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Good morning, everyone, and welcome to our Interim Results Presentation for 2026. I'm Eric Lakin, CFO -- CEO, rather, if you got that right. And I'm joining this morning by Ian Ashton, who joined us as Chief Financial Officer at the end of June. This is Ian's first set of results with TT, and it is great to have him alongside me today.

I would also like to thank Richard Webb who has very effectively served as Interim CFO since May last year, and I wish him well for the future. Ian's appointment is 1 of a number of changes to the Board this year. Phil Swash joined as Chairman in May, and I'm pleased to say he's in the room with us today, if any of you wish to meet him afterwards.

Also, Mary Waldner joined last week as Senior Independent Director and Chair of the Audit Committee. Together, these appointments significantly strengthen our experience as we progress in this next phase of TT's journey, and I'm delighted to serve with them on the Board.

Today, we'll update you on the progress we've made, the actions we've taken and our priorities for the second half and beyond.

When we spoke in March, I described 2025 as a year of transition. It was a year in which we faced real operational challenges, took decisive action to address them and rebuilt the foundations of the business to deliver sustainable, profitable growth. I also said that our focus for 2026 would shift from stabilizing the business to executing against a clearly established value creation plan. 6 months on, this is what has happened. The first half has been about disciplined execution and delivery and I'm pleased to report this is now translating into tangible results. The headline for the half is a material improvement in profitability, margin expansion, and stronger commercial momentum, reflecting the actions we took during 2025, improved execution and the delivery of our strategic priorities in the first half.

Adjusted operating profit was up 37% to GBP 18.5 million, with operating margin up 230 basis points to 8.1% compared to the first half last year. There are 3 drivers behind the profit improvement. First, the benefits of the operational actions we took in EMS. The Cleveland turnaround has been implemented and the site delivered consistent profitability throughout the period.

Second, the return of our Components business to profitability, driven by underlying business improvement and by the closure of the site at Plano, which was significantly loss-making in the first half of last year. And third, our strategic priorities are delivering. The divisional realignment has been implemented. The cost reduction program is substantially complete, and we have seen strong momentum in order intake right across the group.

That order momentum was broad-based across multiple sectors, and it gives us good visibility of revenue coverage into the second half. To illustrate that, our order book at the end of June was approximately GBP 550 million, which is 20% higher than the same point last year. Reflecting that momentum and the benefits of our cost program building through the second half, the Board now expects adjusted operating profit for the year to be ahead of current market expectations. In short, we have moved from operational turnaround to disciplined execution and delivery.

Let me take you through the framework driving that progress. At the full year, we set out 4 clear priorities that would define our next phase, divisional realignment, our cost reduction program, sales transformation and portfolio optimization. This morning, I want to report what they have delivered over the past 6 years with each of these 4 initiatives now driving tangible benefits to the group.

First, divisional realignment. The transition to a product-led organization structure was completed in April. The group is aligned around 3 clear divisions: Power, which includes power control, conversion and distribution technologies; EMS or Electronic Manufacturing Services with a focus on engineering-led high-mix, low-volume PCB and high-level assemblies; and Components, which as the name implies, supplies individual components, including a wide range of resistors, potentiometers and optoelectronics.

This structure aligns sites with common technologies and production characteristics and also better reflects how we engage with our customers. To give an example, there are several situations in which we have 1 new or existing EMS customer that can be supported across multiple EMS sites, and we can adapt to their evolving regional supply chain needs, such as the recent transfer from China to Malaysia manufacturing or support requirements for localization.

In Power, we have focused investments in our technology road map, including next-generation silicon carbide power modules and additive layer manufactured products, both of which were showcased at the recent Farnborough Airshow. The creation of these technology platforms as well as our R&D Center of Excellence has strengthened global collaboration and our sales pipeline. We are already seeing the benefits. Teams are working more effectively and collaboratively across our global footprint, and we have secured new customer wins spanning multiple sites, and the result is a more agile, customer-focused organization.

Second, our cost reduction program is substantially completed during the first half, and it is progressing as planned. The costs associated with the program of approximately GBP 3 million were recognized within our operating profit in the first half and were effectively self-funded during the period. So the costs are behind us, while the financial benefits will be delivered in the second half.

We're, therefore, on track to deliver the previously announced GBP 3 million of net savings during 2026. And from 2027 onwards, the annualized benefit is expected to be more than GBP 6 million. This gives us a leaner organization and enables a more devolved operating model with clearer accountability at the operating company level. It also provides a strong, more resilient platform for continued margin expansion.

It's important to note that the cost reductions have been focused at the administrative levels. It's vital that we continue to preserve and invest in the crucial capabilities that customers value and provide sustainable competitive advantage, including specialist engineering skills, operational and supply chain excellence and commercial talent with relevant domain knowledge to understand customer needs.

The third component of the framework is sales transformation, which is the priority I'm perhaps most encouraged by because it is the one that shifts TT from recovery back to growth. During the period, we continued to invest in our commercial organization, expanding business development resource, especially in North America and China, improving capabilities and strategic selling, driving consistency in pricing in the bid review process, improved deployment of our CRM and strengthened pipeline management.

These initiatives are beginning to deliver greater commercial discipline that involves a focus on market segments and applications in which we can add most value and the right to win, is driving stronger order intake with a book-to-bill ratio of 112% for the group and a stronger order book across all 3 divisions. We have seen improved conversion of the opportunities in our pipeline and encouraging new customer logos and NBO wins, which I'll come on to later.

I'll come back to those wins in more detail shortly because they tell an important story about the breadth of demand for our technologies. There remains further work to do here, but we are building a more disciplined and more effective commercial organization and the benefits are coming through.

Finally, portfolio optimization. Following the completion of the strategic review of the Components business announced with our full year results, we have tested market interest in acquiring the business, and we have received an encouraging number of indications of interest. The Board is now evaluating a potential divestment, and I'll reemphasize what we said at the full year. Any decision to execute a transaction will remain subject to value, and there can be no certainty as to the outcome at this stage.

We've been very encouraged by the return to profitability of Components during the period. The business is performing better in a growing market, and that strengthens our position, whichever route we ultimately take. Alongside this, disciplined capital allocation remains a priority, balancing selective investment opportunities to strengthen our core business with further deleveraging and future capital returns.

Taken together, these 4 priorities are doing what they said would do, driving margin expansion, sharpening our focus and building a platform for sustainable growth and delivering improving financial performance. With that, I'll hand over to Ian, who will take you through the financial results in more detail.

Thank you, Eric, and good morning, everybody. I'm very pleased and privileged to be here as CFO of TT. This is a business with great opportunities in very good markets, and it's already getting very firmly back on track. That was my belief before I joined, and my first 2 months in the business have more than confirmed it. So I'm excited at what's ahead.

It's been great to meet many people across the group already to start to benefit from their knowledge and to see their passion for the business and their own excitement at what's possible in the future. Also a word of thanks from me to Richard, who has done a lot of sterling work in his time as Interim CFO and has been extremely helpful in enabling a smooth and very effective handover.

So the key financial metrics for the half. I won't talk through all of these during the presentation, and some I'll look at in more detail in later slides. But for now, revenue in H1 showed a modest decline of 2.7% versus the prior year, but that was affected by 2 significant one-off factors that have been flagged previously. And absent these, sales grew around 4%. We expect to see positive organic growth with or without any adjustments for one-offs in H2.

Operating profit grew by GBP 5 million or 37%. The key drivers were a strong turnaround in the Cleveland site going from loss-making to profit and the benefits of closing the underperforming Plano site. As a consequence, the other profitability metrics are also very positive versus the prior year with substantial percentage increases in PBT and EPS.

