ALS Limited (ALQ) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to ALS Limited Full Year 2025 Results Investor Presentation. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Mr. Malcolm Deane, Chief Executive Officer and Managing Director of ALS. Please go ahead, sir.

Thank you very much, and good morning, and thank you, everyone, for taking the time to join today's briefing. It's really good to be back with all of you to share what we believe has been a strong fiscal year '25 financial performance for ALS. As usual, I'm joined by our Chief Financial Officer, Stuart Hutton. Earlier today, we released our fiscal year '25 results and an equity raising to fund an extensive hub laboratory network expansion and our future inorganic growth, which we will cover off on -- after the fiscal year '25 results. So we will aim to hit the highlights and not necessarily talk to every single slide. This presentation will run for approximately 40 to 45 minutes, and we will follow with a Q&A session. So let's start by running through the highlights of our full year results, and we are pleased to have delivered results in line with our strategic plan. All in all, we have made strong progress in achieving growth as well as continuing to build resilience into the portfolio. During '25, we produced strong revenue growth of 16% to $3 billion while the underlying EBIT increased by 4.7%, reflecting the strength of the diversified and resilient operating model. The EBIT margin, excluding recent acquisitions, was robust at 19.1%. In Commodities, the Minerals results demonstrated the strength of the operating model and increasing diversified revenue mix. The Minerals margin was maintained about 31% in a year marked by fluctuation and variable sample flow, particularly in the first half. Industrial Materials delivered strong results across all the businesses, in particular, Oil & Lubricants and Coal. Life Sciences delivered robust performance with industry-leading organic growth of 9.8% in Environmental and a solid Food result. Environmental business continues to benefit from supportive industry mega trends including increased testing demand for PFAS. Integration of Life Sciences acquisitions are on track. Wessling and Nuvisan are ahead of plan while York is performing in line with expectations. We are enhancing operations and customer experience across all divisions through innovation, advanced technology and our proprietary data solutions. And finally, we are pleased to report continued strong cash conversion this year, reaching 95% of underlying EBITDA. As you know, in ALS, we remain guided by our vision to be the global leader in the discipline of scientific analysis in pursuit of a better work for all while keeping safety front of mind. Health and safety underpins everything that we do and remains top priority in every aspects of the business. This is essential to protect our people, to drive performance and to build trust with our clients. ALS continues to deliver leading safety performance well ahead of industry benchmarks. Our strong safety culture is not only a provider. It's a key enabler of financial performance. Our business delivered strong overall revenue growth of 16% in fiscal year '25 and organic growth was solid at 4.9%, in line with our guidance. Underlying EBIT grew by 4.7%, 7.7% on a constant currency basis. While the margin declined to 17.2%, reflecting the dilution from recent acquisitions and cyclical pricing pressures in Minerals. However, if we exclude the recent acquisitions, our underlying margin was 19.1%, in line with the fiscal '27 strategic plan objectives. The return on capital employed declined to 18.9%, again, reflecting the impact of recent acquisitions. Underlying net profit asset after taxes declined 1.4% to $312.1 million, noting that the NPAT increased by 2.8% on a constant currency basis. Our cash generation, balance sheet and liquidity remains strong, supporting implementation of our capital framework and continued growth journey moving forward. Reflecting the company's solid performance, cash generation, liquidity and supportive outlook, the Board has declared a final dividend of $0.197 per share, which equates to a 60% payout ratio. So let's now turn to the operational performance across our key businesses. Let's start with Commodities. In Minerals, we saw modest organic revenue growth of 0.5% driven by improved revenue mix in Geochemistry and an uptick in sample volumes, particularly in Q4. Metallurgy was subdued, especially during first half with a modest improvement during the second half of the year. Industrial Materials performed well with strong organic revenue growth of 11.3% and margin improvements across all businesses. Combined, the margin in Commodities business was down 116 basis points to 28.2%. Again, important to note the solid margins in Minerals even in this environment of 31.1%. Moving to Life Sciences. The Environmental business saw a strong organic revenue growth of 9.8%, with low to mid-teen organic growth across APAC and EMEA regions. As expected, Environmental margins were impacted by recent acquisitions, while pleasingly, margins in the legacy businesses improved. In Food, organic revenue was up 6% with low double-digit growth within our largest European markets, offsetting softness in other regions. And finally, our pharma business saw organic revenue decline by 2.6%, with mixed performance across operations. Excluding Nuvisan, the Pharmaceutical business saw organic revenue growth of 1.8%. Combined, the operating margin in Life Sciences business was down 57 basis points to 14.5%. However, excluding acquisitions, the margin in the legacy business improved by 62 basis points to 17.1%. So let's touch briefly on how we are playing in what we think are turbulent times. Everyone on the call is aware of the heightening macroeconomic uncertainty of current times. There are three key points we would like to make about this. First, ALS is well positioned to navigate current macroeconomic uncertainty, supported by a well-developed hub-and-spoke model, predominantly variable cost structures and low exposure to tariff-sensitive inputs with consumables representing only 10% to 15% of our total costs. Second, we are progressively reducing business cyclicality by diversifying beyond mining exploration into resilient high-growth sectors like mine site and environmental that is now our largest revenue division. And finally, ALS is a truly global player with diverse revenue across all major geographies. The U.S. represents 12% of the company's total revenue while China is less than 1%. The next slide outlines the strong revenue growth delivered in fiscal year '25 for a total of $3 billion. But in the interest of time, we'll move straight to the detailed divisional performance, starting with Commodities, which demonstrates resilience in a recovering market. Total revenue for Commodities increased by 0.2%. Organic growth in Geochemistry and Industrial Materials was offset by adverse effects. On a constant currency basis, revenue growth was up 2.5%. The underlying EBIT margin declined to 28.2%, and pleasingly, the Minerals margins remained strong at 31.1%, reflecting steady lowering of cyclicality, flexibility of the cost base and improved revenue mix. Pricing was compressed during the year but finished more positively as volume improved. Reduced sample volumes in exploration were partially offset through an increase in market share, ongoing value-added services take-up and growth in downstream activity. Metallurgy was subdued with some improvements in the second half. The following slide provides a clear picture of Geochemistry performance for the year, including the positive momentum we saw in Q4 and into the start of fiscal year '26. During the first half of '25, we flagged volatility in sample volumes. Pleasingly, the full year ended up with 2.4% increase, an encouraging shift after last year 8.4% decline. We saw strong volumes, especially in Q4 across most key regions, including Australia, Asia, South America. North America was slightly down for the year but showed signs of recovery towards the end of the year. Exploration activity is being supported by strong commodity price. The energy transition and emerging trends like resource nationalism. We have also experienced solid business development activity, which continues to reinforce our key position in the market. Our client mix has shifted towards majors, given the funding constraints for juniors, though we have seen some recent positive increase in equity raisings in that segment. Our commodity mix reflects the recent uptick in gold activity and is consistent with global macro trends linked to electrification, battery metals and rare earth. As we've outlined over the last 2 years, our Minerals business is on a strategic journey to expand downstream, an important step in reducing revenue and earnings cyclicality. With Minerals exploration testing services made up 73% of revenue in '25, with new service offerings and downstream growing at an accelerating trend. High-performance metals continue to see increased uptick with a 3-year revenue CAGR of 28.5%. We continue to develop, enhance and refine HPM, and we are optimistic about the opportunities these unique ALS methodologies continue to provide to clients. On the downstream side, mine site is on a similar accelerated trajectory with a 3-year CAGR of 22%. Metallurgy has a 3-year CAGR of 8%, which is a solid performance considering the soft market conditions experienced during '25. So in summary, we are very pleased with our efforts to maintain Minerals EBIT margins through the cycle with the margin remaining above 30% for the fourth consecutive year. So let's now move to the other segments within Commodities. I will just mention briefly some comments on Industrial Materials. Industrial Materials grew organically by 11.3% in '25, with margin expansion across all businesses. To call out Oil & Lubricants had a very strong fiscal year '25, which delivered 12.6% organic growth. Growth was driven by new client wins in North America and continued solid performance in Latin America, Australia and New Zealand. And we've also begun expanding through greenfield sites in the U.S. with more underway in both Latin America and Europe. So with that, now let's turn to Life Sciences that is the larger of our two divisions. The Life Sciences division accounts for 64% of the group's revenue during fiscal year '25, up from 58% last year. During '25, we experienced strong growth led by Environmental and Food with total revenue growing by 27.4%, organic growth of 6.6% and contributions from recent acquisitions were partially offset by adverse FX movements. The underlying EBIT margin was 14.5% and was checked by recent acquisitions. Environmental delivered market-leading organic growth of 9.8% with mid-teen organic growth in EMEA and low double-digit growth in APAC and Canada. On Food, volume and price growth in Europe supported a strong 6% organic growth. Pharma had a mixed performance across legacy operations with improvements from Nuvisan. With the impact of, from recent acquisitions, it's important to look at Life Sciences performance through three lens: total division results, which we just covered; the underlying performance of the legacy business; and a high-level view of how the acquisitions are tracking against plan. So let's now take a closer look at the underlying performance. As I just said, Life Sciences organic revenue growth was 6.6%, excluding Nuvisan, Wessling and York. Legacy Life Sciences excise organic growth was up 8%. Legacy EBIT margin was 17.1%, an increase of 62 basis points from '24. The margin improvement was led by the Environmental business. While the recent acquisitions reduced margins in the short term, we are targeting continued improvement in Life Sciences margins with ongoing integration and optimization of these recent acquisitions. Consistent with our value creation framework, we are focused on delivering the expected 15% return on capital in the medium term. To touch on Wessling, this acquisition performed well during the year, with both revenue and earnings exceeding expectations. In fiscal year '25, our focus was on aligning the prospects and initiating the rollout of the operating model. The cost-out program was largely completed and delivered successfully with most of the benefits expected to start flowing through in fiscal year '26. We are now entering to the second phase of integration, which centers on embedding best practices, advising our operating model and accelerating growth. Moving to York in the Northeast of the United States. Performance here was in line with expectations. There have been incremental margin improvement and ongoing focus will be on cost out with business case synergies to continue during fiscal year '26. I want to take a few moments to showcase our Environmental business, which is the largest revenue stream in the group and have consistently delivered leading organic growth with an 8.4% CAGR over the last 3 years. ALS is the second largest provider of environmental testing globally. We have over 170 environmental locations through North America, South America, Europe, Middle East, Asia and Australasia. Environmental is a decentralized market segment that is driven by regulation and enforcement at local, state and country level. These remains powerful growth drivers for the business. We enjoy operational leverage through our regional hub-and-spoke model, supported by global capabilities development and best practice sharing across our global lab network. Our strategy focused on expanding our presence in high GDP per capita economies, where regulatory standards and enforcements are strong and where we can achieve or maintain a top 3 market position. So let me make a quick comment around PFAS and the momentum we're experiencing in this market. PFAS remain an accelerator for the Environmental business. delivering organic growth at 2.5x the remaining environmental perimeter. We're confident we have built strong PFAS capabilities across our portfolio that will continue to support not only PFAS environmental demand but also other services like packaging, cosmetics and Food. So with that, let me turn to Nuvisan where we are pleased to report that the transformation program is not only on track but ahead of plan. Nuvisan has great capabilities, systems and relationships already in place, and we are slowly leveraging this across the broader pharmaceuticals. As we know, we have been intent on executing the transformation plan in this business, and this is paying off. During the year our Food ownership, we implemented annualized gross savings of approximately EUR 19 million by the end of '25 of the total target of EUR 25 million by the end of '26. The P&L benefit in '25 was of EUR 11 million. We are on track to complete the transformation program and realize the EUR 25 million exit run rate by the end of the first half of fiscal year '26. This is 6 months ahead of plan. This is no small achievement. So let me extend a special thank you to the team that is leading this efforts. Nuvisan made a positive earnings contribution to the group in '25 and is expected to maintain ongoing profitable growth. We are very pleased with how the sales pipeline is building. And as you can see on the right side of the slide, third-party revenue now represent 56% of Nuvisan total revenue against 48% in '23. To illustrate the strength of the year, closed sale opportunities grew by approximately 20% in value during fiscal year '25. So with that, let me hand over the call to Stuart who will take you through the financials.

