Jakob Sigurdsson: Those here in the room at JPMorgan in London and those joining us online as well to Victrex's full year results presentation for 2025. I'm Jakob Sigurdsson, CEO of Victrex. Before we turn to the results summary in what has been a particularly challenging year for Victrex and of course, the chemical industry at large, I do want to highlight a couple of slides on Slides 2 and 3 in the presentation, and we'll call them out as we go along to put things in perspective. And I also tell you a little bit about how we are addressing the challenges we faced in FY '25 and continue to face, but underline that the long-term prospects and opportunity for Victrex remain very strong. We are addressing these ongoing challenges, and we have been doing that in the past couple of years as well. We're also announcing a profit improvement plan today that builds on our self-help in 2025, but also leverages the recent investments in infrastructure, foundational investments like digital and other things to make us more efficient. We've now concluded those investments, as you clearly see in our CapEx profile and are now continuing to drive improvements on the back of these in many different areas. But it is very important to note that we do remain a world leader in PEEK. Nobody has more experience with application development in PEEK. Nobody has more data on how PEEK is produced, how it processes and what needs to be considered when converting it into performing parts and forms. We have a large addressable market, probably 5x what we're seeing being sold today and very well aligned to strong megatrends, whether they are metal replacement or striving for clinical benefits on the behalf of patients. And with a very differentiated portfolio around which we've built a good intellectual property estate that will give us a sustainable competitive advantage going forward as well. In what has been a particularly challenging year, it is important that we don't overlook the long-term potential of this business. Turning to Slide 4. Ian Melling, our CFO; and Andrew Hanson, our IR Director, are with me here today. A copy of our presentation is on our website at www.victrexplc.com under the Investors tab and by clicking on Reports and Presentations. In terms of format, I will call out the slide number when we are speaking. I will start the presentation with a headline summary of the results. Ian will then cover the financial results in detail, our profit improvement plan and our outlook summary. And towards the end, I will summarize business performance. And finally, we'll finish with a Q&A. Questions from the room first before we take any questions from those that are on the call. So headlines for FY '25 ever so briefly, strong volume growth in the year. Sales volume up 12%, primarily driven by value-added resellers and Energy and Industrial. Momentum was maintained during the second half at volume level overall. Underlying PBT was impacted by currency, which Ian will cover in detail later on by sales mix with stronger [ RAS ] and also within Medical, weaker medical spine and also impacted by the annualized start-up costs from our new China manufacturing facility. It is worth noting that we did deliver half 2 profit before tax in line with half 1 and in line with our latest guidance. On cash conversion, we delivered another strong performance, reflecting strong working capital management, resulting in operating cash conversion of 121%. And this obviously was impacted by a significant reduction in our capital expenditures as well, which have been coming down ever since FY '23, and we've talked about it in the past in detail. Ian will cover our profit improvement plan with a headline of at least GBP 10 million savings being targeted. This further builds on the self-help actions we've implemented in FY '25 and the recent foundational investments in infrastructure and technology to make us more efficient. We've also reviewed our capital allocation policy, and Ian will cover that in greater detail as well. And finally, our outlook for FY '26 is that we're targeting, I would say, solid progress on the top line as well as the bottom line, and we will add more color to that as well when we cover the presentation to Ian and myself. So I'll now hand it over to Ian for the financial outcomes.
Ian Melling: Thank you, Jakob, and good morning, everyone. We'll start on Slide 7 with the financial results in detail, and then I'll cover our profit improvement plan and the additional actions we are putting in place as we look to drive operational and financial improvement. And finally, we will conclude with our FY '26 guidance and outlook. I'll then hand back to Jakob for the business review. So starting on Slide 7 with the income statement. As Jakob has noted, it was a particularly challenging year for Victrex at a profit level despite delivering strong sales volume, up 12% at 4,164 tonnes. The volume growth was driven primarily by VARs and Energy & Industrial. As a consequence of a softer mix and a weaker performance in Medical Spine, revenue was up 1% at GBP 292.7 million or up 3% in constant currency as currency weighed on our full year revenues. I'll come back to sales mix shortly. The divisional revenue summaries are shown in the appendix on Slide 26, with Sustainable Solutions revenue up 2% and Medical revenues down 5% driven by much weaker Medical Spine. Non-Spine revenues were up 7% with broad-based growth and a much more diverse range of applications. Moving on to gross profit, which was 1% lower than the prior year at GBP 132.6 million. This is after the effect of the gain on currency contracts of GBP 3.7 million. Gross profit in constant currency was up 5%. Gross profit was impacted by currency, by the softer average selling price and by the annualized costs from our new China manufacturing facility as well as wage inflation. Our Panjin facility in China accounted for a GBP 3.7 million higher loss year-on-year, reflecting the annualization effect with this facility coming online in H2 2024. For the year as a whole in FY '25, this was an GBP 8 million loss, in line with our latest guidance. I do want to call out how we saw a lower cost of manufacture elsewhere in our asset base, driven by higher asset utilization, along with some raw material savings. I'll cover the detailed movements on the next slide. Gross margin was down 90 basis points at 45.3%. I'll come back to this shortly with China plant costs, mix and currency being the key items impacting gross margin. Turning to overheads. Overheads for the year were up 14% or 2% when excluding the impact of wage inflation, the employer national