Mpac Group plc ($MPAC)

Good afternoon, ladies and gentlemen, and welcome to the Mpac Group plc full year results investor presentation. [Operator Instructions] The company may not be in a position to answer every question it received during the meeting itself. However, the company can review all questions submitted today and will publish responses where it's appropriate to do so on the Investor Meet Company platform. Before we begin, we would just like to submit the following poll. And if you could give that your kind attention. I'm sure the company would be most grateful. And I now like to hand you over to the executive management team from Mpac Group plc. Adam, good afternoon, sir.

Thank you very much, and hello. Over the next 30 or 40 minutes, Will and I will run you through a bit about Mpac, the markets that we serve. The sectors and the regions that we operate in and some example of the strategic initiatives that we've delivered in 2025. Will is going to take you through our results for 2025, which were in line with expectations at the year-end. A record year for the group with revenue up 42% to GBP 174 million. Underlying PBT, up 27% to GBP 13.5 million and good development in margins, up just over 0.5 percentage point on operating profit to 10.4% return on sales. It's the first time we've been into double digits as a group. Now the 2025 results have to be considered in the context of 3 things. Firstly, I said a very challenging market conditions set early on in the year with the introduction of U.S. tariffs, which created uncertainty for our customers it led to delays in new capital equipment projects being committed. Secondly, tailwinds of acquisitions that we completed in the prior year, without which we would have been more exposed to the U.S. market and which created synergy opportunities, which we are able to drive during the year to offset the challenges in our markets. And thirdly, the actions that the team took responding to those factors that position the group for growth in 2026 and allowed us to deliver the results in 2025. We'll run you through the group strategy and the progress we made on delivering that in 2025, and we'll finish with a look ahead to 2026 and your questions. So firstly, a little bit about Mpac. The group today comprises 6 businesses operating from 6 manufacturing sites, 2 in North America and 4 in Europe, with customer service hubs across the world from Mexico to Singapore. We design, build and support the machines that assemble and package the products that millions of people around the world depend upon. With 6,500 machines already in service, our team's focus on customers in the food and beverage, which makes up about half of our revenues, health care, making up about 1/3 of our revenues and other FMCG sectors. In their factories, our customers use our machines to handle raw food, picking and placing and conveying food, for example, in the production of lasagna, biscuits, cookies, meat patties and so on. the BCA team in Boston specialize in these processes. In the Switchback and Langen businesses, our teams in Canada and in the Netherlands, specialize in machines that carton and case pack, for example, putting frozen pizzas into cartons at very high speeds, up to 5 a second. Ice cream bars into cartons that you might stick into the freezer at home, 12 bars a second. Cognac and whiskey bottles into cases. Contact lenses, personal care products, beer cans and much more. All of that going into cardboard cartons and putting those cartons into larger corrugated cardboard cases. In the CSi business, our team specialized in case conveyors, palletizers, wrappers, autonomous guided vehicles to transport those cases onto pallets and move those pallets to the end of line for distribution out of the factory on trucks. The Lambert and the Siga Vision teams are a little different, Lambert specializing in highly bespoke machines with the assembly of our customers' products, for example, razors and other men's creaming products, medical devices, ostomy. And the Siga Vision systems providing quality inspection and line control. One thing that draws all of our group companies together is the way that we operate. We have a long track record of working with our customers, having built hundreds of factories for customers around the world over many, many decades. And whilst the focus of our business is on the design, build and installation of equipment, that's our original equipment business and the monitoring and optimization of those machines in service, that's the service part of our business. The consultation piece that starts that whole process of is very important to us, and it's very important to our customers. In that consultation phase, we work with our customers to look at how to automate new processes, new products, new packaging designs, often supporting our customers in making packaging and product design decisions to simplify the processes in their factories ultimately leading to machine orders with new customers. So a small part of our revenue, but a very, very important part of the business cycle. And the markets that we operate in are highly attractive, and they offer us significant