, not 2025. So that remains our position. So that, I think, is all I'd like to say. So again, just wrapping up, thank you very much for attendance. Operator: That's great. Well, thank you once again for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order the management team can better understand your views and expectations. On behalf of the management team of Regional REIT Limited, we'd like to thank you for attending today's presentation, and good afternoon to you all. Stephen Inglis: Thank you very much.
Unknown Attendee: [Presentation] Please put your hands together for our group CEO, Graham Lee. Graham Lee: Sure. Thank you. Good morning, everyone. It is a pleasure to be here with you to share the results of our last 6 months. It -- is I mean this is quite something for me to be standing here. It's been 2.5 months since I've had the privilege of being CEO, and I have loved every single minute of it. And the reason for that is all of you, every single one of you. All of the 17,000 people in the branches -- from the branches to the [ BSE ]. From the newest consultant through to our Board of Directors, thank you very much for your support for me. Thank you for the excellent work that you've done. And thank you for continuing to strive to be better for our clients. It is more than 20 years since I joined Capitec. And in that time, there's a couple of things which have always been true. We've stayed true to our fundamentals, and we've always put our clients first. So in the spirit of that, we are now up to 25 million clients. It comes from our personal banking, that's 24.4 million. All of our merchants and core businesses as part of Business Banking and the 0.25 million clients contributed by AvaFin, but together, we're now at 25 million clients. Now despite the huge denominator, we've still grown that by 8%. But there were a few exciting segments, which have grown even more steeply, and they give me great optimism for the future. They include young clients. So we're doing very well in youth and also in our clients who are higher income owners, earning more than ZAR 50,000, that's up by 24%. Even more importantly are those clients who use us the most. So our app clients who go on to our app every single month, every single day even who buy our digital products. And most importantly, our fully banked clients, up by 11%. Now that's a really important number because that 38% of our clients contributes roughly 3/4 of all of our income. And then there are two areas which I'm particularly excited about. And that are -- those are Capitec Connect and our core business offering, our business solutions to help grow South Africa. And if you look at Capitec Connect, that's grown by 76%. Now I just need to clarify something here. We've changed our definition of an active client from a 6-month active definition to a 3-month active definition, but both of them grew by pretty much the same rate. We did that to simply be more comparable with the rest of the market. And then in GlobalBiz, our GlobalBiz clients are up by 57%, which is fantastic growth. Our innovation for our clients has resulted in headline earnings of 26% increase, ZAR 8 billion. Now, this is balanced through all parts of the business. If you take a very traditional view of a bank's income statement, you look at the net interest income, and that's gone up by 27%. Strong growth in book, strong growth in a healthy book. And that is at a credit loss ratio of 7.9%. Now that's including AvaFin. AvaFin we're comparing 6 months this year to 4 months last year. So the sales of them has gone up more steeply. If you take AvaFin out, Capitec is at 6.8% credit loss ratio, which is down from 7% this time last year. Then if you look at our noncredit part of the business, all of our transactions connect, VAS all put together as noninterest revenue that's grown by 19%. And that means that of all of our income from operations, 65% is -- comes from business other than credit. Those Fintech businesses, what we're -- what I'm now referring to, strategic initiatives is very much an internal term for ourselves. But looking out there in the world, the businesses that are largely fintech are fintech, our value-added services, the digital experiences that our clients love so much in news daily as well as Capitec Connect, that's gone up by 40%. It's incredible growth. Our net insurance income is up by 45%. Now there are some adjustments that need to be made in order to get a like-for-like growth. And the reason for that is since the transfer of business from ourselves and taking on all of the funeral business onto our own license, there are some movements in the income statement. Where once the interest tax and so forth was netted off in the sale, we now gross them up both in the -- above the line of the income as well as in the tax. But I'll be unpacking that for you a little bit later on. OpEx for the entire group is up by 16%. And again, excluding AvaFin, it's down, it's a little bit lower, it's at 14%. And all of that means that we grew our return on equity to 31%. Now during the year, beginning of the financial year, we simplified and reduced our fees. So one of the things I'd like you to keep in mind is when considering results, remember that despite the fact that we gave back, not only did we not increase our fees and charges by inflation, we actually reduced them. And the net result of that was giving back ZAR 203 million in fees to our clients. So our financial results, the growth is on top of that. Looking at the income statement in detail, there are a few things that I'd like to highlight on income statement, excluding AvaFin. So what you see up on screen right now are the bits just without AvaFin. So looking at the South African credit business, we grew our net interest income by 23%, and that's on the back, like I said, of growth in a really healthy book. Our total net insurance income of 45%, you need to adjust for the sale, tax, you need to adjust for the profit sharing from Sanlam and you need to adjust for the finance charges. So that is actually at a normalized rate of 20%. OpEx of South Africa alone is 14%, and that taxation line goes up. The reason that goes up is because of that gross out from the sale in the insurance business. So the tax comes down there. And for the next year or 2, it will look a little bit higher. Overall, growth for South Africa is at 25%, and AvaFin contributes nicely and lifts our overall earnings to 26% growth. And you can see that in the changes to the earnings contribution. If you look back a year, to August 2024, our Personal Banking contributed 49% of the overall income. AvaFin was only 1%. Business Bank 3%, and you can see that Insurance is 24% and all of our Fintech was around about 23%. In the last year, AvaFin has more than doubled to 2% contribution. Our business banking is also nearly doubled to 5% of the group contribution now, which is fantastic, Insurance at 26% and Fintech, 26%. But the other point that I'd like to make is we continue to grow our physical network. We continue to grow the physical number of branches and our cash distribution, the physical number of our cash devices because our personal bank, all of the clients and distribution and data from that personal bank, they are the launchpad for all of our opportunities. If you take a step back and look from our data, take a view of the South African economy, it is -- well, there are some mixed signals in the broader economy, okay? There are some concerns about rising retrenchment, particularly in some of those industries that are more affected by international trade policy, but this is balanced by optimism. It's balanced by optimism in some of the green shoots that we're seeing in the cooperation between business and government, which is having positive outcomes. However, I'd actually like to stress something far more interesting, which is that with our 24.4 million Personal Bank clients and the more than 300,000 GlobalBiz and merchants, we have very rich data about South Africa, about the entire economy. Economic growth for the whole country is not where we want it to be. Some of the indicators are negative, but we have the data to be able to see and take advantage of the opportunities. And one that I'd like to share is people earning in the emerging market. So what you see in the graph on the top right is the growth in people. This is our fully banked clients who earn a salary, and we've grown them by 7% compared to those people who are entrepreneurs, who have multiple income, who are hustling. And the number of those clients has grown by 15%. Then on top of that, if you take a like-for-like sample; August last year, and August this year, that same set of clients and look at the growth in their income. Salary earners, their income has grown on average by 6% and that's to be expected. But those same entrepreneurs and hustlers, their income, the inflows into their accounts has grown by 15%, more than double, almost triple. And that really is good news. Card machine flows alone to those people has gone up by 26%. Moving on to our launchpad, Personal banking. There's continued diversification in our income streams. There was a time 15 years ago when we were largely a credit business. Now we are so much more than that. Credit income, though, continues to contribute strongly. That's up 24% in the last year. Net transaction income is up 6%. Now this is net transaction income if you strip out all of the new innovative types of transactions that we're doing through VAS and Capitec Connect, and they've grown by 40%. Now that 6% number might seem subdued, but there are a few things that you need to take into account. So the first is we reduced fees. So that's 6% growth, the first adjustment you need to make in order to get a real understanding of what our true growth rate is, is to add back the fees that we reduced it by. Then we continue to encourage our clients to move from getting their notifications on SMS, which is a fee-bearing transaction to an in-app message. It's safer. It's faster. It saves them money. It's good. It's good for our clients, and they have continued to migrate. And then more and more clients are using the send cash functionality because it's slick and useful and cool to do cash transactions for themselves. So you see a reduction in the number of clients using their card and more clients using the digital mechanism for getting the cash withdrawal. When you account for all 3 of those things, our growth in net transaction income is actually 12% and the growth in volumes is 20%. And now all of those things are positive for our clients and intended. They're part of our strategy. Digital volumes continue to grow really strongly. So cash overall, pure cash at the ATM with a card has grown only by 3%. Now if you consider that relative to how fast our clients have grown, you can see clearly that cash per client continues to come down, and that shift us towards all form of digital electronic payments and cards. Digital payments, including Capitec Pay is up by 28%, and card payments have also grown strongly from a big base by 23%. Now unpacking that just a little bit more. If you look at physical card alone, that's up by 19%, but the dramatic change has come in the use of pay wallets. So Apple Pay, Garmin Pay, Samsung Pay, that's gone up by 131% in the last year, really strong client uptake of a form factor, which we know they like very much. If you look at e-commerce, so that's all of the transactions made to buy something online, including and led by Capitec Pay, that's gone up by 35%. Our pure VAS transactions, buying airtime, electricity, our new advances, vouchers, all manner of those digital transactions, including buying new license, they've gone up by 20%. And pure electronic payments were up by 23%. Strong growth across all types of digital payments. And then I would like to take just a minute to do some marketing. If you are traveling internationally, and you do not have a Capitec card, you should get one. We have recently, and recently means from this morning, dropped our international card payment fee for physical card overseas, down to 0. We have never charged an FX margin. And given that our clients in the last 6 months have done more than ZAR 1 billion of physical transactions overseas. It means that compared to what we would have charged them if we acted the same as all of the other card providers, we've saved our clients ZAR 25 million. Focusing on credit for a little bit. Many of you who've known me for a long time, know that I spent a large part of my career at Capitec in credit. And I did come back into my office a month or 2 back, and there was a chocolate on my desk with a small sign saying, my first love is credit. And you're right. Okay. Credit sales growth. So in the Personal Bank, we've had really strong growth in our loan disbursements. That red line, you can see a clear step change. So we are hitting record levels, but we're doing so without taking on additional risk. And what I mean by that is we have not changed our risk appetite. That does not come from us being willing to take on any form of less healthy or worse book, rather it comes from excelling in our credit operations, in using our data and our algorithms to better create personalized offers for our clients and messaging for the clients, and that's increasing the volume of applications. The actual approval rate has remained stable as our risk appetite has remained stable, but bringing our clients in more through the right messages, serving them in more locations, greater distribution and doing so more efficiently, that's what's creating the lift. Particularly, if you look at clients earning more than ZAR 50,000, really strong growth in that as well. 20% of total sales now, more than ZAR 6 billion to those higher income -- higher earning clients. As I've said now several times, it's a healthy book that we're growing at. So we've grown our Personal Bank lending book by ZAR 7.8 billion. And in doing so, we've done it in such a way that we've reduced the roles to default. And we've reduced the roles to debt review which means that both our coverage ratio, our ECL, and as well as the credit loss ratio have both come down exactly as per our plan. Looking at where that credit is coming from, first of all, we've grown really strongly in credit cards. Now you may have heard in my voice earlier that we are proud of the value that our credit card gives to clients. In addition to that 0 currency conversion fee, we don't charge a margin. Every single credit card client gets a gigabyte every month as well as 1% back on all of their spend. And because of that, we're now attracting more and more clients, including more higher income clients. Purpose lending is contributing beautifully as well. We have improved our distribution. We have signed up more partners and working closely with those partners, embedding a better experience of providing credit where the clients need it at the point where they need that solution and then working with them to improve the experience. We have dramatically increased our purpose lending. And this is lending for a good purpose. It has a lower cost to the client. It is a lower risk to us. And all in all, it's a very good part of the business for us. And then clients continue to operate more remotely. They continue to use the app and they continue to use Capitec Direct, and we've seen really good strong growth there largely through data-driven messaging, the appropriate message to the client at the appropriate time. We are adding on more credit solutions. So I mentioned earlier that we've had a really big take-up in our credit card from people earning above ZAR 50,000. But those are not the only clients who want to give those fantastic offers too. The free data and the interest back and the no charges, we want to make as accessible as possible to everybody. And so we have added on additional credit card to make our Capitec credit card more accessible to a much broader set of the population. It is lower exposure, and it's fast to repayment. And what that does is it instills discipline and helps people to build a credit score for the future. More than 65,000 of those cards were given in the 6 months till August. We're also working more closely with our partner SA Home Loans to provide better home loan for our clients. Since February, we granted ZAR 720 million. And we are going to extend that partnership into a new special purpose vehicle to give a better offer to our clients in the coming months. And then, all of those entrepreneurs around the country, they don't just transact. They also need credit to grow their businesses. And we've been enabling that through our multiple income offer, which has grown very strongly, ZAR 984 million, as well as our new repairs you earn. So understanding the variation in flows that entrepreneurs have throughout a month and being able to provide a collection mechanism suitable for them opens up accessibility to far more clients. Moving on to Capitec Connect. So it's very exciting. We are now at 1.1 million clients. And there's a really strong net income contribution of ZAR 165 million. But Capitec Connect is not only about contributing to the bottom line. It's not only about generating revenue. It is to create value for our clients. So as we scale, we will continue to drive down prices and give more data as givebacks to reward our clients for good banking behavior. We gave 449 terabytes back over the course of the last 6 months, and we have just recently started with a new giveback, which is that if your Capitec Connect SIM is the SIM for your verified number, for your banking, with every single purchase, we'll give you 20% extra free. Because of that, we have tripled, more than tripled our usage of data. So it's now at 14.9 terabytes, and you can see on the slide, just for fun, that's 4.3 billion songs. Something else just to be proud of. There was a recent survey done, the South African Telecom Sentiment Index, and we came on top. I think that is a fantastic tribute to the team. That really is a testament to the fantastic work done by all of the Capitec Connect team. Well done. We've also launched devices. So if you go into app right now, you can order any one of 22 devices, and that range will get wider. With that purchase, we will give you free data, and our finance offering is the best in the market, 0% deposits and the lowest finance charge. So we are going to change how our people get access to smartphones. And through that increase the number of people who have them who use our app who use our other digital services, there's a virtuous cycle here. Looking at savings. Now savings continues to be an important barometer of trust in Capitec. So I am very pleased that we've continued to increase our market share strongly, particularly in the access anytime, fixed deposits and notice accounts. So we changed the structure of our interest rates. We changed from a tiered main account to a single flat rate for everybody. And then we strongly increased our interest on our call and notice and fixed deposits to be much more competitive and to encourage people to be much more deliberate in their savings. Because of that, and you can see on this slide, we are up 31% in those strong long-term purpose accounts. And overall, between our access any time call, notice deposits and fixed term plans, at now 68% of our entire deposit book. This is what we intended. We look forward to growing it even more strongly, and encouraging clients to be more purposeful in their savings and earn even higher interest rates. If you look just at notice, our notice accounts are very popular. The 7-day notice deposits, it bridges the gap between those who are not able to save at all and those able to save a little. And there's been phenomenal growth. It is really enabling a savings culture amongst our clients. Moving on to insurance. We've had 19% growth in the sum assured. Now a recent survey done by Swiss Re tells us that, that is 39% of the whole of the South African market. It's ZAR 481 billion in sum assured. And that's 15.8 million lives covered. And since November, 100% of the business is on our own license. We've got a strong focus in insurance on making sure that the 3 products we have are exceptional, that the client experience the entire way through is the best that it can possibly be, and that's what our focus will remain for the short while. If you move on to life. So our new Life Cover, that's new, and there's already ZAR 72 billion in sum assured covered. Now you add those two together, that means the total sum assured for lives covered in South Africa is now over ZAR 0.5 trillion. One of the things that I like most about our life insurance is the way that we enable the clients, empower the clients to choose how that cover will be used. And we allow them to choose between a lump sum payout, between a monthly income to your dependence to help them manage their monthly needs and then specifically, to be paid out into a trust, to take care of your children's education and their other needs. And what you can see up on that pie chart is the extent, the proportions which our clients are choosing to use those 3. So lump sum remains the biggest, but almost half go to that monthly income choice or children's needs. And that's very positive. Now I mentioned at the beginning that you need to normalize growth, so there's very strong growth in our financial statements, and that is the true result. However, to compare with last year, to compare like-for-like, you need to account for the fact that some of the business, some of the book is transferring out of the cell, and to Capitec's own license and all of the new businesses on own license. And as that's happening, there is a taxation effect. In the cell, the tax was netted off. And so now we gross up the income and we gross up the tax. We also do the same thing essentially with the investment income that comes out. It becomes more clear. And then there is the additional profit that we earn because prior to the first November, we were sharing 30% of the profit with Sanlam. And since the first of November, 100% of the profit accrues to us. When you take those three things into account, the adjusted result for insurance is a 20% growth, which is excellent. That was for the insurance team, not me. Moving on to Business banking. I am excited by everything at Capitec. I really am. But what excites me the most is Business banking. And the reason for that is not just because it's such a big opportunity for growth for