And I've referenced on here that these reported numbers are despite an unusually high effective tax rate that's due to the fact we cannot yet recognize a deferred tax asset in respect of U.S. tax losses. Finally, I'd also highlight ROIC at 18%, which is a healthy number and leverage at 1.1x, flat on the 2025 full year after some modest inventory build in H1, but well down on where we were a year ago.

Revenue. This business has great opportunities and importantly, capacity to grow the top line, and that will, of course, be the biggest sustainable driver of value in the future. The headline for H1 was a 2.7% decline at constant currency, as I mentioned, but the underlying picture was positive. This slide shows a simple year-over-year bridge with the movements by division. Power was flat over the prior year.

Aerospace & Defense, which will be very positive long-term drivers, represent around 2/3 of that business. But as noted on here, there were some customer-driven delays, which held the headline revenue number back a bit in the half. Conversely, we expect H2 to be positive. Power sales into Industrials and Healthcare were positive in the half.

EMS' headline number, a decline of 8% was affected by the well-flagged product transfer from Suzhou to Kuantan in the period. Absent that one-off impact, the business grew quite healthily at around 7%. Finally, Components delivered growth of 6% despite the approximately 5% impact of the Plano closure.

This slide summarizes that 37% constant currency profit growth over and above a very small currency benefit of GBP 0.5 million you can see there. I'll talk through the divisional results in a moment, but you can see good year-over-year improvement in EMS and Components driving the group improvement in H1, the former due to the strong progress in Cleveland, as I mentioned.

Power is our highest margin business and generated GBP 14 million profit in the half, albeit it was slightly down on the prior year due to the sales phasing. As I said, we're confident that will come back in H2. So I'll now look briefly at the 3 divisions performance in the period. Firstly, Power. I've mentioned the key drivers of the sales result. As I said, we expect H2 to be stronger.

Agreements recently signed provide good momentum and confidence about the near and longer term with the near-term outlook corroborated by the robust book-to-bill ratio and the longer term by the strong macro outlook in A&D in particular. The Power operating margin of 14% was slightly down on prior year due to the flat sales in the period, but it remains healthy, and we think there is certainly still scope to improve it over time. Eric will give some detail on some of the commercial successes in the period that give us confidence for H2 and beyond.

In EMS, the top line was distorted by the customer transfer, as we said, but showed encouraging robust growth absent that one-off factor. And the operating margin is up to 8%, not where it needs to be yet, but showing very solid progress. The key driver of that improvement has been the turnaround in Cleveland. I've been to that site myself and the management team under new leadership have clearly done an excellent job over the last 6 to 12 months.

There is, as always, more that can and needs to be done, and I'm confident it will be done there, but the site was profitable throughout the half and is very much back on track. As with almost all of our sites, they have existing capacity to cope with substantially increased demand. Components was also a positive story in the half, growing well and back to profit.

The sales growth is being driven by better markets and better execution on our part, and we expect the positive momentum to continue. That top line growth, along with the benefits of closing the Plano site have driven the division back to profitability. We're confident the top line momentum will continue to help drive the margin upwards. And Eric has already commented on the status of the strategic review of the business.

I thought it would be helpful to also include the group sales split by end market and by geography. A&D is the largest segment, weighted heavily to Power, followed by Auto and Electrification, i.e., Industrials and then Healthcare. The sales through distribution are largely in the Components division, about 80% of that 16% on the chart. So we're well exposed to some strong macro tailwinds.

Geographically, we have good diversification, and we're notably well exposed to the currently stronger growing regions of the U.S. and Asia. So some very good opportunities for growth, and Eric will talk further on what we're doing to ensure we get after those as effectively and quickly as possible.

This slide shows the key elements of the cash flow during the period. The high profit was, of course, a positive factor in the half, leading to EBITDA of GBP 24 million. Of the items between that and the free cash flow, the key one is working capital, as highlighted on the slide, which this period saw an outflow of around GBP 13 million.

This was driven by increases in inventory in Power ahead of some of the delayed revenue already mentioned and in EMS at the Kuantan site as they build inventory to support the new business that has been transferred there from Suzhou. Of the other items, the only 1 I'll highlight is the GBP 3.8 million cash spent on restructuring and exceptional items, the majority of that related to the Plano closure and also the closure of the small EMS plant in Mexicali.

Due to the lower cash conversion in H1, free cash flow was nil in the period. We certainly expect it to be positive in H2 and therefore, the year as a whole. I'd also emphasize that on an LTM basis, i.e., June to June, the cash conversion was at 108% and free cash inflow was GBP 23 million. Free cash flow generation is, of course, the key long-term value driver of the business, and I believe that's well understood by all of the management teams. It will remain front and center in all of our decision-making.

As an aside, in the appendix to the slide deck, there are some more detailed guidance points covering some of the full year 2026 numbers, including obviously a few pertaining to cash flow. A quick recap of the key balance sheet metrics and also our current financing. Net debt, excluding leases, was GBP 52 million at the period end, broadly flat on 2025 year-end and well down on a year ago.

Leverage at 1.1x is at a very manageable level, but nevertheless, we do expect to reduce this further in the second half. We also have good levels of financing in place. The RCF of GBP 105 million was almost all undrawn at the half year. As Eric and Richard reported in March, during Q1, this facility was extended to June 2028.

The private placement notes have maturity dates of 2028 and 2031, both at similar rates that amount to 3.65% on average. We, of course, very much value our lenders' ongoing support and we'll, of course, be starting to plan for the two 2028 maturity dates well ahead of time. But in short, the group is in robust shape as regards to financing.

Finally, for me, this slide shows the Board's current and in certain respects, initial thinking on capital allocation, which we thought it would be useful to share. To be clear, at this stage, our focus is on the left-hand side of this slide, i.e., ensuring the business is generating sustainable and increasing levels of free cash flow. That will, in turn, allow any organic investment that's needed to drive the business further forward.

So pretty basic, we want and intend to get into a virtuous upward spiral of ever-improving organic profit and cash performance. How we would think about the other ways of deploying cash generated, whether from organic performance or, for example, from a Components disposal, if that were to happen, is shown on the rest of the slide.

Firstly, absent anything more transformational that might be considered in the medium or longer term, we aim to keep leverage below 1.5x. Obviously, we're below that level today, and it may also go a bit lower in H2. We'll always keep that under close review and ensure we're doing the right thing for the long-term health of the business.

Secondly, dividend. We do not currently expect to reinstate the dividend for the 2026 financial year, but we'll, of course, keep that under very close review. We know it is rightly important for some shareholders. It's fair to say that if and when we do reinstate the dividend, we'd expect to start at a prudent level and build from there.

Thirdly, portfolio. We've discussed Components. Proceeds of the sale will give us options and flexibility beyond what we have today, but the priorities for deploying any proceeds would be as just described and as shown, starting from the left. The other aspect of portfolio, i.e., bolt-on M&A opportunities is something we intend and need to look at as part of longer-term value creation, but to be clear, it is not an immediate priority.

The Board will provide greater clarity in the future on its approach to M&A and selective bolt-on acquisitions, including the disciplined criteria that would underpin any future activity. In summary, our capital allocation framework will help ensure a very disciplined focus on unlocking and maximizing the substantial value we believe exists in the business and with a clear goal of delivering superior returns to shareholders over time. That concludes my section. So I'll now hand it back to Eric.

Thank you, Ian. I think what Ian has just taken you through is a materially stronger financial position, significantly improved profitability, better margins and a balance sheet that is increasingly giving us more flexibility. What I'd like to do now is spend a few minutes on the commercial side of the business and point to some clear examples of our strategy working in action.

Our investment in the commercial organization is translating into a stronger pipeline, an increasing rate of customer wins and a growing order backlog. During the period, we secured material contract awards with blue-chip customers across several end markets. And post period end, we signed a significant multiyear agreement with Rolls-Royce, which I'll come back to in a moment.