Thanks, Malcolm, and good morning, everyone. In short, ALS has delivered solid financial results amidst mixed market conditions. Malcolm has already touched on the main call outs here, so I will move straight along to talk about margins. As noted earlier, the group margin contracted by approximately 160 basis points on a constant currency basis. This is reflecting the impact from acquisitions and cyclical pressures in Minerals. Commodities margin declined by approximately 95 basis points at constant currency, reflecting reduced exploration activities through the first half and some market pricing pressure, which we have referred to before. Life Sciences organic margin grew by approximately 105 basis points. Scope dilution from the Nuvisan, York and Wessling acquisitions contributed to an overall decline of approximately 60 basis points. The adverse impact from FX of 25 basis points for the group was largely due to unfavorable currency impacts in high-margin emerging markets in the Commodities business. Now moving to capital management. The group continues to deliver on the key objectives of the ALS value creation framework, growth, strong cash generation, shareholder returns and balance sheet strength. Leverage of 2.3x was at the upper end of our targeted range of between 1.7 and 2.3x, but well within lender covenants as was EBITDA interest cover. We expect the leverage to start reducing in the second half so -- or through a constant currency [indiscernible] by 0.1x. Moving to growth investments. Total capital expenditure was $165 million, which represents approximately 150% of depreciation and 5.5% of revenue. Roughly 70% of CapEx was for growth with the balance for maintenance activity -- or maintenance investments. We will go into more detail on the capital investment plan for the lab upgrades after covering the FY '25 result. The Board has declared a final dividend of $0.197 per share, franked at 30% and representing a payout ratio of 60% of underlying NPAT that is at the top of our stated range. On an after-franking basis, this dividend payout is in line with the pcp. Moving to cash, where we saw strong cash generation. EBITDA cash conversion increased to 95% and reflects continuous improvement in all facets of our working capital management. The increased M&A expenditure relates to funding for the Life Sciences acquisition in the U.S.A. and Western Europe, while good progress was made on both DSO and DPO metrics in our working capital management. We expect cash spend on acquisition integration programs and ongoing investment in ERP systems to reduce from the levels in FY '25 and in FY '26. Turning to leverage. At 2.3x, leverage remained at the top end of our internal target range, reflecting the investment and integration agenda. The depreciation of the Australian dollar through the second half adversely impacted reported FY '25 leverage. As I mentioned before, applying the FX rate at the end of the first half through the second half, the leverage ratio would have been 2.2x. So it would have started declining as we -- reducing as we had expected. The focus remains on solid cash generation in the next 24 months as the integration of the acquisitions are completed and the ROCE on those acquisitions improve towards our targeted levels. Post the equity raise, pro forma leverage at 31 March, we have been 1.7x, so a reduction of 0.6x. While obvious, we are also calling out at the timing of the investing the $230 million organic growth capital that's been talked about today and timing of any bolt-on M&A acquisitions will clearly impact leverage over the next 2 to 3 years. Let me briefly introduce the property investment agenda. To protect and enable medium- to longer-term growth to be met, a substantial brownfield capital investment plan of $230 million was approved during half 2 of FY '25. This will enable future expansion and optimize our lab network at four of our key hub labs in Lima, in Peru, Sydney here in Australia, Bangkok, in Thailand and Prague in the Czech Republic. We will also circle back more on this as we discuss the equity raise in a few moments' time. Now moving to our liquidity position. In May 2025, the group further extended its debt maturity profile, completing a rollover of revolving medium-term debt facilities totaling USD 250 million. The pro forma weighted average debt maturity is now 4.7 years and average cost of debt is a touch over 4%. The total underlying interest cost on borrowings and lease was approximately $82 million in FY '25. This presents a good guide for interest expense for FY '26. But obviously, investors will notice that with the surplus proceeds of the equity raise, assuming it's successful today, being initially used to repay bank debt, the expected reduction in interest expense in FY '26 is approximately $12 million to $14 million. Now moving to corporate costs and how these have evolved. Corporate costs were well controlled and in line with expectations at 2.2% of revenue. The increase in corporate costs versus the prior period reflects increased higher people costs, sustainability-related carbon credits and compliance as well as additional support in the procurement and strategy plans. Our quest for improvement of operating leverage of the corporate functions continues. Looking ahead, corporate costs are expected to remain at approximately 2.2% of revenue in FY '26. And for those of you, I think we're -- most of you are aware of this, we are also relocating our operational headquarters to Madrid in mid-2025. So Malcolm and I will both be making the move along with other key executives. The corporate head office in Brisbane remains in place. So with that, I will pass back to Malcolm.