us, and it is. It's because this is how we contribute to the growth in South Africa. So because of that, I'm really pleased that a number of our clients has grown so strongly. So our core business banking clients, GlobalBiz, they're up by 57% to 182,000 now. Now they've come to us for a couple of reasons. They come to us because of better service. They come to us for better credits, and they come to us for simpler, lower fees. So on the better credit side, our gross loans have gone up by 23%. That's a loan book now of ZAR 26 billion, catching up with the personal bank fast. And in terms of fees, we've simplified and aligned. So no business bank client pays different fees to a retail client. If you do a real-time transaction, they cost you exactly the same as they should. And because of that, ZAR 93 million of the fee giveback has gone to business bank clients in the year. One of the other changes that you'll see is we become much more efficient in credit across the board. Our intuitive processes are better. But in addition to that, our scored credit is getting stronger. So our scored credit is up 109%, and that enables us to serve our clients faster, give them an answer quicker so that they can carry on running their business. Very recently, we've just landed overdrafts on the app. So our clients can apply, conclude for an overdraft entirely by themselves, self-service on our app. And that's going to change things for them, saving them time. Looking ahead, one of the most important parts of our business going forward is enterprise payments. So we recognize that this is one of the key enablers for business because collection success is critical to business growth. So because of that, we took all of our businesses in which we help other businesses take a payment, debit order collections, merchant services, the e-commerce pieces, and we put to get them together into a single division called Enterprise payments. If you look at the debit order business, Capitec Payment Services, we grew by 19% in the year. And Capitec Pay e-com, that's grown by 36%. Moving on to payment taking via card machines. We're up 165% to 85,000 trading merchants. If you look at the turnover from August this year of ZAR 42.4 billion to ZAR 27.1 billion, you can see just how strong that growth is. And this is well spread. This is not a small number of merchants, 85,000 is a broad cross-section of all of the businesses in South Africa that need to take payment by this mechanism. And we're winning that business because we have a fantastic machine but also the lowest merchant commission rates in the country. ZAR 95 million of the reduced fees has gone in lower merchant commissions and a lower price for those point-of-sale devices. One of the things that you can expect us in the future to spend a lot more time on and invest a lot more in is our enterprise payments business. It's key to our success. Then AvaFin, I mentioned up-front that AvaFin has contributed really nicely, they have contributed ZAR 121 million to our group earnings in the first 6 months of this year. And they continue to focus on making the credit offer exceptional in the 5 markets in which we operate. So we're staying focused on those 5 markets, staying focused on online consumer lending but improving the credit offer and improving the processes to serve those clients. And because of that, we're now up to 250,000 clients and advance EUR 303 million worth of credit to those clients in Europe and Mexico. Group OpEx, our strong financial position allows us to accelerate investment in new technologies. So looking at the middle, our investment in technologies and the people required to implement those technologies has gone up by 30%. And we brought that forward. We can see all of the value that we create for ourselves and our clients in investing faster there. In addition to that, by tapping into the world's best, and I'm talking here of the world's best providers of cloud technology of all forms of AI, including Gen AI. We have partnered with the best, and we're able to benefit. Now because of that, there's a natural shift from CapEx to OpEx, and you see that in those result. If you look at the increase in salaries, that's gone up by 12% as we continue to invest in our people. And all of the other expenses are a pretty muted growth of only 9%. Our continued focus. So what are we looking forward to? Well, we're going to continue innovating. Some of those recent innovations include what you see up on screen here. So it's in-app calling. Now in-app calling is the ability from a client from within their app, when they're making the transaction, when they see the item that they need to ask a question on pressing a button and being connected with the human being. It is safer for the clients. The client knows for sure that they are talking to us, and we know for sure that they're talking to the client. But in addition to that, it saves them money. It saves them airtime. And just in the last 6 months, we've saved our clients ZAR 5 million worth in airtime, and it's also a better experience. Calls don't drop. The quality of the call is better. So we're able to serve our clients better. Our self-service terminals continue to take load off our service consultants in the branches. When clients come in and they only need a very quick transaction, they can do it at a self-service terminal, leaving more time for our very important people to serve our clients because that humanist, that's serving humans with humans is actually an advantage. It's a superpower. We're also saving them time with our branch chatbots. So we have put available all of the questions that a person normally asks through calling help desk. And the person in the branch can now ask those questions to have them answered by a branch chatbot. And what this does again is save some time. It saves some time they would have otherwise spent on the phone and that's the time that the client is with them. So in saving our clients' time, we're also serving our customers better. Then Generative AI, we have done so much here. Ahead of fantastic demonstration 2 days ago on [ Neo ], our fantastic new tool for faster first-time resolution of all client queries, anything that a client needs to ask, and we're enabling our -- we will be enabling our branch and our call center staff to use that tool to be able to answer those questions more thoroughly and more quickly. We also have a solution which we use to automate the verification of trustees. For those of you who watch Suits, it's called Mike Ross, and more and more. And through that and the huge uptake of Copilot, we've seen ZAR 95 million in savings. And we're saving our people's time. We're not saving our time so that we can reduce the number of people. We're reducing the time so that we can do even more with those people. One of those things is reducing the needs -- some of the need for automated testing. I said that wrongly. We still have a very strong need for automated testing. Some of the demand on a person to accomplish automated testing. So very roughly speaking, the time it would have taken to put a used test case together and to implement it, would have been 4.5 hours and now using our new home build tool that takes less than an hour, massive saving there, and allows us to focus on what human genius is better for. And one of the things that that's better for is protecting our clients. The most important application of all of the new technologies is always going to be protecting our clients. We have over 400 people now working in different parts of the bank in a task force to make sure we're doing everything that we can to protect our clients. And that includes implementing new technologies like graph database. And what this has done is, it has enabled us to identify more and more of the unreported fraud and make connections between the bad actors to shut them down more quickly and more thoroughly. Because of this, we've reduced client losses significantly faster than the rest of the industry, and that's according to SABRIC. We are contributing to the prosecution of many crime syndicates stealing from people in South Africa. We blocked more than 70,000 mule accounts and saved more than ZAR 200 million for clients that would otherwise have been lost. Some of the innovations include AI warnings that have stopped scan payments, where the client felt sure that they wanted to do that thing, but we help them understand that we're making a mistake. And Feature Locks, which stop people doing them -- stop people doing things they don't want to do. And we have been first in market with a variety of different innovations, including active call identification and real-time contextual warnings. So the specific client sees the message that's relevant to them to help them understand how to protect themselves. Looking forward to the future, what I'm going to show you on this slide is something you'll have seen before. And that's important because this is a reminder of the key focus areas that we shared with you in February. We will reinforce our culture. Our client-first, highly energized ownership taking culture because it's one of getting things done. All bank strategies, largely speaking, look the same. We win because we actually execute, because we get things done, and we do so by working together. And that is something that we're going to reinforce. We will continue with the virtuous cycle of developing the ecosystem, bringing the power of our 24 million Personal Banking clients together with our businesses and creating a virtuous cycle between them that helps both grow. We will become the leading payment provider in South Africa. And as I said earlier, you can expect to see a lot from us on that. We will grow Business banking and growing Business banking, we will grow the country around us and grow employment. In order to do that well, we need to be able to serve all of our clients everywhere. And that's why we have such a strong focus on our single service platform, which will enable a business client, retail client to move on to any app, any channel, move and walk into a branch, call any number and be served in the same way. We will continue to invest heavily in making sure that we have the most data but also that we're best using that data, actually implementing it for creating value for our clients. And then finally, AvaFin is fantastic, but it's a small step. We are just starting now to craft the strategy to take Capitec global. That is our future. Thank you very much, everybody. Thank you. Thank you to all the 17,000 people who made this happen. Thank you to our clients. Everything starts with you. And thank you to our excellent Board of Directors and all of the shareholders that they represent. I appreciate your support. Thank you, everyone. So now I'm going to ask Grant Hardy to come and join me on the stage, and we will take some questions from our investors. Grant Hardy: Thank you. Unknown Attendee: We've got a few questions. The first one is from Sean. He's asking, when will Capitec be launching VAS on its card machines? Grant Hardy: Okay. Thank you for the question, Sean. It's something we're actively working on and are progressing on. We haven't yet confirmed the exact date, but it is something that we are working very hard on delivering as soon as we possibly can. Graham Lee: Yes. Our clients can expect to see it early next year. Unknown Attendee: Then we've got 2 questions from Charles Russell. First one, can you elaborate on the lower capital adequacy ratio and more specifically the impact on ROE? Grant Hardy: Okay. So as we've communicated to the market, Basel IV became effective on the 1st of July, and that impacted our capital adequacy ratio. We expected the decrease to be between 3% and 5%, and it's come in within that range. Secondly, we also had to deconsolidate Capitec [ ins ]. This is also required by regulation. From an ROE impact, we still have more than sufficient capital, so it won't change the ultimate dividend policy. So it won't have an impact ultimately on ROE. The dividend payout ratio is as communicated to the market, 55% for the full year. Unknown Attendee: The second question from Charles Russell. Can you expand on the strategy to reduce interest expense which was down 8% despite an 11% increase in deposits? Grant Hardy: Thanks, Charles. It was an interesting one because when we actually made the call, we actually expected to pay clients more interest. We actually increased the interest rates across our anytime access accounts. So a client can open up to 10 of those and increased on the notice side. So we became market leaders in those areas. So the thinking behind it was to actually provide more value, let's say, drive more deliberate savings, but the migration from the main accounts into these savings pockets has been slower than what we expected. We are still paying 2% on the main accounts, which is 2% more than the market. But we'll continue trying to educate clients and really show them the extra interest and value that they can create by moving funds into the anytime access and notice savings deposits. Unknown Attendee: Two questions from Ross Krige from Investec. First one, do you expect to maintain a stable Personal banking credit loss ratio for the full year relative to H1? Grant Hardy: Yes. It's well within our range, and that's what we expect to see, let's say, going into the second half of the financial year. It does all depend on how the economy plays out, just given that the unsecured lending on the Personal Banking side is very much determined by what we see and how the economy performs. Unknown Attendee: Second question from Ross. With regards to client givebacks in the business banking, do you expect this pricing activity to be fully in the base now? Or will H2 '26 also be impacted relative to the prior year? Grant Hardy: This is now fully in the base in terms of the big part coming from the merchant commission rates. So those were changed from the 1st of September 2024. So it's now in the base from last year. So yes, it Is fully in. Unknown Attendee: Then a question from Harry Botha from Merrill Lynch. In Business banking, what has cross-selling been like to merchant customers that Capitec has acquired? Grant Hardy: Yes. So for a lot of clients from a Business bank perspective, your first entry into Business bank would be, let's say, a point-of-sale device. And from there, we deposit, let's say, the funds that you put through, the device, into a Capitec business bank account. And from there, they do start using other services. So it's a good entry point for us. They start seeing the value we can provide, the level of service, so it is a good cross-selling opportunity and something that we continue to grow and work on. Unknown Attendee: We've got 2 questions from [ Nitin Sehgal ] from Cora Management. First one, this is a question about your first love, Graham, credit? Grant, what is a good range of through-the-cycle credit loss ratio relative to where you are today? Grant Hardy: So I think you've got to look at it by business unit. So if we go look at retail, we've communicated that we expect retail to run 8% to 8.5%, we're coming in just below there. From a Business banking perspective, we're within where we expect to be at 2.1%. And AvaFin is much higher, but we price for that. So AvaFin is also where we expect to be, given the current loan mix. As we've started to fund AvaFin, what we do want to do is reduce the interest rates and extend the term, so you can expect over time that credit loss ratio to come down. Also important, on the AvaFin side, we have 6 months' worth of results in for this year versus 4 months last year. So that does increase the credit loss ratio because you have a 6-month charge as, let's say, opposed to a 4. Graham Lee: Can I just add to that? In addition, in business banking, you can expect that longer term, the unsecured lending to small businesses, the CLR will approach that of the personal bank. So as the mix changes, the Business bank overall will go up. But if you -- as Grant says, if you split it out in the different types of businesses, they will remain consistent. Unknown Attendee: Then one last question from Nitin. Congratulations on your return on equity. How do you think about this champagne problem? Are there any newer areas you are considering investing in? Or are you thinking about changing the payout policy in the future? Graham Lee: Okay. It gives us optionality. At this point in time, we're not looking at changing the payout policy. There is so many opportunities to still grow our business to deploy our capital and to grow. One of the ways that we will do back, we will do that is by using our economies of scale and sharing the benefits of that back to our clients, and that will bring the ROE down a little. Grant Hardy: Yes. Just to add on to that, I mean you already see some of the givebacks we've given to clients this year. We'll continue to challenge ourselves to make sure that we're providing true value to our clients. And as Graham says, we've always had the principle of giving back the benefit of scale, so we'll continue to focus on that, but it just gives us optionality to make sure we can continue to provide value to our clients. Unknown Attendee: Thank you, Graham. Thank you, Grant. No further questions. Grant Hardy: Thank you. Graham Lee: Thank you very much, everyone.
Operator: Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Halozyme Investor Call. [Operator Instructions] Please note, this event is being recorded. I will now turn the call over to Tram Bui, Halozyme's Vice President of Investor Relations and Corporate Communications. Please go ahead. Tram Bui: Thank you, operator. Good morning, and welcome to our investor conference call. In addition to the press release issued earlier this morning, you could find a supplementary slide presentation that will be referenced during today's call in the Investor Relations section of our website. Leading the call will be Dr. Helen Torley, Halozyme's President and Chief Executive Officer, who will provide an overview of the transaction. We're also pleased to have Chase Coffman, CEO and Co-Founder of Elektrofi, joining us today, together with Nicole LaBrosse, our CFO. On today's call, we will be making forward-looking statements about future expectations, including relating to the proposed transaction with Elektrofi as outlined on Slide 2. I would also refer you to our SEC filings for a full list of risks and uncertainties. I will now turn the call over to Dr. Helen Torley. Helen Torley: Thank you, Tram. Good morning, everyone, and thank you for joining us this morning. Many of you listening probably know about Elektrofi, but for [indiscernible] some of you may be new. So let me start with making a few comments about the company and tell you just how excited I am to be discussing our acquisition of Elektrofi today. Elektrofi is a pioneering company founded 10 years ago to lead the technology development for Hypercon, a hyperconcentration technology applicable to biologic drugs. Today, many biologic formulations are limited by low concentrations. And this can result in large volumes greater than 2 milliliters being needed to deliver the effective dose. By applying Elektrofi's hyperconcentration approach, concentrations of 400 to 500 milligrams per mL or as much as 4 to 5 times higher can be achieved, which can make all the difference to enabling more drugs to be able to be delivered in a small volume at home via small volume auto-injector or even by Halozyme's innovative high-volume auto-injector. For areas, including inflammation and immunology, neurology, nephrology and oncology, at-home patient delivery is the holy grail that just about every pharma and biotech company we're speaking to is seeking. The Hypercon technology is a fit for this very large and growing biologic product opportunity that uniquely addresses unmet medical needs today and into the future. And this is why we are acquiring Elektrofi. We and many experts are convinced that biologic products will remain the mainstay for a growing number of medical conditions. This is exemplified by the expansion of new categories of biologics each year that are in development and the large number of biologics approved worldwide every year. Through adding the unique patent-protected Hypercon technology to hyperconcentrate biologics, we are adding an innovative breakthrough technology that will complement and expand our ENHANZE and auto-injector opportunity and revenue and deliver on our vision to make breakthrough therapies fit the patient's life. This acquisition creates for Halozyme a broad and differentiated portfolio of innovative technologies that will allow us to set new standards of convenience and accessibility by substantially expanding the scope of therapies that can be delivered subcutaneously. Importantly, the acquisition allows Halozyme to capitalize on the secular trend towards at-home and in health care practitioner office administration of biologics. Shown on Slide 3 is our agenda for today. And moving now to Slide 5. Let me begin with the strategic deal rationale. There really could not be a better fit to the deal criteria that I've been sharing with you over the last 12 to 18 months. We wanted a truly innovative breakthrough technology that Halozyme based on our expertise could accelerate the development of. There is nothing that is closer than Hypercon. It is an innovative technology that by enabling as much as 4 to 5 times higher concentration than today's industry aqueous formulation biologic concentrations can reduce the volume and can increase the number of products that are able to be delivered subcutaneously using a small volume or even a high-volume auto-injector at home or in the doctor's office. This is a perfect complement to ENHANZE, which is the gold standard for rapid high-volume subcutaneous delivery. The addition of the Hypercon technology will expand the number of partnerships, and we believe will bring additional revenue opportunities on top of the exciting opportunity already in place with existing partners. We could not have a better fit on the business model with Hypercon, which we believe will bring milestone revenue, recurring licensing royalty revenue and low capital intensity. Excitingly, the innovation of Hypercon has resulted in a broad suite of patents into the 2040s, supporting long-term revenue growth. And we are pleased to report that the acquisition, which will be all cash, is projected to result in leverage of approximately 2x net debt to