Secure Trust Bank Stock

Good morning, ladies and gentlemen, and welcome to the Secure Trust Bank Interim Results Presentation. [Operator Instructions] Please note, this call is being live streamed to a webcast for a wider audience and will be recorded. I would now like to hand over to Ian Corfield, Chief Executive Officer, to open the presentation. Please go ahead.

Good morning, everyone, and thank you for joining us. There's a slide on a reporting basis in the pack, but for the avoidance of doubt, unless otherwise flagged, Rachel and I will be commenting on continuing adjusted numbers and metrics. During the presentation, the 2 of us will cover key strategic and financial highlights, along with the outlook for the balance of the year before taking your questions. The first half of 2026 has been an important period for Secure Trust Bank. We've delivered strong financial performance, completed the exit from vehicle finance, continued to make progress against our cost management program and maintained lending momentum across retail finance and business finance.

Most importantly, the business is doing what we said it would do. We're executing against the strategic plan we set out, and the results today demonstrate that we remain firmly on track for our 2026 guidance and our medium-term targets. Before Rachel takes you through the financial detail, I want to focus on why we believe Secure Trust Bank represents an increasingly attractive investment proposition and how the progress we are making translates into future returns for shareholders. In short, targeted growth for higher returns. There are 5 specifics that underpin the investment case for Secure Trust Bank. First, we're operating in large and attractive markets where we have genuine specialist expertise and clear opportunities for growth. Across retail finance, business finance and savings, the addressable markets available to us are all substantial.

Secondly, our model has significant operating leverage. Much of the infrastructure required to support future growth is already in place. As we continue to scale, we expect revenue growth to outpace cost growth, supporting our goal of reducing cost-to-income ratio to between 35% and 40% in the medium term. Thirdly, growth and cost efficiencies together create a clear pathway to higher returns. This isn't dependent on one transformational initiative. It's the cumulative impact of multiple actions that are already underway. As Rachel will demonstrate, our cost program is already gaining real traction. Fourthly, we're now operating with a reduced cost of risk. Credit discipline remains central to how we run the business, and we're seeing the benefits of improved portfolio quality and disciplined underwriting.

And finally, we are well capitalized. That gives us flexibility both to support growth and to increase shareholder distributions with our GBP 10 million buyback program already underway. These strengths have been further enhanced by our performance and actions in the first half. Growth, profitability and return on acquired equity are all consistent with guidance. The vehicle finance exit is now complete. This has been a major strategic program for the group and completing it successfully removes complexity, releases capital and allows management to focus entirely on our continuing growth businesses. The investments we've made in product development are beginning to generate tangible results.

We've launched new products, entered new partnerships and broadened distribution channels across the group. And finally, we've executed strongly on cost reduction. Importantly, this is not just a plan on paper. A substantial proportion of the targeted savings are already delivered or contractually committed. Taken together, these developments reinforce our confidence in both our near-term guidance and our longer-term ambitions. The group has been materially simplified, and we operate 3 complementary businesses. Retail finance provides point-of-sale finance solutions through long-standing relationship partners and serves around 1.3 million customers. Business Finance provides specialist secured lending to U.K. SMEs and property investors. And our savings franchise provides a stable and scalable funding base with more than GBP 3 billion of customer deposits.

Each business has a clear right to win. Retail Finance combines bank balance sheet strength with fintech capability. Business finance benefits from specialist expertise and deep customer relationships. And savings utilizes digital technology to unlock a loyal customer base and diversified funding. What's particularly attractive though, is how these businesses work together. They create a diversified earnings profile, funding stability and multiple opportunities for disciplined growth. Our strategy also remains straightforward. We're focusing on driving targeted growth for higher returns through 3 priorities. The first is product expansion. We've added products, capabilities and distribution channels where we see attractive risk-adjusted returns.

The second is digital capability. Better technology improves the customer experience, increases efficiency and strengthens scalability. And the third is capital discipline. Every investment decision is assessed against its ability to create shareholder value. These priorities support our medium-term targets of around 10% annual lending growth and our North Star goal, return on average equity above 16%. Investors sometimes ask what gives us confidence in achieving returns above 16%. Our confidence is built on the fact that delivering this doesn't require a substantive step change or a material investment paying off. There are just 4 key drivers. Firstly, continuing business growth at around 10% annually. That's in line with the group's historic growth rates.

Secondly, maintaining risk-adjusted margins through disciplined pricing and underwriting. Thirdly, keeping a risk-weighted asset mix consistent with today; and fourthly, leveraging our operating platform so that costs grow much more slowly than revenues. We've already made meaningful progress. Our return on required equity in the first half was 14.5% and reflects a business that is transitioning from restructuring into growth. As cost savings flow through and capital is deployed into new opportunities, we see a clear path for further improvement. Our first half performance followed this trajectory to higher returns. Customer lending increased to GBP 3.5 billion, reflecting continued growth in both Retail Finance and Business Finance. Adjusted profit before tax increased by 9.4% to GBP 31.3 million.

Risk-adjusted margins remained stable and cost of risk improved. Our CET1 ratio increased to 14.3%, providing substantial capital flexibility while remaining comfortably above our 13% ambition. We've also begun returning that capital to shareholders through both an increased interim dividend and our share buyback program. Overall, this is a set of results that demonstrates balance. We're growing, we're improving returns. We're managing risk carefully, and we're returning capital. That is the combination of outcomes we want to deliver. I'd now like to turn to how our strategy is being translated into actions. On product expansion, we've secured exciting new partnerships with Magnet and Centrica British Gas. These scale relationships will strongly underpin our previously announced push into point-of-sale credit for home improvements.

In Business Finance, we've grown our bridging proposition and launched Specialty Finance. And our Deposit business has broadened its distribution by launching our first aggregator partnership via the #1 player, Hargreaves Lansdown. On digital delivery, customer adoption of our V12 app continues to increase, now at over 660,000 users. Our bridging portal is live, and we are simplifying our technology architecture to improve both efficiency and scalability. And on capital discipline, we've completed the first tranche of the buyback program while taking actions that deliver approximately GBP 15 million of annualized run rate savings. The common theme across all 3 areas is execution. Rather than focusing on aspirations or intentions, the business is demonstrating measurable progress. That's the excitement for us, moving the company from strategy into delivery. The first half has shown that we can make that shift, and I'll return later on to our priorities in H2. I'm now delighted to hand over to Rachel to review our financial performance in more detail.

Thank you, Ian. I'll now take you through the financial performance for the first half of 2026. Overall, this was a strong first half with profit growth, continued balance sheet expansion, lower credit losses and a significantly strengthened capital position following the completion of the vehicle finance exit. These results leave us firmly on track to deliver our 2026 guidance and demonstrate clear progress towards our medium-term targets. Starting with the income statement. Adjusted profit before tax increased by 9.4% to GBP 31.3 million. That was mainly driven by 7% growth in average lending balances, while risk-adjusted margins held steady at 4.2%. Adjusted operating expenses increased by 8.8% to GBP 39.5 million. This reflects the transitional impact of reallocating centrally managed costs following the vehicle finance exit, together with selective investment in growth initiatives.

Importantly, the vehicle finance exit delivered GBP 5.5 million of cost savings in the first half. Credit performance remained strong. The impairment charge was broadly stable at GBP 14.7 million across a larger lending portfolio, reducing the cost of risk by 10 basis points to 0.9%. Adjusted return on required equity increased by 60 basis points to 14.5%. This measure normalizes equity to the group's 13% CET1 medium-term ambition and therefore, removes the distorting effect of surplus capital. Adjusted return on average equity was 13.1%, 110 basis points lower year-on-year, principally because average reported equity was higher following capital generation and the vehicle finance exit.

Total earnings per share increased to 126.4p compared with 87.6p in the prior period. And on a statutory basis, total profit before tax increased by 40.8% to GBP 31.4 million, helped by the Vehicle Finance disposal gain. Turning to margin. Group net interest margin remained stable at 4.7% despite the lower interest rate environment, and this reflects active management of both asset pricing and funding costs. Within Retail Finance, NIM did reduce by 30 basis points to 6.7%. This primarily reflected the repricing of retained higher volume retailer contracts and the flatter yield curve. Those pricing decisions were deliberate and considered within our overall approach to growth, risk and returns. Business Finance NIM improved by 40 basis points to 2.9%, benefiting from repricing of past due loans and early repayment charges. However, net revenue margin increased only by 10 basis points to 3.3% as lower fee income partly offset the improvement in NIM.

At a group level, gross yield reduced from 9.6% to 9.0%, while the cost of funds improved from 4.9% to 4.2%. The broadly matched movement demonstrates disciplined repricing across assets and liabilities. The key point is that the diversified business mix and active balance sheet management enabled us to protect group NIM and maintain risk-adjusted margin at 4.2%. On costs, adjusted operating expenses increased by 8.8% to GBP 39.5 million. However, that movement should be viewed in the context of the vehicle finance exit and the transition to a simpler operating model. Following the exit, some centrally managed previously allocated to vehicle finance are now borne by the continuing businesses. We have also invested GBP 0.4 million in product expansion initiatives, primarily through recruitment of specialist capability. As mentioned, the vehicle finance exit did deliver GBP 5.5 million of cost savings in the first half.

The adjusted cost/income ratio increased by 100 basis points to 46.5%, which is consistent with our guidance of approximately 47% for 2026. I'll provide some further details on our cost program on the next slide. Following the vehicle finance exit, we identified a GBP 25 million cost reduction opportunity to be delivered by 2028, measured against that business' annual run rate cost base of approximately GBP 30 million. Actions completed by the 1st of July are expected to deliver approximately GBP 15 million of annualized run rate savings, representing 60% of the target. We recognized the GBP 5.5 million of savings in the first half, and we expect approximately GBP 13.5 million to be recognized across the full year 2026.

Total costs to achieve the program are expected to be approximately GBP 17 million. Of this, GBP 5 million were incurred in 2025 and a further GBP 1.8 million is expected -- GBP 12 million is expected between 2026 and 2028. Within that GBP 12 million, GBP 1.8 million was incurred in the first half of 2026. The program remains a central component of our route to improve operating leverage and our medium-term ambitions. The remaining work includes further simplification and efficiency actions, and we remain on track to deliver the GBP 25 million target by 2028. On credit, the headline is encouraging. Cost of risk reduced by 10 basis points to 0.9% with resilient performance across both our principal lending businesses. Retail finance cost of risk remained stable at 1.4%, reflecting resilient customer performance and continued high-quality origination.

Business Finance cost of risk improved by 10 basis points to 0.5%, reflecting improved asset quality and lower Stage 3 provisions. The business finance impairment charge was primarily attributable to one legacy case and provision coverage increased modestly to 1.5%. This reflects prudent provisioning for that case as well as a more cautious macroeconomic outlook. Our expected loss scenario ratings were unchanged from December 2025, although peak unemployment assumptions increased and house price assumptions were weakened, resulting in an additional GBP 1.7 million of IFRS 9 provisions in the period. Overall, portfolio performance remains supportive of stable risk-adjusted margins, while our provisioning reflects the more cautious macroeconomic assumptions.

Moving to the balance sheet. Total assets reduced to GBP 3.95 billion. That mainly reflects the completion of the vehicle finance exit and the normalization of the elevated cash balances we had at year-end. We used surplus liquidity to purchase GBP 100 million of gilts, maintaining a high-quality liquid asset portfolio to support balance sheet resilience. Customer deposits reduced by 7.9% to GBP 3.23 billion, reflecting the lower funding requirement after the disposal rather than a constraint on access to retail funding. The loan-to-deposit ratio increased to 107% from 105% at year-end. Shareholder equity increased by 4% to GBP 389.1 million. And importantly, tangible book value per share increased by 3.6% to GBP 20.45. On to lending growth. Continuing loans and advances increased by 4.9% to GBP 3.5 billion with growth across both retail and business finance.

Retail Finance was supported by the established national retail partnerships and newer product initiatives. Business Finance benefited from strong activity in residential investment and continued development of the bridging proposition. Portfolio mix remained stable with Business Finance representing 56% of lending and retail finance at 44%. The group's CET1 ratio increased by 148 basis points from 12.9% to 14.3%. The gain on sale and release of vehicle finance risk-weighted assets contributed approximately 148 basis points, while maintaining vehicle finance servicing operations to the point of migration consumed 30 basis points of capital. The continuing businesses were capital generative during the period and the interim dividend and the initial GBP 5 million share buyback tranche together returned approximately 30 basis points of capital to shareholders.

The first GBP 5 million share buyback tranche is now complete and reduced shares initially by approximately 323,000 and the second GBP 5 million tranche will launch in September and is expected to reduce CET1 by approximately 20 basis points. At 14.3% CET1, this is 130 basis points above our medium-term ambition of 13%. Total capital was at 16.6% and the leverage ratio at 10.3%. The group, therefore, remains capitalized to support continuing growth and shareholder distributions. The strategic sequence is clear. The vehicle finance exit released capital and reduced risk. The continuing businesses are generating capital, and we are allocating capacity between attractive growth opportunities and shareholder returns within our capital framework.

Customer deposits accounted for 92.1% of total funding, underscoring the strength of our retail funding model and the deposit mix remained broadly stable with term deposits representing 80% of deposits and access deposits representing 20%. FSCS coverage remained high at 97.6%. Liquidity is also strong with an average liquidity coverage ratio of 208.6%, and our savings franchise continues to give us funding flexibility for planned growth. New products, automation and wider distribution, including the deposit aggregator partnership launched in July, further strengthens that capability.

Finally, our full year 2026 guidance is unchanged. We still expect net lending growth of 8% to 10%, around 10 basis point improvement in our risk-adjusted margin, a cost-income ratio of around 47% and a CET1 ratio of approximately 13.5%. The first half gives us a solid base for delivery. Lending growth is progressing. NIM is stable. Credit performance has improved. Cost actions are in place and capital remains strong. So our focus remains the same: targeted growth, stable risk-adjusted margins, better cost efficiency and disciplined capital allocation. Together, these support our ambition to deliver a return on average equity of more than 16% by 2028. Thank you. And I'll now hand back to Ian, who will cover the outlook.

Thanks, Rachel. Now we've covered the first half performance. I'll turn to our outlook for the remainder of the year. The key message is straightforward. We remain on track for our 2026 guidance and continue to see a clear pathway towards our medium-term targets. Equally, as we move into the second half, our priorities are clear. First, we will continue to grow through both existing and newly launched products. Secondly, we will deliver the next phase of our cost program and technology simplification agenda. And third, we will complete the remaining GBP 5 million tranche of the buyback program from September onwards. While the macroeconomic outlook remains uncertain, we believe Secure Trust Bank is well positioned. Our retail finance customer base are high-quality middle-class borrowers. Our business finance portfolio is well secured, and our savings franchise provides stable and diversified funding.

The business model has proven resilient through different economic cycles, and we believe we are well placed to benefit from any stability or improvement in the broader environment. So let me close with the investment case. Secure Trust Bank today is a simpler, more focused and better capitalized business. We operate in attractive specialist markets. We have multiple opportunities to grow. We're reducing costs and increasing efficiency. Credit performance remains resilient, and we have the capital strength to both support growth and increase returns to shareholders. While there remains work to do in ensuring delivery in an unstable macro environment, the first half demonstrates that our strategy is working. We've delivered strong performance, completed a major strategic transition and made meaningful progress towards our medium-term goals. Thank you for your continued support. And I'll now hand over for your questions.

[Operator Instructions] We'll take our first question from Gary Greenwood of Shore Capital.

I've got 3, if I can. So the first one was on costs. I think you've indicated you'll get to sort of GBP 13.5 million this year. I think the original plan was to be at GBP 10 million this year. So is that you executing faster? Or is it you executing more than you previously expected? And then also, why aren't you upgrading your guidance given cost ahead? Or are you just being sort of conservative at this part of the year? So that's the first one.

Second one was just on the retail finance repricing that you mentioned impacted on NIM. If you could just elaborate a little bit on what's going on there? And then the third one was on deposits. Obviously, you were sort of out of the market in the first half of the year as you sold the Vehicle Finance business. I'm guessing deposits will start to grow again now. So just maybe talk a little bit about that in the context of what seems to be quite a competitive market at the moment and how you navigate that.

Thanks, Gary. I appreciate the question. I think what I'll do is I'll let Rachel address the NIM question in a second. I'll deal with cost and then come on to reflect on deposits. I think just in terms of cost, to answer your question directly, this is us executing faster. We now have a bottom-up plan essentially that addresses the GBP 25 million. So we're clear where that's going to come from over the course of this year into '27 and a little bit in 2028. We're getting there at a pace that was ahead of our initial projections. But the reason we're not upgrading our guidance in that respect is that ultimately, we're now moving into the phase of that cost reduction program that gets a bit trickier. We've obviously closed a part of the business and the people who were running that business have left, and we've started to exit a number of technology platforms. But the simplification across the broader business, which we are now focused on, will, of course, be more challenging by its nature because it relies on technology deployment into different parts of the business.

That doesn't mean we're not confident in delivering it. We are. And I think you can see the progress that we've made in getting to a GBP 15.5 million run rate already. But as I say, the reason we're not upgrading that guidance is we think we can get there more rapidly, but ultimately, delivering that full GBP 25 million is still our goal. So hopefully, that addresses your question. We remain confident in that cost program, but we know we've got more wood to chop as we get into the second half and then into 2027. Rachel, do you want to just reflect on margins?

Yes. So Gary, there's probably 2 parts to that to the answer on retail NIM. One is the yield curve as it's come down in terms of Bank of England rate, then that does have a timing lag with the furniture and now home improvements having sort of a back book that takes a while to actually execute in terms of pipeline. The second part is there is competition out there, and we are trying to ensure that our major retailers that we take more of a share from them. That involves us having to look at our pricing. It's a competitive environment, but we believe that the returns that we get even at that slightly lower margin is still a very good return in terms of that business. So we're happy to make those decisions to retain those large retailers at sometimes a little bit tighter margins than we might have seen in the past.

Thanks, Rachel. And Gary, just in terms of deposits, again, you're right, we definitely benefited in the first half, particularly the first quarter from the funds that we got from the sale of vehicle finance. Obviously, that meant that we had less of a liquidity requirement during that period of time. That said, we are still a relatively small player in a GBP 2 trillion market. And what we're finding is that whilst obviously, the macro remains unstable and there are periods of time where swap rates are well advanced relative to the Bank of England rates. We are still finding opportunities to go into the market and to be booking liquidity at the sort of margins we want to see it in. And certainly, there is no challenge in terms of the overall availability of liquidity.

I guess though that's also why we continue to be focused on expanding both our product range and our distribution for our deposits franchise. I think moving on to Hargreaves Lansdown is one step forward. But of course, there are a number of other aggregators that will now be focused on as other sources of distribution. And we've continued to expand our product set in the first half as well. So look, it's an unstable macro, as you know, but I remain confident in our ability both to attract funds and to come in and out of the market in timing that reflects the sort of margins we want to be booking at.

[Operator Instructions] Our next question is a written question from Piers Brown with Investec. You've announced good progress building out new products and partnerships. For example, home improvements and bridging finance. What are your priorities for 2H?

Thanks for the question, Piers. Look, our priority, as I outlined in the second half, particularly from a growth and partnership perspective, is that we maintain that growth that we saw in the first half. We are still looking to deliver that 8% to 10% growth in assets across the period. We continue in retail finance to sign new partnerships all the time. However, I do think that Magnet and Centrica Brushes Gas are going to be 2 big cornerstone partnerships. I wouldn't expect that to be repeated in the second half. More our focus will be on launching those partnerships and making sure that we're booking strong volumes through them.

So that focus on growth is there across the business. But the exciting bit for me remains that now we've got a much broader product set, we can take that growth in places that we see accretive opportunities for the business. We're not just taking any growth that happens to be passing. We're focused on making sure that we're booking growth at margins that we think are strong and positive for the business. So that's going to be our focus in the second half alongside, of course, continuing to execute against both our cost program and our share buyback program.

We have a follow-up from Piers saying, are there any P&L items currently booked in discontinued operations that will migrate back to continuing? Example, the GBP 9.2 million of 1H discontinued OpEx?

That's an excellent question. I think Rachel should answer.

Thanks. So as you can see from the accounts, discontinued is a separate entity. What we've done and why our cost-income ratio has gone up slightly in the first half is because those stranded costs that related to vehicle finance are now back into the continuing business. So we don't expect too much more to go through discontinued other than some future hedging unwinds that will continue to go through discontinued. The rest of the cost base will be firmly within continuing, which is why our cost management program needs to go into the second phase of removing those centrally managed sort of stranded costs that weren't directly easy to be taken out in terms of stopping the business within vehicle finance. So there won't be anything left really and discontinued much into the second half and certainly not really a lot into 2027.

Thank you. There are no further questions. I'll now hand over to management for closing remarks.

Well, thanks ever so much, and thank you for giving us your time. I hope what you've heard is that Secure Trust Bank is a business that's doing what it said it would do. We've continued to grow to generate a further additional profits, and to make sure that we are driving returns that take us on track to our medium-term target of 16% return on average equity. Ultimately, those things continue to be our focus in the second half, and we're excited to crack on with that delivery program. Thanks for your support, and we look forward to seeing you all at the full year. Thank you.

Thank you.

Thank you for joining. That concludes today's call. Have a nice day.

Good morning, ladies and gentlemen, and welcome to the Secure Trust Bank Interim Results Presentation. The presentation will commence shortly. [Operator Instructions]. Please note, this call is being live streamed to a webcast for a wider audience and will be recorded. I would now like to hand over to Ian Corfield, Chief Executive Officer, to open the presentation. Please go ahead.

Good morning, everyone, and thank you for joining us. There's a slide on a reporting basis in the pack, but for the avoidance of doubt, unless otherwise flagged, Rachel and I will be commenting on continuing adjusted numbers and metrics. During the presentation, the 2 of us will cover key strategic and financial highlights, along with the outlook for the balance of the year before taking your questions.

The first half of 2026 has been an important period for Secure Trust Bank. We've delivered strong financial performance, completed the exit from vehicle finance, continued to make progress against our cost management program and maintained lending momentum across retail finance and business finance. Most importantly, the business is doing what we said it would do. We're executing against the strategic plan we set out, and the results today demonstrate that we remain firmly on track for our 2026 guidance and our medium-term targets.

Before Rachel takes you through the financial detail, I want to focus on why we believe Secure Trust Bank represents an increasingly attractive investment proposition and how the progress we are making translates into future returns for shareholders. In short, targeted growth for higher returns. There are 5 specifics that underpin the investment case for Secure Trust Bank. First, we're operating in large and attractive markets where we have genuine specialist expertise and clear opportunities for growth.

Across retail finance, business finance and savings, the addressable markets available to us are all substantial. Secondly, our model has significant operating leverage. Much of the infrastructure required to support future growth is already in place. As we continue to scale, we expect revenue growth to outpace cost growth, supporting our goal of reducing cost-to-income ratio to between 35% and 40% in the medium term. Thirdly, growth and cost efficiencies together create a clear pathway to higher returns. This isn't dependent on one transformational initiative. It's the cumulative impact of multiple actions that are already underway.

As Rachel will demonstrate, our cost program is already gaining real traction. Fourthly, we're now operating with a reduced cost of risk. Credit discipline remains central to how we run the business, and we're seeing the benefits of improved portfolio quality and disciplined underwriting. And finally, we are well capitalized. That gives us flexibility both to support growth and to increase shareholder distributions with our GBP 10 million buyback program already underway.

These strengths have been further enhanced by our performance and actions in the first half. Growth, profitability and return on required equity are all consistent with guidance. The vehicle finance exit is now complete. This has been a major strategic program for the group and completing it successfully removes complexity, releases capital and allows management to focus entirely on our continuing growth businesses. The investments we've made in product development are beginning to generate tangible results.

We've launched new products, entered new partnerships and broadened distribution channels across the group. And finally, we've executed strongly on cost reduction. Importantly, this is not just a plan on paper. A substantial proportion of the targeted savings are already delivered or contractually committed. Taken together, these developments reinforce our confidence in both our near-term guidance and our longer-term ambitions. The group has been materially simplified, and we operate 3 complementary businesses.

Retail finance provides point-of-sale finance solutions through long-standing relationship partners and serves around 1.3 million customers. Business finance provides specialist secured lending to U.K. SMEs and property investors. And our savings franchise provides a stable and scalable funding base with more than GBP 3 billion of customer deposits. Each business has a clear right to win. Retail finance combines bank balance sheet strength with fintech capability. Business finance benefits from specialist expertise and deep customer relationships. And savings utilizes digital technology to unlock a loyal customer base and diversified funding.

What's particularly attractive though, is how these businesses work together. They create a diversified earning profile, funding stability and multiple opportunities for disciplined growth. Our strategy also remains straightforward. We're focusing on driving targeted growth for higher returns through 3 priorities. The first is product expansion. We've added products, capabilities and distribution channels where we see attractive risk-adjusted returns. The second is digital capability. Better technology improves the customer experience, increases efficiency and strengthens scalability.

And the third is capital discipline. Every investment decision is assessed against its ability to create shareholder value. These priorities support our medium-term targets of around 10% annual lending growth and our North Star goal, return on average equity above 16%. Investors sometimes ask what gives us confidence in achieving returns above 16% -- our confidence is built on the fact that delivering this doesn't require a substantive step change or a material investment paying off. There are just 4 key drivers. Firstly, continuing business growth at around 10% annually. That's in line with the group's historic growth rates. Secondly, maintaining risk-adjusted margins through disciplined pricing and underwriting. -- thirdly, keeping a risk-weighted asset mix consistent with today; and fourthly, leveraging our operating platform so that costs grow much more slowly than revenues.

We've already made meaningful progress. Our return on required equity in the first half was 14.5% and reflects a business that is transitioning from restructuring into growth. As cost savings flow through and capital is deployed into new opportunities, we see a clear path for further improvement. Our first half performance followed this trajectory to higher returns. Customer lending increased to GBP 3.5 billion, reflecting continued growth in both Retail Finance and Business Finance.

Adjusted profit before tax increased by 9.4% to GBP 31.3 million. Risk-adjusted margins remained stable and cost of risk improved. Our CET1 ratio increased to 14.3%, providing substantial capital flexibility while remaining comfortably above our 13% ambition. We've also begun returning that capital to shareholders through both an increased interim dividend and our share buyback program. Overall, this is a set of results that demonstrates balance.

We're growing, we're improving returns. We're managing risk carefully, and we're returning capital. That is the combination of outcomes we want to deliver. I'd now like to turn to how our strategy is being translated into actions. On product expansion, we've secured exciting new partnerships with Magnet and Centrica British Gas. These scale relationships will strongly underpin our previously announced push into point-of-sale credit for home improvements. In Business Finance, we've grown our bridging proposition and launched specialty finance.

And our deposit business has broadened its distribution by launching our first aggregator partnership via the #1 player, Hargreaves Lansdown. On digital delivery, customer adoption of our V12 app continues to increase, now at over 660,000 users. Our bridging portal is live, and we are simplifying our technology architecture to improve both efficiency and scalability. And on capital discipline, we've completed the first tranche of the buyback program while taking actions that deliver approximately GBP 15 million of annualized run rate savings.

The common theme across all 3 areas is execution. Rather than focusing on aspirations or intentions, the business is demonstrating measurable progress. That's the excitement for us, moving the company from strategy into delivery.

The first half has shown that we can make that shift, and I'll return later on to our priorities in H2. I'm now delighted to hand over to Rachel to review our financial performance in more detail.

Thank you, Ian. I'll now take you through the financial performance for the first half of 2026. Overall, this was a strong first half with profit growth, continued balance sheet expansion, lower credit losses and a significantly strengthened capital position following the completion of the vehicle finance exit. These results leave us firmly on track to deliver our 2026 guidance and demonstrate clear progress towards our medium-term targets.

Starting with the income statement. Adjusted profit before tax increased by 9.4% to GBP 31.3 million. That was mainly driven by a 7% growth in average lending balances, while risk-adjusted margins held steady at 4.2% -- adjusted operating expenses increased by 8.8% to GBP 39.5 million. This reflects the transitional impact of reallocating centrally managed costs following the vehicle finance exit, together with selective investment in growth initiatives. Importantly, the vehicle finance exit delivered GBP 5.5 million of cost savings in the first half.

Credit performance remained strong. The impairment charge was broadly stable at GBP 14.7 million across a larger lending portfolio, reducing the cost of risk by 10 basis points to 0.9%. Adjusted return on required equity increased by 60 basis points to 14.5%. This measure normalizes equity to the group's 13% CET1 medium-term ambition and therefore, removes the distorting effect of surplus capital. Adjusted return on average equity was 13.1%, 110 basis points lower year-on-year, principally because average reported equity was higher following capital generation and the vehicle finance exit.

Total earnings per share increased to 126.4p compared with 87.6p in the prior period. And on a statutory basis, total profit before tax increased by 40.8% to GBP 31.4 million, helped by the vehicle finance disposal gain. Turning to margin. Group net interest margin remained stable at 4.7% despite the low interest rate environment, and this reflects active management of both asset pricing and funding costs. Within Retail Finance, NIM did reduce by 30 basis points to 6.7%. This primarily reflected the repricing of retained higher volume retailer contracts and the flatter yield curve.

Those pricing decisions were deliberate and considered within our overall approach to growth, risk and returns. Business Finance NIM improved by 40 basis points to 2.9%, benefiting from repricing of past due loans and early repayment charges. However, net revenue margin increased only by 10 basis points to 3.3% as lower fee income partly offset the improvement in NIM. At a group level, gross yield reduced from 9.6% to 9.0%, while the cost of funds improved from 4.9% to 4.2%. The broadly matched movement demonstrates disciplined repricing across assets and liabilities.

The key point is that the diversified business mix and active balance sheet management enabled us to protect group NIM and maintain risk-adjusted margin at 4.2%. On costs, adjusted operating expenses increased by 8.8% to GBP 39.5 million. However, that movement should be viewed in the context of the vehicle finance exit and the transition to a simpler operating model. Following the exit, some centrally managed previously allocated to vehicle finance are now borne by the continuing businesses. We have also invested GBP 0.4 million in product expansion initiatives, primarily through recruitment of specialist capability.

As mentioned, the vehicle finance exit did deliver GBP 5.5 million of cost savings in the first half. The adjusted cost/income ratio increased by 100 basis points to 46.5%, which is consistent with our guidance of approximately 47% for 2026. I'll provide some further details on our cost program on the next slide.

Following the vehicle finance exit, we identified a GBP 25 million cost reduction opportunity to be delivered by 2028, measured against that business' annual run rate cost base of approximately GBP 30 million. Actions completed by the 1st of July are expected to deliver approximately GBP 15 million of annualized run rate savings, representing 60% of the target. We recognized a GBP 5.5 million of savings in the first half, and we expect approximately GBP 13.5 million to be recognized across the full year 2026.

Total costs to achieve the program are expected to be approximately GBP 17 million. Of this, GBP 5 million were incurred in 2025 and a further GBP 1.8 million is expected -- GBP 12 million is expected between 2026 and 2028. Within that GBP 12 million, GBP 1.8 million was incurred in the first half of 2026. The program remains a central component of our route to improve operating leverage and our medium-term ambitions. The remaining work includes further simplification and efficiency actions, and we remain on track to deliver the GBP 25 million target by 2028.

On credit, the headline is encouraging. Cost of risk reduced by 10 basis points to 0.9% with resilient performance across both our principal lending businesses. Retail finance cost of risk remained stable at 1.4%, reflecting resilient customer performance and continued high-quality origination. Business finance cost of risk improved by 10 basis points to 0.5%, reflecting improved asset quality and lower Stage 3 provisions.

The business finance impairment charge was primarily attributable to one legacy case and provision coverage increased modestly to 1.5%. This reflects prudent provisioning for that case as well as a more cautious macroeconomic outlook. Our expected loss scenario ratings were unchanged from December 2025, although peak unemployment assumptions increased and house price assumptions were weakened, resulting in an additional GBP 1.7 million of IFRS 9 provisions in the period. Overall, portfolio performance remains supportive of stable risk-adjusted margins, while our provisioning reflects the more cautious macroeconomic assumptions.