[indiscernible] and Thank you, Stuart. We'll not do the rest of the call in Spanish. So let's recap the key performance highlights from the year, and more importantly, share the outlook and priorities for '26. Many of you are well familiar with the value creation framework, which we introduced last year to support growth and profitability, with the ambition to deliver top quartile shareholders' return. The framework combines a risk-weighted approach to capital allocation that will protect, extend and expand the portfolio. Overall, the group is targeting mid- to high single-digit organic revenue growth in the medium to long term and steady improvement in operating margin and strong ongoing cash generation. Allocation of growth capital is deployed seeking a minimum ROCE of 15%, ensuring maximum growth and returns for shareholders over the medium term. As demonstrated in fiscal year '25, our value creation framework is actively guiding both inorganic and organic capital allocation with more than 70% of the overall organic investments directed to Minerals and Environmental business. The next slide shows our fiscal year '25 scorecard by businesses growth. Most of these items has already been covered. I just want to call out one point within Pharmaceutical, on the right side of the slide. During Q4 of fiscal year '25, the Mexican FDA issued a new regulation that released certain pharmaceutical products imported into Mexico from local testing requirements. Minimization efforts are underway. However, this change poses a $5 million to $10 million EBIT risk during fiscal year '26. With solid performance across the portfolio in '25, let's now shift focus to our digital agenda. This is an area where we continue to build momentum and deliver meaningfully. ALS is an innovative data-driven company, and we continue to invest across every area of our business to drive growth, efficiency and value creation. From day-to-day testing improvements to the rollout of our proprietary LIMS systems that we are targeting 95% coverage of key businesses in the next 3 years, we are advancing our operating model. We are also deploying robotics to enhance safety and productivity and most importantly, we are using data to improve client experience, margins and unlock new revenue streams. We'll share more about our innovation journey at the Investor Day later this year, but the key message is simple, ALS is committed to embedding technology and innovation into everything we do and lay the foundation for what is coming in '26 and beyond. It's important to acknowledge that we have a resilient operating model to navigate any near-term uncertainty related to macroeconomic conditions as a result of the ongoing tariff announcements. We remain focused on delivering top-tier service to our customers consistently, safely and reliably. The fiscal year '26 priorities are: ongoing successful integration of recent acquisitions towards targeted ROCE hurdles; complete Phase 2 of Wessling integration and the separate Nuvisan transformation plan 6 months earlier than was originally expected; the expected incremental gross EBIT benefit from Nuvisan is of EUR 11 million in '26; we're also looking to the expansion of our laboratory network through execution of the capital investment plan; and we are looking to minimize the $5 million to $10 million impact on EBIT from the change in Mexican pharma testing regulations that I noted earlier. For the wider group, we are targeting 5% to 7% organic revenue growth and margin expansion. The Commodities segment is positively exposed to recent volume tailwinds, which are showing a positive return on exploration investment, primarily by majors and mid-tiers. The sample volume recovery we saw predominantly in Q4 continued at the beginning of this current fiscal year '26 with positive momentum in Central Asia, Australia, South America and Africa. At the same time, we also continued experiencing a recovery in sample volumes in North America. At this point, that [indiscernible] peak season has not yet fully kicked off, it is more modest than in other regions we just referred to. We have reasonable confidence that the positive sample volume trend will continue for the first half of '26. However, we expect incremental margin improvement from the positive sample volume growth. The price pressure encountered in Minerals in fiscal year '25, will largely offset the full potential operating leverage benefit in '26. Within Industrial Materials, we remain focused on accelerating organic growth in the Oil & Lubricant division, supported by new greenfield development across the multiple regions. Regarding Life Sciences, current market conditions support a continuation in organic growth. For '26, the group is targeting margin improvement of 20 to 40 basis points within legacy operations, which, of course, is in addition to the incremental benefit of the Nuvisan transformation. Environmental maintained its strong momentum through Q4 and into the early part of this fiscal year. Capital allocation and minimum ROCE targets will continue in line with the value creation framework. The group has pivoted to organic capital allocation in several key hub locations to accelerate medium-term growth in our core focus segments. Looking medium term, subject to macroeconomic conditions, the group remains on track to meet the fiscal year '27 financial targets. This includes growing revenue to $3.3 billion and growing underlying EBIT to $600 million, with a group EBIT margin floor of 19%, excluding the impact of recent acquisitions. We will provide a further update at our AGM as well at the Investor Day in July of this year. So we've taken you through fiscal year '25 results, and we share the outlook for the year. Let us move now to providing more color on the proposed pipeline of growth opportunities in front of ALS and how we will fund this. We're very excited about the strong pipeline of growth opportunities we see across ALS. So let me -- let us take you through some of the details. Before I have to -- be clear on this, due to legal restrictions, we are unable to discuss details around the placement other than the basic terms referred during this presentation. So please refrain from asking questions about more specific details of the placement as well or legally restricted -- we're legally restricted from answering those questions on the call. As noted earlier, we are planning to develop -- to redevelop four of our key laboratory hubs, two brownfields, all of which leverage existing sites. These upgrades will protect the business we have today, significantly increase testing capacity and improve operational efficiency, supporting long-term sustainable growth. 70% of the investments will be made during fiscal year '26 and '27. To fund these developments, we are raising $350 million through an institutional placement with an additional SPP targeting up to $40 million for our eligible retail shareholders. At the same time, we continue to see active consolidation across the TIC sector. Proceeds above the $230 million used for the lab upgrades will be used to pursue bolt-on and M&A opportunities over the next 24 months. While we remain committed to our deleveraging plan, these opportunities have come together at once. We believe it's the right time to strengthen our balance sheet so we can move decisively on both organic and inorganic growth opportunities. As most of you know, ALS operates in the attractive Testing, Inspection & Certification industry. Our portfolio is unique and diversified. And we are focused on those areas where ALS has a clear competitive advantage and where we see significant demand. Our disciplined approach to value creation is built on strong organic growth, complemented by targeted bolt-on strict M&A. We are delivering on our commitments, tracking well towards fiscal year '27 objectives with a clear disciplined strategy. The testing markets within the broader TIC industry is large, growing and evolving going driven by global megatrends such as regulation, sustainability, electrification and supply chain complexity. ALS is focused on the testing segment, which represents over half of the TIC market and is increasingly shifting towards outsourcing. By 2030, outsourced testing is expected to make up to nearly 50% of the total market. We are well positioned in this space, currently leveraged to around 30% of the market, and we see significant opportunity to grow both organic and through continued industry consolidation. As mentioned before, ALS is a leading global player in the TIC industry with a well-diversified and resilient portfolio, both in terms of end markets and geography. Our Environmental and Minerals business are global leaders and together accounts for approximately 73% of the group's revenue. The remaining portfolio comprising Industrial Materials, Food and Pharmaceutical adds further diversity and long-term growth potential. This scale and balance supports a strong earnings profile and attractive returns underpinned by a disciplined focus on ROCE. ALS has a strong track record of creating shareholder value. Since 2018, we've delivered approximately 11% compound annual revenue growth and a total shareholders' return of 189%, well above industry benchmarks. These results reflect the strength of our portfolio, the disciplined execution of our strategy and our focus on delivering sustainable long-term value. We've covered the disciplined value creation framework, so we'll skip to the next slide. This next slide captures the exciting opportunities ahead for ALS. Over the past few years, we've been strategically developing our hub-and-spoke operating model, and we now have a clear path to unlock further value in two key areas. First, we are investing $230 million to upgrade four major hub laboratories across key regions where we see strong organic growth and have a leading position and a competitive advantage. These upgrades will significantly increase capacity, support continued market share gains and enhance efficiency, especially in Minerals. Importantly, these investments also give us greater flexibility on our cost base during future cycles and reduces risks around environmental lab accreditations by securing long-term infrastructure stability. And second, ALS has a proven track record of disciplined accretive bolt-on acquisitions. We see a strong pipeline of opportunities to add scale and capabilities to the group. And this raise will give us the balance sheet flexibility to decisively as these opportunities arise, ideally enabling bilateral deals where we can move quickly and creating long-term value. So let's start with how we plan to deploy the $230 million investment. Let me start by saying that these upgrades will enable in the first instance to protect the business we have in those regions. And most importantly, enable us to participate in market growth for the medium to long term. As many of you know, ALS pioneered the hub-and-spoke model in the TIC industry. This model enables us to deliver standardized, high-quality service to clients across regions while leveraging best practices, technology and systems globally. It also provides operating flexibility by allowing samples to be tested across different hubs, ensuring consistency, efficiency and business continuity. Our global lab network today includes more than 200 spokes and 24 hubs. In Minerals, we run a mature global hub-and-spoke model, thanks to the centralized workflows and global demand. In contrast, the Environmental business has developed strong regional hub networks due to local regulatory drivers and more limited cross-border sample movements. Strategically, this model gives ALS four key advantages: it allows us to adapt quickly to change the regional demand; deliver strong operating leverage; supports global clients with consistent service; and diversifies our revenue base. With that in mind, Stuart will walk go you through the four hub locations where we propose to expand through these the space.