EBITDA at closing. Let me move to Slide 6. Now why are we doing the transaction today? The Hypercon technology is at a true value inflection point. Three agreements have already been signed with marquee pharma and biotech companies and two products that are derisked mechanisms of actions and already blockbuster partner commercial products to date are projected to enter the clinic and begin clinical development by the end of 2026 or earlier. Yes, within the next 12 to 15 months or earlier, we project that two partner products will enter the clinic. This sets a clear pathway for significant growth with royalties beginning as early as 2030. We Halozyme have strong royalty revenues projected for many years and we are pleased that we will be diversifying our business to bring in a new royalty revenue stream as early as 2030. It is certainly exciting to onboard a new technology with such strong revenue timing. Now in addition to royalties, there are also milestones. The milestone payments for the two products projected to enter the clinic by the end of 2026 or earlier represent up to $275 million in potential, further derisking the acquisition. And by adding in Halozyme's drug delivery development and commercialization expertise, we believe that we are in a strong position to accelerate the timing to approval and expand the revenue opportunity by expanding the number of targets in development and creating the next waves of launches. Let me now turn to the terms of the transaction, which are shown on Slide 7. Under the terms of the agreement, Halozyme will make a $750 million upfront payment and future payments will be tied to successful marketing approvals of the first 3 Hypercon products. Upon each of the first 3 approvals, there will be a $50 million payment up to a total of $150 million. The acquisition will be financed through Halozyme's strong cash position and with our credit facility. Following the close, we expect leverage to increase to approximately 2x net debt to EBITDA. And our goal is to delever in the subsequent quarters, supported by our robust free cash flow. The transaction has been unanimously approved by the Boards of Directors of both companies, and it is expected to close in the fourth quarter of 2025, subject to regulatory review and other customary closing conditions. And from a financial perspective, the transaction is expected to be less than 5% dilutive to EPS over the medium term, noting that this excludes potential milestone payments related to the programs that are in development, which could offset dilution prior to the projected royalty revenue in 2030 and beyond. We expect full year 2026 incremental operating expenses will be in the range of $55 million. Let me move now to Slide 9. Our vision at Halozyme is very clear. Our goal is to transform the way important medicines are delivered so that treatment fits the patient's lives rather than the patient having to organize their lives around treatment. The acquisition of Elektrofi clearly reinforces this vision, adding new subcutaneous drug delivery opportunities. Moving to Slide 10. The addition of the Hypercon technology broadens Halozyme's portfolio of drug delivery technologies, creating three differentiated solutions: ENHANZE, Hypercon and our auto-injectors. Starting with ENHANZE. Today, our proprietary rHuPH20 enzyme is enabling biologic drugs with biologic concentrations of between 40 and 180 milligrams per mL, which for the needed dose has resulted in injection volumes of between 5 and 23 milliliters. ENHANZE transforms treatment by reducing administration times from hours for the IV treatment to just minutes for the subcutaneous, saving time, money and allowing more therapies to move from the infusion suite to the community and health care practitioner office settings and to the patient's home. With the addition of Hypercon, we project we will extend subcutaneous delivery to an even broader range of biologics. Hypercon enables ultra-high concentrations of biologic products of between 400 to 500 milligrams per mL, enabling lower volume requirements for the effective dose. This lower volume creates new opportunities for at-home self-administration and for efficient delivery in the health care practitioner setting while also expanding the range of molecules that can be delivered subcutaneously. Our auto-injectors have significant commercial synergy. Our high-volume auto-injector remains the first and most advanced device capable of delivering 10 milliliters of a biologic in just 28 seconds. This represents a compelling opportunity to combine the device with ENHANZE and also with the Hypercon-enabled formulations. In addition, pairing Hypercon with our best-in-class small volume auto-injectors represents another attractive avenue for commercialization, particularly in immunology, neurology and other chronic diseases where at-home administration is the future of care. Bringing together these 3 innovative technology solutions creates new commercial opportunity for our partners and strengthens Halozyme's mission in advancing patient-centered drug delivery solutions. Turning now to Slide 11. Today, we have 10 approved ENHANZE products. On this slide is an illustration of how the availability of ENHANZE and Hypercon, together with our auto-injectors will continue to enable subcutaneous delivery of products by health care practitioners, which is shown in the lower dotted line. Importantly, as shown by the top dotted line, we project the potential for strong growth in at-home biologic delivery in addition, capitalizing on this important secular trend for patients delivering their own medication at their convenience at home. In essence, we see a path using the expertise that we developed from the success of ENHANZE to create a whole new wave of opportunity with Hypercon. I'll move now to Slide 12. What makes this acquisition especially compelling and is a key derisker are the efficiencies from combining Halozyme's and Elektrofi's business models. Similarly to ENHANZE, Hypercon is structured around a licensing royalty-based partnership approach, supported by strong intellectual property and designed to deliver long-term growth. Both technologies create value by enabling our pharma partners to expand patient access and enhance product differentiation while generating recurring revenues. In addition, similarly to Halozyme, Elektrofi operates a lean business model with leverageable partner support. For both technologies, we serve as advisers to our partners on the regulatory and clinical development. As a result of this advisory role, we do not have to bear the high costs related to clinical development and commercialization. The deep experience we have gained in development of subcutaneous delivery technologies and product approvals over the last 12 years will serve as an accelerator for Hypercon partners. We also do not own the manufacturing plant and thus require very low capital intensity. This capital-efficient approach will allow us to continue to concentrate resources on innovation and on partner success. This shared foundation ensures that Hypercon integrates seamlessly into our portfolio, reinforcing our strategy of building a diversified, sustainable business model anchored in innovative drug delivery technologies. Moving now to Slide 13. Elektrofi has 3 current global partnership agreements with leading companies that validate the potential of Hypercon and underscores the confidence that leading biopharma companies have placed in the technology. Importantly, I'll point out that the licensing agreements are structured around milestone payments and have attractive mid-single-digit royalty rates. Additionally, existing collaborations are anchored in two established blockbuster therapies that are advancing to the clinic by the end of 2026 or earlier, providing the opportunity for up to $275 million in development and commercial milestone payments, which will further support revenue growth as the programs advance. And we see this as just the beginning for Hypercon. We will apply the same approach as we did for ENHANZE, expanding the number of partners and products in development with many of the world's leading biopharma companies, creating a trusted model for developing, commercializing and scaling innovative technologies. Our learnings on what it takes to gain regulatory approval for our drug delivery technology and our insights gained on development and CMC requirements give us confidence in the expansion and acceleration of Hypercon future launch waves. Let me now move to Slide 15. Since its founding 10 years ago, Elektrofi's mission has been to transform how biologics are administered by making treatment faster, more convenient and more accessible for patients, helping patients get the medicines they need when they need them. Based in Boston, the 80-person strong team, including more than 60 R&D specialists have pioneered this breakthrough technology under the leadership of CEO and Co-Founder, Chase Coffman. The success they have achieved thus far is a reflection of the strength, dedication and innovation of their team and of the leadership of Chase. And we look forward to bringing on board their technical depth, collaborative mindset and the proven execution as an innovator in subcutaneous drug delivery. And I'm very pleased to announce that following the close of the acquisition, Chase Coffman will become President of Hypercon and will become a member of Halozyme's leadership team reporting to me. I'm truly delighted to welcome Chase to Halozyme, and I'm very excited to be working together and post close. Let me move now to Slide 16. The Hypercon technology is an innovative microparticle approach that sets a new standard in the field, enabling ultra-high protein concentrations while maintaining syringability, meaning it can be injected smoothly and easily. Let me walk you through how it works. Through a gentle dehydration step, water is removed from the standard biologic aqueous solution, resulting in the formation of uniform spherical microparticles that encapsulate and protect the protein. These microparticles are then suspended in a lipid-based medium that's been optimized for subcutaneous injection. Upon subcutaneous administration, the microparticles rapidly and naturally rehydrate in the subcutaneous space, which enables controlled release of the therapeutic while maintaining the protein structure and function. The process is highly innovative, and this has been recognized with multiple patents and pending patents across 15 patent families. Moving now to Slide 17. Hypercon's operating model is lean, capital efficient and supported by partnerships. This approach enables Elektrofi to focus on technical expertise and advising rather than a large-scale infrastructure needed for clinical trials, commercial scale, manufacturing or commercial execution. As shown on the right in green, commercial scale manufacturing or commercial execution are the partners' responsibilities. And similarly to ENHANZE, the low fixed cost base and limited capital intensity creates an efficient model generating robust cash flow. Moving now to Slide 18. Elektrofi has built a formidable intellectual property state to protect the Hypercon technology, securing 9 issued U.S. patents across 6 distinct parent families and filing worldwide applications spanning 15 unique patent families, which are currently pending. Together, these create the potential for patent protection extending into the mid-2040s. Let's move now to Slide 20, and I want to share with you why we are confident in the long-term growth opportunity this acquisition creates for Halozyme, our partners and our shareholders. The Hypercon technology is poised for a major value inflection. By year-end 2026 or earlier, we expect two partners to initiate clinical development, each with a derisked and each with an established approved blockbuster product. Excitingly, an additional product has also been nominated by a partner and several other products are in feasibility testing. Let me share with you now how I will be measuring success and suggest that these would be good metrics for you also to track. I will be tracking the start of the clinical development for two products within the next 12 to 15 months or earlier. We will be defining a registration paradigm for Hypercon that makes clinical development streamlined. And it will be our plan to sign and advance new targets into development for Elektrofi partners, Halozyme partners and for new partners within the next 12 months. Let me turn now to Slide 21. I want to close by reiterating my incredible excitement to add the Hypercon technology and the entire Elektrofi team. This is truly a breakthrough technology that is at a value inflection point. Importantly, licensing agreements are structured around milestone payments and attractive mid-single-digit royalty rates. And the opportunity to expand and accelerate subcutaneous delivery, especially at home, is large and growing. And very importantly, this acquisition uniquely creates a series of unmatched synergies. By adding in Halozyme's drug delivery technology development and commercialization expertise, we are in a strong position to accelerate the timing to approval and expand the revenue opportunity by expanding the number of targets in development and creating the next waves of launches. The opportunity to offer our complementary technologies across current and new partners is obvious, but worth emphasizing. And with Halozyme's backing and support, the Hypercon team can be fully focused on advancing the technology as rapidly as possible and expanding drugs in development and not worrying about fundraising and building infrastructure as examples. I want to extend a very warm welcome to the entire Elektrofi team as they joined Halozyme post closing. We deeply value the expertise, innovation and dedication that you will bring, which has been so central to Elektrofi's success and reputation in the industry. And we're very excited to combine our differentiated strengths to advance subcutaneous drug delivery solutions, expand the opportunities available for patients and build on the momentum of both of our organizations. And now I'd like to open the call for your questions. Operator? Operator: [Operator Instructions] Your first question today comes from the line of Sean Laaman from Morgan Stanley. Morgan Gryga: This is Morgan on for Sean. I have two. First, just if you could go a bit deeper into how Hypercon complements ENHANZE versus substitutes it? And in which use cases would partners choose Hypercon instead of ENHANZE? And then finally, for the two partners projected to begin the Hypercon formulated clinical development by year-end '26, can you disclose anything about the therapeutic areas or molecule types and -- any more information there would be super helpful. Helen Torley: Thanks, Morgan. With regard to the targets entering the -- or the products entering the clinic, unfortunately, due to confidentiality, we're not able to talk in any more detail other than what we said in the prepared remarks. Excitingly, these are both derisked mechanisms of action and are established blockbusters today. So that's really all we can say about that. With regard to the positioning, when a company is developing a biologic, it's thinking about which patient population it's going to be used in. It's thinking about what the setting they want it to be used in, and they're also thinking about the competitive profile. And so when we think about ENHANZE, ENHANZE is a great fit for those products that are going to be high-volume subcutaneous injections that can be given in the physician's office, in the infusion suite, which sometimes happens just as a good location and also if the volume is relatively small in the patient's home as we've seen with VYVGART. Now what the Elektrofi Hypercon technology immediately opens up because it can achieve 4 to 5 times the concentration of today's average biologic, its volumes are subsequently reduced by four to fivefold. And so this enables many more products to be able to be developed, to be delivered in 2 mL or less in the patient's home, potentially even with a small volume auto-injector. And so this is why they are complementary. The pharma companies will have a different goal for each of their technologies based on the factors I mentioned. And we see a lot of opportunity for ENHANZE to be selected for certain patient populations and settings and for the Hypercon to be selected for different patient populations and settings. And this is why it so broadens Halozyme's opportunity and Hypercon will have its own wave of launches and growth just as we've demonstrated with ENHANZE and just as ENHANZE is going to continue to grow with additional launches for many years to come. Morgan Gryga: Very helpful. Congratulations. Operator: Your next question comes from the line of Brendan Smith from TD Cowen. Brendan Smith: Really big congrats on the deal, guys. Great to see. Can you maybe first just give us a sense of how we should be thinking about the economics of Elektrofi partnerships with Hypercon relative to what we know about traditional ENHANZE partnerships? I mean should we think of this kind of similar royalty rate across the Board? Or just any considerations you're able to disclose there would be helpful. And then just maybe a second one would be kind of in the context of the CMS update from last night, do you have any sense maybe where this tech might play out with CMS? Do you think any policy changes, if implemented for 2029 on hyaluronidase specifically would potentially be where to encompass some of this technology? Just any thoughts on how we should be considering that there, too? Helen Torley: Yes. Thanks, Brendan. With regard to the economics, and we did include a slide in our presentation deck that summarizes what's publicly available. But what I can say is that in terms of the milestone, the cadence of milestones as well as the royalties being on average in the mid-single-digit royalty, this is very similar to what you've seen with ENHANZE and the same type of value creation potential as we have with ENHANZE. So economics similar is the bottom line. In terms of the CMS update and for anyone who didn't see that yesterday, CMS basically indicated they need to do more work on their definition in the future potentially for fixed combinations or two active ingredients, recognizing it's a very complex topic and it's going to take them time if they are ever going to finalize such a policy. So -- but I would say specifically for the Hypercon technology, because it's a formulation change, it's not an active ingredient. It's not added in to become a fixed combination. The CMS guidance is totally irrelevant for the Hypercon technology. What it does is create a brand-new formulation that will get its own registration path, its own BLA and will be entirely unaffected by the CMS fixed combination guidance. Operator: Your next question comes from the line of Michael DiFiore from Evercore ISI. Michael DiFiore: Congrats on the deal. Two for me. Just simply, how will the NewCo prioritize business development and dealmaking for Hypercon versus ENHANZE products? And separately, I just wanted to focus more on the NewCo's pending patent application. It's actually one of Elektrofi's pending patent applications. One of them suggests that the Hypercon formulations might be combinable with ENHANZE [indiscernible]. So if this is true, like could that in any way solve for the looming ENHANZE LOE in 2029? Helen Torley: Yes. Thanks, Mike, for those questions. With regard to the pending patents, it really is too soon to say. There certainly has been some early experimental work done in combining Hypercon and ENHANZE, but we want to obviously evaluate that in more detail before we provide any commentary on it. On the -- how we will position both drugs and how we promote them, that's what I must say, I'm personally very excited about. We are going to have team members under Chase leadership who are going to be focusing on the Hypercon technology and be building that business, really promoting exactly where that works to capitalize on the secular trend for more at-home subcu delivery, particularly inflammation, immunology, oncology and neurology nephrology. We will also have members of the Halozyme team who are promoting the broad portfolio. And so in promoting ENHANZE, our high-volume auto-injectors, but also talking about the Hypercon technology, there's a fantastic opportunity for them to be generating leads, if you like, for Hypercon, which we would then pass over to Chase and his team to follow up on, whereas if they profile that works for that individual pharma or biotech companies product is enhanced with a high-volume auto-injector, the Halozyme team will focus on that. And so we will have a terrific set of business development professionals with the ability to significantly broaden our reach as we fit having this broad and very strong set of offerings for subcutaneous drug delivery. Operator: Your next question comes from the line of Corinne Johnson from GS. Corinne Jenkins: Congrats on the deal. Maybe you could talk about how you think about this kind of offering changing the pace of new deal flow? Does it help to accelerate kind of the one deal per year guidance? And also, could you talk about the role that the clinical derisking could play in terms of establishing additional business development with those drugs entering the clinic next year? Helen Torley: Yes. Thanks, Corinne. By having a broader set of offerings, obviously, we're very pleased with our pace of ENHANZE offerings over the years, and we continue to expect an additional deal this year on ENHANZE. Chase and the team at Elektrofi have done a super job as well, generating one deal a year, I would say, on average as well. And so it certainly will be our goal that you're going to see each of these businesses operating separately to meet the goals of advancing and bringing in new partners, but not just that, the current partners advancing more products into the clinic. So we certainly will expect more than one deal a year on average with regard to that. I do think the clinical derisking with any new technology is also another inflection point. But I do think the mere fact that two leading companies are taking the technology into the clinic for the clinical development start within the next 12 to 15 months is itself a value inflection point. And then obviously, the data. Now I can say that based on the extensive preclinical data that's been