growth opportunities. And there are 4 things really to take away. The first is that our markets are very large. Every year, about $60 billion worth of packaging machinery, for example, is bought somewhere on the planet by our customers. The second piece is that our competition is highly fragmented, from some much, much smaller businesses than Mpac that may be operated with a specialist piece of machinery or maybe only in one particular region of the world, right through to some multibillion-dollar businesses that we compete with who have grown to become that size by acquiring some of the smaller businesses along the way. And of course, we've done the same with the acquisitions that we completed over previous years. Now we're able to compete even with those large [ vermouths ] of our industry because our customers make decisions on an engineering basis, and it's often the engineering insights that our teams have into how to solve those automation problems that unlocks a new project for us. It also creates a barrier to entry because our business depends on the expertise of the people in our business to solve those customer problems. That's how we win business, and that's how we keep our competitors out. Now our market makes us attractive in -- as an investment proposition. We talked about the scale of the market. I think there are 4 other things I'd like to touch on. The first is -- 3 other things I'd like to touch on. The first we are a relatively capital-light business. Excluding the acquisitions, we don't require large capital allocations to grow our business. With the pension scheme buy-in that we announced during the course of last year, we also have an opportunity now in the rest of our business to drive return on capital employed to circa 20%. We were at 19.1% prior to the acquisitions last year and obviously, with the acquisitions that's been diluted down. So opportunity for us to do more there. Our margins are growing. The Service business made up 23% of our group revenues last year. And that was diluted, in fact, by the acquisitions that we've made during the prior year. Our pre-acquisition group delivered 30% of our revenue in services last year, a target we'd set many, many years ago, and we've been working hard to get to that 30% target. And with the acquired businesses offering the opportunity for us to do more there, we still have opportunity to drive more growth in our Service business to come. Lastly, barriers to entry. We talked about the expertise in our people. We have nearly 700 technical staff delivering just under 600,000 hours of technical work in 2025. And when I meet our customers, it's the quality of our people that I hear most about. Last year was a great year for Mpac broadening our customer base. We won 135 original equipment orders with 83 different customers. And by value, 28% of our original equipment orders were with customers that were new to the Mpac Group. Of those, GBP 15 million, about 13% of our original equipment order intake came from customers -- 7 customers who have the scale and geographical breadth to place orders with us, not just once in a single year, but many orders at a time, many years after each other. Interestingly, we covered a wide breadth of our sectors. [indiscernible] from pizzas, baby [ look ] powder, confectionery, cookies, layered cakes, medical devices, wound care, quite a staggering breadth. One of those 7 was a second order with a customer that we won the first order in the prior year, and we make no apologies for counting second orders with the customer as part of our new customer count. Winning that first project is hard, but that's not a new customer win. You've not really consolidated until you've won your second order with that same customer, and then you really know you capture the customers' interest. And in 2025, one of those 7 was to say was a second order from a new customer, but in a completely different factory operating different products in a different region of the world. And it really demonstrates how important these strategic relationships are. We'll continue to count those second orders with our new customers as we drive this strategy in our business in future years. A second example of strategic action delivered during 2025 was the completion of preassembly of our first Langen OSTRO in Romania. Just a reminder, Historically, our Langen products have all been built in the Netherlands and in Canada. And when we acquired the CSi business, we noted that CSi manufactures and assembles all of its products in Romania. In 2025, our Netherlands and Romania based teams collaborated really closely to transfer knowledge into the Romania business, and we celebrate the completion of that first machine. We've already made more progress in 2026, and I look forward to telling you about how we're doing at the end of this year. It has freed up our team in the Netherlands to focus on [ first-to-man ] machines and machines with high complexity and high legislative content and I'm absolutely delighted with the way that team has performed. I've been asked many times since the acquisition about sales synergies and commercial growth that, that will unlock. And I'm