Thanks, Malcolm. Let me begin by emphasizing that managing laboratory expenses is core to ALS, and we do this every year as part of our normal operating $150 million to $170 million CapEx spend. We have a strong track record of delivering projects on time and on budget while achieving expected returns. In this instance, we are investing in four important hub locations, three in Environmental and one in Minerals. Given their critical role in our network and the long-term nature of these sites, we prefer to own these labs than lease them. These four projects share three characteristics. Firstly, they are in markets where we have a leading position and right to win, which supports continued organic growth with current facilities nearing capacity. They will double the size of the existing laboratory footprint, that's the second point. And third, they will be equipped with state-of-the-art technology and automation to enhance efficiency and scalability. The use of funds will be split roughly 1/3 for land and 2/3 for construction and equipment. Importantly, all lands has already been secured and these projects have been carefully planned over the past 12 to 18 months and in some cases, longer. The capital will be deployed progressively, 40% in FY '26 and -- or approximately 40% in '26 and approximately 30% in FY '27 and the remainder of between '28 -- between FY '28 and FY '30. Let me share some more detail on each of the four projects. Firstly, Lima in Peru. This is a high-growth market where ALS has a strong position and a new hub will be critical to supporting that momentum. ALS Geochemistry has been operating in Lima, Peru since 1997 and in the current locations since 2001. We will be consolidating three separate facilities, including sample preparation and the analytical labs into a single modern site, enabling us to capitalize on future up cycles and increase market share in the Central and South American region, which this hub lab serves. This will significantly improve workflow, efficiency and logistics access and overall client service. Importantly, the new site also provides room for future expansion beyond this investment. Secondly, Smithfield in Sydney, which has been owned by ALS for more than 25 years. This is one of our flagship environmental facilities and one of the top three contributors in terms of revenue and EBIT in the Environmental division. This site is a key hub lab for developing industry-leading methods, including PFAS testing and central to the global rollout of our environmental systems and capabilities. The proposal involves converting the existing building into a purpose-built laboratory then redeveloping the existing lab for offices and common areas. Construction has already started on this site. Thirdly, the Prague facility, which is the second largest environmental lab by volume and a crucial European hub for environmental and food testing, serving over 70 countries and processing approximately 25,000 samples weekly. The facility is approaching capacity. To ensure future continuity and resolve logistical issues, which we have at the current time, ALS has secured the adjacent plot of land, which perhaps opportunistically became available. This will enable the company to further expand the lab's analytical capabilities through new methodologies and technologies as well as free up capacity in other European labs. It will also support the consolidation of 2 other divisional sites in Prague into a single modern facility aligned with the ALS Way. Finally, Bangkok in Thailand is a significant Life Sciences business, representing a strong Environmental unit and the third largest geography within the Food business. ALS Bangkok is the hub laboratory for Thailand following Food and Environmental, microbiology and chemistry analysis with approximately 350 employees on site. The lab has been in its existing facility for 14 years during which time revenues have quadrupled. There is no room for further growth in the current site and hence, there is a risk of business stagnation and loss of key talent and also leakage to competitors. Each of these sites play a critical role in our global network and are designed to support sustained growth, efficiency and technical leadership across our key markets. Now moving on to the sequencing of the developments. For three of the four developments, the location of the new site has been identified while Sydney involves redeveloping an existing owned facility. In Lima, we have already signed an agreement to acquire the land with settlement due in the first half of FY '26. We've designed an approvals well progressed and construction plans to start immediately thereafter. We anticipate construction to take approximately 1 year and target commissioning in the first half of FY '27. In Sydney, we have secured all the planning approval and the construction has commenced. We expect to complete the laboratory upgrade by the end of FY '26 with commissioning shortly thereafter. In Bangkok, we plan on completing the acquisition of the land in the first half of FY '26, finalizing design and permit and commence construction by the end of FY '26, with a construction time frame of approximately 2 years. Prague is a slightly longer-dated projects. As I said, the land has become available opportunistically, so we pass on it. We plan to commence construction in half 2 of FY '27 and commission the new facility in half 2 FY '30. We'll obviously endeavor to do it fast on that if we can. So once we secure the land, which we will settle in June -- the June '25 quarter, there are some demolition works with completion required -- with completion expected by the end of FY '26. We will carefully manage the transitioning from the existing hubs to the new ones to ensure minimal disruption to the business as we have done before. In aggregate, the projects are expected to meet our ROCE target of 15% in the first full year of earnings post commissioning of the final new laboratory, which is to be clear, is FY '31 or calendar FY '30. Our teams are working diligently to ensure that we stay on schedule. To ensure the success of the projects, we have partnered with leading real estate consultancies that have and will support us across the entire process. We have a solid track record of delivering projects on time and on budget and meeting target returns -- or target returns within the expected time frame. To provide some additional context of the strategic importance of these sites, in Lima, Peru, our minerals hub lab for Geochemistry in Latin America has shown high single-digit revenue CAGR since FY '18. This investment will capitalize on the increased investment in the Latin American mining sector, including for minerals such as copper, gold and battery metals. In Sydney, Australia, our environmental hub has demonstrated a mid-single-digit revenue CAGR over the same period, driven by significant regulatory tailwinds and innovation in new methods by ourselves. Similarly, our Bangkok, Thailand hub for environmental and food testing has experienced strong market demand due to more stringent food safety regulations and increasing government outsourcing in that country. Lastly, our Prague, Czech Republic hub is the largest environmental testing lab in Europe, with double-digit revenue CAGR over the last 5 years or so. This expansion will accelerate growth in target regions and support market entry into Benelux and Eastern Europe, and as I mentioned before, will free up capacity in other adjacent countries. I hope from this summary that you as investors understand the rationale for why we are undertaking these investments and why we are doing it now. All our highly strategic hubs with the development demand driven in line with our growth ambition. And with that, I will now hand back to Malcolm to conclude the presentation.