generated, we're very confident in the technology and what we're going to see in the clinic. Concentrations in that 400 to 500 milligrams per mL has been demonstrated. It's been compared to aqueous solutions and performed well. And so I think about both of those, Corinne, as being value inflection points and derisking points. Operator: Your next question comes from the line of Jessica Fye from JPMorgan. Jessica Fye: I had a few, so maybe a little bit following up on one of Corinne's questions, I think. So Helen, I remember the lack of clinical derisking in humans had historically been a reason that Halo didn't pull the trigger on this asset sooner. So can you talk about the specific preclinical derisking data that Elektrofi has generated that ultimately got you comfortable? Second question to confirm that up to $275 million of milestones associated with those two partner products Elektrofi has entering clinical development in '26, does that say you could earn up to $275 million from those products in '26? Or if not, over what time horizon could that $275 million be realized? Are those all development milestones? Does that include regulatory and commercial milestones? And then lastly, putting the fixed-dose combo guidance from CMS aside because it doesn't appear this technology that would apply here. Were you suggesting earlier that you think the Hypercon formulations of existing antibodies would not be aggregated with prior versions of those antibodies for purposes of determining eligibility for price negotiation, i.e., like the time to negotiation? Just wanted to clarify that. Helen Torley: All right. Thanks, Jess, for those questions. Let me start with the milestones. The milestones are very similar to what you've been experiencing over the years with ENHANZE. They up to $275 million is for two products. And for these, about 40% to 60% are development milestones, which takes you from that first in human all the way up to the approval. And then the remaining milestones are spread over time as certain sales thresholds are established. So exactly how you would model for ENHANZE and the similar types of time frames, Jess, I think would be very reasonable for you to model for these milestones, too. With regard to the Hypercon technology, what's really been very, very impressive to us is the significant progress that has been made over the last several years. And I think the derisking events [indiscernible] that so impressive were the signing of deals with 3 marquee pharma companies, so Lilly, Argenx and J&J, but also this readiness to be advancing into clinical testing in just 12 to 15 months. And so we consider that. And obviously, we've taken a look at that, and we're very confident in that projection based on the wealth of clinical data and all of the steps that -- sorry, preclinical data and the wealth of information that you need to be ready for that first-in-human filing. So we've had a great chance to evaluate that. And for the two products, everything is progressing very nicely. And that's what gives us the confidence with regard to that. For the question with regard to this being a fixed-dose combination, it's not a fixed-dose combination. I think we're going to have to take a little bit of a look at the final guidance, Jess, to know whether this would or would not be included and bundled into it. I think it's certainly my expectation that it isn't, but I think we've got to see the final guidance before we are going to be able to make a final determination on that. Operator: Your next question comes from the line of Jason Butler from Citizens. Jason Butler: Congrats on the acquisition. Two for me as well. I was just thinking back over the history of ENHANZE, there was an initial number of deals, and then it took a while really until you've got initial regulatory approvals until the technology was more broadly considered by partners. Do you expect something similar with Elektrofi? Or could it happen faster than that? What do you think the awareness is of the technology now amongst, for example, your current large pharma partners? And then secondly, just how do we think about patent strategy here in terms of co-formulation patents? Have partners already started to pursue co-formulation patents with the technology? Helen Torley: Yes. I think with regard to the cadence of partners, it's great to go back and think about ENHANZE where we really were the pioneer in this whole concept of subcutaneous drug delivery. It wasn't the dumb thing for biologics at the time. And so there was a little bit of that inertia you described for being able to -- after getting the first couple of partners, get that broader group of partners on Board. The Hypercon technology is going to benefit from a much greater acceptance and indeed a desire by pharma and biotech to be taking more products directly to subcutaneous especially in areas like inflammation and immunology, neurology, nephrology, where they want the patient to be able to deliver a small volume at home by themselves. And so I do think just the fact that there is now -- it's so well established, it's so desired, it's so seen as a competitive differentiator. We're going to see a different pattern of being able to bring on new partners and new products than we saw with ENHANZE because the market has been very successfully created, I will say, by Halozyme's pioneering work in this space. With regard to the patent opportunity, there is an opportunity to get new patents related to innovations found in new product. It's not quite a co-formulation. It's -- I would describe it, but there certainly is an opportunity to be able to generate new patents based on the innovations that will be found by being able to take products from perhaps a concentration of 80 to 100 milligrams per mL all the way up to 400 or 500 milligrams per mL. So absolutely an opportunity there for new IP for the products being tested. Operator: Your next question comes from the line of Mohit Bansal from Wells Fargo. Mohit Bansal: Congratulations. I have two questions. Helen Torley: Mohit, I must apologize. Mohit, we're not unfortunately able to hear your question. I don't know if you're able to. That's much better. Mohit Bansal: Okay. Awesome. So I have two questions. One is, do you anticipate any FDC issues here given that there are different technologies, but they both like ENHANZE and Elektrofi are trying to achieve the similar goal of making things convenient for the patients? That's number one. And number two, I would love to understand, so like I think it does seem like the royalty rates are higher, like higher end of the mid-single-digit range. So I think probably it is a question for Chase as well. So I mean, what -- like when you due diligence, like how is the value proposition different from the ENHANZE technology that makes pharma pay a little bit higher royalty rate for this technology? Helen Torley: Yes. Thanks for those questions, Mohit. So I'll say that we are confident that this transaction will clear any regulatory review. Obviously, that is going to play out over usually a 30-day period from when we file our documents for that. But based on our assessment, Mohit, it will clear. With regard to the value, I would think about the value, particularly as it relates to the royalties as being very much in the same ballpark across both of the technologies. And so that, on average, mid-single digit is very aligned to what you've been used to seeing with ENHANZE and what's created the very strong value for Halozyme from the adoption of the ENHANZEtechnology. Operator: [Operator Instructions] Your next question comes from the line of Mitchell Kapoor from H.C. Wainwright. Unknown Analyst: This is [ Katie ] on for Mitchell. I'm kind of wondering a little bit about how you're going to seek out partners for this technology? And if you're going to apply any selectivity into what products or applications you're going to pursue most actively. So if there's any particular attributes or applications that you're looking at in partners. Helen Torley: All right. Thanks, Katie. I really do -- when you think about when pharma partners are developing a new drug, they are very much thinking about how it's going to perform in the market. And so they think about what's the patient population and what's going to be best for them. They think about what is going to be the right setting for care. Is it something that would be given in a hospital, in a doctor's office or in the patient's home ideally for the patient. And they think about the competitive profile. What else is there and can they create something that is going to be the most desired to be used from a point of convenience or even the risk-benefit profile. And so I do think we'll be presenting our offerings to them. We now have three platforms -- sorry, technologies for the patients or companies thinking about using this. We've got ENHANZE, which will be for the high-volume rapid subcu delivery. We've got Hypercon, which allows you to get to those smaller volumes, enabling more at-home use, which, as I mentioned a moment ago, is very much a secular trend and an absolute desire, if not the holy grail for companies who are developing in inflammation, immunology, neurology, nephrology as an example. And then enabling all of that would be our small volume auto-injector for volumes under 2.25 mLs and our high-volume auto-injector for anything between 3 and 10 mLs. And so this broadening of our offerings, each company for a different product will have one that fits best for meeting their specific target product profile. And so we do think this is going to expand the number of opportunities for Halozyme to engage with these partners, and they will select which one is best. We don't need to do the positioning. Operator: Your next question comes from the line of David Risinger from Leerink Partners. David Risinger: So I wanted to add my congratulations to you, Helen and Chase and also your teams on the transaction. I have two questions, please. First, regarding the timing of this announcement, it obviously coincides with yesterday's CMS announcement. So could you just provide some color on the timing in conjunction with that CMS disclosure yesterday? And then second, regarding the manufacturing scale-up for Elektrofi and what needs to happen for the 2 Phase I programs to be initiated next year. Could you provide some details on that, please? Helen Torley: Yes. Thanks, David. The timing is utter coincidence. Obviously, for the CMS IRA guidance, we knew it would be sometime September, October. Totally independent from that many months ago, Chase and I initiated a discussion with regard to what the power could be of bringing our two great technologies and companies together. And obviously, any deal transaction takes several months to actually make happen. But our teams worked very diligently, and thank you for recognizing the team for that because we had a super team of Halozyme technical working with the Elektrofi team to evaluate the technology. And just as it turns out, we signed our merger agreement yesterday. And shortly after that, the CMS guidance came out. So pure coincidence, David. And obviously, we are delighted to be able to announce this broadening of our portfolio and more options for patients for subcu delivery. With regard to the manufacturing scale up, that's certainly something that we have dug into, and we actually just have a team who are back from spending time specifically evaluating the manufacturing scale up. And what I can say is we are very confident that the scale-up will be ready for the initiation of the clinical development, which will be in that 12- to 15-month time frame. Everything is very nicely on track for that and just terrific work done by the Elektrofi team under Chase's leadership to be really doing a super job on that. Operator: [Operator Instructions] And that concludes today's conference call. We thank you for your participation, and you may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Addex Therapeutics Half Year 2025 Financial Results, Corporate Update Conference Call and Webcast. [Operator Instructions] Please note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Tim Dyer, CEO. Please go ahead, sir. Timothy Dyer: Thank you. Hello, everyone. I would like to thank you all for attending our half year 2025 financial results conference call. I'm here with Mikhail Kalinichev, who will provide an update on our R&D programs. I draw your attention to the press release and the financial statements issued yesterday, which are available on the website. I also draw your attention to our disclaimer. We will be making certain forward-looking statements that are based on the knowledge we have today. I will start this conference call by giving a quick overview of our recent activities and achievements before reviewing our pipeline. I will then hand over to Misha, who will review in more detail our GABAB PAM preclinical program for cough. I will then review our financial results. Following that, we will open the call for questions. The first half of 2025 has seen several important achievements across our pipeline. We've made excellent progress in our GABAB PAM program with our partner, Indivior, successfully completing IND-enabling studies with their selective drug candidate for substance use disorders. As a reminder, under the terms of the agreement, Addex is eligible for payments of up to USD 330 million on successful achievement of prespecified regulatory clinical and commercial milestones as well as tiered royalties on the level of net sales from high single digit up to low double digits. Also under the terms of the agreement, we have the right to select compounds for development in a predefined list of reserved indications. We have selected a compound to advance our own independent GABAB PAM program for the treatment of chronic cough. We have substantially completed preclinical profiling of our selected drug candidate and recently published robust antitussive data in multiple preclinical models of cough. Misha will speak about this exciting data later in our presentation. We also regained rights to our mGlu2 positive allosteric modulator program, including the Phase II asset, ADX71149, from our partner, Johnson & Johnson. We are currently evaluating a number of therapeutic indications for the future development of this program. We have repositioned dipraglurant, our mGlu5 negative modulator, for brain injury recovery and recently entered into an option agreement giving us access to an exclusive license to intellectual property covering the use of mGlu5 inhibitors in this interesting therapeutic indication. In June, we invested in Stalicla, a private clinical-stage neurodevelopmental disorder focused company. Stalicla has developed proprietary precision medicine patient stratification technology platform, which allows the company to select patients based on their underlying biological dysregulation rather than their behavioral phenotype. Proof of concept of the platform has been demonstrated by applying the technologies to identify and develop drugs in subpopulations of patients suffering from autism spectrum disorders. We believe that Stalicla's technology platform can be broadly applied to other disease areas where patients are defined based on behavioral phenotype or where there is significant heterogeneity within the patient population. Moving on to the financials. We completed the half year with CHF 2.3 million of cash, which provides us with a cash runway through mid-2026. I'd like to highlight that the cash burn has been significantly reduced following the Neurosterix spin-out transaction. However, current cash does not fund the progression of our unpartnered programs into the clinic. Now for a quick review of our pipeline. We continue to believe in dipraglurant and are executing our plans to reposition the development of the drug for brain injury recovery. As mentioned, our partner, Indivior, has selected a GABAB PAM drug candidate for development in substance use disorders and successfully completed IND-enabling studies. We are advancing our independent GABAB PAM program for chronic cough and are ready to start IND-enabling studies subject to securing financing. Neurosterix has made excellent progress in advancing its pipeline, including completing IND-enabling studies for their M4 PAM program. The program is on track to dose patients this year, and we expect to be able to announce further progress in the coming months. Now I will hand over to Misha, who will give you some more details about our exciting portfolio. Bob Pooler: Thank you, Tim. Let me start with GABAB allosteric modulator program which is partnered with Indivior. The aim of this collaboration is to deliver a better baclofen for substance use disorders. As a reminder, GABAB receptor activation has been clinically validated in a number of disease areas using baclofen, a GABAB allosteric agonist. Baclofen is FDA-approved for treatment of spasticity and is widely used off-label to treat numerous diseases, including substance use disorders. However, baclofen has a short half-life and comes with significant side effects, hampering its wider use. Thus, there is a strong need for a better baclofen. We believe this can be achieved with positive allosteric modulators and their differentiated pharmacology, having the efficacy that is similar or better than that of baclofen but longer half-life and improved side effect profile. Our partner, Indivior, has selected a GABAB PAM drug candidate for development in substance use disorders and completed IND-enabling studies in H1 2025. As part of our agreement with Indivior, Addex has exercised its right to select a compound to advance its own independent GABAB PAM program for the treatment of chronic cough. I will now present this exciting opportunity. There is a strong rationale for developing GABAB PAM for chronic cough. Chronic cough is a persistent cough that lasts for more than 8 weeks and can be caused by a variety of factors, including respiratory infection, asthma, allergies and acid reflux but also by cough hypersensitivity syndrome. There is a large unmet medical need in novel antitussive drugs as current standards of care are ineffective in 30% of patients and only moderately effective in up to 60% of patients. In addition, the current treatments carry risks of serious side effects. On the next slide, we show that GABAB PAMs are likely to have a superior tolerability profile in comparison to the current standard of care and show no taste-related side effects, as seen with a newly approved P2X3 inhibitor, gefapixant. Support for using GABAB PAMs in treatment of chronic cough comes from the clinical evidence that baclofen, a GABAB agonist, is used off-label in cough patients and from the anatomical evidence that GABAB receptors are strongly expressed in airways and in the neuronal pathway regulating cough. Therefore, we believe that GABAB PAMs could offer superior efficacy in cough patients. With pre-R&D activities including in vivo proof of concept studies, non-GLP tox and CMC have been completed. Our clinical candidate has shown favorable efficacy, tolerability and developability profile. The compound has demonstrated a consistent minimum effective dose of 1 mg per kg and ED50 of 6 mg per kg in models of cough in vivo. No signs of tolerance were seen after sub-chronic dosing and more than sixty-fold safety margin was demonstrated based on respiratory depression and sedation biomarker. The IND-enabling studies are planned to start this year. In the model of citric acid induced cough in guinea pigs, acutely administered compound A delivered a robust antitussive efficacy, reducing the cough number dose dependently and achieving 70% reduction at the maximal doses. The antitussive profile of compound A was similar to that of nalbuphine, [ olretitant ], baclofen and codeine. Compound A also increased the latency to first cough dose dependently, thus delaying the onset of cough. Its profile in delaying cough onset was similar or better than that of referenced drugs. In the same experiment, compound A appeared well tolerated as there were no marked changes in respiratory rate at up to 60 mg per kg. In contrast, nalbuphine, [ olretitant ], baclofen and codeine resulted in robust reductions of respiratory rate at their highest doses, indicative of sedative-like effects. When evaluation of the antitussive efficacy across compounds was done at the respective high doses free from respiratory effects, compound A was shown to be superior to nalbuphine, [ olretitant ] baclofen and codeine in both cough number and cough latency measures. Reductions in body temperature, a rodent-specific biomarker of GABAB receptor occupancy in the brain, suggests that at 60 mg per kg of Addex compound, there are less than 50% GABAB receptors occupied in contrast to near 100% of occupancy at 3 mg per kg of baclofen. Increases in growth hormone release in plasma, a translational biomarker of GABAB receptor occupancy in the brain, confirmed less than 50% receptor occupancy at up to 60 mg per kg of compound A. Following sub-chronic administration for 7 days, compound A showed signs of improved efficacy and potency and no signs of tolerance in comparison to an acute treatment. No marked changes in respiratory rate, body temperature and growth hormones were seen in sub-chronic versus acute treatment conditions with compound A. In the model of ATP-potentiated citric acid cough in guinea pigs, in a head-to-head comparison experiment, acutely administered compound A exhibited a trend of better efficacy and potency in comparison to that of P2X3 inhibitor while showing signs of similar tolerability. In summary, we have selected a clinical candidate for chronic cough with a robust reproducible antitussive efficacy of 1 mg per kg and good PK/PD. The compound has the potential to have the best-in-class, best-in-disease efficacy and tolerability profile and broad application in cough patients. The compound showed a favorable developability profile in non-GLP tox studies performed in rats, dogs and nonhuman primates. Subject to raising financing, we are ready to start the IND-enabling study. This concludes our prepared remarks and the progress of our R&D program. Now I hand it back to Tim. Timothy Dyer: Thanks, Misha. Now for a review of our Q2 2025 financials. Starting with the income statement. Income decreased by CHF 0.1 million in Q2 2025 compared to 2024 and amounted to CHF 0.1 million. The decrease is primarily due to the completion of the funded research phase