insurance increase, partial bonus payments based primarily on strong cash conversion, the first for 3 years. The largest element was noncash charges for employee share schemes and employee retention. We retained tight cost control, including on recruitment and discretionary spend with the areas that did increase focused on customer programs. Interest was an expense of GBP 2 million in the year compared to GBP 1.2 million in the prior year as our China loan interest was capitalized in H1 FY '24. We expect interest expense will be at a similar level in FY '26. After the GBP 8 million impact to PBT from currency, the resulting underlying profit before tax was GBP 46.4 million, down 21% and down 10% in constant currency. Reported PBT was GBP 33.8 million, up 44% as our exceptional items were materially lower than the prior year at GBP 12.6 million. These comprise the final part of our ERP investment, business improvement costs aligned to Project Vista, which saw strong volume growth as well as sales pipeline growth and procurement savings and a noncash impairment of GBP 4 million for our Surface Generation investment. Underlying earnings per share of 43.9p was down 15%, slightly better than the movement in underlying PBT. The resulting effective tax rate was 23.9% versus 22.2% in the prior year. This reflects the lower proportion of profits being eligible for the Patent Box rate when profits are suppressed. This rate is above our midterm guidance of 15% to 19%. And the effective rate in FY '26 is again expected to exceed the top end of this range, unrecognized tax losses in China and the proportion of profits available for U.K. Patent Box being the key drivers. Turning finally to our dividend. The Board are pleased to maintain the final dividend of 46.14p per share. I'll come back to our updated capital allocation policy later. Slide 8 shows the underlying year-on-year PBT movements. Looking at the key movements beyond currency, which was GBP 8 million adverse. Thanks to an increase in production volumes through the plants, asset utilization saw a GBP 6 million benefit. FY '24 saw a significant inventory unwind, which explains the materially lower production in the prior year. Raw materials saw a year-on-year benefit of GBP 4.7 million. Sustainable Solutions growth drove a GBP 2.5 million year-on-year improvement to profit net of price and mix. Operating overheads I already touched on, with the impact of wage inflation and partial reward being the main element impacting profits by GBP 4.8 million. Employee retention-driven share schemes were an incremental GBP 3.7 million following the prior year where release of previous accruals meant almost 0 net cost. Our China plant start-up and the annualization effects, including depreciation and costs being expensed for the full year was a GBP 3.7 million adverse impact versus FY '24. Medical was a year-on-year adverse profit impact of GBP 2.4 million, driven by Spine declining as the continued effect of titanium regaining share in the U.S. caused by 3D printed and expandable spinal cages as well as some of the volume-based procurement challenges in China impacted us. Jakob will expand on this later, along with the positive progress in non-spine, which is an exciting area for us as we open up even more new applications. Growth investment of GBP 2.6 million was principally supporting our customer-facing functions as well as some incremental investment in our medical acceleration program with our product development center in Leeds. With the resulting annualization of interest expense, this led to PBT of GBP 46.4 million with H2 PBT being in line with H1 as per our most recent guidance. Turning to Slide 9 and ASP. We can see the movements in average selling price, which was down 10% in the year from GBP 78 per kilogram to GBP 70.3 per kilogram, driven by sales mix, end market, product and customer mix and currency. Constant currency ASP was down 7%. Approximately 80% of the total year-on-year movement was due to mix and currency, with mix most heavily impacted by the strength in VARs within Sustainable Solutions and the weakness in Spine within Medical. VARs and Energy & Industrial were the source of the majority of the price impacts, whilst like-for-like pricing in other key end markets remains robust. Where price did decline, this reflected some incremental price competition in VARs as we signaled earlier in the year or where we targeted regaining business in the likes of Energy and Industrial. Jakob will cover the key role that VARs play in our value chain to drive new uses for PEEK later. A very brief word on midterm pricing as shown on Slide 10, with mix and currency being the main drivers on ASP in FY '24 to '25. If we look over the past 5 financial years, we see a very similar picture with a very small impact from price, customer and end market mix, offset by a positive change in divisional mix. In summary, a medium-term view of our business shows that mix and currency have been the key drivers on our average selling price. Whilst we have been successful at price pass-through to customers, particularly following the energy price crisis, we have also retained or regained business within specific end markets with some impact on price. Moving to gross margin on Slide 11. Starting with the prior year of 46.2%, currency was a 150 basis points adverse impact to gross margin, reflecting the sizable headwind we saw this year. Our China plant start-up impacted gross margin by 120 basis points. Remember, we've seen some gradual operational improvements in this facility during the year, but production volumes were still only around 50 tonnes, so a very low level of utilization. Mix and price within Sustainable Solutions dragged on gross margin by 90 basis points with the adverse mix in Medical being an impact of 60 basis points. On the positive movements, raw material cost savings added 130 basis points with the higher asset utilization helping us by 200 basis points. A brief word on the gross margin, excluding our China manufacturing facility. This was 47.7% versus the reported 45.3%. So overall, the China plant is a 240 basis point drag on gross margin for the group, which we will look to overcome in the coming years. Finally, the chart does show the indicative drivers for our gross margin in FY '26 based on latest assumptions. I'll cover the overall guidance summary shortly. Moving on to cash flow, which is shown on Slide 12. The main headline is a strong cash conversion at 121%, a key measure of our cash flow efficiency and a positive result for our business. This is one of our key strategic objectives in the organization, which employees