delighted to say that having completed the CSi acquisition in December 2024, in 2025, we secured our first orders for turnkey full line solutions. In this example, a Langen cartoner and case packer combining with CSi palletizers and AMRs, autonomous mobile robots for a blue-chip customer. Now that particular line takes its input into our systems from a vertical form fill machine, essentially a bagging machine that the customer is buying from another supplier, and our equipment then picks that up to carton, pack, palletize and deliver to logistics at the end of that factory. Most importantly, we presented ourselves as a single project interface with the customer, and that was key to this project. It really demonstrates the progress that we've made in offering an integrated program from the sales piece through project management and into engineering, and it's a very encouragement step in our progress. In the middle of 2025, we also announced the opening of our new engineering hub in Kuala Lumpur, Malaysia. Now the team have grown steadily through the second half of the year, providing engineering design resource to projects in other Mpac facilities around the world. We're building on the capability of engineering talent in Malaysia. It expands our pool for recruitment in the future, and it supports our focus on managing margins. It also builds our capability to support customers in the region. More to come in 2026. Now at this point, I normally hand over to Will to take you through the 2025 results, and I will do so in just a minute. But this year is an interesting moment in our history. This year, after 14 years with the Mpac group and 8 years with the Board, we will also say goodbye to Will as he moves on from new role outside the group with another listed business in the U.K. Will has made an outstanding contribution to Mpac. If I look back, he joined the Board in 2018 in a year where our group revenues were just GBP 58 million. Our underlying PBT that year was GBP 1.4 million, and our operating margins were 2.4%. Our share price incidentally was a 114p. Today, by comparison, revenue is up threefold, profit is up 10x, and Will is absolutely delighted to take your questions on the pension scheme, having completed the buy-in with Aviva earlier this year. I'd like to say a personal thanks to Will, from me and the Board for his leadership to congratulate him on his new role and to wish him very well for the future. We've also announced that [ Duncan Tyler ] will succeed Will as our interim CFO, working alongside Will over the coming months to complete an orderly handover. Duncan is currently the Corporate Development Director for Mpac, he's a chartered accountant, he's been with our group for more than 25 years, so he knows his inside out, and he's held a variety of roles in that time, including Group Finance Director, Group Finance Controller, Group Head of Finance. He spent several years in the U.S., running businesses for us there. And it great gives me great pleasure to welcome Duncan into his new role, and I look forward to introducing him to all of you in due course. But for now, let me hand over to Will to take you through the 2025 results.

Great. Thank you, Adam. Thank you for the kind words. And it's been a really interesting 14 years, 8 years on the Board, very grateful colleagues on the Board on the executive leadership team and throughout the organization for their excellent collaboration support, and I think we've done some fantastic things over that time. And I'm really pleased to be able to hand over to an internal candidate with the experience that Duncan will bring, and I'm sure he will help support the business on its next stage in its strategic development. But to the results for last year. The first slide is our usual overview of financial highlights. I mean, as Adam has already indicated, it was a year where there were some commercial challenges especially in the first half of the year driven by tariff disruption, interventions to reduce overhead, consolidation of operational footprint helped to drive margin in the second half. And that's been really one of the success stories for the year with improved gross and operating margins. But I'll start with order intake. So after half 1, we say, impacted by disruption from tariffs, order intake and the order book stabilized in the second half of the year, and we're reporting full year order intake of GBP 150.9 million. That's up 26% on the prior year. On a like-for-like basis, so excluding the 2024 acquisitions of BCA and CSi, we see a 10% reduction from the organic businesses who were more exposed to tariff disruption in the North American market. Split between OE and Service, both were up 23% on the prior year. And following the acquisitions from '24, the EMEA market is now our largest geographical market for the group. To touch on revenue and order book. We've seen revenue grow by 42% to GBP 174 million. And I'll draw your eye to the graph, the column graph at the bottom of page showing 5 years of consecutive revenue growth. Following the acquisitions in '24 by [ vertical ], food and beverage is now our largest sector. And this leaves us with an order book