Thanks, Stuart. So let's shift our focus to M&A opportunities, of which we intend to deploy in time $120 million of the total $350 million placement space. We have a pipeline of M&A opportunities. In the last 12 months, we've reviewed approximately 80 opportunities, and we are primarily focused on bolt-on opportunities and have had initial discussions with a subset of these targets and are actively evaluating a handful of priorities opportunities totaling $150 million of cumulative revenue. We continue to see significant consolidation opportunity in our priority capital allocation segments. These are largely and rapidly growing markets that are underpinned by strong underlying payments. Both minerals and environmental markets are highly attractive and growing, well supported by macro [indiscernible]. We remain disciplined in our approach to M&A and apply our value creation framework in our assessment of M&A opportunities. There are three layers to our assessment. The first is whether the asset fits in our portfolio and whether ALS is the natural owner. Second, that the opportunity aligned with our capital allocation priorities in line with the value creation framework. Risk-weighted growth will be prioritized for Environmental, Minerals and Industrial Materials. And lastly, we target a minimum ROCE of 15% in the third or fifth year across investments. On the next slide, we map out the expected financial outcomes of the capital deployment strategy. Of the equity raise, we plan to deploy $230 million towards organic investments in the laboratory network. The investments will be phased with majority of the capital deployed within 24 months. As mentioned earlier, we expect aggregate returns to meet or exceed the 15% ROCE hurdle in the first full year post commissioning of the new labs. The remaining proceeds will be used to pay down variable components of debt. We will generate interest savings before being deployed into future growth initiatives, including M&A opportunities within the next 24 months. We anticipate mid-single-digit EPS accretion based on run rate earnings from these three laboratories, which is fiscal year '30 for Lima and Smithfield and fiscal year '31 for Bangkok and fiscal year '33 for Prague. And further EPS accretion beyond mid-single digit for the deployment of remaining proceeds in future growth initiatives that meets ALS targeted return hurdles. On a pro forma, 31st March '25, basis, our leverage would be at 1.7x, which is at the lower end of the targeted range of 1.7 to 2.3x. Consistent with our previous messaging, we expect leverage to reduce -- to fall as sales grow and begin to realize incremental earnings from these and other recent investments. So to finish, we are very pleased to deliver another strong set of results. We have carried strong momentum into the start of fiscal year '26, and we remain positive around the outlook for our business as we look to target 5% to 7% organic growth across the business along with improved volumes and margins. ALS is a resilient global leader in the TIC sector with diverse end markets poised to capture growth opportunities from industry megatrends. We have a clear strategic advantage through our leading hub-and-spoke model and are proud to hold leadership positions globally in Minerals and Environmental and regional strength in Food, Pharmaceutical and Industrial Materials, with today's announced investments in the new hub development to further entrench this position. I'm very proud to lead a strong global team and culture with our innovative data-driven approach to continue to provide growth opportunities and enable us to better support our clients. And finally, we have a diverse earnings profile, our disciplined capital allocators and ultimately want to deliver strong cash generation to maximize returns to you, our shareholders. So to finalize before we open the floor for questions, I want to thank the entire ALS team for their continued dedication and commitment. I sincerely appreciate everyone's efforts. And with that, I apologize for the long call. We thought it was important to cover both presentations, and we'll open the floor for questions.