are fully focused on. Looking at the key movements from operating profit or EBIT of GBP 48.4 million, we incurred depreciation of GBP 25 million, an increase of GBP 1.7 million on the prior year, driven by the new China plant. Working capital was an inflow of GBP 7 million, driven by a further inventory reduction of GBP 5.4 million. Remember, we had a much higher inventory position at the end of FY '23, GBP 134.5 million. So the reduction in inventory this year, whilst pleasing, was not as sizable as FY '24. We do have an opportunity to further reduce inventory whilst noting that our reputation for delivery is valued by our customers and that we have a broader geographic base and portfolio than we have historically. On CapEx, we tightly managed key capital expenditure this year and continue to do so. We're obviously pleased to move beyond the period of heavy investment in capacity and capability. CapEx was GBP 21.8 million, a reduction of 33%, meaning that CapEx represented 7% of revenues, below the lower end of our guidance of 8% to 10%. This resulted in operating cash flow of GBP 58.6 million compared to GBP 68.5 million in the prior year. Cash tax totaled GBP 4.4 million, similar to last year. Cash exceptional items of GBP 9 million were marginally lower than FY '24 and primarily related to our ERP system, which includes ancillary systems such as CRM and Project Vista costs. Our digital investment is supporting a number of business process improvements and an ability to support and serve customers better, for example, through digital approaches to R&D. As a result, free cash flow was slightly lower than FY '24 at GBP 49.3 million versus GBP 51.4 million in the prior year. Of the other movements on dividends, we maintained the FY '24 final dividend and paid the FY '25 interim dividend, which represents the GBP 51.8 million shown on the chart. With exchange movements, our closing position saw us with cash of GBP 24.2 million versus the prior year at GBP 29.3 million, giving a net debt of GBP 24.8 million, GBP 3.7 million higher than the prior year. Net debt to EBITDA was 0.34x at the end of '25, an increase of from 0.25x at the end of FY '24. Finally, on our RCF, although we did have to draw on these facilities during the year, we repaid the facility back by the end of FY '25. Slide 13 covers our updated capital allocation policy, which I'd like to spend some brief time on. Firstly, we're reflecting all of our stakeholders' interest by targeting a new net debt-to-EBITDA range of 0.5x to 1x. This is a commitment to the strong balance sheet Victrex is known for. As a result, we are pleased to maintain the FY '25 final dividend at FY '24 levels of 46.14p per share. Dividends will be maintained at the current level as long as we do not exceed the 0.5:1 net debt-to-EBITDA range. Any excess cash can be returned via share buybacks or special dividends when net debt-to-EBITDA moves sustainably below 0.5x. We will secure additional term debt prior to payment of the final dividend in February 2026 to reduce the reliance on the RCF to pay the dividend. As shown on the chart, we will also maintain CapEx at 8% to 10% of revenues, though in the short term, we expect to be at or below the lower end of this range. Investment remains focused on growth or capability with medical acceleration, a recent example of where we've invested to support specific growth programs or to support customer scale-up. Overall, we believe this offers a resilient capital allocation framework suited to our business. This allows us to maintain balance sheet strength, noting the interest of all stakeholders. Turning to Slide 14. Alongside our revised capital allocation policy, we will be taking more extensive and incremental actions in FY '26 to improve operational and financial performance. In FY '25, we focused on self-help through our Project Vista go-to-market programs, primarily helping us to improve our sales efforts, including through the use of digital tools with customers and sales excellence, delivering strong sales volumes to record a record annual increase in our sales pipeline, which was up 16 -- sorry, 18% in the year to focus on operating efficiency, where we drove a lower cost of manufacture, including GBP 2 million of annualized procurement savings in addition to those on raw materials. Cost control remained tight, including on CapEx and for discretionary spend. So for FY '26, we will be going further, focusing our profit improvement plan around three main areas. How we can simplify our portfolio. How we can drive an even better operational performance, not just through volume leverage and efficiency, but by transforming our operational processes and through our overhead cost base alongside leveraging our D365 ERP system and thereby reducing SG&A costs. Overall, we're targeting at least GBP 10 million of savings with the majority of these to be delivered as full year benefit in FY '27 coming from these three areas. We will start to implement these actions through FY '26 with some early benefits in H2 2026. Wrapping up on Slide 15, I'd like to summarize our guidance, which mirrors our outlook statement within our announcement. Firstly, on volumes, whilst we're mindful of the wider economic environment, we are targeting low to mid-single-digit growth. ASP, we expect to be similar to FY '25 based on current trends. Medical Spine remains weak and Sustainable Solutions is seeing a similar end market mix as we saw in the final quarter of FY '25. At the margin level, we will be targeting some additional inventory unwind, meaning that production volumes will be broadly similar to FY '25 based on our current sales plan. We will continue to see some modest benefit from continuous improvement and procurement initiatives, including those from Project Vista. The China plant will not be a big driver of margin as it remains significantly underutilized despite sales starting to ramp. Consequently, gross margin percentage, we anticipate being flat to slightly ahead. On OpEx, we continue to retain discipline with a lower pay rise in FY '26 and then starting to see some small benefits from the profit improvement plan in the second half. On cash flow, we are targeting continued strong cash conversion with CapEx discipline and inventory reduction. In summary, we are mindful of the macro environment, particularly after a challenging year. We're targeting solid progress versus FY '25. And based on our current assumptions, we would anticipate this being second half weighted, reflecting the usual seasonality in H1 alongside a slightly higher currency headwind in the first half. With that, I'll hand back to Jakob.