In EMS, we won 2 new logos in scientific and analytical instruments. And in Power, we secured 1 new contract to supply power electronics for subsea oil and gas applications. The commercial pipeline continues to strengthen. We have signed a letter of intent with MBDA, a leading European defense company based on our credentials in ruggedized power electronics that could drive significant long-term value.

Our Power business is engaged on the Future Combat Air System, which has the potential to be 1 of Europe's largest next-generation defense programs. We're also engaged on major armored vehicles, including Boxer and Challenger through Rheinmetall BAE Systems, and we continue to support the Typhoon and F-35 air defense platforms. Against the backdrop of increasing defense investment across Europe and the U.S. and an accelerating focus on delivering critical capability, TT is well positioned to support our customers through the next phase of production growth.

What I want to highlight here is the breadth, new customer wins for EMS and Healthcare and a return to growth in the wafer fab capital market segment demonstrate commercial traction extending beyond Aerospace and Defense, and these wins span each of our 3 divisions and provide broad-based momentum. I want to bring 2 of these relationships to life, starting with Rolls-Royce.

Shortly after the period end, we signed a significant multiyear agreement with Rolls-Royce to supply high-reliability solutions for all of their wide-body civil aircraft engines throughout their operational lifetime. The content is mission-critical power electronics and precision magnetics that support the performance and reliability of those engines. This is not a new relationship. It builds on more than 4 decades of collaboration between our 2 businesses.

What the agreement does is formalize and extend that partnership and reinforce TT's position as a trusted design and manufacturing partner to 1 of the most demanding customers in aerospace. For us, the significance is twofold. It provides attractive long-term revenue visibility, and it demonstrates our ability to convert deep engineering relationships into strategic long-dated commercial agreements.

The second example is a program rather than a customer. We have supported the Eurofighter Typhoon program for almost 30 years through production, upgrade and in-service support, the kind of longevity that provides real long-term revenue visibility. During the first half, we secured further material contract awards on the program, reinforcing our position on 1 of Europe's leading air defense platforms.

What makes Typhoon a useful case study is what comes next. As I mentioned just now, we are engaged on the Future Combat Air System, known as FCAS, supporting the transition from today's Typhoon platform to Europe's next-generation combat aircraft. The capability we have built over 3 decades is precisely what positions us for the programs that follow.

That capability sits across our sites in Manchester, Barnstaple, Bedlington and Fairford, highly skilled engineering teams that create a strong foundation for future defense programs. As you can see, targeted investments in technology and business development capabilities is leading to rising commercial prospects and gives us the confidence to support new aerospace and defense contracts in the future.

Finally, turning to the outlook. We entered the second half with improving momentum and with increasing pace and effectiveness in execution across the group. Starting with revenue and our markets. We expect revenue to return to organic growth in the second half, supported by a strong order book, which at the end of June is 20% above the same point last year.

And demand in Aerospace and Defense continues to provide a strong foundation for the group, supported by increasing defense investment and a healthy pipeline of program opportunities. Within EMS, we're encouraged by increasing commercial activity, improving conditions in Healthcare and Life Sciences, the successful transition of customer production in Asia and order growth in the semiconductor supply chain.

Regarding operational performance, a drive for productivity improvements, combined with a lean cost structure is supporting profitable growth and margin expansion. Strategically, our focus remains on commercial execution and operational excellence, and we continue to optimize the portfolio. The Board is evaluating a potential divestment of the Components division with any transaction remaining subject to value.

With respect to the balance sheet, cash generation is expected to strengthen significantly in the second half with further deleveraging expected for the full year. Reflecting this momentum, together with the benefits of our cost reduction program building through the second half, the Board now expects adjusted operating profit for this year to be ahead of current market expectations.

The progress we have made over the past 12 months has transformed TT into a stronger, more resilient business with a clear strategic focus. Last year, we were fixing operational problems. Today, we are executing against a clearly defined strategy with improving margins, a stronger balance sheet and genuine commercial momentum.

I just want to use this opportunity to acknowledge that this is a team sport and the execution of the turnaround would not be possible without the support, commitment and expertise of the many great people we have throughout the business, which I'm very thankful. There remains a lot more to do and continuous improvement remains a mantra. But as I said earlier, we have moved from stabilizing the business to executing against a clearly established value creation plan.

We are increasingly seeing evidence that our strategy is delivering, and that gives us confidence in our ability to deliver growth and long-term value for our shareholders. Thank you very much for your time this morning. Ian and I are now very happy to take your questions.

It's Joel Spungin from Investec. I've just got 2 questions. First of all, on your guidance and your -- when you talk about return to organic growth in the second half, presumably against the minus 2.7%. Are there any sort of -- is there any noise in the second half still either from the customer that transferred to the Kuantan site? Is that now completely out of the numbers for the second half? And anything related to Plano just to sort of help us frame that comment?

Yes, sure. So I'll pick up on that, and you can add if -- augment indeed. So with the customer transfer, it's complete in the sense that production ceased in Suzhou, China at the end of the last year as required by the customer. And so all of the capability and the drawings and the manufacturing, the first articles have all been successfully deployed. The next phase is to ramp up to more consistent production volumes.

And so it's that ramp-up phase in the first half, which meant against a high comparative period, we've had some impact in the second -- in the first half. So in the second half, there's still a ramp-up to be done. And there's obviously always -- with the orders, there's always an execution risk with any manufacturing business, but we're quite confident of the trajectory.

And therefore, we won't expect noise as such to making any such adjustments in the second half to effectively have an adjusted underlying growth. We expect the headline growth to be there, even taking into account Plano. So Plano, obviously, was roughly sort of GBP 10 million of sales in total last year. They aren't in the numbers this year, but we anticipate even with taking that into account, we expect to return to growth in the second half.

So that GBP 14 million effect in the first half from the customer transfer is going to be significantly lower in the second half?

Correct.

Much less negligible noise year-over-year from that. So you can sort of take the 4% that we referenced for H1 as a sort of underlying number as sort of a reasonable steer as to sort of broadly where we might expect to see H2.

And then just a sort of more strategic question. Really just obviously, you've announced there's a review of Components underway, and that's going to be resolved one way or another in the next few months. But I was wondering if you could talk about the synergies between the 2 remaining businesses, Power and EMS, like how closely knit are they? What benefits do you have from having them under the same roof? Or would it make sense for them to be separate?

Yes, excellent. Great question. And it's something I've really spent quite a lot of time getting my arms around since joining. And there's no question in my mind, there's a strong synergy and fit between EMS and Power, which is different from Components. We've talked about in the past, very different characteristics and there's limited cross-selling.

But for me, 1 of the tests is you look at the intercompany transfers, and it's quite material within -- between Power and EMS sites. To illustrate the point as 1, our Kansas site, Power site in the U.S., their biggest supplier is Cleveland. There's a real advantage, and we're seeing that with new opportunities and new customer wins.

It's a real advantage, particularly in Aerospace and Defense and ITAR-compliant sites and so on, where we can offer a full package. We look at a typical power conversion box, DC/DC converter. It will have PCBAs within it. And having that vertically integrated supply, it can give a real edge in terms of the design authority, the speed to manufacture quality control.

So it is meaningful. And we're also looking at opportunities where there are you're speaking to a customer, and we're doing some nice cross-selling where it could be a Power customer or EMS. And they didn't appreciate fully that actually you also have got capability in an adjacent area. So it's very relevant and already and increasingly so in the future.

It's Henry Carver from Singer. Just a couple of queries on the sort of new business wins, new contract wins. First of all, the Rolls one, obviously, you've been partners with them for a long time. Was that the end of a previous multiyear arrangement then you won a renewal for? Or was there any sort of different way in which you're doing business with them?

A bit of both. So with Rolls-Royce, it's a 4-decade partnership. And typically, it's been a rolling sort of 3- to 5-year contract upgrade. And this time around is different in that under Tufan's leadership with critical sole-source suppliers like us for their engines, they're keen to get life-of-type arrangements. So the support whilst there's still at least 2 units produced a year of an engine.