[Operator Instructions] We will now take our first question from the line of John Purtell from Macquarie.

Malcolm and Stuart. Just two questions, if I can, please. The first question on Minerals. I mean it sounds like Australia and South America are driving the recovery so far. Are you expecting recovery from other regions going forward, and I suppose, particularly your outlook for '26. And are you assuming any recovery from the juniors as well, I suppose, particularly your first half outlook?

Thanks, John, for the question. And yes, so we called out that the recovery was coming from South America. That's correct and Australia, but also we mentioned Central Asia that we're having a good momentum. In North America, I think we are seeing mixed figures, especially probably in the U.S.A. and Mexico in a different path than Canada and within Canada, Eastern Canada is stronger than Western Canada. This recovery overall is coming from -- sorry, majors and mid-tiers, and we've seen probably the commodity mix is slowly -- slightly higher goals than what we've seen last year. In terms of your question around juniors, probably we have seen recently some junior developments, but it's a little bit too early for us to say whether the full recovery will be push through juniors or continued exploration expenditures by majors and mid-tiers. Did I answer your question, John?

Thanks, Malcolm. And just second question on Environmental. I mean, you've talked to -- obviously, we're seeing the 10% growth here. You talked to that as industry-leading. What do you see the drivers of that above-average growth? I mean, presumably share gains and you've got obviously a strong position in PFAS. Are there any other factors to call out?

Well, we are very excited about the Environmental opportunity. And I think we called out that the CAGR over the last 3 years was 8.4%. It's a business that has been experiencing not only top line growth, but steady, consistent margin improvement across all regions. And what is driving that? I think that you called it out, I would say that 1/3 of that is pricing. That pricing discipline that we all gain through COVID era, it's continuing to be very much embedded in our operations. Obviously, probably on the near future that the tailwind of price will be less than the previous 3 years, but seeing the disincline there. Second, I will say that there is a component of market share we've been successfully deploying, I think, a very reliable service. And when you -- when your service is reliable, the clients tend to accept your proposal at a different price point. So we have been able to differentiate our services on quality as well. And the third one is we continue to see a continue pushing on the enforcement of existing regulations. I will not call out new regulations, but the existing regulations are -- and the enforcement of those regulations are consistently and continuing pushing for more work. And that has been consistent in most of the regions. If you want, including in the U.S., that the state regulations are still there and enforcement is still very much [indiscernible].

Our next question comes from the line of Nathan Reilly from UBS.

Just curious to dive a little bit deeper into the minerals testing volumes. Obviously, I look at the chart there in terms of monthly trends. But in terms of maybe how the fourth quarter tracked for you, can you just give us an idea on monthly trends. I'm guessing March was a reasonably strong month for volume growth. So can you talk through what you saw there and to the extent that you can in terms of those April and May to-date trends, please?

Yes. Thanks, Nathan. I think that you're going to be happy that, that chart is on [indiscernible] first couple of slides of the presentation and you don't need a big magnifying glass to read the trends. And I think you call is very -- what you said is very true. I think that the momentum or the improved momentum started, I would say, at the beginning of Q4 of our fiscal year. Normally, the Christmas season is a slower season than what we experienced this year. We've seen mining activities probably resuming earlier than previous years. So that's number one. That -- those sample volumes setting continued steady and help us to rebuild inventory and work in progress in the labs. And that gave us also a little bit of a change in momentum in terms of pricing. So I think we didn't mention this, but at the beginning of the calendar year, we raised prices by around 4% to 5%. And also the current demand is helping us to be a little bit more successful with pricing than what we had on the previous years. What we said during the call, we are seeing continued momentum. So you see the sample volume chart, there's a clear change, I would say, and that is what we've seen since the beginning of the fiscal year without any concern, major concerns of that change. We are pulling out that we are quite confident of H1 revenue because that's the visibility that we have. And it's -- in these macroeconomic conditions, it's very hard for us to give or have certainty beyond that one. But the confidence right now in terms of revenue is quite strong.

And final question. What do you think has characterized that volume growth? Are you seeing outsized volume growth coming through from your mine site market share penetration strategy? Or are you seeing, I guess, the benefits of gold majors reinvesting in some of their exploration programs given strong free cash flow generation that they'd be generating with elevated gold prices?

I would say, Nathan, three things. The first one is the mix of services. Clearly, the uptake of HPM is still there. And in this environment of less budget constraint is quite compelling in the outlook that we have. You rightly call the mine site. I think we mentioned during the call that the mine site had a 22% CAGR in the last 3 years. So clearly, we're seeing ongoing momentum. But the third one is you're absolutely right. We've seen an increase in gold activities through our labs that probably that was the main driver. In South America, I would say that the critical metals are driving the momentum and not so much gold. Stu, anything to add?

No.

Our next question comes from the line of Megan Kirby-Lewis from Barrenjoey.

My first question, just on the outlook for growth CapEx. So just noting that it was $120 million in '25. How will that look for the next 2 years with the inclusion of the brownfields lab investment?

Megan, thanks for the question. Look, I'd say to you the sort of level of operating CapEx that we've seen in recent years will continue on. So the $120 million of -- I think the total CapEx issue is around $160 million, $170 million. I see that as the level of that will remain at. And then these hub lab investments are on top of that. So perhaps historically, because we haven't had the magnitude of these projects all happening at the same time, where we've been investing in our labs for minor expansions, that's just been funded out of that sort of $150 million of CapEx. But these four projects are in addition to what would be seen as an ongoing level of operating CapEx. I hope that answers your question.

No, it does. That's clear. And then just to clarify, just the commentary on the Minerals pricing, but that will be offsetting the operating leverage. So just if you could just explain simply, I guess it just sounds like the pricing commentary has actually improved in the fourth quarter. So why will that be offsetting the operating leverage in '26?