Moving to the balance sheet. Total assets reduced to GBP 3.95 billion. That mainly reflects the completion of the vehicle finance exit and the normalization of the elevated cash balances we had at year-end. We used surplus liquidity to purchase GBP 100 million of [gilts], maintaining a high-quality liquid asset portfolio to support balance sheet resilience.

Customer deposits reduced by 7.9% to GBP 3.23 billion, reflecting the lower funding requirement after the disposal rather than a constraint on access to retail funding. The loan-to-deposit ratio increased to 107% from 105% at year-end. Shareholder equity increased by 4% to GBP 389.1 million. And importantly, tangible book value per share increased by 3.6% to GBP 20.45p. On to lending growth. Continuing loans and advances increased by 4.9% to GBP 3.5 billion with growth across both retail and business finance.

Retail finance was supported by the established national retail partnerships and newer product initiatives. Business Finance benefited from strong activity in residential investment and continued development of the bridging proposition. Portfolio mix remained stable with business finance representing 56% of lending and retail finance at 44% -- the group's CET1 ratio increased by 148 basis points from 12.9% to 14.3%. The gain on sale and release of vehicle finance risk-weighted assets contributed approximately 148 basis points, while maintaining vehicle finance servicing operations to the point of migration consumed 30 basis points of capital.

The continuing businesses were capital generative during the period and the interim dividend and the initial GBP 5 million share buyback tranche together returned approximately 30 basis points of capital to shareholders. The first GBP 5 million share buyback tranche is now complete and reduced shares in issue by approximately 323,000 and the second GBP 5 million tranche will launch in September and is expected to reduce CET1 by approximately 20 basis points.

At 14.3% CET1, this is 130 basis points above our medium-term ambition of 13%. Total capital was at 16.6% and the leverage ratio at 10.3%. The group, therefore, remains capitalized to support continuing growth and shareholder distributions. The strategic sequence is clear. The vehicle finance exit released capital and reduce risk. The continuing businesses are generating capital, and we are allocating capacity between attractive growth opportunities and shareholder returns within our capital framework.

Customer deposits accounted for 92.1% of total funding, underscoring the strength of our retail funding model and the deposit mix remained broadly stable with term deposits representing 80% of deposits and access deposits representing 20%. FSCS coverage remained high at 97.6%. Liquidity is also strong with an average liquidity coverage ratio of 208.6%, and our savings franchise continues to give us funding flexibility for planned growth.

New products, automation and wider distribution, including the deposit aggregator partnership launched in July, further strengthens that capability. Finally, our full year 2026 guidance is unchanged. We still expect net lending growth of 8% to 10%, around 10 basis point improvement in our risk-adjusted margin, a cost/income ratio of around 47% and a CET1 ratio of approximately 13.5%. The first half gives us a solid base for delivery.

Lending growth is progressing. NIM is stable. Credit performance has improved. Cost actions are in place and capital remains strong. So our focus remains the same: targeted growth, stable risk-adjusted margins, better cost efficiency and disciplined capital allocation. Together, these support our ambition to deliver return on average equity of more than 16% by 2028. Thank you. And I will now hand back to Ian, who will cover the outlook.

Thanks, Rachel. Now we've covered the first half performance. I'll turn to our outlook for the remainder of the year. The key message is straightforward. We remain on track for our 2026 guidance and continue to see a clear pathway towards our medium-term targets. Equally, as we move into the second half, our priorities are clear.

First, we will continue to grow through both existing and newly launched products. Secondly, we will deliver the next phase of our cost program and technology simplification agenda. And third, we will complete the remaining GBP 5 million tranche of the buyback program from September onwards. While the macroeconomic outlook remains uncertain, we believe Secure Trust Bank is well positioned. Our retail finance customer base are high-quality middle-class borrowers.

Our business finance portfolio is well secured, and our savings franchise provides stable and diversified funding. The business model has proven resilient through different economic cycles, and we believe we are well placed to benefit from any stability or improvement in the broader environment. So let me close with the investment case. Secure Trust Bank today is a simpler, more focused and better capitalized business. We operate in attractive specialist markets. We have multiple opportunities to grow. We're reducing costs and increasing efficiency. Credit performance remains resilient, and we have the capital strength to both support growth and increase returns to shareholders.

While there remains work to do in ensuring delivery in an unstable macro environment, the first half demonstrates that our strategy is working. We've delivered strong performance, completed a major strategic transition and made meaningful progress towards our medium-term goals. Thank you for your continued support. And I'll now hand over for your questions.

We will now begin the Q and A Session.[Operator Instructions]. We'll take our first question from Gary Greenwood of Shore Capital.

Hi thanks for taking my questions. I've got 3, if I can. So the first one was on costs. I think you've indicated you'll get to sort of GBP 13.5 million this year. I think the original plan was to be at GBP 10 million this year. So is that you executing faster? Or is it you executing more than you previously expected? And then also, why aren't you upgrading your guidance given costs ahead? Or are you just being sort of conservative at this part of the year? So that's the first one.

Second one was just on the retail finance repricing that you mentioned impacted on NIM. If you could just elaborate a little bit on what's going on there? And then the third one was on deposits. Obviously, you were sort of out of the market in the first half of the year as you sold the vehicle finance business. I'm guessing deposits will start to grow again now. So just maybe talk a little bit about that in the context of what seems to be quite a competitive market at the moment and how you navigate that. Thanks.

Thanks, Gary. I appreciate the questions. I think what I'll do is I'll let Rachel address the NIM question in a second. I'll deal with cost and then come on to reflect on deposits. I think just in terms of cost, to answer your question directly, this is us executing faster. We now have a bottom-up plan essentially that addresses the GBP 25 million.

So we're clear where that's going to come from over the course of this year into '27 and a little bit in 2028. We're getting there at a pace that was ahead of our initial projections. But the reason we're not upgrading our guidance in that respect is that ultimately, we're now moving into the phase of that cost reduction program that gets a bit trickier. We've obviously closed a part of the business and the people who were running that business have left, and we've started to exit a number of technology platforms.

But the simplification across the broader business, which we are now focused on, will, of course, be more challenging by its nature because it relies on technology deployment into different parts of the business. That doesn't mean we're not confident in delivering it. We are. And I think you can see the progress that we've made in getting to a GBP 15.5 million run rate already. But as I say, the reason we're not upgrading that guidance is we think we can get there more rapidly, but ultimately, delivering that full GBP 25 million is still our goal. So hopefully, that addresses your question. We remain confident in that cost program, but we know we've got more wood to chop as we get into the second half and then into 2027. Rachel, do you want to just reflect on margins? Yes.

So Gary, there's probably 2 parts to that -- to the answer on retail NIM. One is the yield curve as it's come down in terms of Bank of England rate, then that does have a timing lag with the furniture and now home improvements having sort of a back book that takes a while to actually execute in terms of pipeline.

The second part is there is competition out there, and we are trying to ensure that our major retailers that we take more of a share from them. That involves us having to look at our pricing. It's a competitive environment, but we believe that the returns that we get even at that slightly lower margin is still a very good return in terms of that business. So we're happy to make those decisions to retain those large retailers at sometimes a little bit tighter margins than we might have seen in the past.

Thanks, Rachel. And Gary, just in terms of deposits, again, you're right, we definitely benefited in the first half, particularly the first quarter from the funds that we got from the sale of vehicle finance. Obviously, that meant that we had less of a liquidity requirement during that period of time. That said, we are still a relatively small player in the GBP 2 trillion market. And what we're finding is that whilst obviously, the macro remains unstable and there are periods of time where swap rates are well advanced relative to the Bank of England rate, we are still finding opportunities to go into the market and to be booking liquidity at the sort of margins we want to see it in. And certainly, there is no challenge in terms of the overall availability of liquidity.

I guess, though, that's also why we continue to be focused on expanding both our product range and our distribution for our deposits franchise. I think moving on to Hargreaves Lansdown is one step forward. But of course, there are a number of other aggregators that will now be focused on as other sources of distribution. And we've continued to expand our product set in the first half as well. So look, it's an unstable macro, as you know, but I remain confident in our ability both to attract funds and to come in and out of the market in timing that reflects the sort of margins we want to be booking at.

Thank you very much.

[Operator Instructions] Our next question is a written question from Piers Brown with Investec. You've announced good progress building out new products and partnerships. For example, home improvements and bridging finance. What are your priorities for 2H?

Thanks for the question, Piers. Look, our priority, as I outlined in the second half, particularly from a growth and partnership perspective, is that we maintain that growth that we saw in the first half. We are still looking to deliver that 8% to 10% growth in assets across the period. We continue in retail finance to sign new partnerships all the time. However, I do think that Magna and Centrica Brites Gas are going to be 2 big cornerstone partnerships. I wouldn't expect that to be repeated in the second half.

More our focus will be on launching those partnerships and making sure that we're booking strong volumes through them. So that focus on growth is there across the business. But the exciting bit for me remains that now we've got a much broader product set, we can take that growth in places that we see accretive opportunities for the business. We're not just taking any growth that happens to be passing. We're focused on making sure that we're booking growth at margins that we think are strong and positive for the business. So that's going to be our focus in the second half, alongside, of course, continuing to execute against both our cost program and our share buyback program.

We have a follow-up from Piers saying, are there any P&L items currently booked in discontinued operations that will migrate back to continuing? Example, the GBP 9.2 million of 1H discontinued OpEx.

That's an excellent question. I think Rachel should answer.

Thanks, so as you can see from the accounts discontinued is a separate entity. What we've done and why our cost/income ratio has gone up slightly in the first half is because those stranded costs that related to vehicle finance are now back into the continuing business. So we don't expect too much more to go through discontinued other than some future hedging unwinds that will continue to go through discontinued. The rest of the cost base will be firmly within continuing, which is why our cost management program needs to go into the second phase of removing those centrally managed sort of stranded costs that weren't directly easy to be taken out in terms of stopping the business within vehicle finance.

So there won't be anything left really in discontinued much into the second half and certainly not really a lot into 2027.

There are no further questions. I'll now hand over to management for closing remarks.

Well, thanks ever so much, and thank you for giving us your time. I hope what you've heard is that Secure Trust Bank is a business that's doing what it said it would do. We've continued to grow to generate further additional profits and to make sure that we are driving returns that take us on track to our medium-term target of 16% return on average equity. Ultimately, those things continue to be our focus in the second half, and we're excited to crack on with that delivery program. Thanks for your support, and we look forward to seeing you all at the full year. Thank you.

Thank you.

Thank you for joining. That concludes today's call. Have a nice day.

Okay. Well, welcome, everyone, to our Mello Monday. It's 5:00, and as ever, we are bringing you the latest in the markets from a Mello standpoint. And we've got 4 companies with us tonight. And we've got, as you can see in the program, an interesting talk from SIGnet and of course, our BASH at the end of the show. But one thing we'd really like to let you know about it is only a week away now, Mello Birmingham. We're moving away from the London base just for one day, but it's a great show for you to attend.

And of course, we're trying to get away from being in London for everything. We do get complaints where people say it's always in London. Well, it's not. It's in the Midlands for a day this time. Lots to see, look at all these companies and funds attending. And there's more than just that. Those are the only ones we could fit on the slide as they say. So do get your tickets if you haven't already. There's an offer there. You can see it on the screen. You're very welcome to come and join us. You'll be in a network with hundreds of investors.

If you go in a pub and you mention you buy shares, you will switch off and they just don't want to know. But if you go to Mello, they all want to chat to you. So you will really enjoy your day out. Anyway, that's enough about our shows. Let's get on with this one. And first of all, we've got with us Richard Staveley, ever so popular at our physical events. There's usually a crowd around Richard. We do like him on our shows and here he is to join us for tonight's show. Welcome, Richard. How are you?

I'm very well, David, and hello, good evening to everybody else.

Always good to see you and do tell us what's going on at Rockwood.

Sure, sure. Love to. What I'm going to do today is share some slides. I'm going to have to assume, David, unless you tell me otherwise, that there's a number of people that don't know Rockwood, but I'll do it relatively quickly because I've done this a few times now. So we'll have -- we'll zoom through those and then get on to the actual stocks as soon as possible to help current investors and potential investors. So let's try and do this here we go.

So what is Rockwood Strategic? Well, it's a listed investment trust on the U.K. main market. We're a specialist U.K. small companies fund. We're highly differentiated from the mainstream small companies funds, and I'll explain how that is in a moment. We think the strategy is proven now. I've been running it since late 2019, and we're acting in a very inefficient part of the U.K. stock market, the bottom 2%.

We're targeting stocks that we think can at least double over a 3- to 5-year period. And if it doesn't over 5 years, that gets you a gross rate of return of 15% a year, and that's our kind of target for the gross returns for the fund less costs. On the value investor, so valuation does really matter to us, not a growth investor, and we run a concentrated portfolio. There are currently 25 holdings in the portfolio. Most U.K. smaller companies funds have 60, 70 and in some instances, more than 100, and we're an active investor.

So we're not only taking active risk, and as much as we ignore benchmarks, we think those are quite dangerous things in U.K. small cap. But we also roll up our sleeves and engage constructively with the companies that we invest in, either to catalyze change or speed up change or to make changes ourselves. I run the fund from Harwood, which is founded by Christopher Mills, a legendary British investor, who also has a couple of investment trusts himself. And he also has a private equity team, private credit team, property team, and I benefit from their expertise within the building when I can draw on there, particularly their insights into private markets.

I'm very focused. A lot of managers are quite distracted to have multiple types of strategies or accounts, but this is the only thing I do. It's the only fund I have. And I'm fully aligned. My family and I own just under 1% of the trust and Christopher Mills owns just over 15% of the trust. The fund as of this morning is about GBP 157 million in market capitalization.

So here are the returns. I think there's two things to focus on today. First, let's do the positives first. Let's look at the longer-term record, AIM down over the last 3 years. The funds NAV up 36% and the TSR a bit better than that. Just put that in context, that is actually the best performing U.K. domiciled small companies fund over that 3-year period. And go a bit further, the last 5 years, we've roughly achieved what we were setting out to do, which is to double the value every 5 years. The sixth year includes that big bounce back after COVID, puts a nice shine on it, but those are the numbers. So there you go.

The last year has been pretty frustrating actually, and I'm sure it is for many of the people on this webinar. As of near the end of February, the NAV intra-week, you got up to about 303p, 304p a share, which is actually up -- would have been up about 21% for the year at the end of March, which is Rockwood's financial year-end. And clearly, events have transpired during March, which have impacted risk appetite, and we've seen market makers mark down shares across the portfolio, pretty willy-nilly and in our view, with little interest in the fundamentals of what's been going in those businesses.

But understandable given the implications of -- to risk appetite, interest rates and possibly the world economy of what Trump is potentially up to. So the long term at these points of stress, everyone is easy to forget about the longer-term returns. I'm not going to dwell on this slide other than to say that the DNSC 1000, which is the dark blue line there showing the performance of the bottom 2% of the market back to 1955, would have transformed compounded GBP 1,000 into GBP 29.6 million by the end of 2025. The point I'm trying to make from this chart is that the small -- that is clearly a small cap effect.

The GBP 11 million you have got would have been if you invest in the bottom 10%, slightly bigger small caps. If you got in the mid-caps, you had GBP 5.6 million and the FTSE 100, GBP 1.9 million. And it's a good advert for equities overall over the long term. But I think the point is the smaller you go, the higher the returns can be, and that's definitely the case.

So what have we got, operation, Blind Fury, Blinding Incompetence, Blind Drum, I don't know, whatever it is, what happens next is your guess is as good as mine. It clearly is going to have an impact on a range of companies' earnings this year, either through the impact on consumer confidence or business confidence. There's more direct impacts on energy, whether you're a consumer or not. We actually don't believe there's huge impacts across our portfolio. We think we're pretty well insulated in the nature of the companies, which I'll show you in a minute.

There's a couple of areas where business confidence will be relevant. But I think the point I'd say is that since I've been running the strategy, the U.K. has left the European Union. We've had COVID. We've had the Ukraine invasion, the SVB, Credit Suisse debacle, tariffs and now Iran. And you just saw the slide of what you can do in a stock-specific strategy otherwise. So although it does impact market valuations in the short term, we think the underlying fundamentals will come through in any event in the portfolio. And we just wish that this -- they will come to some form of agreement as soon as possible.

The drawdown in small caps has been very great. So the red line, I've stolen this from River and global investors. It's a good chart. It's just showing how the performance of small cap versus large cap in various down cycles since 1990. And you can see that in every single situation, other than the red line, which is the one we're currently in, it's basically mean reverted and you've got it all back and actually small caps performed as good as large over time. So we do quite a strong outperformance of large cap, which has been doing very well of late.

And clearly, the valuations are low, but I'm sure you've known that, everyone on this call should know that already. It's been sort of touted in the press for a number of years in itself is not the great key. It's a reason why small caps will start to do better, but it is a precursor for doing and they need to be cheap to start a period of strong performance. What we really need is interest rates to be falling. I'm afraid the Iran conflict isn't making that happen any quicker. If Iran was to be resolved in any time soon, the direction of interest rates otherwise is down, and that is positive for U.K. small caps.

So for those that don't know, very quickly, we look for in Rockwood, small businesses that were -- that are proven with identifiable assets. We are very free cash flow focused, and we look for mean reversion potential. So we're basically biased to recovery situations. We're looking for businesses whose profitability has become depressed and has the opportunity for recovery, where the balance sheet has become stressed, but there's the opportunity for mending that balance sheet and where the valuation has become low and where there's an opportunity to move back to fair value.

That's going to require some change, and we need to identify those catalysts for change, either they're happening already, but everyone is ignoring them or they're ones which we will catalyze ourselves. When we're catalyzing ourselves, we engage with the other shareholders in the businesses we do. We've been doing that recently, causing change at a number of the companies within Rockwood. And we're doing that in a positive constructive way in order to sort of sort things out for shareholders generally.

We create an exit thesis at the point of entry, how we're going to get out of the stock because we're taking pretty decent sized stakes in these companies. And as a result, we do have quite a high tempo of takeovers. In fact, we've had one in the last few days within Rockwood, a company called Van Elle, where we have been engaged with the management requesting them to put the business up for sale and realize value for shareholders for some time, and we're delighted that's finally happened.

So the time it takes to invest properly in a small cap, I've always said takes a sort of minimum of 3 to 5 years. Of course, you'll probably all have had opportunities to trade a small cap or realize investment over shorter timeframes. But for proper recovery style investing, it takes 3 to 5 years to sort these things out. And this is just a kind of idea of where they are in that time horizon, some of the holdings in our portfolio at the moment. But we've got ones in the stabilization phase. That's the riskiest phase for investment where there's a lot of change going on, and we're taking our stake in order to try and make things improve.

And once those changes have made, maybe there's been some evolution of the management team or the Board or we've done a fundraise to help sort of solve the stress on the balance sheet. They move into delivery phase where they're delivering the improved profitabilities and margins, which are happening in a range of those companies there. And then finally, we move into the realization phase where people realize the company is basically mended or nearly mended and the stock market should fully rerate them to a fair multiple. Or if it doesn't, sort of other actors, trade buyers or private equity realize it's happened, but they think they noticed the stock market doesn't seem to care and they come in and bid for the company themselves, and we realize that investment through a takeover.

Right. On to the stocks, the best, that was just all really the preamble. These are the top 10 holdings of Rockwood. A number of these are well on their journeys to shareholder returns. Our largest -- you'll see for those that don't know, a good mix of businesses here from education to tech, to public sector, private sector, overseas operations and U.K. domestics.

You'll also see those are roughly the sort of size weightings, although ideally, we'd like a few more with a bigger weighting, but we've had considerable flows into Rockwood in the last 18 months. And in a number of holdings, it's been quite difficult or inappropriate to sort of keep adding in size at every point.

I'm going to just mention a couple here because we're going to go into a number of these in detail in a moment. I just mentioned RM, our largest holding, which has committed publicly now to dispose of its noncore divisions, which will pay off its very high levels of debt that it currently has. We are fingers crossed and bated breath that we're going to get some sort of resolution to that in pretty short order in fact. It really -- we had thought it would have happened by now. So that's sort of pregnant with news flow on RM, hopefully, in the next few months, and that will create, we expect a re-rating of the equity there.

Lower down, because the next few we're going to talk about. I just mentioned that Capital Limited has been a particularly strong stock for the company in the last 12 months. It's a picks and shovels play. They rent and deliver services to the mining, drilling rigs and drilling services and laboratories to test rock samples for the mining industry around the globe. And Capital is obviously benefiting from the early stages in the mining cycle and also the strong performance in the gold price, which has moved to a level which has made a lot more drilling economic.

M&C Saatchi is actually one of those ones where we've engaged and multiple conversations with the largest shareholders there. I'm delighted to -- for those that aren't aware that there's been two new Board appointments to M&C Saatchi in the last month or so. Vin Murria, the highly respected British software entrepreneur and leader, has gone on to the board of M&C Saatchi. Vin Murria has a large stake of just over 20%, and she bid for the company previously. And she's made a public statement this time to say that she won't be bidding for the company again.

And Nick Shott has gone on to the Board as well, who is an outstanding corporate financial or investment banking adviser, formerly Head of Lazard's Investment Banking. And we think there is huge amounts of value in M&C Saatchi now. And they've got a number of business units, and we believe that the value can be realized for shareholders with the new constructive Board over the next year or so. So we'll see how that plays out.

Obviously, the advertising part of M&C Saatchi, which is actually less than 1/4 of profitability these days, will have be impacted by general industrial confidence. But we're not really that concerned about this at this point. There's huge value in there, it's called World Services division, which provides strategic communications advice to governments. And we think that business itself is probably worth more than the entire market cap, leaving you with the advertising business. They have a big sports and marketing business. They have a performance marketing division that Brave Bison bid GBP 50 million for last year and was rejected. So we think that's going to happen.

This is my slide which pulls it all together for those that know Rockwood. I don't believe in thematic investing. I'm sure some people use it quite effectively for marketing purposes. But what I've done is just clump these into kind of how my mind is with the various investments within Rockwood at the moment. If we start with the far left, catalyst pending, we've actually, just in the last few weeks, had a major catalyst at Capita. I couldn't -- it couldn't have happened at probably a worst time.

They actually -- after the invasion, in the first few days after the invasion, they released their results when it was in massive risk off and everyone was looking for any reason to sell anything they had. And they had results where they actually achieved their expectations for the year, but did caution on the outlook for one of the activities, the Contact Center division within Capita. And they were punished really quite severely in the early March. 16 days later, in late March, they announced the full sale and exit of those activities, creating an upgrade.

Now the stock obviously bounced on the day of the notary, but it's still materially down from when they were before, which in our view is completely ridiculous. And it leaves Capita with only two activities left in the business. The public sector division, which the results are showing is performing very, very well. It's making over 8% margins now, high cash conversion, very sticky contracts with the government, a well respected and a good partner for the government and very strong incumbency positions on a number of key contracts. Growing its top line with a very high -- with a record or very significant order book.

The other business is a pensions advisory and management and administration business, very similar to a mid-cap company called XPS Pensions, which like XPS, actually is much more profitable than the other division and is making low teens kind of operating margins, and we think it's worth a lot of too. Balance sheet now is in much, much better shape than it was years ago at Capita. They don't have any pension fund obligations. And we think those two remaining businesses, netting off the liabilities of the business, mean the market cap should be north of GBP 1 billion, which means there is a huge amount of upside from the current market cap.

I'm going to go to Big 26 on the next slide. On delivery work in progress, the other one that's really coming in on the delivery front is James Fisher and Sons, which has been delivering some lovely upgrades from its defense division that was a turnaround situation for the last 2 years. And we would expect to see further upgrades and improved profitability from its record order book, which we think is going to grow further during 2026, really driving that share price forward.

And then in the realization phase, as I mentioned at the start, we just had a bid for Van Elle, and which we're very pleased about. They bid 52p, which is essentially book value for Van Elle. They were trading at 32p. We're going to realize an IRR of about 13.5% on Van Elle. It's slightly less than our target return of 15% IRR. And essentially, I put that down to the fact that this bid has come a bit later than we've been -- we had hoped it would. But 13.5%, whilst AIM is down, I think, 50% in the same time period, we're pretty pleased with that outcome.

You can understand from what I just said why M&C Saatchi is in the realization column. Centaur Media was a business that we -- I myself went on to the Board on. In fact, we have Board positions or proposed people successfully onto the Board of 12 of our 24 holdings. And at Centaur Media, Martin Rowland is there, who placed in as Executive Chair, has essentially broken up that business and returned all the money to shareholders. He's got one little business left to exit shortly, but that's delivered a very significant return on when he was put into the business.

Right. These are the big 26. Actually, these three companies make up just under about 20% of the NAV. Funding Circle is really on a roll now. I'm surprised it hasn't pushed on further. You can see what this -- how fast profits are growing. These are real profits. These aren't EBITDA profits before all the adjustments and all that nonsense. This is proper profitability coming through in a world-leading British business that really does dominate the space of lending to SMEs with very, very strong and effective credit control.

They themselves have limited credit risk themselves. They do have a little bit, but they're primarily a platform, which we think is -- should earn them a very high multiple. I know I put 9.9x down on the P for '27. If you adjust for the cash, it's more like sort of 6x. And the business obviously has got a lot of net cash, doing a big buyback and just look at that profit performance that we're expecting this year. Well, let's see if they do -- it will be a big '26 if they deliver that, we would expect a significant re-rating if they do.

Same with Vanquis Banking, which actually is a full lending business. It's the former Provident Financial doorstep lender. And that is again on P at 5, when the guys came in, the new management team, we've got a new Chair, new CEO, new Finance Director. They changed a lot of people underneath them as well, changed the IT systems, which are almost complete and should complete this quarter actually. They've exited certain lending activities, rebranded the business. They have an excellent app called Snoop, which I suggest you all download. Mrs. Staveley saved some money by doing that and realizing because it flags kind of where you're spending your money. And you can see there, they've moved it now from losses into profits last year, but a massive improvement expected in 2026, further in 2027. And that will -- to put it in context, that GBP 85 million is putting the money into low teens return on tangible equity, which is what they've been targeting for some time and is in line with the nature of their lending to poorer credit scoring individuals.

Just finally, Filtronic, it's a pretty well-followed stock now in the kind of private investor community. And why shouldn't it be? It's a world-leading technology business, and they really are absolutely smashing it. It's been, again, a bit like Rockwood's last 6 months. It's been a little quiet on the actual share price performance path. And in fact -- and obviously, the shares now do expect a high level of future growth from the business.

So we're sort of awaiting some sort of monster contracts, I think, that's what the market is kind of waiting for. We were highly encouraged by the most recent announcement where they announced a brand-new customer. And they haven't released the name of that customer, but there's clearly been a lot of speculation as to who that may be. But it strikes me that it is someone very significant in the United States who is planning to build a very large satellite, LEO Earth Network. And I think that is probably a very significant development for Filtronic. The size of which will only become clear as that relationship matures, a bit like it did with SpaceX at the start where they couldn't really say it was SpaceX for some time and they got initial orders. And once they've got comfortable, they're able to tell everyone the big orders came in.

But that business, although the share price has done extremely well, is really at the -- still at the early stages of development. And you only need to get excited about what was happening in the last week or so beyond the moon. Actually, the use of RF for any moon-based stations that are part of the plans, various quite sensible people, including NASA will require RF communications. So Filtronic really at the cutting edge of what's going on in the world in space.

These are our core holdings. For those that don't know, these are the ones where we typically roll up our sleeves a lot more than others. And you could see that we really do have some very influential stakes in these businesses. There's sufficient to call an EGM and every single one, you 5% to call an EGM. And you can see those. But I've got one stock I want to talk to you about. So I'm going to spin on and maybe it's time for Q&A, sorry, David. So it's actually the biggest investment in Rockwood's history so far, and it happened on the 30th of March. And as we can see, the wonderful Tom Cruise, who's journeyed with me through my life on the silver screen. He's there sitting in front of a camera, which on top of it is what is called a fluid head and the world's best fluid head pieces are made by a brand called OConnor.

And in fact, the OConnor fluid head camera mount was used for every single Oscar nomination for best picture this year. And OConnor is just one of the brands owned by a company called Videndum, which has been around for years. I have followed for over 20 years. It was called Vitec for a number of years. And it's a specialist manufacturer of photo broadcast equipment. It's really strongest brand is probably Manfrotto, which makes tripods for photographers and for content creators.

In fact, nearly half of their customers are these independent content creators doing YouTube and all the other broadcast formats that you'll be aware of. They also have Autocue, which I never known actually was like Hoover is so successful. The brand is actually the name of the thing, but they do own Autocue. It does -- lots of this equipment gets sold to professional photographers, content creators, film and TV. They just had GBP 8 million worth of business out of the Winter Olympics.

But -- and last year, they did GBP 228 million of sales and were still profitable. However, it has been a bit of a mess. The former CEO did nearly GBP 0.25 billion worth of acquisitions and didn't really integrate those businesses, lost control of the business, got over-indebted and basically nearly bust the whole show. And we've now participated in the refinancing of the business, which should allow a butterfly to gradually emerge over the next 2 to 3 years.

The new Exec Chair has serious form. He did a brilliant job of body coats and is a proper operator. He's Exec Chair, he'll step back to Chair. They're looking for a CEO now. But Stephen, with his reconstructed Board have been trying to sort out this refinance for over 15 months. And I can't tell you how much efforts have to go into something like that relative to how much time they can spend on the actual business.

In the actual business, there's huge -- there's loads of pockets of opportunity. The pricing discipline has been poor. There's loads of back office synergies. They've got finance departments all over the place that can be restructured. They've got thousands -- I think it's over 100,000 SKUs, which they can rationalize. There'll be loads ones that don't make sense to make. They've done no joined-up sourcing of products or saving modes from there.

The footprint consolidation they've done, they did have an operation manufacturing stuff in Bury St. Edmunds, but they've moved that all to Italy, the benefits of which should start to come through this year. They also have far too much stock plus new product innovation was terrible. I think they had 5 new products 2 years ago. In the last year, they've introduced 21 and some of those are meant to be -- going to be quite big contributors.

The company is targeting 15% margins on GBP 350 million of sales. And you can see on the far right of the chart, the backdrop to this business. I mean, it's a serious concern, which has produced profits almost every year through to the collapse from sort of '23 onwards. So what we're hoping for now is a sort of return and actually improvement on the business that was there run before in time. We think that they're being conservative medium term about that margin target.

And if we look for those -- I'm sorry, some of you have to pull out spectacles, but on the bottom left is a row of the EV to sales ratio, the valuation ratio of the value of the company despite it being fully run or other things happening for many years. And as you can see, the market cap is currently GBP 156 million with almost 0 debt. So refinance actually raised more than we thought was necessary. But as a result, they've almost got 0 debt now left.

So I'm sure David is keen to get me off the mic. Just to recap, value bias, small cap bias and markets, no doubt are depressed. We're doing this from a position of experience. We're targeting minimum doublers. We're properly active. We're ignoring the benchmark, and we're getting -- we're properly focused in the portfolio and with our time. And I basically will share your pain or your joy as a shareholder if you join the register because we're fully aligned. So there we go, David.

Great. Thank you, Richard as ever, I am with 100 on the webinar. Of course, we've got lots of questions. I'll ask a couple, but then you can possibly do your own answering offline if you want to in the chat area.

First one from John. Richard, can you say a few words about Restore? Charles Skinner appears to have the business firing on all cylinders. Operating margins anticipated to exceed the target of 20%. How do you see the future though?

Yes. So I think it's so difficult to like categorize Rockwood into the best, best opportunities in terms of upside or whatever. I obviously have that written on a spreadsheet. But for sort of risk reward, Restore has got to be right up there at the top. That quality of that business now, as your gentleman asked the question, it's now making over 20% operating margins. They're generating loads of cash. It's a duopoly essentially in the U.K. I mean, not officially, but Iron Mountain and them.