Jakob Sigurdsson: Thank you, Ian. So moving to Slide 17. Sustainable Solutions, good progress in the year, driven by VARs and Energy Industrial, with notable progress on milestones in other end markets as well, even if some of these end markets do remain challenging. So let's look at them individually. Aerospace. At the half year, volumes were up 7%, but we did see supply chain challenges in the second half at the 2 key OEMs, consequently facing off some business into 2026. So volumes for the year were 2% down in Aerospace. As we will cover shortly, the outlook for aerospace is optimistic for FY '26. Build rates are forecasted to increase in some models, particularly at Boeing with 737. We also note that COMAC deliveries in China have been slower than anticipated this year. They build 25 planes versus 75 as a target. And remember that Victrex has a sizable set of volumes in each 919 aircraft. The deliveries have been reined back for the current year. We see these factors as short-term supply chain driven and note that COMAC is expected as an example, to increase deliveries over the next couple of years significantly. And on Advanced Air Mobility, I do also want to flag that we won new business in this area during FY '25. This is all based on our composite technology as well as our parts capability at our Rhode Island facility. All of which are driven by our low-melt PEEK technology in several applications where especially designed polymer for easier processing has really been getting very strong attention. The potential in Advanced Air Mobility using Victrex PEEK and the aim of some of these being launched in time for the Los Angeles Olympics in 2028, as an example, the certification progressing well in different global regions, positioning ourselves exceptionally well for future technology developments in the area. Turning to automotive. As most companies have signals, we know that uncertainty driven by tariffs and global demand has had an impact in this market. Our volumes were down 1% after a better second half in auto for us. Half 2 volumes were actually up 1% but reflecting some of the challenges in the industry. If we look at the market data, I think S&P is forecasting a production of around 91 million cars in 2025, a modest increase on the year before and a similar increase going into 2026. This is in contrast with 2018 when you had roughly 96 million cars being produced. So we are quite far away from that peak yet. We do remain closely aligned to auto growth in China, particularly. And just as a recap, our auto business in China in 2019 was around 11% of our overall volumes in auto that year. It's now close to 27%. And if we include Korea and Japan, the corresponding figures between 2019 and 2025 have moved from 43% to 55% and our auto business in China has roughly tripled since 2019. So we remain well placed across a number of different platforms and applications, but also in the geographic shift that we're seeing in the automotive industry. Briefly on e-mobility, we didn't see the quicker adoption of the new 800-volt platforms this year. So e-mobility revenues were actually down slightly year-on-year. The long-term opportunity to increase PEEK penetration across this new platform does remain strong, however. And in fact, we've got qualifications on several new platforms during the year that will be coming through to support midterm growth. If we then move to Energy & Industrial, volumes here up 17% and the activity levels have increased in this space during the year, particularly in the second half. It's worth keeping in mind that energy is around 40% of this end market overall with industrial being the majority. As it relates to energy, rig count was actually down at a global level by around 101 or around 10% since October '24, but we have continued to enjoy good business across oil and gas, gas equipment, whether it's in valves, pumps, ceilings and the like. On the industrial side, PMIs have remained just above 50 for both China and the U.S. for the year, and this is a good sort of correlating factor with our end demand in the manufacturing side. It dipped a little bit in Europe, below 50 in November, but still indicated an improvement in business conditions for the 10th time in the past 11 months. PEEK benefits from being in all kinds of machinery on the industrial side, whether it's food processing, chemical processing, and we continue to see good progress and growing interest in replacing PFAS in various applications, both on the industrial side that's reported in this segment and on the medical side as well. On Electronics, good progress here despite the softer second half in semiconductor, volumes were up 2% for the year, which is in line with JPMorgan's own semicon forecast of 2% growth in CapEx in 2025. Remember that PEEK has good exposure to semicon and smart devices where durability and reliability remain key drivers. On the smartphone side, we are part of a number of innovation in smart devices, which offer good medium-term growth opportunities, particularly around the move towards 6G, for example, or how metals are used differently in handsets. If we look at industry data, JPMorgan forecast demand to be around 3% in 2026 and a significant growth as it relates to CapEx in semicon as well. Moving on to VARs. So I'll cover a recap on their very important role the VARs play in the value chain in my next slide. But VARs were up 21% in volumes and 13% in the second half. And remember, their business is highly correlated with conditions in both manufacturing, engineering and Energy and Industrial as well as semicon. And finally, on sales pipeline, up 10% in the year, record annual increase. If you look at the key driver of the increase in the pipeline, they are coming from aerospace and energy industrial were the key drivers of the increase. With aerospace around 1/3 of the total sales pipeline right now. This is based on mature annualized revenues, which we would need conversion of all the pipeline. We delivered the $404 million in revenue numbers. Conversion rates are typically much lower than that. And over the cycle, we're used to be seeing around 30% to 40% conversion of this particular number. But it gives a good outlook of the scale of our sales pipeline and the opportunities that we have for growing the business. On value-added resellers on Slide 18, spend a moment on those because they do play a key role in our supply chain. You already heard that our VAR volumes were up 21% during the year. They are a key part of growing the market for Victrex PEEK. They serve aligned end markets like auto, energy and electronics, as I said before. They do process high volumes of PEEK for compounding with other materials or into stock shape to sell to other manufacturers and they actually carry a wide range of polymer in those forms as well. The key message here is that VARs get a significant pool for the customer for Victrex PEEK. If you go on to the website of some of the larger ones there, you'll see that they do brand Victrex 450G as a main grade and often leverage our brands in their promotional activities as well. These were Victrex's first customer when Victrex went into market, and they've been a very valuable set of customers for us all along, and they spent a significant time on innovation and market development as well. Customers are specifying Victrex PEEK, as an example, 450G from value-added resellers, and that supports how we're building the peak market. Remember also that VARs do see cyclicality. If we look at the 5-year growth CAGR, it's around 6% on volume. So healthy growth rates even if we see variability to the cycle. Within VARs this year, we have continued to build on our long-term standing relationships that's built on quality, security of supply and a well-respected brand to name a key factors. Turning on to Medical on Slide 19. Some clear headwinds here in Spine, but continuing good progress in non-spine. And we're now a much more diversified business than we used