Yes. Megan, again, good question. I think the way you got to think about pricing, it's really the -- we encountered from sort of Q2 and Q3 of FY '25 really because volumes are still subdued. The market was tight, and to retain the volumes that we have, we have to meet the market. And therefore, the pricing environment was much more pressured. So when we enter into those contracts, I mean, effectively, we're basically -- if we went as short as we could, but see that as a sort of a 12-month commitment to the client. So while we had to meet that pricing, those tests will be carried out in the ensuing 12 months. So some of that impacted FY '25, so see that in second half but will continue on as we run through FY '26. So while we expect if these volumes that we're currently seeing are retained or maintained, we will see some operating leverage benefit, which we want to see, and I'm sure you want to see even more. But in this period where we've got this -- the flow-through of the back book of business at a lower margin that is going to impact and largely offset any operating leverage benefit certainly in the first half. We would expect that as that back book at the old pricing or the more competitive pricing flow through the system or flushed through the system, so to speak, that we will start to see more of the benefit of the operating leverage, which is why in our outlook, we say we're looking for incremental marginal improvement in Minerals, but that's most likely going to be more in the second half than the first half. And to your point, began, we have seen now volumes have improved the pricing environment has, if you like, become more in our favor. So we're getting back to where we'd like to be, but I don't know that we can declare victory on that just yet.

Our next question comes from the line of Nicholas Rawlinson from Morgans.

Malcolm and Stuart. Just a couple for me. On Minerals, sample volumes look to be up about 15% in April, May. How do we reconcile your guidance for 5% to 7% organic growth between Life Sciences and Commodities? Just wondering if you could sort of give us an indication of what you're assuming for each division.

Yes, I'm not sure your math there, Nick, but I'd say that's a bit more than what we're seeing. I think what we're -- I think if you back calculate last year, so we were flat in the first half. And then we were up for the full year at sort of 2.5% in volumes. So that started in December. So while we said it was predominantly in the fourth quarter, that is correct, but we start to see volumes move positively in December, the sample chart will show that. So I think if you go backward engineer it, all the math, so I think that delivered an organic growth of somewhere around in that sort of 7% -- 6% to 8% somewhere around that. And that's what we're seeing. So that's why, that's given us the confidence to call out that we expect across the group this year to deliver 5% to 7% organic growth. And you'll recall last year, we said across the group will be around 5%. So we're feeling more optimistic. But I think everyone's got to understand that these are uncertain times. We're not trying to be too negative or conservative here. But we have seen -- even in last year, we had some volume fluctuations quite regularly, especially in the first half. So I think we just -- I guess we're cautiously optimistic is how I describe it.

Okay. And then just on that 20 to 40 bps of margin expansion in Life Sciences, ex your acquisitions, does that include the $5 million to $10 million impact from Mexico? Or do we need to deduct that afterwards?

You need to deduct that after. So it's a separate building block.

Okay. And can I just ask one last one. I've heard through a few juniors that turnaround times have actually blown out here in Australia for some of your competitors. Could you just comment on the industry landscape here in Australia and whether that will give you some incremental pricing power?

Was that a question? I think that it's a fair assessment, Nicholas, but that's everything we can comment. We always want to improve our service delivery and be sure that we can serve the client demands. But obviously, while capacity continuum will start lacking in the market that will give us opportunity from a price perspective. That's -- I think you made a fair comment.

[Operator Instructions] We will now take our next question from the line of Jakob Cakarnis from Jarden.

I'm interested in, obviously, the focus on volumes. But clearly, price/mix deteriorated in the Minerals business through the second half. It looks like including FX in the first half, price/mix was positive 3.2%. And then if you back it out, it was negative 4% in the second half. And then you've bothered in the commentary on Slide 33 to say that you think it's going to constrain the operating leverage. I'm just trying to separate essentially what looks like an elasticity as you've dropped price, you've got more volume. How do we think about that in the first half and then second half? I mean it sounds like you're expecting some of that price/mix headwind to continue in the first half. But what gives you confidence that, that reverses?

Yes. So Jakob, good question. Similar to Megan's question, I think. So what we're saying is this is how, I guess, the pricing works. So as we went through Q2 and Q3 in FY '25, the market was, if you like, in the clients favor and the demand was still subdued. So to meet the market, we had to lower prices to firstly retain the business we had or that we were bidding for. And similarly, we were still endeavoring in those times to grow market share because as the market hopefully recovers, you have the market share that you can then leverage into a better pricing environment. So those commitments to our clients tend to be 12 months in duration. So as we've started to provide those testing services, they have impacted -- start to impact in Q3, more impact in Q4 and will continue FY '25, that is and will continue to impact through FY '26. And you're quite right, we would -- we think our estimate at the moment is in terms of margins, because of that pricing pressure, that's going to largely offset, especially in the first half, the benefit of the operating leverage that we are absolutely steadfast in pursuing on the improved volumes. But as those, call it, pricing arrangements start to runoff in the second half of FY '26, we should start to see our margin -- we expect to see how margins expanding. That's why we've called out across the year, incremental margin improvement, but I think you should be thinking of that more second half than first half.

And is there a case study historically, Stuart, that you can point to like seems like we're in a similar situation to FY '18, FY '19? Is that the kind of operating leverage we should look at? There was obviously a big improvement in commodities earnings across those 2 years versus the base from the prior years. Is that the kind of operating leverage that you're talking to? I mean operating leverage seems a little bit vague as a catchall. I think consensus has 100 basis points of commodities margin expansion for '26 on '25. How do we think about all of those?

It's a good question, Jake. I think we need to see how the year plays out before we see -- we can tell you whether it's a similar cycle than the years that you just called. Secondly, obviously, from a mix perspective, the revenue mix in ALS has change since that year from a downstream perspective. That's also something that we have to take into account with a big focus on expanding mine site and the reason of expanding mine site is to reduce cyclicality on the future down cycle. So I think it's hard to give you a precise number because if you want to the positive, we should have the HPMs that they were not as material as they are right now. So I think we -- as we said in the past, it's something that we want to improve. We're always working on improving our operating leverage. Short term, as Stuart said, on the first half, I think that the headwinds are the pricing that we needed to have in order to secure market share and expansion last year. But we will have to see how the cycle plays on the second half to give you a solid answer on where's the upside of that. We are quite confident of the operating model that we have in Minerals. And I think in every up cycle, we have proven that we can break that ceiling, but let's wait for the cycle and see where is that ceiling, and we'll always be looking to break it. So I think it's something we need to prove and we are working on, but it's too early to give you a number.

Yes. Obviously, that downstream as you push into mine sites at lower margin than the overall group just given that that's growing faster and the margins are going backwards? Is that the right conclusion, Malcolm?