As a result, they put through a bit of a price rise every year. That drops through to the bottom line. They had a kind of poorer business, which I'd actually engaged with Charles about over the years, which was the kind of moving business, the office moving, which they've now got rid of. And the balance sheet is already in good shape to the extent that, again, we engaged with Charles and said, "Look, you've got opportunities to deploy capital", and they've just done a fantastic acquisition last year, which does loads of NHS -- manages NHS documents.

But we think that at sub-10x PE generating this amount of cash, we're going to see multiple buybacks going forward, and we will get a re-rating of that business. I think its average rating over the last 15 years. It's more like 17, 18x. It's just -- it's basically a no brainer on names as far as we're concerned. And Harwood continue to add to our position. I think with Christopher, we've got up to nearly 14% of the company now.

Very good. Now Mark asks, and this is an interesting one for those who do get involved with anything that's on a takeover. He wants to know, in a situation like Van Elle, would you sell once the deal is announced or hold on for the long haul and get the last pennies?

Yes. So it always depends essentially on the nature of the transaction. In regard to Van Elle, we were slightly concerned that one of the large shareholders, a very effective and capable man called Peter Gyllenhammar, who I know very well, might have not felt the price wasn't quite right and tried to cause sort of problems and maybe stop the deal. And as a result, we were keen to make it clear to everybody, we thought it should go through. So we signed an irrevocable saying we will hold the shares through and only sell them to them unless there's a counter bid more than 10% higher.

So if for Ven Elle we're going to hold. I was on to the brokers at the end of last week, and they think the whole thing will take until sort of June to get our cash back. So we don't have to wait too long, but I felt that was important to get that to make sure the deal happened.

Great. Well, thank you for answering that, Richard, and feel free to answer any of the other ones in there. You're always popular. And of course, you will be in our London Mello in June. So there's a chance for everyone to come and meet you and chat to you, it's always popular and...

They're great events. If you've only done Mello Mondays, get to come down in person, there's a great vibe, lots going on. I can even be slightly because this is online. In the real ones, I can sort of be rude or something like that generally do rude acts. So obviously let them be rude back. Yes, I'll be all right.

Great. Thank you, Richard. Take care.

Thanks very much.

Thank you. Okay. Now we've got our first company presentation. Joining us will be Quartix. Welcome, Sally, and welcome also to Dan. Yes, hi, Dan.

Hello.

You've got Sally's name on your...

No, I'm blessed with Sally's name. I think it's an improvement.

I don't know. She has hijacked you.

Yes, yes.

Sorry to be a little late, but sometimes they run over a little bit. But do tell us how things are going at Quartix.

Yes, very good. I mean I don't know if you want me to just briefly introduce myself and Sally as well.

Yes, do.

I mean I'm, Commercial Operations Director at Quartix. So I've been here for about 9 years. So I look after the sales teams, the marketing team, the operations team, account management team and the support team. Previously at ABF plc, so kind of FTSE 25 business at the time and then Domino Printing Sciences as well, studied engineering at Oxford, previously been CFO here, Chief Operating and Financial Officer, and I did this role previously as well. So pleased to meet you all. I've not done this before, first time, so looking forward to presenting.

Well, my name is Sally. Dan, your name has changed now. So yes, I'm Sally, I'm Finance Director. I joined the company in 2019, having previously audited it when I was at Grant Thornton. I joined as group financial accountant and have kind of slowly risen up the ranks and was promoted to Finance Director at the beginning of 2025.

I did attend with Andy Borman, the Mello Monday event back in October, which was quite fun. So hence, the decision to do another one now. And it's great to have a good audience. And yes, I think I'm hoping I'm showing my screen. Is that -- great.

Very good. So I'll get cracking. So just so for people who aren't aware of what we do, we're a vehicle tracking business. So simply put, we install tracking boxes into vehicles, and we present that data to our customers on our software platform. So importantly, that's on a subscription basis. So we get subscription, we get recurring revenue from that. And the total number of our subscriptions is shown in this slide here and the full definition of subscription is the annual report, so please see that.

But this is the total number of subscriptions, which approximates the total number of vehicles under subscription, and that is 334,000 vehicles now. And you can see a kind of good growth there in every year. We grew 11% in 2025 against 2024. So the subscription base continues to grow.

So if we move on to the next slide, I just want to just give you an idea as to what we do. So you can see a picture there of what we do. The tracking unit triangulates satellites and then sends us location data via the mobile network, and we present that on our software platform. So GPS tracking has been around for a long time, but our belief is that it's a growing market. And though -- obviously, please do your own research on that, but we believe it's a growing market.

And we're now also selling dashboard cameras, which you can see on the bottom right there. Our customers are typically SME companies with mobile workers. So an example might be a Plumber, plumbing company whose employees travel to customer sites for their work. And through tracking their vans, we would provide that plumbing business with information on a subscription basis. So it's a subscription that they sign up to.

This slide then gives you an idea of the quality of our revenue base. This is a really important point for us. I won't just list every number, but there are a couple of things that I wanted to draw out from this. So firstly, annualized recurring revenue or ARR per employee is GBP 208,000, and I'm sure you guys all know that's a key efficiency metric for subscription businesses. The second point is that 96% of our sales are subscriptions. Now these subscriptions have contracts associated with them. So unless those contracts are canceled, they continue to recur.

So they're contracts rather than what we might deem what -- you could deem other sorts of revenue recurring revenue, but we only class contract-linked revenue as recurring revenue. Thirdly, because of the type of customer Quartix brings on, which I talked about a second ago, our ARR is made up of 334,000 vehicles and almost 33,000 customers. So it's a lot of buying decisions. And the largest customer is less than 1% of sales. I think that's in the bottom there. So we have -- we believe, a very defensible revenue base.

And finally, it's a growing revenue base. So you can see ARR grew by 14% in 2025. And again, more detail on everything I said can be in the annual report. So the KPIs, we had good growth in new fleet subscriptions, total fleet subscription basis as we've seen in that chart, you saw a minute ago. The fleet customer base, we have almost 33,000 customers globally and the rate of customer acquisition, these all grew between 7% and 11%. But -- we've seen it already, but the key forward-looking measure of the group is ARR. It's also a key indicator of shareholder value.

Now again, as I say, we measure ARR by looking at active subscriptions, which have a contract associated with them. So unless those contracts are canceled, the default is that the customer would continue to use the service. And in 2025, our ARR grew by GBP 4.5 million on a constant currency basis, and it ended the year on GBP 37 million. I'll go into that in a bit in the next couple of slides. But that's where we ended.

Net revenue retention and NRR is another important measure of how well we keep revenue streams from our existing customers over the course of the year. Again, the full definition is in the annual report, but essentially, it theoretically tells us how much revenue would be left over after a year if we didn't bring on any new customers. In 2025, our NRR was 98.1%, and that's an increase of rounded 3% against 2024. And then finally, fleet recurring revenue was also up in the year.

The next slide, I just want to show you how our ARR has been moving over the course of the last few years. And this chart gives you growth in ARR by month. So it's cumulative in the year, and it just shows you the growth in ARR every year, if that makes sense. So the line graph shows everything since 2021. 2021, obviously, coming off the back of COVID. And then 2022, we performed well. Dipped in 2023. And in 2024, performance increased, and we also benefited from the introduction of customer indexation. And that gave us a record year, finishing on a GBP 3.5 million increase in ARR. 2025 has now been another record year with a GBP 4.5 million increase on a constant currency basis. So remember, that's growth on growth.

So we go to the next slide. That will just show you -- this just gives you some color as to how that GBP 4.5 million increase in ARR splits out. So you can see in the top left chart there that the major increase came from the U.K., almost GBP 2 million, in fact. So the U.K. had some modest increase in vehicle tracking subscriptions, but also the sales of the group's new dashboard camera option had a significant impact. So the dashboard camera, which you may remember I had on a previous slide, that had a significant impact.

We saw some good performance in France, in Italy and in Spain. So apologies, the graph is a bit small, but you can see Italy, Spain and France all grew. The growth in ARR grew, particularly in Italy, by the way. So you can see a decent increase in Italy. The U.S. and Germany saw a reduction in ARR growth, but still increased their ARR overall. And you can see that in the bottom right graph. So that the bottom right graph splits out the year-end ARR of GBP 37 million. And you can see that each country has seen an increase. And whilst the U.S. saw modest growth, good increases were registered in the remaining countries.

The final point just on this slide is we're an increasingly diversified business. So you can see it says 47% of ARR now comes from outside of the U.K. and that number is growing. Okay. So we move on to the next slide. I think we're on to financials.

Yes, that's me. So I'm just presenting the annual results from 2025 here. So if you have looked at the presentation on our website, apologies for the duplication. But -- so it's just showing the restated 2024 results. We had a change in accounting policy in the year, which all of the details are in our annual report as compared to our 2025 performance. So we've got a 12% increase in revenue. So one of the things to highlight there is that despite almost half of our revenue being generated outside of the U.K. and in other functional currencies, the growth in constant currency revenue was also 12%. So there's no hidden FX benefit that we've had in the year there.

The gross margin slowly ticking up from 72% to 73%. We had a product launch halfway through 2025, which we had a benefit from. And that was the latest generation of TCSV17 or 4G compatible unit that was launched in the second half of 2025. The operating margin is getting closer to that aspirational target of ours of the 25%, where we can see that went from 20% in 2024 to 24% in 2025. There's a few things there that have driven that.

One of them is the acquisition that we made back in 2023, which the Board made the decision to liquidate. We don't have any of those costs tinting the performance in 2025, and that was about GBP 0.5 million in the prior year. Additionally, we had some management related administrative costs that we don't have in 2025 as a result of that sort of cost restructuring. And additionally, in 2025 in the first half, we went through a restructuring of the team. We saw the opportunity to create a front-end development team to really target some skills and effort on some front-end development with React.

And what that reorganization identified was some duplicate resource in the back-end team, and we did some redundancies there. And that stuff had some really promising impact in the business that we've seen so far.

The adjusted EBITDA -- EBIT, sorry, there has increased by 38% from GBP 6.4 million to GBP 8.8 million with that increase in revenue from 12% just dropping down, but also the reduction in the manufacturing costs from our cost of sales and the reduction in administrative costs flowing through into that operating profit line.

Our free cash flow almost doubled and a big chunk of that was the higher costs related to the 2G swap-out that we had in 2024. But that's despite some -- we did still have almost GBP 1 million worth of cash outlay for the swap out in 2025. And despite that, we still had a very promising cash flow number there.

So to summarize really, 2025, as Dan already said, we had record growth in ARR with GBP 4.5 million or 14% on a 12 trailing month basis. We have had some benefit come through from customer indexation. We've had really good growth in customer acquisition of 7,500 customers in 2025. And as Dan is saying, the importance of our subscription model in that new customer acquisition drives repeat business in the future. So it gives us a really good foundation.

Subscription base up by 11% to 334,000. The French upgrade program is on track. So we still have about 15,000 units to replace in France. And now that we've got the TCSV18 OBD unit in production, we're in a better position to continue with those self-installed units over the course of the remainder of this year. Operating profit margin, as I said, has improved from 20% in 2024 to 24% in 2025 despite an increased investment in sales and marketing.

And our outlook from a management perspective is that our six target markets continue to offer potential for future progress. And because of that, we've invested in all of our markets to bolster the indirect channel or to develop -- to penetrate those markets in the indirect channel. So this is the distribution business where we identify resellers in those markets to find customers on our behalf.

And with controlled overheads and administrative expenses, it gives us a good platform to invest into growth for the future and thus gives us a confident outlook for 2026 and beyond. I think that might be all of our slides potentially. So if there's any questions. David?

Thank you both. We do have quite a few questions already, but I will just mention to the audience, if you do have one for both Dan and Sally, do put them in the Q&A box. I will ask them for you. First one up from Ian. You both joined the company before the time when Andrew Walters stood back from the day-to-day running. He stayed on and stayed on during the period of near disaster with the German investment by the Board and is still with the business. Now that Mr. Walters is back, how was the whole period to work through?

All good questions, free to answer if you can.

Quite a blinder of a question. Dan, do you want to...

I mean I could start. So -- so you're right. So I joined in 2017, so about 9 years ago. So kind of did very well. You're right, there was an awkward period. So actually, both Sally and I -- neither Sally and I or I were on the Board at that time. So I actually stepped off for personal reasons for a couple of years. Sally joined thereafter. So we weren't kind of right in personally, if the question is a personal one, how is it to work in there.

Certainly from my perspective and Sally can answer for herself. It was -- honestly, it didn't affect me in the sense of being on the board and having whatever conversations were being had. So I'm now back on the operating Board, but yes, for me, personally, it wasn't a -- as in from a personal perspective, it wasn't a significant thing. Sally, I don't know if you want to answer that.

Yes. I mean, I think there was -- with the previous board, there was some new energy, which is not always a bad thing. But it was potentially new energy that didn't understand Quartix fully.

So in terms of personal impact at the time with everything sort of snowballing. There wasn't really a -- to me, this feeling of oh, something's going hellishly wrong here. But obviously, once the decision was made by the Board that this was actually in fact the wrong decision.

It was hard work by everyone to get the ship back on the straight and narrow. And I think just a reinforcement of the message that Quartix does well, what we know best, and that's our core product and finding the value of new customers again in terms of seeing that chart that Dan presented of the -- how that new customer acquisition and that cumulative ARR growth, that trajectory and how that changed in 2023. That was primarily because there was a lots of focus on our core product.

So I guess it was aftermath, there's definitely a learning curve. And there was a lot of work, and I think everyone played their part in how we kind of got back on to the straight and narrow, and hopefully, what's the phrase, fool me once, shame on you, fool me twice, shame on me. .

Well, thanks for answering that, honestly. And as an investor, we learn so much more from our mistakes than we do from our successes. And it sounds like your Board has taken it all on board, as they say. And it's good to know that you're on track. And most importantly from investors looking now at you, it's quite good that we know that even though you were working through it, you're not the ones who technically got it there and you're seeing it into the future, so.

Yes. And Andy Walters is obviously back and he's the Exec. Chairman as well. So that makes a big difference.

Yes. And -- and we've met Andy physically at our shows. We know he's a good guy. So everything is all through that, well done anyway, but answering that one. Lots more to answer anyway. So one from Jake here. There's so many questions coming in that's moving around. Your growth in customers is impressive. But what percentage of the potential market do you have? And will it not be sticky, so difficult to acquire new customers.

Yes. So it's a good question. So that depends on market. So in the U.K., we would be one of the top tracking providers in my view, in France, I think that would probably be the same. In Italy, Spain and Germany, we are -- we're probably not right at the top, but we are accelerating pretty quickly, especially in Italy and Spain.

So Europe kind of looks very positive. I couldn't give you an exact percentage, but certainly in the U.K. and France, we'd be up there amongst the top providers.

In the U.S., we'd be smaller. So there's some real big companies in the U.S. who have a big chunk of that market. So we have a tiny slice of that U.S. market at the moment. Sorry, the second part of the question, David, was saturation -- is about saturation in the market.

So there is a level of saturation. I would say the U.K. is one of the highest. That said, there's always opportunity even in saturated markets. Some other markets are far less saturated. So I think some of the European ones and the U.S., in fact, are far less saturated, so good growth in those countries. But even in somewhere like the U.K., there's opportunity to take market share, you get shakeouts, you get all sorts of stuff in that kind of a market.

So I think there's opportunity in every market, even though I would say, to be honest about that the U.K. has some level of saturation in it.

Yes. And a pickup on that from Cliff, how much of a priority is investing in the U.S.? And what about your expansions in Europe, those selling in Europe cost more?

So -- I mean, Sally can maybe answer the question about costing more in Europe. What we try to do is approach each market in a fairly consistent way. So I mean there might be some additional shipping costs to get it from our -- we have a stock holding in around the Cambridge area. So we have to ship out. So it's obviously less to ship to the U.K. than it is to some parts of Europe.

But -- and there might be one or two things like that. But fundamentally, we have a consistent product. We have a consistent software base, we have a consistent way of approaching the market. Marketing consistent way of selling. All of those things are very consistent. We have a back office team that is -- every country is part of a function. So it's a very, very consistent way of approaching the market.

So I would say there might be one or two areas where it costs slightly more like shipping, Sally can maybe answer that more fully. But generally, we try and be consistent. In terms of prioritizing the U.S., we do want to make the U.S. work. I mean, I think you just have to look at our history to see we've had better growth in Europe than we have in the U.S. We tried to make U.S. work for a while now.

We do want to make it work. We're doing various things this year that -- we're making various changes. But I wouldn't say at the moment that we are prioritizing the U.S. over any other country, but we do want to make it work.

Yes. Now that Martin wants to know, could you give us an example of how your tech is used to for example, improved fleet fuel efficiency and also how are you using AI in the business?

So in terms of fleet fuel efficiency, it's not -- we do -- customers do get fuel efficiency benefits. It's not the #1 way in which we sell. So we do various kind of sexy things like drive the behavior. And there's various things we can do on how people are driving and where they should be driving, how they should be driving and fuel efficiency stuff.

But primary reason by an absolute mile why our customers, plumbers, electricians, et cetera use our software is capacity utilization. So making sure that their team are doing a full day's work, not knocking up early on a Friday, not going to see a twitch [indiscernible] on a Saturday or whatever they're doing what they need to be doing. And it's not that -- in that sense, it's not that glamorous, but it's a big demand for it.

In terms of AI, we are looking at AI in various guises. We're thinking about it -- I don't want to say too much, but we're thinking about it both from a software perspective, but also from an internal operational efficiency perspective. I think I'll leave it at that.

Yes. Now Ian wants to know, where there is the saturated market, as you say, how do you get the growth? In other words, how do you steal those customers? And if that's the right word, e.g. do you say that you give a better service, more cost effective? How are you approaching?

Yes, it's a good question. So our service, absolutely, so is in terms of USP, our service is absolutely core to what we do. We pride ourselves at least we try to be a company that tries to do the right thing that gives customers every -- if a customer has an issue, we try to help them out, don't always get it right, obviously, but we try to help them out.

In terms of how we -- so that's the way we approach the market and what we are trying to do is, over the past few years, over several years, there's been a lot of technology associated with a lot of telematics companies. And we -- whilst we have good technology, we tried to hit the majority of the market, so maybe 80% of the market rather than 100%. And so we have the more simple, easy-to-use product with good service.

And we find that a lot of companies who've bought tracking in the past with a variety of technology are actually not interested in that, and they come to us because they're more interested in a good price, good service, easy-to-use product, and that's how we're approaching the market.

Okay. Now Roger wants to know about Italy, it's been a real shining star amongst your territories. What specifically has worked so well there? And how much of that playbook do you think you can replicate in any other market?

Yes. So -- so certainly, sales team, we have got a very strong sales team. So part of it is internal in all honesty, and we're looking at how we can replicate, there's some legislative stuff in Italy as well, which is driving some demand. Some of it's just kind of like [indiscernible] almost like the point of how far along the curve they are. So I think that probably those would be the 3 biggest reasons.

Okay. And in the context of higher inflation, and tighter financial conditions for SMEs. What are you seeing in customer health, churn, bad debts, et cetera? And how is that shaping your near-term planning. Also how are rising costs flowing through to your P&L, both in terms of cost pressures and your ability to pass them on in pricing.

Do you want to do that one, Sally?

Yes, yes, I can take that one. So I think, again, this comes back to our target customer, is not necessarily haulage businesses where they're actively trying to reduce their costs, but it's the site-based service like the plumber that's trying to increase the ability to generate money, generate income, and therefore, they are bottom line by having another job that's billable.

So in terms of our customer health, the cost of the tracking service is a drop in the ocean compared to their other costs. Our average rental pass per unit is GBP 9 per month. So in terms of how much it costs to run a vehicle, it's significantly less. So in terms of priority of when would they not be able to pay our bills. We're going to be last on that list -- one of the last things on that list. So we -- in 2025, anyway, we didn't see any significant increase, obviously, we're monitoring that now.

And one of the things we do have in terms of flexibility, if we are in a scenario where a customer is struggling to make ends meet, is we could offer some sort of flexibility potentially.

But in terms of costs, so far, I mean, we've said in terms of the -- in our annual report about cost increases to memory cards, SD cards for the cameras that affects the camera business certainly, the trackers at least at the moment.

So in terms of our cost base, we're fairly resilient. It's something that we're monitoring, and price indexation is in our contracts for 90% of our customer base. So that is taking into account inflationary pressures that we're having to pass on to the customer. So it's just a fairly weighty question, but hopefully, that's answered.

Yes. Anyway, that's all we have time for. And obviously, with so many investors keen to learn. You are very welcome to answer the questions that remain there. Always good to see you at our shows. So do come and join us, hopefully, I think, in London maybe later in the year. And thank you for coming on the show.

Thank you.

Thank you. Nice to see you.

Okay. Well, now we've got the company who are joining us for the very first time at Mello. We've got Ian joining, welcome Ian. Secure Trust Bank and instantly, I'll declare I am a shareholder. I've been for a year now. So all years and as are the 100 or so in the audience. So good to see you and do tell us how things are going.

Great. Thanks, David. Look, good to be part of the Mello community for the first time. Just to briefly introduce myself. I'm Ian Corfield, I'm the CEO of Secure Trust Bank. Despite my youthful looks I've been in financial services for 25-plus years in the U.K., Australia and Ireland, predominantly running retail banks and business banking operations.

I guess what I'm going to cover today is really why we believe that Secure Trust Bank is a really strong investable proposition. And there are 5 key reasons that we believe that which I'll take you through as we step through the presentation.

The first one essentially is that we are now operating in a couple of very large investable and scale markets, where we believe we have considerable expansion opportunities by accessing additional products in those market spaces. Secondly, through the investment that we're going to make in cost efficiency, and I'll talk to you a little bit more about that. We think we've got a great opportunity to improve our cost-to-income ratio in line with market-leading peers at 35% to 40%.

Thirdly, we're on a clear trajectory. And again, I'll step you through that to higher returns in the business. The business is now materially simplified and we're operating at a reduced cost of risk. And finally, the business is really well capitalized, and we're going to use some of that capitalization to start a share buyback program subject to regulatory approval. So for those 5 key reasons we think that Secure Trust Bank is a really investable proposition.

Now just to explain a little bit more about the business on the next slide. We have a very simple sort of operating structure. Essentially, the business is made up of 2 lending divisions. Firstly, retail finance, secondly, business finance, and that's supported by a very strong deposit franchise. Stepping in here because the slides appear to have jumped down. It was a second and I hopefully can -- here we go. Okay, we got the slide deck back, here we go, okay.

So essentially, it's a very simple operating model. We've got a retail finance area, business finance area, and that's supported by a very strong, say, deposit franchise.

Four key metrics for the business in 2025. We delivered just south of GBP 60 million in profit. Our return on average equity, obviously, a key measure for banks health was at 14.3%. Our CET1, which is a key measure of capital held by banks was at 12.9%, and I'll talk about some enhancements to that in a second.

And finally, I guess this is a key number for investors. Our tangible net asset value per share was GBP 19.73, which compares to a share price today of GBP 13.28. So we are trading materially below tangible net asset value.

So that's a brief overview of the business. Just to talk a bit more about what's -- what the business is made up of, as I say, 3 different areas of the business. Firstly, our V12 business, the Retail Franchise is a B2B2C operation. It delivers point-of-sale lending on big-ticket items. So furniture, we've got a very strong presence in jewelry and health care.

Typically, these are middle-class customers who are looking to spread the cost of a big purchase very often and the vast majority of the market is made up of interest-free options. So this is retailers essentially deciding to sacrifice some of their margin to make sure that they can get those customers to spread the cost over time. And obviously, that enhances their sales. That business is now operating at scale. We've got over 1.3 million customers and some really strong brands sat behind the business.

Secondly, our business finance area, this is much more of a relationship-driven business. Essentially, it's made up of a few key areas. The first one is real estate finance. So these are not sort of buy-to-let sort of landlords. These are professional investors who might own the block of flats or be developing the block of flats. That's the sort of financing that we're doing in this space as well as having a smaller business that does asset-based lending. So this is landing into mid-tier corporates typically against our inventory and other forms of security.

So our business finance area is much more of a relationship-driven business. It's got a very small market share in a big, big space, which I'll talk about again a bit more in a second.

And then finally, in terms of our savings proposition, as the businesses continue to scale, our savings products, we've been able to keep up with that scaling. We've got about 85,000 customers. Typically, these are people in their mid-60s, and they are the savers in the U.K., and they access us through simple products, often via Best Buy tables or as repeat customers, and increasingly, that's a big chunk of the book as we move forward. So as I say, a simple operating model and a simple set of products supporting that proposition.

Let's talk though a bit about why we've got a right to win in those different spaces and what it is that we think, as I say, creates a sustainable business model as we go forward. Firstly, in terms of V12 Finance. This is a really exciting business. It's actually a business that I've tried to buy myself in the previous guises. It's a fintech. It's essentially operating and delivering through a very strong technology platform that's easily integrated with retailers, and it's very simple to maintain.

However, it's doing that with the financial stability of a bank, and that is very, very powerful, particularly obviously in a highly regulated sector for some of our big retail clients. We're competing. Of course, it's a competitive market with people like Novuna and BNP who are also trying to get into that space where they're delivering big tickets lending spread over longer periods of time.

We're typically not competing with people like Klarna, who tend to be much more focused on people with both poorer credit scores, but also buying much smaller ticket items. Then in our business finance space. Well, this is a different -- obviously, a different proposition and a different right to win.

Essentially, what our clients are looking for in this space is more of bespoke solution. And in particular, they're looking for short-term decision time frames. And of course, as a small business, a small bank, we can get all the key decision makers in a room relatively quickly and give the client the sort of clarity that they need to make business decisions on their side.

So it's that sort of proposition that really gives us the right to win in this space. Of course, again, there are strong competitors, Shawbrook, Aldermore, United Trust Bank, but this is a GBP 90 billion market that we're operating in, and we've got a very small market share, and therefore, the capability to make sure that we're selecting the right deals as we travel through time.

And then finally, of course, deposited a GBP 2 trillion market in the U.K. again, lots of strong competitors. But from our point of view, we've got a very simple product set with some good opportunities to expand both our product set and our distribution as we move forward. So in each of our different spaces, we think we've got a very strong right to win. And I guess that track record has been shown in the way that the business has grown itself over the course of the last 3 years.

Moving on, just to give you a little bit more of a highlight in terms of 2025. The balance sheet grew by about 8% across the course of that year. We did that whilst maintaining RAM and NIM on a stable basis. As I said earlier, that drove a 14% return on average equity. And we've done that in tandem, we're taking a step forward with our efficiency program. The cost to income ratio moved down to 45%.

But I guess for me, the key step forward in 2025 was that we exited and then sold the book of our vehicle finance business. And for those who have been following, Secure Trust is a business that has not been profitable since its inception. It's been a drag on the business and exiting it both releases a chunk of capital that we can invest in continued growth in the future, but also as importantly, a drag on the PBT has now gone.

So these results that I'm showing you here are essentially our continuing business and it's that continuing business that we're building on as we move forward.

So 2025 was a step forward for us. But I guess, critically, with now a simple business and with vehicle finance behind us, we felt it was the right time to set a revised strategy for the business. And that strategy is to seek targeted growth for higher returns. We think we've got loads of opportunities to grow the business, but we're going to grow it where it's enhancing our returns though time.

There are 3 key legs to this strategy. Firstly, we want to continue to operate in those 3 key markets that I've talked about, retail finance, business finance and deposits. But we think whilst operating inside very clearly those trend lines, there are opportunities to do slight sideways steps to introduce new products to either our existing customers or open up access to new customers, but without stepping outside the capability set that we currently have. So product expansion, we think, is going to drive as we move forward.

Secondly, we've got a very strong opportunity to drive effective digital solutions across our business. We've got some very strong component parts to our IT architecture, as I said earlier. But the group has historically been run as a sort of patchwork of different businesses. And as a result, we've got lots of historic and legacy architecture that we're going to get rid of and focus much more strongly on the strong platforms that we have. That will, of course, drive efficiency and further enhance the product solutions that we can give to customers.

And finally, as you'd expect for a specialist lender, we've got a very strong focus on capital discipline. We really understand the markets that we're operating in, both from a sort of marketing and distribution point of view, but as critically from a credit perspective. And it's using that capability and insight to make sure that we're really deploying capital where we're going to make the strongest returns that is critical to delivering against this strategy.

So 3 key legs to the strategy, just to bring that to life a little bit more under each of the legs. Firstly, in terms of product expansion. Well, as I was saying, we think we've got real opportunities to use our existing capability to put to do slight sideways steps that expand our market footprint considerably. Firstly, in Retail Finance. As I say, we're very strong in furniture and jewelry and health care, but we don't have any share at all in home improvement. This is a big market. It's an expanding market, particularly as people enhance their homes to try and drive further energy efficiency. And it's a market where, as I say, we currently have no share.

So strong opportunity for us to sell into that middle class home owning base that we currently operate with in furniture, jewelry and health care and for us to build a market presence in that space. That's exactly where we were, frankly, with health care 3 or 4 years ago, and that's where we want to enhance as we march forward.

In Business Finance, we've historically not done bridging loans even though we're in real estate finance. That's when we've had to say goodbye to some of our existing customers as they've exited their particular product -- sorry, their particular development. And therefore, we want to open that up and really give ourselves a further opportunity. So bridging is a key focus for us as we move forward.

Secondly, we've also got an opportunity on the back of our existing ABL business to move in specialty finance, higher lending to nonbank lenders. We think that's another good opportunity for us through the cycle to make sure that we're using existing capability, but stepping as I say, into a new market space.

And then finally, in deposits, as I say, we've got a strong but I think, relatively simple product set. There are areas like reward accounts that are increasingly a large part of that market that we currently don't offer and we've also got other opportunities to diversify our distribution channels. So product expansion is going to be a key leg of the strategy.

Secondly, though, we've also got an opportunity to use some of those strong platforms that we upgrade in the business to really enhance both that product expansion push and the push to drive further efficiency in the business. We're going to deliver a credit checker in Retail Finance that allow consumers, particularly in the home improvement space who want to understand what they can spend before they start spending it to know that.

In Business Finance, we're going to deliver a new digital broker portal that will allow us, particularly in bridging where they're typically smaller ticket loans for us to do much more loan submission online and to drive further volumes and efficiencies through that business.

And finally, in deposits in 2025, we launched a new deposit app. That gives us much more capability as we look forward, and we're going to use that to drive further efficiency. So effective digital solutions is the second key part of the strategy.

And then finally, in terms of delivering capital discipline, well, as I say, we're going to really make sure that we are using our understanding and our insights in the different markets that we're operating in to drive higher returns. I'll talk a bit more later on about the capital deployment framework that we are utilizing. But ultimately, it's our specialist knowledge in those different markets that is going to differentiate us as we move forward.

So a different strategy that we're delivering inside the business, but alongside that, as you'd expect, some different medium-term targets. Now -- when we talk about medium-term targets, this is what we're expecting to be delivering across the year of 2028, and we set just 2 medium-term targets. The first one, and this is really our North Star, it's the target that we above anything else are focused on delivering against is driving our return on average equity to above 16%. And I'll talk to you in a second about how we plan to get there.

Secondly, our second target is to make sure that we get there with circa 10% annual net lending growth that's in part, obviously, because that delivers that level of return, but also because as a specialist business in growing markets, obviously, that is a key source of differentiation relative to other stocks that you might be considering investing in the banking space. But as I say, our North Star is at 16% plus number. If we get there with 8% lending or 11% lending, I don't really mind, the focus for us is making sure that we pick delivery and deals that they're going to give that return level for us.

And finally, in each year, of course, we're going to be guiding the market to a specific set of in-year numbers as well. In particular, we focus on making sure that we've got a strong capital base that will continue to improve our cost-to-income ratio, as I say, to that market-leading 35% to 40% level, and that we're maintaining a stable margin as we move through time. So those are our revised medium-term targets.

Just to talk to you a little bit more about how and why we think that's a 16% plus ROAE is deliverable. This hopefully gives you a little bit more insight. Essentially, there are 2 key areas that we really need to get right in order to deliver. We've got to make sure that we deliver, as I say, circa 10% growth, as you can see, if you look back over the course of the last few years in the business that we're now driving, we've been in and around that level of growth.