of our collaboration with Indivior. R&D expenses of CHF 0.2 million primarily related to our GABAB PAM program and decreased by CHF 0.1 million in Q2 2025 compared to Q2 2024, and again, mainly due to the completion of the research phase of our collaboration with Indivior. G&A expenses of CHF 0.5 million decreased by CHF 0.1 million in Q2 2025 compared to Q2 2024 primarily due to decreased legal fees. The share of net loss from the 20% participation in Neurosterix Group, accounted for using the equity method since April 2, 2024, increased by CHF 0.7 million and amounted to CHF 1.2 million for Q2 2025 compared to Q2 2024. Under IFRS, we are required to recognize our share of their results, which is a net loss. Now to the balance sheet. Our assets are primarily held in cash, and we completed H1 2025 with CHF 2.3 million of cash held in Swiss francs and U.S. dollars. Other current assets amounted to CHF 0.4 million, primarily related to prepaid R&D and G&A costs. Our noncurrent assets of CHF 5.8 million as of June 30 primarily related to the 20% equity interest in Neurosterix Group, recorded on the balance sheet under the equity method of accounting for associates, and our investment in Stalicla. Current liabilities of CHF 1.1 million at the end of June increased by CHF 0.3 million compared to December 2024, primarily due to increased payables. Noncurrent liabilities of CHF 0.1 million at the end of June decreased by CHF 0.1 million compared to the end of December, primarily due to the reduction in retirement benefit obligations following changes in financial assumptions. Now to summarize. We have made excellent progress in our GABAB PAM program with our partner, Indivior, successfully completing IND-enabling studies with their selected compound for development in substance use disorders. Neurosterix has made excellent progress with their lead M4 PAM drug candidate successfully completing IND-enabling studies. We have strengthened the IP in our mGlu5 NAM program and dipraglurant is ready to restart clinical development for brain injury recovery. Our GABAB PAM cough program has demonstrated excellent preclinical efficacy and tolerability with IND-enabled study ready to start. We are validating partnerships with industry supportive investors and a reasonably strong balance sheet, which puts us on a solid position to deliver on our strategic objectives. This concludes the presentation, and we will now open the call for questions. Operator: [Operator Instructions] We are now going to proceed with our first question, and the questions come from the line of Raghuram Selvaraju from H.C. Wainwright & Co. Raghuram Selvaraju: Congratulations on all the recent progress. I just wanted to ask if you could comment on recent developments in the neuropsychiatry space, both from a precedent M&A as well as a licensing standpoint, that might conceivably have implications for both Neurosterix and Stalicla. And also, if you could comment on Stalicla's future funding requirements as well as the possibility of public listing for that entity. Timothy Dyer: Okay. Thank you very much, Ram, for that question. It's very encouraging to see that there is continued renewed excitement within the neuropsychiatry CNS space. As you know very well, this all started at the back end of 2023 and continued through 2024, and now we see renewed interest with a number of recent transactions. So we are strong believers in CNS. And again, we've spun out Neurosterix with CHF 65 million in financing in a Series A in April last year really as a financing mechanism to get our portfolio of neuropsych assets moving. And they are moving very, very nicely. I really cannot speculate about the future of Neurosterix as we are a passive investor now, only holding 20%. With respect to Stalicla, Stalicla is currently pursuing a number of strategies around financing, as are most private biotechs that are looking for money. They are discussing actively with potential pharma partners both at the preclinical -- sorry, at the pipeline level but also at the platform level. As you know, one of the things that Stalicla has pioneered and potentially is a world leader in this ability to stratify patients based on their underlying biological dysregulation as opposed to just select them based on phenotypes. And they very much focused the platform on autism spectrum disorders, and they've developed a portfolio in-house. We're very excited about what we're doing. Now the financing need, they're pursuing a number of discussions with investors to do a Series C financing, and we will continue to be very supportive of what they are doing. So I hope that answers your question. Raghuram Selvaraju: Yes. No, very helpful. Two other very quick ones, if I may. Notwithstanding the inability to speculate on the future of Neurosterix, I was just wondering if you could give us some insights into whether or not the development of long-acting injectable formulations could conceivably be a part of Neurosterix' long-term strategy in targeting the neuropsych space. And also, if you could comment on the ideal or optimal target patient population for your chronic cough program, specifically as this pertains to those patients who have chronic cough of specific etiology, to what extent you've already determined what the ideal target patient population would be for future clinical development. Timothy Dyer: Okay. So there's two questions there. I'll leave Misha to answer the question on chronic cough. With regard to the muscarinic M4 space, we are all fully aware that Karuna has launched Cobenfy, this new class of antipsychotic. It's getting a lot of traction. There's a number of competitors out there both in the fixed dose combination area. But we are very focused -- well, Neurosterix is very focused on an absolutely selective M4 PAM. As you know, AbbVie have now moved -- moving their M4 PAM, emraclidine, back into clinical development, so this is very exciting news, despite them hitting a little bit of a bump in the road last year -- or earlier this year, I should say. We've also seen Neumora as well moving two compounds into Phase I. I think we and others are strongly believing in the M4 PAM space. We are moving forward a compound, which is a once-daily small molecule. Now we all know that in schizophrenia, compliance is an issue. So while at the moment, the development within Neurosterix is very focused on moving through Phase I and then into a Phase II study, I'm sure M4 PAM will be developed into longer-acting formulations, not because they need to be but just from a compliance point of view, That's the comments that I can make on the M4 PAM program within Neurosterix. And I'll hand over to Misha for comments on the GABAB. Mikhail Kalinichev: Yes. From the range of GABAB PAMs that we had, we intentionally selected a centrally acting compound in order to broaden and maximize the range of clinical patients that we can aim at. This has been discussed a number of times with KOLs. And the progress of nalbuphine nicely captures the potential of centrally acting antitussive drugs and their superiority over peripherally restricted antitussive drugs, such as gefapixant and other P2X3 inhibitors. We saw very robust effect of nalbuphine in IPF cough patients. And also in a recent data, they replicated this effect in refractory chronic cough patients. So that suggests that, indeed, the central approach, the central activity is essential for achieving maximal coverage of a variety of patients within chronic cough domain. Operator: [Operator Instructions] There are no further questions showing. Thank you, ladies and gentlemen. This brings the main part of our conference to be close. And I would like to hand back to Mr. Tim Dyer for the closing remarks. Timothy Dyer: Well, thank you, everyone, for attending our half year 2025 conference call. We look forward to speaking to you again soon, and wish you all a very pleasant rest of your day. Operator: This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.
Patrick Cheong: Greetings. Welcome to New World Development's FY 2025 Annual Results Announcement webcast for analysts and investors. I am Patrick Cheong, Head of IR and also the moderator for this session. First of all, let me introduce to you our management. They are New World Development's Executive Director and CEO, Ms. Echo Huang; New World Development Executive Director, Mr. Sitt Nam-Hoi; New World Development, Executive Director, CFO and Joint Company Secretary, Mr. Edward Lau; New World China, COO, Mr. Benny Chan. [Operator Instructions] Now I will pass the floor back to Echo. Shao-Mei Huang: Thank you, Patrick. Friends from the investment sector, greetings. Welcome to New World Group's FY 2025 Annual Results Announcement. Time flies. Half a year ago, when I first shared our company's performance with everyone, I outlined 3 key work directions. First, focus on the property business, continuously advancing and expanding business development to ensure normal and stable business continuity, business as usual. Second, improve the company's cash flow and actively manage our finances. Third, continuously optimize operational efficiency and governance capabilities and regularly provide everyone with the latest business updates. Through our team's dedicated efforts over the past period, we have achieved some modest results. I would like to share 3 key points with you. First, on 30th June, we successfully completed a HKD 88.2 billion bank refinancing. This refinancing provides us with valuable time to focus fully on developing our core business. I would like to once again express my gratitude to every bank for their support. Besides yesterday, we successfully secured the first tranche of an additional HKD 3.95 billion of committed loan facility as today. This amount will be used to address the company's debt-related needs. In the future, we also have the flexibility to scale up further. Second, our core business delivered outstanding results. Despite persistent market uncertainties, we successfully achieved our annual property sales target of HKD 26 billion with multiple projects in Hong Kong and Mainland China selling exceptionally well. Retail and office leasing also delivered strong results with K11 MUSEA and Art Mall in Hong Kong, achieving record-high foot traffic, while sales across multiple tenant categories saw double-digit growth. Third, our debt reduction efforts have yielded initial results. Both total debt and net debt declined throughout FY '25 while cash flow improved significantly and returned to positive territory, reflecting our group's gradually stabilizing financial position. I understand that our recently announced full year results shows a loss of HKD 16 billion on the books. However, there is no need for undue concern as this figure is primarily impacted by several noncash provisions and losses of a one-off nature. I will elaborate on this shortly. Looking ahead to the coming year, we'll continue our 3 directions. Focusing on our core business, actively managing finances and enhancing operational efficiency. Among these, I would like to highlight 2 key points. First, we will seize the opportunity presented by market improvements. With falling interest rates and the rebound in property market sentiment, we will continue to push forward with sales and accelerate cash flow recovery. Second, we must maintain highly prudent operations while pursuing steady progress. Current market uncertainties persist. Interest rates have only been cut once this year so far and the trajectory still contains risks. Our debt reduction efforts are just beginning with a significant journey ahead. Yet I firmly believe our team possesses the capability to navigate all challenges. Next, I would like to discuss the progress of the 7 measures to reduce indebtedness that I proposed at the last results announcement and how we achieved steady progress. First we continue actively selling development projects. In Hong Kong, all 3 of our Pavilia collection projects were met with enthusiastic market response and achieved outstanding sales results. These include North Point State Pavilia, which has successfully kicked off the year when launched. Meanwhile, Deepwater Pavilia in Wong Chuk Hang has generated over HKD 10.7 billion in sales since its midyear launch, making it this year's top selling new development. Last Friday, our first new project for FY '26. HOUSE MUSE in Kowloon City sold out all units listed on its price sheet on the very first day of sales. In Mainland China, we also successfully exceeded our elevated full year targets. Guangzhou's Central Park View, The Sillage, Canton Bay and also Shenyang, The PARKSVILLE, all delivered exceptionally strong results. Second, actively advancing our asset disposal plan. Through property sales and asset disposal, we successfully achieved our FY '25 annual sales target of HKD 26 billion. Our FY '26 annual sales target will be further increased to HKD 27 billion. Third, unlocking the value of the group's farmland holdings to fully advance the Northern Metropolis project. The [indiscernible] Row project in collaboration with China Merchant Shekou commenced construction in March this year said to deliver 2,300 units with sales expected as early as FY '27. The first phase of the Yuen Long sales project developed jointly with China Resources Land has completed the land premium payment. Construction is expected to commence within this year with presales anticipated as early as FY '27. Fourth, we will enhance rental return. Our commercial properties in Hong Kong and Mainland China are performing well. Office leasing remains robust despite current market conditions. And we will continue to strive to increase rental income. Fifth, streamline costs and reduce CapEx and OpEx. We strictly manage expenses with CapEx and OpEx, both showing significant further reductions in FY '25. We will continue to prioritize cost efficiency in the coming period. Sixth, suspend dividend payments. We have temporarily suspended dividend payments to shareholders and perpetual bondholders to preserve cash. Seventh, proactive treasury management. We have completed the previously mentioned HKD 88.2 billion bank refinancing, providing greater flexibility for future business development and financial needs. Moving forward, we'll continue to work diligently and fight every tough battle. Finally, I would like to express my gratitude to the management team, every colleague in the company and all friends and institutions that have supported us. It is through everyone's united effort that the situation has begun to stabilize. Now let me very quickly share our financial performance for FY '25. Specifically, regarding core operating profit and segment results, although we recorded solid contracted sales in both Hong Kong and Mainland China in FY '25, the property delivery volume was lower than FY '24 due to the impact of Mainland Chinese delivery schedule. Besides we incurred some preopening expenses for several newly opened investment properties in FY '25. So core operating profit for FY '25 decreased by 13% year-on-year, while segment results declined 4% year-on-year. Excluding the impact of asset disposals and new openings or new development expenses on revenue, the IP segment recorded a 2% increase in segment results. K11 segment results also rose by 4%, demonstrating that despite the continued relative weakness in the retail and office markets, our investment properties continued to deliver stable performance. Our FY '25 loss attributable to shareholders was HKD 16.3 billion. With the second half recording a loss of about HKD 9.7 billion. While this exceeded the first half loss of HKD 6.6 billion, it was mainly impacted by several noncash provisions and losses of a one-off nature. Notably having previously adjusted valuations for some investment properties, the full year fair value loss on IP for FY '25 was only about HKD 400 million including HKD 300 million impairment on the office portion of 11 SKIES. Prior to property development, significant impairment charges were also made. Related provisions for the first half of FY '25 amounted to HKD 3.4 billion, while the second half of FY '25 recorded about HKD 5.1 billion. Although the market sentiments and transaction volume for Hong Kong real estate improved in the latter half of FY '25, property prices remained relatively weak. Therefore, we made corresponding provisions in line with market conditions. Besides, in second half of FY '25, we recorded HKD 5.2 billion of other provisions and one-off losses primarily comprising 3 components. First, due to changes in Hong Kong's overall retail environment, we correspondingly adjusted the valuation of the 11 SKIES retail portion, resulting in a provision of HKD 2.7 billion. Second, we disposed of certain long dormant legacy projects in Mainland China during the second half of FY '25, resulting in a loss of about HKD 1.2 billion. Third, bulk transactions and other businesses also incurred one-off loss of about HKD 1.3 billion. On the expenses side, G&A expenses amounted to HKD 3.5 billion, down 16% year-on-year. This decrease exceeded the 9% decline recorded in the first half of the year, mainly due to our ongoing organizational optimization efforts. By enhancing collaboration between Mainland China and Hong Kong teams, we improved departmental efficiency across functions like IT, finance, HR and ESG, successfully achieving cost savings. CapEx amounted to HKD 12.6 billion. A significant 15% decrease year-on-year, and it is also below our latest FY '25 CapEx guidance of HKD 13 billion. This is mainly due to our continued strict control over CapEx. In FY '26, we will further reduce CapEx to below HKD 12 billion. Regarding debts, our total debts continued to decrease, reaching a level as of the end of June 2025, our total debt decreased by HKD 5.7 billion compared to June 2024 and slightly decreased by HKD 0.5 billion compared to December 2024. This is due to the refinancing completed with banks in the second half of FY '25. Edward will elaborate more shortly. Notably, apart from total debt, our net debt also decreased falling by HKD 4.5 billion compared to December 2024. This is mainly due to our cash flow returning to positive territory. Regarding the refinancing progress and debt reduction that everyone is most concerned about, let me pass the floor to Edward, our CFO, to explain. Edward Lau: Thank you, Echo. Regarding refinancing progress, I believe everyone has read our announcement. I will briefly summarize it here. The amount of our refinancing this time reached HKD 88.2 billion. I would also like to take this opportunity to once again thank all banks for their support. As Echo mentioned earlier, completing this refinancing has strengthened our financial position, including -- this refinancing has extended the earliest maturity date of certain bank loans to 3 years later, specifically 30th June 2028, thereby, enhancing the group's short- to medium-term liquidity. As shown in the right chart, our debt maturing within 2 years decreased by HKD 44.8 billion, falling from HKD 73.8 billion in June 2024 to HKD 29 billion in June 2025. Of this HKD 29 billion, HKD 6.1 billion represents bonds maturing within the next 2 years. About 80% of this amount or HKD 4.9 billion will mature in the second half of FY '27. The remaining HKD 22.9 billion consists of bank loans. Of this amount, about 98%, that is HKD 22.4 billion represents secured loans. This means our debt maturing in FY '26 totals only HKD 6.6 billion, with HKD 1.3 billion being bonds. This refinancing also provides greater flexibility for our future business development and financial needs. Regarding total debt, we successfully reduced it by HKD 5.7 billion in FY '25 from HKD 151.6 billion in June 2024 to HKD 146 billion in June 2025. At the same time, we successfully controlled the scale of net debt reducing it from HKD 124.6 billion in December 2024 to HKD 120.1 billion in June 2025, a decrease of HKD 4.5 billion. The net gearing ratio slightly increased to 58.1%, primarily due to shareholders' equity declining from HKD 224.9 billion at the end of June 2024 and to HKD 206.7 billion at the end of June 2025. This decline was impacted by the previously mentioned property development impairment and one-off losses offsetting the decrease in net debt. However, benefiting from interest rate cut in the U.S. and Hong Kong, our average interest rate decreased from 5% in FY '24 to 4.8% in FY '25. Consequently, the reduction in total debt, combined with lower interest rates resulted in our total financing cost decreasing by HKD 1.3 billion from HKD 8.7 billion in FY '24 to HKD 7.4 billion in FY '25. I will pass the floor back to Echo. Shao-Mei Huang: Thank you, Edward. In the coming part, I will provide a detailed overview of each business segment. Regarding Hong Kong DP, our attributable contracted sales for FY '25 reached HKD 11 billion. All 3 Pavilia collection projects launched in FY '25 were well received by the market, demonstrating buyers' preference for the New World Development brand and products as well as their confidence in us. Our super luxury project, Deep Water Pavilia in Hong Kong Island Southern District offers 825 units across 2 phases. Since sales commenced in May 2025, performance has been exceptionally strong. To date, over 620 units have been sold, generating total contracted sales exceeding HKD 10.7 billion, making it the highest growth in new development in Hong Kong this year-to-date. Our residential project, State Pavilia in North Point offers 388 residential units launched in January during a relatively sluggish Hong Kong property market, it immediately set 3 major records in 2025. That is becoming the first project this year to sell out its first batch of units on the same day, achieving the highest per square foot price for a new development on the Hong Kong Island at the time and reaching a peak price of HKD 51,000 per square foot. To date, over 335 units have been sold with total transaction value exceeding HKD 3.7 billion. Our Kai Tak project, Pavilia Forest commenced sales in July 2024, offering a total of 1,305 residential units. To date, over 690 units have been sold with contracted sales exceeding HKD 4.8 billion, making it the highest selling presale project in Kai Tak's runway area to date. Besides residential properties, we continued to advance the sales of the group's office project in West Kowloon. Leveraging the group's effective sales strategy, the office project at 83 Wing Hong Street has attracted numerous owner-occupiers and investors. To date, the