So this is -- it could run -- this run for multi-decades from now. And so for us, we're very keen to enter that very long-term relationship, but with the right terms. It's really important to get the visibility adjusting for inflation, our own material supply. And as part of that, you might expect there was appropriate discussions around pricing.

And so we -- it's a true win-win. I don't you don't always see that in business, which is why Rolls-Royce took a very unusual step of having a joint signing with us and publicized us as a strategic supplier because it's a really good relationship. It's good for us. It's good for them. In addition to that, it opens up the path to potential new business as well and new products beyond what we're supplying already. It's currently from 2 sites, Bedlington and Barnstaple, but we could do more with them. And I referenced earlier the potential for crossing the EMS. That's a good example of that.

And sort of extending that into the other new business wins, I'm just trying to see what the link is between the sales transformation and how you're actually fundamentally going to win new business. What -- how much of it is just because those end markets are really strong at the moment and you've got a good enough position to win new business or a combination of the 2, I guess, clearly, the sense.

It's -- for sure, it's a combination of 2. I think -- I mean it's a real -- clearly, a real driver for future growth is getting top line growth. It's 1 thing doing divisional realignment, taking out costs, improving the bottom line, but we need to return back to growth. So there's been a huge amount of focus. There's a whole range of initiatives within that, and I gave the example of some of those during the voiceover. And it is deliberately despite taking out costs adding to our business development team.

We had -- for example, we had no dedicated BD people in China whatever until a few months ago. And now we do. And not only that, we're going to exhibitions. We're getting significant leads from going to China exhibitions on the medical device sector, in Industrials. And so we're getting -- you can tangible see the going from leads to qualified opportunities to order intake. Now that will be much harder in a difficult market.

So combining that with the market improvement, we're seeing the benefit. The same story, particularly in the U.S. And then Components is another example. You'll see that market is recovering. It has the last sort of -- since the beginning of this calendar year, which is great. And our peers are seeing a similar recovery in high book-to-bill. But if we hadn't taken the action around getting our pricing right, improved marketing, some product innovations, we wouldn't have captured the benefits from that rising market as we would have done. So it's certainly a combination of the 2.

Toby Thorrington from Equity Development. 3 from me, please, 2 on contracts, 1 on tax, I think. So following on from Henry's comment on regarding the Eurofighter material award, could you again clarify whether that's incremental in terms of product supplied? Is it incremental in terms of length of contracts? A bit more detail on that would be helpful, please.

Yes. So Eurofighter, it's an extension of the existing contracts we have with -- so Eurofighter, we sell through Tier 1s, typically like BAE Systems. And so it's an extension of that. And anyone following the defense market would may might be surprised with the continuation of a very -- quite an old platform, but there's often developments and enhancements.

So for this example, with the power electronics, there's always ongoing improvements in the weight, in the form factors and efficiency. And so we incorporate those. So it's effectively -- although the airframe is very similar, it's an upgrade within that. So we're providing in effect, it's new products. So some of our design engineering is supporting that, but it means we can continue with the platform and keep the competition at bay, if you will.

Okay. And in the presentation, you briefly mentioned wins in the subsea oil and gas sector. I noticed you had Baker Hughes on the slide. I'd be interested to hear a bit more about that, please.

Yes. I mean I'll highlight that just because it shows the diversity of our end markets and it's actually quite a significant win for us sort of multimillion-dollar win. And we have -- it shows -- and it's with our magnetics businesses. So it just highlights there's a lot of quite sophistication in some segments you wouldn't necessarily associate with power electronics, but the sort of sensors and controls needed for the subsea sector is -- it actually lends itself quite well to what we do. And there are -- and what I like about it is it's a good reference logo, but there are other customers out there in the sector that we don't serve and we're talking to today.

It's a very high-growth sector. Yes.

Yes.

Okay. And tax, 1 for Ian. Perhaps you can help us out. So a small refund in the cash flow in half 1, liabilities, GBP 20 million payable on the balance sheet at the end of the first half. Can you just give us some kind of steer as to what you think the cash would be?

Without getting too much into the weeds, the reason for the China, in particular, the driver of that, where we get refunds for reasons, which, frankly, I probably don't want to get into right now. But there's just -- there's a timing issue there, predominantly in China, which means that, as you say, very, very modest inflow, in fact, in the first half and then about GBP 6 million outflow in the second half.

Okay. And normal cash tax relative to P&L tax, annual, do you think?

Yes. I mean, broadly, yes. Yes, exactly.

Mark Fielding from RBC. A couple of questions, please. Firstly, on EMS. I think Ian, when you were talking in the presentation, you've referenced the margin improvement, but there was still more to do. I mean, assuming that there's not been a material shift versus what was GMS before and advise me if I'm wrong on that then. I mean, it didn't send much sustainable period of time above sort of 8% margins historically. So I'm curious just what is the potential and the opportunity on that one. Maybe start with that.

Shall I pick that one up first then, Ian? So the first part, it's broadly the same as GMS. The 1 difference is Fairford before the cable harness business is now part of Power. It's more naturally fitted within Power and its common customers. So effective EMS is the 3 sites that do PCBA assembly, high-level assembly and box build. So that's Suzhou, Kuantan and Cleveland.

It will -- if you look at the EMS peers, particularly some very high-volume companies, Flex, Jabil, Plexus, I mean typically, it's a high single-digit margin EBIT business, but they are higher volume, sort of more high volume, lower mix than us. So I won't give any forecast, but I think it will always be a lower margin business than Power because it doesn't have as much design or engineering content. It's more sort of outsourced manufacturing.

But the flavor we have, the high-mix engineering-led should mean that we've got the potential to have higher margins than our peers, even though some of the listed peers have much more volume. So hopefully, that gives you a flavor of what's possible, but it's never -- it's not going to be reached to the levels of Power that we see today.

I said the same thing about Power. We see there's margin opportunity in both of those businesses and not least driven by volume. There is capacity there to drive more volume and just the operating leverage that comes from that.

And just secondly, just on cash flow and cash conversion, obviously looking at 70% to 80% this year. I mean there's been a lot of moving parts in the group the last couple of years. So I suppose just how do we think about the normalization of cash flow, the normalization of cash conversion now?

Yes. I mean about that, let's say 70%, 80%, we think is -- I mean, clearly, as the business grows, that will drag a little bit of working capital along with it. But 80% is -- we think is a sort of sensible assumption going forward. There'll always be sort of the odd spike up or down, but I think that's a reasonable assumption for the medium term. And if we do that, we're clearly throwing off sustainable free cash flow and which gives us some of the options that we talked about.

Richard Hill from Jefferies. Just 1 from me. I just want to kind of narrow in on the A&D and looking at your kind of contracts you pulled out, the JV between BAE and Rheinmetall, the Boxer-Challenger. I wondered, those are quite U.K.-centric, although they have brought in European partners. Is there an opportunity there to kind of explore on to the continent and kind of access some of the larger growth that's there with the U.K. budget constraints, et cetera, that we kind of see here?

Great question. Yes, yes. I think one of the -- we do have, it's fair to say, U.K. and U.S.-centric proportion of A&D customers and business. I mean, within the defense supply chain. So for example, we serve JSF through a U.K.-based Tier 1 and they supply the prime in the U.S. There are some challenges with accessing European defense programs because of workshare arrangements and such like.

So in some cases, we'll need to consider partnerships. And it could be commercial arrangements or it could mean some form of -- some sort of footprint in Europe to do that. So the -- one of the reasons we highlighted MBDA partnership and announced that is that's 1 such example of how we can potentially access very large, sizable future defense program in Continental Europe without necessarily having sort of physical manufacturing presence locally. So we are looking to do more of that. So watch the space, but I think there's the potential to do more than we currently do.