Secondly, we've got to make sure that we deliver our efficiency program because that's going to be key to delivering operating leverage for the business. And again, I'll tell you a little bit more about that in a second. We want to make sure that we're doing that whilst maintaining risk-adjusted margins. But when I say maintaining it is literally that.

So if I averaged our RAM over the course of the last 3 years, in the businesses that we're now operating, that's essentially what we need to be doing over the course of the next 2 or 3 years. So this is not some big leap that investors need to believe in, this is essentially maintaining the margin position that we're currently in.

And finally, doing that with a stable RWA mix, what does that mean? Of course, in banking, you're putting different levels of capital aside against different types of lending. But I can tell you our 60-40 split that we currently have between business and retail is broadly what we're expecting to maintain so that RWA levels should remain stable. So essentially for you as an investor to believe that 16% number, it is really about making sure that we can deliver cost efficiency and we can do it whilst growing the business.

This next slide gives you a little bit more insight on that cost management approach. Essentially, as I said earlier, we've exited vehicle finance. That is a big chunk of the costs that we're going to need to take out over the course over the next 2.5 years. But alongside that, again, as I said earlier, we've got an opportunity both to make sure that we have a much more focused IT architecture and the states. And finally, that in terms of our business operating model, we really take the opportunity that running a very simple business presents us to manage cost effectively.

The result of all of that is that we are essentially investing GBP 17 million over the course of the next 2.5 years to deliver GBP 25 million cost-out program. We think and believe our plans reflect that about 90% of that cost will be out by the end of 2027. So this is not me saying to investors, this is a 5-year program where we're going to be continuously coming back to give you updates about cost. These are things that are in front of us. And in fact, we are already progressing with our cost takeout program.

So delivering that 35% to 40% cost-to-income ratio, I believe, is eminently achievable. And of course, that's a key management focus across the business.

Turning then just to our capital approach. I wanted to give you just a little bit more insight into how we view this. So we've now, as I say, with the exit from vehicle finance, we've moved to 14.7% on a pro forma basis, capital ratio. The way that we look at utilizing that capital is essentially we first say, okay, what's the level of capital that the business needs to make sure that investors and of course, regulators although this number is well above the regulatory minimums. But there's enough capital buffer in there that no one is going to be in any doubt through the cycle or the business is going to be in good shape.

We think, and I guess it's a pretty much market standard number these days that about 13% CET1 ratio is where we should be setting that. So that's the first step in our capital allocation framework. Secondly, obviously, then we think, as I been explaining that we've got lots of opportunities in the business to invest that capital in organic growth, and we intend to do that over the course of the next 3 years to really take those growth opportunities that are margin enhancing.

And then finally, where we've got excess capital on the back of those 2 assessment points, then of course, we'll look to redeploy that capital back to shareholders, either through dividends or through share buybacks. At this stage, we think we've got about GBP 10 million in excess capital over and above the businesses, their requirements. And therefore, once we've got regulatory approval, will be initiating a share buyback program. That's I guess, the feedback that we got from shareholders over the course of the last 6 months, but of course, it may be that in future, we look more strongly at dividends or we come back to share buybacks.

So we'll have to see how obviously, how things progress from a capital perspective, the business continues to generate capital. So I'm very much hoping that we will be using this capital allocation framework in [anger] as we move forward. So hopefully, that gives you a bit of a whistle stop to all through the business.

Just to recap, we believe that Secure Trust Bank is a strong investable proposition. There are 5 key component parts to that. We're operating in large-scale markets with lots of product-driven opportunities for us to continue enhancing our position. Our investment in cost efficiency is going to deliver a 35% to 40% cost-to-income ratio, in line with market-leading peers. We're on a clear trajectory already based on 2025's results to higher returns. We're now operating a very simple business at a much reduced cost of risk.

And finally, we're a really well-capitalized business, and we intend to start utilizing some of that capital to deploy a share buyback program. So thank you, David. Appreciate the time. And I guess that's the whistle stop on Secure Trust Bank.

Indeed, the pleasure is ours and the questions are mounting up. So let's get underway. First one is from Ian to Ian. And Ian asks, how are you able to achieve growth targets, are you stealing from competitors? Or do you plan to grow by M&A? Or is that not a significant objective?

So thanks, David. And it's always good to have another Ian because it's not a popular name these days. But look, from our point of view, we are very much focused, as you probably hear, on organic growth, and that is 100% of the management team's time. We think we've got lots of opportunities to take that growth, either in markets that are growing themselves. So home improvements, for instance, in Retail Finance is a market that is organically growing as a result of consumers enhancing their homes.

So obviously, there is growth there for different players across that market space. But yes, we are also winning market share from some of our competitors and V12 has consistently grown its share over the course over the last 10 years and believes it's got plenty of opportunities to do so as we move forward. And of course, Business Finance, as I say, we've got a tiny share in a massive market. So lots of opportunities for us to grab.

Yes. Now Cliff asks, what is your strategy on bad debts in this current economy? What happens if the economy gets worse, what does the loan book look like if when employment rises?

Yes, good question and obviously, one that's occupying the management team given some of the current sort of macro situations. I guess what I'd say at a top level is that, I think actually the U.K. economy and we only operate in the U.K., is in a relatively robust position. But equally, obviously, if we're talking about a long run macro impacts then that won't last forever.

I guess when I look at our business in particular, we've got a relatively robust business model and what do I mean by that? Well, the first one is that our retail lending is predominantly to middle-class consumers. That doesn't mean that they are completely -- they can completely avoid any downturn, but usually, they've got some more depth in terms of their capacity to manage debt inside their households.

And therefore, usually, when you look back through the cycle, they are the people who are getting into difficulties towards the back end of those cycles. As I say, it hasn't made them immune but this is not near prime lending. This is middle income customers who have borrowed at 0%.

And our business finance area, again, we've got -- these are professional investors and corporate businesses. Obviously, given who we're dealing with we're making sure that there's a lot of capacity relative to our lending before we get into any sort of difficulty so there have to be a material reduction in the value of the assets that we're funding before we get challenges.

And I guess, finally, on the flip side, because this is a deposit funded business, lots of the people that we are competing with in our markets are, in many instances, rely on private credit or bank lines in order to fund the lending that they're doing.

So actually, whilst I wouldn't necessarily celebrate it, I think we are well placed to continue to trade through any challenging economic situations because we are deposit funded, and we can take those opportunities. And I guess, what happens again in the downturn is that very often swap rates move ahead of consumer deposit rates, and that's exactly what's happened at the moment.

So I certainly wouldn't be celebrating a downturn, but equally, we've got a pretty robust business model that I hope would give investors some confidence that we're going to be seeing it through in decent shape.

Now a question here regarding big banks. They're clearly making good returns. Why would anyone invest in secured trust bank over that?

They are. And look,the people running their big banks have done, I think, a good job over the course of the last few years and they're now starting to turn in strong ROAEs themselves. Now I do think some of that is cyclical, and it's about the turn in the interest rate cycle. So I think investors need to ask themselves about that.

But I guess more critically from our point of view, we're going to be delivering growth at -- well, whether it's 8%, 9%, 10%, 11%, we are going to be considerably growing our book and therefore, the asset value of the business well ahead of where a big bank would be, which obviously is more likely to be a system growth of low single digits.

So essentially, when you look at Secure Trust Bank, what you should be looking for over the course of the next 2 or 3 years is a return level that's on par with the big banks but supported by a growth level that is materially ahead of it. And that's why I believe this business is such a strong and investable proposition.

Yes. Now then a member of the audience has very interesting and convincing presentation. Thank you. What are the positive and negative headwinds you may face? And are you prepared for -- in this particularLy dynamic world we live in?

Well, that's a really good question. Look, the positives, I think there's plenty of those. Maybe that this macro is sooner than we all fear, and I think that will allow us to fall back on some of the strengths in our business model. As I say, I think we are one of the businesses on our retail side that really help retailers to grow. And therefore, I think we've got bags of opportunity in that space, particularly as some of the other providers starts to struggle.

And in Business Finance, we've got plenty of opportunity to move the business into different areas with confidence that we really understand and have the capability to underwrite in those spaces. So -- and finally, I guess I'd say, from a positive point of view, this is a business that can be run much more efficiently and I think with vehicle finance now not part of the overall operating model. We've got some great opportunities to really run the business more efficiently.

I think on the challenging side, look, as we've already just talked about, the credit headwinds could be real, and we've got to be live to them, I guess, having spent 25 years in the industry. I've seen plenty of ups and downs and the team around me or last year.

I haven't done the depressing moment of adding up how much their experience is, but it's going to run into hundreds of years. So we've got to make sure that that essentially we are managing effectively in that environment and really making sure that we protect the business and investors if there is that sort of downturn.

And then look, there's always a challenge that other competitors decide to either do something that is not something that's positive from an investment perspective, but they just decided to earn some money. That's happened to me plenty of times before. And you've got to be live to those and make sure that you've got a business model that's set up to survive however long that period of irrationality lasts for.

But as I say, I joined the business in the middle of last year. I joined it because I knew it from outside and I knew that it has these opportunities in front of it and and I'm excited to pursue them

Very good. Now last one here regarding something investors always like to know about, dividends. You had a consistently very high dividend cover. On what factors is that perhaps is based, what's the policy going forward? And also I mentioned that it's been good to see you buying shares. Investors love that when they see management obviously taking that initiative.

Yes. So there are probably 2 slightly separate things. But yes, look, from a dividend point of view, we've got a progressive dividend policy. We recognize that our dividend right now isn't sort of up there relative to some other banks. But that's why I guess we've been seeking feedback from shareholders as to how we deploy excess capital over the course of the last 6 months.

You won't be surprised that given we're trading at 0.65x, 0.7x book a share buyback, not every investor wanted a share buyback, but certainly the vast majority of them, and I think that makes good economic sense at the moment, and that's what we'll be doing with the GBP 10 million, as I say, that we're investing in the share buyback. But that doesn't mean that we wouldn't look at the dividend again, and we want to make sure ultimately that investors are enjoying the right returns.

And if the more efficient approach for how we deploy excess profits is to do it via that route because fingers crossed touch wood, the share price has rerated itself, then that's obviously the route that we go down.

I guess from my point of view, look, I've always -- I spent 9 years in a PE business before this, I've always believed in alignment between management and what the business is driving towards and the value creation that it wants to focus on. So I guess, in joining this business, I bought GBP 1 million worth of shares myself because I believe the business is fundamentally underrated, it's not my job to tell investors what they should think about it, only to highlight the strength of the business, but I guess in making my own investment judgment, that's why I put my money where my mouth is.

Always good to hear that. And certainly, if I could go in a bank and buy pound coins for 65p, I think I'd probably be doing it.

Great. Good. Thank you for joining us, Ian. Do come and join us at one of the physical shows you'll meet lots and lots of investors. And always good to see you. Thank you very much for coming.

Thanks, David. Appreciate it.

Thank you. Okay. Well, we've got another presentation for you now. Any company joining the show. We've got Winking Studios, I think quite a few presenters. Welcome on board, guys.

Hi, good evening, everyone. Thank you for joining us today. I'm Johnny.

I can't see you all at the moment, but that's not a problem. I can announce who you are separately if you like. There we go. Okay. Perfect.

Thank you. Good evening, everyone. Thank you for joining us today. I'm Johnny, Founder and the CEO of Winking Studios. Joining me today is our CRO, Claude. He has over 20 years of experience in external development. The company he founded was acquired by Keywords, where he went on to hold a senior leadership role, he now leads the global growth and development of our business.

In addition, Harry is our Financial Controller and also leads Investor Relations, while Amber is our Corporate Development Director.

Winking is an external development company in the global game industry. Put simply, we act as specialist partner to game developers and publishers, helping them create part of a game.

In some cases, we also take on full game development projects from start to finish. We are better known for producing the art used in games, which accounts for around 82% of our revenue, while our game development services, complement and strengthen this core offering.

Working with us allows our clients to scale up production more efficiently and control costs. And it's the direction the industry is moving in right now. We have more than 25 years of history. And today, we are one of the top 4 app service companies in the world. Headquartered in Singapore, we operate 13 studios across Asia with more than 1,400 employees, alongside teams in the U.K. and in North America.

We work with 22 of the top 25 global gaming companies and many of our big clients have partnered with us for more than 10 years. We have contributed to more than 1,000 titles, including well-known IPs such as GTA V and the Final Fantasy series.

Let me now share our financial year 2025 key highlights. First, our revenue performance was strong. Revenue increased by 42.6% to $45.5 million, this growth was supported by 2 main drivers: the successful acquisition of Mineloader and solid organic growth of 8.6%.

'25 was our first full year after listing in the U.K. despite higher listing maintenance costs, our adjusted EBITDA still grew by 13.2% to $5.4 million, with the acquisition of Mineloader and the launch of Vertic Studios, accumulated participation in AAA titles increased significantly from 14 to 117 titles. This demonstrates our growing track record and capability in AAA production.

In terms of revenue visibility, based on client retention over the next 24 months, we currently have about $48.6 million of indicative bookings, for comparison, the figure was $35.8 million at the same time last year, showing clear and significant growth of 36%. Our balance sheet remains strong. We hold $28.8 million in cash, cash equivalents and bond investment. We have no debt. This healthy financial position provides strong support for our expansion in western markets and future M&A opportunities.

Now I will invite Claude to introduce our accelerated revenue expansion, our strategy, et cetera. So Claude, please.

Hi, everyone. So I would like to point out first that the growth of Winking over the past 5 years is quite impressive. I would say, even particularly for '24 and '25. I know quite well how the industry was affected the last 2 years in the service sector, and Winking is one of the most resilient business that went through that headwind with still impressive growth, both organic and acquisition.

The video game sector is still expanding. By the way, I know we see a lot of news about the layoffs at our client side. For example, Ubisoft or other big studios are letting people go. But for us, it's almost a positive. It means they will rely more on external service providers. The IP owners, they want to have better control on their costs. This is what we provide. The model changed for video game development now. It's getting closer to the model that the movie industry have had for years, where they will have a very strong core team owning the IP and using specialists externally. The content for game is now increasing also. There's more and more content on every game.

For example, GTA VI costs over $1 billion to make. This is the kind of work that Winking is equipped to provide. So one of the other good points about Winking is the diversification. Diversification of clients. First, in 2020, Winking had 200 clients and in '25, 600 clients. So that means that there is no dependency on a single client. However, the top 10 clients are global blue-chip companies. So they're more stable. It's a lot of repeat business.

There's also diversification by geography. In the beginning of Winking, there was a lot of business coming from China and Asia, but now it's more and more diversified, including big growth in Japan, which is a key hub for video game development and also increasingly clients from North America. There's also another reason why I'm joining the group. I joined only 2 weeks ago, but part of my mandate is to extend that development client base in America. Yes, the percentage of revenue from client base and client base from China declined from 34% in '23 to 22% in '25. So although it's still a big portion of the revenues, its concentration has decreased. There is no heavy reliance on any single region that makes the business more resilient. The growth in our industry is built on trust and on repeat business, which brings me to the next slide, where we have a lot of business coming from follow-up LiveOps revenues.

So LiveOps, for those who are not familiar with that, is the additional content you get on online games. For example, when a game is very successful, let's say, Fortnite, then they will release new content regularly for the game. They will rely on external service provider to do that, such as us at Winking. And actually, I would say the percentage of repeat business coming from LiveOps at Winking is particularly high on the market. And between '23 and '24, 40% of the revenues was coming from liveOps. Now it's a little lower in '25, it's 33% of the revenues. And the main reason is the acquisition of Mineloader, which are doing a lot of AAA games who don't necessarily have LiveOps. But the percentage of LiveOps is still growing, and that's also something that's a trend in the industry where once an IP is successful, our client, they will want to create more content. And once we're embedded with the client, they trust us to provide the content. So that means the relationship is more symbiotic, and there is no real end date of the mandate.

So in terms of strategy, the strategy for business development and growth will be around three pillars. The first pillar is I'll call strategic partners, which comes from strategic hires, for example, I'm part of that strategy. I'm joining the group and helping in business development and sales, but we're also hiring some very senior business development people. In the past, Winking relied mostly on their great reputation and delivery to grow their client base. Now we'll be much more proactive in business development. So that's one of the pillars. Also hiring some key members of the team in North America, specialists for some key points in gaming because we want to get away from being just an asset provider. What we want to do now is to be a solution provider for our clients.

Second pillar would be M&A acquisition. We're still -- we still have a very healthy pipeline of potential M&A, but we don't want to acquire just for the sake of acquiring businesses. We want to acquire the best in class. We want to acquire specialists, and we want also to expand geographically to be a truly global business. So in the next few months, we are exploring acquisitions. It's a good market right now for buyer. A couple of years back, the multiples were much higher. Now given the lower appetite for acquisitions, it's easier for us to have a healthy multiple to make our acquisition. Also, it's still a very fragmented market. So a lot of midsized or small studios, they are looking to be more focused on what they do best and rely on the platform when they can have the support of a company such as Winking.

And of course, the third pillar is organic growth. The market is still growing, but also, as I said, a lot of the business development in the past few years was mostly reactive to what the client needed. So now we'll be probably a little more aggressive in getting market shares from competition with the team we'll have in place.

Since our IPO, we have accelerated the expansion strategy. Within 3 years, we completed 3 capital raisings and 4 acquisitions. And on top, as Johnny mentioned, we have opened the studio from scratch in Kuala Lumpur, Vertic Studios with already 80 talented developer working there. We are very prudent with acquisition, as I said. The main thing for us, even before we even talk about valuation when we meet with a potential studio that we want to acquire is to discuss about the culture. I saw a lot of things going wrong in different industry with acquisitions where the culture is not right and everybody is working in silos and then you make an acquisition and rather than being additive, it's subtractive to your efficiency. In our case, we truly want to make 1 plus 1 equal 3. And the way to do it right is to go get specialists, make sure they can do the best work of their life and be aligned with the vision we have in building a company that will outlast us and become a legacy. We don't want to have a short-term success with acquisition. We really want people to contribute to the greater good of the group.

So one of the acquisitions that happened, which is the largest acquisition so far was Mineloader in China. It was before I joined, but I can tell you that I already knew Mineloader from my experience in the industry. They have a fantastic reputation. So first of all, in terms of reputation, it was great. They've been 22 years in business. They worked on massive AAA games such as Battlefield and The Last of Us. So it was a very good complement to Winking. The idea is not to add more of what we already do very well is to add the complementary things. So for example, they do full development, which is not a thing that Winking was doing a lot, and full development will require more artists. So that's a way to bring more business for the entire group. So kind of all, we're working on a lot of AAA games, while Winking was concentrated on mobile game mostly, so that opened another possibly different client base. The integration has progressed super well. I met with the team as well. They are great team players, and they have in mind the success of the group.

Yes. And let me introduce the acquisition of AMPERA. In early April, we completed the acquisition, a North America-based studio founded by Claude, a former senior leader at Keywords. We intend to position AMPERA as an accelerator for the group's overall business growth. Claude and his team played a key role in the rapid expansion of Keyword's app service segment, and we believe that acquiring AMPERA is an important first step in building our U.K. hub. Through AMPERA, we now have a strong and the influential presence in North America, with a fully integrated team covering sales, production and project management. Being in the same time zone language and cultural context as our North American clients, gives us a significant advantage and will undoubtedly strengthen our position in Western markets.

We have also put in place an incentive plan designed to drive AMPERA to deliver at least USD 33 million in cumulative EBITDA over the next 6 years. Claude, perhaps you can share more about AMPERA and also our market position.

Yes, absolutely. So the idea when I started AMPERA was to address the current market environment. There's an appetite for very strong senior talent in the West, but there's also some pressure on pricing to get real value from our clients. So the perfect mix is really to have the possibility to expand with the Asian team that is at a more attractive price point, but have the leadership based in America close to clients. So for now, we hired mostly super experienced leaders on the team. I personally have over 20 years of experience in the industry. We have a Head of Sales with over 20 years of experience as well, same with the Head of Production, our Head of Finance. So we want to get the best-in-class for what we're doing.

Also, this is a relationship-based business. So in terms of talent, of course, I know the real -- the talent that has been delivering for years, but the clients as well are all friends and people that I've been working with for years. So the first step for us is to open like we have the office in Canada right now, where we focus right now on art creation, procedural content generation and marketing services. But AMPERA is still a new business we incorporated last December. The second phase is midyear, we'll expand in America with full game development.

So in terms of market positioning, first of all, the portfolio of clients are around three axis. So you have AAA clients like those big projects everybody is hearing about, multimillion dollar, hundreds of millions of dollars. So this is important because it's great for the brand. It's also a lot of business, larger engagement, very stable. So that's one of the client tiers that we want to go after.

Second one is the AA and mid-tier clients, where we have smaller projects, but still very interesting and very ambitious in terms of Art quality, which we can serve very well. And in this case, what's interesting is we can now with the team we're putting in place, own the entire project. So in some cases, we can work on a project, for example, a smaller game that has $10 million, $20 million, $50 million budget and own the entire creative process and the entire budget, which will make it bigger clients. And I know on the previous slide, we saw 600 clients for the revenue base we have right now. So part of the strategy is to offer more and scale those clients by offering the entire capacity of developing the entire game for them.

And the third axis is in the developers and creative projects. Although they are smaller, I think it's very strategic for us to participate in helping those indie projects. First of all, they are super exciting and fun to work on, so it's good for recruitment. And second, it's a good way for us to get back to the community, which I think is good for our image as well. And third, some of these indie projects will be widely successful. And when you help them in the beginning, it's always good for us because that will be a sticky partner in the future.

So our goal is to compete with the top creative studios, not to be a low-cost vendor. Of course, we want to have a great value proposition. The clients don't want to pay for something they don't get value from. But from my experience, the client we have, which are the best studios in the world, what they want is to have the top quality they can get and pay a fair price for it. So that's what we want to do. In our case, what we want is to be big enough to have a seat at the table for all those major engagements of $10 million, $50 million, but to be specialized and quality-focused. We just don't want to be big for the sake of being big. We want to be big enough to do the best work we can. I believe that the margins will follow and the client will be happy with that kind of service.

Thank you, Claude. And now I would like to invite Amber to share some case study.

Yes. Thank you. First. Let me share a quick example of how we support AAA publishers under pressure. So in 2025, Ninja Gaiden 2 Black and Ninja Gaiden 4 were released within the same year, creating a very tight development schedule. Winking completed this challenge through a participation of multiple studios. Our Winking original team focused on the combat and character animations for Ninja Gaiden 4, while Mineloader delivered several complete levels for Ninja Gaiden 2 Black. By running development in parallel with a unified pipeline, we helped the client deliver both titles on time and at a high quality.

So this kept the player engagement strong and protected the long-term value of the franchise, and this underscores our M&A strategy advantage, demonstrating our strength in scalable delivery, operational reliability and long-term partnership.

And here is the second case study, which briefly introduced our partnership on 2XKO and team Teamfight Tactics. Both are live service titles with frequent update, which creates long-term production pressure for publishers. As the industry moves towards full pipeline outsourcing, developers increasingly rely on partners who can manage end-to-end production. So Winking initially supported limited content, but through consistent delivery, we're gradually expanding to a core full pipeline partner. Today, we cover the entire art production process and support large-scale quality updates. This helps our clients to reduce operational risk, improve efficiency and maintain long-term player engagement. So it demonstrates Winking's ability to grow from project support to strategic partnership. Thank you.

Thanks, Amber. Now I would like to talk about the topic everyone is watching, AI. While AI is exciting, using AI to build game content today faces several major constraints. First, data quality. We like high-quality structured training data for 3D modeling. Without it, AI-generated content remains inconsistent and fails to meet professional production standards.

Second, legal risk. Most AI models are trained on data without clear licensing. For major publishers, the risk of copyrights lawsuits or damaging a flagship IP is simply too high to justify the reward.

Third, player backlash. Games are about emotional value. Many players strongly receive AI-generated art, demanding Authenticity instead. To avoid a PR disaster, most studios are currently restricting using AI.

Fourth, the cost gap. Some AI tools such as Google Gemini III can quickly generate what is essentially an interactive video-like game experience, but it costs about $70 per hour in computing power compared that to the PlayStation 5, which delivers 4K for just $0.44 an hour. So for AI to be commercially viable, costs need to drop by over 100x. Claude?

Yes. And maybe I'll add something about AI because I know that's a very hot topic right now, especially in our industry. First up is there's a lot of misconception about what AI is because it's so great at rendering. So for people who are not coming from the industry, you look at something, you just enter a couple of prompts and then it's super impressive and the render is beautiful. And the same for video, by the way. It can be very impressive for someone doesn't have the experience in the AI.

But I can tell you that for our clients, our directors or for people who are trained, you see the difference. You could say that it doesn't matter. There will be some projects that will be created straight out of AI, and maybe that's true, but that will finish in the garbage bin. All the quality projects, they will require quality people to control the tool. Nothing the tool won't exist. I think it's changing the landscape. But I have another example.

When I started my career in the '90s, I was -- I started my career as an artist myself. So I was a visual artist in video game, and I was working manually, painting with brush and scanning my drawing, sending them on CD ROMs. And I was sharing my artist with a couple of older artists. And at some point, Photoshop became more advanced and concept artists were starting to use tablet and drawing with that tool. And I remember the older artist saying, "Oh, now everyone can be an artist and it goes so fast to create cool art and then everybody started panicking and thinking that Adobe will replace the artist. You know what, today, there are still artists around and Adobe is still successful. Of course, it goes much faster to create art. But what happened is not that the client reduced the budget for their games. They still have the same budget. Actually, the budgets are going up, but they want more content.

So what the trend I see right now is in the rare cases where we can use AI, for example, for texture work, which is easier, the clients that don't request less budget, they require more content for the same budget. So if their budget is $50 million for a game, they will not say I want the same game for $10 million. They will say, I want a better game for $50 million. So the way I see it is just an increase of demand for more content because the players are very hungry for content. If you play in a game right now for the players in the room, you can see it takes much longer to complete a game than it was a couple of decades ago, and it will continue in that trend in that direction.

Market landscape, yes. So another interesting thing. I mentioned earlier, still a very fragmented industry, and it's interesting because when I worked with Keywords for 10 years, and I remember we were having the same conversation 10 years ago with investors that the market was super fragmented. So it started consolidating a little, but it's still very, very tiny. The largest player right now, like those numbers are for arts only, but the largest player is still Keywords because they acquired so many companies, but they're still very, very small compared with the market that is currently addressable.

There's also like I think -- well, one point about Keywords. When they listed, they were valued at GBP 49 million, and they were taken private in 2024 at GBP 2.2 billion. And they were not even that big, and they were barely scratching the surface of what they can achieve. The Create division at Keywords is a division doing art and full dev, which is exactly what Winking is doing. This is the division with the best margins and the fastest growth at Keywords. So that's why we focus on that.

Second largest is Virtuos, very high-quality studio as well, working a lot with Western clients. They do not cover every service. Like Winking, they are focused on art and co-development. Third largest will be Original Force. They focus mainly on game art production and TV animation production. Then you have Winking. We currently rank fourth.

The differentiator for Winking, I would say there are quite a few. But as I said, we want to be specialist experts, best-in-class. And the most important thing as Winking grows, and that's what I witnessed when I visit the different studios, the idea of all working towards the same P&L and the same result rather than all being siloed in different divisions is very important for us. The other thing is right now, most of the business development of Winking was reactive because Winking has a very good reputation even in the West. I know a lot of clients personally and before joining, of course, I did my due diligence and I asked about Winking, everybody had positive feedback that they are great with the quality they deliver. So that's the reason that Winking grew so well so far without even pushing for it. So now with all the business development efforts we'll put and the strategy we have for acquisition, I'm pretty sure next time we speak, we won't be #4.

Okay. Thank you, Claude. Now let's move on to financial review. I'd like to invite our Financial Controller, Harry He.

Thank you, Johnny. Hi, everyone. Let me walk you through our financial performance of the year. So starting with this slide. This is a snapshot of our profit and loss for 2025. We delivered a strong year on revenue, reaching $45.5 million, which is up 42.6% year-over-year. This growth was mainly driven by Mineloader acquisition alongside a solid rebound in our organic growth, particularly in the second half of the year. In line with revenue growth, our gross profit increased to $13.5 million, also up just over 43%. And our gross margin remained stable at around 29.5% to 30%, which we see as a good indication of operational consistency.

Moving down the P&L. Adjusted EBITDA came in at $5.4 million, up 13.2%. Now you will notice that EBITDA growth is lower than the revenue growth. There are a couple of reasons for that. Firstly, we had about $0.4 million of AIM related listing expense this year, I mean, in 2025, which didn't exist in '24. And secondly, we benefited from about $0.7 million of one-off other income in '24, which didn't repeat in '25. So if you normalize for this item, our core EBITDA growth is broadly in line with revenue growth, which we think better reflects the underlying performance of the business. A similar dynamic applies to our adjusted net profit, where the core performance has also improved year-over-year.

Let me now move on to the balance sheet. On the balance sheet side, a few key movements to highlight. Our cash position ended at $27.4 million, down about 31% year-over-year. This was mainly due to the $13.2 million net cash payment for the Mineloader acquisition. As expected with higher business activities, trade and other receivable also increased, and this includes the consolidation of Mineloader's receivables. We also saw an increase in contract assets, again, linked to the acquisition. Importantly, most of last year's contract assets has now been converted into receivables or cash, which reflects healthy project execution and cash conversion. Lastly, the increase in intangible assets mainly relates to goodwill and other intangibles arising from the Mineloader acquisition.

Let's move on to cash flow. Looking at our cash flow, we saw a meaningful improvement in operating cash flow, which increased to $5.1 million compared to $0.6 million in '24. This improvement was mainly driven by two factors. Number one, the absence of one-off AIM dual listing costs that impacted 2024 and stronger cash inflows from a larger operating base following Mineloader acquisition. On the investing cash flow side, cash outflow increased to $14.5 million, primarily reflecting the acquisition. On the financing cash flow side, we had about $1.7 million outflow compared to a $27 million inflow in '24, as '24 included proceeds from share issuance that did not recur in '25. I will now hand it back to Johnny.

Thank you, Harry. Looking ahead to financial year 2026, we are entering a new phase of development. This year, we will strengthen our presence in Western markets. We have built local studio and appointed experienced executives. This brings us closer to our clients in time zone, culture and market understanding. Our goal is to combine Western markets access with Asian production efficiency to improve long-term competitive edge. The global game market is entering a recovery phase. Publishers remain cost-conscious, but external development demand continues to grow. More studios are relying on external partners to improve efficiency. M&A remains important. We have reviewed over 10 targets with more under discussion.

The focus is not availability, but selecting the right partner at the right time. Every acquisition must strengthen our platform and create long-term value. Thank you. We are now happy to take questions.

Excellent. Thank you, all four of you there. That was really interesting and lots of questions. So I'll go straight to Ian. Thank you for your presentation, a new and very colorful area for me. Why have your key profit percentage measures, the operating margin, the ROCA and the ROA fallen away to almost nothing in the last 5 years?

Well, it's -- the way we look at this is one of our pillar for growth is through acquisitions. So basically, we look at our adjusted EBITDA instead of net profit. The reason is because when we acquire companies, we generally -- we issue shares that will incur a large amount of share payments. And that's number one.

And second thing is when we acquire companies, also it will generate the intangible assets and part of intangible assets will be treated as amortization costs. And both of the costs wouldn't really affect the cash flow of the company, but will affect the net profit of the company. So similar to Keywords, I mean, which everyone knows, when people look at the Keyword's performance, investors generally look at the adjusted EBITDA rather than the net profit. And so that's just part of the nature of the business.

And in terms of the trend of the EBITDA, I mean, we believe as Claude joined the company, and we get the advantage of trying to take the price arbitrage in the Western country, whereas we have most of our production base in Asia with low inflation and rich Thailand. Hopefully, we can take the advantage of having the price arbitrage by having -- by increase the margin going forward, not just for adjusted EBITDA margin, but also for net profit margin.