project has recorded cumulative total contracted sales of about HKD 470 million since launch. The Twin Tower Landmark Grade A office project at 83 King Lam Street, Cheung Sha Wan is a leasing project right now. And then there is the NCB Innovation Center at 888 Lai Chi Kok Road recorded sales of HKD 1.3 billion in FY '25. Now I will pass to Mr. Sitt Nam-Hoi to explain our upcoming property project deployment in Hong Kong and progress in the Northern Metropolis development. Afterwards, Benny will share updates on Mainland property development. Mr. Sitt, please? Nam-Hoi Sitt: Thank you, Echo. I will outline our upcoming development projects in Hong Kong. We have ample land bank for short, medium and long term and will continue to drive sales with full force to ensure steady turnover. As Echo just mentioned, in FY '26, besides units from our 3 Pavilia projects, we also have a series of new launches entering the market. This includes last Friday's debut of our first brand-new FY '26 project, and that is HOUSE MUSE, Nga Tsin Long Road in Kowloon City within School District 41, all units listed on the price sheet sold out on the very first day of sales. Besides, we will progressively launch other projects in Kowloon, including 2 Bohemian collection developments in prime West Kowloon locations, one on Canton Road and the other on Kwun Chung Street plus a low-density luxury residence on Rose Street in Kowloon Tong. Besides the 530 units in Phase III of Pavilia Farm, our development above Tai Wai Station, are also expected to be launched in FY '26. The above projects will collectively provide over 2,100 units in FY '26. Furthermore, our JV projects will continue sales such as the Knightsbridge in Kai Tak. Miami Quay, Double Coast in Kai Tak -- Typhoon -- in Kowloon Bay and also the Legacy project on Victoria Road and Mid-levels West will also be launched within this year. The Chief Executive reiterated in last week's policy address, the need to accelerate development of the northern metropolis and has already established a Northern Metropolis Development Committee. The government is currently conducting detailed planning for areas, including the San Tin, [indiscernible], Ngau Tam Mei and Lau Fau Shan. Meanwhile, survey and design work for the Hong Kong, Shenzhen Western Railway commenced this year, with the goal of opening service by 2035. By then the journey from Hung Shui Kiu to Qianhai will only take 15 minutes. Our group has long-standing operations in the district, enabling us to capitalize on policy alignment and accelerate development. We possess about 15 million square feet of farmland area with existing plants expected to provide about 12 million square feet of land bank. Among these, 2 projects have already completed land premium payments, providing about 500,000 square feet of attributable GFA. The first is the Ma Sik Road project, a JV with China Merchants Shekou, which will provide 2,300 units. Construction commenced in March 2025 with the sales expected to commence as early as FY '27. The other is the Phase 4 project in Lungtin, village Yuen Long developed in partnership with China Resources Land. Land premium payment has just been completed, allowing construction to commence immediately. This project will deliver over 700 units also for launch, the earliest in FY '27. Besides these 2 projects, several more are expected to complete land exchange process within the next 1 to 2 years. They include Yuen Long, Lungtin village; Yuen Long, Lungtin village Phase II; Lungtin village phase 5 and also in Sai Kung, Sha Ha. Estimated to add about 2 million square feet of attributable GFA for the group. Over the next 3 to 5 years, we'll continue pursuing urban planning applications and land exchange applications, which are projected to increase the group's attributable gross floor area by about 6.2 million square feet. Key projects include Tong Yan San Tsuen, Wing Kei village, Wing Ning village, and Shap Pat Heung Road. The planning application for Yuen Long, Shap Pat Heung Road was approved by the Town Planning Board in January 2025. And similarly, the Wing Ning village in Yuen Long Land Sharing Pilot Scheme project. The Town Planning Board recently approved amendments to the statutory plan this month to resume the site for residential use. Regarding long-term outlook, the main projects currently planned include in San Tin [indiscernible] village, Ngau Tam Mei and Lau Fau Shan, which together can provide nearly 3.2 million square feet of attributable GFA. In summary, I want to emphasize that we have ample resources locally in the short, medium and long term. And we will cease market and policy opportunities to fully support the group. And for Mainland property development, I will pass the floor to Benny to make a report. Thank you. Unknown Executive: Thank you, Mr. Sitt. On 26th September last year, the Polit Bureau of the CPC, Central Committee explicitly called for promoting the real estate market to halt, decline and stabilize, marking the arrival of a policy inflection points. Then on 13th June this year, the State Council executive meeting further proposed establishing a new development model for the real estate market signaling an even clearer stance on achieving market stabilization and boosting industry confidence. Since this year, local governments have actively responded with significantly accelerated policy rollouts. Major cities, including Beijing, Shanghai, Guangzhou, Shenzhen and Hangzhou, tier 1 cities have implemented measures across multiple fronts, such as optimizing or lifting purchase restrictions, lowering down payment ratio, reducing mortgage rates and refining price caps. Notably, Shenzhen's new policy released on 5th September this year removed purchase quantity restrictions in multiple districts, further boosting market confidence. Consistently adhering to our philosophy of developing high-quality projects, we have successfully capitalized on policy dividend, achieving outstanding results across multiple regional projects. In FY '25, the group's mainland contracted sales reached RMB 14 billion. Even after adjusting our annual target upward in response to market changes, we successfully exceeded our goals. Numerous projects achieved individual sales exceeding RMB 1 billion. For instance, Guangzhou, Central Park View, benchmark luxury project showed RMB 2 billion upon its launch, demonstrating both strong pricing power and market demand. Other projects like Guangzhou, New World; The Silage and Canton Bay and Shenyang, The Parksville reflect the market's support and recognition for high-quality developments -- residential developments. In addition to outstanding sales performance, we successfully delivered 3 high-end residential projects in this fiscal year, including Hangzhou New World, River Opus; Guangzhou, New Metropolis Mansion and Shanghai City Gather. Then regarding asset disposals. In FY '25, we sold the Beijing Xinjiang Office, Ningbo New World office building as well as commercial properties and parking spaces in locations, including Guangzhou, Central Park View, Ningbo New World and Shenyang will continue asset disposal to accelerate capital recovery. In the coming years, the group continue to launch property development projects in Mainland China. First tier cities are beginning to relax purchase restrictions, guiding the market towards high-quality products. Over the next 2 years, we will continue to market premium projects, including Guangzhou, Central Parkview; The Sillage; Shenyang, the Parksville and so on high-quality projects. And Shenzhen Longgang 188 project will commence sales in FY '26. This is a large-scale project with total gross floor area of 650,000 square meters, offering 3,000 residential units across 2 phases. Its prime location at the core intersection of Luohu, Yantian and Pingshan Districts provide significant transportation advantages with direct access to border crossings and high-speed rail stations within 30 minutes. Over the coming year, the group is also in negotiations for multiple asset disposal. We'll continue to adapt to market changes and leverage our sales strengths. We are confident in achieving our annual targets. Now I will pass the floor back to Echo. Shao-Mei Huang: Thank you, Benny. As mentioned at the beginning, regarding IPs, we continued to deliver solid performance in FY '25. Despite the challenging macroeconomic environment, overall segment results and K11 segment results grew 2% and 4% year-on-year, respectively. In Hong Kong, our office leasing performance remained strong. Our occupancy rate performed well with K11 Atelier in Tsim Sha Tsui and North Point as well as Manning building and New World Tower in Central, maintaining high occupancy rates. For shopping malls, K11 MUSEA and Art Mall maintained high occupancy rates of 96% and 100%, respectively with foot traffic reaching record highs in FY '25. In August this year, both malls achieved the highest single month foot traffic since opening, with overall foot traffic increasing 20% year-on-year. Leveraging its prime location, unique positioning and robust foot traffic, MUSEA continues to attract numerous major international brands. Since July last year, over 10 international first-tier luxury brands have successfully opened new stores, upgraded existing stores or expanded their footprint. Among these, Loewe's newly upgraded concept store, Saint Laurent's Hong Kong flagship store and Rolex's special concept store opened in FY '25. Upgrades for AP and VCA stores were completed during the recent summer holiday period. Looking ahead, Prada's new duplex store and Balenciaga's new store will open sequentially in FY '26. This summer, international luxury brands at MUSEA achieved over 20% year-on-year sales growth. Besides, we continue to promote interactive experiences for our customers with 2 major events taking place at K11 MUSEA this summer vacation. First, the Cristiano Ronaldo Hong Kong Museum, the first of its kind in Asia opened in early July, drawing numerous fans. Second, the large scale exhibition of the popular Japanese anime character Chiikawa was held at K11 MUSEA's Waterfront in August. These events further boosted MUSEA's foot traffic and sales performance. Art Mall positioned to target the Gen Z market has capitalized on the green economy trends by actively introducing multiple anime and trendy pop toys brands. Examples include the globally popular Popmart and CardGame giants, [indiscernible] and Toys"R"Us first life play concept store in Asia, successfully cultivating a stable young consumer base. The green economy has significantly boosted sales performance for related merchants with sales from anime and trendy pop toy merchants increasing by over 65% year-on-year in FY '25. In Mainland China, our overall project occupancy rates remain sound primarily due to our effort in brand enhancement and tenant mix adjustments, which delivered richer experience to consumers and sustained consumption momentum. Shenyang K11 introduced 7 new brands to Northeast, China and Shenyang, first store in FY '25, cohosted over 30 events with tenants, attracted more than 13 million visitors throughout the year and achieved record-breaking sales. During FY '25, 2 new K11 projects opened in Mainland China, Shenzhen ECOAST and Ningbo K11, Shenzhen ECOAST, the first K11 flagship project in Mainland China, grandly opened before this year's May Day Golden Week. Since its opening, it has recorded over 12 million visitors, averaging 100,000 daily foot traffic. On the first day of May Day holiday alone, 300,000 people came and high foot traffic was maintained during public holidays like the Dragon Boat Festival, establishing it as a new cultural and tourism hotspot in the GBA. Ningbo K11 was opened in September last year and has gained strong market recognition. Since opening, it has recorded more than 5 million visitors. The project has also brought several new stores to the local area, including Ningbo first Tsutaya book store establishing itself as a landmark in Ningbo and the East China region. In the coming period, we'll continue to see several major investment property projects officially open including Guangzhou's second K11 will open on 29th September 2025. That is next Monday, creating another landmark TOD complex for Guangzhou, Chenglong [indiscernible]. On 28th May this year, we signed a strategic cooperation agreement with the Shanghai government officially launching the major project K11 Atelier to establish a lifestyle hub for high-end consumption and cultural experiences along Huaihai Road. The K11 office Atelier session will open in second half of next year with key initial partners, including MS and a Singapore-based law firm, Rajah & Tann. Meanwhile, the Guangzhou New World Art Centre project has entered its harvest phase. The project boasts a total GFA of 740,000 square meters. Apart from residential units, it encompasses diverse formats, including K11 Art Mall, K11 Atelier hotel, salable commercial components such as office towers and retail streets. Office buildings and commercial streets have been progressively delivered. Phase 2 has reached a structural completion and is expected to achieve full completion by the end of 2025. Regarding CapEx, as shown in this chart, you can see that our CapEx for FY '25 further decreased from HKD 14.8 billion in FY '24 to HKD 12.6 billion, mainly due to, one, we continued to strictly control spending on each project, optimizing and enhancing construction cost efficiency while maintaining high building quality. Two, regarding land bank, we aligned with government policies this year, seizing opportunities to convert farmland into land bank. This reduced both the cost of replenishing land bank and capital expenditure. In FY '26, we'll continue our effort to control CapEx, strictly limiting it to below HKD 12 billion. In terms of operating expenses, we have optimized our corporate structure and processes to reduce daily operating expenses. Our G&A expenses in FY '25 amounted to HKD 3.5 billion, representing a 16% decrease compared to the previous year. Comparing with FY '23, it is down 30%. We'll continue to effectively control our operating expenses, ensuring that every dollar counts. Based on our current financial situation, we have decided to continue suspending dividend payments and perpetual bond coupon. I'd like to take this opportunity to review our progress in treasury management. First, our company successfully completed HKD 88.2 billion refinancing project in FY '25. Second, we also successfully secured the first tranche of an additional HKD 3.95 billion in committed loan facilities yesterday with the option to scale up further as needed in the future. Third, our company's cash flow has improved. Fourth, overall total debt continues to decrease with net debt reduced by HKD 3.6 billion over the past year, and the net gearing ratio has stabilized. Moving forward, we will continue to enhance our company's cash flow, actively manage our finances and prudently handle our debt obligations to achieve steady progress. Finally, I would like to once again express my sincere gratitude to all investors, especially banks for their tremendous support over the past few months. This has strengthened our confidence and we believe the future will get better. Thank you all. Patrick Cheong: Thank you, Echo. Now we will start Q&A session. We have already received many questions. So we have actually categorized them briefly. Our management will answer them one by one. First question, our debt position. So in FY '25, net debt decreased. So does the company have concrete goal for debt reduction and timetable? Shao-Mei Huang: Let me take this question. Now reducing indebtedness is our important work, and I have been emphasizing this. In the coming year, we will strive for progress in stability, we will seize market improvement opportunities to manage our treasury and cash flow. We have put in place 7 measures to reduce indebtedness. And this year, you have seen initial success and achievements. Our total debt and net debt in FY '25, came down by HKD 5.7 billion and HKD 3.5 billion, respectively. Well, this year, we have completed HKD 88.2 billion bank refinancing. For the group we increased short-term and medium-term liquidity. As a result, in the future, in the coming few years, we'll have more time to steadily develop with full force our core businesses. We will continue to strive for steady progress and promote sales and actively improve cash flow to reduce total debt. That is our top most target. We have not set short- to medium-term target for net gearing ratio because that involves a lot of asset disposal progress, cash recovery and interest rate environment factors. Patrick Cheong: Next question is related to your [indiscernible]. So some time ago, New World announced that for a number of perpetual bonds, coupon payment will be deferred. So now you have completed the refinancing project. When are you going to resume payments? In the market, there are rumors that the company will discuss with bondholders about LME options. So when will that be a concrete proposal? Shao-Mei Huang: Edward can you take the question? Edward Lau: Thank you, Echo. Concerning deferment of payment of perpetual coupon while our group has adhered to our prudent capital management principle and that is a decision to preserve cash. All along, our company has been actively managing our finances. Our goal is to lower total debt. We comply with all debt obligations for perpetual coupon distribution. We comply with all contractual terms in our action. So in relation to coupon payments and related changes about the perpetual, we will go according to the contract and related regulatory requirements. And at appropriate times, we will make disclosure and make announcement. Recently, the market -- there are a lot of speculations and rumors in the media about New World. So everything should be based on official announcement, please do not believe in market rumors. As I said earlier, our company has the objective of reducing indebtedness. So the management will continue to keep an open mind to assess different financial tools. In the future, if there is concrete arrangement, we will make disclosure according to the loss. Patrick Cheong: The next question is also about debt. So all along, the company emphasizes that reducing indebtedness is the goal. But yesterday, you took out a new bank loan. So what is the use of the proceeds? And for this new bank loan, is it in conflict with your goal of reducing indebtedness? Shao-Mei Huang: Edward? Edward Lau: As Echo mentioned just now yesterday, we got the first tranche of additional HKD 3.95 billion committed credit facility. We're going to use it to meet debt related needs of our company. As stated in the announcement in the future, we can increase the scale according to needs. As said earlier, this year, we have successfully controlled the scale of net debt. For the whole year, net debt decreased by HKD 3.5 billion. This shows that our cash flow has improved. So while risk will be controllable, we will make good use of financing tools to help our company to increase or enhance liquidity. We will continue to actively improve our cash flow and expedite capital recovery and also our asset disposal plan. So for all these goals, they are for the purpose of reducing indebtedness in the long run. Patrick Cheong: Next question is about the majority shareholder. Will the majority shareholder consider injecting Capital? Unknown Executive: I will take this question. sometime earlier, we issued an announcement to clarify. So far, we have not received any capital injection plan from the majority shareholder. Patrick Cheong: This question is a similar question. Is that -- right now, is it true that the company continues to undertake that there won't be rights issue? If there is no rights issue, will you consider share placement. If so, then are you going to place the shares to the majority shareholder? For CTF service and CTF jewelry, recently, they issued convertible bonds, one after the other, will New World also consider issuing CB? Shao-Mei Huang: Let me take this question. Some time ago, we said that our major goal is to improve our cash flow right now. As management of the company, we will prudently consider any capital tools and options. But so far, we do not have any plan about rights issue, share placement or issuance of convertible bonds. Patrick Cheong: Next question. About this year's P&L. Unknown Executive: This year, for the whole year, results still showed a loss of more than HKD 10 billion. Patrick Cheong: So at the next result announcement, do you think there will still be a loss. When do you think you can achieve a turnaround? Edward? Edward Lau: Just now Echo said that this year, on the book full year results, our full year loss was affected by one-off provisioning and one-off loss. So there are impacts about interest rate environment, overall macro market environment and so on. The U.S. Fed so far had cut rate once. But overall interest rate trajectory still sees a lot of uncertainty. It is difficult to make any forecast now. As mentioned just now, we'll continue to optimize our operating efficiency, we will enhance our property sales results and recurring revenue. We will strictly manage our expenses. We will try our best to achieve steady progress. And when the market improves, we are confident that our profit will improve. Patrick Cheong: The next question is about 11 SKIES. Are you talking with airport authority about lowering rent or selling 11 SKIES? Shao-Mei Huang: Let me answer this question. All along, we have got deliberation with airport authority. There are external rumors about 11 SKIES, and the airport authority has made a response sometime earlier. You can take reference from that response. So far, we do not have anything to add. Patrick Cheong: Next question is about the recent policy address. The policy address states that the government wants to expedite development of the north metropolis. What kind of help will that be to New World in specific. Shao-Mei Huang: Mr. Sitt? Nam-Hoi Sitt: Thank you, Echo. The group welcomes the government's decision to expedite development of the northern metropolis and there will be the setting up of Northern Metropolis Development Committee. This is conducive to the creation of new economic opportunities for Hong Kong. We have 15 million square feet of farmland -- land bank. A lot of them is in the northern metropolis prime sites. We will use different channels to release value of the farmland and to expedite capital recovery. We'll actively bring in strategic working partners to enhance development potential. Now we work with China Merchant Shekou in [indiscernible] Ma Sik Road project. We have completed payment of land premium. And this year, in March, construction commenced. 