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Leon Devaney: Good morning. Our presentation today covers Central Petroleum's annual results for 2025. I'm Leon Devaney, CEO and Managing Director of Central Petroleum, and I am joined by our CFO, Damian Galvin. Throughout today's presentation, you are welcome to submit questions online, which we will address at the end. Please ensure you read the legal disclaimer that applies to this presentation. Last week, we released our 2025 annual report. Consistent with our quarterly reports, the company has achieved several key milestones that highlight strong operational and financial progress. A major success was the conclusion of a competitive gas marketing effort that resulted in a significant multiyear gas sales agreement that derisks and strengthens the company's future cash flows. Operationally, 2 new production wells were drilled and brought online at Mereenie. These wells were completed ahead of schedule, under budget and delivered production rates well above initial expectations, demonstrating effective project execution and strong asset performance. On the financial front, the company restructured its debt with a revised amortization schedule extending to 2030, eliminating refinancing risk and increasing our financial flexibility. As a result of these achievements, the company has the capacity to undertake a share buyback program, marking its first shareholder return event since listing nearly 20 years ago. I'll now hand over to Damian to go through our annual results in more detail. Damian Galvin: Thanks, Leon. FY 2025 has certainly proven to be a pivotal year for the company, and the results won't come as a surprise for those who have been following our quarterly results. Our bottom line statutory profit of $7.7 million is, I think, in many ways, more satisfying than the $12.4 million profit we posted last year, that's because last year's profit included $13.8 million profit from selling our interest in the Range [indiscernible] gas permit in Queensland. So when you strip out those one-off profits, you get a much better feel for how the business has turned around. So the underlying profit is $6.5 million this year compared with an underlying loss of $1.4 million the year before. So that's a significant turnaround. And more than 2/3 of that profit was recorded in the second half of this year as our new -- as those new gas sale contracts came into effect. Now the improvement in performance, it's evident across most of the metrics. You start with the revenues, $43.6 million. That's up 17% from last year, largely due to the increase in realized price, which was up 19% to $9.02 per gigajoule equivalent over the full year. And that flows through to the increased sales margins and the underlying EBITDAX, which was up 43% at $19.6 million. So some other items in there. The result also benefits from lower corporate and admin costs and reduced exploration activity this year. Higher interest rates have kept finance costs relatively steady, and we recognized a profit of $1.3 million on the sale of some surplus land near Alice Springs. So an excellent result for [indiscernible] have a closer look at some of the main drivers. The catalyst for the transformation lies with the new gas contracting strategy that we implemented early last year. And the impact from that on revenues was twofold. So firstly, the new contracts resulted in more reliable volumes. In the first half of the year, we had the benefit of those available contracts wholly within the Northern Territory, and they were mitigating the impact from the extended closure of the Northern Gas Pipeline. In the second half of the year, we had new contracts that also provided reliable offtake within the Northern Territory when we couldn't deliver gas to our customers due to pipeline closures. Secondly, those new contracts, which replaced the legacy contracts from 1 January this year, they're at higher prices. And the chart on the right shows the 27% jump in the second half average prices. And that flows through to the bottom line and cash flows. And I'll come back to margins shortly. Now the 17% increase in revenues was also boosted by record demand for gas from the Dingo field and the 2 new Mereenie wells, which were online from quarter 3, providing much needed additional volume. In terms of other revenue, we also recognized $1.3 million from the release of take-or-pay proceeds, and we're able to pass through some of the increased Northern Territory regulatory costs to some customers and we recovered $600,000. Coming back to volumes. The 2 new Mereenie wells were successfully drilled and commissioned. They're ahead of schedule, are under budget, and they've outperformed the pre-drill expectations. So it was a great result, and we're very happy with the outcome from those wells. Oil production at Mereenie was also higher. It was up 14%, and that was largely as a result of the flare gas compressor that we commissioned and installed late in the previous financial year. However, the oil offtake was partially constrained in the fourth quarter and that did have a knock-on effect on gas production, and we've implemented some solutions recently so that volume shouldn't be affected going forward. We do continue to see some seasonal demand fluctuations, particularly when the NGP is closed. And you can see on the chart, the lower volumes experienced in late winter, early spring, both last year, which is on the far left of the chart and also in the current quarter, which is on the far right. The difference this year is that we've protected our cash flows through take-or-pay arrangements in our recent gas supply agreements. So while we're expecting the September quarter gas volumes to be about 8% lower than the June quarter, cash flows will be less affected. The higher prices have flowed through to margins. So if you exclude depreciation, our gross margins increased by 26%. They're up from $3.65 per gigajoule equivalent last year up to $4.60 this year. Our cost of sales, they rose about 6% on a per unit basis. And some of that's due to the higher cost of our return to overlift gas, and the cost is linked to the sales price, so it's naturally higher. The improved margin that we saw was really just from 6 months of improved contract pricing. So we could expect a further improvement for the full year to June next year. And that's also going to benefit further once the overlifted gas is all returned in May next year. Our focus on cost control continues, though, and we do pride ourselves on being a low-cost operator. For example, the chart on the bottom left shows the progress that we've made in reducing our net corporate and administration costs. They are down 39% from last year and 60% lower over the last 2 years. The improved financial performance and cash flows has us in a much stronger financial position than previously. Cash at June 30 was $27.5 million and net cash, that is cash less debt was $3.9 million. That's our highest in over a decade. Our loan facility is in good shape. It's locked in until 2030. We don't have any mandatory principal repayments until March 2027, but we do have the ability to make earlier repayments if we choose to do so. So this stronger balance sheet has enabled us to commence our first program of shareholder returns through an on-market share buyback. We could buy back up to 10% of issued capital over the next 12 months, and this would cost a relatively modest $4 million at current prices or $2 million if we only bought back 5%. Now we've appointed Morgans to manage this process for us, although it should be noted that the total number of shares ultimately bought back over the 12-month period may be significantly less than the 10% cap. And our trading activity will be dependent on considering various factors, including, for example, the prevailing share price, market liquidity, regulatory requirements and trading constraints under the ASX listing rules, maturity of potential commercial transactions that could be material to the share price and other capital allocation opportunities, including growth opportunities and debt repayment. So although we haven't yet been able to start buying on market, consistent with that buyback strategy to reduce issued capital at the current market prices. We've cash settled some of the vested equity incentives, which would otherwise have converted to shares this month, and that's about 8 million shares that we've effectively taken off the market already. Now another achievement that might have gone unnoticed in the annual report was the reserves upgrade, and that arose from the outperformance of those 2 new Mereenie wells and also the continuing ongoing consistent performance of the Dingo field. So the upgrade of proved and probable as 2P gas and oil reserves means we effectively replaced 96% of our FY 2025 production. And so that's an indication of the ongoing reliability and producibility of these Amadeus Basin fields. Look, in summary, it's a satisfying result across the board. It's got us in a strong financial position. So with that, let's let FY 2025 fade away into the rearview mirror, and I'll hand you back to Leon. Leon Devaney: Thanks, Damian. While we were pleased with last year's performance, our focus remains on maintaining momentum and enhancing shareholder value, including improving the share price. With a cash balance exceeding $25 million and a strong portfolio of firm gas contracts, we are well positioned to pursue both growth and shareholder returns. In addition to the share buyback program, we are evaluating more substantial forms of shareholder returns such as sustainable dividends as part of a broader capital allocation strategy that balances near-term value with long-term growth. Our existing producing assets continue to be a vital avenue for increasing shareholder value with opportunities to rapidly boost production through the drilling of new wells. We have made significant progress in planning and securing approvals for future drilling programs at Palm Valley and Mereenie. These investments are obviously dependent on obtaining long-term gas contracts at acceptable margins, so we will persist in actively marketing these volumes to potential customers. Additionally, we are advancing efforts to restart exploration in our sub-salt permits with the initial activity likely to be an appraisal well at Mount Kitty, a discovery with high helium and hydrogen potential. Concurrently, we are progressing farm-out discussions for conventional exploration in the Western Amadeus Basin, focusing on EP115, which is on trend with our existing producing fields at Mereenie and Palm Valley. Beyond our current portfolio, we remain open to lower-risk, high-impact growth opportunities that align with our core strengths and support reserve expansion and revenue diversification. In conclusion, we are confident in our ability to sustain the momentum generated over the past year well into the future. We have significant opportunities for capital allocation, including further returns to shareholders. And as mentioned earlier, we are diligently working to deliver some of these growth opportunities over the coming months. I want to assure our shareholders that as we pursue growth, we will remain disciplined, ensuring that any transaction adds value and effectively leverages the strong financial foundations we have built. That's the end of the formal presentation, so we can now move on to questions and answers. Damian Galvin: Thanks, Leon. So we do have a few questions here this morning. So happy just jump straight into them. I guess the one we often come across probably a statement more than a question, shares which pay dividends are viewed favorably by investors, obviously. And I think as Leon mentioned in his list of capital allocations, it's one of the -- one of the option that's been very seriously considered at this time, but it is being considered in conjunction with those other alternative uses for capital. So certainly, we're keen to get to a dividend as soon as we can, and it's certainly under consideration. Leon Devaney: Yes. Just to add to that, I think Slides 9 and 10 list some of those capital allocation options that we are working through. We'd like to see how those play through over the next couple of months. But certainly, with the cash balance and the cash flows we have, dividends are on the radar and something we understand would be obviously well received by shareholders and certainly could have an opportunity to rerate the stock. So something we're very carefully considering at this point. Damian Galvin: Okay. Question about our helium prospects, [indiscernible]. When will exploration resume? Leon Devaney: Great question. We are very focused on getting that kicked off. Obviously, it's been stalled for a long time. There is some complexity with the joint venture and our operator in terms of getting that program going. We think we have a strategy and a plan in place to kick start that and get it going again in the near term. If we're successful in that, the target timing would be a Mount Kitty well by mid-2027. That's what we'd be shooting for. Again, there's quite a bit of work we need to do to put that in place and make that happen. But that is a focus, and we have been working very hard in the background to get that going and get a well drilled there. We think it's an exciting prospect, a significant upside for the company. So we're quite keen to get going on that permit and Mount Kitty in particular. Damian Galvin: Okay. Could you clarify what the expected boost in cash flow might be once gas overlift is all returned? So gas overlift, that should all be returned by May next year. So we're getting close now. I think we're returning at about 2 terajoules a day. So if you calculate her out and $9 or $10 gas price, I think we're up around in excess of $6 million a year in extra revenue. So we're certainly looking forward to that boost coming in June next year. In terms of other questions, what else we've got? Can you please give us some indication on timing of drilling new Palm Valley wells? Leon Devaney: We're -- as I mentioned, we're obviously progressing planning and approval. So we're doing a lot of the long lead stuff in terms of getting prepped and ready for a drill-ready positioning for that field. We see a lot of value in being able to quickly bring new production from Palm Valley into the market as a 50% interest holder in Palm Valley and with the production we've seen in the prior wells that we've drilled there, it is a very compelling case for us to invest and increase production and sell that gas. So one of the top priorities we do have is getting that drilling approved, prepared, and fit for it. Now the critical piece of that puzzle, obviously, is ensuring that we do have a market for it. The market, as I've mentioned consistently over the past couple of years has been in a state of change. That change is still continuing, both with production from the Blacktip field, but also appraisal activity at the Beetaloo. Notwithstanding that, we are in active discussions with potential customers, and we are trying very hard to put in place a gas supply agreement for the additional volumes from Palm Valley at acceptable margins that we think are in the best interest of shareholders. And once we're in a position to have that contract in place and underwrite those volumes, we'll be looking to drill those wells very quickly. That's certainly our intent at Central. Obviously, it needs shareholder or joint venture approval with our joint venture partners at Palm Valley. Damian Galvin: Okay. There was a question here. What is the situation with joint ventures? I'm not sure whether [indiscernible] production joint ventures or exploration ones. But is there any sort of clarity around -- I think we're all similarly minded at the moment. Leon Devaney: Yes. I think we've got great alignment with the joint ventures that we are working with on -- across our fields. They're like-minded with us. They're looking to extract value from the operating assets or looking for ways to grow and increase production and sell that into a market that we see as desperately needing firm gas supply. So we've got great alignment. They're contributing significantly to our efforts in the fields. So we couldn't be happier. We're quite pleased with the joint venture arrangements we do have. Obviously, in the sub-salt space, the joint venture has been more challenging in terms of progressing appraisal activity. That's something that we've been working very hard on. We do have a good working relationship with Santos, who is operator, and we think we're making progress on that front, as I've mentioned earlier. So hopefully, we'll have some good news coming in relation to that joint venture over the coming months as well. Damian Galvin: Okay. Could you elaborate on why Dingo production performed so strongly? Is there a possibility that further wells and contracting gas could be on the cards? Leon Devaney: Yes, it's really a market issue for Dingo. It's selling directly into a power station. That power station obviously has a gas requirement that is subject to the energy demands in the Alice Springs area. That demand has increased and their requirements for gas has increased. There are alternative supplies they do have. And so depending on how they adjust their portfolio, that will drive the demand that they require from the Dingo field. Having said that, we do have a very strong take-or-pay position at Dingo and you would see take-or-pay payments being made at the beginning of each calendar year that reflect any volumes that they haven't taken under contracts. So from our perspective, the cash flows from Dingo are very steady and reliable. And we're looking forward to continuing to meet the contract. And if there are opportunities to grow that field or expand that field and add more volume into that Alice Springs market, we're certainly open to it. And there have been conversations in that front with the NT government and PWC, and we'll certainly be exploring that going forward to see if there's opportunities out that are a win-win for both parties. Damian Galvin: Okay. Can you run us through longer-term contracts market that is 2028 onwards? Any changes there? Leon Devaney: No, as I've mentioned quite a few times in previous webinars, the longer-term gas market is probably where there's considerable uncertainty, particularly, as I mentioned, with respect to longer-term production from Blacktip, which has historically been a baseload gas supplier for the NT. That's a decline or appears to be in decline. And we've also got the Beetaloo, which is undertaking appraisal. We don't know what the results of those appraisal tests really are at this point. I think a lot more information is going to be coming out over the next 6 months. It is an uncertain market when you start moving out to 2028. Our focus has been ensuring that certainly in 2026, 2027, we've got ourselves in a very strong contracted position. We do have contracts extending out through to 2030, which does help. But we do have additional volumes that we are trying to contract from 2028 and beyond. Those are the Arafura contract volumes that we backed out of earlier this year. There is interest. It is a bit early. It's a couple of years away. So it is a bit early in terms of contracting those volumes with counterparties. We are also talking to projects in the NT that might require that gas or certainly are interested in that gas, including Arafura as a potential customer going forward. So it is a very active part of our marketing effort and strategy, but it is something that will obviously take time. We'll lock those in when we think the time is appropriate. And we think contracting gas at that point in time is in the best interest of shareholders. Damian Galvin: Okay. Thanks, Leon. Probably also, there was a question here around how the Beetaloo Basin was looking and progressing. So I think you probably covered that off. Leon Devaney: Yes, I didn't spend a lot of time on this particular webinar going into the market. There's not a lot to update. We did a webinar last month, I think it was. There hasn't been a whole lot of information in terms of flow rates coming out of either of the appraisal programs happening at the Beetaloo. And the Blacktip production, similar to what we experienced last month in terms of turndown from nominations due to reduced demand in the NT. It's very hard to understand Blacktip's production at a field level, given some of that could be a result of a turndown as well. So really, at this point, there's not a lot of additional information to be able to get more visibility. I think we'll need to continue to watch this space. And as I said, over the next 6 months, I think or so, getting some more information, and we'll see how it all plays out. . Damian Galvin: Okay. Question here around hydrogen. Are the JVs looking at directing any hydrogen finds into ammonia production? Leon Devaney: Well, obviously, we've got to find hydrogen and be able to demonstrate we can produce it at commercial rates. And I think that is the focus. That's certainly the focus of our sub-salt exploration activity, hydrogen and helium. Obviously, we have hydrocarbons, and we're very familiar with being able to commercialize that. We think that's going to form an important part of the business case for those prospects. But our first step is to get these appraisal wells in, particularly Mount Kitty, demonstrate we can have a commercial flow rate. And once we understand what that looks like and understand with more granularity the gas composition, we can then start to formulate a business strategy around how we commercialize and develop prospects. So it's certainly an area that we see as a potential revenue stream for the company going forward. But we have a period of time before we're actually in a position to say how or with any certainty what that will look like or how it will be developed. Damian Galvin: So I think there was a couple there just around share price and where we're at. I think one of them was why is Context Morningstar valuing the company at $0.06? I guess the short answer to that is I probably just run some AI bot on it that's taken the current share price. I would point you towards the analysis on our website from MST Access. They've got a full research paper there. I think they land at $0.20, which brings us to another question. I can't understand why the CTP share price has not progressed well north of $0.20 per share in the last 5 years or so. I realize all CSG producers are in a similar position, but I would have thought with your gas sale contracts and producing field it would be a little different. Leon Devaney: Yes. I'd go back to really what has been the theme, I think, of this presentation. We've had a great 2025. Our plan and our focus is to -- certainly one of the key objectives that we're quite focused on is to get the share price up. The ways we're going to do it, we've talked about in this presentation, that's to continue the momentum we've had in 2025, continue to deliver safe, strong performance at our operating fields, generate the kind of financial outcomes that we've seen in 2025 and hopefully improve on those, continue to strengthen our balance sheet, and obviously, with the GBA coming off in a few months, that will provide a fairly significant kick start to that as well. And then look at capital allocation options, including shareholder returns. There's opportunities there for us to demonstrate and actually in a concrete way, return more significantly capital to shareholders through sustainable dividends, for example, that could be a good catalyst for the share price. But we have a number of growth opportunities as well that we're looking at. We're very active in discussions with a broad range of things that we think are material and could be quite beneficial for the company and could have an impact on the share price going forward if we're able to complete those and get those across the line. So really, we're working quite hard on a basket of things and our focus is on creating shareholder value. But specifically, as part of that, we think that, that is the opportunity and a pathway to get that share price elevated and increasing to reflect the value of the company. Damian Galvin: Yes. I think probably we all share the frustration of shareholders around the share price and it probably reflected in our decision to allocate some capital towards share buyback at these prices is a good use of capital. So something we're working on across the board. Okay. A couple of other more questions here. What about the company Omega Oil and Gas in Surat Basin? Any comment on this development? Leon Devaney: Obviously, they've had some fantastic success and I understand they've done a fairly significant capital raise. I think what it does show is that despite the challenges in our sector, there's great opportunity for significant growth, significant value enhancement in smaller companies where you're able to successfully find resources and demonstrate that you can potentially commercialize that. And if it's of a substantial size, then clearly, that has a major impact on the valuation of companies. So I think success will be rewarded in this market. And that's one of the key things that we're looking to do at Central, whether it's through creating some visible tangible benefits to shareholders through shareholder returns to demonstrate the success we've been having with the operating assets that we do have in place, improving on those operating assets or in the growth opportunities that we have in front of us, picking and finding the right ones, being smart about it, being smart about how we structure it, how we approach it, finding success and essentially following a similar path where I think Central certainly has the opportunity to go and have a substantial increase in share price if we're successful. Damian Galvin: Question here. Could we see the FY '26 result being boosted by that gas overlift coming off that is like FY '25 being skewed towards a much better second half from the new gas contracts. I think the answer to that is probably won't see a big boost in FY '26 because that gas balancing agreement we expect all that gas to be returned by about May. So it's really only probably 1 month of upside that I'd expect to see on cash flow. So probably not for FY '26. Leon Devaney: Not substantially. But certainly, as we look forward to future financial results, that share buyback is a significant liability that will come off. As Dami mentioned, it's in the order of $6 million to $7 million at current portfolio pricing. That's in the order of a $0.01 per share type of thing. So it's a substantial number for the company. It's something that we have been paying off diligently over the past years, and we're looking forward to that being lifted, and it will have a big impact as we move forward into fiscal year 2027. Damian Galvin: Okay. In light of the Omega Gas comments, would Central bid on new Queensland acreage if it made strategic sense? Leon Devaney: Yes, we are open to opportunities that we think are lower risk, high impact. We're not restricted to opportunities just in the NT. Obviously, that's where we have a core skill set and our existing footprint. But we are casting a wider net and looking at opportunities up and down the East Coast and are in discussions for those. Obviously, there's a lot of opportunity in the market, particularly where you have transitions, whether it's gas market transitions or other events. We've been very disciplined in terms of filtering through those. There's no shortage of opportunities to throw money at, and we're in a great position with our cash balance and cash flow to have that kind of money. So obviously, we're of interest to parties that are trying to farm out or divest. But we do have a very, I think, clear understanding of what we think will add value to the company, what fits this company and where we can create value and what is in the best interest of shareholders. So we are very selective in what we look at and what we engage in, in terms of further investigation. But there are opportunities out there, and it could be in Queensland, it could be South Australia, it could be anywhere on the East Coast, and it could be further afield than that potentially. But our bread and butter, obviously, is, at this point, onshore and the East Coast is a familiar market to us. But having said that, we are open to good opportunities at the right price with the right risk profile, and it's something that we're working very hard to screen and see if we can uncover opportunities that are in the best interest of shareholders. We've had a good track record on that as well. If you look at what we've done with the Range project, we didn't put any capital into it. We had a $12 million profit from that. So that turned out actually quite positive for the company. It didn't go as quickly. We were hoping to get into development, but that was a positive investment for us. The Peak deal, obviously, that fell over. That was unfortunate, but it was really a lost opportunity as opposed to a loss for us. So we've certainly got to make sure going forward that the deals that we do enter into we cover off and really make sure that the credit risk and the ability of the counterparties is there to perform as we expect when we go into a joint venture or a farm-in opportunity. Damian Galvin: All right, I think that's all the questions for today. Leon Devaney: Great. Sounds good. Well, I appreciate everyone's attention and look forward to updating all of you as we go forward through the end of this year. I think it's going to be a very exciting next few months. And we're very confident that some good things will be happening and look forward to sharing that with you as we go forward. Damian Galvin: Thank you very much.