Yes. I think I can add something on margins very quickly, Harry. Also right now, and it's something very typical of a big large service provider in Asia that I've seen in the past, the pressure on pricing is much greater when you provide assets or props for games. So that's part of our strategy to pivot to full game development because when you do full game development, you can come in a higher margin. There is less pressure and less competition. So with that in mind, probably the margins will be healthier over time. That's an investment we make, and that's my experience in the past seeing that.

The second thing is a lot of the AAA clients right now are based in China. So for example, Winking works with Ubisoft Shanghai, but not directly with Ubisoft Montreal. This is for different reasons, but I'm based in Quebec and Montreal. So for me, it's very easy to go see the client directly and be able to keep our great clients in Asia, but also start developing directly with the publishers and the developers, which will also allow us to have a better mandate rate.

Yes. And thanks for mentioning keywords because a lot of the investors have an investment in Keywords went very well. So that's good. Now Gerard asks, I'm wondering why there are no forecasts in the market. Is your business difficult to forecast?

Well, I think, first of all, Winking is a dual listed company. I mean we not only need to update the listing rule in U.K., but also we need to update the listing rule in Singapore. And also, we are a subsidiary of Ace, we need to abate indirectly the listing rule in Taiwan as well. So basically, we are overseen by 3 different regulatory bodies.

And just beginning in the first quarter of this year, the Singapore regulatory body slightly send a signal that they will allow the company to do a little bit of forecasting going forward, but it's just the beginning, which means in the past, it's not allowed, I mean, for mid and small company in Singapore to do forecasting. So hopefully, as regulatory body gradually release sort of the door for the company to release more information, and we can hopefully obey the rule. At the same time, also, we are going to release more information going forward.

And also to answer the question regarding whether it's difficult to forecast. The information for the business, of course, it's difficult. But again, unlike the gaming development company like Ubisoft or EA, their success pretty much depends on the success of a few key projects, whereas the business model for Winking is product for higher model. So basically, we work for the company and we calculate the fee based on the human resource we put in. So basically, whether it's successful or not, I mean, we charge our fee quite on a consistent basis. So basically, we are not affected by the product whether the game product is successful or not by our clients. So because it's a different business model.

So to answer your question, I mean, inherently, I mean, it's difficult to forecast in many industry. But again, our business model allows us to do a forecast, but we need to obey the listing rule in different markets. Singapore market, Singapore regulator gradually open the door for forecasting, hopefully, we are going to disclose more forecasting information going forward. Hopefully, that answers your question.

Yes. Now a question here. It's great to see Winking Studios on Melo. But given your acquisitive strategy where you seek to target top studios in North America, what would attract those studios to Winking? Rather than staying independent or working with your competitors in the aggregation space?

I have a good answer to that. I have two good answers to that. The first one is why someone wants to sell rather than remain independent. A lot of these studios, as I said, it's a very fragmented market. So there's a lot of creative people who started studio, they have been successful. They're making, I don't know, let's say, $10 million, $15 million revenue. So big enough that it's a trouble to manage the studio, but too small to start having a big team of executives. So for many founders that I know, they enjoy having a creative studio. They don't enjoy part of the business that is more managing the company per se.

So having the right platform to keep growing their studio is very appealing, and that was one of the appeals of Keywords, by the way, when we started making acquisitions. Also right now, it's more of a, I would say, a buyer market than a seller market because a lot of these studios, they grew without being very proactive in business development because the market was so good in the past few years. Now you need to have a strong business development strategy to be able to keep growing. So for many of these studios, it's a little stressful. And in many cases, don't have great cash flow. So just 1 month of uncertainty is enough to lack sleep. So I think that is one of the reasons.

Second reason why they would want to join Winking rather than joining someone else. They are passionate people, developers. They want to enjoy their job. It's not only about the money. They want to believe in the vision and building something for the long term. And I think we have a very compelling vision. And first of all, I know a lot of these studios owner and we get along well. So I think there's that. Second thing is even someone like Johnny, for example, he's coming from production. He was a programmer before. He cares about the business. He never sold a single share. We're thinking long term. So I think that's important for someone who wants to join us, especially early in our story like that. I think it's very compelling. And actually, that's the reason I joined as well. I believe in what we're building together.

Great. Okay. Well, thank you for joining us on the show. You're very welcome to come and join us at one of our physical events. I'm sure it will be a good way of showing a lot of the investors exactly what you do. And thanks for joining us, and have a great year ahead, hopefully. Thank you.

Thank you.

Okay. Well, now we have a short presentation with SIGnet. And joining me is [Terry Nelden]. Welcome, Terry.

Good to see you. And we thought it would be nice to just find out a little bit about how things are going at SIGnet. I know, obviously, I'm in a SIGnet Group. I was also a convener of another SIGnet group. So lots of the investors on here probably don't know quite so much about SIGnet. So maybe just explain a little bit about how you operate. And I think you're going to show us where there are gaps around the country where there aren't any groups as well.

Well, yes. And David, it's great to have the opportunity to share this with you this evening. Yes, I'm a private investor. So I'm not here to sell you anything, just to promote a good idea. It's -- I've been a member of SIGnet for must be 26 years or so and found it very helpful, enjoyable, and I'll show you about that as we go through. I also edit the SIGnet newsletter, which comes out every month. But let me start off by posing a question. If we can have the second slide, please.

Yes. I'm saying, could joining SIGnet be one of the smartest decisions you ever make?

Now all companies test and evaluate their new ideas and products before they launch them onto the market. So where do you test out your ideas before you invest? So there are lots of podcasts, blogs, all providing information. But how well do you know these people? What's their tolerance for risk? And is it the same as yours? What's their investment performance record?

Yes, you can get ideas from them, but you still need to do your own research and need to evaluate against your own needs. So let me introduce you to a brilliant sounding board for your own investment ideas. And it's called SIGnet. It stands for the Serious Investor Group Network. And it's really, really helpful. Now SIGnet Groups act as a forum for independent investors to meet and discuss investment issues, exchange ideas with the intention of improving our skills and our techniques as well as the social interaction, which is also pretty important. If we can have the next slide, please.

Now we've got -- we've grown a lot over the last 2 or 3 years. We've now got over 50 investment groups across the U.K., stretching from down in Kent all the way up to Scotland to Edinburgh from Bristol or further Western Bristol from Thornton to Bristol right through to Cambridge and London to Belfast. And there are several groups within London, within the M25. So we've really grown and wherever you are in the country, you've got a good opportunity of joining one of these groups. And whilst the majority of these groups meet face-to-face each month, there are some virtual groups meeting on Zoom or Teams. So geography doesn't matter. Most -- when it comes to what you discussed, most groups cover a wide spectrum of investing. Some groups actually specialize like there is a specific U.S.A. group. There's also a dividend income group, another group that concentrates on technical analysis, other groups that concentrate on fundamentals and there's a new group starting up on exchange-traded funds as well.

Now just to add something that might surprise you. We do not invest as a collective group. We each choose our own investments and adopt our own investment style. And we have an unwritten rule, which again may surprise you. We do not mention how much money we've invested, how much we've gained or lost. And we compare performance using percentages, and it simply avoids jealousy. If we can have the next slide, please.

Now something David Stredder mentioned the SIGnet meeting he'd been at today and about Julian Hermele. And Julian runs the back office for the challenge. Now we started the challenge in January 2020, and it started out as a 12-month competition and its purpose was simply to share good investment ideas across the whole SIGnet membership and publish the full portfolios and leading stock choices every month in our newsletter, so that it could add value. Now with several groups of knowledgeable private investors focusing their brain power on choosing winning stocks, it has the potential to create value for the membership.

Now as you know, nothing in life is guaranteed, and we all have seen how great investors like Nick Train and Terry Smith can still get their stock choices and particularly timings, wrong. But additionally, the competition adds some fun, sharing ideas, but retaining a competitive element. Now the current competition has changed in nature, and we started this change from the 1st of May 2024. Now the competition does not have an end date, and that's to encourage longer-term thinking. But we also have a single year element. So where one group gets a substantial cumulative leap, the 1-year part of the competition retains interest. The top stocks and the portfolios are published every month, so members can check them out. Prices, yes, the winners get a few bottles of wine, but really, it's -- everyone wins from the ideas that are generated and shared.

Let me give you some examples. If we can have the next slide, please. Now here are the top 20 stocks cumulatively. These were up to Friday, the 3rd of April. And as you can see, the top 2 are over 500%. But all 20, they're all over 100%. And that's up to April 3. So that's despite Mr. Trump's efforts to offset the markets. And you'll also notice, I mean, names on there like Rolls-Royce and Barclays Bank, which might be a surprise. Now I would emphasize this is not a recommendation to buy them. And also many of the group choices have failed to deliver. We're not showing those, but it's just to be aware that not all of the stock choices have been winners. If we can just look at the next slide, please.

Yes, these are the top stocks for the year-2. So this is just from the 1st of May 2025 up to the 3rd of April. And so you'll see a different list here. But even here, you'll see that there's been some tremendous performances in just under a year. And even the 20th one, which is an ETF, the Van -- VanEck Vectors Semiconductor ETF, that's achieved 93%. So in what, just 11 months. So excellent performances there. And the membership can look at these and then do their own research. If we move on to the next slide, please.

These are the group rankings. So you can see that the Edinburgh Group are leading. We've got the cumulative position in the left-hand or the middle column there and in the right-hand column, that's just purely the year-2. You can see the Edinburgh Group are leading cumulatively. And they've done that pretty much from the beginning of the competition. They chose Palantir Technologies and Pan African Resources, is gold miner, and they've had a major impact on their performance. But just looking on the right-hand side -- well, sorry, look down the left-hand side to the 12th position, the U.S.A Group. There might only be 12th cumulatively, but they have jumped to being 1st in year-2. So it's -- even though the U.S.A. group are down the middle rankings cumulatively, there's still a lot of interest in the -- just the 1-year competition. So let me just move on to the next slide.

Now these are the second half of the group. I would emphasize not every SIGnet Group has joined in the competition. We've got 26 physical groups participating. plus an additional one, which Julian invented relatively recently, an Artificial Intelligence Group, which is currently in 21st position. You can draw your own conclusions from that. But there are also -- you'll see at the bottom, there are 3 benchmarks that we've been using. The FTSE all share total return, the iShares MSCI World Index(SWDA) and also the S&P 500. And in terms of the groups, you can see that there are many groups there that are beating the benchmarks. If we can have the next slide.

It's sometimes said that investing can be a very lonely pursuit. But of course, it doesn't have to be. And here are three quotes from genuine SIGnet members. The first one, although I knew that I wanted to take control of my investments and make my own decisions, I was lacking in confidence and didn't quite know where to start. Joining My SIGnet Group allowed me to validate the decisions I was making by discussing my ideas with other knowledgeable investors who weren't just there to make money out of me.

The second quote, "I was already an experienced investor when I joined SIGnet. My family were not interested in hearing about the latest stock market movements or my analysis of the risks of investing in the latest upcoming AIM company. At SIGnet, I have found people who share my interest and challenge my thought processes. In fact, I'm pleased to call my fellow group members trusted friends".

And the third quote, "using professionals to manage our investments always seems to result in them making more money than you do. In fact, they often make money while reducing the value of your own investments, achieving results that are no better than a cheap tracker index. Signet has definitely benefited me more than my financial adviser". So if I can have the last slide, please.

Yes, there we go. First of all, thank you very much for listening. If you like what you hear about SIGnet, please give it a try. You can find out more at our website, www.sharesoc.org or e-mail us at [email protected]. If you want to join, it costs less than GBP 100 a year to join, and it could be one of the smartest investments you'll ever make. It certainly was for me. You can join SIGnet as a single group or you can include membership of ShareSoc as well. And the two together, as I say, costs less than GBP 100 a year to join. Our tagline, achieving better investment decisions. And I've certainly done that through joining Signet. So thank you very much, everybody. Question?

Great. Thank you, Terry. That explained it all very thoroughly. And I'll just say that, as I mentioned, I'm in two SIGnet groups. We meet, we chat for maybe 2 or 3 hours and have lunch together. We've got a WhatsApp group in each one. So that's another thing you feel connected to a group because you can literally chat about anything if you want to. Sometimes it's quiet, sometimes it's really buzzy depends on what news has come out. But you always feel connected, which is quite important because I think investing is such a sort of an isolated thing that we do. And as you mentioned, usually family and friends are not really that interested. So it's good to have a group who are.

And once again, I mentioned SIGnet will be at Melo, will be at Melo Birmingham next week. You can see some of the groups there. They are always quite a big part of Melo now because they enjoy sort of meeting up. It's one of those things that you can do when you have an investor event. And good that SIGnet has really grown and developed and well done, Terry, and excellent newsletter, by the way. It's always. Yes. do mention the Melo events in there and then everybody will also know about those, but all good, and thank you for coming on the show.

Great. And thank you for having us. Thank you. Are there any questions?

No, there's no questions. You've covered everything. You've put them into silence. I think you've made sure they understand it.

Great. Thank you. Thank you very much indeed.

Okay. Now we move on to our BASH, and we've got with us Mark Simpson, who, of course, you've seen on the show many times. Welcome to Mark and also a welcome -- a big welcome to a new BASHER. We call you BASHERS, but of course, most people know about the BASH. But Scott McKenzie, first time on the show. So do tell us a little bit about yourself, Scott?

Good evening, David, and thank you for having me. It's a pleasure to be here. Yes, I have joined the private investor community fairly recently. I've been -- I was a fund manager for about over 30 years, and I stopped working at the end of December last year and decided to become a private investor pretty much full time. So we're 3-months into that experiment, and it's been quite a turbulent start to the year for many reasons.

That's a great year to start, Scott.

So yes, I was full of hope at the end of January, having had a solid start to the year and that all got wiped out in March, needless to say. So I guess it's been nice to get that lesson early on in my private investing career. And I just remind you that it's not a straight line and it can be a volatile business.

The good thing is you've had a background in fund management. So it's not as if it's going to you've not given up a day job where it wasn't related and you're suddenly thinking what the hell have I done here? It's a marathon, not a sprint as they say. Anyway, just to ease you into it gently, Mark is going to cover his company first. And I think, Mark, you're going to do -- is it Dot Digital?

Yes. So this is -- I don't -- a company I don't currently own, but I feel like I should. So I'm hoping that Scott or any other people online in the comments are going to come up with some bear case or something I'm missing here. And yes, either this will suggest that this is something I really should invest in or they will pick. They'll find something I missed and will save me from embarrassing myself, which has happened in the past on the BASH.

So let me share my screen because that's going to be the easiest way to introduce this company. So it's a marketing technology company. And I -- amongst all the jargon, they say it's a multiproduct suite expanding TAM and deepening customer value. But I find that this strategy is probably the best explanation of what they do. So they're about connecting with usually individuals, connecting companies with individuals who are interested in their products and services. That can be through e-mail, WhatsApp, different social media presences, and it's about kind of providing the back end, providing the systems that engage. So it's a bit like a kind of Mailchimp, I think, heard of Mailchimp, but also with a lot of extra stuff added in.

And by both development and by acquisition, the company has added features and services to their offering. So we have here the kind of core part of the business is this marketing, the kind of e-mail, SMS personalization, but that can move into also web personalization and making sure that people interacting via websites also have kind of personalized offers, personalized engagement, not just those who sign up for e-mail blasts and they do kind of similar, they've acquired a company called Social Snowball very recently. So this is about effect doing the same sort of stuff via social media. And they have kind of loyalty. So one of the big connections here is they brought a customer -- a company called Alia, and they provide kind of similar services to people who use Shopify as their shop front. So they provide services and products that improve the conversion and the personal customer engagement of Shopify shop fronts or kind of operators. And then increasingly moving towards audience engagement.

So -- and here, they want to -- I think the road map here is the things they're hoping to introduce. They want to add kind of behavioral targeting, gamification, things that engage people. Underpinning this is their own AI system. And again, they've got lots of kind of jargoning kind of words here. But I think this just shows that they they're not necessarily being left behind by AI. They are embracing this and they are and building their product suites on having AI functionality for their customers. It's still quite jargoning even I still find it quite hard to kind of comprehend exactly what they do. But for me, the key point that they make is that customers can implement their system, particularly their CXDP kind of marketing strategy and very quickly get a payback on that investment. It generates engagement for their customers that generate sales and they've got kind of many case studies and many examples where it says, well, you pay us a small amount of money, you'll get a very rapid payback and that will continue.

And that makes it a pretty compelling proposition. The -- whether I can find the slide on here, but there's a slide which has -- this is their kind of here we go, and annual recurring revenue, right? So they have the kind of core business historically has generated reasonable growth, 14% total, 9% organic annual recurring revenue over the last 3 years. So this is a business that's managing to have generate a recurring revenue stream from their products and is growing that. But as I switch to the Stockpedia stock report, you see I put that same 3-year period in here. You see the market really has not rewarded them for these efforts. And I think there's a couple of reasons for that. We have had the SaaSpocalypse as some people have called it where the narrative is that AI will destroy all these SaaS businesses.

And therefore, we shouldn't invest in software businesses at all because they're all going to be taken over by some greater AI kind of people vibe coding in their garage will replace all of these things. And I think like I'm not a skeptical on AI in terms of the actual -- what it can do. But I also think that most businesses will buy from existing companies where they have a relationship and they will -- yes, they will want AI features, they will want to probably pay a little bit less because AI is doing the bulk of the work, but they won't be suddenly going -- running their business-critical systems on a start-up with 2 people who vibe coded it. So I think the other reason this is potentially cheap is that while they've managed to grow revenue, their EPS growth has certainly been kind of lackluster over the period here. But I also note that -- I think it depends on how you do your adjustments here.

So if we take something like the cavendish note for this business, you see that the adjusted EPS her is not growing kind of gangbusters, but it's growing nicely. It doesn't -- isn't showing the -- perhaps some of the flat lining that you see in the Stockopedia stock report. And kind of ish slightly above these consensus figures here. So I don't know whether that's the most realistic view. But even on these figures here, you see that you're looking at PE of about 9, PE of about 8 if you go into 2027. And this marks a pretty good value business. The historical EV to EBITDA was 4. So if you assume there's some growth in there as well, then that's for a business with such high annual recurring revenue, that seems pretty cheap to me. They have a big chunk of net cash and they seem to generate pretty high cash flow because they did an acquisition recently and I think it's $20 million acquisition of social snowball. And it's not really making a huge dent in the cash balance they hold.

A couple of things I don't like. Obviously, they -- as a serial acquirer, they will adjust out things like share-based payments. They will adjust out acquisition-led costs, which you could say that they probably shouldn't get the credit for both, right? They shouldn't get the credit for both the benefit of acquiring companies and be allowed to completely ignore and remove the costs of doing that. So in my opinion, that's a negative point. But I think there's a lot of positives as well. Another negative is this return on capital has been declining here. But a lot of that is to do with your -- so the share count stayed fairly static and just kind of dilution has added to the share count. So they're not acquiring businesses with shares, but they are paying more than net assets as you would expect with kind of software style businesses, which means that their book value is going up and a good chunk of that is goodwill.

And therefore, that means that if their EPS has been relatively static, that return on capital employed is declining. However, if we believe that this is a growing business, and your recurring revenue is going to continue to increase, then you will see these figures increase as well. And in general, it appears to be a relatively low capital-intensive business to deliver growth. Marketing, it's not a great place to be. I think that's another reason that this business has sold off. But those forecasts have not been materially impacted by that. You've seen a slight decline in 2026 EPS, but you're also seeing the 2027 EPS numbers increasing slightly at the same time. So that suggests it's -- this is more of a timing aspect. Customers are delaying some of their spend rather than not seeing value in the products of this business anymore. Probably, I think I'll probably leave it there and get Scott's feedback and take some questions if anybody has got any.

Great. Thank you, Mark. What do you think about Dotdigital, Scott?

I must confess it's relatively new to me. So I had a very brief look at it prior to Mark's presentation there. Yes, I mean, superficially, it looks incredibly cheap for what it is a company with significant annual recurring revenue, more than 25% of the balance sheet and net cash. So the starting point, as Mark has shown in the Stockopedia profile looks interesting. I'm slightly puzzled as to why it's done quite so poorly. I mean, Mark made reference to the selloff in February, all things AI related. So that's part of the story, I think. But yes, I was going to mention the shareholder base actually, which I think is interesting as well, but a number of major shareholders have been selling. And it feels to me like it's a victim of the general malaise in small cap liquidity.

If you have certain shareholders who are seeing redemptions, some of the funds on the list there, you have been seeing redemptions quite meaningfully. And that's a real headwind for most small caps at the moment. So I think perhaps a combination of shareholder selling and the scares we've had regarding AI probably explain it. But at first glance, it leads what looks like a remarkably lowly valued company, Mark. So you possibly could go on to something here.

Very good. And anyone in the audience who wants to comment? Do we have any holders at the moment that have a little. Okay. We've got a comment here. How realistic is the 2026 EPS number on Stockopedia? Since 2020, year-on-year EPS has increased by less than 10%. And for 2026, the forecast is expecting them to go from 3.89p to 4.97p or a 28% increase. What will drive this to in reality?

Yes, it's a good question. I think potentially people are kind of doubting those EPS figures, right? People -- the market is saying, actually, no, you're not going to deliver what you say you're going to deliver. I think there's a couple of things. So one is that those -- that annual recurring revenue, the core part of the business has kind of is growing and grew well in the first half. The average revenue per customer increased as well. So you're seeing some positive trends. Okay, the EBITDA figure didn't grow, and that's partly because of costs and they said kind of strong comparatives in the prior year. But it also -- it seems like the actual business is selling well. And assuming these genuinely are annual recurring revenues, you would expect that to improve in the second half. And yes, I mean I obviously say this is last month's figures. So it's about a month or that they produce their interims, and they say that they're in line with this kind of consensus.

So I think you've got a reasonably up-to-date confirmation from the company that they're trading in line, but it is a risk. I think probably most companies at the moment are at a risk of missing their numbers. And -- but again, I point more to the fact that it depends on what you're -- how you treat those adjustments. So here we go with kind of Cavendish's figures. Yes, it hasn't grown great guns, but going from 4.8p to 5p EPS on coverages Cavendish's adjusted figures is significantly less challenging than what it appears to be in Stockopedia, I think. And even then 5p to 5.8p, I don't think that is out of the question given the quality of the recurring revenue and the fact that they have actually acquired businesses that will add to revenue in 2027. So yes, I think it is a fair point, but I feel like I've got more confidence here than I have in some other companies.

And presumably, with the Iran war going on, it shouldn't be a company that's really quite as heavily affected. They're not big fuel consumption company or anything like that. So hopefully, that's not going to affect them. Ian mentions here, there seems to be a big stock overhang after institutional sell-offs, e.g., Liontrust and others in the first quarter of the year, which does seem to be true for those shareholders.

Yes, that's what -- yes, that's what it looks like, right? It looks like Liontrust [Indiscernible] 10% of their holding in the -- although the final figures here are from February, so it doesn't necessarily explain the yes, the continuous sell off. I don't know why it doesn't attract somebody else. So that's you always have to question why isn't somebody maybe like Harwood coming in and buying a position and...

Maybe they're waiting for it to get that bit lower before they [Indiscernible]. It could be -- we don't know, but there could be more selling to be done rather than it just be that first amount that we see there.

Is it a problem across the small cap market that we're seeing this across a number of companies and [Indiscernible] seems to have been caught in that cross fire of general selling and redemptions. And it's a really major problem for small-cap investors. The big funds are all seeing significant redemptions in the open-ended funds, Rachel stated that. It is in the fortunate position he has a closed-end investment trust and he can make long-term decisions, but the open-ended funds are really suffering at the moment.

I mean you're the perfect one to probably tell us how it goes within a fund if you've got to sell. Do you do it early and quick? Or do you sort of try and ease it out as it goes along?

It's a very difficult process, and it's not a situation anyone wants to find themselves in. And in the case of here, we're looking at Liontrust and Octopus, the problem is when you have a very significant stake in a company, it's very visible, we can all see it. And that's a difficult thing to manage, but that's been relentless really. I was looking at the data for the i.e. small cap sector today, it's down to about GBP 7 billion. It's quite a niche sector these days. It's very small compared to -- I think it was perhaps GBP 20 billion and it's -- it's come down quite a lot over the recent years. And I think that explains a lot of these companies like Dotdigital. The selling pressure has been there, which way beyond perhaps the fundamentals.

Yes. And another thing that goes on, Scott, and you probably know of it, when a company goes into a takeover situation, I find that if I've got a holding and I don't see why they're wanting to sell out, whenever I contact a fund manager in the past year or so, they literally say, well, we wouldn't want to sell out, but a takeover is actually useful for us because they need that liquid fund.

And that's why you've seen and you are seeing takeovers on the cheap really because the fund managers, in many cases, are for sellers and they need the liquidity. So they can't really hold out for the best, most attractive price even if they wanted to.

Well, Yes. Liontrust will probably be quite happy to see it go. I'm not so convinced Octopus would because I'd imagine that's in their IHT strategy and that they would have to replace it with something else of a similar size and a similar quality. So I said at least according to this, they were adding towards the end of last year. So potentially, yes.

Okay. Well, I've launched the poll. So Mark, you're not yet a buyer, but I...

Yes, I'm not convinced we've seen any -- thankfully, anything that convinces me I shouldn't buy at the moment. So I'm going to go buy.

Okay. And Scott, what's your thought?

I don't have the depth of knowledge in the sector at this moment. So my suggestion would be that existing holders definitely hold. So I'm going to go hold for now just based on my lack of knowledge of the sector really.

Okay. That's fair enough. And holds just suddenly jumped up. The must be following you a little bit there. So yes, indeed. So I'm going to end the poll and give you the result. So there we go, buy is 31%, avoid 23%, sell 4% and hold 42%. So yes, hold certainly just edged it there, but still a few buyers. I'd love to know why 23% want to avoid, but I wouldn't have thought it was that bad, but you never know, of course. There's always a reason. So there we go, kill that one off. And let's look at another company then. You're going to go through one with us, Scott. It's a company that actually came to Mello in Derby 1.5 years ago, Mortgage Advice Bureau.

Okay. Right. I also try and share something here, if I can, right? Mark was very clever and used a live stock. I've just done a quick snapshot here, but we can always return to it at the end if we need to. So yes, Mortgage Advice, I think, is probably relatively well known to many people on the call. What I've done here is just presented the 10-year share price chart because I think it's quite interesting that for much of its quoted life, it IPO-ed in 2014. It really was seen as a high-growth stock. The shares peaked in 2022 as did many shares, north of GBP 12p share. 2023 was a really tough year for the business and for the mortgage market in general. And you saw there that the shares pretty much halved between the end of '22 and '23. And really since then, they've been very range bound and quite volatile. And we can see more recently that the shares have kind of fallen away again, having reached about 800p in January, they're now at 580p.

So back to being relatively depressed. And if you believe the forecast that the P/E ratio looks very attractive compared to what it's been in the past. The price to sales is also very attractive, again, compared to where it's been previously. So at the moment, it feels like the shares are pretty depressed. You can see the market cap here is 335. There's a tiny amount of debt, not very much. But one of the interesting things as per our previous conversation was that the company is now moving from AIM to the main list. And that's a notoriously difficult transition to make as many others have found companies such as Brooks Macdonald, Gamma Communications, et cetera. It's not an easy path to change our shareholder base dramatically. The good news is we're coming to the end of that process, and the company is due to leave AIM at the end of this month, end of April. And my suggestion is that we're probably down to the last 2% or 3% of the register now who are still effectively in the AIM IHT type for seller category.

So I think that's one of many reasons why it's probably a good time to have a look at Mortgage Advice that there's been quite a big technical overhang in recent months. I think I wanted just to start with outlining some interesting facts in the mortgage market because I think the problem with a company like this is we all have basically an opinion on the housing market. And everyone kind of gets spooked by headlines, and it's quite easy to kind of get kind of sidetracked by what's in the news. At the moment, for example, there's all the dramatization about the Iran war about the fact that there's less mortgage availability, the interest rates are going up. So these are all short-term headwinds. If we look at the actual amount of mortgages in the U.K., there are over 8 million outstanding mortgages in the U.K. And each year, about 1.5 million to 2 million people have to refinance.

So that's kind of part of the market is there pretty much year in, year out. Most people fix for between 2 and 5 years. So we have a natural turnover in the mortgage market with the new transactions. And you can see here, it's quite interesting that people actually own the houses outright are more than 10 million people in the U.K. People have mortgages just over 8 million. And then you can see the balance of the 30 million homes is made up by renting, both private and social. So in the U.K., we have about 30 million dwellings. What's interesting is that the number of transactions that take place are about 4% of those dwellings each year. So 1.2 million last year, forecast to be almost exactly the same in the current year and into 2027. So this is a really flat market. The total gross mortgage lending last year was GBP 291 billion. That doesn't include product transfers. We'll come on to that in a moment. And the forecast from U.K. finance is for a small growth in overall mortgage lending in the current year.

That could be too optimistic given the current circumstances that we find ourselves in. But nonetheless, that's the forecast at the moment. So when I look at this company, my initial conclusion is that it's not in a growing market. I think the mortgage market is very, very flat and the outlook is very flat. And indeed, the outlook for house price inflation is also very flat. So why bother looking at a company involved in the mortgage market, I guess, would be my next question. Quick bit of history on Mortgage Advice. It's been around for over 25 years now. The company IPO-ed in 2014. It started life as basically tied agent to state agents and has evolved quite considerably over that 20-odd year periods. It got into the new build market in 2012. And then in 2022, it made an acquisition of a company called Fluent, and that got them into the national lead sourcing game, which is a fairly major kind of new revenue source for them. It has to be said, that acquisition didn't go very well. The timing was poor. The company themselves acknowledged that. They paid around GBP 70 million for this business and had to write down some of that goodwill within a couple of years.

So at the time, it wasn't a good acquisition. But since then, they have turned that around and it now looks though it's going to be making a fairly major contribution to the future strategy. Move forward to today, they've acquired other businesses along the way, a company called Dashley, which is an electronic dashboard, which is used by advisers and also product providers. And really, what they've done in the past 3 years, in particular, is reengineer the business, having had that downturn in 2023, they have basically invested heavily in the digitalization of the business. They've also made a number of strategic acquisitions and totally rebuilt their tech.

Important to note that the tech is all in-house. It's owned and built by MAB. So it's a completely bespoke platform that they have, and it's gone well beyond just having being a network for approved representatives. As we look forward, they have a number of initiatives, which is all designed to make them basically have a greater market share, which we will come on to. And this is the 10-year track record here. You can see that they've got the gross lending numbers here, which I referred to a moment ago. Those have been up and down over the years. We can see that the kind of post trust budget year of 2023, there was a big fall in gross lending in that year, and that was a pretty tough year for MAB. They struggled to grow their profits against that background. Interestingly, though, they grew their market share, and the business has a long history of growing market share even in tougher times. You can see that more recently, the market share has been pretty flat, and we'll come on and discuss why that is the case.

But over the past 10 years, the business has grown 15% compound annual growth in revenues and 13% in profits, and that's through a multitude of different cycles. So up until now, it's been a relatively reliable growth company. But clearly, the share price today no longer believes that. More recently, you can see the revenues have begun to increase again. Last year, revenues were up about 20%, pretax profit up about 14%. But we can see that the 2023 year was a tough year for them. EPS down from 37p to just under 30p, but that has since recovered and last year's adjusted EPS was 44.5p. So compared to today's share price of GBP 5.80, a relatively modest rating. You can see also the pending capital employed that suffered quite badly during that poor year in '23 and has since recovered pretty strongly. Net debt is negligible within the business. So a very small amount of debt overall and cash flow remains very strong.

The other thing which we'll come on and talk about is the profit margin. One of the key reasons to own the shares is if you believe the profit margins will improve. I can see here that they've been slightly static over the 3-year period, and they were down last year as they invested in the business. So I think they do have to improve -- prove to investors that they can improve the profit margins. So rather busy slide, but I'll try and summarize just how MAB makes its money because as the name suggests, it's a mortgage adviser, but there's a bit more to it than that. We can see here the table in the middle. 42% of the revenue comes from fees that are paid to them by lenders essentially. But a very substantial portion also comes from the selling of protection insurance as well. And some people on the call may have noticed that last year, the FCA did a review of protection, and that caused a fair bit of uncertainty for the MAB price.