2,300 residential units can be offered and sales can start in FY '27 the earliest. We also work with China Resources Land in Yuen Long Lungtin Tsuen Phase 4. We completed land premium payment this month. After that, construction will commence. 700 units can be offered, and they can be launched as soon as FY '27, the late -- the earliest. Patrick Cheong: The next question is about Mainland China property development. So what are the management's views in Shenzhen. Recently, there are new policies released? What kind of help will that be to the company? Shao-Mei Huang: Benny? Unknown Executive: Yes, in Shenzhen, there are 2 projects that will be launched soon in the market. In Shenzhen, there are new policies, they will definitely help the sales of our new projects. Let me add a few points about the new policies. They cover 80% of the areas of Shenzhen, number of units purchased restriction is abolished for non-Shenzhen [indiscernible] people. The purchase restrictions are lowered. And then for first units and second property unit mortgage rates, it is unified at 3.05%. And this has lowered the cost for property buyers significantly, and it also helps the purchase desire. In the first week after the new policies, for firsthand residential transactions in Shenzhen, comparing with August same period, there is an increase by 40%. September and October, our traditional peak season, together with these new policies, turnover is being driven and the main demand is from upgraders. And for our 2 projects in Shenzhen, the first one is the Longgang 188 project. It is in the nonrestricted area. There is convenient traffic. Within 30 minutes, people can go to the border control points and high-speed real station. Apart from local residents, there are many Hong Kong people who may be interested to buy properties in Shenzhen, they will be attracted to the projects. Another project in Shenzhen is in Nanshan, Xili urban renewal project. So all the demolition works have been completed. The main body construction is being approved by the government already. In 2026, we will launch the project to the market. Patrick Cheong: Next question about K11. Some time ago, the former CEO of New World, Dr. Adrian Cheng, established K11 by AC. So together with K11 Group, especially -- together with New World Group and K11 brand under the group, what are the relationship? Shao-Mei Huang: Let me take this question. K11 is wholly owned registered trademark and brand of our group. When Dr. Adrian Cheng left our group, he sought the consent of our group to use K11 by AC brand. K11 by AC current investment businesses and operations, including the asset-light management projects are not related at all with K11 and New World Group. At the same time, the Hong Kong K11 MUSEA that we are operating and managing, K11 Art Mall, Guangzhou K11 and Shanghai K11 and also the K11 projects mentioned in our annual reports are totally not related to K11 by AC. Finally, I would like to supplement that apart from our group series of companies, K11 series under our group at present do not manage other property projects developed by third parties. Operator: Next question is about asset disposal. Some time ago, there are rumors in the market about K11 Art Mall. Apart from that, does the group have planned to sell Shanghai K11. This year regarding asset disposal, do you have any concrete goals? Now, the market is not that good. There are many developers which want to sell properties to achieve encashment. So when you dispose of assets, do you encounter big difficulty? Unknown Executive: Let me answer this question. Regarding false market rumors, we will not make further comments. But I would like to state the point that from time to time, our group receives asset inquiries from potential buyers. This shows that our assets are of good quality, and they are attractive in the market. In the market, there is both buying and selling. This is normal. These are normal behaviors. I would like to emphasize that we will only sell our assets when our targeted price is reached. Patrick Cheong: Because of time, I will now read out the last question. This question is about recent rate cuts. Recently, the rate cuts -- how much help is brought to your interest expenses? How much interest is saved in the coming FY, how much money do you think you need to repay? Shao-Mei Huang: Edward? Unknown Executive: Thank you, Echo. Yes, rate cut helps our group to lower funding costs. Based on our current debt structure, if interest rate falls 1%, we can save around HKD 800 million annual interest expenses. As mentioned earlier, debt that will mature in the coming 1 year amounts to only HKD 6.6 billion. We will actively do financial planning. We'll use diversified tools to manage our refinancing risk. Patrick Cheong: Thank you, Edward. Finally, once again, thank you all for joining New World Development's FY 2025 Annual Results Announcement today. Thank you.
Operator: Good morning, and welcome to the Regional REIT Limited Investor Presentation. [Operator Instructions] I'd like to submit the following poll. I'd now like to hand you over to Chief Executive Officer, Stephen Inglis. Good morning, sir. Stephen Inglis: Good morning, everyone, and thank you for attending. Very much appreciated. This is a presentation of the half year results for Regional REIT for the period ending 30th of June 2025. I will run through in a few seconds the half year results and then spend just a bit of time updating you on the progress that is being made towards our strategic goals, which to remind you are increasing net income and growing the NTA by adding value to the portfolio, also continuing to pay a strong and covered dividend and finally, further debt reduction. The business has, in my opinion, a great opportunity ahead as we strategically reposition our portfolio to drive long-term value. As mentioned just a few seconds ago, there will be time for Q&A at the end of this presentation, and therefore, questions will be at the end. If I can introduce those on from the company. I'm Stephen Inglis, CEO. Alongside me this morning, Simon Marriott, the Property Fund Manager; Alistair Hewitt, you can also see on screen the Finance Fund Manager; and Adam Dickinson, our Investor Relations Manager, who will deal with all questions submitted. There has been a huge amount of work undertaken by the team. And as I will demonstrate, a great deal of progress has been made, which will produce increased returns for the company in the short- to medium-term. I'm encouraged that our occupational market seems to have reached an inflection point with yields having been stable during the past half year period. Unfortunately, we have experienced some unexpected tenant breaks, which shall act as a headwind for our income and which directly caused the 1.03% like-for-like net asset value decline at property level at these half year results. Excluding these specific assets, our portfolio saw asset value stability for the first time since before COVID. Because of these tenant breaks, the company has been prudent and guided down market consensus for this year's income. However, we will still hold our dividend in absolute terms, expecting to be 10p per share, which unfortunately shall remain covered. I am, however, confident on the income side, looking just a little further out as we are making strong progress on a pipeline of material new letting opportunities even if their contributions are expected to benefit our next financial year. Further, we are making good progress on the Capex Programme, an essential part of our strategy to improve the quality of the estate and capture the increase in occupier interest we are witnessing. We're also making good progress on sales in a little bit more detail in a few minutes, and we'll be repaying debt. Finally, progress is also being made with our lending partners on our August 2026 debt maturity, which Alistair will discuss later. Okay. So let me take you through the salient points for the half year to 30th of June, following which, as I said, I will spend a little time looking at the key initiatives and providing some insight on what we are seeing in the markets, both occupational and investment and what we might expect to see moving forward. H1 2025 has been about working towards repositioning the portfolio. This includes continuing and increasing the number of Capex projects, increasing sales to reduce debt and selling noncore assets, underperforming assets and assets at the end of their business plan to reduce the void costs of the portfolio. There does, however, remain huge uncertainty created by in part geopolitical conditions and closer to home the perceived shambles of the current U.K. government. And this has played out in the real estate markets and delays the decision-making and little improvement in the investment markets as the number of sellers continues to outweigh the number of investors actively buying. So in terms of the portfolio, we have invested GBP 6 million in Capex in the first 6 months, this compares to GBP 8.2 million in the entire year 2024. There are currently 5 projects on site and a further 18 in transition, and we will commence on as many projects as practical in the coming months. We've sold 5 projects and a further -- we've sold 5 assets rather for a total of GBP 7.3 million. Undoubtedly, the pace of sales completing has been slower than we anticipated. However, there's an element of timing as we have sold a further 5 assets for a further GBP 15.6 million. And there are further 10 assets either contracted or in legals that we should complete between now and the year-end. We had planned at the beginning of the year to sell a total of GBP 40 million to GBP 50 million of assets in this year, and we're already trying to achieve this. New lettings have continued. And while there has been a slow market, we have achieved 20 new lettings in H1. Encouragingly, we are still achieving rentals in excess of ERV. The level of interest from prospective tenants has increased considerably across the portfolio, and this increase in requirements and inspections will flow through to an increase in leasing activity in H2. But as I stated back in March, we do not expect this to be reflected in our numbers until 2026. While EPRA occupancy is marginally up, this is not reflective of true occupancy, which owing to some unexpected breaks and expiries, we have lost tenants and this has impacted gross rental. The reason that EPRA occupancy is up is because of our increased Capex activity to provide better quality space and to reduce void costs. So this is the reason that rental income is down while EPRA occupancy is showing an improvement is the core of the EPRA system. As you can see, earnings per share on an EPRA basis is 5.2p per share, so the dividend of 5p per share in the first half of the year is fully covered. The company will pay a dividend of 10p per share in the year, which we would fully anticipate will be covered by earnings. Net LTV is slightly up, reflective of the drop in value linked to the loss in income and a couple of additional breaks being exercised that will impact H2. Valuation was like-for-like 1.03% down, but 2% down when you include the Capex not yet reflected in the values as projects are midway to completion. I suggested at the full year results announcement that we were at or very near the bottom of the market. If you analyze yields of individual assets and yields have not moved, suggesting the market and the values view at least has bottomed out. I concur with that. It's the income difference that has reduced our total valuation number. Otherwise, we would have been flat as I had suggested in the full year results in March. Gross borrowings have reduced by a further GBP 6.7 million as we continue to repay debt and the company has produced a total return for the period as at the half year of 9.6%, so very slightly ahead of the index. Okay. So looking at the chart on the left, you can see the average rent has been slowly increasing with average office rents now GBP 15.25 per square foot. This will increase further as new lettings are undertaken on better quality space and with the majority of renewals and lettings now achieving in excess of GBP 20 per square foot. Just next to that, you'll see the yields column and the bar chart there. You'll notice that yields from the December '24 and June '25 are almost identical. As I mentioned, these haven't moved, suggesting yields have stabilized and indeed that we have now seen the bottom of the market. Each market is different, but we are seeing a number of larger requirements and interest on some of our larger spaces and that's a slight change from last year when the majority of interest was in smaller spaces. We're not yet convinced this is a trend and may well be disappoint in time, but it is something we will monitor closely as it does influence decisions whether to create smaller or larger spaces for the occupier market when undertaking refurbishment projects. We also remain an office-focused business with offices accounting for 90.4% of the value of the portfolio. And as mentioned previously, 20 new lettings undertaken, which will create a GBP 1.4 million rent roll and importantly, reduces void on these assets, again, achieving in excess of ERV as rental growth, which has -- we have witnessed over the last 3 periods continues. It's a [indiscernible] slide, but you'll see from the slide the activity over the period, and you'll see this is literally from Glasgow to Bristol and many places in between. There is an increase in activity across all of the major conurbations. Just looking at some of the office rents achieved, Milton Keynes at GBP 21 per square foot; Bristol at GBP 20 per square foot; Capitol, Leeds at GBP 24 per square foot; Coach Works, Leeds GBP 30 per square foot. And you can see for that better quality space that we're creating, we're achieving rents well over GBP 20 a foot, and we expect that to continue and continue to improve. Let's now take a moment to look at what's happening in the marketplace from an occupational viewpoint. On the demand side, we are seeing demand improving. You will note the top left, the Big Nine markets have shown the strongest take-up in terms of numbers since 2019 and an average rental growth across the market of 3%. This is in line with what we have achieved on average 4.2% ahead of ERV. Looking at the top right graph, you'll see rental growth in U.K. regional markets, again, outperforming London after a short-term reversal in 2024. Of course, much lower base rents, therefore, any improvement has a bigger impact. On the supply side, we continue to see a contraction both in new developments and the bottom right graph shows this in stark numbers, but also total stock repurposing as many office buildings are repurposed for alternative uses. And when combined, this will lead to a supply issue. So little in the way of new development coming on, you'll see the numbers falling dramatically in terms of deliveries for '26, '27, '28 and literally nothing coming out '29, '30. And if you think that from start to finish on a new development, it's probably in the order of 36 months, we will see a period with little or no new space in regional markets being delivered. That combined, as I say, with continuing repurposing of buildings that have reached the end of their economic life, and we will see further contraction in the supply. I think it's highly unlikely we'll see any new development in the short term of any scale, just given the fundamentals of that market, increasing costs, a lack of available finance and the relatively thin investment market, all makes it extremely difficult to make financially viable developments. My development colleagues tell me that we need to achieve somewhere between GBP 55 and GBP 60 a square foot for it to be a financially viable market. This will lead to an increase in rental growth on existing good quality stock. And this will accelerate further when combined with EPC requirements, the closer we get to the next requirement in 2027 and more specifically, the requirement for EPC A or B by a deadline in 2030. As part of the asset strategic review, we undertook a segmentation exercise, looking at the assets we want to retain, referred to here as Core and Capex to Core. And those assets we will dispose of being the right-hand 2 columns comprising of assets at the end of the business plan, nonperforming and sales post value-add initiatives, which we hope to achieve increased pricing based on suitability for alternative uses. So in effect, we draw a line down the middle. Everything on the left, we want to retain for longer-term rental growth. Everything on the right, we want to sell in terms of both current sales and value add, which will be longer term. And that splits quite nearly to 75% we want to retain, 25% we want to sell by value. If we then look at the occupancy levels of the various tranches, you know the core portfolio on an EPRA basis just under 88%. Capex to Core just under 80%, but that's obviously excluding those under refurbishment, the number is closer to 65% in terms of true occupancy. And then as you'd expect, much lower occupancy numbers in terms of the value added 65% and the assets in the current sales at 55%. So these are assets not contributing in a positive way to income. Part of the strategy clearly is to reduce gearing and undertake sales to reduce overall debt and to sell more noncore assets to reduce void costs. As mentioned earlier in the period, we sold 5 assets for GBP 7.8 million. This slide was produced obviously for the half year, so there's a further 4 at GBP 6.8 million. You have read that we sold a further asset last week at GBP 8.8 million. So as mentioned earlier, we have sold now in the order of GBP 23.2 million or thereabouts of assets. A further 10 assets totaling over GBP 40 million either contracted, agreed or in advanced negotiation and could well complete before the year-end. Certainly, we would anticipate reaching our GBP 40 million of sales in the year and somewhere between GBP 40 million and GBP 50 million, which was the intention at the beginning of the year. Now looking at Operational Capex, we continue to make progress. In 2025, we've completed 9 projects, a further 5 on site and a further 18 that are various stages of advancement. We're committed to bringing forward as many projects as practical as soon as we can to ensure that we give ourselves the best chance of increasing occupancy given the improving leasing market and move to quality that we're witnessing. Just a reminder of our strategy in respect of the assets identified as potentially suitable for value-add alternative uses. Just running through the stages, obviously, feasibility studies in the first stage, looking at the financial feasibility of each site. Then assuming they are financially feasible, we undertake planning initiatives for change of use. That could be pre-planning inquiry level or planning in principle or indeed a full planning consent. Each stage of that produces an increase in value. And of course, we're looking to dispose of these. We are not intending developing directly, therefore, we will be looking to dispose of these once we have achieved some form of planning uplift and therefore, valuation uplift. Just having a quick review of these 2 projects. The one on the left, we announced last week as a sale, sold to one of the French SCPIs. This is a refurbishment project that we refurbished around the sitting tenants. So we have obviously increased EPC from D to B and the tenant on the basis of our refurbishment works agreed to sign a new long-term lease. So the reason for the sale was twofold. One, it generated a profit that wasn't being realized in terms of valuation, values and the markets quite often have different views. Secondly, achieved part of our strategic goal to sell at the end of business plan and the need to reduce debt, and Alistair will talk more about the debt facility this is in a few seconds. On the right-hand side, again, this was in our full year results. You see the works have been completed and again, taking improvement to EPC and obviously, increasing the value by undertaking the Capex. So GBP 700,000 turned into a value improvement of GBP 1.6 million. Look at the next one. This is, again, just a refurbishment project we undertook increasing rents from GBP 17 to GBP 23 per square foot, EPC improvement D to B, and this was led during the improvement works to Harron Homes on new 10-year lease. And again, you'll see the improvement in value. One more Thorpe Park, Leeds, very strong business park. Again, we've improved the rents here from GBP 22 to GBP 24 per square foot. We've taken it from a D to an A grade, and you'll see the likely value uplift of GBP 1.35 million. At the moment, we've been attributed GBP 1 million by the valuers as the final space is under offer, not quite signed in the half year, we'll see the additional improvement in value once that lease is signed. One more on the Ipswich, again, EPC D to A. And by undertaking these works, we have then been successful in leasing up 1 of the 2 buildings we have in Ipswich. The other building is likely to go for alternative use just given limited demand in terms of the Ipswich office market. And one of the Value Add assets, this is the largest urban development site that we have in the portfolio, [indiscernible] in the middle of Leeds and lots of redevelopment ongoing around. This has been identified as suitable for beds and likely to be residential of up to 1,000 additional units. So a very large-scale site at the moment is a distribution facility for Asda, although they use it as a Asda training center for the supermarkets. And we have 5 office buildings surrounding that. So the entire island site. The bottom right-hand thumbnail is a building we bought in. So the only acquisition we've made, which was to complete the development site, so only part of the development site we didn't own, and therefore, it was prudent for us to buy that. ESG remains a very, very important part of the overall business, specifically EPC ratings. And despite the sentiment in some parts of the U.S., it does continue to be very important in the U.K., both for occupiers and investors. You may well be aware of the EPC targets and deadlines, but the entire market is continuing to focus on EPC A or B by 2030. We previously reported estimates that in terms of the regional U.K. office market, only 20% to 25% of assets conform to those standards. You'll see there in the slide, the latest research from the British Property Federation estimates that on an overall basis, only 17% of commercial buildings currently comply with the 2030 target. So only 17%, 83% of existing buildings in the commercial world do not comply to that standard. I mean, regardless of the various parties' estimates, this remains a massive issue for the industry. I'm pleased to say we continue to make progress and currently have just under 60% of our portfolio complying with those EPC A or B and obviously, with our continuing Capex and refurbishment programme have plans in place to improve this. And then with what I've just commented on, we continue with new initiatives and some further improvement in sustainability goals. In terms of the solar, we announced this some time ago that we'd enter into a joint venture. That's now done, and I'm pleased to announce that Phase 1 has been completed with Phase 2 now commenced. None of these actions on solar have yet been included in upgrading our EPC. That will be done when buildings are reassessed. Also, I would add the refurbishment projects we've completed are also not part of the current EPC numbers. Again, those buildings required to be reassessed. And once they are reassessed, they will have an upgraded EPC rating. Our 4D installation programme, as you'll see, is so far installed at 41 locations with the next phase about to commence. From our very initial monitoring, the efficiencies identified on just 3 properties are in the region of GBP 123,000 per annum. This is very substantial when you look at it in context of only 3 assets. The benefit is for the asset. So in some instances, this will be shared between the occupying tenants and the landlord, but nonetheless, is a step in the right direction and also improves our EPC and ESG credentials. 