Operator: Thank you for standing by, and welcome to the Q3 2025 AGF Management Limited Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Mr. Tsang. You may begin. Ken Tsang: Thank you, operator, and good morning, everyone. I'm Ken Tsang, Chief Financial Officer of AGF Management Limited. Today, we will be discussing the financial results for the third quarter of fiscal 2025. Slides supporting today's call and webcast can be found in the Investor Relations section of agf.com. Also speaking on the call today will be Judy Goldring, Chief Executive Officer. For the question-and-answer period following the presentation, Ash Lawrence, Head of AGF Capital Partners; and David Stonehouse, Interim Chief Investment Officer, will also be available to address questions. Slide 4 provides the agenda for today's call. After the prepared remarks, we will be happy to take questions. With that, I will now turn the call over to Judy. Judith Goldring: Good morning, and thank you for joining us. This was a strong quarter for AGF, but one also marked by profound loss with the sudden passing of Kevin McCreadie, our former CEO and CIO. Kevin was a tremendous leader and friend who is deeply missed by all of us. In the face of this tragedy, AGF's strong governance and well-established succession plan enabled us to respond with stability and continuity. In July, I announced updates to our senior leadership team. including naming Chris Jackson as President and COO; David Stonehouse as Interim CIO and Ash Lawrence as Executive Management team sponsor to the office of the CIO. A global search for a permanent CIO is underway. And in the interim, I am confident in the strength of our investment team under the leadership of David Stonehouse and the office of the CIO. As CEO of AGF and together with the executive management team, we are committed to continuing to execute on our strategic priorities. With the right people in place, a clear strategy and a strong balance sheet, we are well positioned to deliver consistent results and drive long-term success for the benefit of all of our stakeholders. Now moving on to our business updates. Global Markets were strong in Q3, overcoming the volatility experienced in the first half of 2025. With this macro backdrop, Q3 was another strong quarter for AGF. I'll begin with some highlights. AUM and fee-earning assets were $56.8 billion at the end of Q3, up 14% from a year ago. Compared to Q2, our average AUM was up 6%. AGF Investments retail mutual funds reported net sales of $262 million or 0.08% of mutual fund AUM in the quarter, outpacing the Canadian mutual fund industry. Our SMA and ETF AUM remained strong, which increased by 64% year-over-year to $3.5 billion. We reported adjusted diluted EPS of $0.46 in the quarter, up 18% from the previous quarter. In addition, we have $432 million in short- and long-term investments on our balance sheet. Net debt of $17 million with $186 million remaining on our credit facility. We have capital available and flexibility in our capital allocation strategy. Our European subsidiary was once again accepted as a signatory to the U.K. Stewardship Code, a best practice benchmark in investment stewardship. Finally, the Board declared a $0.125 per share dividend for Q3 2025. Starting on Slide 6, we will provide updates on our business performance. On this slide, we break down our total AUM and fee earning assets in the categories disclosed in our MD&A and show comparisons to the prior year. AGF Investments mutual fund AUM was $33 billion, up 17% year-over-year, outpacing the industry increase of 12%. The growth of our ETF and SMA AUM remains strong. I'll provide more color on our mutual fund sales and ETF and SMA AUM in a moment. Segregated accounts and sub-advisory AUM increased by 4% compared to the prior year. During the quarter, we received a redemption notice from one of our institutional clients for $500 million. The redemption was driven by the client's shift toward passive management to comply with regulatory requirements and is expected to occur in Q4 2025. The financial impact of the redemption is not material on our financial results, and we continue to see strong interest in our strategies in the institutional space. Our private wealth AUM increased by 10% compared to prior year to $9 billion, and our AGF Capital Partners AUM and fee-earning assets were $4.6 billion at the end of the quarter. As a reminder, New Holland Capital's AUM of $9 billion is not consolidated into AGF's total AUM and fee-earning assets at this time. Now turning to Slide 7. I'll provide some details on mutual fund sales. With volatility in equity markets subsiding, the Canadian mutual fund industry saw net positive sales in the quarter of $9 billion or 0.4% of AUM. AGF Investments retail mutual fund sales outpaced the industry and achieved $262 million of net sales in the quarter or 0.8% of our mutual fund AUM. The strength of our retail mutual fund sales reflects the successful execution of our distribution and marketing strategy, particularly in penetrating high-growth distribution channels supported by strong investment performance. Notably, all distribution channels delivered net positive sales this quarter, underscoring the broad-based momentum across our platform. Let me provide a brief update on our investment performance, which continues to be strong. AGF Investments measures mutual fund performance by comparing gross returns before fees relative to peers within the same category with the first percentile being the best possible performance. Our 1-year performance was in the 44th percentile. Our 3-year performance was in the 50th percentile and our 5-year performance is in the 41st percentile and approximately 58% of our strategies are outperforming our peers on a 3- and 5-year basis. Turning now to Slide 8. Slide 8 shows our ETF and SMA AUM. The AUM in this category is at $3.5 billion and has grown 62% on a compounded basis over the last 2 years. Included in this number are Canadian and U.S. listed ETFs and SMA platforms globally. We have seen consistent growth and momentum in our SMA AUMs across the U.S., Canada and Asia, where many of our strategies are available on leading wealth management platforms. I will now pass it over to Ken to discuss our financial results. Ken Tsang: Thanks, Judy. Slide 9 reflects a summary of our financial results with sequential quarter and year-over-year comparisons. The financial results in these periods are adjusted to exclude severance, corporate development and noncash acquisition-related expenses. Adjusted EBITDA for the quarter was $46 million, which is $7 million higher than Q2 and $6 million higher compared to the prior year. The improvement was primarily driven by higher AUM levels. SG&A was $61 million, up $2 million from both the previous quarters and the same time last year. The increase from Q2 was mainly due to higher performance-based compensation, reflecting our strong business momentum. Adjusted net income attributable to equity owners for the current quarter was $31 million and adjusted diluted EPS was $0.46. Free cash flows for the quarter was $31 million, up $7 million from Q2, primarily due to higher net management fee revenues and distribution income in the current quarter. Slide 10 provides a further breakdown of our net revenues. Within our traditional asset and wealth management businesses, net management fees were $92 million for the quarter, which is $8 million higher than the prior quarter and $11 million higher than the prior year. This growth was primarily driven by higher AUM levels, as previously noted. Revenues from AGF Capital Partners business remained strong, reporting $16 million this quarter. The decrease from the prior year is mainly due to elevated recurring manager earnings and carried interest income in Q3 of 2024 as a result of the monetization of one of Kensington's investments. These monetizations can be lumpy from quarter-to-quarter. On Slide 11, we outline adjustments to our EBITDA. As you might recall, the AGF Capital Partners business gives rise to various LLTIP, contingent consideration and put option obligations. These liabilities are fair valued each quarter with the difference flowing through to the P&L. These accruals and fair value adjustments have no immediate cash impact and create noise quarterly, which is why we've adjusted for these items to facilitate easier comparison of quarterly results. This quarter, we have also adjusted for nonrecurring expenses related to the accelerated vesting of Kevin McCreadie's long-term incentive plan as a result of his passing. Adjusting for these items, along with severance and other expenses, our adjusted EBITDA for this quarter is $46 million. Turning to Slide 12, I will walk through the yield on our business in terms of basis points. This slide shows our average AUM, net management fees, adjusted SG&A and EBITDA as basis points on our average AUM in the current quarter, previous quarter and trailing 12 months. This view excludes AUM and related results from AGF Capital Partners as well as DSC revenues, other income and any other onetime adjustments. The EBITDA yield this quarter was 25 basis points, which is 1 basis point higher than the prior quarter and 2 basis points higher than the trailing 12 months. The increase was driven by lower SG&A relative to our AUM, highlighting the operating leverage of our business. Turning to Slide 13, I will discuss our free cash flows and capital uses. This slide represents the last 5 quarters of consolidated free cash flows on a trailing 12-month basis, as shown by the orange bars on the chart. The black line represents the percentage of free cash flows that was paid out as dividends. Our trailing 12-month free cash flow was $108 million, and our dividends paid as a percentage of free cash flows was 28%. In the same period, we returned $49 million to shareholders, consisting of $31 million in dividends and $18 million in share buybacks. During the quarter, we repurchased over 1 million shares under our NCIB for approximately $12 million. We ended the quarter with net debt of $17 million. We also have $432 million in short-term and long-term investments and have $186 million remaining on our credit facility, which provides credit to a maximum of $250 million. Our future capital allocation will be balanced and includes returning capital to shareholders in the form of dividends and share buybacks as well as investing in areas of growth. Before I pass it back to Judy, let me take a minute on Slide 14 to look at our market valuation. AGF's current share price of $14, which, by the way, has increased by approximately 30% year-to-date, translates to an enterprise value of approximately $920 million. Taking our $432 million of short- and long-term investments into account, our remaining enterprise value is about $485 million. This implies a 3.7x enterprise value to EBITDA multiple on our trailing 12 months adjusted EBITDA, excluding income from our long-term and short-term investments. Comparing this multiple to those of other traditional and alternative asset managers and recent acquisitions would suggest further potential upside to our valuation. I will now pass it back to Judy to close out our presentation. Judith Goldring: To wrap up this quarter, we've made significant strides in achieving our strategic goals. Our AUM and fee-earning assets continue to climb, reaching nearly $57 billion. Our investment performance remains solid. Our sales momentum remains strong and continue to outpace the industry. We remain disciplined in our expense management while investing for growth and the strength of our balance sheet and capital position will provide us with flexibility in our capital allocation strategy and the resilience to weather a challenging market environment. I would also like to take a moment to thank our AGF team for all that you've done and continue to do to support our organization. Your resilience, professionalism and unwavering commitment has been truly inspiring. Your dedication continues to be the foundation of our strength as we move forward together. We will now take your questions. Operator: [Operator Instructions] Our first question comes from the line of Gary Ho of Desjardin Capital Markets. Gary Ho: First, just on your mutual fund net flows, $262 million, perhaps for Judy, fairly strong. Just wondering what strategies are you seeing the most success in? And with rates coming down, are you seeing perhaps greater flows into equity categories yet? And then perhaps if you can elaborate on whether that strong momentum has carried through so far in Q4? Judith Goldring: Yes. Thanks, Gary. Certainly, we did see in the industry flows, they had positive flows going into heavily weighted at least into the fixed income categories, but there was, of course, strong flows going into the balanced equities and some of the specialty categories. Similarly, at AGF, we do tilt more towards the equities. So we did see strong flows into our equity categories. But we did see flows into our Fixed Income Plus and Global Select European equity, which, as you know, is a 2-time Lipper award winner 5-star Morningstar fund. So it's been seeing some interesting flows. And then we launched recently our enhanced income fund, which -- Income Plus, which has actually seen some very strong flows in a very short period of time. So it's really demonstrating a broad breadth of our product lineup and seeing the flows across that. And then quarter-to-date, we're seeing $64 million or $65 million, I should say, as of last night, again, emphasizing continued strong flows. Gary Ho: Great. Okay. That's good to hear. Second question, maybe for Ken. As you plan out your budget for next year, just wondering any priorities that may require a higher cadence of SG&A. Historically, I think you've kind of guided to kind of cost of living type increases in the 3% to 4%. Just curious to hear if there are any other investments that you're looking at in the pipeline over the next year or so. Ken Tsang: Yes. Thanks, Gary. As you might know, we typically provide guidance on next year's SG&A in Q4. Having said that, of course, as you might be aware, we did make some earlier on investments in our sales force, which is clearly paying off now. But we continue to evaluate all investment opportunities going forward, and we'll provide more clarity in Q4 as to our SG&A guidance. Gary Ho: Okay. Great. And then maybe just last question, just spreading it out a bit for Ash. Wondering if you wouldn't mind giving an update on how New Holland is progressing. I believe there -- I think you mentioned around CAD 9 billion. Just maybe just remind us when you could potentially increase your stake in New Holland and your appetite for that? And how is the launch of the Tactical Alpha Fund in Canada? Ashley Lawrence: Yes, for sure. Thanks, Gary. So more broadly, just on New Holland Capital, they're having a pretty good year. on a few fronts, net inflows to a number of their strategies, including their multi-strat and some of their credit investments that they make as well and some positive feedback from market on the fundraising side for them. So it's been a pretty good year on that front. As it relates to our AGF run feeder fund here in Canada, that just launched earlier this year. And so most of our activity has really been on approvals getting on platforms. We have had good response from market as we've been touring around seeing advisers and investors with the New Holland team. So we do expect as we move into the latter half of this year and early next to start seeing some activity there, some more activity there. So that's been a positive. And then the last point of your question, as we've disclosed in February of next year 2026, we have the first of 2 options to both convert our position from debt to equity and increase our ownership to 51%. We are evaluating that now, and we'll make a decision as we go forward and that window opens. But at the present, based on the update I just gave you, we're feeling pretty positive about where we want to take our relationship with New Holland. Operator: And our next question comes from the line of Graham Ryding of TD Securities. Graham Ryding: Can you hear me? Operator: Yes, we can hear you. Graham Ryding: Great. Just on the ETF SMA side, pretty solid growth there, collectively up 64% year-over-year. Is there any color you can provide in just sort of breaking out what the AUM is for SMA and ETFs in particular? And then maybe what the flows are like for those 2 different areas of your business in the quarter or year-to-date? Judith Goldring: We don't split out the actual ETF and SMA. In part, that's just due to the timing of getting the accurate AUM of the SMA in particular. But certainly, we've seen strong growth in the U.S., largely on the backs of us getting on to several different platforms. And so that growth has been quite impressive, hitting just over $2 billion for the ETFs and SMA. And then in Canada, we continue to penetrate different platforms as well. And we've just seen huge investor demand and adviser demand for that particular kind of product. Graham Ryding: Okay. And then on the Capital Partners side, is there any fundraising underway that you can flag either at the institutional level or maybe some color on traction or progress on selling capital partners products, be it Kensington or New Holland Capital into those retail channels. Ashley Lawrence: Yes, sure. It's Ash here. So we're relatively early days in terms of the build-out of the capital partners distribution team here in Canada. So what I can tell you is we are actively out there with a number of strategies, some of those being related to New Holland Capital that I gave a previous answer on. We're seeing good traction in terms of conversations and interest. It's probably a little bit early in terms of actual flows. Sales cycle for alternatives in the institutional world is relatively long. And a lot of the -- especially for New Holland introduction to Canadian investors is the first time they'll be seeing this strategy in that manager. But we're feeling pretty positive about the meetings and how that is going. As well on the -- what I'll call the evergreen side, we're starting to see some good activity on the private credit side. I think the competition has picked up in certain retail channels for that strategy, but our sort of consistent performance and now longer track record is helping us in that channel. On the private equity side, returns have been relatively muted across the whole industry for reasons that I think everyone probably has read about with the rapid rise in interest rates and then followed on by the tariff situation. So it's been pretty muted in that sector, especially when you have a mature fund that has been investing through the full cycle versus some of the competition that is relatively early in their inception. Graham Ryding: Okay. Understood. And sorry, did you say that New Holland Capital on its own, even though it's not consolidated in your results potentially just yet, but New Holland Capital is seeing solid organic growth onto itself? Ashley Lawrence: Yes, they've been positive fundraising over the course of the year this year. Again, given that most of their investor base or all of their investor base at present is institutional, it does tend to be a little bit chunky. Ken Tsang: I'll just -- Graham, it's Ken. Just a reminder, when we made the acquisition of New Holland, average assets under management was about USD 5 billion. And as of the end of August of this year, it's currently at around USD 6.7 billion. So certainly have seen some very strong momentum in that business. Operator: [Operator Instructions] I'm showing no further questions at this time. I'll now turn it back to Judy for closing remarks. Judith Goldring: Thank you very much for your questions and for attending today. Just to recap, this was another strong quarter for AGF at $0.46 EPS. Our investment performance remains strong, and our sales momentum continues to outpace the industry. Our strong balance sheet and strong cash flow positions us well to return capital to our shareholders while driving long-term growth. So thank you again for attending, and we look forward to our Q4 earnings call on January 27, 2026. Operator: Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.
Operator: Good afternoon, and welcome to the Pharos Energy plc investor presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Katherine Roe, CEO. Good morning. Katherine Roe: Thank you, Lillian. Good afternoon, everybody. Thank you for taking the time to join our presentation today, busy time with results. So we appreciate you taking the time. We will be running through a short presentation to deliver some of the key things that we've been working on, the catalysts for moving forward, what shareholders and investors have to look forward to as well as the performance for the first half of this year. So good afternoon, and welcome again. I'd like to start with a bit of an overview. We've said here a year of strategic operational and financial delivery. Obviously, first and foremost, this is a first half interim results presentation. But I joined as CEO last year and presented my first set of interim results this time last year, and we are here today as my second set. So I thought it might just be helpful to start off with a recap on what we've achieved in that time frame. I think for those of you that joined last year, we were very clear about the near-term priorities and focus for our business in terms of what we needed to achieve with the existing assets. So on the left-hand side here, we just recap on those. We have 2 jurisdictions with producing assets in both Vietnam and Egypt. We have exploration potential in both of those jurisdictions as well. Vietnam is the producer of the majority of our production is the core part of our business. And it was really critical that we secured those license extensions for our 2 producing fields, and those were achieved in December last year. What's really important about that is the unlocking of the significant work program that we are about to commence in the coming weeks in Vietnam, not just to arrest the natural decline of these assets but also to try to deliver incremental production volumes and growth from next year onwards. We'll come on a little bit more later in the presentation on that drilling campaign. In Vietnam, we also have a high-impact frontier exploration. Some of you may be aware of this that we've discussed before in Blocks 125, 126. This is deepwater offshore frontier exploration. And we also achieved a 2-year license extension, which gives us until the end of 2027. Why is that important? Because we really need to seek a farm-in partner in order to give us the ability to drill our first prospect, which we would ideally like to do next year. We put ourselves in the best possible position to do that. We've started a new structured formal process, partially to feed in some of the historic bilateral conversations, but also to attract some fresh interest. And we have also managed to secure long lead items and that 2-year extension to provide maximum optionality to find a partner. So that was also achieved. That extension was granted to us in June of this year. Just announced yesterday, we have successfully agreed new fiscal terms for our existing licenses in Egypt. We have far better economics, far better improved terms and importantly, additional time on those licenses by consolidating into one new fresh agreement. You'll see here that's given us an immediate uplift in value. We have a 25% uplift in 2P, largely a function of that additional time on the licenses. And again, importantly, going forward, it means a very healthy and attractive financial framework for further reinvestment, which we haven't been doing so far this year. We're -- also important to us to achieve the strength in our balance sheet after many years of having to service that legacy RBL facility. That was repaid last year. We remain debt-free and building cash on the balance sheet, as Sue will come on to. Again, flexible financial and strategic optionality. We have fully funded capital investment programs from our internally generated free cash flow and obviously not having to service debt allows us even more flexibility. It also means we have a clean balance sheet, which provides further flexibility going forward if we needed to leverage. Very important to us that we maintain the shareholder dividend. This has been part of our policy for some years, and we are now trying to strike the right balance between continuing that return to shareholders through the dividend whilst also trying to achieve a capital return by reinvesting back into our assets. We also achieved a strengthening in the Board. We appointed a new Chairman to the Board in June. That's received alignment with our major shareholders and is working well with the rest of the Board. And there's alignment in terms of strategic progress of our business, what next. And that leads quite nicely into the right-hand side here of what is next, what do we have to look forward to? Where does the growth in our business come from. So really, really important in this 6-well drilling campaign in Vietnam. It's the largest investment campaign that we've had into our existing assets since the original development. So really, really important. We believe it's capable of extracting and delivering additional value through those increased production from next year and beyond. We'll talk a little bit more about that. And as I mentioned, we also have this formal process ongoing for the exploration, which is, again, a new fresh look at how best to find a partner to deliver hopefully, a drilling campaign next year. Egypt, more noncore part of the business, but still equally valuably. Those new terms make a huge difference in terms of our economics and provide that attractive framework. We're now going to work with our partner in country to put together the near-term drilling program. And again, all designed to increase production from the existing volumes that we see today. It does remain an absolute priority for us at Pharos to see a material recovery in our existing receivables balance. And Sue will talk a little bit about our current receivables position. And we are in discussions with EGPC, our government stakeholder about seeing that materially reduced, giving us the confidence and the ability to reinvest, but only in a very disciplined and self-funded framework. I think having said all of that, we do still recognize that we need to add scale to our business. We're in very good shape. We've got lots to look forward to with organic growth, but we would also like to add to that. And we're now in the fortunate position that we're operationally and financially strong enough to look at additional opportunities that fit the strategy and can build additional scale. And that's very much a priority as we move forward. So I just wanted to set the scene with where we are. I'll hand over to Sue on some of the interim results and then come back. Thank you. Sue Rivett: Thanks, Katherine. So just in terms of the first half -- just some highlights there from the first half. So revenue, we were able to maintain our position there of just over $65 million for the first half, which compares very similar with 2024. That was actually despite a sort of $12 reduction in Brent price in the period. And really, that revenue has been maintained because we were able to bring in some of our inventory that we held at the year-end. So that inventory supporting the revenue number there. In terms of the net cash, again, a good build from first half '24 to $22.6 million as we left the half year. Cash flow from operations, $16.1 million. That's down quite a bit from the '24 number. If you recall, in March '24, we received a one-off dollar payment, $10 million from EGPC. We didn't receive that in the first half this year. We are very much after that in the second half. And we've just come back from Egypt, Katherine, myself and our new Chair, and we believe, hopefully, there is something coming very shortly into the second half there. So hopefully, we'll prop up that in the second half. In terms of the hedging, despite having got rid of the -- or paid down the RBL, we still have a 26% hedging position there for the second half, just supporting us with a floor of $60. So again, very helpful to have in our portfolio. In terms of the Egyptian receivables, $33.5 million as we finished the half year. That's down since then as we've managed to collect a bit more receivables in this third quarter. So as I say, $5.6 million in this quarter that we've just received, but we are hopeful that we will get a reasonable dollar amount in the coming month or 2. And just to say, in terms of the production guidance, we've narrowed the guidance from 5 to -- it was originally 5,000, we brought that up and it was originally 6,000, then we brought that down. So just narrowing that guidance as we know more as we get towards the year-end. And if we can move to the next slide. Thank you. So in terms of the cash flow itself, so $34 million in there from inflow from operations, of course, taxes to governments and which gets you down to the $16.1 million, which you mentioned of the OCF. A modest capital program in the first half, $8.2 million. Essentially, the big capital program comes in the second half as we start that drilling campaign, that 6-well drilling campaign in Vietnam, which Katherine will pick up later. In terms of where we finished for free cash flow, so $7.5 million. We have had $0.7 million in from contingent consideration from our partner. There is a further $2.5 million due from them, which should come into the second half. So something to bring into the second half there. And if we can move to -- in terms of shareholder returns, as you know, we're committed to a sustainable dividend for our shareholders there. We have announced a 10% increase in prior year dividend, so just under 0.4 per share, which will be paid in January. And just to say that the buyback, which we've been running for some time, completed in January, and we haven't renewed that at this point. And with that, I'll hand back to Katherine. Katherine Roe: Thank you, Sue. So we've just got a couple of slides here just on activity for the second half, looking forward into what are we doing with our assets and how do we maximize value to drive those -- that production growth that I talked about at the beginning. Just here on Vietnam, you can see on the left-hand side to start with our first half production comfortably within our annual guidance range, and it's very steady, stable production, very low breakeven. So even in this challenging macro environment that we find ourselves in with sort of fluctuating Brent price, we are continuing with healthy production and healthy free cash generation. We expect that production to remain stable throughout the rest of this year. But of course, where do we see next year and beyond for these producing fields, can we achieve more growth? Yes, we think we can, but it requires this capital program to do so. So just taking TGT first there, our first field. You can see the existing production from those green blobs, the callout boxes are our infill wells that are part of our program and the yellow are the appraisal wells. So we have a 4-well program in TGT. We will most likely start with an infill well in the next few weeks. We have 2 rigs. They're on their way. We have all of the drilling preparations underway. This has been going on for this year in order to get prepared, and we're expecting to spud our first well of this program, as I say, in early to mid-October. What's really important here is that bottom left corner of the field. And again, the yellow call-out boxes, 18X is our first identified appraisal well, which we're likely to spud this year. If that's successful, we are looking to unlock that to date undeveloped part of the field. They are challenging wells. There is risk to this. And obviously, we need to see how we get on with that appraisal well. If we are successful, it potentially opens up that additional development that you see there in the white call-out boxes, and that will really drive incremental volumes and production. We're likely to know the outcome of this drilling campaign in Q1, Q2 next year because they are challenging wells, does take time. So whilst a lot of the activity will happen this side of Christmas, we'll be sharing the outcome in the first half of next year. Similar story in CNV, the next field there. We have one committed appraisal well, and we expect to do one infill well again in Q4 of this year, hopefully, again, successful to unlock further potential. I did mention Blocks 125 and 126. I think it is worth saying, again, that we have deliberately put a structured framework around this process. We do believe that there are some new interested parties partly helped by the macro environment being a little bit more conducive to high-risk exploration, again, frontier exploration. There are very few frontier basins left to explore, and that certainly attracted a bit more interest than might have done a few years ago. So we have got some encouraging discussions. We've been guiding that we would like to be able to give an update on that process before the end of the year. But we've done everything we can to put ourselves in the best possible position. We've secured those -- that 2-year license extension to give us time. We've committed to the long lead items. We have all of the data information. We have a full physical data room. So we have everything that we can do to ensure we have the best possible chance of finding a suitable partner and seeing the drilling of that first prospect, hopefully next year. So lots to look forward to in Vietnam, very exciting. We have excellent alignment with our joint operating company, which is ourselves and our partners. Our partner includes PetroVietnam, the government. So again, hopefully, the delivery of the license extension just helps to tangibly show the strength of that relationship with the government. It's absolutely critical to how we do business. And that, again, is coming through and strong alignment on this drilling campaign, and we're all excited to see the outcome. So that's Vietnam. Just moving on to Egypt. As I mentioned, we announced yesterday that we have improved fiscal terms agreed with the government. Again, really important that stakeholder relationship with EGPC, our government entity in Egypt, very collaborative approach to ensure that we have terms that work for us, and they have a committed developed -- a committed work program that allows us to -- incentivizes us to put further reinvestment back into our existing assets. We have been given an extension of time, as you can see there, and that's really helped drive that immediate uplift in value. So on the back of our announcement yesterday, we have a 25% uplift in 2P reserves from the end of last year, and that's really based on that long extra time on the licenses, but also very much on the improved fiscal terms. We've put on the right-hand side here just a bit of the time line. It is a long process. There are peers that you might have seen that have gone through a similar process. It is very iterative and requires a lot of discussion and collaboration with the government. So it's not easy to get to where we've got to, and we're really pleased that we have. Really also importantly is that we have managed to agree a retroactive effective date. And what this means is that we do not need to wait for formal parliamentary ratification before those new terms apply. So those new terms can take effect from formal Board approval, which we're expecting in the next week and equally helps to start our planning for that reinvestment program. So it works for us and it also works for the government. We have shared the exact terms of that agreement in our announcement yesterday, if you want to see the detail of that. But we put the key points here, increase in cost oil, significantly higher profit oil share and that signature bonus has been agreed from a relatively different place from where we started. But ultimately, it can be offset against our receivables. So it's a noncash commitment. So I think what does that mean for capital allocation? So just take you on to this slide. We've presented this before about our capital allocation for this year. We do take capital allocation very seriously. We have to be disciplined, and we have to ensure we have enough financial flexibility to run the business and weather any shocks that we might see, particularly in our sector and given the global challenges that we all face. So we balance that with a sensible careful reinvestment back into the existing assets. And then also the other piece is the shareholder return through the sustainable dividend, which is really important to us. Majority of the capital this year is going into that Vietnam campaign. Again, really important to note that, that's the largest investment campaign we've had since the initial development. So we really think that we will see some value coming out of that. And we're fortunate that we're able to fully fund our investment program from internally generated cash flow. So it's a fully funded program without needing any dilution or additional leverage. What we're just showing here in the pie chart is where that just sits in terms of this year and next year. It's a '25 program, but some of the actual expense will fall into 2026. That's just a function of timing as we move through and start drilling and incurring the cost of that program. We've just put on the bottom half here what that program looks like and what that CapEx relates to, but we've just covered that. So hopefully, that's clear. I think just on the outlook, again, for those of you less familiar, really worth reinforcing the low breakeven position we have in Vietnam. We're very fortunate when there's challenges to the oil price, we not only get a premium to Brent in Vietnam, but we have that low breakeven. So oil price has to fall a long way before Vietnam becomes economic, and that's clearly not something that we're concerned with. And that license extension that we achieved just before the end of last year allows us to have healthy economics on that capital reinvestment program. Egypt has been a low CapEx first half, and we have seen relatively underwhelming production volumes. We are a little bit lower than expected, and that partly contributes to that narrowed guidance for the year that Sue referenced earlier. And that's partly deliberate because we needed to see those improved fiscal terms, improved economics and also very, very key reduction in the receivables balance before we can justify and defend further reinvestment. We're making really good progress, new terms into effect yesterday. And as Sue mentioned, we're in live discussions with our partner, the government partner in terms of reducing that receivables balance. It is a constant risk in Egypt, but we do understand that there will be liquidity coming into Egypt, particularly for the oil and gas sector. So we hope to benefit from that, and we'll obviously be sharing that with the market when we can. So I think that wraps things up from us. We do have a brief outlook here, which just summarizes what we're trying to do. We call it protected growth because we have a very robust protected platform, but also the ability to grow additional volumes from our existing assets organically, but also starting to look at how we can add to the portfolio to build that scale that we mentioned. We are very fortunate that we've got good quality assets that are capable of delivering that free cash flow. We just need to build on that. And that's very much the priority going forward. So supported our downside, lots to look forward to on the growth. And hopefully, we've demonstrated that we do that in a disciplined way and remain focused on delivery and execution and ensuring that we can deliver on the things that we say we can. So thank you for listening. We appreciate the support of all our shareholders and those that are looking at investing in Pharos. We do believe we are differentiated from a lot of our peers. And we're obviously here to take any of your questions. So thank you again for listening, and I think we'll hand over to the Q&A. Operator: [Operator Instructions] I'd like to remind you that recording of this presentation along with a copy of the slides and the published Q&A can be accessed via investor dashboard. As you can see, we have received a number of questions throughout today's presentation. And Minh-Anh, if I could hand back to you to share the Q&A, and then I'll pick up from you at the end. Minh-Anh Nguyen: That's great. Thank you, Lilly, and thank you, Katherine and Sue. I will now go through some of the questions that were pre-submitted to the company. Starting off with Vietnam. We were hoping that the license extensions in Vietnam may have led to a more aggressive development drilling campaign. Why has the development drilling campaign been timid? It hasn't been anything more than what we've seen on average over the past number of years, i.e., 2 to 4 wells. Katherine Roe: Thanks, Minh-Anh. I can probably take that. I think it's really important, again, to note that you need the right economic framework in order to reinvest so that you have a return on your invested capital. And we needed the license extensions in Vietnam to justify and support reinvesting back into the asset with significant drilling. These are complex wells. It's not straightforward drilling. We do have a lot of expertise and experience having been producing in Vietnam for 20 years, but we do still need to be very careful about the investment program and the return on capital. So what I would say is that the license extensions achieved just before Christmas allowed us that leeway, that runway of time to recover costs, but also to have sufficient economics. And we've driven very hard. The license extensions were approved in December. By early January, we were already in the planning stages. And this is the earliest that we can drill in October given the weather window and the long lead items. So there's been a very, very big push, I would say, between ourselves, PetroVietnam and our partner to drill as quickly as possible. And so I do think it's aggressive. I think it's aggressive and it's exciting, and it's the first time in many years that we've done a campaign of this scale in nature. And as I say, you really needed the right economics and environment to justify deploying that capital. So I think the outcome of this 6-well program will be really interesting for us. Minh-Anh Nguyen: Thank you, Katherine. When is Block 125 going to be drilled? Katherine Roe: Well, I think I partly answered that in the presentation. We do have an identified prospect. So we would really like to be in a position to drill next year. Again, there's certain planning required and we do need a partner, which is what we're in the process of trying to secure at the moment. We do have the license until the end of '27. So we could drill this year or drill next year or 2027. Obviously, we'd rather sooner if we can have everything lined up. But what we have done is put ourselves in the best possible place we can. We are dependent on rig availability and that farm-in partner being appropriate and agreeing appropriate terms. So that's what we're hoping for. But we've just given ourselves optionality. We can't control everything, but we can put ourselves in the best possible position and give ourselves maximum optionality, and we feel we've done that at this point. Minh-Anh Nguyen: Thank you. On the same topic, if blocks 125, 126 are as good as the company has been saying, why has industry uptake been so poor? We've been trying to farm them out for nearly half a decade. Katherine Roe: I can take that as well. I'm not sure it's been half a decade. I know it has been several years. I would say it's difficult to attract interest in a frontier basin, deepwater. This is an expensive risky drilling campaign. I think exploration for frontier basins has been challenging for the macro environment. A lot of the majors have not been focused on this over the last few years. And where they have, there have been other parts, maybe West Africa, for example, where a lot of that capital has been allocated. There is a discrete amount of capital for deepwater offshore exploration drilling. But I think what we're seeing now is a change in that macro environment. Exploration is very much back on the agenda for a lot of the majors. And that's a new bit of interest that we're seeing coming through. And there just aren't very many frontier basins, undiscovered frontier basins left in the world. So it's a lot about timing. and a lot about sort of getting the right person at the right time, and that feels like a bit of a shift. Minh-Anh Nguyen: That's great. Thank you. The next question is, given where the share price language at the moment, surely the most value-accretive acquisition the company could make is buying itself. What are the Board's latest thoughts on reinstating the share buyback or better still enacting a tender offer to buy out the persistent seller? Katherine Roe: Yes. I mean share buyback is always -- it's always part of our Board discussions. It's there as an agenda item all the time, particularly in relation to capital allocation. So when we discuss best use of capital. We have, as you probably know, or for those of you don't, we had a share buyback program for many years. When we were not in this position to reinvest in the assets because of the economic environment, we also had less financial flexibility and our own liquidity due to the legacy debt. So now we're in a position where we're in the right framework ourselves financially, but also the economics in Vietnam and Egypt, where we can reinvest back into those assets. And we believe that will drive more growth. Share buybacks are -- there are pros and cons. We have low liquidity. There's only an element of how much you can actually buy back. And at this point, we do want to put our capital to work. We think that capital can work harder by reinvesting back into the existing assets. That obviously doesn't mean that we're not very conscious of shareholder returns, which is why we also ensure that we sustain the dividend. And if at any given point, we calculate that the share buyback provides a better return to shareholders, then that's what we would do. We would reinstate that. Minh-Anh Nguyen: That's great. Thank you, Katherine. Moving on to the financials. On a previous webinar, you stated that the best time to secure debt is when you don't need it. It was also mentioned that different types of debt instruments were being discussed and considered. Can you please give an idea of the progress made in this regard? And when do you think the company may be in a position to give us a detailed update on this? Sue Rivett: Yes. I mean it is one thing that we've been looking at, obviously, after getting rid of the -- or paying down the RBL last year. And clearly something in our toolkit, if you like, with a balance sheet that hasn't got any debt in it, a great opportunity for the potential M&A activity. So yes, we have been looking out in the market. Clearly, there is interest in the market. And I think once we identify some good opportunities, then I think we should be able to get that to come home, if you like. I don't know if you want to say anything else. Katherine Roe: No, I agree, Sue. I think we -- the exercise that we've been through demonstrates there's access to capital for us at the right time and for the right transaction. And that obviously helps support some of the conversations, having robust production and an unlevered balance sheet gives us that toolkit, as you say. Sue Rivett: I mean we'd only do it for the right opportunity. I think that's the key. Minh-Anh Nguyen: That's great. Thank you, Sue. The next question is, Capricorn Energy has informed the market that EGPC communicated to them that it intends to make payments of approximately $130 million through the remainder of 2025, which is approximately 90% of their 2024 revenues and more than double the amount they received in 2024 from EGPC. Have you received similar assurances from EGPC? Katherine Roe: The short answer is yes. It's a conversation that we have with EGPC as do all of our peers. We do -- as I said before, we do understand that liquidity is coming into Egypt, particularly for our sector. And ourselves, Capricorn and all of the international oil and gas companies are in the same position. So we do expect a material reduction in our receivables in the near term. Minh-Anh Nguyen: That's very helpful. Along the same line, are there any levers that can be pulled to expedite the receipts of the Egyptian receivables other than choosing to continue to hibernate? Katherine Roe: Well, I think having agreed these new fiscal terms on the consolidation, having that, clearly, the idea from the government's perspective is that comes with a committed work program. It is phased, and we have deliberately agreed a relatively modest program that we not only hope to meet but also exceed. But it depends on recovery of receivables. And certainly, the timing of that investment will be dependent on that recovery of receivables. So that's the leverage, if you like. Yes. Minh-Anh Nguyen: That's very helpful. Thank you, Katherine. The next question is, have you had further discussions with the activist investor who attempted to vote at the majority of the Board of Directors? What are his concerns? What strategic shifts is he looking for? Activism by unknown activists who hasn't communicated via an open letter with the wider investor base is very concerning to private investors. Katherine Roe: Thank you. And I would say that we talk regularly with all of our shareholders, including our largest shareholder. We don't hide away from communication. We do try to be as accessible as a management team and Board as possible. So yes, we have active dialogue. I think it's really, really important. At the end of the day, we're here to run the business on behalf of shareholders. It's really important to us that we listen, understand shareholder concerns, frustrations, ambitions, et cetera. We did have a change in our Chairman, and he has, again, settled very well and been well received by our major shareholders. So we feel that we have stability and there's been no concern at this stage at the Board level regarding that shareholder. We have a resilient, strong and stable Board, which importantly is aligned about the future for our business. Minh-Anh Nguyen: Thank you, Katherine. Is the key jurisdiction for any potential inorganic growth, Southeast Asia? Katherine Roe: I think the answer to that is we need to leverage what we're good at. If we sit back and think what are we good at Pharos, we've been in country in Vietnam for 20-plus years, and we have a very strong stakeholder relationship with PetroVietnam. We're well regarded in country. We can clearly see the support that we get with the license extension. So we'd like to do more, leverage that relationship. That does expand into Southeast Asia as well because it's a high-growth region, lots of opportunities. It's where we're seeing that GDP growth in the Southeast Asian economies, and they all, again, are seeing that need for increased energy. So there are lots of opportunities in Southeast Asia, and that is more of a priority at this stage. But again, it all comes down to the type of transaction and the return that it can deliver. And we're very focused on that. And I think that's what we try to get across when we say disciplined and focused. Minh-Anh Nguyen: Wonderful. Thank you, Katherine. I will now move on to read out some of the questions that were submitted live to the company during the presentation. First question is from Sam S. Can you please provide the key differences between the new structured formal process versus what was carried out previously? Katherine Roe: Sure. Yes. Previously, with the farm-out of 125, 126, I think there's been a consistent message throughout Pharos' history that a partner is required. Again, it's a real challenge for a small business to drill that well, sole risk that well just from a cost and a risk reward perspective. So we've always been trying to find a partner. The difference is historically, it's been done on a bilateral basis, which means that conversations have been happening between Pharos and parties at any given time. And what's new here is that we've tried to put a formal structure around. We have a third-party adviser running the process for us. That creates a bit of competitive tension. It creates some time frames. It creates structure in terms of the steps between entering into a CA, a confidentiality agreement to receiving data to visiting the physical data room, et cetera. So it just creates a little bit more of a formal process. And I think what it's achieved for us is a wider and deeper testing of the market and accessing people that we wouldn't necessarily have been able to access on our own. So that's what's different. Minh-Anh Nguyen: That's great. Thank you, Katherine. The next question from Peter. Can you give us an idea of the scale of the upside in TGT and CNV that could be unlocked with the appraisal wells? Katherine Roe: Yes. I mean it's hard to put a number on that, which is why we haven't to date. But as I say, we think it could be materially beyond arresting the decline of current production. So what does that mean? You'll see we're sort of relatively stable at the 4,000, 5,000. We want to see that growing. So we want to be seeing 6, 7-plus thousand barrels a day from those fields if we have appraisal success. Minh-Anh Nguyen: That's great. Thank you. A few questions from Keith about 125. What are the parameters you seek in terms of number of wells committed, et cetera? What are the target expectations for the well of the identified in 125? Katherine Roe: I think all of this depends on the negotiation with the partner at the time. It depends who the partner is. If there's an ability for a couple of the majors, they have a different budget and they can commit to not only just the exploration program, but possibly a development program in a success case. We have a 1-well commitment. So that is obviously the priority to cover the first initial exploration well. But when we look at and show potential partners our detail and our work, we have a couple of different prospects. So it really depends, and we're not quite at the stage that we can share that detail. Minh-Anh Nguyen: That's helpful, Katherine. Switching on to financials. Why are you still carrying a hedging position? The company was unhedged prior to the RBL. Sue Rivett: Yes. No, it's a good question and obviously one that we ask ourselves internally. I think the key for hedging is it supports your underbelly. So when you're stress testing at very different oil prices, we've seen crashes in the oil price before, et cetera. I think it's an important tool to make sure that you're supporting, as I say, your underbelly, as I call it. But I think you want to keep quite a bit in the top side for clearly, if share prices pop up not share price. But if Brent price pops up, you want to see that ability to take some of that. So this is really about supporting the underside. Katherine Roe: Yes. Protecting without reducing our exposure. Sue Rivett: Yes. Absolutely. Minh-Anh Nguyen: The next question is, what is more risky about the 6-well program this time? Katherine Roe: The risk is really around the appraisal wells. So of the 6 well program, 4 of those infills, they're relatively well understood and low risk. So the risk is really around the appraisal because it's looking at a different part of the field that is previously not producing. So where that appraisal well, for example, in TGT 18X, that is not currently a producing part of the field. So that's where the risk lies. And likewise, in CNV, which CNV is even more of a complex well. It's complex geologically, but also operationally. So there's some risk there. But I would say the infill wells are relatively straightforward. We've got a lot of experience of having done those. So I hope that answers that question. Minh-Anh Nguyen: Thank you, Katherine. I believe that is all the time we have for today. So I will now hand it back to the Investor Meet Company team. Operator: Katherine, Sue thank you for answering all those questions you can from investors. And of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Katherine, could I please ask you for a few closing comments? Katherine Roe: Thank you. And I just want to say thank you again to everybody for taking the time to listen. We do appreciate it, and we look forward to updating the market and shareholders with new news as we move forward. It's a really important half for us as we move towards the end of the year. So we look forward to further updates, and thank you again for your time. Operator: Katherine, Sue thank you for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure it'll be greatly valued by the company. On behalf of the management team of Pharos Energy plc, we'd like to thank you for attending today's presentation, and good afternoon to you all.