The good news is that, that's largely been concluded now. The FCA have just recently brought out an initial finding, which as all these things tend to be -- have a few remedies that they would suggest. But overall, the impact on MAB is going to be, I think, relatively muted. So that's a regulatory issue that I believe will be possibly behind them now. We can see the mix of the how the mortgages work. 60% are for new mortgages purchases and the other 40% are new mortgages and product transfer. The new purchase market was down last year as a percentage of revenue and the other 2 were up. That had a margin impact because the margin that MAB makes on remortgages and product transfer is a good bit less than the margin they would make on purchases. So that was another reason why the profit margin was under a bit of pressure last year. The mix wasn't favorable.

And if we look at the protection market, as I say, it's 37% of revenue, so it's very material. They have a market share in total of 5.6% of the total U.K. market in protection policies, 2 million policy market. MAB do just under GBP 100,000 each year and income protection is a particularly strong kind of feature for them. So that's a brief snapshot as to where the money is made. One of the things that interests me about this company is they have a 5-year strategy. And last year was the first year of that strategy. And the basic objective behind the strategy is to double the size of the business from 2025 to 2029. So we're year 1 into that strategy, and the progress has been pretty decent, certainly on the revenue and on the cash. Those are both very strong in 2025.

The 2 areas which require quite a bit of faith and future success are the profit margin, which was actually down last year from 12% to 11.4%. The target is greater than 15%, you can see from the strategy and also the market share, which again was very flat year-on-year between '24 and '25, although they did make some inroads into the product transfer market, but that's a much smaller market share for MAB today. So they're trying to double the market share and increase the profit margin materially. So those are the 2 factors that any investor really has to believe in if you want to invest in this company. So how are they going to do it? First of all, the market share aspect, this is a slide from the results, and it looks at the overall market. This is the same data that I quoted 5 minutes ago from U.K. Finance. So it's a GBP 300 billion market, if you just look at the purchasing side, i.e., new mortgage advances and then we have remortgages at GBP 109 billion, giving you GBP 300 billion in total.

MAB has about 8.5% of that GBP 300 billion. There's also a large amount of product transfer goes on almost the same size again. And historically, that's been a part of the market where MAB has been quite weak. A lot of banks still obviously managed to keep that in-house. But the need for advice there has actually gone up surprisingly. But you can see there that the market share for MAB is still small, and that's something that they are targeting. And the way they do it really the traditional business uses a number of routes to market. The Property Franchise Group, another quoted company uses MAB. It's a tied agent to MAB for many of its Mortgage Advisers, similarly, Lomond Rental. And you can see here the new housebuilders as well. MAB is actually very strong with new housebuilders. They reckon their market share in new housing is about over 20%. That's clearly been quite challenged recently, and the outlook remains pretty poor for new housing as we've seen from the housebuilders recently, all reporting pretty difficult market conditions.

The section here are some new routes to market that they've developed, and these are largely digital routes. So they include companies like credit scores, ClearScore, Rightmove, obviously, the dominant property portal in the U.K. They have a link with them. We also have a strong link with MoneySupermarket, again, the most popular newsletter for finance in the U.K. And finally, they're moving into staff mortgage provision as well. They've done a transaction with Amazon to give Mortgage Advice to their staff. So quite a few new routes to market for this company and all to do with the digitalization of the sector. And this is really their pitch to investors that they've invested very heavily in digitalization. They have a platform which covers all sorts of channels, whether it be AR network, Mortgage networks or digitalization, they're adopting a dual strategy of both human face-to-face contact and digitalization and the scale of MAB is one -- it's probably the largest mortgage broker in the market. It's a very, very fragmented market.

So some of the names you'll see there, they're not generally household names. Primus is the one for LSL, which is a quoted company. It's one of the larger ones. But most of them are not household names, and it's quite a fragmented market. So the challenge for MAB really to try and take a lot of market share in what is essentially a flat market. In terms of how to get to the profit margin target, the mix of the business has changed quite a bit in the past 10 years or so. Certainly going back to the IPO, it was almost entirely an appointed representative of network. You can see today that they are network is 56% of revenue. Invested businesses, which are basically businesses owned by MAB or where they have an equity stake, those have gone up to 44% of the entire mix. And that is the part of the strategy, which will increase over the next 4 years, and it's a really important part of the targets that they've set themselves. And the reason for that is that the gross margin on the invested businesses is significantly higher than the gross margin that they make just purely on the appointed representatives.

The AR network is effectively a kind of franchise system, which has basically a revenue share where the invested businesses, they take on considerably more risk. And they take on considerably more risk in invested businesses, but get much higher returns because we retain the profits as well. So if things go according to plan, the overall margin will increase as the proportion of invested businesses increases and also as they increase the number of advisers and improve the productivity. And you can see here that the number of advisers is still about 75% from the AR Network despite that being only 56% of the revenue, whereas the invested businesses, the productivity per adviser is almost double that in the invested businesses than it is from the appointed representatives. So a combination of productivity gains and far more investment in the invested businesses should help the profit margins move forward.

So that's been a fairly quick canter. Basically, to conclude, I've shown the forward price to earnings ratio of MAB. I think it's quite instructive. The company has gone from being a very high-growth Gogo business to a relatively lowly rated one in the space over the last 3 or 4 years. You can see that per year in '25, where the shares have been heavily derated ever since. And that's kind of inconsistent, I think, with the strategy to double the earnings. We're already 1 year into that. And last year, the earnings growth was 14%. So, so far, they're on track. I've done what I call my back of a side pocket earnings scenarios. And I've just taken really the last reported adjusted earnings, 44.5p. I've just outlined some bull and bear cases for the earnings.

The company would have you believe that they're going to double the size of the business and grow by 15%, that would imply 78p of earnings at the end of the period. I think a more realistic case is probably 10% earnings growth over the next 4 years, giving you 65p. And then the bear case is probably half of what the company are targeting 7% growth, which takes you to 58p. So when we look at the shares today, they're trading at below 10x what I would regard as the bear case for the strategy. So all of that suggests to me that there's a very high margin for in today's share price. So that really concludes just the basic background and my thoughts on that. Happy to take questions.

Excellent. Excellent. Thank you, Scott. That was very thorough and detailed, really useful. Mark, what are your thoughts on Mortgage Advice Bureau?

So I've got a question as the first point is they've got -- you said sort of 8% roughly market share in the core mortgage market and about sort of 5% on the ancillary services. Who are they -- and that's great because they've got room to grow and take market share. But who are they competing? Is it people going direct to their bank to nationwide or somebody to get a mortgage? Or is it these other very disparate networks of, you listed there and we've heard of not many of them.

It's more of the latter, Mark, because what's happened in the past 10 years is that the penetration of advice within mortgages is actually remarkably high. And the reason for that was that 10 years ago, the FCA did a mortgage market review and basically encouraged the banks to promote advice as part of their selling process and as part of the regulation. So I mean, it seems amazing to think, but the proportion of mortgages that are sold with advice is in the high 80%. So that's been transformed in the past 10 years. And that's one of the reasons why MAB did so well for that 10-year period. It was actually in a very growing market because the penetration of advice in the mortgage market was increasing dramatically. That's largely done now.

So I think to your question, they are competing with all of these other networks. And therefore, I think they have to prove that they are the best and that they've got the best technology. And obviously, as a market leader, they've invested very heavily in technology. Not all of the other groups have done that because some of them are quite happy just to have franchise system, whereby the actual member firms do their own investing where MAB have got a hybrid approach. They've obviously developed their own investing businesses fairly dramatically in the past 5 years. It doesn't mean to say they're ignoring the ARs, but both of those are now growing quite nicely for them. So it's very much about them taking market share. If you don't believe they'll take market share, then the shares probably aren't that attractive. You have to believe in that concept.

Yes. And do you think there is an AI risk? Because obviously, my naive thought is that this is a similar network business to something like moneysupermarket.com or Gocompare. And obviously, the prices of those sort of businesses have been destroyed really, perhaps unfairly, but equally, is there a market narrative here that's going to be a headwind for some time?

I mean it's a fair point. It's difficult to answer the question as we sit here today. I think it's different to the other companies you mentioned because the likes of money, which again, I've looked at quite closely, it doesn't really have -- it doesn't capture its customers. They come once a year, I mean try and buy car insurance, but you don't really own those customers, whereas the advice business, you absolutely do own the customers. And it's obviously heavily regulated as well. So the FCA, I think that's -- and this applies to financial advisers in general, not just Mortgage Advisers.

So I think AI will be used as an enormous tool for advice firms. Whether it will destroy them, I think I find that debatable because of the regulatory aspect of what we're doing that would require the FCA to really change its modus up quite dramatically. But the answer is we don't know as we sit here today, but the fact that they own the customer, I think, is vital really.

Yes. That's a good point. Yes, like in general, I like it. It's a pretty cash-generative business with pretty low capital requirements to grow in general, I don't like -- the same critique for Dotdigital, right, is that they adjust out all their -- they make a lot of acquisitions and then they adjust out all the cost of doing the acquisitions. And you have to question how realistic those earnings numbers are true economic value. But they're still pretty cash generative. So for me, it's somewhere between a sort of buy and hold and it's more to do with the timing, I think. So I think if you're willing to just say, okay, I'm going to put by now, I trust the management to deliver on this growth strategy. They've got plenty of room to take market share and they know what they're doing on the technology front. I'll put it at the bottom draw. You open that draw in 5 years' time. I'm pretty sure it's going to be a more valuable business.

And from what you say of the risk that isn't seem quite low. We can't rule them out, but they seem quite low. But in the short term, I think there's a high chance that they will struggle just because of where the mortgage market itself is going. I think the March RICS numbers. So the Royal Institution of Chartered Surveyors ask estate agents, are they seeing prices rise or fall and then they take the difference and it's minus 23% means that 23% more -- 23 out of 100 more are seeing falls rather than rises. And that's probably the most forward-looking of any of the indicators on the market. And I think the last time it was back down to that level was somewhere back in -- just let me grab the data, yes. So December 2023 was lower. And obviously, you already pointed out that 2023 was a pretty poor year for the business. It was pretty much 20% to 30% or as far as 60% negative for the whole of that year on this RICS measure.

And at the time, the mortgage approvals were down at sort of I think the lowest was about 39,000. So that's about -- and last month, it was 62,000, 63,000. So I can easily see a sort of 20% -- perhaps the extremest sort of 30% drop in the number of mortgage approvals just based on where we are in the cycle and the fear that's in the housing market at the moment, the interest rate rises, what the RICs are seeing. Are you more optimistic than that? Are you feeling that's overdone?

I mean I made the point earlier that this -- everyone's got an opinion on housing, it makes this quite a noisy stock. And you see that the share price pattern in the last 3 or 4 years has been quite volatile. It's kind of traded between GBP 6 and GBP 9 on a number of occasions. I mean it's important to point out that what you're referring to is effectively 1/3 of the market, i.e., the new transactions. 3 of the market are remortgaging and product transfers, i.e., the 2- and 5-year cycle. And I think that's a point that sometimes gets lost is there's actually going to be a significant increase in refinancing in the current year, which will help offset some of the factors that you alluded to.

I don't disagree with you that the numbers could be too optimistic for the mortgage market given where we are today. But I think the refinancing remortgaging part will help them weather the storm. The question is, will they take share in a down market. I think that's the crucial question here, really.

Yes. And again, I think that feeds into the long-term narrative, right? They take share in a down market and they're more capitalized than their competitors that actually they will do -- again, with that kind of 5-year view, put it in the draw, they actually do better. They'll be on the top end after that 5 years. I would just be a bit fearful of a profit warning.

I mean, obviously, like Dotdigital, they've just had the full year results, and we're kind of relatively up speed. That was in the middle of March. So we're a couple of weeks into the conflicts. And fun enough, I did contact them subsequent to doing this chat tonight, and they confirm that they're pretty happy with the kind of projections that people have for this year. That could change, obviously. I think you're right to highlight that. But it's one of those ones I think it's a growing company within a cyclical industry, if that makes any sense. That's been the history of it. It's grown in good and bad times, but you'll have the occasional year where things will not go according to plan. I think that's fair.

Very good. Right. Well, I'm going to launch the poll for the audience. And I guess, Scott, you buy for this one?

I am talking a book here, a recent buyer, I guess.

Yes. And Mark, you seem to be a sort of hold. I don't know.

Yes, again, I'd say somewhere between buy and hold, but on the time zone, the time frame. But the -- yes, I think probably hold overall.

Great. Let's see what the audience are feeling. I'm going to share it. Well, over half are a buy, 52% avoid just 5% and sell just 5% and actually 38% are a hold. So definitely a strong buy and hold, but buys just takes it and looks like one that even over the longer term as well should do well. So yes, that's good pick there, Scott. You're first one on here, that's...

Yes, David.

You just never know. Yes. We never know. well, we will know, but it might be a while before we know. Anyway, good to have you both on the show and really, really good to -- it's been a long show, but really good to have covered quite a few companies tonight. And I hope you enjoyed it, Scott, on your first one.

Very much thank you for having me. I really enjoyed it. Thank you.

That's good. And I think we'll be seeing you -- did you say you're going to come to the London event?

I'm coming to Birmingham, Nick. So [Indiscernible] I'm very much looking forward to that as well.

You'll find Mark there. It'll be encouraging you to come for a drink the night before.

Yes. I'm not too many because I told you I'd do a talk, David. I'll be too hung over the next time.

Yes. And watch out, [Indiscernible] will be signing you all up for the BASH at Birmingham. So anyway, good that you've enjoyed the show, hopefully, if you've joined us and you've not been on Mello before, do come again and do come and join us in Birmingham. It's only a week away or 9 days away. It's amazing. We'll all be meeting up. So yes, grab your tickets. And we've got a show tomorrow. We've got a trust and fund show tomorrow.

So it's all happening at Mello. Grace is going to show you the screen again for Birmingham. There we go. Any of you who haven't got a ticket, grab one with that code, save yourself 25%. And see you all there. Thanks, guys, for joining us, and thank you, everyone, in the audience. See you in Birmingham.

See you in Birmingham.

Thank you.

Welcome. Great to have you all at Investec and online today. Just to briefly introduce myself. I'm Ian Corfield, I'm the CEO. I joined the business in the middle of last year. And despite my youthful looks, I've actually spent 25 years in financial services, predominantly in retail and business banking in 3 different countries. And I'm glad to be here.

Now we're going to spell out a number of things across the course of today. But I guess the key thing for us is why we believe Secure Trust Bank is a strong and investable proposition. There are 5 key reasons behind that. Firstly, we're now lending into 2 scale addressable markets where we've got a strong track record and loads of market share headroom to grow into.

Secondly, we'll talk about it more later on, but our investment behind simplification and efficiency in the business is going to drive us to a cost-to-income ratio that's in line with our sector leaders of 35% to 40%. The business is already, as we'll show, on a trajectory to deliver 16% plus return on average equity, driven by 10% annual net lending growth. And we're going to deliver that with lower sub 1% cost of risk.

And finally, with the exit of vehicle finance, the business is now well capitalized, and we're planning to use some of that capital to buy back our own shares over the course of the next 12 months.

We've structured the day in order to take you through exactly those points. Firstly, Rachel and I are going to talk about 2025 and some of the goals that we've kicked across the course of that year. Then we'll give you all a cup of tea. And then we're going to focus on what it is we're going to do moving forward. Ultimately, what's the strategy that the business is going to be pursuing and what are the revised set of medium-term targets that we're going to be chasing down over the course of the next 2 or 3 years. Then we'll hear from our business division heads in terms of how exactly they're translating that strategy into plans in their business lines. And then, of course, there'll be a chance to hear from you in terms of any questions that you've got about the business as we move forward. So that's the structure of the day.

Let's focus then on 2025. Well, the year -- well, sorry, actually, before I do that, I should give you the small type. The small type is all the numbers that Rachel and I are going to talk about over the course of this presentation are on a continuing basis. Of course, online, you'll have all the different numbers, but where we're referring to numbers, unless we tell you otherwise, they are on a continuing basis.

Now in terms of 2025, lots of things went on across the course of the year. And of course, there were some missteps. When I looked at the business outside in before I joined, I sort of looked at it and thought, okay, this is a business with some strong component parts, but that's been really struggling both from a regulatory and an operational perspective to make this motor finance business work. And actually, coming into the business, that's very much what I found. There are some really strong key component parts of this business. We've got genuine specialist knowledge, particularly about the credits and the markets that we're now operating in.

Secondly, we've got some strong flexible IT platforms that we can genuinely use to scale the business. And finally, and critically, from my point of view, we've got lots of people across the business who want to do the right thing by both the business and their customers. So there are some fundamental component parts that I think allow us to really build the business as we move forward.

My job is to make sure that I bring real strategic clarity that we refresh the team and that we focus now on delivery. Delivery without missteps is one of the key things that we're going to be driving towards over the course of this year.

But if I look back on 2025, again, some strong numbers have been delivered. Return on average equity in the continuing business at 14.3%. We've simplified the business model with the exit from Vehicle Finance. That's driving a stronger performance in terms of cost-to-income ratio. Yes, we need to address some of the stranded costs now that we've got as a result of that exit from Vehicle Finance, and we'll talk more about our cost program later on, but a strong result across the course of 2025.

And then finally, and this again gives me some confidence as we look forward, we've delivered net lending growth of 8% in both Retail and Business Finance. So we've got a strong platform to continue to grow the business. and enhance returns as we march forward. If you look at where the business is now, as I say, it is materially simplified. We've exited Vehicle Finance that is now discontinued. And as I say, we've managed to grow both in Retail and in Business Finance across the course of the year. And our deposits business has managed to match that growth as we put assets on year in and year out. So a strong set of performances across our different business lines. And I think a business now that is materially simplified from where it previously was.

You can see that coming through in some of the key numbers when we look across the business. NIM, very stable at 4.7%. As I say, an improved cost-to-income outcome in terms of 45.2%. Yes, we need to address some of those stranded costs, but the numbers look strong when you look through the lens of the different KPIs in the business. So as a result of all of that, I'm really pleased that we were able to announce an enhanced dividend at 35.5p, a 5% increase year-on-year. So some strong numbers that have been coming through the business, and that is ultimately what we should expect to see as we move forward.

When you look through this historical lens, you can see that the business has been building momentum year-on-year. We've continued to grow balances with stable margins with strong operational efficiencies starting to come through. That's driving return on average equity. And in turn, obviously, really pleased to see capital accretion across the course of 2025. So the business is materially simplified. It's kicked some goals in 2025. That's building on some of the strength that the business has been focused on over the course of the last few years.

So now is the right time for us to start to address where do we go moving forward. And obviously, this afternoon, what we'll do is to reset some tighter medium-term goals so that we can give you clarity on where it is we're looking to take the business.

On that note, I'm going to hand over, to give you a little bit more detail on 2025, to our fantastic CFO, Rachel Lawrence.

Thank you. Okay. Good afternoon, everyone. I'm Rachel Lawrence, and I have been the CFO of STB for over 5 years now, and I have close to 20 years' experience in fast-growing banks. So I will now guide you through the 2025 annual results in greater detail. All the figures, as Ian has just mentioned, I'm going to mention our continuing operations unless I specify otherwise. So firstly -- sorry, that was me.

Firstly, our return on average equity stood at 14.3% compared to 15% in 2024. This result remains comfortably within our mid-teen ROAE ambition and reflects our ongoing commitment to delivering value to shareholders. Profit before tax was GBP 59.3 million, largely unchanged from GBP 59.4 million in the previous year. However, this figure was impacted by some nonrecurring operating expenses and a small increase in impairment charges during the period.

In terms of income, operating income rose by 6.2% to GBP 165.2 million, up from GBP 155 million in 2024. This growth was underpinned by a 9.5% increase in our average net lending book, which contributed to a 10.1% rise in net interest income. This strong performance was partially offset by a reduction in net fee income from our Commercial Finance division.

We continue to drive operational efficiency, resulting in a 120 basis point improvement in our cost-to-income ratio to 45.2%, down from 46.4% last year. While operating expenses did increase by 3.5%, this was entirely due to nonrecurring costs associated with the changes in our senior leadership team. The underlying growth in the cost base from business volume and inflation was effectively mitigated by these operational efficiencies that we delivered.

Cost of risk increased by 20 basis points to 1% with the impairment charges rising by GBP 8.2 million to GBP 31.4 million. In Retail Finance, the impairment charges did normalize following one-off model benefits that were in 2024, and there were a small increase in the number of cases within Business Finance.

Turning to discontinued operations. We saw a significant reduction in the loss before tax pre-exceptional costs driven by lower impairment charges from the Vehicle Finance business. However, this was offset by the additional provision we took in '25 for the Motor Finance redress. And finally, from a statutory perspective, the PBT was GBP 27.5 million compared with GBP 29.2 million in 2024.

So let me just walk through our net interest margin performance in a bit more detail. So overall, net interest margin remained stable at 4.7%. This demonstrates the effectiveness of our cost of funds management and our disciplined approach to asset pricing. So within Retail Finance, NIM increased by 10 basis points, and this uplift was primarily driven by the contractual repricing lag where as the yield curve declined over that period. But in contrast, the Real Estate Finance business saw a decrease of 20 basis points, and this is due to a greater proportion of our low-risk residential investment lending, which has moved from 88.1% of the mix to 92.4%.

And lastly, turning to Commercial Finance, there was a small decrease in net interest margin of 10 basis points, and this stemmed principally from a timing lag in lowering the portfolio cost of funds as U.K. base rates moved down from its peak in 2024. Lastly, but very importantly, our cost of funds fell by 0.8 percentage points to 4.7%, down from 5.5% in the previous year with an exit rate of 4.5%.

Now on to operating expenses and cost income ratio. Lending growth has been a key driver for the year, increasing our operating income by 6.2%. On the other hand, our cost base has grown at a slower rate of 3.5%, reflecting inflationary pressures and operating expenses as well as the higher national insurance contributions. Despite all of these headwinds, we have managed to offset the annual operating cost growth through the successful delivery of efficiencies.

You've heard before Project Fusion. I'm pleased to announce that we've completed that and the efficiencies that we achieved in our continuing business from that this year resulted in a 90 basis points reduction in the cost-income ratio.

It is important to highlight, however, that there was GBP 2.5 million of costs, which we classify as nonrecurring, which were due to changes in the senior leadership team. Without these nonrecurring costs, we would have seen a much lower cost/income ratio because they've contributed about 150 basis points of that. So excluding those, cost/income ratio would have stood at 43.7%.

Just looking briefly at the jaws. So excluding the nonrecurring costs, we saw an impressive improvement of 6.2 percentage points, demonstrating our focus on cost discipline and operational efficiency. Overall, these results underscore the progress we've made controlling costs while continuing to drive income, positioning us very well for the future.

Now let me take you through our cost of risk performance for 2025. We saw a modest rise in our overall cost of risk, reaching 1% compared to 0.8% in 2024. This reflects our ongoing commitment to prudent risk management across our portfolio. Looking at the divisions. Within Retail Finance, the cost of risk increased to 1.4%, up from 1%, but it is worthwhile noting that this uplift was mainly due to nonrecurring model enhancements in 2024 that totaled GBP 2.6 million. So if you exclude those, the cost of risk would have been 1.2%, demonstrating a much more modest increase year-on-year.

In Real Estate Finance, the cost of risk rose to 0.6% compared to 0.3% in the prior year. This was principally driven by 2 cases, including a legacy issue, which is now materially resolved. Commercial Finance, we saw a notable improvement with the cost of risk declining to 0.9% from 1.7% last year. The prior year figure was affected by a significant loss on a single client. Our overall coverage ratio remained steady at 1.4%, unchanged from 2024. And overall, the impairment provisions increased by GBP 2.1 million, driven by GBP 13.9 million relating to new business written and an additional GBP 2.5 million of management overlays. These overlays are applied to ensure our provisions are accurately reflecting the current risks in the portfolio.

We've experienced minimal changes in macroeconomic scenarios this year. So overall, these results reflect our disciplined approach to credit risk management and demonstrating our ongoing efforts to actively provision against current and emerging risks within our portfolio.

Moving on, I'll give you a bit of an update, which probably most of you are already aware of on the 2025 developments on Motor Finance commission redress. So in October '25, the FCA published a consultation paper outlining its proposed Motor Finance redress scheme for customers that they had considered been treated unfairly. This proposal is obviously subject to consultation, and we expect the FCA to come back to us by the end of March with an update on what that policy will look like.

But in anticipation of the scheme, the bank recognized an additional provision of GBP 16.4 million to cover the potential customer redress and associated costs. So this figure was based on updating our range of probability weighted scenarios with a high likelihood of the FCA scheme being implemented as it was originally proposed. We've already updated that if it was proposed exactly as the FCA scheme, it would cost us a further GBP 6 million. Following the sale of Consumer Vehicle Finance business, we will retain the responsibility for any payments due under the redress scheme for the relevant loans once the scheme is finalized and the criteria is confirmed. So we obviously are closely monitoring the situation. We'll keep all stakeholders updated as the consultation process and further details emerge.

Right. Moving on to the balance sheet. Our cash balances have increased year-on-year, which largely reflects the GBP 45 million cash deposit we received from the sale of the Consumer Vehicle Finance business at the end of December. And that sale has now successfully completed as of the 25th of February this year.

Our continuing loans and advances to customers saw an increase of 8.1% with growth primarily driven from Retail Finance and Real Estate Finance. And also our discontinued loans and advances have reduced as the VF book continued to wind down after we've decided to cease lending in that business. Deposits from customers have grown by 8.2%, supporting the expansion in the lending book. On the other hand, the wholesale funding decreased by 43.9%, which is fully attributable to the early repayment of TFSME. Importantly, shareholders' equity increased by 3.8%, reaching GBP 374.3 million, and the tangible book per share rose by 5.8% to just shy of GBP 20.

Let's now just turn to loans and advances to customers. As you can see in this slide, our total loans and advances have increased to GBP 3.3 billion, up from GBP 3.1 billion in 2024. This represents a solid growth of 8.1% in the year, underlying the continued momentum in our lending activities. When we break down this growth by business line, Retail Finance delivered an impressive 8% increase with particularly good strong gains in the furniture sector. Real Estate Finance saw an even stronger growth at 9.4%, driven predominantly by further expansion into residential investment lending. Commercial Finance also contributed positively with a 3.2% increase, which largely reflects the volume of new facilities written and drawn during the year.

Looking at our lending mix, the overall portfolio is gradually shifting towards Business Finance. At the end of '25, Business Finance now represents 56% of our total lending portfolio compared to 55% in the prior year. Our Consumer Finance accounts for 44%, slightly down from 46% in the previous period.

Turning now to our capital position for '25. We've seen continued capital accretion over the year. Our CET1 ratio increased by 60 basis points, reaching 12.9%. This improvement reflects our ongoing efforts to strengthen our balance sheet while supporting growth in our lending portfolio. So if we take a closer look at the drivers of this capital progression, the capital required to fund our lending growth was comfortably met by reductions in RWAs, largely driven to the runoff of Vehicle Finance and by retained profits following the deduction of some exceptional items. These factors have all contributed to the uplift in our capital ratios. Those exceptional items actually totaled GBP 24.1 million, which were all exclusively related to Vehicle Finance. The sale of that Vehicle Finance business has released additional capital, further improving our CET1 ratio on a pro forma basis to an impressive 14.7%.

In line with our progressive dividend policy, we are proposing a full year dividend of 35.5p per share. Our robust capital headroom above minimum regulatory requirements provides us with the flexibility needed to support future growth initiatives. Overall, our capital position remains strong, underpinned by disciplined management and the strategic actions that we took during the year. The combination of improved capital ratios, healthy capital headroom and consistent dividend policy positions us well for sustainable growth in the periods ahead.

Next, on to funding and liquidity. We continue to increase our funding at low cost, which has been instrumental in supporting the growth of our lending book. So customer deposits grew by 8.2% compared to 2024, reaching GBP 3.5 billion. This growth in deposits has not only supported our lending expansion, but importantly, deposits remained stable compared to the first half of 2025 as the deliberate reduction of our vehicle finance book lessened the need for any additional funding.

During the year, we secured GBP 1.8 billion in new funding. It is worthwhile to note that over 59% of that funding is due to mature in the next year. This gives us both increased sensitivity to changes in cost of funds, but also allows us to remain agile and respond to the market.

In terms of deposit security, the FS of the financial services compensation scheme now covers over 97% of our total deposits, offering significant protection to our customers. Additionally, we've also increased our funding in sale and repurchase arrangements to just over GBP 200 million, up from GBP 125 million in 2024.

From a liquidity perspective, our liquid assets consist of balances held with the Bank of England, cash and gilts. Our regulatory minimums -- regulatory metrics remain very strong with an average liquidity coverage ratio of over 190%, well above the regulatory minimums. This ensures we maintain a prudent liquidity buffer as we grow. So if we break down our customer deposits a bit, total fixed term deposits now account for 77% of the total, up from 73% last year and notice and access deposits make up the remainder. Overall, our disciplined approach to funding and liquidity management provides a solid foundation for continued sustainable growth as we move forward.

Let's now review our segmental financial performance for '25. Starting with Retail Finance. We saw an increase in income driven by higher balances, lower costs offset by higher impairment charges, all contributing to a strong uplift in PBT of GBP 57.7 million.

Turning to Real Estate Finance. We experienced an increase in lending within lower margin, lower-risk residential investment segments. Impairment charges rose, but this was mainly due to the 2 specific cases with the majority of the impact relating to those legacy cases materially now being resolved.

In Commercial Finance, we observed lower fee income, reflecting a reduction in early termination fees compared to the previous year. But on a positive note, the impairment charges improved relative to 2024, demonstrating our continued focus on prudent risk management.

Finally, underlying operating expenses remained broadly flat after adjusting for the one-off costs linked to the changes in leadership. Our segmental performance demonstrates our ability to manage risk, control costs and deliver sustainable growth across our lending portfolio.

Okay. So let's now turn to the strategic decision made regarding the Vehicle Finance business and the resulting impact that had on the financial performance and the future direction of our business. So as you know, in July '25, we made a significant decision to stop originating new loans within our Vehicle Finance business. We placed the existing book into runoff and move fully aligned with our strategy to focus on the most profitable and higher returning segments of our business. The rationale behind this was clear: to improve our return on average equity and unlock capital that can be better deployed into our continuing businesses, supporting a more sustainable and attractive returns for our shareholders.

To reinforce this strategy, I'm pleased to confirm that the sale of the consumer Vehicle Finance business was completed on the 25th of February, and this transaction accelerates our exit from Vehicle Finance, generates immediate value and unlocks additional capital for reinvestment. The consideration received was GBP 458.6 million, resulting in a net gain on sale of approximately GBP 9 million, which will be recognized in our 2026 results. As I mentioned, on a pro forma basis, this boosts our CET1 capital ratio by 180 basis points to 14.7%, further enhancing our financial strength and flexibility.

Operationally, the exit from Vehicle Finance is expected to deliver a reduction of GBP 25 million in annualized costs by 2028 with further details to be provided in our investor update later this afternoon. These decisive actions on Vehicle Finance have strengthened our capital position, improved cost efficiency and positioned us to deliver better returns going forward. We remain committed to disciplined growth in our core businesses and to maximize value for our shareholders.

So in summary, we've delivered resilient results in 2025, demonstrating strong cost control, prudent risk management and strategic progress in reshaping our business for sustainable future growth. Thank you for your attention.

I will now pass back to Ian, who's going to talk a little bit about the strategic review and outlook.

Thanks, Rachel. I love these things, fantastic. So just to briefly recap in terms of 2025 relative in particular to the strategy that the business was trying to pursue. We have materially simplified the business. Obviously, we've already talked about the exit of Vehicle Finance. I'm really hopeful and the FCA have now said to us they're going to do this by the end of the month that when we get the final rules, we can move on, get that -- get whatever is in front of us out the way and draw a line under Vehicle Finance from a Secure Trust Bank perspective.