to be. Just to put it into context, in 2015, we were 75%, 75% of our revenues were coming from spine and 25% non-spine. That's pretty much reversed in 2025, where we're now 74% non-spine and 26% spine. A quick recap. In 2023, our Medical business achieved a record year post-COVID and when surgeries -- elective surgeries rebounded. Meanwhile, in 2023, the Chinese government implemented its volume-based procurement, or VBP, as it's called, policy with the spinal industry, within the spinal industry aimed at controlling health care costs. This policy had already impacted other sectors on the medical device industry, where a small number of domestic companies won government tenders that guaranteed high product volumes, but at average pricing -- average selling prices that were significantly lower. In 2024, many large medical device companies began to signal concerns around profitability in general, while revenues continue to grow, rising interest rates and inflationary pressures, particularly in staffing and raw materials, led to declining profits. In response, companies took decisive action reducing inventory levels and containing costs. What is clear, though, is that industry destocking appears to be over in non-spine -- but in spine, titanium-based 3D printing has been significantly more advanced than PEEK-based methods, enabling U.S. companies to develop porous cases using titanium, and this has been happening all the way back to 2018. We have seen our first approval for our Polar 3D case last year, and we expect to see them in the market over the next year. PEEK remains -- PEEK has still strong evidence of clinical benefit and imaging in spinal devices, but 3D printed methods gained more traction in the U.S. at the expense of PEEK, and we have the opportunity now to start to reverse that with our 3D printed cases having been approved. Remember that the U.S. has been our main region since starting our medical business back in the early 2000s. As I said before, spine was around 75% of our revenues in medical in 2015 versus 26% today. So clear headwinds for growth. The good news is that we are now a much more diversified medical business with more applications, including great opportunities in pharma and cardio. And we noted that J&J, as an example, report that PEEK was already used now in around 500,000 heart devices. What do we need to see from medical revenues to grow again? Well, some stabilization in spine, number one. And remember, this is principally impacting the U.S. together with continuing non-spine growth, offers the opportunity for medical growth to restart. And then obviously, that will be layered on to with the progress of the knee program on one hand and trauma plates on the other. On Slide 20, a brief one on knee. We now have 85 patients that have gotten PEEK-based knee implants over the past 4 years, including 20 in the U.S. So really, really good progress. We continue to work towards additional collaborators and partners and are in active conversations with some of the top 4. We're also preparing regulatory pathway in other regions beyond the submission in India and should expect good progress and potential registration in Europe in FY '26. Slide 21 on Magma , as a quick recap. At the half year, we communicated that TechnipFMC had secured a technological contract from Petrobras. This enables them to develop qualification pipes that are the route to full commercialization of the hybrid flexible pipe. Remember that a hybrid flexible pipe is 50% lighter than steel and water based on Victrex's PEEK and know-how and our pipe -- and our composite tape as well, all specified Victrex materials. And to put this in perspective, every kilometer of 6-inch pipe contains around 8 tonnes of PEEK, so this is a very sizable long-term opportunity. Our facility in Portsmouth will be key for the scale-up and has been busy during the final qualification stages. The vision is that longer term, the production will be shifted to Brazil, and that will be done then in Technip's facilities. So we will not be incurring CapEx into those scale-up phases. We've developed several 2-kilometer sections of pipe with TechnipFMC over recent months, and we'll wait a new flow in 2026 for the next steps towards commercialization from TechnipFMC and Petrobras for their ongoing requirements. Slide 22, end market summary. I think Ian has already covered the main outlook on the guidance. Slide 2 provides an indicative view of the end market as we see them currently. And then also briefly Aerospace, optimistic based on forecasted build rates and new business win. On automotive, like the rest of the industry, we are neutral to cautious in this end market, given the supply chain risks and demand uncertainty. Electronic neutral with semicon and smartphone forecast being positive for 2026, but likely to be second half weighted. On Energy & Industrial, neutral to optimistic. We do see some additional opportunities on the industrial side and energy activity remains very positive. Activity and growth here is very much evolving around PFAS replacement and robotics. On VARs, neutral. It reflects that we saw a strong year in FY '25 and demand across some of the aligned markets is still uncertain, although they should be exposed to the same drivers that we see for Energy Industrial and Electronics as well. Finally, on Medical, clearly, Spine remains challenging for the reasons we discussed. So we're cautious there. Non-spine, we're optimistic. It was up 7% in FY '25, and we do see further opportunities across a very attractive range of applications. Pricing will reflect a broader range of ASPs now, but very high-value applications in cardio and active implantables alongside with some nonimplantable business in pharma. And non-implantable revenues were up 12% actually in FY '25. So this concludes the formal presentation, and I will now hand it over to Q&A. We'll start in the room here, and I'd be grateful if you could state your name for the benefit of those that are listening in on the line and will be asking questions later on.
Vanessa Jeffriess: Vanessa Jeffriess from Jefferies. Just wondering if you could clarify what's going on in China. So I guess a year ago, you thought you'd do 100 to 200 tonnes and then you have the start-up issues. I know you've done 50, which is in line with customer demand. I guess in '26, it feels like you should be doing 200, but it will still be loss-making. I mean has the demand profile changed? Or are those start-up issues is ongoing?
Jakob Sigurdsson: I think we're working well through the start-up issues. So we delivered what we said we would deliver in FY '25. We do still need to scale this up with customers as well and then getting used to materials being shipped from that plant. I do want to take the opportunity as well to put this in the broader context also in the sense that China is the fastest industrial market in the world these days. We have grown China almost 2.5x since 2019, 12% of our revenues or of our volumes back in 2019. It's around 18% right now, and it grew 18% last year. So the plant is incredibly important from a strategic perspective. All the business that we have been growing has been imported into China until now. But this allows us to expand our product portfolio and bolster our position as we're building -- we've been building up systemically since 2018, first by adding to our technical service capabilities, augmenting the sales force as well, then building this plant and that compounding facility as well. So both of these facilities that we have built along with the infrastructure and the human capital that we've invested in, in the labs as well, I think position ourselves very well to compete in a rapidly growing market in a tough competition as well. But to your point, I guess we are modest in our outlook for China this year. We're still working through the issues, but we are aiming at always being a step ahead of demand, and I think we're progressing well on that journey.