Sorry, Mark Fielding. Obviously, just a quick follow-up question. In terms of that strong order book momentum, I suppose, just how do we think about the delivery time line of the order book? At times in the past, it was quite elongated sort of multiyear orders? Or is this more immediate conversion type stuff?

Yes. It's a whole range. So for example, Components and order intake has been very significant, typical lead time 10 weeks. So that gives us visibility for sort of 3 months typically. For EMS and Power, they're more similar. It can vary a lot. I mean lead times can be more like 6 months or so depends on the products. It could be if it's engineering-led, some can be much longer than that. Some can be short if it's existing product.

And the order book can include everything from deliveries in a few weeks to multiyear. It's a real range. But I'd say probably a useful way of looking at it is we've got very good visibility of this year through the calendar year. So we effectively for EMS and Power got -- we can see we've got the order book coverage for our revenue expectations for the year.

So it's all about delivery. There's no book and ship risk. There's a little element around the Components type business as you expect, but that's closing as the year progresses. So -- and then you look at the as a tail of orders that go into next year and beyond. So there's quite a range of durations within that.

Sorry, Andrew Simms from Berenberg. Eric, you mentioned talent and getting people into the business, both in the engineering side, but also on the sort of the sales and domain knowledge side. How is that going? It's a competitive space. I suppose from the point of view of what TT offers now as a place to work and the offering. How is that evolving now?

Yes. No, it's a great question. I mean it certainly helps when we have a bit of a skip in our step and we're getting improved results because any ambitious capable recruit will look at a business and they want to be part of that journey. What -- and so we've had some good successes in attracting talent around the world, in particular, as I mentioned, the focus on BD has been U.S. and China, but engineering has been throughout.

I think one of the selling points -- well, first of all, it's an interesting business. We cover multiple sectors we've talked about, whether it's Healthcare, Semiconductor, CapEx, A&D. So really exciting programs. But the size of the business is quite interesting. And it's a similar discussion I had with a number of customers at the Farnborough. So it seems to resonate.

We are big enough that we've got really interesting diverse footprint. We've got 20 sites around the world, 16 manufacturing bases, a lot of capabilities we can draw across regions and across different locations, engineering depth, so we can support a U.S. aircraft company in the U.S. with engineering R&D capability in the U.K., et cetera. So it's quite compelling. But we are small enough to be agile and responsive. So on a customer point of view, I'll ensure that I'm meeting the appropriate people. They get senior level airtime and responsiveness they wouldn't get from others.

And they're definitely getting feedback from them around compared us to some multibillion companies that don't necessarily adapt to the needs. And that also applies for individual hiring. They can join a large -- typically, what I'm seeing is people coming from large companies, and they don't necessarily get the sort of time or visibility that they would otherwise get, and they can join us, 1 recent person joined other BD professional in China that joined from a very large EMS, 1 of the top 3 EMS companies in China, really capable, but he felt he can make much more of a difference with us and also we get the right comp and ben incentive plans as well together.

So it's not completely straightforward. In the U.S., the TT brand isn't that well known. Some of the sub-brands are to extend, but we're making good progress on that. And I've seen a couple of examples of engine engineers recently in Kansas, you've got a couple of big firms down the road, including Garmin and others. A couple have gone and then realized the culture is not when they want to come back again.

So I think we are -- it's an area we're focused on and getting things on LinkedIn, you might see, but making good progress there, but more to do because it's really important for our lifeblood engineering, sales, operations and supply chain. Okay. Okay. I think we're all done. Well, thank you very much for coming again and really appreciate the questions and happy to chat to you afterwards.

Thank you.

All right. Thank you.

Good morning, everyone, and welcome to our full year results presentation for 2025. I'm Eric Lakin, CEO, and I'm joined today by our interim CFO, Richard Webb. Very happy to be with you all again for my first full year announcement at TT. 2025 has been a year of transition for TT Electronics. It was a year where we faced clear operational challenges, but also one in which we took swift action to address them. Our focus has been on restoring operational control, strengthening our balance sheet and creating a solid platform for future growth. While there is a lot of work still to do, I'm pleased that we have delivered a stable performance and we enter 2026 with a much stronger operational and financial foundation.

Let's start with a look at the headlines for the year. Despite the macro headwinds we faced, we delivered results in line with expectations with momentum notably strengthened in the second half. We saw improved operating profit, margins and cash flow, driven by better execution and strict cost discipline across the group. Notably, our cash generation was very strong. We have significantly reduced our net debt and strengthened the balance sheet, which Richard will detail shortly. We have successfully restored operational control following the conclusive actions we took earlier in the year, particularly at the Plano and Cleveland sites, and I'll cover this in more detail later.

Performance was mixed by region, but for clear reasons. Europe performed strongly, driven by structural growth in aerospace and defense. Meanwhile, North America materially improved, and we have ceased production at Plano, as we complete the closure of that site. Asia was impacted by softer macro driven demand in EMS, but we view the region as better positioned operationally as we enter 2026.

The next slide breaks down the specific actions taken during the year to build the stronger platform. First, Plano, production is ceased and the site was closed according to plan. We saw a benefit in the second half from last time buy activity, but importantly, the closure removes a significant drag on our earnings going forward. Second, Cleveland optimization. We deployed specialist operational support to the site and results are clear. We have improved yield, productivity and customer service levels, including quality and on-time delivery. The site is now stabilized and on track to return to profitability, more on this shortly.

Third, our components review. We conducted a strategic review, which concluded that the components business could potentially be worth more under different ownership. So we'll be testing that. We have separated its management to ensure more focus and oversight, and the Board is currently evaluating a value-led disposal process, but it is not a commitment to divest as it is subject to market conditions. This is a solid business. And with the changes implemented, we are confident that it will be a positive contributor to the group.

And finally, balance sheet stability. Working capital discipline has materially improved, and we delivered strong cash conversion in part due to successful inventory reduction initiatives in 2025. This work culminated in a significantly reduced year-end net debt and leverage positions.

Focusing specifically on our Cleveland site on the next slide. In 2025, we launched a business improvement project targeting operational performance with a focus on rework hours and productivity, and I'm pleased with the progress made. As the charts illustrate, we have seen sustained improvement with overall productivity levels now consistently above our higher target levels and rework much better than expectations. On-time delivery, yield and cost of poor quality have also all improved. Crucially, the Cleveland site is stabilized and its financial and operational performance has materially improved throughout the second half. There is still opportunity to drive further improvements and the current focus is on the sales growth from existing and new customers to utilize the capacity available and further absorb overheads.

Turning now to our next phase. As we look to the year ahead, our focus shifts from stabilizing the business in 2025 to a more proactive agenda for value creation. On this slide, we have outlined the four clear priorities that will define this next phase.

We have established a disciplined framework designed to drive sustainable growth and margin expansion built around four key pillars, which are: one, a realignment of the business to focus on divisions as opposed to regions. Two, a targeted cost reduction program, delivering material savings. As announced this morning, we expect to deliver approximately GBP 3 million of net benefit in 2026 and annualized savings of double this figure to deliver significant benefit in future years. Third, a sales transformation plan to upgrade our commercial capabilities. And fourth, portfolio optimization to improve synergies and margins across the group.

I will take you through each of these in turn in more detail later. But for now, I will hand over to Richard who will talk you through our financial results.

Thank you, Eric, and good morning, everyone. I'll now take you through our 2025 financial results. Starting with our group performance. Against the backdrop of mixed market conditions, we have delivered a resilient financial performance that highlights the benefits of the operational actions Eric just outlined. Revenue and profit figures are presented on an organic basis. This reflects performance at a constant currency and with the impact of the quarter 1 2024 Project Albert divestment removed from the prior year comparative.