Eric Lakin: Good morning. I'd like to welcome everyone in the room and on the webcast to the TT Electronics 2025 Half Year Results Presentation. I'm delighted to be here today to present the results as Chief Executive of TT. This follows a permanent appointment decision by the Board of Directors last month, and I'm grateful for the trust placed in me by the Board and for their support. I'm also very happy to introduce you to Richard Webb, our Interim CFO, who joined us in May this year. It's been a remarkably busy 5 months since the 2024 results were announced in April, and we have made significant progress since then. In the first section today, I will cover the headlines for the half, including the key financials and an update on the actions taken to stabilize the business. Then Richard will take us through the results in more detail. In my second section, I will share more of my early impressions of TT's business. I'll also talk about the overall direction of travel and provide more color on the outlook for the remainder of the current year. We will then take Q&A. Before I start, however, I wish to recognize and thank all of my colleagues for their hard work, commitment and support during what has been a challenging time with significant change. Overall, TT has made solid progress over the past few months, including significant strides with the business improvement in North America, and we're on track to meet expectations for the full year. Our European region has once again performed well as momentum continues, benefiting from our strong long-term positions on several Aerospace & Defense programs. For the Asian region, business operating margins held up through our Lean business program in Suzhou despite being impacted by some order delays for certain customers. With regard to our North American business, there have clearly been a number of challenges to navigate over the past 12 to 18 months. In the first half of this year, we have taken prompt action to stabilize this North America region. In April, we announced that we were launching a strategic review of the underperforming components business. As a result of this ongoing review, we took the decision in June to close our loss-making Plano site in Texas, which lost around GBP 6 million last year. We also established a separate management team for components to focus and provide greater oversight. We stepped up action to turn around the loss-making Cleveland site. We deployed external consultants to undertake a full operational review of the business, which has now concluded, and the local management team is now at full strength. I feel confident that we have turned a corner with the performance of this business. More about that later. Our drive for inventory reduction continues to progress well, which contributed to an excellent cash conversion outcome of 135% in the half and leverage of 1.9x, which is within our target range of 1 to 2x and slightly ahead of our previous guidance. Richard will cover this in more detail. Overall, I would summarize the first half as a transitional period. While the performance in the half doesn't reflect many of the operational improvement actions taken, these actions do underpin both the second half improvement in profitability and future run rate profits. Importantly, we continue to expect full year adjusted operating profit to be in line with market expectations. So let's take a closer look at the operational turnaround projects in turn. Firstly, the Components' strategic review. The Components business has a different operating model and characteristics from the other TT businesses of Power Electronics and Manufacturing Services. We are, therefore, undertaking a strategic review that was started in the second quarter. Components is a more transactional higher-volume business with shorter lead times and therefore, has less future visibility than other parts of TT. The route to market is predominantly through distribution channels, which also tends to exacerbate the stocking and destocking trends. Consequently, I believe it is the right decision to give this business separate management focus within TT, and we are already seeing benefits from this new structure, including tailored initiatives for pricing, marketing and product development. This will ultimately drive improved performance through volume, margin and overhead recovery, especially when we see a positive turn in the industry cycle. We continue to monitor levels of our Components' product inventory held by distribution partners. And as you can see from this graph, encouragingly, the stock levels have been showing a consistent downward trend. Although we haven't yet seen a significant uplift in new order intake, it is encouraging to see a stabilization of order levels. A key action to improve the performance of the Components business was the decision to close the Plano site to stem the losses. Production is planned to discontinue by the end of this year. The factory is currently fulfilling demand from last time buy orders, which also helps underpin the second half improvement for the business. We are now expecting cash closure costs of around GBP 4 million, which is lower than originally anticipated and delivers a payback of less than 1 year. Now for an update regarding the ongoing activities to improve performance at the Cleveland, Ohio site. There has been a lot of activity at this site, and I'm pleased to share some recent data. In fact, Richard and I were there last week along with the Board, and we were heartened to see the significant progress being made. I'm glad to report we have turned the corner in Cleveland, having implemented a detailed improvement plan, which was developed with our local site team in collaboration with the external consultants. The plan incorporates multiple margin and cash flow initiatives, including pricing, production planning, inventory optimization, procurement and efficiency measures manufacturing processes at the site have become more efficient, supported by improved factory layout, process optimization and waste reduction. You can see the outcome of these initiatives in the two charts on this slide, which show encouraging trends. In the blue column chart, productivity, which is defined as standard hours earned divided by total labor hours paid, has been consistently improving during the year and has now reached our target level. June was an expected temporary dip due to a planned 1-week factory shutdown to improve the layout and flow. Productivity improvement has been delivered partly through a reduction in scrap and rework hours, which can be seen in the purple column chart. In addition, we have further reduced headcount at the site, which is down 17% since the beginning of the year. More efficient operations has led to improving service levels to our customers, including on-time delivery, which puts us in a better position to tighten our commercial terms for legacy low-margin contracts. The benefit of this work stream will be delivered over several months as existing contract terms come up for renewal. We have also completed a comprehensive balance sheet review, which has resulted in a largely noncash restructuring charge in the first half of GBP 5.7 million, predominantly related to aged and obsolete inventory. Now that the external consultants have completed their assignment, the improvement project work streams are owned by the Cleveland team. There is full commitment from this team to continue to deliver on the improvement plan, and it was very encouraging to hear updates from them last week. So hopefully, that gives you a good feel for the progress with our short-term priorities, especially as we focus on improving the operational performance in North America. Now I'd like to hand over to Richard to go through the first half numbers in more detail. Richard Webb: Thank you, Eric, and good morning, everyone. This is my first set of results with TT having joined the group in May, and I'm really pleased to be part of the great TT team. It's been a busy few months, but I'm pleased with what has been achieved and the actions taken to stabilize the business. Clearly, it's been a mixed half with continued strong profit progression in Europe, offset by specific challenges at two North American sites and order delays for our Asia business. Now moving on to the group financial metrics. Throughout the presentation, I'll refer to organic performance. This reflects the performance on a constant currency basis and with the impact of last year's Project Albert divestment removed. Revenue was down by 6% organically. If we exclude the Plano site from both periods, we would have been down by 4.3% organically. As already communicated, Plano will be closed by the end of the year. Adjusted operating profit declined by 29.7% organically to GBP 13 million as strong operational gearing in Europe was more than offset by 2 loss-making North American sites. Adjusted operating margins dropped by 180 basis points on an organic basis to 5.5%. Adjusted EPS declined to 1.9p, reflecting the reduction in operating profit and the impact of a much higher effective tax rate in the current year as we cannot currently recognize a deferred tax asset for the U.S. We've taken the prudent decision to focus on strengthening the balance sheet and have decided to continue the pause on the dividend and will not be paying an interim dividend. Return on invested capital was flat at 10%. This metric benefited from a reduced denominator following the December 2024 impairments of North American goodwill on components assets. And just to flag, half 1 2024 has been restated, mirroring the restatement of the 2024 full year we highlighted in our announcement of the 10th of April. This all relates to North America. On this slide, we're showing the revenue bridge, which adjusts for the Albert divestment and FX and shows the makeup of the 6% organic revenue decline. Our positioning on long-term programs in the strong Aerospace & Defense end market has driven the growth in Europe, offset by the issues at two sites, Plano and Cleveland in North America and the order delays impacting our Asia business. Similarly, for adjusted operating profit, you can clearly see the strong drop-through on the European revenue growth. However, this was more than offset by circa GBP 3.5 million of losses at Plano and the Cleveland challenges, which Eric explored earlier. On a more positive note, we're really pleased with the strong cash conversion of 135% in the first half. Net debt, excluding leases, reduced further to GBP 73 million. This is a GBP 36 million reduction since the end of June last year, and we're very happy with the good progress on cash conversion and debt reduction. Free cash flow was GBP 6.4 million. Over the last 18 months, there's been a significant focus on reducing our inventory levels, and this initiative resulted in a GBP 5 million contribution to the half 1 cash flow, putting us well on track to delivering the commitments to a GBP 15 million reduction in inventory by the end of 2026. We closed the half with covenant leverage at 1.9x. As profits recover and cash generation continues, we expect to see a slight further reduction in leverage over the remainder of this year. Looking at the cash conversion in a bit more detail. Working capital movements were a net inflow of GBP 0.9 million in the half. This comprises the GBP 5 million of underlying inventory reduction mentioned just now, partially offset by a GBP 3 million creditor reduction and a GBP 1 million receivables increase. It's a much better picture than half 1 last year, where there was an GBP 18 million working capital outflow. We expect working capital movements in half 2 to remain broadly neutral. Before we move on to the performance of the regions, it's worth looking at end market revenue, which shows similar themes to 2024. Aerospace & Defense continues to grow strongly with the main benefit showing through in our European performance. Healthcare was down 6% organically, driven by the well-documented reduction in U.S. research grants and funding into the sector. Automation and Electrification declined by 14% organically, reflecting end market weakness for our customers. And finally, Distribution, which is where we have continued to experience our main challenges, with a 17% organic reduction. The biggest impact was in the North America region, particularly for our Plano site. As Eric mentioned earlier, we are now seeing distributor inventory levels stabilize. Now moving on to the regional performance. The European region continues to perform well, reflecting our long-term positioning with key customers in the A&D sector. We have built on a strong 2024 performance to deliver a 5% revenue increase on an organic basis and a 34% organic increase in adjusted operating profit. Operating margins have further improved, up 330 basis points, to 15.6%, benefiting from a favorable product mix in the half, good operational leverage on growth and further efficiency improvements coming through. Order cover for the region remains very strong, and we expect to deliver further organic revenue growth for the year as a whole. Clearly, North America has faced another difficult half given the slow components market and the execution challenges at our Cleveland site. However, as Eric has explained, action has been taken. And although not visible in the first half results, we expect to see evidence of these actions in our second half performance. Revenue was down 10% on an organic basis with some good growth in Kansas City, where a successful turnaround has been achieved from the challenges noted last September, more than offset by declines in Cleveland and in Components. If we exclude Plano from both periods, the organic revenue decline is 5.8%. The GBP 5 million loss in the region includes a circa GBP 3.5 million loss at the Plano site, which will be closed in the second half. In the half, we have booked restructuring costs taken below adjusted operating profit with GBP 6.7 million booked in relation to the Plano site closure and GBP 5.7 million for restructuring of Cleveland, which is mainly inventory related. As we look into the second half, a combination of higher revenue, management actions taken, such as the Plano closure and the Cleveland improvement plan means we expect the region to return to profitability in the second half, although the region is expected to be loss-making for the year as a whole. Finally, Asia, which has made another good contribution to the group despite lower levels of revenue, reflecting order delays due to geopolitical and related uncertainties. On an organic basis, revenue was down by 9%. Operating profit reduced by 14% organically, driven by the adverse impact of volume reductions. 2025 is a transition year for the region with the ongoing transfer of production for a major customer at their request from China to Malaysia. This is progressing to plan. The region is still delivering a strong margin performance with margins broadly maintained at 13.2%. Revenue in the second half is expected to be slightly lower as the order delays are expected to continue. The drop-through impact will result in half 2 margins being marginally lower than half 1. I wanted to highlight on this slide the ongoing balance sheet derisking. Inventory has reduced by GBP 22 million in total. GBP 5 million was a result of the sustained hard work on our ongoing inventory reduction initiatives, as I mentioned for the cash conversion slide earlier. These initiatives are expected to further reduce inventory in the second half, and we are on target for achieving the previously stated GBP 15 million reduction by the end of 2026. This is on top of the GBP 14 million reduction in inventory delivered in 2024. Separately, the Plano closure announcement has resulted in around GBP 5 million of inventory being written off below adjusted operating profit and the comprehensive balance sheet review at Cleveland also resulted in a circa GBP 5 million of inventory being written off, also below adjusted operating profit. As previously flagged, profit in 2025 is expected to be weighted to the second half. This slide gives some of the building blocks, not drawn to scale, to deliver the step-up in second half profitability. The Plano and Cleveland sites were significant drags on half 1 profitability. The decision to close the Plano facility and subsequent last time buy activity into the site in half 2 will provide a positive contribution. The Cleveland improvement plan will start to deliver improved performance. We have also factored in the impact of the ongoing order delays for our Asia business. We expect full year adjusted operating profit to be in line with market expectations. With that, I'll hand back to Eric. Eric Lakin: Thanks, Richard. So having spent much of the presentation so far looking back and reviewing the turnaround activities and progress, what's next? It is still early days in my tenure, which has been focused significantly on steadying the ship, but I do want to share with you some of my early take and direction of travel. TT has foundational capabilities, but there remain areas where we still need to improve our operational efficiency and leverage all of our assets across the business. We must continue to develop our people, products and market positioning to drive sustainable shareholder value in the long term. I'll shortly be covering examples of where we have been investing, technology, for future growth. In the meantime, our short-term priorities are clear. We must complete the fix of operational issues, complete the Components business strategic review, including performance improvement and restore confidence and deliver on our commitments to all stakeholders. I also want to mention that early on in post, I empowered the three regional heads by bringing them onto the executive team. This brought clear lines of responsibility and accountability and encourages collaboration across the organization. The executive team also now includes a leader for the Components business. Beyond our short-term focus, we also need to look further out strategically and drive top line growth. I've been impressed by many things that I've observed, getting to know our business and our employees over the last few months, which I think goes to the heart of the underlying investment case. TT is focused on structural growth end markets driven by megatrends and rising demands. While there have been some short-term softness related to geopolitical uncertainties, I believe ultimately that these are the right strategic markets to be in. Our engineering, manufacturing and sales teams have deep domain and application knowledge across these sectors. TT has particularly strong capabilities in Power Electronics, including Conditioning and Conversion and Electronic Manufacturing Services, known as EMS. TT offers high specification, highly customized electronics for mission-critical applications, which provide strategic advantage through differentiation. We collaborate with our blue-chip customers on long-term programs, and I believe there's a real opportunity to accelerate targeted investment in innovative technologies and products compatible with customer needs. A good representation of TT's strength is demonstrated by some significant recent customer wins, including a GBP 23 million contract this month with long-standing customer Kongsberg. Next, I want to remind you of the broad customer relationships we have across our end markets, which is so important for the business. We are proud to work with many blue-chip customers with whom we have long-term relationships. In fact, our top 10 customers have all been working with us for over a decade and many have been partners for 20 years or more. First, in Healthcare, Asia has secured some notable contract wins this year, reinforcing our regional strategy supporting life sciences OEMs with local production capabilities. In North America, our Minneapolis site is working with a medical equipment partner on next-generation surgical device development that use electromagnetic tracking technology. In Aerospace & Defense, we see continued growth opportunities with the NATO commitment to raise Defense spending targets from 2% of GDP to 5% by 2035. And we're also seeing momentum in civil aviation, driving demand for new aircraft and spares. For Automation and Electrification, we are well placed for growth through the cycle with strong brands across different specialist sectors, including semi equipment, power, security, rail and data centers. This chart may be familiar to you, but it illustrates our business model and customer spend patterns and how we seek to partner to support our customers from the concept stage through to full-scale production, leveraging our global footprint for engineering and manufacturing at each stage of the product life cycle. This development path varies by market and some programs can extend for many years with high barriers to entry in regulated markets, which provides visibility over long-term revenue streams. We have established a group-wide engineering and R&D function to leverage TT's expertise across all regions with product road maps for all sites. I've been greatly impressed with the technology and industry experts at our sites who help develop solutions for our customers' challenges. The image on the left shows how TT combine a fully integrated offering. For example, the use of our magnetics devices on our PCB assemblies, which along with our hybrid microelectronic devices can be designed into high-level assemblies. A core product of TT is our power units, which can incorporate our own PCBs as well as TT connectors and cable assemblies. On the right, it is an example of our customer-led approach to investment. Silver sintering is a key manufacturing capability that enables cutting-edge power modules for critical applications to be fabricated using the latest silicon carbide semiconductor devices. This represents the next-generation technology, enabling higher power with superior reliability and thermal performance within a smaller, lighter package, which are particularly valued by Aerospace customers. Another investment example is Altitude DC, our high-voltage direct current power system that was launched at the Farnborough Air Show last summer. We developed this in collaboration with the Aerospace Technology Institute as well as shared investment with them. This platform provides efficient and reliable power conversion solutions to enable longer duration flights at higher altitudes in civil aerospace, defense and air mobility vehicles. The modular design means reduced development time and costs and simplifies the qualification process. So that's just a couple of examples I wanted to share with you to illustrate our investment in the future. Let's finish with an outlook for the remainder of the year. We are clear on our short-term focus to deliver improvement in operational performance and margin and have taken decisions to accelerate this. This includes a component strategic review and the planned closure of Plano as well as the Cleveland turnaround project. Very important to me this year is -- and the future for TT is that North America is expected to show a step change in performance, leading to a return to profitability in the second half. Yes, it's still expected to be loss-making for the year as a whole, but it's good to have positive momentum in the region. This sequential improvement, together with further second half progress in Europe and a resilient contribution in Asia is expected to underpin a significant uplift in profitability in the second half of this year compared to H1. As stated earlier, we expect adjusted operating profit to be in line with market expectations. While our short-term priorities are clear, I plan to share further thoughts for the longer-term strategy in the new year. In conclusion, following my first few months in the business, I am convinced that we have a robust platform for growth with leading products and capabilities, deep customer partnerships in attractive end markets, and this makes me excited for TT's future. So now we're happy to open up to questions, initially from those in the room. There's also a facility for those on the webcast to submit questions, which we'll cover after those in the room. Thank you. Eric Lakin: Okay. First hand up. Mark Jones: I'm sure that's working. Mark Davies Jones from Stifel. Could I ask about the Asian business, please? Because clearly, the U.S. has been a priority and you're getting scripts with that, but delays seem to be drifting onwards in Asia. When does delay come -- become work that's not coming your way? And if you're relocating business from Suzhou to Malaysia, what does that mean in terms of ongoing capacity utilization at the China plant? Eric Lakin: Yes. Thanks, Mark. So overall for Asia, First, in terms of the production transfer, that's going very well and to plan. That was quite a significant transition for one customer in particular. It represented GBP 20 million or more of annual revenues. That will be complete this year. There was some safety stock that was purchased last year in the first half of this year. So that will contribute to some short-term softness as that safety stock is sold and consumed by the customer. I mean, overall, that does mean there is capacity for the Suzhou site. We have 4 SMT lines there and a very capable workforce. We have taken some modest adjustment to the headcount there to counter the transfer of business from Suzhou to Kuantan. But the underlying growth, if we look at the -- there's two large customers in particular, where we're seeing some softness in end customer demand patterns, partly due to the geopolitical uncertainty we've been talking about, specifically with the ongoing uncertainty around tariffs, it's difficult to know where they will be in 3, 6, 9 months' time. Some of the decisions made to agree the supply chain and location of fabrication has meant that there are some delays in those orders, which feeds into short-term softness in revenue. The good news is we're not losing business. We have a diverse portfolio with different geographies to provide offshore, both China and Malaysia, but also nearshore with Mexico, with the Mexicali EMS facility, but also indeed Cleveland. We're having increasing discussions with some of our key accounts and new accounts about onshoring production and EMS into the Cleveland site. So we're doubling down on our regional Asia for Asia projects. In fact, we're increasing our resource for business development headcount in Asia, including China, to grow our book of business with local customers in China. And we're having some good early traction with wins within the region so far. So I think I see it as temporary short-term softness in Asia, which we've not seen before due to specific end customer demand patterns and uncertainty. But over time, and as we go into certainly the second half of next year, we see a return to growth from our existing customers, but also as we see benefits for new business opportunities and new customers. Mark Jones: And maybe one for Richard. Lot of moving parts in the numbers. I wouldn't say I've read every page of the release yet from this morning. But in terms of setting the baseline for revenues, obviously, you restated the first half. Have we got full restatements on the same basis for the full year numbers? And how much of that revenue is Plano? So how much drops out next year from that? Richard Webb: So we're not going to give specific guidance on Plano specifically. But in terms of the restatement, so we've restated 2024 half 1 on a consistent basis with the 2024 full year restatement, which is about GBP 1.1 million of revenue that was taken out of the 2024 half 1. Vanessa Jeffriess: Vanessa Jeffriess from Jefferies. Just to start on a really positive note in Aerospace & Defense, obviously, seeing a lot of momentum there. Can we continue to expect double-digit growth over the next couple of years? And is the margin improvement in Europe all from operating leverage? Or is there more self-help to come through? Eric Lakin: Yes. So in terms of the first question, we're seeing continued growth momentum in Aerospace & Defense, as you'd expect, particularly on the Defense side. That's largely in Europe, but also increasingly in North America as well. We're getting defense contract wins in Kansas and Cleveland. I mean, this month, in particular, is a particularly strong month. We'll have -- this year will represent a record order intake for our Europe business. So certainly very strong demand and a lot of these contracts are multiple years. It gives us good visibility over the future years and particularly underpins a continued growth into next year. I couldn't -- I wouldn't comment on double-digit growth for the next 2 years because it's -- you're starting from a higher base, but we certainly expect continued growth over the next couple of years, if not beyond, which is very good from that tailwind. And ongoing discussions with customers, we expect to see more of that. I think in terms of the operational leverage, it's largely down to increased revenue and over a well-maintained cost base. There's some other initiatives as well in there, partly mix. We have some increase in some spares, which is higher margin, but also some other self-help initiatives, including some pricing reviews and changes, which helps the margin as well. Vanessa Jeffriess: And then on Asia -- obviously, you've just explained all the drivers behind the delays. But I think it's fair to say that your decline was maybe a little bit bigger than some of your peers. Coming into the business, do you think that you are as well set as peers to deal with the volatility that's arisen from tariffs? Richard Webb: Yes. It's -- I mean it's a fair observation. I'd say we've got specific large customers that have impacted the revenue for this year. And in particular, it's the extra stocking and safety stock from last year is partly contributing to that. And we're seeing, as I mentioned, some order delays. And some of these -- we're having live discussions with them right now. They're looking ahead and trying to understand, for example, U.S. import duty from Malaysia is currently 24%. Is it going to go down to 15%, 10% or less or stay where it is? So the -- we're set up, so we don't incur direct tariff costs through our Incoterms, it's a customer that bears those costs. So we don't see that, but our customers do. And it can be, in some cases, quite significant. So they are choosing to consider where to place business with us and whether that's Asia or Mexicali or Cleveland. So we are seeing that perhaps more acutely than the general market because of the nature of some of our customers. There is some also compounding that some specific end customer softness, particularly in healthcare, you've got some reduced R&D spend in North America, which is affecting some of the equipment devices that we sell into in OEMs. And for other specific reasons, some current softness in the automation electrification space. But we don't expect those conditions to prevail for the indefinite future and expect -- I think -- we expect certainly, by the middle of next year, return to growth for the Asia region. Vanessa Jeffriess: And then just finally, on North America, you said that for a while that there's been no customer losses. But maybe if you can talk about how your customers are responding to hearing the business under review, under separate management? Eric Lakin: For the Components business specifically? Vanessa Jeffriess: Yes. Eric Lakin: It's -- yes, I think the -- I mean, the immediate impact was quite acute in Plano. We've got some last time buys, which I mentioned at premium pricing, which is obviously contributing to the second half uplift. But more generally, what -- because it's quite a different business, as I've explained, it hasn't really had the focus to support our customers as it might have done in the past under the previous divisional structure. So by addressing that and having separate management and focus on individual customer conversations, both with the distributors, which is most of the -- mostly sold through indirect channels but also end customers. We have a lot of touch points with them on engineering, product design, pricing. We're already seeing the benefits of that anecdotally and more generally. And we've just had very little marketing, for example, in that business when you're competing with much larger competitors, Bourns, Vishay and so on. It's really important to keep getting the message out there of new products and the capabilities and the specifications of those products. So that's certainly helping. In terms of the fact that it's under strategic review, we're not -- I mean, it's not really impacting our day-to-day business. I mean my position on that is we're keeping options that -- the priority is to improve performance. And whatever we choose to do in the future, whether or not we decide with the best owners, it will only help that. Unknown Analyst: Just starting with capital allocation. Clearly, deleveraging has been a key aspect of that. I was just wondering if we could get any color on what -- whether there's kind of any key milestones we should look out for the resumption of the dividend? I'll just start with that one. Eric Lakin: Yes, fair question. Yes, so I'm not going to predict when we would resume the dividend at this point. But it's fair to say some of our investors really value the dividend, and it's a good discipline as well to distribute surplus cash. We will review it at the end of the year. And as Richard outlined, we expect to continue to deleverage at the end of the year, and we'll reflect on the -- I mean, the priority is to get balance sheet strength and support the lending banks and make sure that we got very good covenant headroom. But at the right time, we'll certainly look to reintroduce the dividend. Unknown Analyst: Perfect. And just one more, if I may. I mean, it feels like the business is stabilizing as you've kind of alluded to in your presentation. I guess I'm just keen to get more of a sense of how you're kind of managing the culture through what's been obviously a very turbulent time. And are you still able to kind of attract and retain the best talent? And what are you doing around that? Eric Lakin: Yes, that's an interesting question. Yes, it's really important for the organization because it often gets overlooked with a huge amount of change and disruption at the top management team within the organization, with the plant closure as well. I've made it a very high on the list to communicate a lot internally. We have regular meetings. We've reinstated pulse surveys around engagement and responding to those -- the most useful part about that is you get the sense of how people are feeling and what to do about it. And the [ heart ] of it, as you'd expect, is communicate, communicate. And we're doing lots of explaining what we're doing, why we're doing it and the benefits of what we're doing and making the business stronger. And that's really, I think, resonating. We're seeing improvement in the survey results that are coming through. And I make a point of having regular town halls, both all hands and the sites I go to. And I think what's the -- how does that manifest? The attrition rates we are seeing are higher than I'd like them to be generally. But if you look across the manufacturing sector as a whole globally, we are no worse, about -- better than the average. So it is a challenge, particularly some of the sites we're at. It's notoriously difficult to attract and retain people at all levels, including direct labor. But I think we're actually -- we're measuring up okay. There's room for improvement. But I'm feeling it's getting appropriate attention because it really matters, obviously, business is heart of it is our people. Harry Philips: It's Harry Philips, Peel Hunt. A couple of questions, please. The -- just thinking about tariffs in Asia and what have you and obviously, the relocation of some business into Malaysia. And I appreciate sort of -- it's directly outside your control, but do you envisage sort of going forward that there might be more sort of moves out of China by some of your customers and the need to follow? So I suppose the question is, how much sort of residual capacity have you got outside China to sort of facilitate that change? Eric Lakin: Yes. No, great question. We have -- I mean, specifically, that one customer move was largely triggered, not so much by tariffs, by the U.S. CHIPS Act and wanting to not have China in the supply chain and IP. So we've addressed that, and that's been well received by the customer. Not seeing any signs of other customers needing to do that in the other sectors we're in. So it really becomes -- and obviously, the quality, in particularly our Suzhou factory is best-in-class. So generally, the decisions being made are economic. And we're not seeing any -- expecting other known transfers from Suzhou. I think, in terms of capacity, we've deliberately made a point of investing in capacity to support changes. So we -- the SMT line in Kuantan is now being well utilized also in Mexicali, EMS, and we've got spare capacity in the PCB assembly for the Cleveland site. So we're well placed. I mean our issue fundamentally is we need more orders and grow the revenue and volume. And that's the most fundamental way of improving our operating profit margin, by getting the leverage up and covering our overheads. So we are not short of capacity. That's not a constraining factor. So one of the things I'm doing now is a reorganization of the sales and marketing team, and we're investing more in business development resource across all regions, in particular in Asia and North America, to fill the factories. So we're well placed for any further moves or increases in orders. Harry Philips: And then second question is just on working capital, so apologies in advance. Just -- I think your comment was that working capital will be broadly flat second half. And I'm just thinking, against the context of last time buy Plano, where clearly, by the year-end, you'd expect obviously cash in, if you like, against that last time buy, maybe it runs over a little bit into next year, but sort of -- and then also the rundown in the sort of safety stock. You were talking about in the context of the Asian switch, which doesn't sort of makes flat working capital sort of seem -- well, I would hope to expect maybe a reduction rather than just simply running at the same levels. Richard Webb: So we're not going to see sort of 135% of cash conversion for the full year as a whole, but we will see very strong cash conversion. So there will be a kind of positive contribution for the full year. We will be seeing kind of balance sheet delevering continue, and we'll be within the kind of range of 1.5 to 2x but will be a kind of decrease from where we are at, 1.9x. So there will be a kind of good strong full year cash conversion for the group. Eric Lakin: Yes. I mean specifically on second half working capital movement, I don't want to share -- go into the details. But I think there's certainly, the last time buy opportunity you referenced, and that is very much back-end year loaded. So a lot of the receivables we picked up in the second half of the year. So I wouldn't be surprised to see a growth in receivables at the end of the year. But it's -- we continue to drive down all parts of working capital where we can. And there's more to go with inventory reduction over time as well. Okay. Any other questions in the room? Otherwise, Kate, have you got any on the webcast? Kate Moy: Yes. A question from Joel at Investec, and we touched on it a little bit. But can you talk a little more about the weakness in the automation segment? And to what extent is that an end market customer issue as opposed to a TT-specific issue? Eric Lakin: Yes. So I mean, it's -- I would say, broadly, it is specific end customer demand softness. If I look at the -- in effect automated electrification is a lot of specialty industrial sectors that includes semiconductor equipment, in particular, rail, power, also bespoke postal equipment, smart card readers, ePassport. And we've got -- there's a handful of customers that they've just got current reduction in their end customer demand for different reasons. It's not -- certainly not a TT issue. We haven't had any issues in terms of production, supply, quality, on-time delivery. And so we are delivering to the customers' demand, requirements and production plan. And -- but ultimately, as I said, that sector should be growing. We're seeing -- I mean, it's probably without exaggerating the point, the semiconductor equipment market, some parts of the semi sector are going extremely well, as you'd expect, given the demand for increased amount of semi chips and AI and so on. Within that, though, the second order of the growth in the semiconductor equipment does vary by customer. And the U.S. CHIPS Act whilst offering significant opportunity, I think the last number was around $100 billion investment, there's so much uncertainty around that, and it takes time and a lot of planning to build up new fabs in the U.S. It has caused a pause in demand for a couple of our customers. So that's a contributing factor. So again, we expect long-term trends to improve, but short-term softness. So that's it from the webcast. Any final questions in the room? In which case, thank you all very much for coming. It's great to see a full turnout. That's heartening. Thanks for the questions, and I look forward to chatting to you later on. Okay. See you next time. Richard Webb: Thanks, everyone. Eric Lakin: Thanks.