In a mix sense, Jakob, that's right. I think perhaps the other -- if you pull apart first half, second half. I think what I would take away from our second half is the margins were the same as the first half. So I would say -- see it as a positive that we're able to offset the pricing pressure that was coming through in the second half with, if you like, call it, operating leverage benefit, which is a whole number of things, to your point, it's not easy to quantify exactly. But I think for the operating leverage or margins would have gone backwards. So I think we're comfortable with the operate leverage there. And yes, it's been masked by the impact of the pricing. But I said, we made the decision to retain the volumes and keep our labs as full as we could we weren't uncomfortable with short term pricing, I guess, call it, meeting the market because it enabled us to keep our market share on the basis that we know from history, if you go back to you mentioned 2018, we have done this before, where we make sure we keep the volume so that when the market conditions change, some else raised the question around turnaround times and competitors, et cetera. If you've got the business, it's up to us to continue to deliver to keep it, but you've got to have a first, it's very hard to win business in a much tighter or much more demand-driven market than it was during the sort of middle period calendar '25.

Just one final one for me, just on Life Sciences, just to rehash, Nicholas' question. So you're saying 30 to 40 basis points on the underlying business, it sounds like we've got to take off that $5 million to $10 million from Mexico. But given the mix of those businesses that you've acquired are essentially less than group or a drag on group. Is there a chance that FY '26 Life Sciences EBIT margins as reported are less than FY '25?

I wouldn't think so because the other thing as you got to factor in the Life Sciences, which, again, in addition to that $20 million to $40 million is, you got ongoing improvement in Wessling and you've also got the ongoing improvement in Nuvisan. So on the math, I wouldn't see margins going back within Life Science.

Our next question comes from the line of Rohan Sundram from MST Financial.

Malcolm and Stuart. Just a question on tariffs. And I appreciate you said that's a minimal impact to your cost base. But in terms of impacts to your customer base, just wondering if any customer groups are showing any more sensitivity than others around tariffs? And do you see it as a potential opportunity in some instances for your customer base or with regards to your customers?

Thanks, Rohan. Good question. To your first part of the question, whether we have seen more sensitivity, I think what we try to product is that we've seen ongoing momentum. I think that the question is on the lack of stability and when these tariff discussions will settle, specifically, I would call out that for Canada, I think that the volatility in Canada was a bit larger than in other regions. And -- but we haven't seen that sensitivity and plans pulling back. And I'm reflecting, I could say with some certainty in none of our businesses, we've seen that. And in terms of upside, let's see where the tariff ends and what's the meaning of that because clearly, whether that's going to be an opportunity for operations that we have in India or in Mexico or in Brazil, clearly, those -- some of those countries will be more benefit, especially in Mexico and India, maybe on the discussions. I think it's too early to go the upside. But clearly, from a negative, we haven't seen an impact or we have been seeing an increased sensitivity from clients.

[Operator Instructions] Our next question is a follow-up question from the line of Megan Kirby-Lewis from Barrenjoey.

I just wanted to ask on the acquisition strategy. How should we be thinking about the deployment of those surplus funds? And just any commentary you can give on potential size and the end market focus would be helpful.

Thanks, Megan. I take that one. So on the acquisitions, deployment, I think you should be expecting anything in the next 6 months. We're still focused on completing and starting Phase 2 or Wessling, completing the transformation plan of Nuvisan. But this will give us the opportunity to start shaping the pipeline. I think with have a solid pipeline. In terms of end markets, clearly, Minerals, it's an area that we are looking and we have seen an improved pipeline in the last 12 months. Where -- in Minerals, I think we're looking throughout entire value chain, but specifically everything that we call not exploration. So it could be Metallurgy, consulting, it could be a mine site as well. And in the case of the Life Sciences portfolio, we're clearly our focus on expanding our Environmental business. There are some opportunities across different regions that we're looking. Those opportunities will take probably 12 months to start realizing. Why do we want to have this flexibility? Because I think we give us opportunity to have bilateral discussions, and that's also always improved the return for our shareholders that go through process, private equity process or institutional process. So it's a better outcome for our shareholders. So in terms of end markets, you should be picking on those two areas as key areas of focus.

Our next follow-up question comes from the line of Jakob Cakarnis from Jarden.

I'm just interested in the move of head office to Madrid. Can you just talk us through the thinking there and why now?

Thanks, Jakob. So a move to the -- of the head office to Europe was something that we discussed since I joined or took the CEO position. And the truth it's pretty simple. We have right now, the executive team in 6 different time zones. And primarily, the executive team is now focusing in Europe, that's number one. So from an agility of decisions, I think it's -- we value the culture that we can create in one same office. We've seen that Europe is the right location. So also from a talent perspective. Most of the big players are there, and we have been making changes to the executive team and the senior leadership team with the key individuals within the market that are normally in Europe. Why -- so that's the second point. And the third point is 40% of our workforce is in Europe. And as you can see from our results, we have been having a lot of focus on improving Nuvisan and improving Wessling, expanding in terms of Europe, expanding in the Nordic. So it's clearly an area of focus for us. And in terms of the time right now, it's something that we've been speaking for the last 12 months. It's the right time to do it right now because the recent hires of the executive team are all based in Europe. And in terms of cost from a company perspective, mobility is slightly lower than other jurisdictions, so that will give us an advantage. And why we are in Houston? I think that in Houston, we are because the previous CEO was based there and the focus was in America, but it doesn't change at all the focus in the United States because we have a very strong regional team that will continue being focus there as we have in Canada, the entire Minerals team being focused in Vancouver.

Our next follow-up question comes from the line of Nicholas Robinson (sic) [ Nicholas Rawlinson ] from Morgans.

Just wanted to clarify, so that 20 to 40 bps of incremental margin expansion in Life Sciences. So put that to one side, that's ex acquisitions. But is it fair to say the expectation is that the acquired businesses, Nuvisan, York and Wessling would actually have higher incremental margin expansion just given the restructuring and the turnaround within those businesses?

Indeed, Nick, very good observation, it's correct. That's why we're not quoting a blended story because those businesses, I mean, those on the call recall, both of those business when we acquired them or with Nuvisan to 100% we're losing money. They both turned profitable -- turned the both into profitable outcome in FY '25, which we're really pleased about. But we're still a long way to go. And you quite like, we're only growing those or improving margins by 20 to 40 points, that's a fail, so that will be improving at a faster pace than that.

Right. Okay. So the 20, 40 some of the low watermark. Awesome.

Well, it's for the, call it, the legacy perimeter, excluding Nuvisan, Wessling and York.

I'm showing no further questions. Thank you all very much for your questions. I'll now hand back to Malcolm for his closing comments.

Yes. Just to close, I want to thank shareholders for their support, everybody for the patience during this call, I think it was quite important for us to explain the fiscal year '25 results, but also the perspective that we have in '26 plus equity raising. And lastly, but most importantly, I want to also thank, again, all the employees of ALS for the hard work and commitment to this fiscal year '25 and what we have ahead. Thank you, everyone. Enjoy the rest of the day.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.