Vanessa Jeffriess: And then ASPs, you're saying broadly stable for '26 and down 7% this year. You talked about reducing pricing to regain share and in response to competitive activity in Energy Industrial. But from everything you're saying about '26, the mix would be similar and then medical will reflect a more diverse range of prices. So I guess I'm just wondering like why would pricing not be down 7% again? And why is it stable? If you could just...
Ian Melling: So the majority of the 7%, Vanessa, was mix, right? So stable -- if we have a more stable mix, which is what we're forecasting this year compared to last year, then we wouldn't expect to see that significant mix impact that we saw this year. There is some price pressure out there, particularly in the VARs space. And I think the actual overall piece that we end up with may be somewhat dependent on the volumes, right? The stronger the volumes tends to drag the mix down because it tends to mean higher VARs, Energy and Industrial. But based on a similar mix, I think what we said on ASP is deliverable. We also don't have the big currency headwind, at least at current exchange rates that we had last year on ASP.
Vanessa Jeffriess: And then sorry, just one quick one. In VARs, you just talked about it being the lowest cost to serve on the slide and -- but there's that pricing pressure as well. Would you say that there's opportunity to reduce that cost to serve? Because I guess if it's the lowest across the business, that would suggest to me there's less opportunity in other segments.
Ian Melling: So I think the cost to serve is very low with VARs. They -- we don't have a big sales force that supports VARs. It's a very small number of people, very close relationships. So I think the opportunity to reduce cost in serving VARs is limited. That being said, we do work with them given the significant volumes that they buy, we do work with them on how they take that volume, how we do that most kind of operational efficient -- the most operationally efficient way. And that does bring us small benefits as we go forward, but not ones that you'd want to call out in terms of the overall margin for the group.
Jens Lindqvist: Jens Lindqvist at Investec. A couple of things on medical, if that's okay. First of all, on the knee. 85 patients recruited so far into the program, 65 back in July. Those 20 all in the U.S., if I understand it correctly. Is there anything that can be done to accelerate that recruitment rate a bit? I mean it's 20 in 6 months. It's a relatively high volume procedure. And also on the knee, could you remind me just what number you need to get to for U.S. and European approval? You're talking about a filing in Europe?
Jakob Sigurdsson: Right. So I think it is sort of a phased start in the U.S., and this is clearly sort of [ max ] thing to comment on. So we have a limited ability to influence that, but it is a relatively slow start with an expected ramp-up probably in 2026. So I think you'll see increased recruitment rates in 2026 compared to what we've seen here. And the bigger picture is we are awaiting approval in India, and Max is expecting that to happen relatively soon. That clinical trial was a huge success, I would say, without any interventions after 4 years. And on the back of some of that data and data that has been developed in Europe, the plan is to launch in Europe in 2026 or file for registration in Europe in 2026 as well. But to answer your question bluntly, can we impact the recruitment rate? No, we can't. And this is sometimes one of our dilemmas with the mega-programmes that we're not the ones all the time that can control the rate of adoption, and this is one example of that. But there is a relatively slow phase in the early phases of the trials in the U.S., and then that's expected to ramp up probably in 2026.
Jens Lindqvist: Okay. Just one on the trauma plates. It seems to be lagging a little bit, both in terms of business development in the U.S. and the regulatory process in China. Again, in China, is there an option to partner with the Chinese orthopedics business? I mean is that the...
Ian Melling: Yes. So I think if I look at trauma, I think you're right, Jens. I think it's been a slow year and certainly in terms of revenue in trauma, having had approvals previously in the U.S. and having launched products in the U.S. I think 2 things to speak about there. One in the U.S. our launch partner, which was In2Bones was acquired. And that certainly had an impact in terms of kind of their focus on kind of growing into new plates and the like. Whenever there's an acquisition, then strategy comes into focus and people are thinking about whether -- which way they go going forward. So that's been an impact, and we're looking pretty hard for new customers in the U.S., and we have some promising leads, but too early to talk publicly about new customers in the U.S. for trauma plates. China, you're right, regulatory has been the big hurdle. We're pretty confident that we will get over that hurdle in the next few months here, and then we should be full speed ahead with the launch with -- I think we talked in the announcement about 6 plates in China, which is a broader range than we have today in the U.S. through a significant player in the Chinese orthopedic trauma space.
Jens Lindqvist: Sorry, just one quick one. Just on R&D expenditure, you're talking about 5% to 6% of sales, I believe. I mean, is that a realistic number to assume also going forward? And how does that split between medical and sustainable solutions, please?
Ian Melling: Yes, I don't have to split medical to sustainable solutions to [ Hanyens ], but we do spend a good amount, particularly as a result of the medical acceleration program on the medical R&D kind of focused on knee and trauma, but we do have other programs in medical as well. We also have a core piece of R&D, which supports our kind of core manufacturing facility kind of capability, which would support the whole business. So it's not -- it's kind of medical sustainable solutions agnostic. So there is an important part of manufacturing kind of R&D there that we shouldn't overlook in terms of making ourselves more efficient. But I think the number in terms of a target going forward, is a sensible one. We will -- we've obviously got the profit improvement plan where we'll be looking at things going forward, but I wouldn't expect us to be spending materially less on R&D going forward.
Chetan Udeshi: Chetan from JPMorgan. I had a few questions. Just one on -- you mentioned record increase in sales pipeline. When do we see record earnings for Victrex? In other words, when does that translate into proper earnings inflection at Victrex? Maybe we take one by one.