Anne-Sophie Jugean: Good evening, and welcome to Quadient's Half Year 2025 Results Presentation. I am Anne-Sophie Jugean, Quadient's Head of Investor Relations. Today's presentation will be hosted by Geoffrey Godet, CEO; and Laurent Du Passage, CFO. The agenda for today's call is on Slide 3. As usual, there will be an opportunity to ask questions at the end of the presentation. You can submit your questions in writing through the web or ask questions live by dialing into the conference call. Thank you very much. And with that, over to you, Geoffrey. Geoffrey Godet: Thank you, Anne-Sophie. Good evening. The first half of 2025 showed a solid performance from our two growth engines, Digital and Lockers, with a double-digit growth in recurring revenue. Both solutions are firmly on a strong and predictable revenue growth trajectory. From a profitability standpoint, lockers' EBITDA margin also confirmed its fast-improving trend. And both solutions are expected to deliver EBITDA margin increase for the full year 2025 and also for 2026. The end of the U.S. postal decertification program that we mentioned last time impacted our mail hardware sales in the U.S., leading to a temporary lower revenue in the period for Mail Solution. All players in the industry have experienced similar declines. More importantly, we managed to protect the profitability of our Mail Solution. Thanks to the cross-selling between our solutions and also the contribution from the recent integration of the Frama acquisition that we did a little more than a year ago. As a result, for the first half of 2025, we delivered EUR 517 million in revenue, which represents a 3% organic decline compared to the same period last year. Despite the decline in mail revenue, current EBIT for the period was stable at EUR 60 million. So let's now turn to the details of our H1 result with Laurent. Laurent Du Passage: Thank you, Geoffrey. Overall, Quadient delivered EUR 517 million in total revenue in the first half of 2025, representing a 3% organic decline compared to last year. This reflects a 13.4% organic drop in noncurrent revenue, affected by the lower mail product placements in the U.S. compared to last year, decertification period. Mail performance was very much in line with Q1 and also consistent with overall market trends. That said, our subscription-related revenue continued to grow and now stands at EUR 384 million, representing 74% of total revenue, up from 72% last year. From a geographical perspective, North America has been declining by EUR 10 million compared to last year, resulting from a EUR 19 million decline in Mail, while our other solutions continue to grow. Europe performance in H1 is in line with previous year, with a notable exception, U.K. and Ireland, overperforming the rest of Europe as it benefits from strong dynamics in both Lockers and Digital. International has also been overperforming, thanks to large local deals. Let's now turn to the revenue bridge by solution on the next slide. This bridge clearly highlights the strong and continued momentum in both Digital and Locker Solutions, while Mail experienced a sharper decline of EUR 31 million in the middle. Out of this EUR 31 million, EUR 16 million are coming from that lower U.S. hardware placements. Just as in Q1, Lockers delivered double-digit growth and Digital grew above 7%, while Mail declined by around 8% year-over-year. The scope effect added EUR 9 million on the left, mainly coming from the acquisition of Package Concierge in December 2024 and to a lesser extent from the Serensia acquisition in June 2025. On the right-hand side, you can see the EUR 10 million negative currency effect entirely coming from Q2 due to U.S. dollar. Moving now to the next slide on current EBIT. So Slide 9. Despite higher decline in Mail, Quadient delivered a stable current EBIT, thanks to a slight growth of EBITDA in Digital, a limited decline in Mail, thanks to our cost adjustments as well as significant improvement in Lockers, which is up by EUR 5 million year-over-year. The reported current EBIT for H1 2025 stands at EUR 60 million. It's nearly unchanged compared to the EUR 61 million from last year with a slight positive organic growth, 0.1%, offset by the currency effect of EUR 1.7 million on the right-hand side compared to last year. So now we'll move into the details of the performance by solution. Over to you, Geoffrey. Geoffrey Godet: Let's move now to our H1 2025 accomplishment in our Digital automation platform. Our leadership was further reaffirmed in Q2 '25 with top position in both CCM and CXM Aspire Leaderboards. But I'm also proud to share that Quadient earned the highest score in both AI vision and road map as well as the AI maturity. This leads to be recognized by QKS as the most valuable pioneer in the CCM AI Maturity Matrix. This recognition proves that at Quadient AI is not a buzzword. We're not experimenting. We're scaling AI in ways that set high standards for the industry. The real challenge with AI, as you know, is to deliver measurable value and such at scale. Too often, AI in business today gets reduced to hype, pilots or sometimes even disconnected use cases. At Quadient, we focus not on what AI could do someday, but on what it does today to create sustainable value and accelerate customer success. Our investments in AI position Quadient ahead of the competitors and show the direction for the whole industry. We also advanced strongly in the account payable AP metrics compared to 2024, especially in technology excellence, where we're now firmly also amongst the leaders of the industry. And finally, I wanted to highlight that Quadient received also the IDC SaaS award for customer satisfaction in the Account Receivable Automation segment. That's based on the highest scores across 32 customer metrics from product value and usage implementation and customer relationship. So if we step back, taken together, these recognitions show one thing very clearly, Quadient Digital is delivering innovation, customer value and market leadership across every segment we play in. Our go-to-market approach, as you know, has been built on two strong pillars, acquisition and expansion. On the acquisition side, Quadient Digital delivered strong momentum in the first half of '25. We added this time 1,100 new customers, new logos, right, with strong dynamics from large accounts and also on the mid-segment, over 30% growth that is coming from the cross-selling from our Mail customers into our digital platform. We also secured some several new large enterprise logo, and that includes two large enterprise deals that are each worth more than $1 million. In particular, the one deal that I want to mention to you was a Spanish Bank, which is quite interesting because once it will be fully implemented, they will be one of the largest user of our digital platform, hoping to generate more than EUR 15 billion. I just want to stress that EUR 15 billion communication annually. If we move onto second pillar on the expansion side, we continue to build value with our more than 16,000 existing digital customers. Following the acquisition -- on another note, sorry, following the acquisition of the e-invoicing platform that we did of Serensia in June of this year, the positive momentum is accelerating. First, Serensia has successfully passed the French tax authority invoicing platform test that was in July. And since July, it is now an Accredited Platform. And as such, it has already been selected by major accounts and white-label resellers as their Accredited Platform and such ahead of the invoicing compliance date for next year. Now what it means for Quadient is that we're already guaranteed now to manage over 200 million of invoices annually in 2026 and moving forward, securing at least over 10% of the addressable market in terms of numbers of invoice that will be managed annually. In terms of upsell, I also wanted to share with you another strong example of the benefit of the approach of Quadient of having a best-of-suite approach. This customer story has everything that we could wish for. It's a competitor takeout and it's also a multiproduct, multi-module sell. We signed a deal in H1 with a leading cloud-based electronic healthcare record provider in North America with a full platform bundle, and that included our account payable module, our account receivable module, our hybrid mail distribution module, our CCA module. Over to you, Laurent? Laurent Du Passage: As in Q1, we continued to deliver double-digit organic growth in subscription-related revenue for our Digital business with particularly strong performance in North America and the U.K. Our annual recurring revenue or ARR has increased to EUR 241 million, representing an organic growth of over 10% on a 12-month basis compared to the January 2025 mark. EBITDA on the right-hand side for H1 2025 remained stable year-over-year despite the integration of Serensia and higher commercial expense tied to strong bookings. Looking ahead, we expect profitability to increase for the full year, higher than the 17.5% margin reported for 2024. In summary, Quadient's focus on recurring revenue streams and successful integration of new acquisitions are driving the sustainable growth and supporting our long-term profitability targets. Turning now to Mail on Slide 14. Geoffrey Godet: Thank you, Laurent. Mail had a difficult H1 caused by special circumstances in the U.S. and the U.S. is our main and most resilient market traditionally. The root cause of the H1 decline came primarily from the earlier-than-expected end of the U.S. decertification program. And with all Mail market players experiencing a similar level of both hardware and/or total revenue decline in H1, to get in bit more details and be more precise, the U.S. decertification program officially ended in Q1 2025. But the initial deceleration in terms of opportunities came as early as the end of last year -- sorry, of the first semester of last year in 2024. So that was roughly 6 months earlier than we had anticipated. With over 50% of the competitive base, generally speaking, the entire market, right, that has been updated in the last 2 years as a result of that program, the resulting factor is a lower numbers of [indiscernible] to sign or to renew deals in H1 2025. This is the primary driver of the decline in Mail hardware sales in H1 that you can see in this graph with North America accounting for more than 80% of the drop in mail product placements. Moving forward, Quadient anticipate that hardware sales performance is going to improve and is going to improve in the coming quarters as the echo effect of the post-COVID rebound 5 years later, will create higher opportunities for equipment renewals. The fundamentals of our mail market remain the same. The usage volume and the usage on the machine in H1 are unchanged. Our forecast for midterm mail volume usage globally is also confirmed. So naturally and consequently, we foresee a rebound in U.S. hardware sales in H2 and in 2026, and we'll see a return to a more muted revenue decline for Mail Solution over the medium term. And this is what allows us to confirm our 2030 guidance on Mail revenue of around EUR 600 million. Laurent? Laurent Du Passage: Thank you. On Slide 15 now, as we announced, the Q2 trends were very similar to those in Q1. So for H1, Mail hardware sales declined by 17.5%, primarily driven by a strong comparison base in the U.S., as explained by Geoffrey, due to last year decertification, which ended in Q1 '25. Despite these headwinds, Mail EBITDA margin improved by 0.8 points compared to H1 '24. This was supported by the successful integration of Frama, which delivered the expected benefits, the enhanced commercial productivity with Digital and a mix effect from lower hardware placements with limited impact from U.S. tariffs. Overall, while top line trends reflect the current market challenges, our focus on operational efficiency and integration synergies has enabled us to maintain strong profitability in the Mail segment. Now moving back to Lockers with Geoffrey. Geoffrey Godet: Expansion of our Lockers platform accelerated in H1 as well, both in terms of the size of the network and in terms of its usage. Our overall installed base now is reaching 26,600 lockers globally as we added naturally, I think, more than 1,100 lockers in H1 alone. In the U.K., the deployment of our network has continued to focus on premium location, and we have signed new partnerships with Shell petrol stations, but also a retailer chain, The Range, so that they could install our lockers. In H1, we also saw further initiatives that drives the volume in our lockers. So if we take another example, in Japan, we extended our partnership with JR East, Smart Logistics. So now users are going to be able to both receive and send parcels through the lockers installed in the train station themselves. Moving to Slide 17. If we look at the European networks, we can clearly see the benefit of having an at-scale network as a key driver for the growth in usage. The graph on the left highlights the steady acceleration in locker installation across Europe, in particular for open networks since January 2024. Over the past 18 months, the installed base has tripled with mostly premium locations, as I just mentioned to you, some of those new partners. Now let's look at the graph on the right side because that's a clear demonstration, I think, of the successful J-curve of developing and how it develops for our open networks. From the threefold growth in installation, we have been able to generate a 13-fold increase. So just let me repeat, a 13-fold increase in volumes over the same period of time as now users and carriers and consumers are increasing their usage of our lockers. With that, I'll now hand it over to Laurent. Laurent Du Passage: Thank you. On Slide 18, let me start with just showing you the longer-term track record of our Locker business. On this slide, we have shown the evolution of the key financials and operational metrics for our Locker business over the past 3.5 years. The quarterly revenue evolution emphasis strong revenue momentum as Lockers already is a EUR 100 million revenue business on a 12-month basis. An increase in the share of subscription-related revenue with 4 consecutive quarters of strong double-digit organic growth. Now moving to the other graph, let's review the EBITDA evolution shows a low point in 2022, which was impacted, if you remember, by adverse transportation cost impact at the time. Most importantly, EBITDA breakeven was achieved in fiscal year 2024 last year. With a regular and strong increase of EBITDA margin since 2023, the H2 '25 is expected to be both sequentially and above year-on-year, and we are well on track to reach the above 10% EBITDA margin by 2026. Moving now to Slide 19. We continue to deliver that strong momentum in both revenue and profitability in H1. Reported growth reached 30%, including the positive impact from Package Concierge acquisition, which contributed EUR 8 million. Organic growth continues to be double digit in Q2 like it was in Q1 and despite the software hardware performance in North America in Q2. We also achieved a double-digit organic growth in subscription-related revenue, driven by the outstanding volume ramp-up in open networks across U.K. and France as well as continued momentum in the U.S. residential segment. On the right-hand side, our EBITDA has significantly improved, I mean for the first half compared to last year. It's up by EUR 5 million. It's more than 10 points better than last year. And this was fueled by rising recurring revenue and increased usage as well as the accretive contribution from Package Concierge. On Slide 20, moving now to Quadient financials. In this slide, you have just a summary of the different metrics we did review, summing up to the EUR 517 million published revenue or 21% EBITDA and the EUR 60 million current EBIT at the bottom. Moving now to Slide 22. We see the P&L. Income before tax is particularly improved in H1 '25. It's 50% more than last year, thanks to lower optimization expenses than last year, which I remind you included an IT project write-off and some office optimization. And we have also a stable financial expense. H1 '25 income tax is normalized, while H1 last year included a EUR 15 million tax benefit. We even have a negative cost in tax last year. It results in a net income at EUR 21 million for this period compared to the EUR 24 million last year. Let's move now to Slide 23 and the free cash flow. Free cash flow stands at minus EUR 8 million despite the seasonality that we know of our working capital and the debt interest payment and tax one-offs. We have two one-offs this semester. Lower mail hardware placement have benefited to the cash flow, on the other hand, thanks to the lease portfolio decline and lower CapEx for Mail, which we'll review in more detail on the next slide. On the acquisition side, you can see the impact of Frama acquisition last year in H1 and Serensia this year. Moving now to the next slide to see details on CapEx. The evolution of CapEx presented here, excluding IFRS 16 CapEx moving forward as in fact, IFRS 16 is not reflecting such a cash out. Well, this evolution reflects the dynamic by solution we explained before, a stabilization of sustained, I would say, investment in Digital, which is mostly related to R&D, the EUR 12 million, increase in Lockers for the benefit of our open-network rollout notably in U.K. that increased to EUR 14 million. And last but not least, the reduction in mail CapEx due to the lower placement in franking machine tied to the end of the decertification and the reduced activity. Moving now to Slide 25 on net debt and leverage as of the first half of '25 our net debt declined to EUR 712 million. It's clearly favorably impacted by the USD weakening against Europe. The leverage ratios are down. It's at 2.9 including leasing and 1.6 excluding leasing from the 3.0 and 1.7 respectively at the end of January. This improvement reflects the resilience of our EBITDA, with a continued discipline on the balance sheet. Over the past 18 months, if you look at the figures, we have seen that the leverage kept -- was kept stable or declining. And this despite the EUR 45 million of acquisitions we made over the period. Our leverage ratios continue to stand well below our maximum covenant levels, ensuring long-term financial stability for Quadient. Moving now to Slide 26. During the first half of '25, we raised EUR 50 million in new facilities, a U.S. private placement issued in July. Thanks to the shelf facility signed earlier this year. We also completed the repayment of our 2025 bond and Schuldschein in February. Our liquidity position remained strong with EUR 123 million in cash at the end of July and a EUR 300 million on joint credit facility, which has been extended to 2030. The customer leasing portfolios stand at EUR 556 million, it is down by EUR 67 million, which in fact is due for EUR 43 million to ForEX. And we see the maturity and the bottom was spread over the coming years. Back to you now, Geoffrey, for the conclusion. Geoffrey Godet: Thank you, Laurent. This H1 2025 performance, I think demonstrated clearly the solid dynamics of our two growth engines, Digital and Lockers, offsetting the temporary U.S. softer mail impact that we described today with a stable current EBIT. For the second half of the year, we expect Quadient revenue to increase compared to H1, and this will be supported by a few things. The first thing is the continued, sustained strong momentum in Digital and also in the Lockers. It will also be supported by a rebound in U.S. Mail for us, although it's tougher than initially expected. We also expect a further increase in profitability in H2 versus H1 this year. How does it going to be supported? We're going to have a strong increase in Digital and also the low-cost contribution in H2. And Mail EBITDA margin is going to remain at a high level as well, thanks to the continued cost adaptation and despite the impact from the U.S. tariff in particular. So consequently, and taking into account the global macroeconomic uncertainties that we all have experienced, we are updating our full year 2025 guidance. And we now expect the full year revenue to decline by a low single-digit on an organic basis. And the full year current EBIT to come in a range from stable to low single-digit decline on an organic basis. If we look at the midterm guidance, we are confirming all our 2030 guidance, and we're also confirming the full year 2026 EBITDA margin targets and such for our three solutions. So with EBITDA margin expected to be above 20% for Digital, above 25% for Mail and above 10% for the Lockers. Based on the 2024 result and on the revised guidance for '25, we're currently suspending all other elements of the guidance from being part of the previous '23-'26 trajectory. So thank you. And with that, we're ready to take your questions, as usual, for the Q&A, Anne-Sophie. Anne-Sophie Jugean: Thank you, Geoffrey. [Operator Instructions] There are no audio questions at this time, so I hand the conference back to the speakers for any questions sent via the webcast. Thank you. Thank you. So we have a first written question. So the question is, why did you suspend your guidance for Lockers and Digital on the revenue side for the 2023-2026 period. Geoffrey Godet: That's a good question and Laurent feel free to comment. It just is too early to give the full guidance of '26. So it's likely something we will share with you and we'll get to March 2026 after the full year presentation. The real things that made us suspend the guidance is really related to the U.S. Mail performance that we have this year and the level of uncertainty that we still have as it relates to the pace of the rebound that we'll get in the U.S. main market for H2 and for the pace, obviously, the beginning of 2026, in particular. All the other elements of our business, including the performance that we have in the Mainland Europe that is at the same level as we expected in the previous years. The performance on our digital activities as well as our local activities are in line with our expectations. And this is why also we're able from a profitability or margin perspective to be able to -- ahead of time to confirm the trajectory. That being said, we live in a world with quite a lot of uncertainties. So it will be, I think, good for us to be able to -- until March to be able to precise the revenue trajectory or solution once we get there. Anne-Sophie Jugean: Thank you, Geoffrey. So the next question is on Digital. So could you please provide further details on the decline of EBITDA in the Digital segment? What are the expectations for the second half of the year. Laurent Du Passage: So I'll take this one, Geoffrey. So EBITDA for Digital is growing. So it's plus EUR 1 million compared to last year. That's what we saw in the bridge. And yes, we still have some growth and scale. I think you're referring maybe to the EBITDA margin that is slightly down. You have this dilutive slight impact from Serensia and the integration cost as well that is a factor. And the second factor is obviously some strong bookings that have impacted the commission side. We are very confident on the second half. We still have the growth in recurring revenue that is highly contributive and we have a level of OpEx that is not expected to significantly increase in H2. As you remember, we have usually payroll increase at the beginning of the fiscal year. So it should really benefit to the Digital segment and will end up higher than the 17.5% that we had on the full year last year. Anne-Sophie Jugean: Thank you, Laurent. So the next question is on U.S. tariffs. So regarding the tariffs, are you more impacted than your Pitney Bowes and competitor as being a non-U.S. provider. Geoffrey Godet: It's a good question, and it's difficult to know because we haven't looked at the information if Pitney Bowes has actually shared the amount. They have more volume than us in terms of equipment being a larger player. So they may have been more impacted in absolute value, and it depends obviously on how and where they source their -- the production and the manufacturing and reassembly of the activities. I think they are not producing in the U.S., so they are likely to be subject to tariff like any of the other players like FP and ourselves. That being said, the rate could vary from the one that could be potentially manufacturing in Europe, like some of our competitors in Mexico, which I think may be the case for Pitney Bowes and Asia, like it could be for us. So I hope that answered your question. Anne-Sophie Jugean: Thank you, Geoffrey. The next question is at which leverage would you consider resuming your share buyback program? Laurent Du Passage: So I am getting this one, Geoffrey. When we have the Capital Market Day last year, we mentioned that it would be below the 1.5 leverage, excluding leasing by the end of 2026. We are still at 1.6. So clearly, it's about forecasting and projecting what will be this evolution across the coming quarters. So, so far, we have -- you have seen we still have CapEx, notably in Lockers and the rollout, obviously, of the network. But clearly, it's something we continue to monitor and continue to arbitrate with the trajectory and how much security or guarantee we have to reach that 1.5 that we want to meet at the end of next year. Anne-Sophie Jugean: Thank you, Laurent. So the next question, is there outstanding earnout on your latest acquisitions? Geoffrey Godet: No. That was a straight answer, no. Anne-Sophie Jugean: So moving on to the next question. Have you completed the office optimization process? Laurent Du Passage: Yes. Geoffrey Godet: Yes, we have mostly completed the program completely. We may have -- always -- we're always looking at eventually when we renew lease and have opportunities to adapt to the scale of the business. In some cases, we have a little more people that we have hired. In other cases, people that took the benefit of the flexibility and the program that we provide them to let them work from home. So some time, we adjust down. So there might -- could be some more savings coming. Laurent Du Passage: Absolutely. And just to complete one thing, Geoffrey, when you -- notably, when you -- when we do acquisitions, obviously, we are seeking sometimes to make sure that we merged some offices, so that might be additional, I would say, optimizations. But for our existing offices, I would say we did really the bulk of the work at this stage. Anne-Sophie Jugean: Thank you, Laurent. So the next question is -- Quadient is a key player in the CCM market. What is your view on the recent acquisition of Smart Communications by Cinven this summer. Geoffrey Godet: It's a good question. So to be specific, our understanding is that the current -- the previous owner of one of our competitors, Smart Communication saw the controlling interest, so -- not the entire company to another private equity or Cinven for a valuation that I believe is estimated at EUR 1.8 billion for the entire business for a company that is much smaller than Quadient Digital today from what we know. This means it implies a high multiple on this transaction. And it shows that this company was highly valuable. So the first thing is congratulation for this transaction. But the best news is that I see that as a win for Quadient and Quadient Digital because it shows that the segment that Quadient Digital has decided to play and focus strategically in. So among them, obviously, we have our CCM activities, the one we're discussing now. But also, as you know, some of the financial automation segment, hybrid mail, the account payable, the e-invoicing with the acquisition of Serensia, all those segments, obviously, highly sought four segments with investors willing to pay high valuation because it shows the value that those segments provide. So that means that all the segments of Quadient because we've seen some previous transactions, I think more recently in the last 6 months with transactions from Bridgepoint on Esker, but also the transaction in the U.S. around AvidXchange. So it shows it continues to show that those segments are quite valuable for us. So that's the first thing. The second thing is that I see also that as a win for Quadient because we're obviously recognized by some of the industry analysts that I mentioned to you as the leader, and we continue to show the win in the industry. So I'm quite happy that this segment is recognized, and we have the opportunity to lead the segment naturally in this environment. So overall, it's a great news for the market and for Quadient Digital and for the player. Anne-Sophie Jugean: Thank you, Geoffrey. So moving on to Lockers for the last question. What will be the current local usage in France and U.K.? What would be the target for the average full year 2025? Laurent Du Passage: So first, we don't go to that level of detail because we have a lot of metrics that would be communicated. I think what's important to recall is, is the volume in absolute value, which I think is a key metric for us because, in fact, the more you will roll out Lockers or you see you have a ramp up for each locker, so -- looking just at the average of the utilization rate of all the rolled out lockers is not necessarily the right metric, I would say, because basically, if you just expanded for, let's say, 200 just in the past month, then you will drop basically your average utilization rate. So I think we need to focus also on the total volume of parcel that Geoffrey commented earlier. And I think, yes, we still have some room in the existing lockers, but the usage rate is ahead of our plan, so very satisfactory to us. And we see a good traction of existing carriers that are committing or double -- I mean increasing their capacity requirements. Geoffrey Godet: I think I could even add with a certain level of confidence is that the usage -- that we currently see with the usage trend and path that we see in the U.K. is actually above the trend and the level that we're seeing in Japan. So this is why, as we know, we have a quite profitable base today in Japan. So we're quite excited about the prospect of having such a usage trend evolution in the U.K. in particular. Anne-Sophie Jugean: And we have one last question. What are the EBITDA margin prospects for mail? Could the 2025 EBITDA margin for mail be flat compared to 2024? Laurent Du Passage: So as you could see in H1, clearly, we had an improvement in EBITDA margin despite the decline in top line. And we mentioned the several factors, out of which, obviously, our ability to scale the OpEx, is not the only reason, but that's one of the reasons. Also, there is a bit of a mix effect. H2 EBITDA will be higher than H1 EBITDA. So we have clearly room in H2 to generate a significant amount of EBITDA and continue to be maintaining the level above the 25% by next year, which is the commitment we took last year and will maintain. We will -- the H2 compared to H2 last year, yes, there will be an impact from the tariffs. I mean we know that. The ability of pushing that impact to the customer is something where basically we need to assess and view. So we will not -- and we don't go into a detail of EBITDA by solution by semester obviously. But you can be sure that it's going up compared to H1 and that will maintain the 25% mark as a minimum for this year and for next year. Anne-Sophie Jugean: Thank you, Laurent. So we have no further questions at this time, so we can close the call. Thank you very much for attending this presentation and for your questions. Our next call will be on the 2nd of December for our Q3 2025 sales release. In the meantime, we look forward to meeting some of you in the coming days during our road shows. Thank you, and have a good evening. Geoffrey Godet: Thank you. Laurent Du Passage: Thank you.