Secondly, Project Fusion, I think, points to what we can deliver from a cost point of view. That GBP 8 million has been delivered and that program has been closed. And finally, we are now operating as one group. The business is one unit. It's got, as I say, 2 lending divisions and its deposit business. So we've materially simplified the group as we move forward.

We've also made some significant enhancements from a customer point of view. 90% of our retail applications are now auto decisions in 6 seconds. And I think that when you look across the business, our approach of combining both a digital and a relationship-led approach is really making a difference. So those sort of enhancements from a customer point of view are some of the things that have underpinned the, I think, impressive growth that the business has delivered over 2025. 8% growth both in Retail and in Business Finance is being driven by record volumes in both of those divisions.

And finally, I think you can see where our tech platform could take us. We've already got, I'm pleased to say, 500,000 people today registered for the V12 app. I think that's only going in one direction. The launch of our new savings app has also enabled us to deliver additional functionality to those customers. And as I say, I think we've got some strong flexible platforms that we use -- intend to use much more powerfully as we go forward.

So 2025, it hasn't been without its missteps, but I think we finished that year in a much stronger position as a business, and that sets the platform for what we'll be taking you through later on in terms of where we intend to drive the business in 2026 and beyond. On that note, I'm going to close the 2025 section, but really keen to get any of your questions or thoughts in terms of the performance during the year.

Rachel, do you want to come and join me just to -- so happy to take any questions that we've got in the room, and then obviously, we'll go to online.

Gary, there's a mic coming around to you.

It's Gary at Shore Capital. I just wanted to ask about deposit markets and competition in deposit markets. I think we heard from OSB recently that they've seen a bit more competition. I heard from Shore [indiscernible] this morning that they haven't seen an increase in competition. So just interested as to what your view is on deposit market competition at the moment and how you're positioned.

Sure. So I'm actually pleased we've got Rajat Mehta here, our Savings Director. So Rajat, you can come up in a second and comment on this. But look, from our point of view, and I think it's one of the powerful things about this business, we've very much been able to be in lockstep in terms of our deposit raising relative to the growth of the business. And actually, whilst, of course, there are ups and downs in that market, we haven't seen it materially shift. Ultimately, obviously, the savings ratio in the U.K. is going in the right direction. There's a strong set of liquid assets available to us. And I guess our spread across that market has enabled us to maintain that stream without material impacts on the margin.

But I don't know, Rajat, if you want to add anything to that?

I think just echoing what Ian said, I think it's been quite stable for us. And we believe that we can continue to sort of effectively fund our lending ambitions and in fact, continuing to optimize our cost of funds. So actually, no real sort of difference or if anything, efficiencies to be built in.

Alberto [indiscernible] Holdings. I have another question on the deposits. When I look at 2025, most of the growth in deposits came from ISAs. And with the change in regulation where the limit is moving on the cash ISA is moving down to 12,000, how should we think of that going forward? How should we think of the growth of the ISA deposits?

Again, I'll get Rajat to comment in a second. But I guess from a sort of headline point of view, we don't expect a material impact. Firstly, that's not coming in until 2027. But secondly, we -- ultimately, it depends on what you expect to happen. I don't expect all of those cash deposits to flow directly into shares. I suspect a large chunk of them will continue to be spread across the deposit market, but just in less tax-efficient vehicles. So we still think there's going to be strong availability for us.

But Rajat?

Yes. I mean, I think if you look at our market share, our market share in the deposit market of $2.1 trillion market is 0.17%. So we see a very large headroom to continue to grow. If you also look at the ISA market over the last many years, the cash ISA market has actually grown at a much faster clip than any of the other deposit sort of segments. So that growth may sort of curtail a bit, but our customers are essentially the higher value sort of customers we're talking about at our average balance per customer is 41,000. So essentially, these are relationships that we've held for a period of time. And we don't actually see a material impact of this on our ability to raise new deposits. We will continue to add new products. And I think we are very well diversified on our ambitions on savings. So we'll have to see how it sort of evolves out, but I don't think it impacts banks of our size. If anything, there is enough headroom for growth in the future.

Phil, have we got questions online that you want to tell us about?

So we have got questions online, but they do relate to the future strategy. So I propose to save those for the second session, Ian.

Okay. All right. Well, unless there's other questions that people want to put in the room, then maybe we'll pause there. We'll have a slightly longer cup of tea, and we'll come back for 2:15, where obviously we'll be talking about 2026 and beyond. Thank you very much.

[Break]

All right. Welcome back, everyone. Thanks for returning for the second half. This is our chance to really talk in a bit more detail about our plans for 2026 and beyond. So we've deliberately structured the next bit of time in order to give you some more detail around that. Firstly, I'm going to outline the strategy that we're going to be driving towards and the revised medium-term targets that we'll be focused on. Then Rachel is going to take us through, in particular, our approach to capital allocation, and we'll take you through that in a bit of detail. And then specifically, the cost program that we intend to be launching inside the business. Then we're going to wrap up with some insights from the people leading each of our business divisions so that you've got a picture of how they're going to take that strategy and convert it into plans in their specific areas. And then there'll be another chance for you to ask any questions or give us your thoughts.

So I guess without further ado, I just wanted to very briefly recap on some of the messages from this morning before I talk about where the business is going to go as we march forward. As I said, we've substantially simplified the business. It's now operating as one. We've enhanced, we think, significantly our customer proposition and experience. And as you can see from the sorts of sales delivery that we've seen in 2025, we're really leveraging the networks and relationships that we've built. And we think we've got a really strong technology layer again that will drive efficiency, but also customer acquisition as we move forward. So I think we've made some of the right calls across the course of that year.

But also when you look back a bit, there's been a material change in the group. We've gone from 8 businesses to 2. Those 2 businesses since 2022 have grown by circa 30%. So it's a material lift and material scaling of the business, and I think shows you the potential as we move forward.

We set, I think, in 2021, a group of medium-term targets, and the business has made progress against those. Obviously, the Vehicle Finance business was a challenge in the midst of it. But ultimately, the capital ratios have improved. The NIM has remained stable. The balances have grown and the cost-to-income ratio has improved as a result. So we've made significant progress against those targets. But ultimately, obviously, they were set a fair bit of time ago, but also in an era where the business looked materially different. So now is the time for us to reset both the strategy and also the targets that go alongside that.

So as I was saying earlier, we now operate the business in a materially simplified structure. We've essentially got the Retail Finance business that I'm sure you all know well. We've got the Business Finance division. We very deliberately brought that together under one leader in order to make sure that we can make really effective capital allocation decisions. And then our deposits engine, we talked a bit about it this morning earlier today, is really powering that growth, and we think there's more opportunity in that space as well. So a materially simplified business that we think structures us really effectively to deliver against the strategy that I'm about to outline.

Now where is it we're trying to go? Well, ultimately, we want to get a really, really clear focus on how we create value. And ultimately, we think that's best done by getting really targeted growth that are going to drive returns for all of our shareholders as we move forward. Ultimately, much of what I'm going to talk about in a second, you'll see some component part of it in a lot of specialist banks. So for me, it's being really clear about what the strategy is, but then obviously focusing very heavily on delivery against that strategy. That is the thing that's going to differentiate this business.

But there are 3 component parts to what we're going to try and drive towards. The first one is product expansion. As I said earlier, we're now operating in 2 scale addressable lending markets and of course, the vast deposit market in the U.K. We think that actually, given that we're currently going to market with asset-based lending, with some Real Estate Finance and investment and development finance with a sort of a decent but fairly vanilla set of deposit products and point-of-sale lending, but again, in a narrow group of sectors, we think we've got a whole bunch of opportunities, which I'll talk about in a second, to expand that product set without significantly moving outside where our current capabilities are. That's the first point.

Secondly, in terms of effective digital solutions, again, we think we've got an opportunity to both improve the efficiency of the business and improve the customer experience, utilizing a group of the platforms that we currently deploy inside the business. We also have a very significant opportunity to tighten that architecture, i.e., get rid of legacy platforms and utilize the platforms that we've got, the scalable platforms much more effectively.

And then finally, in terms of capital discipline, as you'd expect, we want to make sure that we are taking the opportunities that are in front of us that are going to enhance returns. Now sometimes in businesses, you sort of like, okay, I'm trying to grow and that sees me trying to take every opportunity that's in front of me. The great thing about this business, I think, in the markets that we're operating in is that we can pick the opportunities that are genuinely going to enhance shareholder value. So those are the 3 component parts of the strategy that we're going to be pursuing.

Just to deep dive into each of those a little bit more. And as I say, you'll hear from the business heads in a little bit more detail as well. In terms of product expansion, in retail finance, we've built a great business in furniture and jewelry and increasingly in health care. We've built that organically, but we know that the point-of-sale lending market is much more material than the sectors that we're currently addressing. In particular, in home improvements, there's a great opportunity for us to build a strong business there. This is a classic sector where people want to borrow money over extended periods of time and very often at reasonably big tickets. So we think there's a very strong opportunity for us to use our existing capability in that space.

Secondly, in terms of Business Finance, well, we've got a couple of big opportunities. Our Real Estate Finance customers today, they very often want to utilize bridging either as they're entering development or a deal or exiting it. At the moment, we're just watching them walk away because we don't have that -- we haven't had that capability.

At the moment, we're just watching them walk away because we don't have that -- we haven't had that capability. Equally, there are lots of people who enter that market through a bridging facility, and we're not able to talk to those customers. So with a slight switch in our capability, adding some additional people into the team, that's a business that we're already up and running in.

And then in Specialty Lending, we've built a strong asset-backed lending business, but we've watched as others have offered wholesale funding lines to nonbank lenders and have built material and substantial businesses on the back of that. Again, we require some additional knowledge and capability in order to move into that space. We're already bringing those people into the business. But fundamentally, it builds on the key component capability that we already have in our asset-based lending business.

And then finally, from a deposit point of view, look, we -- as we talked about earlier, we've got a good spread in that market, but there are areas like reward accounts and other areas of the deposit market where we think there are opportunities for us to enhance our customer relationships. At the moment, we know that a customer who has multiple products with us has 2x the deposits. So there is a material opportunity for us by expanding our product set to really deepen our relationships with those customers and enhance the average holding that we've got with each of them. So products are going to play a key part as we target higher returns.

Secondly, effective digital solutions. Look, again, there are a number of opportunities for us using the existing platforms to really enhance our capability in this space. In Retail Finance, we're going to be building an eligibility checker so that customers, particularly in home improvements, but across our different sectors are able to understand how much they can borrow, before they go through a full application and before they make their purchasing decision. We think that's really going to enhance that customer journey in the markets that we're seeking to address.

In Business Finance, we're building an online digital application portal so that we can handle business much more efficiently. That's how customers expect to be doing business, particularly in bridging finance, and that will drive efficiencies into the business in tandem. And then in Deposits, as I said earlier, we're really proud of the new app that we've built, but we know that there are lots of enhancements and capability improvements that we can build in that, again, will allow us to deepen relationships with customers. And all of that is going to be delivered through a tight single group-focused IT strategy that really builds those effective digital solutions. That's the second leg.

And then finally, obviously, we're going to be focused on capital discipline. Ultimately, from my point of view, growth is not the objective, returns are. So as we're having debates and we have this sort of week in, week out about where the opportunities are that we're going to be taking, we are looking to drive returns. That is ultimately our focus. We want to make sure that the capital that we've now got in the business is really effectively deployed and our focus is turning that ambition into returns rather than just a headline growth rate. So those are the three key component parts of the strategy.

As I hope you'll get from that, our focus, as I say, is how do we make sure, yes, we can scale the business, but equally that we are driving returns to the bottom line and in terms of the return that we get on capital in tandem. Therefore, as we've debated on what medium-term targets we should be moving towards, we've looked at those through exactly that lens. And we've set just two. And we've set two because we think actually, these are the things that we're really focused on. We want to make sure that we're driving a business that gets us to north of 16% ROAE, and that is powered by a circa 10% increase in Lending growth each year. We're going to do that, of course, with a strong capital base with a focus on cost-to-income ratio with making sure that we manage the margins to a broadly stable position. And we will give you guidance, and Rachel will talk a little bit more about this later on in terms of where we're going to go each year.

But in terms of our medium-term targets, these are the two that we're going to be focusing on and the two that we are driving the business towards. We've got a really, really clear focus on driving shareholder value, and that's what we think these two targets are going to do for us. Why are we confident in terms of getting there?

Well, ultimately, we're confident because the math add up. If we can deliver 10% growth, if we can do that whilst maintaining RAM and a stable RWA mix, and we believe we can. And by the way, that sort of 60-40 split that we've got today between business and retail finance, we expect that to remain broadly stable as we move forward over the course of the coming years. And then when we layer on top of that high operating leverage, we get to that target of 16% ROE. So we're confident that we can deliver against it. We believe we've got the strategy in place to do it. We've refreshed the team. We've exited Vehicle Finance, and we think we've got every opportunity now to really move forward and deliver the sorts of numbers that you all expect to see from this business.

On that note, I'm going to hand back over to Rachel, who's going to talk a bit more about our capital allocation and our cost approach. Thank you.

Okay. So I'm delighted to share with you our approach to capital management, provide you a practical example of our capital tool framework in action following the recent exit of vehicle finance, discuss some cost management and also offer some specific guidance for 2026.

So our capital framework is designed to optimize the deployment of our capital resources, focusing on sustainable growth and the creation of long-term value. This disciplined methodology ensures we maintain strong capital buffers while strategically allocating resources to advance our business objectives and deliver consistent value to our shareholders. Capital generation is driven by prudent earnings, asset disposals and operational efficiencies. The decision-making process begins with a thorough assessment of our available capital buffers, safeguarding our financial resilience. We then evaluate each deployment decision based on projected returns, risk profiles, anticipated regulatory developments and current market conditions. This comprehensive analysis allows us to align capital allocation with our strategic priorities of balancing risk and opportunity to achieve the best possible outcomes. So let me begin by outlining the key stages of our capital deployment process.

So first and foremost, we conduct a thorough review of our capital buffers. This disciplined evaluation ensures we maintain the financial stability required to meet regulatory obligations, providing us with a strong foundation for making prudent and well-informed capital decisions. A major pillar of our approach is maintaining our CET1 ratio at approximately 13%. Prioritizing this target strengthens our capital base and bolsters the bank's resilience, particularly as the regulatory landscape continues to evolve. By keeping our CET1 ratio at this robust level, we are well positioned to changing conditions and safeguards the interest of all of our stakeholders. So once we've ensured our capital buffers are secure, we access any surplus capital for the most effective use. Our preference is to direct the success into divisions of the business that offer the highest projected returns and the most sound risk profiles. So by prioritizing investment in these growth areas, we drive sustainable performance and build lasting profitability for the group.

Alternatively, when appropriate, we evaluate options for returning that capital to shareholders, either through enhanced dividends or share buyback programs. This approach ensures any surplus capital is put to work efficiently, providing ongoing value for our investors. Also, all of these priorities are carefully aligned with our overarching strategic objective, fostering sustainable growth, ensuring continuous regulatory compliance and consistently delivering shareholder value. We want to be transparent that this is the framework that we will be using going forward. This gives clarity to all stakeholders and demonstrates our commitment to managing capital in line with our long-term ambitions.

So let me now turn to our capital position at the close of 2025 and how our capital framework that I've just outlined will work in practice. So our CET1 ratio stood at 12.9%. And on a pro forma basis, recognizing the sale of consumer Vehicle Finance, this increases to 14.7%. So that transaction has generated a surplus of 1.7% above our new CET1 ratio of 13%, providing us with substantial flexibility to support future growth and enhance shareholder returns. With this surplus, we are well positioned to the upper end of our 8% to 10% net Lending growth ambition in the divisions with the higher projected returns, further strengthening our core business.

Importantly, we're also now able to enhance distributions to shareholders. So I'm therefore happy to announce we intend to initiate a share buyback program, deploying GBP 10 million of capital over the next 12 months in multiple tranches, subject to the necessary regulatory approvals. This decision reflects our confidence in the bank's ongoing strength and future prospects whilst reaffirming our commitment to delivering long-term value for shareholders.

So cost management, I'd like to provide you a bit of an update. This plays a crucial role in supporting our commitment to sustainable growth. As we outlined at the half year, we anticipated that the exit from Vehicle Finance would result in GBP 25 million of cost savings with a cost to achieve estimated at GBP 5 million and to deliver that by 2030 as the book ran down. However, the recent developments have enabled us to bring this forward significantly. The sale of Consumer Vehicle Finance business, which, as I said, completed in February and together with the planned migration of the servicing at the end of quarter 2, 2026, accelerates our complete exit from Vehicle Finance. Firstly, this transaction realized a circa GBP 9 million profit from the sale. It also accelerates the need to remove stranded costs given the immediate loss of income in 2026. So our revised target is still the removal of the GBP 25 million of run rate costs, but now importantly, by 2028, with approximately 90% of those savings to be achieved by the end of 2027.

However, to deliver these accelerated savings, we anticipate an additional GBP 12 million of cost to achieve this. Additionally, the product growth initiatives that recently were outlined by Ian, we will require around GBP 5 million per annum of run rate costs by 2028 to deliver those. This initiative will support our strategic objective by simplifying the organization and targeting a cost/income ratio of between 35% and 40%, in line -- in the medium term, in line with most leading specialist banks.

So turning to some 2026 guidance. 2026 is a pivotal year as we build on the decisive actions we took in 2025. So we are projecting net Lending growth of between 8% to 10% within our divisions, demonstrating the strength of the core business and the opportunities presented by our new products. 2026 will be a transitional year characterized by the launch of these new products and the execution of the accelerated cost management. So while these strategic initiatives are crucial for our competitiveness in the future, they will temporarily result in a higher cost-income ratio, which we anticipate to be around 47%. In addition, we expect our capital ratios to remain elevated with a CET1 ratio of around 13.5%. We aim to improve the risk-adjusted margins by around 10 basis points across our ongoing divisions, underlying our commitment to achieving enhanced returns for shareholders.

Regarding Distributions, we are dedicated to maintaining our progressive dividend policy to provide consistent returns to shareholders. And furthermore, as I've just announced, pending regulatory approval, we plan to initiate the GBP 10 million share buyback program. This reflects our confidence in the company's ongoing strength and future prospects.

Lastly, as we complete the exit from the discontinued activities, we expect these areas to reach breakeven, enabling us to focus fully on our continuing divisions. So in summary, 2026 will be a year of transition, strategic investment, and accelerated cost management for the group. These efforts will lay the groundwork for sustainable growth and value creation in the years to come. Thank you. And I'll now pass you over to Andy Phillips, who will take us through our first divisional spotlight. Andy?

Good afternoon, everybody. My name is Andy Phillips. I'm the Managing Director of V12 Retail Finance. I've been with the business for 11 years now, originally joining as a Sales Director back at a time when we were a small challenger business writing around GBP 50 million worth of lending per annum, a figure that we now more than double every single month as I stand here today. I've been in the industry though for 20 years. Prior to V12, I was -- held roles at Hitachi Capital, Lloyds Banking Group and BNP Paribas.

For those of you who don't know V12 Retail Finance, we are a specialist point-of-sale credit provider. We provide credit facilities through a network of retailers right across the United Kingdom, everyone from very small independents, right the way through to major national brands that you would know, a few of which you can see on the screen there. 90% of the lending that we do is interest-free credit. That was very much a specific decision that we made a number of years ago, a strategic direction to look at driving volume, low credit risk lending. And as a result, we partner with the sort of retailers that drive exactly that kind of low-risk customer to us. When I say that sort of customer, what I mean is an aspirational customer. So these aren't customers that necessarily need to borrow money to make a purchase. They are looking to better their lives. They are -- for example, they bought a property and they want to buy the furniture or they're planning on getting married and it's time to buy the engagement rings or perhaps their career has taken off and it's time to buy that first Swiss watch. And whilst they don't need to borrow the money, they'd much rather take the retailers' interest-free credit facilities and leave their own money in the bank earning interest. So it's a really big driver of the success that we've had with the strategy, not just in terms of driving the volume, and as you can see here, we are now a GBP 1.5 billion business off the back of that strategy.

But also it's been the driver of our incredibly low cost of risk that we've enjoyed over recent years. And you can see that, that comes through in the risk-adjusted margin of 5.8%. In terms of the number of retailers that we work with, we have 900 retail partners that extends into many, many thousands of outlets around the U.K. across a number of different sectors. In terms of our market share and where we operate, we use the Finance and Leasing Association statistics to gauge where we are in terms of market share and also how much business we're writing in each individual retail sector.

So as you can see from the statistics, we currently have a market share of 15.5%. Our total addressable market is between GBP 9 billion and GBP 11 billion. What I've tried to do here on the left-hand side is just to show you some of the different sectors that we're active in and where we have particularly high market representation and where that's lower. You won't be surprised to see that we have a very high representation in the furniture and jewelry market. According to the FLA statistics, we rank #1 and #2 in those two sectors. And again, that shouldn't be surprising because they are exactly the sorts of retailers that drive the kinds of customers that I've referred to.

What I would add, though, that's quite important is even though we have a really good representation in those sectors, we also have really significant runway in front of us in terms of additional opportunities, and there's a couple of reasons for that. Firstly, I think the important thing to remember is we actually are still only the third largest player in the sector, and that's easy to forget when you look at the market share that we have and the size that we are. There are two players out there bigger than us, and we've proven time and time and time again that we're well capable of taking business away from those competitors. So still plenty for us to go at even in the markets where we have a strong representation.

Also, we're really operating at scale now as well, and that's opened up a number of opportunities for us that perhaps weren't there before because now we're able to push into much larger volume opportunities with a very limited impact on the cost base. And again, that opens up a lot of new avenues even in those high market share sectors to do some deals that we perhaps couldn't have done a couple of years ago. Just looking at the medium market share, I've picked a couple here. There's a number of different sectors that aren't named here on the slide. I've mentioned leisure and health care. Leisure really covers everything from cycles and gym equipment all the way through to camping equipment and handling equipment and everything in between. So it's a very varied market. We have a decent representation in the market, but again, still very, very much to go at in retailers across the U.K.

But the one I think that I probably want to draw your attention to most is the health care sector. The last time I stood up at one of these occasions was 2 years ago. And I remember talking about how we quite like to look at the health care sector as a next area for us to look to penetrate. And at the time, I remember saying we already made a bit of a start on things and 2% to 3% of the new business that we were writing was now in that sector. As I stand here today, that's nearly 14%. So again, it just goes to show that we're very good at looking at these sectors, understanding what the retailers in these sectors need and then attaching to them our points of difference, our rights to win, if you like, to make sure that we add real value to those retailers and to their businesses. So it's been a really big driver of our success.

Then finally, low market share. It's no secret because Ian has already mentioned it, but home improvement is a very, very obvious one that stands out quite clearly. I'll give you a little bit more information as to why that is in the coming slides. I mentioned about that right to win, what makes us different, what it is that we bring that our points of difference in the sector. The place to start really in explaining that is the blue bubble in the middle. We are a fintech owned by a bank, and that is an incredibly powerful combination in the marketplace. You hear a lot in the press around how fintechs can't compete with banks because they don't have the cost of funds. And banks can't compete with fintechs because they don't have the agility with tech. And both of those things are true. We are really lucky in that we can address both sides of that coin.

So the STB ownership brings us all of those sort of banking hygiene factors that you would expect to bring, surety of funding, competitive cost of funding, but also the regulatory and compliance side of things, the governance side of things that, of course, is important to us as a business. But it's also really important to our retail partners. These partners are regulated entities in their own right. So increasingly becoming a point of difference. They want to partner with people that will keep them safe in this regulatory environment as well. So that bank backing really does enable us to do some really special things that as a loan fintech, we would struggle to do.

In terms of the fintech side of things, I think it's fair to say that's what we're known for. Anybody that knows the business knows that we're a tech-led business. We always have been. That's the key point of difference that we try to bring to market. Really, the secret sauce to that is our ability to integrate and to integrate so broadly with retailers, be they very small or very large, be they very sophisticated in their tech stack or completely unsophisticated in their tech stack and everything in between. And it's the ability to be able to do that right across the U.K. that helps us to build the sort of retailer network that we've now got.

To put it into perspective, I have competitors that might do 2, 3 integrations a year, whereas we'll do 2 and 3 integrations in a week. So it gives you an idea of the sort of difference that you're looking at in terms of our agility in the market. I've mentioned the other points, that operating at scale is really something that's starting to make some very big differences to us now as we become the size of business that we are. I've missed one thing. There's also another important element to mention. I mentioned around the percentage of applications. 90% of applications made in under 6 seconds is fantastic. It's something that we've been working on very hard over the years to make sure that we maintain that performance. But there's one more area that I'm going to mention here rather than perhaps later on, which is the omnichannel reach.

In earlier on this year, we launched our app to market, which gave us an opportunity to start talking directly to our customers. At the moment, we have 500,000 of those 1.3 million customers already into the app. And what that's now enabling us to do is to speak directly to those customers. Historically, and of course, going forward, we'll still deliver the service that we do via retail relationships. That will continue to be a massively important part of what we do. But it's very obvious that having that many customers with a direct communication channel, there are really significant opportunities for us to offer those products new products and services, be it from within V12 or from the broader Secure Trust Bank Group. And I'll give you just a small example of that.

In Q2 of '25, we launched V12 Personal Finance. That is basically a personal loan aggregator. So what we're effectively doing is going to our customers to say, are you interested in taking a personal loan? If you are, come here to complete an eligibility check and we will then place you with one of a panel of lender partners, which we've now built partnerships with. So this is business that's written on their balance sheet rather than ours, and we receive a fee income for pointing the customers in that direction.

Even though it only launched in Q2 of last year, we drove GBP 1 million worth of fee income just from that activity. So it shows we can talk directly to these customers. They want to hear from us. They are interested in the products that we provide, and we are a banking group. And anybody using a banking group's app would be expecting to find more that they currently do in this app. So the future for us in terms of business to consumer for me is enormous. It's not just attractive to customers either, it's attractive to the retailers because increasingly, they look at the app and like the fact that you've got 1.3 million customers in there that they could offer retailer offers to, for example. So it becomes very much a complementary relationship with the end consumer, the retailer relationships and ourselves there in the middle. So I hope on future occasions, I'll be talking to you much more about the progress that we're making in those areas.

Just going back to the traditional Retail Finance business, as I talk to you more about home improvements and why home improvements. The home improvement market is a really, really significant market. It's a GBP 3 billion addressable market as it stands today for point-of-sale credit. And what I'd also say is, when I say home improvements, this GBP 3 billion is the traditional home improvement market. So it's people buying conservatories, windows, kitchens, bedrooms and bathrooms. What it doesn't include is what's increasingly becoming the home improvement sector, which is renewable technology, something that historically has been quite niche, but is now becoming more and more part of everybody's everyday lives, solar panels, batteries, air source heat pumps, et cetera, et cetera, the sorts of things that going forward, we'll all be looking at much more and our future home improvements are likely to revolve around those sorts of products. That GBP 3 billion doesn't include any of that. So there is such significant growth in the market on top of that GBP 3 billion in my view. How will we do it?

Well, you'd be surprised if I didn't say we were going to use some technology to do it. So that's exactly what we'll do. We'll introduce an eligibility checker to the market. What this will enable us to do is customers will be able to complete a soft search, check their eligibility for credit, and we'll be able to tell them if they're good for credit and how much they're good for in terms of monthly payment. That means that customers can proceed with real confidence knowing they'll be accepted and how much for, but also the retailer knows that. The retailer has confidence of the customers' acceptance. And also the retailer now knows that as they embark on their home improvement project, which these things invariably are rather than a one-off spend, they know that, that retailer has -- that customer has headroom to make those further purchases.

We've already started talking to the market about this, as you would expect. We've already been out there talking to home improvement retailers, and it's really interesting to them. They think it makes a real difference, and it's certainly opened the doors for us to have some really strong conversations. So really, really high level of confidence in terms of our ability of what we're able to do in this market and how quickly it is growing. And again, you'd be surprised if we haven't already made at least a little bit of traction. So here, I have a testimonial of one of our early home improvement retailers that we've already onboarded. [indiscernible] is a business that sells gas boilers as well as air source heat pumps, new renewable technology, et cetera.

And the reason that I really, really like this testimonial is that the reasons they said that they love us are all the things I would hope that would come through in our points of difference. They are the things we hope the retailers notice. So just to pick some of this out, "V12 enables us to deliver a fast, frictionless application journey. There's the tech. We'll maintain the standards and the safeguards that customers expect". So you've got that the hygiene factors, the safety of the bank ownership. The balance between speed, integration and responsible finance and how well they're supported by the team.

If we went out to market and try to put in a nutshell what value we add to retailers, that's it. So that testimonial really pleases me. If we can continue to get those sort of results in that market, then I have no doubts at all that we can grow it very successfully.

So what do things look like now and next? We'll continue to operate in the sectors that we're in today. As I've already mentioned, we still got lots of runway there. We've got two guys bigger than us to go at and a proven track record of going at them successfully and taking business away from them. We now have real economies of scale that helps us to do that even more powerfully than we have done in the past. And we've also got those hygiene factors I referred to that stable funding that's going to enable us to push, push harder into these future markets, and that gives us a lot of benefits. The home improvement market will come next. As I've mentioned, big addressable market. Our rights to win really do apply there very well. It looks an awful lot like those great quality customers that we already attract today. And again, we've got a proven track record, as I've said, of what we've done in the health care market. We can repeat that in home improvement. So we have a high level of confidence that we're going to be able to apply those points of difference in these sectors and gain some real growth for the business.

And then finally, going forward, 1.3 million customers, an app to engage them. Retailers that love the idea of putting offers into our customers, customers that seem to be very receptive to have other things from us in terms of products and services and a banking group that can provide them. So from my perspective, the future in terms of a direct-to-consumer play for V12 Retail Finance is really, really exciting. Thank you for listening. I look forward to fielding your questions later on. But in the meantime, I'll hand over to [indiscernible] to talk to you about business finance.

Good afternoon, everyone. I'm not sure which is more concerning the fact that Rachel and I are the only presenters not wearing tires or the fact that I've got this massive [indiscernible] South African Zebra steering at me that looks like it's either going to attack me or be very judgmental about what I'm about to say.

So my name is Luke [indiscernible], and I'm delighted to be presenting to you this afternoon as the MD of Business Finance at STB. Business finance at STB exists to support U.K. SMEs who require specialist or event-driven funding in order to help their businesses grow and be successful. We provide deep experience with a proven track record in delivering bespoke, high-value transactions with certainty and speed across large addressable markets. I've been with STB for just over 12 months now and bring with me over 30 years of experience in the industry, including roles previously as the Head of Real Estate Finance for Barclays Business Bank, the Head of Sales for the Fintech Funding Circle and CEO of Momenta Finance, which is a commercial lending business in the U.K. I'm going to spend the next 15 minutes talking to you about an overview of business finance, our product sets, our competitive advantage in our markets and in particular, our product expansion growth strategy in line with what Ian mentioned earlier.

And again, as Ian mentioned, we've moved away from talking about separate business units of real estate finance and commercial finance have now combined these products under a collective business finance franchise. So just moving on to give you a quick overview of Business Finance. We provide specialist secured lending facilities to U.K. SMEs ranging in size from GBP 2 million to GBP 5 million. Last year, we originated over GBP 600 million in new business, which took our loan book to a record size of GBP 1.9 billion, and we have delivered 23% of lending growth over the past 3 years. Importantly, we delivered a risk-adjusted margin of 2.5%, underpinned by strong credit underwriting and a laser-focused approach to our portfolio management.

On the left side of the slide, you can see our full product set out, which I'll step through just to give you all a flavor of what those products entail. But importantly to say that of that 5 product sets, 3 of those products are core to the business and have been in play at STB for over 10 years. And there were two new recently launched products, which are in line with our product expansion strategy, which I'll touch on in this section, but go into more detail at the end of my presentation and bring them to life with some case studies.