4D is effectively a sophisticated monitoring system of energy systems that improves EPC rating, but does, as you will see from above, the GBP 123,000 produce financial benefits too. We're rolling out car charging points across the portfolio as required in some instances by tenants looking to occupy. But generally, across the portfolio, we will be increasing the number of car charging points as EVs become more and more popular. Introducing reflex, I mean we have had an element of flexible offices in our portfolio for some time, some managed by third parties and various different guys within the portfolio managed by ourselves. We were keen to identify the best way for us to be in the flexible market. Certainly, when we have used third parties, it works for the third parties, but not for us as a landlord as all costs are passed on effectively to the landlords. So overall rentals always underperform what the original business plans have suggested. But we 18 months ago, brought in a consultant, formerly a Chief Executive, NewFlex to look at the portfolio -- our own portfolio, what would best suits our portfolio. And I'm pleased to say that having run various trials, we have identified reflex, the pilot at Glasgow as being the best option for us. The main difference is that we are still providing high-quality flexible space and all of the niceties you would expect an office from fresh fruit, breakfast, coffees, et cetera, but staff-free. So asset-light allows us to create smaller spaces as well as larger spaces. The problem with having fully staffed offices is the cost of those staff, and therefore, you have to have larger spaces. Our idea is that we can have this as a flexible approach to smaller and larger spaces. And effectively, it works exactly as you would expect in a normal office where things are key coded. We can use technology for the booking of meeting rooms, technology for turning on and off of lights and heating, and other services. And this is a far more efficient way of running flexible office space. With our intention of creating all things to all people, we want to be able to create one desk for 1 day or 100,000 square feet for 10 years. But you'll see the interesting numbers in the bottom right-hand corner, pilot rent there. We're achieving GBP 45.50 net against our traditional rent of GBP 17.50. Now the pilot site was 100% let and therefore, has gone very, very well. But clearly, this model works on anything of 60% occupancy and above with a market rate of 85% occupancy. So it could be very profitable for us. We've identified the first nine sites 28.53 and will be rolling this programme out over the course of the next 24 months. Some key metrics. I mean this is a summary of what we've discussed earlier just there in a simplified form for [indiscernible] a look at. Okay. Alistair, can I hand over to you to talk about the debt and specifically the August '26 expiring. Alistair Hewitt: Yes. Okay. So this slide shows the breakdown of facilities as at the 30th of June, 4 facilities with total debt of GBP 310 million. Stephen mentioned, we repaid GBP 6.7 million in H1. To date, we've repaid [GBP 6.4 million] in H2 from sales with another GBP 8 million to come from the sale that was published last week and further repayments to come from sales that will happen over the next 2-3 months. If all the sales complete that we anticipate completing this year, the LTV should move below 40% by the year-end. The key focus just now is on the refinancing of the facility we have with RBS, Bank of Scotland & Barclays, which is the first one in that row table -- sorry, first row of that table. Current balance is about GBP 96 million. This facility has been the focus of a lot of sales activities, and we anticipate the balance on refinance to be near GBP 80 million, and we're targeting refinancing that by the end of this year. We're not anticipating a big move in the margin. You'll see the margin there is the 2.4%, but we will see an increase in the net cost of funds because that facility at the moment is fully hedged until August 2026. The cost of funds, the hedged cost of funds is shown on the table there just under 1%, but that will move to near 4% on the refinancing. So that will increase the cost of funds in that facility by 3%. And that would increase our weighted average cost of debt from 3.4%, which is shown in the bullet points at the top of that table to 4.2%. As I said, it is hedged until August ’26, so when we refinance it, we have the option of the opportunity to keep that hedging in place to retain lower interest costs for the next 10 months or so or we can break that existing hedging, which will generate just under GBP 3 million of value for us, and we can use that value to either buy down the rate for the refinance term or just pay on market rate from day 1 and retain those funds for further Capex investment and working capital. I think that's all I have to say, Stephen. Stephen Inglis: [indiscernible] some questions on this later, but thank you for this now. Okay. So just a reminder of our strategic priorities and repositioning of portfolio and as such, reposition the attractiveness of the company. We remain committed to reducing debt, as Alistair just said, and aim to have debt below 40% in the near term, hopefully, by the end of this year. We continue to focus on driving income at headline level by creating better quality spaces and driving leasing, but also on a net basis by reducing void costs by a combination of new lettings and sale of lower occupancy nonperforming assets. We continue to improve our EPC numbers and our overall ESG rating. We are pursuing opportunities to add value in some of the assets by fully investigating change of use options. And we are, of course, committed to paying an attractive fully covered and sustainable dividend, so they are the key strategic priorities. Okay. So now I have provided you with where we are currently. Hopefully, some insight as to the immediate outlook and longer-term outlook. What I would also like to say is that I am for the first time in a long time, feeling far more optimistic about the outlook for the office market generally and specifically for regional REIT. And that optimism has come really because of the improvement in the occupational markets and my strong belief that we will have an issue in terms of the supply-demand dynamics for regional offices coming down the track given current requirements of occupiers. And that requirement is for grade A space conforming to EPC A and B. And that's exactly the type of space that we are providing for occupiers. Second part of that optimism is we have seen stability in the valuation market. So while you are seem to have settled on the basis of yield, so we are at the bottom of the market, in my opinion. We did see, of course, consistent falls and increasing yields on asset values right away from 2020 COVID until December '24. June '25 being the first time that we saw stability. So that, again, gives me a little bit of optimism for the future. And some of the key components to that optimism also previously predicted are now becoming a reality. I would say that we're seeing the majority of people back in the office for the majority of time. That's now beginning to be more widely seen. We have, for some time, looked at our own numbers, and we're back to pre-pandemic occupancy numbers on average 4 days out of 5 in the office a week across our regional portfolio. I know there's various differences in the Southeast, specifically London. But I think we are seeing more and more people coming back. A move to better quality space. I've used this many times, but why would we expect people to work in an environment worse than their own home. So the majority of demand is, as I just mentioned, for Grade A space conforming to those EPC ratings. And that will continue, that flight to quality will continue. And that quality doesn't mean ivory towers. It doesn't mean brand new glass buildings in the city of London. Just bear in mind that, that is only a small percentage of occupiers who require or prepared to pay for that and likewise in the regional markets. The supply would reduce given the slowdown in development and demolition repurposing of existing buildings for alternative uses. I've touched on this earlier, but this is happening and has been happening for some time. If you have no new supply coming into the market and supply being repurposed, then clearly, total market reduces in size. Therefore, it's all down to demand. And therefore, what is going to happen with demand? Well, we're seeing upsizing in many instances of companies who had previously downsized, so that's encouraging. And we're seeing lots of new requirements come from specific industries, technology industries, defense, a big one, where we're seeing a number of inquiries, energy, number of inquiries. So we are seeing demand from certain sectors in the market increasing. I thought there would be a demand-supply imbalance going forward, and that will increase, I think, as we get closer to 2030. And that increase in that supply-demand imbalance will create increasing rental growth. I do suspect that we will see -- we've seen rental growth over the last 3 periods. In any event, I think that will increase in scale as 2 things happen. One, we'll have more demand for less space and just the quality of space will not be available to occupiers. Refurbishment and development stripping back to shell would become more prevalent. I think that is going to be the case going forward. I think there will be restrictions both in terms of financial restrictions and making things financially viable and in terms of planning, trying to get carbon footprints to a sensible level. And therefore, I think refurbishments will be the way forward rather than new builds in many instances. And then it would take some time for investors to show interest again in offices and we need to see sustained improvement in the occupier demand to attract more investment. I think that remains my position. I don't see -- while I'm seeing good strides and encouraging signs on the occupational market, I don't anticipate a huge improvement in the investment market until such time as we've seen periods of sustained improvement from the occupational side. I think that's what we'll have to see to attract in any substantial investment. We are seeing slightly more interest from investors, but these are not sustained. These are one-off purchases in many instances, not people coming in wholescale to our sector. But I do anticipate that will happen, just it will take some time to come through. So I think that's the end of what I'd like to say this morning in terms of presentation and obviously very happy to take any questions. Operator: [Operator Instructions] Recording of this presentation along with a copy of slides and the published Q&A can be accessed via investor dashboards. As you can see, we have received a number of questions, both pre-submitted and throughout today's live presentation. And Adam, if I could hand over to you to chair the Q&A, that would be great, and then I'll pick up from you at the end. Adam Dickinson: Thanks Alexander, thanks Stephen, for that comprehensive presentation. We see quite a few questions. I just kind of group them together if I may. The first one, so the sale of Clearblue, which was announced last week, was at 11% premium. And should we expect similar pricing across the pipeline? And what does that mean for the debt reduction? Stephen Inglis: Yes, I think we can deal with 2 questions here at the same time. So selling prime assets with good rent, but presumably is also reflective of the Clearblue deal. I think I mentioned in the presentation, that asset was at the end of business plan, which was to improve the quality of the building we took it from EPC D to B and sign a new 10-year lease. That clearly, at this point in time, add value to the market, and we're obviously looking to reduce our debt ahead of the refinance [indiscernible] 40.28 mentioned earlier. So 2 reasons for selling, one, end of business plan; second, to reduce debt. On the 11% premium, should we expect similar pricing across the pipeline? Well, the vast majority of assets we're selling just now are the poor-quality assets, those assets with less income. And as far as I'd like to think so, we have been able to achieve at least value. And indeed, of the GBP 50 million of assets that we are likely to sell, if not by the end of this year, early part of next year, they will be slightly ahead of value on current pricing. So we're hoping to achieve just ahead of value on the poorer quality assets. And of course, the intention is to retain as many of our higher growth assets, better quality assets as we can. Adam Dickinson: Thank you. Another question just in terms of disposals -- most of the assets seems to be -- disposal seem to be in Scotland. What has changed fundamentally in Scotland since you initially built the portfolio? Stephen Inglis: Yes, that's not deliberate. It's just coincidental, so there's no real political change in Scotland, as you have noted. The market in Scotland behaves very, very similarly to those in England. These just happen to be coincidence that we have a number of small assets in Scotland that we want to sell, so it's the numbers rather than the scale. So the numbers of assets are higher rather than necessarily the value -- total value, so no changes to speak of just coincident. Adam Dickinson: In terms of the assets that have been disposed of, the size of the assets is that having any bearing on the disposal? Stephen Inglis: Yes. I think the more liquid assets are smaller or assets with income. So Clearblue sale, we had some decent interest and obviously achieved a decent price. Most of the assets we're trying to dispose of are at the smaller end in terms of by value, sub [GBP 5 million]. And that market has a bit more liquidity given that it's not as reliant on debt. A lot of private individuals, small property companies, small-scale developers buying from us at that end and [indiscernible] occupiers. So I think you'll continue to see the majority of sales being of small lot sizes. Adam Dickinson: And in terms of the current discount to NAV, what do you think is causing that at the current time? Stephen Inglis: I think we've got 2 discounts. I think we have a REIT discount. And if you look across the REIT sector, the vast majority of REITs are trading at a discount. That in part is down to the generous investment market looking for different types of investment. A lot of money has come out on the stocks and that has created that reduction and size and scale of the discount. And then for us, we've got a second discount because we're in the office sector. I think part of it definitely is sector driven. I think the first thing in my opinion that will happen is that sector discount will disappear. I think as the office market continues its strides forward from a very low base, I would add, I mean, it has been the [indiscernible] of the marketplace since COVID, but there's definitely signs of improvement. I think a lot of people are now taking note of the office market and all of the doomsday scenarios that were muted at COVID are one by one disappearing in terms of return to office and indeed office space being required. So I think that second discount will disappear first, in my opinion. And then we have a general improvement in market sentiment for the REIT discount to improve. I think part of it is that investors don't truly believe the values. And I think in our particular case, I think our values are understated. They've been hit very, very hard. But nonetheless, I can understand investors looking at stocks that have intrinsic value such as real estate stocks and saying, are these values actually true values. In the absence of any real investment market, that's difficult. As investment markets begin to improve and as those values are demonstrated to be real, then you should see a discount closing towards NTA. Adam Dickinson: And in terms of -- we recently saw you acquire some shares in your own name, and we've seen in the past that David Hunter, the Chairman acquire shares in his name. Is this a confidence in Regional REIT. Stephen Inglis: Yes. It's as simple as that. I wouldn't -- I mean I already -- I'm a decent shareholder of my family; therefore, we took the view that as a family they offered a very, very healthy dividend and that the discount is far too large. So from a total return point of view, you've got a great running income return and you would hope a capital upside to come as the discount begins to close. So yes, I think it's exactly that confidence in what we're managing. Adam Dickinson: And more on the occupational side questions. When do you think occupancy will start to increase again across the portfolio? Stephen Inglis: As soon as possible, I think we -- I mentioned and alluded to in my presentation there that we are in discussions with a number of decent sized occupiers ranging from 20,000 square feet to 150,000 square feet. One or two of those landing makes a substantial difference to the occupancy of the portfolio. Added to which we are selling down those assets, which are on the whole, the smaller assets, which are poorly occupied. So the combination of those sales and hopefully more letting activity, particularly of the bigger spaces will make a substantial difference to our occupancy. And that increased income will go quite some way to offset the increased interest costs that we're going to have on the refi. And that's a key part. It's fine getting rid of void costs that get rid of half of your issue. But if we can let space, it's almost double and let me explain that. So for every pound of income, we receive roughly GBP 1.85 to the bottom line because we're then getting rid of the void costs that we incur as a landlord on vacant space being insurance service charges and all other costs, so we have substantial cost of landlord making up about 85p. And actually, the building I'm in just now, we undertook a 14,000 square foot letting earlier this year, and that was almost pound per pound. So GBP 22 a square foot rent, GBP 20 additional income to us on the void cost. So that's worth GBP 42 to us in terms of letting. So that's -- if we can lease up space, it has a double effect. If we sell space, obviously, we get rid of the void costs, so combination of both will improve the overall occupancy of the portfolio. I can't hear you, Adam are you on mute? Adam Dickinson: Thank you, Stephen. That covers the questions. Alexandra, if I may hand back to you. Operator: Yes, of course. Well, thank you very much for answering those questions. Of course, the company can review questions submitted today and publish responses on the Investor Meet Company platform. Just before redirecting, investors provide you with their feedback, which is particularly important to the company, Stephen, can I just ask you for a few closing comments? Stephen Inglis: Yes. Thank you very much everybody for attending this morning. It's very much appreciated. We obviously underwent a restructuring of the business last summer with REITs, which has put us in a position now to go forward with our strategic priorities, and we're making good progress against those, so the priority for this year was sales and reduce debt, look at an increased net income and those void costs will come down hopefully before the end of this year and get LTV to sub 40%, all of which we would hope to be able to do prior to the end of this year. So I think we've made good steps forward, but we've got to improve upon that. The benefits of the Capex programme, I think I said in March, I did say in March, will not really be seen until 2026. And the reason for that is by the time you go on site, undertake the works and then let the space, there's just a time frame there and therefore, any new income really will benefit us in 2026, not 2025. So that remains our position. So that, I think, is all I'd like to say. So again, just wrapping up, thank you very much for attendance. Operator: That's great. Well, thank you once again for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order the management team can better understand your views and expectations. On behalf of the management team of Regional REIT Limited, we'd like to thank you for attending today's presentation, and good afternoon to you all. Stephen Inglis: Thank you very much.
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