Revenue for 2025 was GBP 481.4 million, down 2.7% organically, reflecting the strong growth in European Aerospace & Defense, which largely offsets the softer demand we saw in the EMS markets for North America and Asia. Despite the lower revenue, adjusted operating profit increased by 2.2% to GBP 37.2 million, demonstrating in large part the success of the turnaround actions undertaken in North America.

Consequently, our adjusted operating margin expanded by 30 basis points to 7.7%. This margin progression was driven by the turnaround in North America gaining traction, continued progress in Europe and tighter cost controls across the group, more than offsetting the decline in Asia. Adjusted profit before tax is up 5.5% to GBP 28.7 million benefiting from the lower interest costs associated with our reduced debt levels.

Adjusted EPS is 6.9p, down 37.3% year-on-year, reflecting the impacts of the higher effective tax rate of 57% as we cannot currently recognize a deferred tax asset for the U.S. On a normalized basis, if we had been able to recognize deferred tax assets, the adjusted effective tax rate would have been 25.4%, and the adjusted EPS would have been 12p. Finally, we significantly strengthened our balance sheet reducing leverage to 1.1x from the 1.8x this time last year, driven by net debt being reduced by almost GBP 30 million.

Turning to the revenue bridge and focusing on the organic performance in the year. Europe was the standout performer, delivering robust growth. This was driven by sustained demand in aerospace and defense, where we're seeing structural shifts that are supportive to the business. This was offset by North America and Asia, where we faced volume reductions. In North America, the decline mainly reflects the EMS and components end market softness. In Asia, the reduction was primarily due to ongoing geopolitical uncertainty impacting customer order timing, particularly for the automation and electrification sector.

Now turning to operating profit. The operating profit bridge tells a positive story of execution. Despite revenue headwinds, adjusted operating profit increased to GBP 37.2 million, up 2.2% year-on-year. Overall, we delivered GBP 0.8 million of net organic profit growth. This is the result of operational gearing in Europe, where higher volumes and favorable mix dropped through to profits and the turnaround actions in North America where the stabilization of Cleveland and the elimination of losses from Plano were critical. These actions allowed us to return the region to profitability in the second half.

Plano, which was significantly loss-making in the first half, generated around GBP 3.5 million of profit from last-time-buys in half 2 and contributed approximately GBP 1 million to the group adjusted operating profit for the full year. Revenue at the site was GBP 13 million in 2025. Production ceased at the end of the year, and this contribution will not repeat in 2026. The progress in North America helped offset the impact of lower volumes and transition costs in Asia, where we have been investing to support the transfer of production from China to Malaysia.

Now I'd like to focus on the balance sheet, which is the highlight of these results. We've delivered a strong cash performance this year. Free cash flow increased to GBP 29.9 million, up 7.9%. This was driven by a significant step-up in cash conversion, achieving 150% compared to 117% last year. The primary driver here was our disciplined focus on working capital, specifically inventory reduction. We have successfully executed inventory initiatives across the group, resulting in a GBP 14.8 million contribution to cash flow. When combined with the GBP 12.8 million inventory reduction in 2024, that reflects the very pleasing GBP 27.6 million reduction over the last 2 years.

This strong cash generation has directly strengthened our financial position as we've reduced net debt by almost GBP 30 million to GBP 50.3 million and leverage down to 1.1x. Balance sheet discipline will continue to be a key focus. Earlier this month, we extended the expiry dates of our revolving credit facility to June 2028 and reduced the size from GBP 162 million to GBP 105 million. This facility is only drawn by GBP 10 million currently and in the next few months will be completely undrawn.

Before I move into the regional performance, I will reiterate that from our next set of results, we'll be moving to a divisional reporting structure, which better reflects how we manage the business. This means a realignment away from regions into 3 clear divisions, Power, EMS and Components. Eric will talk about this in more detail shortly. And you can also find pro forma revenue and adjusted operating profit under this new structure for 2024 and 2025 in the appendix.

Turning now to regional performance and starting with Europe. Europe performed well during the year, continuing to be a structural growth engine for the group. Revenue grew 7.4% organically to GBP 144.4 million, driven by our sustained demand in our aerospace and defense markets. Adjusted operating profit increased 13.9% to GBP 22.1 million, with strong operational leverage, expanding margins by 90 basis points to 15.3%. We are seeing strong order intake across A&D, and the trends are set to continue into 2026.

Turning to North America. Revenue declined 3.7% organically to GBP 173.1 million. This reflects the volume reduction both at Cleveland and in the Components businesses. However, operational performance improved during the year and the region returned to profitability. Adjusted operating profit was GBP 1.2 million compared to a loss of GBP 2.7 million in the prior year. Margins recovered to 0.7%, a 220 basis point improvement. The operational turnaround was driven by 2 main factors. As Eric highlighted earlier, actions taken to stabilize Cleveland, improved yield, productivity and execution, materially reducing losses in the second half.

In addition, production at the Plano site ceased at the end of '25, removing a structurally loss-making site from the group with last-time-buy activity, also supporting regional profitability during the year. We entered 2026 with a recent operational base in North America, which positions the business in this region for further improvement.

And finally, to Asia. Revenue declined 9.2% organically to GBP 163.9 million. This was due to ongoing reduced demand from EMS customers in the health care and A&D sectors with continued geopolitical uncertainties, delaying customer ordering. Operating profit fell to GBP 21.6 million, with margins compressing to 13.2%. This performance reflects lower volumes and some transition costs as we transferred a major customer from our facility in China to Malaysia, which is now complete. Completing this transfer strengthens our resilience against geopolitical uncertainty, better positioning the region moving forward.

On the next slide, we have broken down revenue by our end markets. Aerospace & Defense was the standout, growing 12% to GBP 152.8 million. This highlights our increasing exposure to structurally attractive markets where defense spending continues to rise. Automation & Electrification softened by 13%, reflecting the macro intrapolitical uncertainty that caused customers to be cautious with order placement. Healthcare was down modestly by 4.3%, primarily reflecting reduced U.S. research grants and funding though our pipeline in medical and life sciences is healthy, and this remains an attractive market for TT. Distribution declined 4.7%, which was expected as component demand continues to normalize post-COVID.

Overall, the strong growth and positive structural trends we are seeing in aerospace and defense give us confidence. Whilst other end markets have not performed as well as we would have liked, this largely relates to macro-driven softness of demand. We entered 2026 in a better, more stable position.

Thank you, everyone, and I'll now hand back to Eric.

Thank you, Richard. I think we can all see there is an improving picture and a stronger financial base for TT. I will now return to the 4 priorities for our next phase before touching our customer base and finally, look at the outlook for 2026. First, our divisional realignment. As we have mentioned, from this year, we are shifting how we organize and present the business away from our current regional structure managed as Europe, North America and Asia, to a product-led divisional structure. The group will be aligned around 3 clear divisions, Power, EMS and Components.

Why are we doing this? It aligns us better with our customers' capabilities and markets. It enables us to develop and deliver more coherent strategies aligned to divisions that have different technologies, characteristics and routes to market. It also creates clear accountability for product development, sales and planning. As part of this reorganization, we will devolve further responsibilities to the operating companies to enable a more agile business with faster decision-making being made by those closest to the customer. This also facilitates a simplification of the organization structure including an element of delayering and increasing the accountability of performance to the sites. As mentioned, pro forma divisional breakdowns are available in the appendix.

Second is our cost reduction program. To support this leaner operating model, we have initiated a targeted cost reset to permanently reduce our structural overheads. We expect this program to deliver around GBP 5 million of gross benefits in FY 2026, which will be a net benefit of approximately GBP 3 million after implementation costs. Looking further out, we anticipate annualized savings to be around double this year's level. This is a program that directly supports our margin progression goals, and we will share more information as the year progresses.