Michael Hazell: Good morning, everybody, and welcome to Saga's results for the 6 months ended 31st of July 2025. My name is Mike Hazell, and I'm the group CEO, and I'm joined today by our Group CFO, Mark Watkins. I'll kick off with an overview of our first half performance. And then Mark will take you through the financials in detail. Finally, I'll provide a brief update on our strategy before we open for questions at the end. I'm pleased to report we've had a strong first half with a performance ahead of our expectations. We've seen first half revenues increase, profits perform ahead of our expectations and a significant reduction in net debt. Underpinning this performance was the continued momentum we are seeing in travel. Alongside a strong trading performance, we've also continued to deliver the strategic actions that we previously laid out. We completed our refinancing in February, putting in place a new 2031 corporate debt facility and repaying our 2026 bond maturity and the Roger De Haan loan facility. To support the delivery of our next phase of our strategy, we have reorganized our management team. The new leadership team in place across insurance and travel now in place. In July, we successfully completed the sale of our underwriting business with cash proceeds GBP 17 million ahead of our forecast, and we're making good progress on the preparations for the launches of both our Ageas and NatWest Boxed partnerships later this year. In doing so, we're making rapid progress towards a less complex, lower-risk business model with more predictable earnings that will allow us to focus on our core strengths of customer insight, marketing and data in support of our medium-term growth plans, particularly in travel. To that end, we were delighted to launch the latest addition to our river fleet earlier this year, responding to the demand we are seeing for our boutique cruising offer. I was on board the Spirit of the Moselle last month, and she's an amazing ship. Taken together, as we go through this morning, you will see clear progress being made on both underlying trading performance and our strategic execution plans. This gives me even greater confidence with regard to the GBP 100 million profit target we laid out in April. On this slide, I've highlighted some of our key trading metrics. I'm not going to speak to every line, but you can see even at a glance, the strength of our trading performance across travel and insurance and the foundations we have put in place for money, all of which set us up well for future growth. I'll now hand to Mark to go through our financial results in more detail. Mark Watkins: Thanks, Mike. Good morning, everyone. It's a pleasure to be here today. I'll spend the next few minutes covering the detail of the financial results before covering the outlook for the remainder of the year. Saga had a really good start to the year, delivering a strong financial performance in the first half, largely driven by our travel businesses and insurance broking. Underlying revenue, which excludes some accounting adjustments and one-off items, increased by 7% from the prior period. Underlying PBT from continuing operations of GBP 23.5 million is marginally behind the prior period, but importantly, is ahead of our expectations. This was largely driven by the continued growth in our travel businesses and an improved performance in insurance broking, offset by higher finance costs. This was expected due to the successful refinancing at the beginning of the year. The group continued to be highly cash generative in the first half with available operating cash flow of GBP 89.4 million in the period, a 64% increase. This does reflect some seasonal strength, which I'll touch on again in a moment. Net debt reduction continued, and the position at the 31st of July was GBP 515.1 million, GBP 102.1 million lower than 31st of July '24 and GBP 77.7 million lower than at the year-end. Alongside strong trading EBITDA growth, which grew 8%, this supported further deleveraging with a total leverage ratio now at 4.3x compared with 4.8x at the same point in the prior year. I'll now focus on the headline underlying profit contribution from each of our business units. Our Travel businesses continued to generate strong customer demand, delivering GBP 41.6 million of underlying PBT in the first half, a 33% increase on the year before. Our Insurance Broking business performed well in the first half. Despite the anticipated decline in earnings, performance was ahead of our expectations. The standout performance of this business is that after a number of years of decline, policy volumes for motor, travel and our private medical insurance have returned to growth. Other businesses and central costs marginally increased due to lower investment income as the group now holds a lower level of cash than it previously did. The result of this is that underlying profit before tax increased from GBP 27.2 million in the prior year to GBP 38.7 million. Insurance underwriting is now classified as discontinued, but the strong performance in the first half supported our ability to capture an additional GBP 17 million of cash from the sale, which completed on the 1st of July. I'll now spend some time covering each of our core businesses in a bit more detail, and I'll start with ocean cruise. Our Ocean Cruise business had an exceptional start to the year, growing underlying PBT by 23% and continuing to show extremely strong forward bookings. Revenue grew 8%, supported by an increased load factor and per diems. The load factor in the first 6 months of the year was 94%, which compares with 90% last year, and the per diems worth GBP 391, 8% higher than the year before. Underlying PBT of GBP 34.5 million was 23% higher than the prior period supported by cost discipline and lower finance costs. The lower finance costs reflect the continued repayment of the cruise facilities. This has now reduced to GBP 55.6 million per year due to the repayment of the first COVID deferral loan. Looking ahead to the full year, the booked load factor and per diems are very strong, currently 2 percentage points and 10% ahead of the same time in the prior year, respectively. For the '26-'27 season, the booked load factor is 3 percentage points ahead with the same time last year with the per diems continuing to increase at 13% ahead. Now turning to our River Cruise. In the first half, we successfully launched the Spirit of the Moselle, our third Spirit Class rivership. The timing of this launch meant we operated with marginally lower capacity in the period, driving revenue to be flat against the prior period. The 93% load factor in the first half was 7 percentage points higher than the last year and the per diem of GBP 364 was 7% higher, reflecting the strong demand for our river cruises. This supported growth in underlying PBT of 34% from GBP 2.9 million in the prior year to GBP 3.9 million. Bookings for the full year are strong and currently reflect a load factor of 87%. The per diems of GBP 351 is ahead of the same time last year, albeit lower than H1, reflecting expected seasonality. Bookings for next year are also in a good position with strong load factors maintained alongside growing per diems. Turning now to our holidays business. Revenue grew 14% against the prior year, supported by a 13% increase in the number of passengers traveling with us. Underlying profitability was also strongly ahead at GBP 3.2 million against only GBP 0.3 million in the prior period. This serves to validate our step-up in the level of marketing to support bookings. As you'll see from this slide, revenue growth is set to continue into the second half of the year, with current full year booked revenue 14% ahead of the prior year, with passengers 12% ahead. The team are now focusing their attention on driving demand for next year's bookings. Insurance Broking also showed an improved performance in the first half, generating underlying PBT of GBP 8.9 million. This performance supported an increased investment in policy growth ahead of the Ageas partnership with 3 of our 4 main products, after many years of decline, returning to growth. Motor grew by 26,000 policies and the combination of PMI and travel grew by 5,000. This investment is expected to continue into the second half, further driving policy volumes ahead of the go-live date with Ageas. The graph on the left-hand side shows the material drivers of the movements in underlying PBT. The motor contribution before overheads decreased by GBP 0.6 million, driven by higher renewal margins, particularly for 3-year fixed-price policies as market-wide net rates reduced, offset by higher investment into volumes. Home is the most significant driver of the overall decline with a GBP 6.2 million lower contribution as net rate inflation, which was more pronounced within our panel, led to a reduced competitiveness and 19% fewer policy sales. Private Medical Insurance benefited from lower net rate inflation together with the GBP 2.6 million profit share from the Bupa partnership. Travel insurance remained broadly flat with policy volumes growing in the period. Our insurance underwriting business, AICL, was sold to Ageas on the 1st of July and therefore is treated as discontinued throughout these results. As you can see, AICL performed strongly prior to disposal generating an underlying PBT of GBP 15.6 million. This supported our ability to generate an additional GBP 17 million of net cash from the disposal with AICL paying a GBP 10 million pre-completion dividend and there being a GBP 7 million positive adjustment through the completion mechanism. We received GBP 57.9 million on the completion date, representing 90% of the proceeds, with the remaining 10% due in October. There remains a further GBP 2.5 million payable on the go-live of the partnership. Debt reduction is a clear strategic priority for Saga, and I'm pleased with the progress made in the period. During the first half of the year, net debt reduced by GBP 77.7 million to GBP 515.1 million, with a leverage ratio of 4.3x also below the year-end level of 4.4x. Available operating cash flow for the first 6 months was GBP 89.4 million, 64.3% higher than the last year. This was driven by a step forward in cash generation from all of our businesses together with the GBP 10 million dividend paid by underwriting. Debt service costs have increased due to the HBS refinancing, which was drawn in February this year and restructuring costs have increased due to the AICL disposal and the Ageas partnership. While the cash generation is strong in the first half, it does include some positive seasonality from both the Ocean Cruise and Insurance Broking business. These are benefiting from positive working capital positions with Ocean holding a high level of customer advance receipts and policy growth in Insurance Broking also benefiting cash. So let's now turn our attention to the full year. Bookings for the full year in cruise are strong. We do, however, expect profitability in the second half to be marginally lower than the first, purely due to the normal seasonality within that business. The peak trading months for our Holidays business are typically August to October. And as a result, we expect the underlying profitability will be materially higher in H2 as we benefit from economies of scale and operational leverage. In Insurance Broking, we expect the trends that we saw towards the end of the first half of the year to continue for the second half, but a step-up in investment in the second half means that profitability will be lower than the first. What this all means for the group is that the momentum we have seen in the first half gives us confidence to move our guidance for the full year. We now expect the full year underlying PBT to be in line with the prior year and importantly, our net debt leverage ratio to be below that of the prior year. And with that, I'll hand back to Mike for an update on strategic progress. Michael Hazell: Thanks, Mark. Now I'm going to take you through more detail on the delivery of our strategic priorities and our growing confidence that we are paving the way for long-term sustainable growth. Underpinning everything we do is our brand and customer insight, so it's worth a moment to remind you how that makes us different. Saga is one of the best-known and most trusted brands in the U.K. This is built on our deep understanding of our target customer and our extensive customer database, which together provide us with a competitive advantage that sets us apart from our competitors. Nobody understands older people better than us. And we have more than 70 years of experience designing products and services exclusively for them. We know who they are, we know what they like and we know how best to communicate directly with them. This means that in the growing attractive and affluent market for people aged over 50, we are ideally placed to succeed. Our businesses leverage these advantages through a series of consistent principles that I have shown on the screen. With the customer at the heart of our strategy, we will deliver quality and value through a suite of differentiated unique products uniquely tailored for our customer group using the insight we have developed over decades of experience, all supported by our powerful marketing and publishing channels that drive deep customer engagement. Since joining Saga, I've redoubled our focus on these principles, all of which are now central to our growth. In April, we laid out our medium-term profit target of GBP 100 million and a leverage ratio of less than 2x by January 2030. A strong first half performance gives us even greater confidence in these targets and our time line to achieve them. Our four strategic priorities laid out the routes by which we would deliver these targets, and we continue to make good progress on each of them, progress that will be obvious as I now touch on each business. Travel is now the largest contributor to Saga's profits. In March, we announced that we had combined the leadership and operations of our previously separate Cruise and Holidays businesses under the leadership of Nigel Blanks, previously CEO of our Cruise division. No longer operating in silos, a single management team ensures consistent, excellent customer experience and a coherent marketing strategy across both Cruise and all of our Holidays. Best practice is shared across the different product lines and customers are more easily introduced to a wider range of holiday options for their next experience. Saga has been taking older people on holiday since 1951, and we are the experts in catering for their needs. Our customers are time rich and have money to spend. They like to travel outside of peak season, enjoying quieter destinations, sometimes though quite adventurous ones. What unites them all is that they know Saga can offer, when needed, a little more support than our peers to ensure they can really make the most of their holiday. We take our customers to places they might not otherwise go, tailoring the experience to meet their needs. We open the world to them and allow them to enjoy traveling for longer. By understanding these needs, we create holidays exclusively designed for this age group catering for them in a way that the mass market can't. By playing to our strengths, we separate ourselves from our competitors and all of our travel businesses are now growing as a result. Ocean Cruise remains at the heart of Saga's travel offer with its enduring popularity only getting stronger. Forward bookings remain strong and repeat bookings are consistently high. This performance is down to the quality of our product and our relentless focus on our guests. Tailor-made for our customers, built on decades of cruising experience, our customer satisfaction and TMPS scores are market-leading. Our 2 ships provide a tailored luxury experience within a boutique cruise environment, setting us apart from the mainstream providers or the mega ships, which constitute the wider market. Smaller and easier to navigate, our specialty designed ships provide a tailored experience for our customers' holiday from our nationwide chauffeur car pickup service at the start of their holiday to the number of single cabins we have catering for solo travelers, to the quality of service and hospitality onboard. We continually look to improve and refresh our proposition across dining, trips and entertainment. You can see on the screen a picture of our newly launched French restaurant, aboard the Spirit of Discovery. Refined but contemporary, it offers a fantastic dining experience and is proving extremely popular with our guests. We aim to do things differently catering for our distinct customer base. And in doing so, we generate strong demand for our product and loyalty to our brand. That demand is driving high load factors, more early bookings and increased per diems, the amount of customers pay per day, as our need to discount reduces. But importantly, our customers still recognize the great value for money they are getting. This is a trend we are confident will continue as we carry on giving customers what only Saga knows how to do. River cruise holidays are perfect for our customers, sitting between our active land-based touring options and our no-fly hassle-free ocean cruise experiences, River cruising offers a gentle river-based touring option without the need for lengthy coach journeys and multiple changes in hotel. Customers wake up each day at an exciting new destination. We moved our River Cruise business under the leadership of the Ocean Cruise team earlier this year -- sorry, several years ago and have been aligning the service experience across the 2 propositions. As you can see from the page, the results have been very successful, with load factors, per diems and customer satisfaction all performing very well. Building on this success, we're adding more ships. And this summer, launched our newest vessel, the Spirit of the Moselle. This is an outstanding contemporary ship, especially designed by us for our customers. Its sleek exteriors and modern interior design is already proving incredibly popular with our customers, demonstrating the opportunity we have to scale up our river cruise business. Our next river ship is already in development and due to launch in summer 2027 as part of our ongoing growth ambition for this part of our business. Our cruise performance has somewhat out-shown our holidays business in recent years, but we've been making great progress there, too. And there are clear opportunities to build on this under our new leadership structure. At Saga, we offer holiday options that meet customers' needs whatever their age. We tend to find a younger, more active customer attracted to our land-based touring holidays, often as a gateway to a more relaxed river cruise in the future. Other customers look to enjoy a hotel stay at an interesting destination through one of our specially selected hotel stays, complete with Saga host on site to make sure they get the most out of their holiday. Whatever their choice, we understand that older customers are drawn to different aspects of travel to those generally catered for by the mass market. With more time available to them, older customers will typically choose to stay a little longer to more deeply experience the destination they are visiting. They're interested in understanding the language, enjoying local cuisine and visiting culturally significant sites. Beaches and swimming pools are nice, but our customers would typically prefer a nice meal overlooking amazing scenery without the sound of children splashing around behind them. Our holidays offer had over time become a little too generic, missing this opportunity to fully play to the differing demands of our customers, something that our cruise businesses have been doing brilliantly. Now under the leadership of Nigel Blanks, previously CEO of our Cruise division, we are bringing the focus more squarely back on our customers and differentiated experiences tailored for them. Recognizing the type of holidays our customers want, we are expanding our range of special interest holidays, think bird watching, food and wine, history, archeology and so on. It's early days. But as you can see, this refocus, which will take a while to fully flow through to our program, has already started to work. Revenues and profits are continuing to grow from an already strong performance last year and satisfaction levels have materially improved. Customers tell us they love our nationwide chauffeur car service and so from April, our chauffeur service will be included in all Saga Holidays as standard, meaning that whatever their holiday choice, the Saga experience starts from the moment they leave their house. Our insurance business is in a transitional year, as we prepare for our Ageas partnership. Nonetheless, we've made significant steps forward towards our new simplified lower-risk operating model and traded well in the meantime. Under the new leadership team we put in place earlier this year, led by Lloyd East. We've been investing in price and marketing to support long-term growth and prepare us for the Ageas partnership. And the results have been strong. Three out of our 4 policy lines are now growing after several years of decline and our customer satisfaction scores reflect the refocus on customer that Lloyd and his team are bringing. Much credit goes to our insurance colleagues for Saga's Insurance business being ranked in the top 50 organizations for customer satisfaction by the Institute of Customer Service, only 1 of 2 insurers to be named in that group. Preparations for our Ageas partnership have continued at pace, as we work towards a significantly simplified lower risk insurance business model. We completed the sale of our underwriting business in July, meaning that Saga is no longer exposed to underwriting risk, and we will transition a large part of our broking operations to Ageas later this year as we go live with that home and motor partnership. I'm particularly excited about how new products and services can drive future growth. In particular, we are focused on creating more ways to engage on a deeper level with our customers more frequently. Take our money business, for example, the partnership we signed with NatWest earlier this year is exciting in its own right, given that we are expanding our suite of differentiated products. But more than this, it's symbolic of how we could pursue additional innovative partnerships across different business lines in the future. Elsewhere, we've already been deepening our customer relationships with lesser-known products within the Saga portfolio. For example, our Saga wine club, Vintage by Saga, with more than 10,000 customers regularly buying wine from us. Similarly, our Saga Connections introductions service for older people engages with 13,000 subscribers checking their connections on the website multiple times a week, significantly increasing their exposure to Saga and our wider product set. These are great ways for us to remain front of mind with customers beyond their annual holiday or insurance renewal. While our primary focus remains on our core travel and insurance propositions, you can see the obvious crossover from those businesses to these types of additional service. So there are undoubtedly opportunities to cross-pollinate and build on areas like this that amplify our customers' engagement with Saga. Our publishing business lies at the heart of our customer engagement strategy. Celebrating the lifestyles of older people, it provides deep and regular engagement with our target customer group and in a digital world is increasingly a powerful source of insight into what is on their minds and what attracts their interest. As you can see from this page, comprising our award-winning magazine, newsletters, website and online articles, it's a fantastic aspirational communication channel, positively portraying the lifestyles and interests of older people. This month's magazine encapsulates that perfectly. You will have seen coverage of our interview with Pierce Brosnan and Helen Mirren right across the mainstream press. And in every instance, crediting Saga Magazine in the reporting. And we have a real opportunity to build on this amazing content, given the early success we are seeing across our digital channels and platforms. Our print magazine is already the largest paid subscription magazine in the U.K. By servicing this content on our website and refreshing it regularly, we're now driving highly engaged customers into the heart of our business, where they spend more time and come back again to see what else we've got to say. They sign up for more content, allowing us to then communicate with them more broadly. We're now seeing 1.3 million monthly visits to our magazine website, 37% of which are new to Saga and these numbers are growing every month. Building on this brilliant content, we're sending around 10 million newsletters each month, covering anything from lifestyle tips to personal finance matters and seeing opening rates of up to 49%, a clear indication of the quality and relevance of that content. By refreshing our website, both our Saga homepage and the magazine side, we are driving traffic into the Saga environment, exposing customers to individual businesses and the messaging while they browse. You should recognize this slide from April where Mark and I laid out our medium-term targets. So I wanted to update you on our progress. We previously guided that UPBT for '25-'26 would be lower than that of '24-'25, largely due to the increase in finance costs. You will have seen from Mark's slide that as a result of our strong first half performance, we now expect UPBT to be in line with '24-'25. Trading EBITDA is now expected to be ahead of '24-'25 demonstrating the strong trading momentum that we've seen. And with leverage falling, we now expect year-end to be below that of '24-'25. So while it's too early to update any medium-term projections, we have clearly made a strong start and are ahead of where we expected to be this year giving us even greater confidence as to the level and timing of those medium-term targets. Finally to wrap up before we move to questions: We've made significant progress in the first 6 months of this year. We've delivered a strong financial performance, particularly in travel, and we have significantly reduced our debt. Alongside this, we've achieved some significant strategic milestones toward our more customer-focused, simplified business model going forward. That puts us in a great position as we head towards the full year. Looking ahead, we expect to go-live with our Ageas partnership in Q4 2025, beckoning the start of a significantly less complex and lower-risk insurance model for us next year. We will continue to build on the momentum we are seeing across our travel businesses, leveraging the benefits we are now seeing from the combined operations that we've put in place. And we'll go-live with our NatWest Box partnership at the end of this year, which will start us down the path of engaging customers in more differentiated products and services beyond our travel and insurance offerings. In short, we'll keep delivering on what we said we would do. We'll now go to Q&A, taking questions in the room before moving online. Timothy Barrett: Tim Barrett from Deutsche Numis. I had a couple of things, please. A question on Ocean Cruise. Could you give us an idea on how we should benchmark your performance there? And specifically, GBP 437 on the forward book looks really impressive, just wondering how you would encourage us to think about next year as a whole? And then interested in what you said about the database. Could you talk about scaling that and what size it is? I guess, how the database is growing? That would be great. Michael Hazell: Sure. So taking the ocean point first. So what we're seeing on ocean is really strong load factor growth and performance. Clearly, that's been growing year after year. We're getting to the point now where we're well into the 90%. What that translates into is a very powerful performance in per diems. The per diem growth is coming from a combination of the demand and people competing to get on to their favorite ship and their favorite cabin and their favorite holiday. But we're also seeing that translating into earlier bookings which means we then didn't need to discount less to drive that demand. So that, together with improving the itineraries, improving the onboard experience, improving the onshore excursions, all of those things add greater value, which drives that per diem growth. So as we now get to the point where it's pretty clear that there's only so far you can take a load factor growth, it will continue to grow a bit. But actually, the growth opportunity from here is continuing to add more value, discount less and drive that per diem growth. So very confident that now we've got the load factors in that sweet spot that per diem growth will now continue through a combination of demand management, less discounting and adding more value as the proposition improves year after year after year. So that's the way to think about per diems. In terms of our database, we've got the largest database for older people in the country, we've got 9.7 million people on that database. It's a really powerful insight tool. We've got contact details and can communicate to 7.7 million of those customers. So you can think of it, first and foremost, in 2 aspects. The power of that database to enable us to understand older people and curate our product proposition for those customers, whether it be on holidays, insurance or anything else, that is a really powerful tool for us, made even more powerful by our publishing business, whereby we can talk to them post articles, if you want to know who might be interested in pet products, send out a newsletter with a pet article and see who opens it. You'll then very quickly understand what resonates with those customer groups. You'll then understand who's got a dog. But we're actually getting even cleverer. With the benefit of AI now what we've been able to do is back, what's the word I'm looking for, tag all of our historic articles to get a better understanding of what type of article works for what type of customers. So it's not just about was it an article about dogs or was it an article about cats and so on. But actually, some customers respond better to a top 10 list of X, other like an interview style article. So what we can do is both, understand more about the customers and what they're engaging with in that publishing business and then curate and tailor our articles going forward to make sense of that. All with a view of a virtuous circle us communicating with our customers and then learning more about those customers in the process. Obviously, the other side of that is, it's a very powerful marketing tool off the back of that. So we've got the insight on the one hand, but we've got 7.7 million customers that we can communicate with about the products that we offer. So it is something that we're driving hard. What we have done more recently, and I touched in my presentation is, we're starting to make our Saga homepage a destination for customers online, putting brilliant publishing content on there, so that customers are seeing the content somewhere in the web, in the newsletter or simply because they've come to Saga. They see the brilliant content and then they come back the next day or even later in the day to see what else we might be saying because it talks to older people in a way that other people don't. Clearly, in surfacing, both on the homepage and then those articles, what we're able to do is flash up relevant product content alongside it to then drive those customers into our business units. So when I say we're bringing publishing to the heart of the business, it's not in an off-line way, it really is as an introduction into our business with that insight powering the products that we offer and the services we deliver alongside them. Sahill Shan: Sahill here from Singer Capital Markets. Three questions from me, if that's okay. On the money side of the business, I appreciate it's relatively small at the moment. But you made progress in terms of partnerships. How should we be thinking about how that's likely to play out or you're planning to play out over the next few years or so? Just help me understand, I think there was a waterfall chart. And within them, was quite a decent chunk in terms of contribution going forward, the building blocks to actually get that kind of profitability going forward. So that's on the money side of things. Secondly, just more generically, clearly, you're doing fantastically well on the cruise business at the moment. Can you just help us understand and just give us an overview of the state of play of the cruise market at this moment in time, particularly the area that you're focusing on? And are there any competitive threats that we need to be thinking about? And finally, just ahead of the launch of the relationship with Ageas in Q4, how is that going in terms of the lead up to that particular launch? That would be really helpful. Michael Hazell: Sure. So if I take the money business, and thanks for raising that because I think that's a really exciting opportunity for us. But you're right to call out the bar in that building block. It's there quite deliberately because we can see the opportunity that is a medium-term opportunity. The NatWest partnership goes live later this year. We've got around 180,000 customers engaging with our money products even today. But in the short term, it's not about driving profitability. It's about scaling up, driving engagement, talking to customers regularly for that wider Saga environment. But clearly, as we build that proposition over time, then the focus shifts from the early scaling up to then converting that into more profits and returns on that investment. So I'd encourage you to think about that as a long-term opportunity with a short-term scale up. In terms of the cruise market, look, I think it's dangerous right the way across our holidays proposition to think about the market rather than understanding that we do something different to the market, and that's what I'd encourage you to think about. Nobody is doing what we do. We've got 2 ships, and I said it in my presentation, that are tailored uniquely for older people, and we tailor our entire proposition for that market. When you look at the wider market, they are either in a mass market, larger scale cruising environment or they're operating outside of the ex U.K., i.e., you've got to fly cruise. Nobody is offering that, no fly boutique cruise experience to U.K. customers exclusive for people over 50 in the way that we do. So when we talk about what's the wider market? Actually, the wider market will have its own sort of ebbs and flows. What we are seeing for our customers is consistent and growing demand year after year for what we do brilliantly. In terms of competitive threats, I think that therein lies the answer. We do something different right the way across our holidays proposition, whether it be cruise, ocean crews, river or holidays. We win by being Saga, understanding older people better than anybody else and then curating products and services in a way that nobody else actually wants to because they're catering for a mass market, and you'll see that as we move into this new phase for Saga, where we've moved away from fixing the business, which we've been focused on for the last couple of years. This point around we do what Saga does, we understand older people better than anybody else and right the way through all of our