So starting off with our Residential Investment Loans. These make up about GBP 1.4 billion of our current loan book. And these are interest-only facilities granted to professional landlords and are secured against large income-producing residential property portfolios at conservative LTVs. And important to say for this product, given the size and the makeup of our book, they are very capital efficient in that they only attract a 35% RWA. Our second core product is our development finance product offering. This product in our loan book is between GBP 60 million to GBP 100 million, which is relatively small, but that is by design, given all the headwinds around the housing market and the construction industry, but we're looking to grow this product significantly over the next 2 years, hopefully, as those headwinds ease. And this product is all about providing funding to professional property developers to deliver residential houses across the U.K.

Our third core product is our Asset-backed Lending products. The makeup of this is about GBP 360 million in our loan book. And these are revolving credit facilities granted to SMEs to support a range of purposes, including working capital needs, acquisitions, refinancings and growth events. And importantly, these are always secured against assets that belong to the borrower and these range from account receivables, stock, plant machinery, property or a combination of all of those. So on the slide in front of you, I'm getting ahead of myself I'm not talking about the strategic products. So excuse me, I'll -- again, I'll touch on them now, but we'll come back to them in more detail at the end of the section.

So I think Ian actually did a good job in summarizing the two new products that we are launching. The first are bridging finance loans, which are short-term property-backed facilities to provide funding gaps to borrowers until long-term finance kicks in or typically, they have asset sales to repay their bridging facilities. And the second product is Specialty Lending, which are wholesale funding lines given to nonbank lenders who operate in the U.K. who in turn on lend those monies to their own borrowers. So having walked through the product sets, the slide in front of you gives you an idea of the addressable markets that each of those products operates in. And I think the key takeaway from this slide is that even with modest penetration into those markets and modest growth across those products, that supports our growth ambitions hugely, and we can grow our loan book significantly just by taking a small share of the respective markets.

So having spoken about our products and the markets, I'm going to move on to our competitive advantage, and Andy spoke about the right to win in the Retail business. Our right to win in the Business Finance space sits across a number of pillars. The first is a strong relationship approach to origination. And in fact, if we look at all the business that we originated last year, over 70% of that was repeat business from existing borrowers or existing business introducers. We have the ability to deliver bespoke specialist solutions faster than traditional banks. I know every specialist lender will probably tell you that, but we validate it all the time. And as a good example, we provided a GBP 75 million asset-backed lending deal to one of our sponsors last year in Spirit Capital, who are looking to acquire a business called Watsons [indiscernible]. They needed certainty of the funding to proceed with that acquisition very quickly. They engaged with us early, and we were able to give them an answer and being able to support them within 2 weeks as opposed to a number of months, which is typically what the traditional banks would do on a ticket size that large.

We have a highly experienced team that have been in the market and with STB for a number of years, which naturally wins us business. And as a good example of that, we have a relationship director across our real estate products that alone originated over GBP 75 million in new business last year. And finally, we are highly recommended in the markets. We conduct a survey of our borrowers every year. And from the latest survey, over 90% of our existing borrowers would recommend us to others in the markets that require funding, and that's obviously something that we're very proud of.

So hopefully, that has given you a flavor of what we do and how we operate. I'm going to end off my section talking about the two strategic products that both Ian and I have covered off already, just in a bit more detail and bringing them to life with some case studies. So Bridging Finance, we estimate that the addressable market for bridging finance is now close to GBP 11 billion, and it's a market that has matured significantly over the last 3 years. Importantly, these loans fit very strongly with our existing real estate products. They have the same borrowers, the same market risk, the same asset class, and actually managing that product leverages off our existing infrastructure that we have in the business. So the cost to enter that product has been low for us, which is great.

Importantly, around bridging loan products, these loans are dominated by commercial finance brokers in the U.K. as a distribution channel. They are used to dealing with lenders where they can make their loan applications electronically. So we've needed to match that. And very happy to say that by the end of H1 this year, we will have a fully digital loan submission portal that will give us access to a completely new and large distribution channel in the market, which is very exciting. And probably the most important thing about bridging finance is that strategically, it allows us to fund property professionals and developers across the whole life cycle of their various projects. So we can grant a property developer, the bridging loan on the way in to acquire the land, development finance to build out their scheme -- once the scheme is built, we can give them a stability bridging loan while they wait for the property to rent up. And once it has rented up, we can provide them with a long-term residential investment loan. So it becomes very sticky with borrowers when you can fund them across that whole life cycle and becomes very important for both sides.

I'll bring the Bridging products to life using a case study for one of our -- it's actually one of our largest borrowers in the bank by the name of Cubic Capital. They have about GBP 40 million of lending with us at the moment, and they've been doing business with us for over 5 years. They had targeted a site that they were going to use for their next residential development. Unfortunately, we couldn't help them with the development finance for that because of the concentration in our portfolio. But they ran into planning delays, which means that they couldn't fund the -- couldn't trigger the development finance with the new lender. And the whole scheme came under pressure because the vendor was threatened to withdraw from the transaction. So they came to us. They said, you guys know us well, you always managed to find a way, is there anything we can do? And because we're able to offer them a bridging loan, we did give them the finance that allowed them to secure the property and take the pressure off of them while they finalize their planning issues, and we will get repaid when the development finance kicks in.

And then the last strategic product that I'm going to touch on is our Specialty Lending products. So we estimate that the market size for Specialty Lending deals now is between GBP 7 billion and GBP 9 billion, the product itself is in a very close adjacency to our existing ABL products, but with the key specialism needed to understand nonbank lenders. And we've invested heavily in resourcing talent into our business that do understand that specialism

And we've invested heavily in resourcing talent into our business that do understand that specialism, mostly from some of our competitors who, again, as Ian mentioned, have been very, very successful in the space. I'll bring it to life in terms of another case study. So Pro Marine Finance is a business that's been trading for over 15 years. They are specialist lenders that provide finance to people who want to buy marine mortgages or leisure craft.

We've actually been prospecting them for about 5 years just because they are such a good business, but we could never get -- quite get our proposition to them to work because we were trying to fund them with an ABL product, and they already had a specialty lending product from one of our competitors. So needless to say, as soon as we launched our product, we spoke to them, it became very clear that we could assist them with more funding on more flexible terms to help them grow their business, which we did. And as part of our funding, we've refinanced the other lend out completely and took security over the whole business to protect ourselves and the business has subsequently flourished.

Now unfortunately, the specialty lending industry has been spooked recently by 4 large nonbank lending failures, 2 in the U.K. and 2 in the U.S. And essentially, this is down to a fraud issue where all of these lenders were double booking assets into their various collateral pools. So I think it's an issue we're very well aware of. We're very conscious of it. But it is important to say that this is unfortunately not a new issue in the industry. And actually, it's a risk to all ABL facilities, not just to specialty lending facilities.

We only have to think back to 2021 in the U.K. where we had the Arena TV collapse for a very similar issue. So we are confident that we can mitigate against this risk because we have a strong record -- track record of being forensic on our borrowing bases and data tapes in our ABL business at the moment, and we will certainly carry that risk discipline forward into our specialty lending facilities. And actually, I think because of the chaos, the recent failures of course, in the markets. I think big banks will do what they always do and panic and overreact and withdraw. And actually, I think that gives us a really good opportunity to step into the gap and get access to borrowers that ordinarily we just wouldn't have been able to. So I think the phrase is never missed the opportunity to take advantage of a crisis.

So that's it for me. I'm going to leave you with this slide, which again sets out our existing products and those that we have started to scale already. I think my takeaway comment that I can hopefully leave you with is that all of our full product sets allow us to operate in an addressable market of over GBP 90 billion. The new growth products are very close adjacencies to our proven core products, and we plan to leverage what we do well on those core products to grow well into the new products. which gives us a huge market to go after without needing to compromise on our credit risk or come down on our proposed return hurdles. So that's it for me. Thank you for listening to me. Look forward to taking your questions in the Q&A. I can see lots of nodding heads when I mentioned the specialty lending. But until then, I'm going to hand over to Rajat.

Good afternoon. Really happy to be here. My name is Rajat Mehta, and I have recently joined Secure Trust Bank as Savings Director. My background, over 2 decades in building retail banking franchises across multiple geographies. More recently, I was leading the deposit franchise for OakNorth Bank, and I helped them build that over a $6 billion franchise, scaling it 3x over. So savings is a really interesting opportunity, and I'm really excited to what we can do here at Secure Trust. We have a really strong underlying business, $3.5 billion of consumer deposits, as we know, but 85,000 highly engaged customers. These customers have an average deposit size or average relationship size of 41,000.

This is a really healthy number. And we think, however, that there is actually opportunity of growing this much further. Over 50% of our book, we see has customer balances or relationship sizes between 50,000 and 85,000. And there's a clear trend that customers were trying to maximize the FSCS limit. Now very recently, the FSCS limit has gone up to 120,000, and we see that as a clear opportunity to actually increase the relationship size with these very customers. Furthermore, when we look at the cross-sell index, our customers hold on average 1.3 products with us.

However, only 21% of our customers hold multiple products. So that's a big opportunity. Now why that could be really interesting is that when a customer holds 2 products, we see their relationship value with us go up by 60%. And if they hold 3 products, the relationship size with the bank doubles. Now I, for one, see a massive opportunity to really deepen these relationships with our existing customers and of course, bring in newer customers that can add value.

Finally, these customers, our existing customer base of 85,000 customers have been with us for 38 months and growing. For everyone who understands the deposit market, most customers can be quite -- most banks see customers leaving around for rates. But we see a lot of our customers reinvesting and reinvesting with us and that 38 months in growing is a clear reflection of the trust that they have with the Secure Trust savings franchise, which is a really, really great opportunity, in my opinion, for what we can do to build on and clearly sort of build for the future.

When you look at our product mix, 78% of our products are term products, and that's a really healthy mix across product groups. But the advantage of having 78% of products as term is it gives us a really strong view of our liquidity profile, which is a really good place to be given our focus on lending through. And finally, when you look at our market share, we're only 0.17% market share in a $2.1 trillion household savings market. That is a massive opportunity. There's a lot of headroom for growth. And as we invest more, as we bring in more products, we think that there is absolute comfort in continuing to fund our exciting lending businesses through -- over the next few years, and we think that we can further deliver more value and more efficiencies in the business. Moving on and within the structure of what Ian has mentioned, there are 3 key areas of focus.

I think 2026 and beyond are going to be really exciting for savings at STB. In terms of product expansion and our initiatives there, we're looking at adding newer products to widen what our customers can save with us through. Tracker products, base rate tracking products and hybrid savings are clearly examples of products that customers have said that they would be interested in. These are also products that have lesser competition, and we think that, that could be a great addition to our suite of products that our customers save with.

In terms of segments, and I've spoken about the $2.1 trillion household savings market, there are other segments of savings and deposits, particularly through pools like charities, business deposits and education institutions. These are increasingly looking to save with banks such as Secure Trust. We want to get into these segments, and that's going to give us access to $300 billion of additional deposit pools, which is going to further enable us to raise new deposits at competitive prices. We want to also build effective digital solutions.

Distribution is key in any retail business, and we want to diversify distribution by working with deposit partners. We also want to continuously invest in our digital platforms so that we can scale far more efficiently. And an interesting data point that I want to share, 4 out of 5 customer interactions today are self-serve transactions or interactions that our customers do on our digital platforms. This, I think, is a great opportunity for us to grow, but grow in a very efficient manner. So as we scale, as we get more customers and more deposits, we can continue to bring in cost efficiencies because these are very scalable platforms and our customers are increasingly self-serving a lot of their needs, which is a really good place to be.

And finally, I think this is a really efficient business, but we will continue to build this business in a very efficient manner. We want to drive customer loyalty, customer relationships. And I think by doing that, we're in a really, really good position to continue to fund our lending businesses, but at a much lower cost and cost efficiencies coming in. So I think overall, really interesting space for savings in 2026 and beyond.

And I'm going to hand it back to Ian to take this forward.

Thanks. Thanks, Rajat. Well, I hope you found that informative. I guess, listening to it, I think I've set 2 soft plans for the 3 of them. So I'm going to have to reflect on that after today. But just to recap in terms of some of the key messages from us in terms of how we take the business forward. We've set a refreshed strategy. It focuses on making sure that we deliver targeted growth for higher returns. There are 3 key parts of that. We're going to expand our product set, but inside the markets that we're currently addressing, building on the capability that we already have.

Secondly, we're going to utilize our strong flexible IT platforms to make sure that we're really delivering digital solutions for customers. That's going to enhance our distribution, but it's also going to drive efficiency into the business. And finally, we're going to execute all of that with really clear capital discipline, making sure that we're looking not just for growth, but for real opportunities that are going to enhance value. And I guess the good news, and I guess you've heard it from the guys now, the good news is that in each of our markets, we've got plenty of opportunities to enhance value at the same time as growing.

That gives us some confidence in setting 2 medium-term targets. Firstly, delivering 16% plus ROAE; and secondly, driving that with 10% circa annual net lending growth. So we've got some clear targets, a clear strategy to deliver against them. But just to remind you again why we believe that Secure Trust Bank is such a strong, highly investable proposition. There are 5 key parts to it that we've covered today. Firstly, we're operating in large markets where we've got scale, we've got a track record. We've got the capability to deliver continued market share gain in those markets.

Secondly, and as a Northern, you can rely on me for a continued focus on cost, we've got an opportunity with the investment that we're going to make to continue to simplify and drive the business efficiently. That will deliver a cost-to-income ratio that's in line with our sector peers, market-leading sector peers. Thirdly, we've got a clear trajectory to those 2 targets that I outlined, 16% ROAE driven by 10% growth. We are on a trajectory to deliver that. And we'll do that with a lower cost of risk, sub-1%. And finally, we are now well capitalized, the sale of vehicle finance, but also the capital accretion in 2025 puts us in that position.

And subject to regulatory approval, we will start to use some of that capital to buy back our own shares over the course of the next 12 months. We really believe that those 5 key component parts of the proposition make this a very investable bank, and we look forward to working with you over the course of the coming years as we deliver against those plans. On that note, I'm going to wrap up. I'm going to ask the team that are presented to join me. I'm hoping we can get a couple more chairs up here and really interested to hear your questions and thoughts on what we've outlined,

There we go. Okay. Who wants to kick us off with a question? Phil is holding his mic and he's passing it over. Would you mind introducing yourself just for everyone else when you're asking?

I'm Paul Stephanie from TCM Wealth. On the 10% lending growth number, do you envisage this being 10% for both sides or want to grow faster?

So I don't have any favorite children in this respect. I think actually, as we've been outlining, we've got very strong growth potential across both retail and business finance. So the short answer is, yes, I would broadly expect that. I think probably there'll be a slight skew towards business, if I was going to pick it relative to that 10%. But I think I would expect as the bank grows that, that 60-40 split that we've got between business and retail lending would continue. I don't know, guys, if you want to add anything to that.

I think that's right. And just typically because of the deal sizes that we fund are obviously large -- we obviously try to manage a granular portfolio. But naturally, when you're funding those large tickets, you will see majority of the growth coming out of the business finance side.

The other thing just to mention on retail is up until now, it's been a relatively quick churning portfolio. Moving into home improvements will put term on to that. It's a lot longer term. So we should see retail finance growing at least as to what we've seen in the past.

Within the home improvement sector, the perhaps the furniture retailer might be a 2-year agreement and perhaps an average transaction value of a couple of thousand pounds. In the home improvement sector, these are 10-year agreements and average transaction values that are 5 and 6x that size. It makes it much easier for us to scale and to maintain the size of the loan book.

To that end, are there different returns available in different segments of B12?

Yes, the returns always vary slightly. I wouldn't say they necessarily adjust by segment. It's more by size, as you would expect, generally larger opportunities will be of a similar margin to a smaller, more niche opportunity. So you do get differences there. But sector to sector, not particularly the risk profile adjusts for reasons that I've mentioned in terms of the sort of customers that the retailers attract. But return-wise, not especially no, pretty similar.

Gary, there's a mic coming your way.

Gary at Shore Capital. I've got three, if I can. So the first was on the product investment. I think you mentioned GBP 5 million or building towards GBP 5 million of investment by 2028. I just wonder if you could sort of break that down a little bit in terms of the various areas that you've talked about. I don't know if you want to take the...

Rachel, do you want to talk about the investment?

So there is investment across all of the divisions, both from a people perspective and from tech. I mean you heard from Andy that we've built an eligibility checker, so that's part of that. I think in terms of a profile of how we get up to the GBP 5 million, it will be slowish in '26 and ramp up more in '27 and '28. But it's a combination of people and tech.

Okay. Once I've got you, I'll ask a second one just on the capital. I think you said CET1 ratio to come down to 13.5 by the end of 2026, but your target is 13%. Just wondering why you're not running a little bit faster to get down to the 13% quicker. Is there something -- some reason for that? Or is that just to build a bit of an extra buffer?

Yes, I think it's a bit of both. I mean, obviously, we've got some growth targets there that won't consume all of it in 2026. We need to launch these products and make sure that we are -- as Ian keeps mentioned, we need to enhance returns. We're not going to deploy capital unless we're going to enhance returns. And the framework that we've just outlined, we will continuously monitor that. If we can't find a place for the capital, then as we've already outlined in the framework, we will return it.

Okay. And then just on the retail finance side, you mentioned the household products as being the area of growth. What's the competition in that part of the market at the moment? So who you trying to?

Very similar. In fact, it's exactly the same suspects that we've been used to competing with for the last few years. So really very little difference. It's a mixed bag of some of it more specialists, some much more sort of major bank operators, but exactly the same as we compete with today.

In the spirit of it being at our day, but do you want to name some of the suspects just so that people can get a...

Yes, sure. The 2 above us are Navuna, who used to be Hitachi Capital and BNP Paribas. So they're the 2 that sit above us that we generally find ourselves going at. There are lots of other big bar players in the market operating on the margins or in particular niches, but they're the 2 main suspects.

Tom here. Just on the home improvement, are you going to be lending only to homeowners or also landlords? And then is it going to be noninterest finance, IFC?

Yes. So yes, to homeowners, not to landlords. So it's very much a direct-to-consumer play in that respect. Sorry, your second question was?

Interest-free credit.

Interest. Yes, it's a mixture. There is a good chunk of interest-free credit in the marketplace. They also use traditional deferred interest-bearing credit. which will be the sort of credit where you have a payment holiday to begin with perhaps 6 or 12 months. And then it will roll into some interest-bearing agreements, but those APRs are particularly low. So typically, they might be between 6% and 9%. So it's a very different sort of -- so you've got an interest-free crowd and then you've also got a very low rate interest-bearing element to it as well.

And are you thinking of like bathroom, kitchen improvement? Is that the type?

Exactly, yes, exactly. So it varies. So it could be windows, conservatories, things like that or it could be kitchens, bathrooms, bedrooms, et cetera. And as I say, going forward, increasingly -- boilers is another large part of the market as well, gas boilers. And of course, as the years go by and we see more and more renewable technology come in, we'll see those 2 swap out over time, I suspect.

And would you have any maximum you'd be thinking? Would you have to put maximum on that type of lending?

Maximum lend amount, 50,000.

Do the big groups in home improvement retail currently just stick with one supplier? Or are they like, say, switching with multiple?

Yes, they tend to be more with multiple than you would find in typical retail. Yes, within typical retail, probably the vast majority of the people we work with are exclusively with us. And then there will be a handful of major nationals that have enough business to spread around more than one lender. Yes, in the home improvement sector, you do tend to see much more of it.

You also have specialist lenders within the home improvement sector that are lending to a very different sort of risk profile of customer, which obviously is not where we will play. But in terms of the home improvement dealer having a panel of lenders to suit, then they will choose different lenders with different appetites.

Is there any move to to allow point-of-sale action to dynamically choose from an existing panel rather than have each site being one supplier, as I believe things are at the moment?

Again, that varies. In retail, there are some retailers that will put one lender in a particular region. In home improvements, you don't tend to see that it will likely be multiple lenders in each site so that they have that sort of waterfall of credit risk appetite in each site. So different to what we see today in that respect, I would say.

It's Piers Brown at Investec. I've got three. Maybe I don't know if you want to take them, Terry, but the first is just on the scaling of the buyback. If you could just share some of the thinking about GBP 10 million, why only GBP 10 million? And did you think about going for more just given the size of the book discount the shares are currently trading at? It looks like quite an attractive proposition to be retiring equity at this point.

We debated going for more, but I think we've done the right and prudent thing. But Rachel, do you want to add to that?

Yes. I'd just say it's prudent. We've tried to combine the fact that we wish to grow into the new products that we've just spoken about and the business that we've already got in terms of products and return some of it back to shareholders. I will repeat what I've just said that if there is excess capital, we will go back through the framework and potentially announce further buybacks if that's what we think is the right use of the capital.

Yes, we just wanted to be completely transparent about our capital approach, and hence, we've got that capital allocation framework. As we move forward to the extent our plans change in some form, we'll use that capital allocation framework to reassess whether the buybacks at the right level, but we're committed to the GBP 10 million over the course of the next 12 months.

Okay. Perfect. And the second one, sort of detailed point probably for Rachel. On the GBP 12 million additional cost to achieve the GBP 25 million of cost savings. Can you just give us some color on what exactly that GBP 12 million is going to be spent on? Is it redundancy costs or service contracts? What's the nature of the spending?

It will be a combination of people costs and also technology spend to ensure that we can get the costs out as quickly as possible and make sure that the business is digitized as possible going forward. So this is simplification as well as taking out some people.

And the final one is actually probably for Rajat on the savings business. I mean we have a lot of banks complaining about just the savings market being ultracompetitive at the moment. I mean, are you able to share any numbers on what the current average rate paid is on the savings book and what you're seeing on the front book, whether that's in excess of what the back book is currently paying? And I suppose allied to that, your confidence in being able to fund the pace of the anticipated lending growth on the deposit side at acceptable rates.

So no, we don't see enhanced competition. I know there was a question actually in the first half, which is similar. We don't see anything change a lot. If anything, we're actually -- so the current quarter, we haven't had the need to raise a lot of savings because of our vehicle finance proceeds. But generally, if we had to go out and sort of raise, we think actually we could raise new money at better cost than back book, which gives the confidence that we think we could manage our margins quite well. The market continues to be incredibly liquid. And what we are also looking at, as I spoke of, is diversified distribution channels to just access more pools, both in terms of segments and potentially distribution aggregators, deposit aggregators.

All that will mean is that we will be able to access millions of additional clients and billions in additional deposits. So I think we're very well poised to actually continue to optimize the cost of deposits in the year ahead.

Yes. None of us can pick where exactly the macro is going to go, but I think we can all say that some of the fluctuations are going to continue to drive some consumers to continue to hold a substantial amount of cash, and that ultimately is obviously the market that we're trading in.

Just another question on the cost management. You referred to the GBP 5 million initially and then additional GBP 12 million. Just to clarify, is the total GBP 12 million or GBP 17 million in terms of the cost?

Total GBP 17 million. So we booked GBP 5 million.

Okay. And then just a final question. Given the structure of the V12 market, do you expect over time the bit part players, as you call them to basically withdraw. Data is growing in importance. Presumably, your long history of millions of clients should give you the ability to say yes, better than a smaller business, basically.

Good question. What's the answer? Yes. I think there's a quick one word answer to that.

Is there evidence there?

There is definitely evidence of people pulling back. I think the reality is that some of the smaller providers don't have the capital to continue to grow and support where they want to go. So the point Andy was making in his presentation, they don't have the funding costs to compete effectively. And ultimately, particularly if we are going to go through some period of turmoil, we think our ability to underwrite putting a point with a very long history and track record is going to stand out relative to those players.

Those players do -- they tend to, as you would expect, operate in particular niches where they can gain a foothold. And of course, the niche is a niche for a reason that it's only so large to get to a point where they need to scale and as Ian says, unless you've got back backing, you just -- you won't achieve that. And that's, of course, the situation V12 found ourselves in several years ago of needing that push on to be able to push into the volume space. So it's -- yes, I think...

It's worth saying we're not running the business on that basis. We're running on the basis that this is a highly competitive market, and we just need to sharpen our game. And frankly, what happens to the smaller players happens to the smaller players.

Yes. I have a question on AI. I think that's the first presentation I've been in for the last year probably that hasn't mentioned the word AI yet. So here we are. I guess, generally, can you tell us kind of like what is your AI strategy across the organization? Are you utilizing it to improve your process internally? And more specifically for businesses such as retail finance, which is quite a tech-heavy business. What do you see kind of like the opportunities there? And what do you see the threats AI.

So just in terms of our approach. So our immediate focus is on taking some of the opportunities that I've talked about, and those are about consolidating our IT architecture, consolidating our data architecture, bringing those together. Those are going to drive efficiencies and benefits to our business. Now some of those are already starting to be in place. And actually, we have a lot of very strong data in different parts of the organization.

So we are now starting to look at a list of use cases, as you'd expect, for where we can deploy AI. And indeed, in some of those use cases, we've already started to deploy it. You won't be surprised, you'll have heard it from others, some of the immediate spaces that we can deploy spaces like complaints. We're about to have, obviously, the FCA conclusions.

I suspect that's going to be an immediate use case in its own right. We're also looking at how we can use it in terms of software development and in terms of how we underwrite, particularly to your point, in some of our consumer credit areas. So I think there are powerful use cases there. But I guess from our point of view, the reason I haven't focused on it today is, frankly, our focus is making sure that we can deliver against the core strategy. I think AI will be an enhancement to that strategy, but it's not going to deliver the strategy for us. So our focus is making sure that day in, day out, we are focused on delivery against the things that I've talked about, and we'll be looking to use AI where we can to really enhance it.

Just a quick question on the bridging loans. You mentioned that, that would be on the example to an existing client. Is that going to always be the case that you're new to existing clients or they'll be open to a new one?

No, not at all. I think it's a huge addressable market that we need to go after. I think Ian said it well in his intro. A bridging facility is often an to get in with a new borrower and build a relationship. And that is typically on the way into a development or they've built something, not selling quite as they plan, they need a bridging loan to extend, and that's when you get into borrowers on the way out. So it's an enhancement to what we can offer existing borrowers, but it's certainly a new distribution channel that will bring us more borrowers.

I was just going to ask about M&A because I think you mentioned that in the presentation and where that fits into the strategy in terms of sort of building out the new products, whether you need to make acquisitions to do that. And then also maybe just linking into the specialty finance where you're lending to other lenders, whether you sort of consider taking equity stakes in maybe some of those lenders as an avenue to potentially building out as an ownership model further down the line?

Well, I'll let Luke take the latter half of that in a second. But essentially, in terms of M&A, look, our 110% focus as a team is on how we deliver against this strategy organically. As we've said across the course of this afternoon, we think there are loads of opportunities in our addressable markets for us to do exactly that, building on a lot of the capability and frankly, teams that we've already got in the business.

So I don't want to stand here and completely rule out that something comes up that offers real value or might accelerate the strategy to a significant extent. But I am not and these guys certainly aren't trawling the market looking for where the next -- where an inorganic opportunity might sit. Our focus is on the very significant opportunities that we've got organically as we march forward. Luke?

So [indiscernible], I think when you provide a nonbanking with specialty lending, you obviously get very good insight into the business, to the quality of the equity, the quality of their management team, their loan book, procedures, et cetera, et cetera. So it's definitely sort of a date before you marry model where if you know the business very well and there is an opportunity to have those discussions, then absolutely. I think a lot of our competitors will tell you that, that is an active strategy of theirs. And I think a good market published example of that is Shorebrooke acquiring [indiscernible], where they learned through the business through a senior line and they've ended up acquiring the business.

If there's no more questions in the room. In Business Finance, Luke, could you give us some more clarity on how much of the business has an intermediary or some kind of referral commission element?

So I think there's 2 aspects to it. On our ABL products, we don't work with brokers. So we work with debt advisory, PE firms, accounting firms, et cetera, on a small panel that introduce business to us. So there's no fees that we pay out to them via those introductions. Slightly different on the real estate side. We probably get about 30% of new business from commercial brokers and other introducers.

But as I said, as we expand into the bridging market, we expect that to go up. Importantly to say that when we do step into that broker market more, we won't deal with all brokers. We'll obviously have a very select panel that we'll work with initially just to make sure that we get the right quality of deals into the business. So I don't know if that answers the question completely.

Okay. We do have some online questions.

So first question is from a private investor, relating more to the first part of our event earlier today. Can you please comment on the staff satisfaction score reducing from 83% 2 years ago down to 64% this year. This was not a metric commented on earlier, what is being done to address the steep decline?

Yes. So look, I'm not trying to dismiss it, but I'm not completely surprised, particularly given the year of change that we've had exiting vehicle finance and obviously, a lot of people leaving the business on the back of it, that that's had an impact on that score. Obviously, our focus is making sure now that we are engaging all of our colleagues in terms of the go-forward strategy and things that we want to do with the business, which we think are very exciting.

And I think colleagues are starting to feel that. So it is a focus for us. But I think ultimately, in any business, there is ongoing change. There will be ongoing change in this business. And so whilst it's a focus for us, we've got to make sure that we build strong resilience amongst our colleagues because we're in an environment in a market where there is going to be ongoing change.

Next question is from [indiscernible]. What is the nature of the vehicle finance stranded costs? Why does it take so long to remove them? Will they be shown as a discontinued item or as part of the continuing group?

Rachel, do you want to take that one?

Yes. So there are discontinued. So within vehicle finance, as we reported in our segmental reporting, we would have allocated both direct costs relating to kind of the front office element of vehicle finance and also the support costs that we would have incurred in providing other functions that support that business.

So in terms of how long it takes them to come out, the front office element of it have come out. Most of those people have left the business at the end of '25 or into the beginning of January. There will be some more as we continue to service the book. And obviously, some of those colleagues will leave us before the -- by the end of half 1. Then the rest of the program is really not just looking at people costs, there are also contractual costs.

There are other people that support the business that we need to make sure that we can find ways of taking that cost that we would have allocated to vehicle finance out through either some technology solutions or simplifying our organization and our operating model. So those things take time to plan. They take time to execute, and they're not things that you do quickly because you need to make sure that you're running the business safely.

Next question is from Edward Roskill from Roskill Family Office. How actively are you considering M&A? What is the maximum cash you would look to deploy on individual acquisitions?

Well, I think, Phil, Mike answer is exactly the same one that I was just given to Gary, which is we're not actively considering it. And therefore, I haven't considered how much cash we put towards it because it's not on our agenda.

Okay. Next question is from Joseph Isaunders from Symmetry Investments. Why are you guiding to such a high medium-term CET1 ratio?

Rachel, do you want to take that?

Medium-term CET1 ratio.

That's what the question asks.

Okay. So 13%, I wouldn't say in this current capital regime is a particularly high CET1 ratio against the market. There are changes coming through with SDDT and Basel 3.1, which do change the capital stack. You may have seen others have looked at it. We have looked at that. There is a change in the capital stack whereby CET1 ratios will drop in terms of the requirements. So we may well look at those again towards the end of this year and into next, and we may rebase at that point. But under the CRR, I don't think 13% is a particularly high CET1 ratio.

And the final online question is from Marvin Tubner from Westgate Healthcare. With the introduction of the renters rights bill and the potential negative impact on landlords, do you expect the growth of residential investment finance to reduce going forward?

Luke?

Thanks for the question. I think the short answer is no. We are becoming more established in that space and getting a good reputation of being able to fund those deals. We are very aware of the act and the potential implications that they have, but feel there will be a bigger impact on smaller borrowers who will fund smaller landlords, not the professional landlords that we do. And as a result of that, we're probably exposed to the edger part of the market. So again, the answer to the question is no.

Thank you. No further online questions.

Okay. Great. Well, look, thank you. I really appreciate the engagement across the course of the afternoon. I hope we've given you some further insight into the business and why we are so excited about the future over the course of the next couple of years. If there are questions that you didn't get a chance to put or occur to you afterwards, then obviously, we'd be really happy to field them. Ultimately, we want an engaged and active investor base, and we'll be looking to build that as we move forward. So thanks a lot for your time, and no doubt, speak to many of you soon.Cheers.