Third is sales transformation. We're upgrading our commercial capabilities and bench strength, particularly in North America and Asia, and investing in business development talent, tools and processes aimed at delivering improved pipeline, order intake and pricing discipline. In particular, there is a renewed focus on new customers and new product introductions with these activities already bearing fruit as there's been a significant increase in new business wins in recent months, especially in North America.

And finally, portfolio optimization. And as a management team, we continue to review the group's portfolio on an ongoing basis to ensure it remains aligned with our strategic priorities and areas of competitive advantage. Our strategic review of the components business is now complete. The Board is actively evaluating a range of options, including a value-led disposal process. But as mentioned earlier, we are not committed to a sale. Our current focus is on improving margin quality and returning the business to being a value accretive part of the group.

Looking further out, we have restarted early-stage prospecting activity for targeted strategic bolt-on acquisitions that strengthen our core capabilities and reach, especially in the power electronics sector in which we have developed a strong capability and market position. All in all, we see these 4 priorities as being key to the next stage of TT's growth and delivering value for all our stakeholders.

I would like to spend a bit of time looking at some of our customer relationships. During my first year at TT, I've been able to see our client relationships in action and understanding the significance of these relationships gives me great confidence. We serve some of the world's most respective and demanding companies across our core markets. And these companies choose us because we operate in the mission-critical space.

Whatever the requirement, our customers rely on TT for precision, reliability, engineering capability and production excellence. These are not transactional relationships. They are deep multiyear engineering partnerships we seek to solve customer needs typically in regulated markets for demanding specialist applications. This diverse blue-chip customer base provides us with resilience against market cycles and is a foundation upon which we will build our future growth.

I want to highlight what one of our partnerships looks like in practice on the next slide. So Edwards is a customer we have supported for more than 15 years. They supply solutions to the semiconductor capital equipment market and we provide a full tier EMS solution spanning PCB assembly through to complex high-level assemblies and specialist testing for vacuum technology. They operate in a highly demanding sector where precision and reliability are nonnegotiable.

By providing everything, from comprehensive test development support to supply chain transparency, we give Edwards the confidence to meet their own commitments. It is this level of deep rooted reliability that allows us to grow alongside our most specialist global clients. I recently met with the team at Edwards, and they conveyed the importance of our ongoing relationship to their success and the future growth of the business. As this example illustrates, our partnerships with customers go well beyond the supply vendor dynamic, and we are deeply integrated with their processes to help create value over the longer term.

Finally, turning to outlook. TT enters 2026 on a firmer operational and financial footing. We have taken swift action to improve operational performance and are aligned on a clear strategy moving forward underpinned by the growing strength of our balance sheet. We have high exposure to the A&D market, which supports growth and margins across Europe and North America in what will now become a significant portion of our Power division. While we do expect some continued softness in EMS markets, I remain mindful of the ongoing geopolitical uncertainty. Our focus is firmly on what we can control.

The operational and cost actions we have taken are expected to continue driving margin improvement and better execution across the group. The North America turnaround is now becoming a tailwind with losses in the first half turning to profits in the second half. The significant improvement in the region, together with the cessation of production at Plano, give us a cleaner, more stable earnings base moving forward. Cash generation also remains a key priority. We will continue to focus on working capital discipline and operational efficiency to support strong cash conversion.

With leverage now reduced to 1.1x and our financing facilities extended, we have significantly strengthened the balance sheet and increased our financial flexibility. So we expect 2026 revenue and adjusted operating profit to be in line with current market consensus. And this reflects a more stable, higher quality and more resilient business following the actions taken during the year.

2026 is about consolidating the operational progress we have made, maintaining margin discipline and continuing strong cash generation as we build a stronger platform for a return to growth better placed to capitalize on opportunities as they appear. While there is still more work to do and the remain external factors and market uncertainties, we entered the year with a more focused business, a stronger financial position and the greater confidence in our ability to deliver further progress.

So thank you very much for your time this morning. I hope you'll agree that this is an exciting time for TT, and we are looking forward to showing our progress moving forward. Richard and I are now very happy to take any further questions you might have.

Mark Davies Jones from Stifel. A few things, please. On the change in divisional structure, does that effectively get us back to where we were before the move to the regionals? Or is there a difference in what allocation you do between those divisions? And if you're devolving more responsibility to the operating units, are there implications for the divisional management teams? Are you retaining the current team and new people coming in?

And then the other one is the step-up in sales investment. Does that consume some of the benefits of the cost savings plans? And what sort of investment financially does that involve?

Thanks, Mark. I'll take those 3. The new divisions are very similar to but not identical to the previous divisions. I think there's a couple of differences. For example, Sheffield is power, not components as it was before. And Fairford is also power not part of EMS, which it was before or GMS in the previous name, but broadly similar. But the divisional structure we've got now is really designed to put all the sites with similar characteristics together. And so it's much more coherent. And the Components division is, therefore, what we've separately been running internally already, but without the Plano production.

So the whole scope of that is within the review.

Correct. correct. And in terms of the impact of what was the regional teams, I mean, in fact, it's part of -- the cost reduction program is separate, but partly facilitated or enabled by the divisional reorganization. So for example, with the executive team, we've gone effectively from 4 regions, so 3 components to 3 divisions. So that's 4 to 3.

And the divisional teams will be significantly smaller than what was previously regional teams. So there's that element of delayering. So it puts a point around putting more responsibility to the site teams and leaders. Much of the saving is around what was previously the group functional costs. So support, particularly in the sort of non-primary functions, supporting what was the regions and the teams, those responsibilities are covered affected by the sites, and so there's been a lot of reduction in that area. And then your...

The cost of the investment on the sales?

Yes. So I think there is some net increase in cost for BD. It's really important that we don't -- with all the short-term benefits of cost cutting, we don't forget really, our mission is to grow the top line and drive profitable growth. There are some -- so I mean overall, the actual change in the business development function, including sales, commercial teams won't be materially different from prior year because we've also had some evolution of the sales team.

So part of the sales transformation is a high-performance culture. And so as you expect in that culture of sales team, there will be some people coming in, some people going out. There'll be a net increase in head though. And so there'll be a modest absorption of some of the net savings, but it's quite small compared to the headline savings. And it certainly should pay for itself.

It's Andrew Simms from Berenberg. Just a couple of questions around pricing initially. I mean you talked about sales transformation. It would be good to get maybe a little bit of a feel for where you're seeing the benefits of pricing coming through? Maybe some examples of how that's coming through there, that would be great. And then following on from that, in terms of new business, in terms of new logos as well, how should we think about gross margins and that business coming through, how that supports medium-term operating margin ambitions?

Thanks, Andy. On pricing, there's 2 parts to it. It's existing contracts and new contracts. So with the former, we've done a review of a large customer and contract margins, in particular, around Cleveland. So we did customer product profitability analysis covering close to 100 different contracts and that was quite insightful. And that revealed really, so you can pareto these things, a handful of opportunities where the margins are not what we need or expect and some are very low in a couple of cases, actually negative. There's a legacy there and part of it is getting the right standard cost and rigor around bids.

With the visibility we have in some of these cases, a contractual ability to increase prices with existing contracts, particularly in the aerospace and defense, we've got the right to have a transparent cost review and apply appropriate margin. So we've had 2 quite significant successful price negotiations and outcomes at the back of last year, which will have ongoing benefit this year. So that's been helpful. And it actually shows -- these aren't easy discussions to have, but the customer chose their value and need our ongoing support.

Going forward, it's a point around sort of bid and pricing discipline. We've got a good -- a rigorous bid, no-bid structure in place. And so we make sure that we make the right decisions. And it's much about pushing the highest prices. For components, for example, we had a sort of a particular mandate, not accepting margins below x percent. And actually, we turned away some business that would have been contributing to our bottom line.