product propositions and indeed anything new that we offer, you're going to see us, first and foremost, thinking about the customer how their needs are different and then playing that out. And therefore, when you think about that competitive advantage that brings, it's not so much about what the wider market is doing about what we can bring that is different to that wider market. And Ageas. So just to remind you on the Ageas for those that won't be close to it, really exciting opportunity, will transform our insurance business model. So it's a home and motor partnership where Ageas will bring the operations and the insurance infrastructure scale and investment as a first-class insurer in the U.K. After their acquisition of they will be in the top 3 U.K. insurers. They do that brilliantly. What we do brilliantly is understand older people market in a way that other people can't using our database and our experience of marketing to older people and help Ageas design products and services for those older customers. Put that together, you've got the perfect combination of Saga doing what it does brilliantly and Ageas is doing what it does brilliantly as a first-class insurer. So really exciting opportunity, but not just because of the overall opportunity to grow but also because it frees us up to focus on what we do best and allows Ageas to focus on what they do best. So in striking this partnership, we will and are rapidly implementing a much more simple and lower risk business model, whereby we no longer take underwriting risk. We completed the sale of our underwriter in July. And by the end of the year, we'll be live with the Ageas partnership, whereby they run the policy administrations, they run the back end, they run the infrastructure and so on and they have all the regulatory complexities that come with that, we will become a customer-focused marketing driver of that business and, therefore, be able to focus on what we do well. So as well as the growth opportunities, that simplification objective that frees us up to focus on what we do best is a really powerful aspect of that. So underwriting completed end of July, the wider partnership due to go live at the end of the year, and everything is on track. Any other questions in the room before we move to online? Any questions online, Chantel? Unknown Attendee: Yes, a couple. Under holidays, how are the Saga and Titan brands being developed differently? And also, how is the destination mix changing under holidays? Michael Hazell: Okay. Thank you for that question, whoever that came from. So yes, really, really important point. So we have the opportunity to win twice in holidays because we've got a brilliant Titan brand, which is an open-age holiday business, touring business, that's got great heritage in touring and then we have the wider Saga proposition that both does touring, holidays and obviously, our cruising business. But it's really important that we recognize those are two different businesses. And therefore, what we have been developing over the last couple of years and will continue to develop is differentiation across those two propositions because actually, in the past, we've been dangerously close to offering the same or similar experiences on Titan tour as you would a Saga tour. And going forward, we definitely want to separate the two out so that you get something different as a different type of customer for Saga as you would from Titan. So where you see Saga on the badge, you'll see all of the things that we curate for that older customer base that comes through in with the Saga customer. And then likewise, those customers that are looking for a complementary proposition that may be slightly younger and more active will engage with the Titan brand potentially as a feeder to engaging with Saga at a later stage when they see what the wider service and product proposition we can offer under the Saga banner looks like. So great opportunity. It's a complementary product set between the two. And in terms of destinations, look, we'll talk more about product development and proposition in the future as Nigel and the team get their feet under the desk. Our immediate focus on proposition has been to really double down on what our customers look for from a business that offers something different for older people. And that starts with special interest holidays. So as I said in my speech, older customers go on holiday for something different. They're not typically looking to go and lie on a beach or lie by a swimming pool. They're looking for something that engages their brain, maybe participate in their hobbies and just have a great experience beyond simply the pool side. So special interest is always something that we've offered, but we are increasing the range of special interest holidays and seeing increased demand for our special interest holidays. So we're seeing more people engaging with our special interest holidays quite a mouthful, but I'll keep saying it. And as we add in more special interest opportunities going forward or experiences going forward, then we're seeing increased demand as a result of that. So we're seeing more demand for what we've got, and we're driving more growth in that demand by adding in more. Unknown Attendee: Okay. I've got a couple more. That's from Peel Hunt, from Ivon Jones. Say ocean cruise, how are the dry dock timings managed? And were the cruises impacted by the Middle East over the summer and what was the financial impact? Michael Hazell: Okay. Taking the latter easily. We're not impacted by the Middle East disruption. The way to think about our ocean cruise is, it's a floating hotel, and therefore, we float wherever that we want to in any given year. So Middle East is not a big part of our itinerary. And therefore, we flex that itinerary every year to make sense of what we're seeing in the demand, but also the geopolitical environment. So actually a really flexible market for us. And despite all of the disruption in recent years, you've seen that we've gone from strength to shrink without any disruption there. In terms of dry dock timing. We had a dry dock in the first half of this year and we had the other ship, and I forget which way around it is, but the other ship had a dry dock in the second half of last year. And you'll see that just having a slight impact on the load factors in any given year. So that therefore, effectively, the dry docks are now out of the way, and I'm going to look at Nigel, this is why I bring the team here. The cycle for dry docks are every... Nigel Blanks: It's effectively every -- we do 2 docking every 5 years, a wet dock and a dry dock. Wet dock clearly ships those in water, dry dock comes fully out, so that's what we do, our statutory and compliance work. Michael Hazell: So it's a 5-year cycle. Was that the 2 questions? Great. Any other questions online? Unknown Attendee: One more from Ivor. Travel marketing, how are they being deployed and how is that changing? Michael Hazell: So there's a few things on travel marketing. Firstly, by combining the two travel businesses, cruise and holidays, we get much bigger bang for our buck because we're able to optimize our marketing right the way across our travel proposition rather than focusing on cruise marketing overhead or holidays marketing over here. So that is increasing the penetration of our marketing spend right the way across the business. The profile of marketing is slightly different this year to previous years. We focused our marketing in the current year on driving our current year bookings, and you'll see that passenger numbers in here are 13% ahead of the strong year that we had last year. What that means is as we go into the second half of this year, we'll shift our focus into marketing next year, but it does mean that the year-on-year booking profile is slightly different, which is why you're seeing that next year bookings are slightly behind where we were this time last year for the year ahead, not concerned about that. That's simply because we've rightly focused on driving this year, driving the growth into this year, which will then mean that translates into repeat business for next year and then we drive the next year's bookings in the second half of the year. So very confident in the outlook, and that's a business that's growing very well. Outside of the sort of coherent marketing approach right the way across travel, what we are also now doing is really driving up our holiday marketing, more tailored for our customers, again, by looking at all of what works and what doesn't work right the way across our holiday propositions, we can take learnings from one part of the business into the others. So I would say that in our holidays business, we've probably been a little overexposed to digital marketing and a little underexposed to analog marketing. That means that if you recognize our customer base, they tend to respond more to the white male catalog marketing than they will do to digital marketing. There's room for both, but our cruise business has got brilliant experience in doing that. The Marketing Director that was sitting across cruise is now sitting across the whole of our Travel business, bringing those learnings into the Holidays business. So we're rebalancing the spend between digital and analog, importantly. But we're also out on radio. You'll notice that insurance is now actively marketing on TV as well, that brings us a halo effect. So right the way across the board, you'll see Saga present not just in travel, but more generally, putting your head above the parapet, which I think is a real sign of where the business now is. We're coming out, we've got a strong footing, we've got our funding in place, we've got our growth trajectory ahead of us, and we're now trading the business hard and investing in that growth, and clearly, it's working. Any other questions online or should I say from Ivor? Good. All right. Any other questions in the room? Doesn't sound like there's any more online. Okay. Just to wrap up then, thank you for joining today. Look, I think we've made really good progress. You can see that we're trading well, which sets us up really well for the trajectory we're on. But really importantly, that's going to be underpinned by the delivery of our strategic actions, and we're getting on with that stuff as well, which means when we talk about those medium-term targets that we set out in April, we're even more confident here today that we'll deliver on those targets, GBP 100 million profit and less than 2x leverage by January 2030. So great fun, and we're getting it done. Thank you, everybody.
Craig Baxter: Good morning, ladies and gentlemen, and welcome to EnQuest PLC's results for the first half of 2025. Throughout this webcast, you will have the opportunity to submit questions at any time, and we will look to answer as many of these as possible during the Q&A session at the end of the presentation. Without further ado, I will hand you over to our Chief Executive Officer, Amjad Bseisu. Amjad Bseisu: Thank you very much, Craig, and good morning, ladies and gentlemen. Welcome to our 2025 half year results presentation. Thank you very much for the time joining us today. My name is Amjad Bseisu. I'm the CEO of EnQuest. Joining me today is our Chief Financial Officer, Jonathan Copus; and Steve Bowyer, our U.K. North Sea Managing Director. Craig Baxter is also joining us, Head of Investor Relations and Corporate Affairs. Steve and Jonathan lead the high-performing teams across our business, and our operational performance has remained very strong in the first half of the year, as you will see. Let's start with the backdrop of U.K. The U.K. North Sea remains one of the most challenging environments in oil and gas as evolving fiscal and regulatory pressure continue to undermine global competitiveness. With the sector losing 1,000 jobs every month according to our industry OEUK outfit, crucial that the government urgently reforms energy profit study, which now delivers a fraction of the originally projected revenue. Only a fair, more predictable tax environment can help companies like ours to invest and secure a U.K. energy supply that protects jobs in this critical energy transition environment and allows success of the business. The opportunity is there now and today to enact positive change in the upcoming autumn budget. We are poised to play a leading part in enhancing the U.K.'s energy security and protecting the jobs that are vital to our country and also the energy transition ambitions. So let's start by looking at our fundamentals, which have been strong and that underpin the business. For those who are less familiar with EnQuest, EnQuest is an independent energy company with operations focused on the U.K. North Sea and Southeast Asia. We are listed in 2010, and our foundations are based on acquiring mature underdeveloped assets and from the majors and developing those assets and producing more out of those assets. We've done that in 9 hubs and continue now with the new expansion in Southeast Asia to have 7 operating assets. We've built a strong expertise in mature asset management, driving efficiencies, optimizing operations to extend lives. Over the years, our capability mix has expanded also to maximize recovery of oil through top quartile drilling and major project execution. We are also now proud to be recognized as we've built a very strong sector-leading decommissioning business. Over the past 12 months, we've also expanded our Southeast Asia business significantly. We are now in 4 countries, building on a strong reputation that we have forged over 11 years of successful operations in Malaysia and having been chosen the Operator of the Year 2 years in a row in Malaysia, something I think is the first to have. With the recent acquisition of Harbour's Vietnam business, we now have 7 assets, as I mentioned, with material reserves and resources in place, and we operate nearly all of our assets, deploying our operating expertise to maximize our value, which is our big business proposition. We also operate the Sullom Voe Terminal in the Shetland Island in Scotland, which is a very critical asset for us, both upstream as well as for our new energy decarbonization and renewable business, which is [ varied ]. We've got a number of assets which have also moved into decommissioning over the last few years and have reached the end of their useful economic life. So we have had from taking the assets to decommission the assets, a full cycle of asset management. As we're all aware, the energy transition -- the energy landscape is in transition. And to ensure our long-term success, we recognize that the business must continue to show resilience, creativity and adaptability. The combination of the core capabilities set for EnQuest set us apart from any of our peers. We are able to take these assets and produce more out of these assets and have proven that over the last 15 years. By lowering cost, improving uptime, these assets last longer and run in the hands of us as a better operator. Since our inception, we've extended the useful life of all 9 assets that we've operated. Next slide. Our strategy is underpinned by us being established as a top quartile operating company, both in the U.K. and in Southeast Asia. This is demonstrable across the whole life cycle, as I mentioned, of the assets from the beginning through decommissioning. During the first half of 2025, our production efficiency was 89% and would have been 94%, excluding a third-party infrastructure outage in Magnus, which is certainly upper quartile and maybe even best-in-class. With 96% of our 2P reserves under our operatorship, we maintain control over our asset management, which is a key factor for our excellence over the years. The operational control has been pivotal in our ability to extend the lives of every asset that we've operated and also provide us with a line of sight of material organic opportunities around our assets for optimizing our core assets. We've done that in Magnus, Kraken, PM8/Seligi and our other assets. We can now proudly say that our expertise extends to the decommissioning performance, where we've executed 81 wells since 2022. And the activity has been mostly focused on Thistle and Heather, where we recently completed also the largest lift of topsides in the U.K. of 15,300 tonnes in 2025, the heaviest lift planned in 2025. We have now completed the Heather disembarkation and look forward disembarkation of Thistle in early 2026. And again, as I said, we're very proud to have now the ability to say we are sector leading in the decommissioning area also alongside the other areas like drilling, project execution and operations. This new capability is a key enabler for us, both to transact in the U.K. and to maximize the value of our assets. As you will see from Jonathan's presentation, we've had a significant continuing deleveraging path during which we've directed our free cash flow to repay around $1.6 billion of debt. We remain very much ready for our transformative growth and looking to utilize our tax assets. Our net debt, as mentioned, continues to go down and was $377 million on the 30th of June. And our liquidity has increased from $475 million at the end of last year to $578 million at the end of June. We've been clear on our strategic focus on executing transactions, which we have done in Southeast Asia and using our U.K. tax asset of $3.3 billion to execute another transaction in the U.K. It's a matter of public records that we were in discussions with Serica earlier this year about a combination, which didn't come to fruition, but we remain engaged in negotiations across several other U.K. growth opportunities, and everyone at EnQuest is motivated to complete a value-accretive U.K. deal in the coming months, similar to the deals that we've done in Southeast Asia. We also remain active outside of the U.K., adding scale to our business in Southeast Asia. Next slide, where conditions are conducive to investments across the life cycle. Over the past 12 months, we've executed 5 growth transactions across Southeast Asia, and we've stated that we see this as part of a business reaching 35,000 barrels of oil equivalent production by the end of the decade. We have visibility now on getting to our goal through the acquisitions that we've made. These transactions include a full corporate acquisition in Vietnam, which brings flowing barrels which have produced over 5,000 barrels in the first half of this year. Development of existing infrastructure to unlock significant gas volumes. That's done in PM8 Seligi, where we have signed a gas sales agreement, and we will be starting to produce 70 million scfs a day early next year for production into the system. New developments like DEWA in Sarawak as well as in Brunei with -- the joint venture with the government -- 50-50 joint venture, which we've announced recently, which will be gas weighed into gas sales agreement and into LNG plants and a significant exploration and appraisal opportunity in Indonesia with us being as operator and bp and the LNG Tangguh Alliance being our very strategically important partner because we have access to the infrastructure there. Our growth in the region sees EnQuest in these new areas, adding 3 new countries to our main hub of Vietnam and emphasizing the strong reputation we've built over 10 years operating in Malaysia. I was extremely proud to see EnQuest again named as Operator of the Year in Malaysia, the first of any operator to achieve this accolade. And this is clear that PETRONAS' recognition of our credentials has opened the doors for us in many other countries. We've also received the award for decommissioning excellence in Southeast Asia, of which I'm extremely proud. The Southeast Asia team continues to deliver against our strategic growth aims, and we intend to build on our recent deal momentum with further M&A activity. I'll hand over to Jonathan to cover the financial performance for the first half of the year. Jonathan Copus: Thanks, Amjad. So just moving to my first slide. I think the first thing to say here is that financially speaking, the foundation of everything we do is our capital structure, and we are committed to maintaining both a strong and flexible capital structure. Now to that end, in the last 12 months, we have taken steps to simplify our balance sheet as well as continue paying down or reducing our net debt. At the moment, we have -- well, now we have a structure that is built primarily around our flexible RBL and also our foundation of bonds as well. When we think about capital discipline, we are focused on a few things. First of all, fast payback investment. That is where we can see opportunity organically within the portfolio. And alongside that, of course, we're also focused on growth, diversification and internationalization. And Amjad spoke about our transactional activity in Vietnam, but also ambitions both in the North Sea and Southeast Asia. And of course, we also paid our maiden dividend in June of this year. If we move on to the income statement, Amjad mentioned that in the first half, we had disruption at the -- third-party disruption at the Ninian facility. And that meant that we lost about 3,500 barrels a day of production in the first half. Now that's equivalent to about one cargo deferred and the value of that at prevailing prices would have been something like $40 million to $50 million. We also saw a 14% year-on-year reduction in Brent. However, we have a strong commodity hedge position and gains on that hedge book mean that in the period, we reported revenue of $549 million, which was a strong delivery. Cost of sales totaled $389 million. And within that, we held operating costs flat year-on-year, and that was despite an 11% weakening in the U.S. dollar. So again, a strong performance here in terms of costs. On a unit basis, of course, the numbers are again impacted by the Magnus outage. And including hedging, our unit OpEx for the period was $26.4 per BOE. Our adjusted EBITDA was $235 million. And the other number that jumps out of the income statement is our tax charge, which is significantly distorted by the 2-year extension to EPL and the deferred tax impact that we see coming through the income statement. So within that $239 million tax charge, $50 million of it was current and $189 million was deferred, $124 million of that figure being this 2-year extension to EPL, which has impacted our numbers, and you would have seen that impact across the sector as well. However, if you move to free cash flow, we delivered free cash flow in the period of $33 million. And from that, we paid our $15 million dividend, and we reduced our net debt to $377 million. CapEx in the period was $83 million. We spent $31 million on decommissioning. And at the 30th of June, our cash and available facilities had increased to $578 million, which is about $100 million rise on the position at the end of 2024. Now driving that increase was a positive redetermination outcome on our RBL, which we detail on the next slide. So through our year-end redetermination, we saw a 34% uplift in terms of our capacity on the RBL. And that reflects the tangibility, but also the consistent delivery and high levels of uptime on our assets as well. As Amjad mentioned, you can see that in recent years, we have reduced our net debt position by $1.6 billion. And that has taken very significant focus and very significant discipline, and it's something we're proud of. We have no debt maturities before 2027. And of course, the other key asset that we have as well are our tax assets. And those at the 30th of June totaled $2 billion in the recognized category with a further $1.2 billion that are yet to be recognized. Finally, turning to our guidance. We are reiterating all of our guidance points today. These are given on a pro forma basis: production 40,000 to 45,000 BOE a day; operating expenditure, $450 million for the year; CapEx of $190 million; decommissioning of $60 million; and of course, as I said, we paid our maiden dividend of $15 million. Looking to 2026, organic growth is our focus in terms of the core portfolio, and we have projects such as the Kraken EOR project and the optimization of Magnus production. In terms of operating expenditure, we are consistently focused on maintenance and maximizing our asset uptime and continuing the excellent production efficiencies, which we continue to see across the portfolio, both in the North Sea and Southeast Asia. And in terms of CapEx, we remain very focused on low-cost, quick payback opportunities. And in terms of shareholder returns, these sit within our capital priorities, and we aim to deliver every year a sustainable capital allocation framework that builds value for our shareholders. So now just handing over to Steve, who will cover the operations. Steve Bowyer: Good morning, everyone. Thank you, Jonathan. I'm Steve Bowyer, U.K. Managing Director. I'm pleased to report on a very strong operational year for the business. Our operational performance has been exceptional across all facets of the energy transition, and I'll talk you through how we've managed to do that and through the first part of the year, with the only blip in the year being the third-party outage at NCP and what I'm pleased to report that we worked very well and collaboratively with CNRI, the holder and operator of the Ninian Central platform to resolve the minor [indiscernible] on NCP in short order and making sure we delivered an alarm solution and got production back on within 5 weeks. Just to talk through our operating performance, underpinning everything we do is delivering safe results. We continue to strive for continuous improvement on our health and safety performance. As Amjad mentioned already, we've received awards in Malaysia, not just for our operating performance, but also for our HSE excellence where it's been very strong, and I'll talk through that when we get to the Southeast Asia section. And we've delivered 3-plus years LTI-free on Kraken, and we're 19-plus years LTI-free on GPA. So very strong performance across the assets. Our operational excellence comes through very strongly in our production efficiencies. Production efficiency of 94% is best-in-class. That excludes the NCP outage. But if you look at what we're in control of as EnQuest as operator, a phenomenal performance by the teams. And that's focused on prioritizing the right operational activities, making sure we understand the asset fully, invest in integrity and making sure our assets run as well as they possibly can. And when you consider within that portfolio is Magnus, which is over 40 years old, that's a phenomenal performance. Production is right in line with guidance for the first half of the year despite the NCP outage. Obviously, if you exclude Vietnam, which is 5,000 BOEs a day, so we're right in the middle of the range if you exclude Vietnam. And Amjad already mentioned, we're very proud again to be awarded Malaysia Operator of the Year, which I believe is the first. And I think in the market we're in, we all know the North Sea is quite difficult at the moment with the continued application of EPL and obviously, commodity prices being lower than potentially we'd expected, our strong cost discipline comes to the fore. So we have a track record of extending field lives significantly of 10-plus years. We've used that cost discipline and work very closely with the teams and good collaboration across all teams from supply chain through operations to ensure that we maintain costs flat despite material inflationary pressures and material FX impacts across the business. So really good work by the teams in a particularly challenging market. We remain at the forefront of the energy transition, decarbonizing our existing oil and gas assets and also making good progress on our SVT projects to reduce emissions by 90%. And at Veri Energy, although the transition takes a little bit longer than anyone had anticipated, we're making good progress on onshore wind and continuing to study carbon storage and excited about the potential through e-fuels. And as Amjad mentioned, it's key to be good at decommissioning. If you're going to be active in the energy transition and it's a key part of any future acquisition we do, our performance has been exceptional in decommissioning. We've P&A'd over 81 wells and since 2022, and that's effectively more than 35% of the Northern and Central North Sea P&A across the basin, and we've done that at 35% below the basin average cost. Big achievements as well. So although our wells P&A team is exceptional, good decommissioning comes down to strong project management. And our team there, as you'll see, have safely disembarked the Heather platform, and I'll show you a video later, which highlights how strong our operational capability is as you'll see the Heather fast lift actually in action. And as I talk through each of the assets, we'll start with Kraken. So Kraken continued its exceptional performance from 2024 and 2025. You can see production efficiency. Kraken is up at 96%, which is 30% above the basin average for FPSOs, which is phenomenal. We continue to optimize our emissions through going direct to the marine market for sales. We've managed to take the Bressay Gas tieback and progress that through towards FID. We're not at FID yet, but we have submitted a draft FDP to the NSTA, and we're clearly working with our partner, Waldorf to ensure we can get to an FID point. That project is really important for the future of Kraken. Not only does it reduce our emissions on Kraken, also delivers a material cost saving by reducing our reliance on diesel. In terms of future investment on Kraken, we're working on EOR, as Jonathan has mentioned, to enhance oil recovery. We see good potential upside through that, and we're also continuing to study infill drilling. So the future for Kraken will be EOR or infill drilling or a combination of the 2, and it may well end up being a combination of the 2 that we work on. And just to focus on costs again, the FPSO lease costs reduced at the start of 2Q 2025, which is an $80 million per annum saving, which is clearly very helpful. So really strong performance on Kraken and thanks to Bumi Armada for working very collaboratively with the teams on that asset. Flipping to Magnus. Late-life management asset expertise in play. The asset is over 40 years old. And as I mentioned earlier, we're way up at 95% if you exclude the NCP outage in terms of our operating efficiency, which is phenomenal. And that comes down to the teams really understanding the asset, great collaboration from the offshore teams right through the onshore teams. And if you look at our production that we managed to deliver through the early part of this year, post the NCP outage, we were up at 19,000 BOEs a day. We've sustained production around that level since mid-July, and that's a peak 3-month oil rate that we've seen on Magnus since 2020. But further than that, we've actually managed to take the water cut of the field, which is a measure of how efficient you are in terms of your reservoir recovery. We've taken that back to 85%, which was at pre-acquisition levels. So that's been done by excellent performance on drilling where we've brought the drilling and the well interventions of the recent wells in at cost and on target and tremendous work by the subsurface team working with the operations team and the production teams to ensure that we fully maximize delivery from that asset. And as you look forward on Magnus, obviously buoyed by recent performance, we're planning a future infill drilling program, looking to reestablish drilling back on Magnus later in 2026 and looking at potentially up to 6 wells in that program. Oil production, as we say, has been at peak rates. There's no planned maintenance. So being as efficient as we are, we actually took the opportunity to complete any Magnus shutdown work that we needed to do in 2025 during the NCP outage. So there's no further maintenance outages planned until 2026. And as I've mentioned, our reservoir management strategy has been extremely successful, ensuring that we maximize water injection and throughput and get the water into the right places and sweep as many barrels as we can out of that Magnus reservoir. Flipping into Southeast Asia, where our operating efficiency and our capability has been very well transferred across, you can see production efficiency of the assets at 93%. We've also completed the 4 infill well campaign and well restoration program and well workovers, increasing production by around 10% versus the first half 2024 average. Important as well is the Seligi 1B gas agreement, which expands our gas footprint and expands our reserves and our production. We've managed to accelerate first gas of that project Q1 2026, which will add 6,000 BOEs a day of gas from that point, which is really good work by the teams in Southeast Asia. And just to mention the strong HSE performance, 3 years and over 6 million man hours LTI fees is a great performance by the team. Amjad mentioned how we're expanding our Southeast Asia footprint. So we've got the DEWA PLC now. We're at early stages of studying that opportunity, but it's up to 500 Bcf gas in place, which is a really exciting expansion opportunity for the company. And we've got 2 further gas infill wells planned to be drilled in 2026 in our Malaysian portfolio. So really good performance, not just in the North Sea, but across Southeast Asia. Flipping to Vietnam, which we successfully completed the acquisition of in early July. Pleased to say that the operators handed the asset over in good shape with above expectation production through the first half of the year. We'll now, as Jonathan has mentioned, take our EnQuest skills to bear around getting into fast payback opportunities. We've seen an opportunity and the Vietnam team have highlighted that to bring back some wells into production early on [indiscernible] phase of the asset. So we'll be active on that asset now in terms of getting after the fast quick win payback opportunities. The team have come across and are fully energized and pleased to be part of the EnQuest team. So we're looking forward to extending the life of that asset and making sure we exploit the asset fully. It's a very accretive asset, life of field asset breakeven is about $40 per BOE, and it's high-value crude at a 10% premium to Brent. Just moving on to SVT. So this is a great example for the U.K. government as to how the energy transition should work. And so we're in play at the moment with 2 key projects. We've got the new stabilization facility and the connection to the U.K. grid. They allow us to extend the life of SVT and extend the life of the oil and gas facility and oil and gas production as far as possible. As I mentioned, we're very focused on energy transition projects and new energy projects through Veri Energy. As we all understand in the market now, they'll take a little bit longer to bring to bear, although we are making good progress on onshore wind. So clearly, we need to maintain the life of oil and gas assets as long as we can. We're very focused on that SVT where we can see life going out into the 2050s and that allows more than sufficient time for the new energy projects to come through, hopefully in late 2020s into the 2030s and start to actually act on the energy transition in the way it should be done with a managed and effective transition. In terms of decommissioning, so very strong performance, good validation by our peers who are very impressed with our performance. As I think I mentioned last time I spoke, we were awarded additional P&A operatorship and well abandonment operatorship by one of our peers, which is very