Jakob Sigurdsson: Yes, I'll take this one first. So the metric is derived as follows. So this is the mature annual revenues of the opportunities that we have identified. So that's the totality of that sum. If you look at historical conversion rates, they can be somewhere between 30% and 40%. But they clearly in the first year will not translate into the maximum annualized revenue for each of them. But I think that's a good proxy for how this should be flowing through the pipeline. There's probably some cannibalization in those numbers as well. So you got to account for that also. But I think the good news is that we continue to find new opportunities that are sizable magnitude that should underpin the core business that sort of drives the business above and beyond what we see as an upside potential from the mega-programmes. So headline, it's material, annualized revenues, conversion time probably between 2 and 3 years, conversion rate somewhere between 30% and 40%. And then it depends on the ramp-up profile and the cannibalization as far as what the end number out of that formula might be.
Chetan Udeshi: So that's a gross number without cannibalization impact basically.
Jakob Sigurdsson: There could -- that's a gross number, but there could be cannibalization in that to some extent.
Chetan Udeshi: Okay. Good. The second question maybe for Ian, your second half gross margin was 46.5%. You're guiding for full year next year to be between 45.5% to 46.5%. We would have hoped that there will be progression from second half into next year. So was there any one-off in second half, which is not recurring into next year? Or you just want to be cautious, not extrapolating that second half improvement?
Ian Melling: Yes, I'm a CFO, so I always want to be cautious, Chetan. But I would say, half-on-half, yes, there's some relatively modest impacts in there. The majority of the increase that you see in the second half versus the first half is coming through from the manufacturing and procurement efficiencies that we've delivered this year as we -- in the second half, we started to sell products that we made in the first half. In the first half, we were selling primarily product we'd have made in the second half of last year when we had lower volumes. We're not forecasting a significant -- really any volume increase through the plants next year as we continue to hold on inventory. So I think that's part of the caution. Obviously, there's -- we talked about some of the price pressure in VARs and places as well. So we've got to be a little bit cautious about that impact on the margin. So I think a margin between our full year number this year and our second half number this year, which is kind of the range you talked about is a sensible place to be.
Chetan Udeshi: Okay. The last question I had was anything on current quarter? Typically, it tends to be sequentially lower versus the September quarter. Would you expect normal seasonality? Or is there something that you see particularly in any of the end markets? And just last point, sorry, on your comments on pricing. We saw raw material benefit. Do you expect any more next year? Or you now see raw material prices flattening out basically?
Ian Melling: So I think there's a little bit of raw material benefit still to come based on what we've negotiated in the last 12 months, but I don't think it will be as dramatic as it was in FY '25, albeit we continue to push, obviously, for everything we can get on that front.
Jakob Sigurdsson: I think you know us better than most, Chetan, and you're right, seasonality is there. Q1 is always historically the lowest quarter, and it will be the same this time around. So there will be a drop off from Q4. But nothing that is dramatic, I would say, in terms of Q1 versus Q1 comparisons year-on-year. So we had a good Q1 last year. And we will have a reasonable one for sure this year, although there's plenty to go yet.
Christian Bell: Christian Bell from UBS. I guess just following on from the previous question. Your volume guidance for low to mid-single digit. Can you just give a sense of what the growth phasing might look like across the first half and in the second half across each segment? And what gives you the confidence that you are expecting a stronger second half?
Jakob Sigurdsson: I think we're seeing reasonable momentum heading into the year to begin with. And that's on back of weak aerospace as an example, and relatively weak electronics as well. But I think if we look at industry forecasts, which have been pretty reliable as it relates to electronics as an example, chip growth production expected to be around 3% year-on-year. CapEx sort of starting to come up again for semicon as well based on JPMorgan's forecast I referenced here. I think that gives us confidence in the fact that electronics will rebound as we head into the new calendar year. VARs are correlated with the electronics picture also, remember. So we're not expecting the growth that we saw in VARs this year, but we're expecting modest growth for VARs in the year overall. On the medical side, we'll see a better year there than we had last year as well. So when you look at these key drivers, I would say, the aerospace getting back to normal, I think there's, I would say, good confidence in the fact that with growing build rates at Boeing, the supply chain issues easing at Airbus and also with the new Advanced Air Mobility contract, we'll see growth there that is visible and reliable. If I can phrase it, if anything, it's reliable these days in this world. And then as I said, on the electronics side, I think we've got a reason to believe based on forecast and how they've correlated with business in the past, and that should be picking up as we head into the new calendar year.
Ian Melling: Sorry, just to add, I think it's worth saying when you get into a kind of business area and a quarterly forecast, our order book is relatively short. it's a little bit of a mugs game getting into trying to forecast. I certainly wouldn't want to sit here and say this is going to grow by that and this by that quarter-by-quarter for a year. We present a view for the year as a whole, and there'll be some ups and downs is that we have an order book typically of around 6 weeks in this business. So it's not like we know what we're going to have through this year sat here today. And I think it's worth bearing that in mind when you look at how we position our forecast.
Jakob Sigurdsson: That's why I'm also pinning my comments on sort of expected demand based on statistics from aerospace in terms of build rates on one hand and then the outlook for CapEx and chip production for the coming year as well, which have historically not been too bad.
Christian Bell: If I could just push a little bit harder on that to get to your sort of full year low to mid-single digit very general sort of ballpark type of thing. Is the profile kind of like a negative positive 7% first half, second half? Is that the type of profile that you're expecting? Or is it more like a negative 1%, 4% type of thing?