So in some cases, by exception, we take a different view for certain contracts where it's making a positive contribution. You certainly want to cover at least all the variable costs, direct costs, and actually and get some scale and cover the overheads. So it depends on the circumstance. But overall, we're tracking that and there's a big important part of it.

In terms of new logos and the impact on margin, I mean, it varies, I mean, particularly some EMS contracts. I mean overall, the margins will never be as high as, say, in other parts of the business. And you'll see that come through in the new divisional structure, and that is the nature of it. I mean you look at our peer groups, typically in EMS margins, and they're typically mid- to high single-digit percent. And as we get new logos, we're still pricing them to ensure we get profits from day 1. We're not doing any sort of cost entries.

A couple of examples recently. We've got our first new logo in North America in agricultural drones, another one in data centers. And we are quite well aligned to meet their needs and make profits. There is business out there. We could win, but we'd lose money out. And we've been very disciplined to focus on profitable growth, not just top line.

Alex O'Hanlon from Panmure Liberum. Just a couple of questions from me. Firstly, just on the Cleveland productivity improvement. It's a good chart that you have in the deck, and you can see how that's progressed over the year. It's interesting to see that the improvement has tracked the, I guess, better targets throughout the year. Are we at the target level that you want to see now? Or is there further progress to go?

And the second question is just on capital allocation. You mentioned the possibility for bolt-on acquisitions in the future. I was just wondering, on the dividend, what do you still want to see in terms of progress before you're reinstated?

Thanks, Alex. In terms of productivity improvements, I mean, right, it's very pleasing when you implement initiative and you can see the evidence of that. And so productivity, I mean, the way we define it is, it's total hours spent on a product divided by total standard hours expected. And you're always going to have -- we set it at 75%, we're excess of that, which is good. I mean in practice, the way that is measured, you're always going to have some element of training time, vacation, what have us.

So the similar measures of efficiency, and it's equivalent to that as more like 90% or so. So it's where we expect it to be. Could we push it harder? We're always trying to do more and more. And by getting higher productivity, that manifests itself improved profits by either having more capacity to do more or we can reduce headcount. So I think it's where I'd like it to be. I think if we're; going to sustain at that level, it'll be a good outcome because there's many other factors as well, including quality and the ability to also -- there could be a period where we have a slight impact. So we're bringing in new product introductions, and that has an impact as we get the standard costs delivered.

And then in terms of capital allocation, I mean, look, a priority last year was absolutely a focus on balance sheet strength, resilience getting the gearing down and the refinancing. And Richard and team and Kirsty is here with us as well, Head of Tax and Treasury, done an excellent job resolving that. So it's nice to be getting these questions now.

Looking forward, I think we're very mindful, obviously, a lot of uncertainty at the moment, are very mindful of maintaining a strong balance sheet. So the dividend position, the Board will continue to review that going forward, and we may well have an update at the interims and make sure we're making the right decisions in the medium to long term as well for shareholders. So I mean there's other options available, of course, whether it's share buybacks or acquisitions.

On the acquisition point, it's too early. We need to be good stewards of the business, prove that being more reliable and consistent in our delivery against promises and prove we are a good owner of businesses. But it's also true cultivating targets can take a long time. So we're right to start that now. And there's definitely a runway of opportunities out there that could be additive to our business. So it partly depends on opportunities that arise and then we make the best decisions at the time.

Sorry, can I come back for one more, which is around the moving parts of this year and the guidance you're giving, because obviously, there's a lot of underlying progress. But the guidance you sort of stood behind this morning, the top end of that is flat year-on-year in profit terms and the bottom end of it is obviously a step down. So you've got a GBP 1 million headwind in terms of the full year contribution from Plano, you've got strong growth in Europe in the A&D business ongoing. You've got presumably better underlying performance in the U.S. we should have year-on-year, and we've done the big transfer in Asia. So can you talk through the other headwinds? Is it just volume in EMS?

Yes, Richard, do you want to pick that one?

So one aspect is margins in Europe is now power. So there was -- there's some beneficial mix within 2025 that won't repeat in 2026. There will be some softening of power margins as we go into next year. But yes, the ongoing softness in EMS continues to be an area where we're being cautious for the 2026 outlook. That is the kind of primary driver of why you don't see 2026...

And it could be by end market within the...

I mean I'd just add, big picture, there's obviously a lot of uncertainty. And it's too early to call what the impact would be with the current situation in Middle East. There's likely to be some level of inflationary impact. We've not yet seen any constraints on raw material and supply chain, but they might occur and they could have an impact. Obviously, we've got energy price rises, which could ultimately impact some of our fabrication costs, particularly where we use furnaces and so on.

But it's early days. We don't know, and it's unclear what the impact would be in terms of customer demand patterns as well. But I think there's a broader caution around inflation and the impact of that on the business, which we're obviously taking countermeasures to that with the cost reduction. I mean, by division, the components business, we're two months in, so it's early, we're showing signs of good resilience, which is encouraging, but the lead times there are quite short, so we don't get the visibility of that division as we get for power or EMS.

But in terms of end markets, we're seeing clearly ongoing strength in A&D. I think we have good growth in '25, I think sort of continued growth in '26. But we're not -- a lot of the very large contracts we won last year, a multiyear contract, so it's just temper enthusiasm we're talking. Single-digit growth in '26, not necessarily double digit.

And look at the various markets across EMS. Health care remains somewhat subdued, and we're expecting, hopefully, to pick up towards the second half of the year, particularly around health care spend and that feeds into R&D and specific programs.

Semiconductor CapEx is a very interesting one. That was down last year, which might be surprising, given the trend in that sector, but there's two elements to that. One, specifically to us, there was some additional safety stock ahead of the transition from Suzhou to Kuantan. So that had an impact year-on-year for '24 to '25. And actually, our customers who provide equipment for fabrication facilities. It's a little bit of a soft market because it's really about upgrade to new facilities rather than the production itself rate of semi chips.

But we are seeing signs of improvement in that sector with the conversation we're having now with a couple of our customers encouraging. So we should see a pickup in that. Obviously, it starts with pipeline and then orders and then that feeds into revenue. So I'd be interested how that pans out through the course of this year.

And then other general industrials, it's a mixed bag, whether you're looking at specialist industrials, rail and a number of other sectors we have we serve in EMS. It's sort of a mixed bag. But a key point around EMS because I think we would -- overall, we're not expecting to see growth in EMS this year. But this pivot to regional supply chains and moving and investing in regional and domestic sales is looking like it will pay off, particularly for China, regional sales. So we'll see, hopefully, as we progress that through the year, but we're sort of cautious at this point in the year.

We've got a question from online from Joel at Investec. Can you quantify the costs associated with the customer transfer from China to Malaysia impacting the APAC division? Is that process now complete? And are there any signs that the rate of APAC revenue decline is stabilizing or are you planning on it being lower in 2026?

Do you want to cover the cost base?

Yes. So the overall cost was around about GBP 1 million to OpEx and then some limited CapEx investment as well, and that transfer is now complete.

Thanks for your question, Joel. And I think it's complete. We've had success. It was a crucial project last year for a large customer and all of the first article inspections have gone through well. So we're now in the process of spinning up volume production. So that will be key next stage of that process this year. I think overall, we still expect for APAC region a reduction in the decline we saw in '25. So as I mentioned earlier, we're not expecting a return to growth this year because APAC is really driven by the EMS market. But we're seeing a level of stabilization as in anticipating a reduced decline this year.

And crucially, the lead indicators we have is what does the order intake look like in pipeline to drive growth, certainly beyond this year and potentially see that coming through in the second half. But overall, we're being conservative around our forecast assumptions for '26.

Thank you. There are no further questions from the webcast. So over to you for any closing remarks.

Okay. Well, look, thank you all for coming. It's good to see a full room. Thank you for your interest and time, and appreciate it, and look forward to seeing you all at the interims, if not before. So thanks very much. Have a good day.