good. The Heather P&A was successfully completed by the teams. We also completed safely the disembarkation from the platform. And I'll show you in a minute the Heather top size lift, which was completed with a fast lift. It took about 14 seconds to lift the full topsize facility from the jacket, which is very impressive and done safely. And more impressively, we're looking at basically 95% recycling of that topside facility at the Maersk yard in Denmark. So great work by Heather, and I'll talk a bit more about that before we launch the video. On Thistle, we've now completed all of the platform P&A operations, which is great in terms of Phase 1, 2 and all the conductor recoveries that we needed to do from the platform. As Amjad mentioned, we're on target to disembark in early 2026. And again, very successful performance across that asset. Both projects have remained pretty close to budget within about 5% of the original budgets, and that's been done in a very high inflationary market. So really good performance by the team to control the [indiscernible] costs. And again, Southeast Asia, we transfer our skills across. So really good to see the abandonment excellence award being given to the teams from PETRONAS and the Emerald awards, and that's a good benchmark for the teams. We've also, as I've mentioned, completed the P&A of 81 wells since 2022. We've done that at 35% of the benchmark cost, and we're pleased to have signed up a contract with Well-Safe, which is a multiyear contract, which allows us to complete decommissioning. As always, with EnQuest, our decommissioning, we keep operated control but very low exposure to the decommissioning cost, which is really important from a business management perspective. And we'll commence with low equity but very well-executed decommissioning on the Magnus field with some subsea well P&A, which is due to commence in 2027. In terms of going forward, we keep 95% operatorship of our decom. We've got our decom plans carefully managed. We've got excellent teams in place, and we're very comfortable with the capability we've delivered, which I think is seen as best-in-class across the industry. And just to mention Heather. So Heather was an exemplar asset in its production phase. It went through production of 47 years. The asset is 47 years old now, and I'm pleased to say that it's been an exemplar through the decommissioning phase as well. It's been many workers' homes for a long time. I think one of the employees remained on the asset for the full 47 years. So clearly, it's quite sad to see people moving on and losing their jobs as we P&A assets. But we do it in the right way and we do it as an exemplar of how the decommissioning field should be done, then it's something to be proud of. And you'll see through the video that's just a way to play how strong our decommissioning capability is and how good we are at executing decommissioning with our key supply chain providers. And clearly, the Pioneering Spirit, which executed the work did a phenomenal job of the fast lift. [Presentation] Steve Bowyer: I'll now pass you back to Amjad to conclude the presentation. Amjad Bseisu: Thank you very much, Steve. And that's, I guess, just a great video showing examples of exceptional work where things are very complex, but for everything to fit in exactly at the right time in the right place and the right conditions and the right measurements is, again, just something that shows how we have tremendous attention to detail and the ability to execute these very complex projects. Next slide. So again, delivering organic growth is key. We'll continue to progress and execute opportunities, which provide these growth both organically now that we have a much wider business set, including the acquisitions in Asia that give us more organic opportunities in Malaysia, where we have signed for access to the gas in PM8/Seligi, have signed the first agreement there. We have over 2 Tcf of resource there in the PM8/Seligi fields that we're able to access given the new commercial framework. And we have a ready partner in PETRONAS that needs gas. So I think we're very excited about that. DEWA, transformative opportunity in Sarawak to try and develop gas resources, as Steve mentioned, 500 Bcf. Brunei, a significant opportunity also to develop a gas field and get LNG production there, too. And in the U.K., we're looking forward to the Bressay development that Steve mentioned which again is -- gives us production, but also reduces -- importantly, reduces our emissions in our path to net zero as we've talked about. So we continue also to focus on our relative tax advantage in the U.K. and reemphasizing the expectation that we will grow the North Sea business materially, enable us to release these tax assets, and I think that's one of our key and primary goals and remains our primary goals. We remain committed to growth, as you've seen, but not at any cost. We're focused on creating value for shareholders, and we'll continue to be very disciplined in our M&A, underpinned by a strategy to invest capital where we identify the most favorable terms and returns. This way, we can bring our wide skill sets to bear and continue our track record of extending the economic life of all assets under the execution and operatorship that we have. Of course, our decommissioning expertise now is increasingly important and has become another tenet of our enablers going forward, both in looking at assets and in M&A. In all our endeavors, we also look to diversify the portfolio to improve our overall carbon intensity. And as you've seen, we're shifting a lot more to gas in the future in the commodity mix. We have a clear path in place to add value accretive scale to our business, and I'm energized by the opportunities which are ahead of us. As you've seen, we've seen tremendous growth in Asia, almost 300% growth from last year to next year, and we are continuing to look at growth opportunities in the U.K. and in Southeast Asia. Next slide. In conclusion, you can see our operational strengths are well suited to very mature oil and gas basins and are able -- we are able to transfer for this across geographies. At our core, EnQuest is an agile independent energy company focused on asset-rich regions in the U.K. and Southeast Asia. Since our listing 15 years ago, we have a proven model, acquiring mature and underdeveloped assets from majors and have enabled us to drive operational efficiencies to extend asset lives, maximize value even in complex operating conditions. With our deleveraged balance sheet, enhanced liquidity and significant U.K. tax assets, our strong fundamentals see us very well positioned to deliver transformative continuing value-accretive growth opportunities to our shareholders. Thank you all for your attention. We'll now move to Q&A, and I'll hand over to Craig on the Q&A section. Thank you, everyone. Craig Baxter: Thank you very much, Amjad, and thank you, gentlemen, for the presentation. I'm pleased to say we have a number of questions that have been submitted through the presentation. I'm going to keep you busy for a little bit longer, if that's all right. And we'll start off, if I may, with Alejandra Magana from JPMorgan. And Jonathan, I'll maybe come to you first, and I'm sure Amjad will want to comment on the second part of this question. Alejandra has asked us with regard to transformational U.K. acquisitions to expand a little bit on the financial flexibility that we have today in terms of balance sheet strength, liquidity and the undrawn facilities we can access to act on opportunities as they arise. And maybe this is one more for Amjad. She's looking for a bit of a sense of what we're seeing in the current market and what the sort of bid-ask spreads are in terms of valuation? Jonathan Copus: Sure. Yes. Let me kick off. Yes. So a lot of -- the aim of our deleverage pathway has been to not just reduce our net debt, but to simplify our balance sheet as well, and we've been successful in doing that. We had net debt of $377 million at the 30th of June. And within that figure, our cash balances were $331 million. As I mentioned, we also had a positive redetermination on our RBL. And that meant that the cash and available facilities at the 30th of June was $578 million. Now that provides a great platform to use for transacting. But more to the point, because our debt and our capital structure are simplified, it means that we can also act simply in terms of structuring deals. And that is a great positive in terms of derisking the kind of transactional pathway. I think the other thing that I would point to is that a number of these deals also have quite a long period between the effective date and completion. And you can see this in Vietnam, where the consideration paid was $85 million. The final cash payment was $22 million. So another moving part in terms of financing these deals are those interim cash flow pathways as well. So we certainly have the capacity to transact from a balance sheet point of view. Everything in our ethos around it, not just financially, but in terms of positioning is about being simple and straightforward. And we believe that gives us the best pathway in terms of engagement, but also moving conversations through to completion as well. Amjad, just hand over to you for other comments. Amjad Bseisu: Yes. So the comment on what do we see in current environment on M&A. I mean I think we see a slightly slowed down environment in the U.K. because of the fiscal uncertainty. And so there's been more joint ventures, and that's been kind of the M&A transaction of choice. We've seen a few transactions there with Repsol, NEO and Equinor, Shell and indeed, even Eni is more of a JV there, too. So we've seen that in the past. But I do think we're still seeing opportunities. We're still seeing our asset as a very critical asset and tax asset to move forward, and we are still in discussions on several fronts. In Southeast Asia, as you note, we have had 4 opportunities that we closed: 1 production, 2 developments and 1 appraisal exploration opportunity. And we continue to look at opportunities there. And we have -- we are now in 4 countries in Southeast Asia. So our footprint is growing quite rapidly. I would say we're probably one of the leading independents now in Southeast Asia. We've also tripled our production there in the last -- between last year and next year, so in the last 2 years effectively. And that also is a great testament to ability to grow quickly when we have the balance sheet to do it, as Jonathan mentioned. Craig Baxter: Thanks, Amjad. That's actually a perfect segue into Alejandra's other question, which is around Southeast Asia. And she's looking for a bit of color from you on the sort of the relative cash and cash flow and economic attractiveness of the growth. We've mentioned today in Southeast Asia versus what we see in the U.K., particularly when you factor in fiscal regimes, reinvestment requirements, et cetera. And as a bolt-on to that question, we've talked a little bit about the upside opportunities now that we have our hands on the Vietnam asset, there's obviously some upside there, both with the current assets and across the field. So maybe if you could touch on some of those, that would be very helpful? Amjad Bseisu: Okay. So on the U.K. versus Asia, I mean, they are very different propositions in terms of investment. U.K. gives you full access to cash flow with tax being paid. There is no royalty being paid in the U.K., but it's very sensitive to oil price. And as we've seen this year, the cash flows are lower because the oil price is lower. In Southeast Asia, the opportunities are more production sharing contract types where the cost recovery takes a big load of the contractor, which would be ourselves. So it's less sensitive to oil price movements versus the U.K. So U.K. is very sensitive to oil price movement. And with a high tax rate in the U.K., the investment -- organic investment gets much more challenging because, again, it's the volatility to oil price is very high. So I mean, we're still investing in the U.K., but we would invest more and we would like to invest more if the U.K. fiscal conditions improve. We continue to look at Asia opportunities. I think in Vietnam, we took over in July, and we are looking now to have a full field model analysis and opportunity analysis. I'm confident in the next few months, we'll see a segue to a program. We're already starting a program with our first workover in Southeast Asia in Vietnam, but we will look at a drilling program in the future. And we are looking to expand the Malaysia gas [indiscernible] phase. Our first phase is 70 million standard cubic foot a day from PM8/Seligi. We're looking to expand that significantly. And as you've seen in our analysis -- our results analysis, we also have a contract -- first phase of the DEWA, the development contract; also the first phase of Brunei. These are development opportunities subject to final investment decisions. But we get great comfort that those resources have been certified. And again, we -- in our hands, it will be lower cost to develop them. And that's why they are in our hands because we'll have a much more efficient development approach to them. Craig Baxter: Thanks, Amjad. And staying with the new developments, a question from James Hosie at Shore Capital around the developments at DEWA and Block C in Brunei, whether EnQuest will be selling gas at a price linked to LNG spot prices and what you see the market is for those resources? And James' follow-up is also reverting back to Vietnam. It's around EnQuest's appetite to extend the license beyond the 2030 sunset that's currently in place. Amjad Bseisu: Yes. So on gas prices, in Malaysia, there's this Malaysian reference price. So as we've negotiated the first contract on PM8/Seligi, it's related -- the price would be related to Malaysian reference price, which is probably around $7 or $8 in Peninsular Malaysia. In Sarawak, it could be a multiple of that, but it's usually also relating to the Malaysian reference price. There is -- I mean, obviously, there's -- in Sarawak, there is an LNG plant and PETRONAS could buy the gas for the LNG, but the purchase is relating to the Malaysian reference price. In Brunei, the access is to LNG and the plan is to produce into the LNG plant in BSP, the Brunei LNG plant. So commercial discussions would be ongoing post the first phase of front-end engineering design and when we get to the CapEx and the economics of the project. So that would be the segue into that. And indeed, this is a very early phase in Indonesia, very, very early phase, but that would be the -- also access to the LNG plant in Tangguh is key for developing that resource -- the gas resources once those are in commercial quantities. So again, that would be an LNG development. Hence, the push for us to bring in the LNG partners -- Tangguh LNG partners. On the Vietnam extension, we are keen on looking to expand there, both our investment and extending the PSC. So I think we are -- we will get into discussions on that in the future once our investment program is crystallized. Craig Baxter: Thanks, Andrew. finishing up on Southeast Asia for the moment, unless other questions, of course, come in. Sam at Peel Hunt has asked a little bit about your thoughts on the CapEx required to sort of develop out these resources. And obviously, we haven't put any numbers out there publicly. But just your thoughts, Amjad, how you see the investment landscape between the U.K. and Southeast Asia going forward? Amjad Bseisu: Yes. So you've seen the cash flows from Malaysia and Vietnam. So I think we actually have assets there now that have significant cash flow. So as Jonathan mentioned, between first of '24 and middle of '25, there was over $50 million cash flow from Vietnam. And the numbers in Malaysia are also very robust. And they will -- with the increase in production and the gas sales agreement, they will become robust. So the first thing I want to outline is we have 15,000 barrels a day next year of production. And so our cash flows will have gone up by the same factor of production roughly. So I think we'll have significant cash flows generated in the region itself. And so that will go a long way to actually providing the CapEx. Indeed, our first phase development, the first phase that we've had for the gas development, the 70 million standard cubic feet a day, which was contractually around $100 million, that has been generated internally, and we did not call on resources from corporate or external debt. And so that will be in place for gas to start next year. Now it's too early to identify both DEWA where we're a 40% partner -- 43%, and Brunei we're a 50% partner. But I feel the cash flows will be reasonable, and it's fit for purpose for EnQuest. That's why we're in those developments. So I think we -- between our cash flow and our facilities, we will be able to finance our share of those. Craig Baxter: Thanks, Amjad. That's very clear. Switching to the U.K. now, we've got a number of questions, and some of them I kind of aggregate up because they're on similar themes. A question, I guess, for Steve and Amjad. So we've got a few questions on the scale of Kraken EOR. Obviously, you've talked about that a little bit over the last few months and certainly today. And Steve, I think touched on the combination of infill drilling and EOR. But it would be interesting and there's a number of people asking to get a bit more from you on EOR as a project and how that fits for the next phase of Kraken operations. Let me start with you, Steve. Steve Bowyer: Yes. So we've made good progress on Kraken EOR. We're currently studying polymers, testing polymers and we've been updating reservoir models. And the sweep efficiency of Kraken without EOR has been pretty good. So it's complex. There are new polymers coming on the market as well. So I think we previously mentioned we're progressing that towards a decision tail end of this year. We're still on track with that, but we may push that into early next year as we start to study further the polymers and optimize that fully, but we still see quite a bit of upside through Kraken EOR. There's still infill drilling opportunities on Kraken as well. You know we drill-ready infill opportunities previously. They still exist and are still strong. So I think EOR will either apply across the whole reservoir once we've selected the right polymer or it will be selective in certain areas of the reservoir where we'll instead go after infill drilling. So still excited by EOR. It's still a great potential opportunity for Kraken. It's just it's complex in terms of understanding the polymer, understand how it reacts within the reservoir and making sure we get the right optimized way forward. Craig Baxter: Thanks, Steve. Anything you want to add to that, Amjad? Amjad Bseisu: I just think the opportunities in U.K. organically are still very strong. I think we believe -- I mean, as you've seen from Steve's presentation, Magnus has had a great performance due to the wells drilled there and also to the increase in efficiencies that we've had. And in Kraken, as Steve mentioned, there were 2 drill-ready wells, which we had delayed because of our partner issues, but I think those will be coming in the future. And I think we're still excited about the EOR. The EOR is a material opportunity. The numbers are very significant. It has been tried elsewhere, and we're going to -- we're going to be focused on getting that, like Steve said, maybe in the early part of the next year. Craig Baxter: Thanks, Amjad. So sticking with the U.K., but switching from Kraken to Magnus. Both Charlie at Canaccord and Mark Wilson at Jefferies have asked about the 6 well program planned at Magnus. And talking a little bit -- there's a request to kind of give a feel of what that could generate for Magnus production and also just the sort of cost versus return trade-off with that obviously being a U.K. investment program. And maybe start again with Steve and Amjad, you can give your views if you wouldn't mind? Steve Bowyer: Yes. So we run an active well hopper across all of our assets. We've always got well opportunities there. Obviously, we've got some very successful well results. The 2 wells were above our expectations that we drilled this year, and that just shows the strength of the subsurface team we've got. We've focused on the LKCF, which is a less exploited part of the Magnus reservoir, which is a lower water cut. We've had some success in that. We've got water injection going in there. And we do still see plenty of Magnus opportunities, which we would look to drill. The wells we've drilled recently, they have paybacks within about 12 months. The future wells identified are very similar. And obviously, with those returns, we see healthy returns through our Magnus infill drilling program. When we go back, we tend to want to drill in the sequence and batch of wells. The team have already got a number of those opportunities matured, and we'll be working to mature up the opportunities with a return of drilling probably mid- to end 2026 on Magnus, where we'll mobilize and there will be a bit of time to get the rig back up and ready to run. But we're pretty confident we've got good opportunities already identified and more to mature on Magnus. So quite excited about the future of Magnus. And there'll be similar scale to the existing opportunities we drill where they're somewhere between about 1 million to 3 million barrel recovery wells, and those work out very well economically with our position in terms of our financial and fiscal position. So they are very robust in respect for VPL. Craig Baxter: Amjad, are you going to add? Amjad Bseisu: No, I'll just add that we're quite excited about the LKCF, which we've just drilled a recent well. The recovery factor there is relatively low. It's 24%. So a very rich opportunity for growth. It's almost 400 million barrels of stope there, and we're very excited about looking at that further as Steve mentioned. Craig Baxter: Thanks. Staying with Magnus, [indiscernible] from Sona has asked a question. Obviously, we've seen the third-party outage that's affected Magnus production in the first half of the year. So Steve, maybe coming to you. Do you have any sort of update on the future of the Ninian infrastructure, the time line to decommissioning and what EnQuest is doing to mitigate that and obviously secure future production of Magnus? Steve Bowyer: Yes. So I think it's understood in the market that Ninian Central is due to COP 2027. It may be later than that. We've clearly been progressing a bypass opportunity, which is a subsea -- basically a rerouting of the subsea pipe work. And we're progressing feed on that and we'll be well ahead. So we're ready to bypass the Ninian platform long before it gets to COP. So working very collaboratively with CNR and Total. Obviously, the all wind field comes through the same system, and we're very well progressed so far with our design around how we would bypass Ninian. So the future of Magnus is pretty much secured. We're still to FID the project, but it's a no-brainer in terms of FID. And so good progress by the teams in terms of being prepared for that. And obviously, that's a key facet of extending the life of SVT and the projects we're doing there. So we see a very strong life for Magnus going forward. The subsea operation is kind of routine, it's bypass pipe work. So it's basically a subsea rerouting of the pipe work where we've already got block and bleeds where we can tie into. So pretty solid and robust project that we're progressing forward. Craig Baxter: Thanks, Steve. Jonathan, coming to you, if I may, a couple of questions from Mr. Wilson at Jefferies. We've talked a little bit around -- and Steve touched on material cost inflation has been managed in the business. You yourself, Jonathan talked about the group managing to keep operating costs flat. Can you talk a little bit to EnQuest's kind of approach there and which areas have been the most pleasing for you in terms of that achievement? And also, Mark has asked just for you to give a quick summary and reminder for those listening around the way in which our GBP 3.2 billion U.K. tax asset is split up into the 2 component parts? Jonathan Copus: Sure. Yes. I mean, cost management is sort of absolutely core to what we do. We talk about it being in our sort of DNA, right? And operating in the basin we do and focus on extending the life of late-life assets or underdeveloped assets. A huge part of this is about delivering these things at optimal cost as well. Now in an inflationary environment, one way we can manage that is through activity in supply chain. And so certainly, across our sort of production operation business, but also our decommissioning business, we are good at securing equipment and securing equipment for extended pieces of work. Steve talked about the 6 wells grouping. We've also talked on this call about the Well-Safe contract, which has multiyear options. So that means that because we can give service providers visibility on extended periods of usage, it means we get good prices for that equipment. So I think the team does a great job in terms of all of that. I think the other thing though that goes hand-in-hand with cost management is also making sure that we manage costs in the right way. What we're not interested in doing is undermining the production uptime on the assets as well. So it's also really important to be on top of maintenance and things like that. And one thing that really helps us in this respect is the fact that we operate 96% of our 2P reserves. So that means that we're in very strong control of how we spend our time and also how we spend our money and that puts us in a good place in terms of managing costs. And just to sort of reiterate that point that I made, which is holding operating costs flat despite the weaker U.S. dollar. That's a combination of cost optimization. It's also a product of being proactive in terms of hedging out our dollar position as well. So I think both have kind of helped us in that respect. Turning to the tax assets. So these are very simply held. They sit within 2 entities. And that is a really important point because the value of these tax assets is not just their value sitting in our organization, it's their value deployed, so principally transaction. So Lion's share of that $3.2 billion tax loss sits within EnQuest Heather Limited and that is where all of our producing assets sit, and those tax assets are $2 billion that sit within that EHL entity. And these are what are called recognized tax losses, which means they sit on our balance sheet. So you can see that in our accounts and our notes. The other portion are what are called unrecognized tax losses, and they're only unrecognized because it's about the pathway to recovery, which means we don't recognize deferred tax assets alongside them. Now they total a further $1.2 billion, but they also are on a pathway to recognition, and we would expect to be bringing those into our recognized tax loss pool in the coming periods. So I think there's 2 really important things to focus on the tax losses. One is the size, but the second one is the simplicity of how they're held, which means that they can be deployed quickly and efficiently. And that, of course, is a big part of creating value around production in our portfolio and production that we can bring into the portfolio as well through transactions. Craig Baxter: Thanks for that, Jonathan. That was very, very clear. James, a question coming from [indiscernible], is around, James acknowledges we're not going to talk too much around other companies' processes, but he's asked whether we're seeing any issues arising from the parent Waldorf being in administration of agreement work programs, et cetera, and whether there's an opportunity here. I do understand we can't be too specific about this, but I think it's worth maybe reiterating the way in which the Kraken JV is moving forward. Amjad, do you want to take that one? Amjad Bseisu: Yes. So I mean, I think clearly, the administration process delayed our Kraken wells that we were planning to do. And obviously, we came into a settlement late '23, early '24. So we -- so we will continue looking at those prospects in the future. I would say the discussions on the Bressay Gas and the submission of the FTP, as mentioned by Steve, has been more constructive. And I think we've had a more constructive dialogue with the new management now that the new management has changed in Waldorf. So I think we see progress, but it's tough to say anything more than that at present. I do think that the Bressay Gas going into Kraken is strategically important, but also important from an emissions perspective and meeting emission standards in the U.K. So I think there's an impetus for that going forward. And I do feel that -- again, it's a question of time, but I do feel that the new approach that Waldorf is taking is more constructive. I don't know, Steve, do you want to add anything to that? Steve Bowyer: Yes, no. At a working level, I think relations are good, and we're making good progress on discussions around Bressay Gas. So as you say, the new management certainly improved things, and we're seeing good engagement from Waldorf. So on a day-to-day basis, which I think was the question, there's no real impact. And as you've mentioned, Amjad, Bressay Gas is really important to both companies in terms of the emissions reduction and obviously reducing cost for the asset and also for us, secures the Bressay license, which is important for future oil development once we're in a market where we can invest in large developments again. Craig Baxter: Thanks, gentlemen. I'll wrap up with a couple of wider questions that I'll put to you, please, Amjad. And these are based on a number of questions we've received today in the Q&A. So the first of which is -- and I guess you knew this one was probably coming, but it was around the U.K. fiscal system and our engagement with government and whether you see any positive moves on the horizon as we head towards the late November autumn statement. If you could give some thoughts, Amjad, I'm sure that would be appreciated by those joining. Amjad Bseisu: Yes. No. So I think we -- I'm part of the fiscal forum, the U.K. fiscal forum, which discusses the new tax system. Steve has also been very involved with the OEUK as well as being on the Board of the OEUK, but as well as with the government on these discussions and setting up these discussions, both from an industry perspective and from an individual company perspective. And I would say the government, it has been very constructive -- the discussions with the government have been very constructive. I think the government understands the needs of the business and has indeed come up with a framework that is very palatable to the business in terms of the new type of windfall tax, which we are very much supportive of as an industry, I think. So the question is how quickly that's put in place. And if we can get something put in place relatively quickly, I think we would kind of reduce the risks that are significant on the business. Obviously, the U.K. fiscal environment now is very difficult for the business, and it's one of the most challenging in the world. And I think a change of that fiscal regime is needed. The government, I think, framework for the future is that they've discussed would be palatable. And I think it needs to be put in place as quickly as possible to just reduce the challenges of this -- of our industry, where we're losing 1,000 jobs a month according to the OEUK analysis and our basin is declining. So I do feel that we are part of the transition. We have reduced our emissions by 40%. We're going to reduce them further by these projects in NSF that are very clear and critical. We -- with the new stabilization facility, we're reducing the footprint from 1.5 million barrels a day to 40,000 barrels a day. So we'll decrease the size of the facility significantly. And with the long-term power, we're taking out the gas turbines and removing and moving to wind power, both either on the terminal or supplied by the terminal for backup power. So we will reduce our emissions there by 90%. So we need the investments in the U.K. to be generated from our upstream business, so we can actually enact these very important reduction measures. But more importantly, we don't want to export jobs. I mean the U.K. will continue to use oil and gas for many, many decades to come. And instead of importing those resources and exporting our jobs, it's important that we produce those resources internally in the U.K. and keep our jobs in the U.K. Craig Baxter: Thank you, Amjad. Amjad, I'm going to ask you to close, please. And this is in response to a number of questions that have been raised today from long-standing holders that you know like [ David Larson ] and [indiscernible] you met at AGMs over the years and others. And it's around -- it's around shareholders. And obviously, we're trading at a discount to our valuation. So it's a bit of an outlook from you, Amjad, as to what our shareholders can look forward to in the future with EnQuest? Amjad Bseisu: Well, I mean, we, at EnQuest have a very unique proposition because we have proven that we can take assets that are underdeveloped and late life or mature life assets and extract value out of them. And you can see we've done that over and over again. We've done that in 9 operated assets that we've taken. We've now also proven that we can be the best decommissioning company for assets in our area, but also in Southeast Asia. I think we have done, as Steve mentioned, a tremendous job in the U.K., the largest decommissioning company in the Central and Northern North Sea by a long shot, 81 wells decommissioned, 35% below the NSTA standards. We've got the award in Southeast Asia for the best decommissioning company in Malaysia. And so I think the -- with us being the right shepherd of these assets, even in decommissioning cycle, which I think is important, but all through from their mid-life to the decommissioning, I think we have a unique set of skills. Our acquisition costs when we have the right assets are low. As you've seen in Vietnam, we can actually acquire assets for relatively low amount, similar to what we did in Malaysia and similar to what we've done in the U.K. with Greater Kittiwake and Thistle and Heather. So I think the impetus is on the government to make the basin actually investable. And I think we have the capability and expertise that is clearly world-class and clearly best-in-class in the U.K. to invest in these new opportunities. So I'm looking forward to the U.K. when we're prodding the government to make a change because, again, we've seen a handful of companies either fail or stop production, and there's no need for that. It's self-inflicted wounds. And we also see the platform in Southeast Asia now that we are in 4 countries and continue growing in those 4 countries. So I do see -- I'm very hopeful for the future. I think our financial position is strong, and it's clearly improved significantly from 5 years ago when our debt levels are high. And I mean, the impetus and the catalyst will be -- in the U.K. will be a change in the fiscal regime, which we're looking forward to. But in the meantime, we're redeploying our capital in Asia where the returns are attractive and the risk reward is high. Craig Baxter: Thank you, Amjad. That's very clear. Thanks for that. Thank you for all your time, gentlemen, through the Q&A. So I propose we close here. Thank you very much. Amjad Bseisu: Thank you, everyone. Steve Bowyer: Thank you. Jonathan Copus: Thank you.