Ian Melling: I would say -- listen, I would say it's not that -- in volume terms, it's not that skewed between -- in terms of growth between the first and second half. So I would say we had some strong growth in the first part of last year as we were recovering from a depressed period. I think we've had more stable volumes over the last year. So I don't think we've got a significant skewing to the second half. When we talk about the profit being skewed to the second half, that's more due to profit-related pieces rather than volume, I would say.
Christian Bell: Okay. Cool. And just one final question, if I could. I think I saw in your commentary talking about a more sort of focused business going forward. Does that -- should we read how should we read into that in terms of prioritization over your end markets capacity thinking going forward? Is there any sort of -- is there a reprioritization of your end markets? And are you thinking -- how are you thinking about your capacity?
Jakob Sigurdsson: I think if you look at it over almost the entire lifetime of Victrex, Victrex has at times invested in downstream capabilities to drive the adoption of PEEK, sometimes with the intention of staying in that function. And sometimes looking at it as a catalytic activity means proving that things can be done. And then once you've proven that and you generate end demand, you might exit that production step as an example with that downstream activity. So I think we might simplify our downstream portfolio a little bit in light of that. We will definitely stay with our current positioning in certain aspects, but we might pare down our presence in others as we go forward. As it relates to mega-programmes as an example, the allocation of resources for the mega-programmes is a dynamic process. And building on Jens' point a little bit before, where we see opportunity to potentially spend more, if that correlates with faster adoption, we will. If we see that almost regardless of what we can spend, we're not able to accelerate that, we will not do that. So we do allocate our resources based on the -- what we can do to shorten the time to commercialization, what we can do to eliminate barriers to adoption and at the very least, make sure and ensure that we are not the barriers for adoption, having been the ones that have been pushing these innovations through for a long, long time. So we very much sort of manage our portfolio in a dynamic way in that sense, and we regularly capture the essence of that by saying where is there a return to spend. And if we can spend more, we will. If we don't, if we see that we're not going to be impacting the time to adoption, we won't. So that's a dynamic portfolio allocation decision. But I do think you will see us simplify our footprint in some downstream activities going forward. So maybe taking questions from the audience online, if there are any. And please state your name before asking the question.
Operator: [Operator Instructions] Our first question comes from the line of Kevin Fogarty of Deutsche Numis.
Kevin Fogarty: Just if I can start just with a couple. In terms of the mix within Medical, I appreciate the kind of revenue and volume shift towards sort of non-spine. Could you just remind us of the sort of value contribution, spine versus non-spine, my assumption that spine was much more valuable to you guys? And secondly, from a planning perspective, I just wonder if there was any sort of change in your kind of visibility or guidance you're getting from customers this time of the year compared to perhaps 6 months ago? Is there anything that gives you a bit more confidence in terms of the outlook? So if I could just have just those 2 questions, please.
Ian Melling: Sure. I'll start with the first one, Kevin, if I can. So firstly, I would say our whole medical business is incredibly valuable to us, right? I think it's really important for everyone to understand that our ASPs in medical right through from the most -- the highest ASPs which are actually not in spine, they're in other applications, all the way down to the lowest ASPs, which are in non-implantable medical applications. They're all accretive to our group ASPs and drive high-margin business. Yes, the non-implantable business is a bit lower than the implantable business. But certainly, within the implantable space, it's all hugely valuable. Typically, gross margins on implantable medical business will run 70% plus up into much higher numbers. So yes, there's huge value in all our medical business. I think I gave an example previously, but I'll just repeat it because it bears repeating. If you look at, for example, a spine, spine procedure versus CMF procedure, that's craniomaxillofacial procedure, which is a procedure where you're making a plate out of PEEK to repair the skull. In terms of the amount of PEEK we sell for one procedure in CMF can be 10x what it is for -- more than 10x what it is for a spine procedure. The ASP per kilogram might be 1/3 to 1/2 of what it is in spine, and the gross margin will be correspondingly a little bit lower. But because you're selling more than 10x the volume, the actual gross profit generated from one procedure will be higher in CMF than it is in spine. So it is important to think about the medical business from a revenue point of view and from a gross margin point of view and focusing too much on the ASP per kilogram can miss the point. Some of our highest ASPs in Medical, which I repeat again, are not in the spine space, are actually in applications where a fraction of a gram is used per device or per procedure, whereas, as I said, in something like CMF, you could be selling hundreds of grams into one procedure. So there's a huge broad range of medical procedures. And I think that's what's really positive about our medical business going forward that we have that breadth and range of opportunities.
Jakob Sigurdsson: On the second question, visibility is probably [ whistle seeking ] in many ways these days, and Ian has alluded to it, that our order book -- our tangible order book is relatively short and always has been, and we have sort of a high service model, if you wish, in the sense that we do offer short lead times, which is of high value to most of our customers. But I get back to the point that we discussed before, the fact that we are targeting moderate growth next year is very much based on these key contributors or sectors reversing of 3, you could say. The aerospace forecast and build rates, and we see the improvement in build rates starting to happen, and they are relatively reliable. Secondly, the forecast for electronics and semicon in particularly broken down into chips on one hand and then CapEx on the other. And thirdly, we will continue to see positive momentum on the medical side. But as it relates to detailed visibility, Kevin, it's not there, and it never has been.
Operator: There are no further questions on the conference line. I want to hand back over to management for closing remarks.
Jakob Sigurdsson: So thank you all for coming and joining us here today, those on the line as well and wish you all a very happy ending of the year and a peaceful holiday period. I want to say as well, this is my last one, and I want to thank you all for your interest over the years and intense interest in Victrex and our company and what we do and what we have to offer. It's been a pleasure to engage with all of you, and I thank you for that. Thank you all.