Operator: Good morning, and welcome to the Worthington Enterprises First Quarter Fiscal 2026 Earnings Conference Call. [Operator Instructions] This conference is being recorded at the request of Worthington Enterprises. If anyone objects, you may disconnect at this time. I'd now like to introduce Marcus Rogier, Treasurer and Investor Relations Officer. Mr. Rogier, you may begin. Marcus Rogier: Thank you, Rob. Good morning, everyone, and thank you for joining us for Worthington Enterprises First Quarter Fiscal 2026 Earnings Call. On the call today are Joe Hayek, our President and Chief Executive Officer; and Colin Souza, our Chief Financial Officer. Before we begin, I'd like to remind everyone that certain statements made during today's call are forward-looking in nature and subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For more information on these risks and uncertainties, please refer to our earnings release issued yesterday after the market close, which is available on the Investor Relations section of our website. Additionally, our remarks today will include references to non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures can also be found in the earnings release. Today's call is being recorded, and a replay will be available later on our website at worthingtonenterprises.com. With that, I'll turn the call over to Joe for opening remarks. Joseph Hayek: Thank you, Marcus, and good morning, everyone. Welcome to Worthington Enterprises Fiscal 2026 First Quarter Earnings Call. We had a very solid start to our fiscal year due to the collective efforts of our teams. And I want to start by saying thank you to all my colleagues for their dedication to each other, our company, our customers and our shareholders. In the quarter, we delivered strong year-over-year growth in sales, adjusted EBITDA and earnings per share. Our sales in Q1 were up 18% over last year and up 10% year-over-year, excluding sales from recently acquired Elgen. The gross margin was 27.1% in Q1 versus 24.3% last year. This improvement is after the adverse impact of a $2.2 million purchase accounting charge related to inventory acquired from Elgen. Adjusted EBITDA margin in the quarter was 21.4% versus 18.8% in Q1 a year ago. I said this related to our Q4 results when we were together in June, but our results in Q1 again reflect our strategy and action. Despite numerous headwinds, including cautious consumers and a hot summer that impacted outdoor activities and tariff costs and high interest rates that are impacting residential and commercial repair, remodeling and construction activity, we grew our year-over-year adjusted EBITDA by 34%. Our SG&A expenses were $4.5 million in the quarter, but flat, excluding the addition of Elgen, despite our organic growth in sales and gross profit. As we continue our efforts to optimize our current businesses and grow Worthington, we do so not just as stewards of Worthington's proud history, but as drivers of innovation and strategies that will power our future. We're committed to building a sustainable growth platform, and we will continue to leverage the Worthington Business System and its 3 growth drivers, innovation, transformation and acquisitions to maximize both our near- and long-term success. We've generated tremendous momentum with new product launches, including the Balloon Time Mini, A2L refrigerant cylinders and new Halo Griddles. These new products are enabling us to take market share, grow new markets and win new customers. Our transformation efforts continue to be driven by value stream analysis, automation and new ways of thinking, but our goals do not change. We prioritize safety, asset utilization and cost optimization. The ongoing 80/20 initiative in our water business is having a positive impact, and we're planning for additional 80/20 work streams in other areas of our business. We believe our culture is a differentiator, and we're focused on acquiring companies with great teams that have developed sustainable competitive advantages in niche markets. Our acquisition of Elgen in June is an example of that. We're pleased with our integration of Elgen thus far, and we're excited about its growth prospects. That team has embraced our safety culture, and we're focused on capturing synergies and pursuing growth opportunities in multiple areas. Last June, we acquired Ragasco, a pioneer and world leader in lightweight composite LPG cylinders. Ragasco recently celebrated 25 years in business and has manufactured and sold over 25 million cylinders into over 100 countries around the world. Their people, culture and ongoing initiatives around safety, innovation and quality are second to none. We're very happy that they're part of Worthington, and a group of us is looking forward to celebrating with that team in person in Norway next week. Earlier in September, we published our second sustainability report at Worthington Enterprises, and the content of that report makes us proud. For instance, we continue to outperform our industry benchmarks in safety with a total incident case rate 40% lower than our peers. We're constantly trying to improve. And in fiscal '25, we renamed our safety culture LiveSafe. It is based on proactive mindsets, processes and actions that ensure our teams can be the best version of themselves at work and at home. While many of our end markets continue to face headwinds, we're performing very well and believe our best days are ahead of us. Leveraging our people-first performance-based culture, market-leading brands, a start-up mindset, the Worthington Business System and our strong balance sheet, we will continue to improve everyday life by elevating spaces and experiences in a way that creates meaningful value for our employees, customers and investors. I will now turn it over to Colin, who will take you through some details related to our financial performance in the quarter. Colin Souza: Thank you, Joe, and good morning, everyone. We delivered strong financial results in Q1, getting our fiscal year off to a solid start. On a GAAP basis, we reported earnings of $0.70 per share compared to $0.48 per share in the prior year quarter. The current quarter included pretax restructuring and other expenses of $2 million or $0.04 per share compared to similar charges of $0.02 per share in the prior year quarter. Excluding these items, adjusted earnings were $0.74 per share, up from $0.50 per share in the prior year quarter. Q1 also included a onetime pretax purchase accounting charge of $2.2 million related to the stepped-up value of inventory at Elgen, which negatively impacted profitability in the quarter. Consolidated sales for the quarter were $304 million, up 18% compared to $257 million in the prior year quarter. The increase was primarily driven by higher volumes in our Building Products segment, along with the inclusion of Elgen, which contributed $21 million following its acquisition in June. Gross profit increased significantly to $82 million, up from $62 million with gross margin expanding approximately 280 basis points to 27.1% despite the $2.2 million purchase accounting charge at Elgen. Adjusted EBITDA for the quarter was $65 million, up from $48 million in Q1 of last year, and adjusted EBITDA margin in the quarter was 21.4% compared to 18.8% in the prior year quarter. On a trailing 12-month basis, adjusted EBITDA now stands at $280 million with a TTM adjusted EBITDA margin of 23.3%. Turning to our cash flow and capital allocation. We continue to invest in our operations while maintaining a disciplined and balanced approach. During the quarter, we invested $13 million in capital expenditures, including $9 million related to our ongoing facility modernization project. We also returned capital to shareholders, paying $9 million in dividends and repurchasing 100,000 shares of our common stock for $6 million at an average price of $62.59 per share. Our joint ventures provided $36 million in dividends, representing a 100% cash conversion rate on equity income. Cash flow from operations for the quarter was $41 million and free cash flow was $28 million. On a trailing 12-month basis, free cash flow totaled $156 million, representing a 94% free cash flow conversion rate relative to our adjusted net earnings. As a reminder, this figure includes elevated capital expenditures related to our facility modernization projects, which totaled $29 million over the same period. We have approximately $35 million of modernization spend remaining with the majority expected to be completed during fiscal 2026 and capital expenditures returning to more normalized levels thereafter. As that spend tapers down, we expect to see further improvement in free cash flow conversion over time. Turning to our balance sheet and liquidity. We closed the quarter with $306 million in long-term funded debt, carrying an average interest rate of 3.6% and $167 million in cash. Our leverage remains extremely low with ample liquidity supported by a $500 million undrawn credit facility. Net debt at quarter end was $139 million, resulting in a net debt to trailing adjusted EBITDA ratio of approximately 0.5 turn. Yesterday, our Board of Directors declared a quarterly dividend of $0.19 per share payable in December 2025. Let me now turn to our segment performance, where both businesses delivered results -- solid results to start the fiscal year. In Consumer Products, sales in Q1 were $119 million, up 1% compared to the prior year quarter as a favorable shift in product mix was mostly offset by lower volumes. Adjusted EBITDA was $16 million with a 13.6% margin compared to $18 million and 15.1% in Q1 last year. The year-over-year decline was primarily driven by lower gross margin due to tariff charges and lower volumes. The broader consumer environment remains cautious and demand continues to be closely correlated to point-of-sale activity. That said, our brands are strong, our channels are stable and our products are not large ticket items. They are affordable, essential and play a meaningful role in elevating everyday experiences around outdoor living, celebration and home improvement. We're proud of how our Consumer Products team continues to perform and deliver value for customers despite macro headwinds. Looking ahead, we believe the business is well positioned to benefit as consumer sentiment improves and demand returns to more normalized levels, supported by our market-leading brands, strong customer relationships and a transformational mindset. In Building Products, Q1 sales grew 32% year-over-year to $185 million, up from $140 million in the prior year quarter. Growth was driven by higher volumes and contributions from Elgen, which closed in June and contributed $21 million in sales for Q1. Excluding Elgen, net sales were up 17%, reflecting continued strength in our cooling and construction products, where we are supporting the refrigerant industry's transition to more environmentally friendly refrigerants, along with growth in our heating and cooking products, where we've enhanced our capacity and throughput as a result of the facility modernization investments made over the last year. Adjusted EBITDA for the quarter was $58 million with an adjusted EBITDA margin of 31.3% compared to $40 million and 28.4% in Q1 last year. The improvement was primarily driven by volume growth in our wholly owned businesses, along with a modest year-over-year increase in equity income. Elgen's contribution to adjusted EBITDA was nominal as expected due to the previously mentioned nonrecurring purchase accounting charge. WAVE delivered another solid performance, contributing $32 million in equity earnings, up from $28 million in the prior year quarter. ClarkDietrich operating in a more challenging environment delivered a respectable $6 million in equity earnings compared to $9 million last year. The Building Products team is executing well and continues to do a great job delivering value-added and innovative solutions for our customers. We're also very pleased with our integration efforts thus far at Elgen. We remain excited about the potential growth at Elgen and believe their capabilities strengthen our presence in commercial HVAC and broaden our reach within the building envelope. At this point, we're happy to take any questions. Operator: [Operator Instructions] Your first question today comes from the line of Kathryn Thompson from TRG. Kathryn Thompson: I just have a couple of operational and then a bigger picture question. For your wholly owned Building Products segment, margins again were up in the quarter. I know that that's an initiative that you've been working on. But could you help us understand what drove the margin in the quarter and really kind of the glide path of where you see it going? And what would be a normalized level based on your current portfolio? Joseph Hayek: Sure, Kathryn, it's Joe. In Building Products, excluding WAVE and ClarkDietrich for a minute, I have no doubt that you or somebody else will get to those. But it's really a story of really nice execution in markets that are normalizing and normalized. We look at -- we had really solid growth in our heating and cooking business and really solid growth in our cooling and construction business as well. The water business also improved. The only business that was flattish was our European business, and that has more to do with some big orders and the general economic environment in Europe. But when we look at Building Products, we've talked about, I think, EBITDA margin for the one of the businesses was 10.5% this quarter. We've talked about that getting over time upwards to sort of 12-ish, 13%, not right away, but that's the trend that we continue to see. We're still a little seasonal, right? And when it's cold, there are more things going on. But it's really a credit to those teams. In fact, last week, for the first time in 6 years, we had our all-employee banquet and awards where we got together to celebrate some service anniversaries and some MVPs, both on the personal side. But we gave away the first John H. McConnell philosophy award, and we gave that and drove this award to be given to a team or a group or a facility that went above and beyond in our fiscal year related to safety and performance and really made a difference getting more towards our first corporate goal, which is to earn money for our shareholders and increase the value of their investment. And we were very, very happy to give that award to our facility in Paducah, Kentucky. That's fewer than 100 people. They made 900,000 A2L refrigerant cylinders last year, triple, almost triple what they did the year before. And so it's those kinds of market-driven opportunities that we're trying really hard to take advantage of, and that's what you're really seeing a lot of momentum in Building Products. Kathryn Thompson: That's helpful. Shifting to WAVE, another great quarter. And still up $30 million in terms of contribution. Touch again on the drivers for this outperformance? And is this a level to be expected for the next -- for out quarters? Colin Souza: Yes, Kathryn, this is Colin. So again, WAVE continues to perform very well, up year-over-year in terms of equity contribution for us and down slightly from Q4 for us. Q4 and Q1, those are their stronger quarters. But overall, within the business, their end markets, in particular, when they serve areas like education, health care, transportation, data centers, those are still very healthy, very strong and offsetting some of the weakness in areas like office and retail and you know WAVE's operating model and how they go to market, and it's really driving value to contractors and really working hard to take labor and time and ultimately cost out of the equation for those installs, and they do that extremely, extremely well, and they continue to show value to those customers, and it flows through to their performance. So steady as she goes with -- in terms of WAVE and how they're going to perform, we're very happy with how that's going so far. Kathryn Thompson: Okay. And then a final question if I may. This is the bigger picture question. So Worthington is often the only domestic manufacturer of some of your product lines. And tariffs are complicating the supply chain this year. And theoretically, Worthington should be in a better position relative to competitors with that domestic manufacturing footprint. In the last quarter, you touched briefly on having more conversations with customers, but it's difficult to quantify. Can you give an update on how that dynamic is progressing? Are there any further wins that Worthington can tie back to tariffs and just broader implications going forward? Joseph Hayek: Thanks, Kathryn. It's Joe. I'll take a shot at it and certainly Colin add in. Yes, tariffs are complex for everybody, and they have multiple touch points for us. In our consumer business, where we have some of those tools that are manufactured for us, we had to effectively write a check for a couple of million dollars in the quarter to Uncle Sam. But as you point out, in a lot of our business, some in consumer and a lot within building products, we are the primary or only domestic manufacturer for those products, and we compete with imports. And so having a more level playing field with respect to pricing is helpful. And we've always prided ourselves on trying to be commercially excellent and trying to be really easy to do business with. And so we have absolutely had and continue to have good conversations with our customers domestically. Our supply chain is going to be tighter than somebody that's manufacturing overseas. But we've always really strived to create value and understand our customers' pain points, try and make their lives easier so that they can better serve their customers. A large -- I mean, a lot of our products and 2/3-ish end up in the hands of contractors. And whether it's a distributor or whether it's a retailer, we try really hard to help our customers better serve their own customers, which really are what they and we care about. And so it is hard to pinpoint, but value candidly, is easier to drive when prices are competitive and people are sensitive to prices. And so we're able to keep prices at a very kind of reasonable level historically because we aren't subject to the tariffs other people might be. And so those conversations are ongoing. And we hope when we execute well that, that makes our value proposition that much more compelling. Operator: Your next question comes from the line of Daniel Moore from CJS Securities. Dan Moore: So I'll shift back to Building Products just for a second, very healthy organic growth. Can you just elaborate a little bit more on the pockets of strength? You mentioned cooling and construction products, some of the heating products. How much of it is market growth? How much of it is share gains? And as we think about moving forward, talk about the potential to outpace the market over the next 1, 2, 3 years? Joseph Hayek: Sure. I think it's a mix, Dan. Some of it is kind of market normalization. Some of it is -- and that would probably be more in heating and cooking and in water. Some of it is market share gains. We saw some of those in the heating and cooking business and some in cooling and construction. But then the markets are behaving more normally, maybe a bit more of a catch-up in heating and cooking, a little bit of growth in water. But then in refrigerants, right, in our cooling and construction business, if you go all the way back to 2021, the American Manufacturing Act late 2020, 2021 really mandated a shift in refrigerant to more environmentally friendly gases. And so you're seeing some of that load in and rollout over the past 6 or 8 months. And these things happen periodically. And so I do think that, that market has grown and ought to continue to grow maybe more than it historically would have due to some of those shifts. Dan Moore: Okay. That is helpful. And then if you can -- go ahead, I'm sorry. Joseph Hayek: No, you're good. Dan Moore: All right. Shifting to consumer. Maybe just talk about progress you're making in terms of new product lines and expanding distribution at retail. I'm thinking specifically about Balloon Time Mini, but you've got some of the other new products and initiatives where you're seeing the biggest increases in terms of retail customer penetration? And what's the runway for growth look like? Joseph Hayek: Sure. So with respect to consumer, revenue is up a little bit, profitability down. We did have a tariff impact that was effectively, I'll call it, more than the miss, if you will, relative to last year. We've seen point-of-sale tracking and really mirroring our own orders. And so our camping gas business and the tools business down a little bit, offset in large part by our celebrations business, our helium business, which we continue to execute very well in, in part because of some of the shifts that have gone on with Party City not being part of the mix and our customers getting more of those customers, Walmart, Target, other people like that. But then you mentioned a couple of things on the new product side, Dan. And so with Balloon Time Mini specifically, that continues to enable us to have great conversations with new customers, and we talked about Target, talked about CVS. Walgreens is a recent win, and you'll soon be able to find in a couple of thousand Walgreens stores, our products, both the Balloon Time Mini and the standard legacy Balloon Time product. We're delighted about that. And then Halo Griddles and Walmart, we talked about that historically, small numbers, but that's gone well. In fact, in the spring of 2026, that's kind of the beginning of, I'll call it, grilling or griddle season, you'll be able to find Halo Griddles at even more stores than you could in these past few months. So that team is working really hard and doing a fantastic job really understanding our markets, understanding our consumers, trying to reach consumers both independently and through our retail partners. And so we're really pleased with that. And consumer is probably more impacted sometimes than pieces of building products around people's ability to be mobile and to move. And so we get lower interest rates that translate into lower mortgage rates, which, as you know, have more to do with the longer end of the curve there. We expect that, that would add to our revenues and growth as well. Dan Moore: Very helpful. And Kathryn touched on WAVE. Maybe just quickly, ClarkDietrich, their contribution pulled back to kind of lowest levels since the start of the pandemic. Obviously, the environment is a little challenged there. Just talk about whether -- if this is the new normal, at least for now, where do we go from here over the next few quarters? Joseph Hayek: Yes. No, you're exactly right. And the way that we think of our portfolio of businesses, a lot of our businesses really are right in the middle of repair, remodel, maintenance. And so we don't depend on new construction spending as much as some folks might. In ClarkDietrich, it is a little dependent on new construction spending and the U.S. Census Bureau suggested recently that 14 months have passed since construction spending peaked in May of 2024. And so you do have that number and that growth figure a little depressed. ClarkDietrich is a market leader and they have continued to do well, but you have fewer opportunities that are out there, especially on the smaller contracting side. You do have infrastructure projects and data center projects and mega projects continuing to get greenlighted and to go, which is great. But you'd like to have that mix of smaller projects as well. And you'll see lower steel prices. And so you'll see people being very competitive trying to, in our cases, keep the lights on at some of these smaller companies. And so all that tends to lead to some margin compression for ClarkDietrich. We do see Dodge Momentum finally kind of picking up and looking good. That is a very leading indicator. A lot of times, you see a spike there. It takes 18 months plus for those to translate into sales for folks like ClarkDietrich. And so pretty well positioned, but we think it's flat to potentially down a little bit in the next quarter or 2 and just because you've got to get through this period of uncertainty where people aren't willing to or able to get construction projects going. We know that will change. It always changes. And ClarkDietrich tends to come out better on the other side, but we do have to get through this period, and it's hard for us to be able to forecast whether it lasts 2 weeks or a couple of months or 6 or 8, but that's kind of where we are with that business. Dan Moore: Okay. Last one, I'll jump back in queue. Just maybe talk about the M&A pipeline. As you described, free cash flow is solid and poised to inflect higher as the CapEx cycle winds down. So priorities for capital allocation and the outlook for potential either whether it's bolt-ons around Elgen Manufacturing, other areas that could be potential opportunities to deploy capital over the next kind of 12-plus months. Joseph Hayek: Sure. And our capital allocation priorities continue to center around being balanced with a bias towards growth. You'll see we paid $9 million in the dividend, and we continue to buy back shares selectively. But we have a bias for growth. And when we think about M&A and we think about our ability to continue to seek and add businesses that are high margin, low asset intensity, leaders in niche markets, we're pretty excited about it. And I'll let Colin maybe comment a bit more in sort of some details around the pipeline and how we're thinking about it. Colin Souza: Yes. And thanks, Joe. It's -- we feel like the pipeline is solid right now. The M&A markets are softer, but we're still finding those opportunities that are out there and spending time to really build those relationships and are excited about what that could become as we progress throughout the year. Our criteria, we're looking for leaders in niche areas across consumer and building products and that can demonstrate a sustainable competitive advantage, and that's our -- when we deploy our diligence process, that's what we're really looking to test. And a lot of those are in channels where we already have a big presence and a leadership position, and that gives us some ability to add value, whether it's through channel expertise or through manufacturing expertise or purchasing or price risk capabilities. So absolutely right, Dan. The acquisition of Elgen was a great one for us, and we're excited about that, and that also gives us opportunity to look around our business into adjacencies to see where there may be some more value ahead. So excited about M&A in the future. It's going to be an important lever for us in terms of capital allocation and growth. Operator: Your next question comes from the line of Brian McNamara from Canaccord Genuity. Brian McNamara: I don't think you guys disclosed volumes in the release, but you mentioned them qualitatively. Can you give us an idea of price versus volume growth for both segments in the quarter? Joseph Hayek: I'll take a quick shot at it. Volumes up in Building Products, price pretty stable. In Consumer, volumes were down, but mix shifted more heavily towards our celebrations business, which per unit cost more, and that was really the driver there. Colin Souza: Yes. And Brian, we did not disclose volumes. It becomes very complex, given the size of the products we're offering and then some of our recent acquisitions and different types of products. We're not just selling cylinders anymore. We're selling tools, we're selling components. So the volume data points become a little too cloudy to be able to speak to and lumpy. Brian McNamara: Got it. Okay. I know you got a tariff question earlier. I'm just curious, are you seeing tariff impacts and pricing in your markets? I think back in -- around Liberation Day, there was a reasonable school of thought that there was kind of enough inventory in the channel to get us to the fall, and we're kind of here now. Your home center customers are also being careful with their comments on pricing. But are you seeing price increases on the shelf from your internationally sourced competitors and price gaps widen there? And is that helping the company? Colin Souza: Yes. Brian, not yet. The tariffs are driving impact. Joe mentioned it a couple of million dollars in our business that we paid on the consumer side related to tariffs. I think a lot of companies are still trying to work through how to handle that and what to do and also kind of waiting and seeing how things unfold. So we're seeing that impact in our business, but at the shelf, it's a bit mixed. Brian McNamara: Great. And then finally, I know there's a $2.2 million purchase accounting charge in there, but gross margins are lumpy. I know you're targeting kind of 30% over the medium term. How should we think about gross margins in the coming quarters and any puts and takes there? Colin Souza: Yes. Brian, we did 27% this quarter, up from 24%. There was purchase accounting in both periods for the acquisition of Elgen and then on Ragasco. Strong volumes within Building Products, we talked about earlier, drove some of the volume increase as well as some of the incremental initiatives across the company that are paying off. Sequentially, gross margin was down. Q1 and Q2 are seasonally weaker for us compared to Q3 and Q4. So that wasn't unexpected. But as you said, our goal over time here is to drive gross margins north of 30% and driving our -- holding our costs flat and SG&A as a percent of sales down to 20%. So we feel like we're still on track with that, and our initiatives are driving some momentum and want that trend to continue. Joseph Hayek: Yes. And Brian, Colin is absolutely right. Those numbers, right, that we're striving towards and trying to get to, those are sort of annual numbers, and there'll be a little bit of puts and takes when you have seasonally slower periods like Q1 and Q2, your conversion costs will be naturally a bit higher. And so you'll probably overperform that in Q3 and Q4 relatively speaking. But our goal for that is more of an annual number. Operator: Your next question comes from the line of Susan Maklari from Goldman Sachs. Susan Maklari: My first question is going back to the operational efficiencies that you mentioned in your prepared remarks. You noted that you've seen some nice progress in the water business. I guess, can you talk a bit more about that? And how do we think about where else those efforts can go to across the business and what they could mean over time? Colin Souza: Yes, Susan, I think Joe mentioned in his remarks, 80/20 initiatives. We piloted that in the water business about 7 months ago. It's going very well. A lot of the focus there is how do we reduce complexity, increase focus and drive better results. So we're in the middle of that. We're excited and the teams are very, very engaged. And we've been pleased with what we've seen so far. And to Joe's comments earlier, we're starting to evaluate where could this apply next across our portfolio so we can continue to build that muscle and really drive this way of operating. Joseph Hayek: Yes. And Susan, just a couple of other thoughts. We do really like how that way of thinking is challenging our historic norms. We've been at it for almost 6 months and so, we've seen enough to know a couple of things. One, it's going to have a positive impact; and two, we'd like to do more of it. And so I think you'll see us be thoughtful about how best to roll it out. We don't want to kind of try and sort of boil the ocean, but we want to be thoughtful about it. And it's going to be a great tool in our kit as we go forward. But then the other piece, broader maybe than 80/20 is our constant evergreen initiatives on holding costs down. And in our facilities, there are goals every single month, every single quarter, every single year in terms of taking costs out. And across our facilities, and certainly within the corporate organization. Look, our health care costs continue to go up. Obviously, people get merit increases. But if you look at Q1 versus Q1 last year, we grew revenue, we grew gross profit. But absent the inclusion of Elgen's SG&A, our SG&A was flat year-over-year. And so that's a great testament to the work our teams are doing. That might not happen every single quarter, but it's something that we are very conscious of in that we believe, we have a great platform and we can grow our revenues and gross profits and keep the same kind of infrastructure and base. And we hope that over time, that is consistent with being able to grow margins. Susan Maklari: Yes. Okay. That's helpful color. And then turning to Elgen. Can you talk a bit about how that business can actually help in terms of hitting some of these targets that you've laid out, growing the business overall and especially thinking about perhaps the less discretionary nature of HVAC and what that could mean in a tougher macro and especially if things slow further from here? Colin Souza: Yes, Susan, it's -- we're very pleased with Elgen so far. It contributed, as I mentioned, $21 million in revenue and relatively breakeven from an EBITDA standpoint, which included the $2.2 million in purchase accounting. The stats we released on the business right when we acquired it, $115 million of revenue annually, $13 million in adjusted EBITDA, at the end of the day, this is a good example of our M&A strategy in action and our goal in expanding our portfolio in commercial HVAC and the structural framing. And we found this fantastic business that so far has been a great fit for us. Integration, we believe we're 90 days in. It's going very, very well. We have our operations teams together working side by side, the commercial teams, the purchasing teams. And what we're very pleased with is just the more time we spend with that business, we find a lot of really, really good talent at the company, and we're very pleased with how that's gone so far. And to your point, Susan, the commercial HVAC market, we believe, is attractive and it's resilient over time and provides above GDP type growth. And that's why it was a key target market of ours. And we found this opportunity with Elgen, where we can bring some value and sophistication from a steel manufacturing standpoint and purchasing and operational expertise. And we're getting to work with how we can continue to increase value with them at that company over time. And this is one of hopefully many that we do over time as an example here. Joseph Hayek: Yes. And Susan, your question is really a good one relative to growth opportunities and to the resiliency of that market. We certainly agree with the latter point. We think there are growth opportunities organically within Elgen, but also we look at cross-selling opportunities in our water business, some crossover with ClarkDietrich, some things related to WAVE. And so any time we continue to be able to add value with this sort of 2-step distribution market into HVAC and things that are above the ceiling or behind the walls, people are looking for kind of creative, innovative ways to consolidate their own spend, save money, and we think we can be a part of that solution for them. Susan Maklari: Yes. Okay. That's helpful, Joe. And then one more question, which is just when you think about the business broadly, how are you balancing the investments in the growth and the cost efforts relative to the potential that we do end up in a tougher macro next year and maybe we see the consumer still really being under pressure there? And just how are you thinking about those various factors that are all coming through and noting that there's a lot of uncertainty around there, but just any thoughts generally on that positioning and how you're thinking -- how you're approaching that? Joseph Hayek: Yes, it's a great question. And uncertainty is really a watch word that you see, we see that there are a lot of things out there in a lot of ways, what lower interest rates are meant to do is to stimulate growth. And you've seen interest rates at the very, very short end come down, but not on the kind of 5, 10, 30 year. And so people are still a little hesitant to -- even though reshoring is a priority, people are still a little hesitant to spend money and to put things into the ground and to invest in CapEx, et cetera. And so our -- the advantage we have in a lot of our businesses is we're pretty good at being -- trading down is the wrong way to think about it, but some of the things in our consumer business that we're really good at are substitutes if somebody isn't able to go on a trip or to stay in a hotel or travel internationally, they will spend more time outside. They will spend more time camping. And we're also doing a lot of work around direct-to-consumer initiatives and really sort of thinking about our placement in bricks and mortars because our solutions can, in fact, enable the DIYers who are going to think about those projects instead of something different or instead of hiring somebody. The more macro piece of that -- and again, a lot of our portfolio is repair, remodel, maintenance, a bit more insulated, but not totally insulated. And so we are continuing to invest in being a smarter, more nimble company that's around AI, that's around automation, that's around analytics, while absolutely kind of keeping an eye on a lid on sort of expenses that we think might not have the kinds of returns that we're looking for. And I think that's probably what a lot of people would do in an environment like this is something your cost of capital goes up, but your hurdle rate goes up because your risk quotient is higher. But all things being considered, we go back through and look at where our business sits, and we feel really good about what we're doing right now. And if the economy worsens, then we'll, I think, do just fine and probably outperform. But as markets recover, which they always will, we feel great about how we're positioned and what our solutions will mean kind of going forward into the mid- to longer term. Operator: [Operator Instructions] Your next question comes from the line of Walt Liptak from Seaport Research. Walter Liptak: Yes, great call so far. A lot of questions answered. I would like to try a follow-on on the HVAC refrigerant containers. And so I think it's been a couple of periods so far where you've been maybe doing well with your customers, increasing penetration. Is this the kind of thing where it's like a 1-year bump where you start getting on to more difficult comparisons at some point? Or is there enough customers, a big enough market where you can just continue to serve those customers really well and increase that penetration beyond like a 1-year bump in sales? Joseph Hayek: Yes. It's hard to predict what the future looks like. Walt, it's a very fair question. We think it's probably more the latter than the former. There are lots of things happening in these mandates for more environmentally friendly gases will continue to kind of proliferate. It's up to us to continue doing our level best to service our customers and service their customers. And so we're able to meet this increased demand. And if ultimately, you see things change in a year, it's likely that you would have something to potentially replace a load-in that runs its course. So never say never, but we're feeling relatively good about the future of that business while understanding that these types of things don't happen every quarter. Walter Liptak: Okay. Great. And then I wondered, you talked a lot on this call about the different forms of seasonality and how they impact the business. So as we're going -- so I wonder if you could just go through maybe not in a huge amount of detail, but some detail about the fall and winter and especially going into kind of the spring selling season, when do you start selling products into the spring selling season? When is there inventory lift? And what are the indications in consumer from your large customers? And then maybe in building products, too, what does the seasonality look like over the next couple of quarters? Colin Souza: Yes. So Walt, I'll take a shot at it, and Joe can fill in. I think just generally, it could vary from year-to-year, obviously, depending on what's happened throughout the year. Q1 and Q2 are typically seasonally weaker than Q3 and Q4. And it varies a little bit across consumer and building. And then in particular, as you get into Q2 and Q3, it could depend just on if there's weather-related events, if it's colder sooner or if there's hurricanes or snowstorms that would drive activity. And those, obviously, we can't predict from year-to-year, but they do happen in those time periods. So that's the high-level way we think about it, and then you have to go kind of category by category. Operator: And that concludes our question-and-answer session. I will now turn the call back over to the company for some closing remarks. Joseph Hayek: Thank you all for joining us this morning. Have a wonderful rest of your week, and we look forward to speaking with everybody soon. Thank you. Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.
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