at the end of the year of GBP 90 million, which provides 52% coverage over the guidance for revenue in 2026. In terms of margins and profitability, we've already touched on that the improvements in gross margins, up 6.2 percentage points was the real standout for the year. That growth in margin came all from Original Equipment, Service was broadly unchanged from the prior year. And again, the column graph at the bottom shows that half year-on-half year movement and positive trend in gross margins. So the real question is how that margin improvement been achieved? And what have we been doing to help secure that? Well, certainly, the acquisitions in 2024, the back end of the year helped, CSi brought scale and a high level of operational leverage, which helped to drive margins from that particular business. Alongside that, there were interventions to take overhead out of the business and to improve operational leverage. The impact of that growth in revenue and gross margin means we are reporting a 50% increase in underlying operating profit up from GBP 12 million to GBP 18.1 million. So very strong development and represented in the bar chart on the bottom left. And that gives us a return on sales of north of 10%. And for those who followed the Mpac for a while that was stated as well strategic objective to get to double-digit return on sales. Maybe that's 1 year and the target now moves on to make that a sustainable return on sales. After debt servicing costs we report in underlying PBT of GBP 13.5 million, up 27% and EPS of 35.9p. In terms of our working capital position and debt position at the end of the year, we ended 2025 with GBP 47.9 million of debt. That included GBP 6.7 million associated with deferred consideration and vendor loans or the CSi acquisition from 2024. Some of that's been paid in the first quarter of this year. The remainder is split over quarter 4 '26 and quarter 1 2027. The debt reported equates to 2x EBITDA. That gives us plenty of headroom over covenant of 3x and in terms of liquidity, that level of indebtedness at the end of the year leaves us with GBP 15 million of headroom over the facility. The position of working capital at the end of the year, GBP 13.5 million, that's a factor of timing of order intake and deposits associated with them and how our regional equipment projects are trading through our business. We build unbilled revenue on working capital, which is unwound through the balance sheet and based on timing of where projects are in that life cycle drives the balance of working capital. I'll move on to talk a little bit about the income statement and show the results in a slightly different format. So I'll start with the revenue profile on the top right-hand side. So we're showing OE revenue split from Service revenue, there under development over the 5 years with Original Equipment revenue up 47% on the prior year. Service revenue, up 29%. On a like-for-like basis, revenue is 12% down, excluding the acquired businesses in 2024. And as I mentioned earlier, same explanation as with order intake, the organic businesses had increased exposure to tariff disruption from customers in North America. Service revenue overall for the year was 23% of total revenue. We take out the impact from CSi and BCA acquisitions. The organic piece was 30%, and that has been our target level to bring Service revenue to 30% of total revenue. The acquired businesses had a less developed service offering. So we're dilutive in year 1, but shows the scale of the opportunity there as we develop the service offering from those businesses. In terms of non-underlying items because there's some significant values in there. I'll start with the impairment of the Switchback goodwill and intangibles that we announced at the end of the first half last year. Following the consolidation of the operational footprint in the U.S., we closed the business in Cleveland and impaired the goodwill and the intangibles associated with that prior acquisition. That resulted in an GBP 8.4 million noncash charge. Alongside that, there was an impairment of the lease for that facility, which again was GBP 1.8 million charge. And then on an ongoing basis, there is the amortization of the acquired intangibles, which is GBP 6 million a year, making up the vast majority of the charge. In terms of cash charge, it was GBP 2.6 million, so significantly less than the overall noncash element that went through the income statement. If I then refer back to the bar graph on the left-hand side, which shows the waterfall between prior year underlying PBT of GBP 10.6 million and the 2025 underlying PBT of GBP 13.5 million. You see there's 2 major factors there are volume effects, so higher volumes sales on a consistent margin and the improvement in margin, again, driven mainly by regional equipment sales from CSi being the major 2 factors to improve the position. The additional admin and sales and marketing costs are predominantly all associated with the full year consolidation of the CSi and BCA businesses in '25. In 2024, there was a month of trading CSi in 3 or 4 months trade in the BCA. So that reflects the consolidation of the full year operating model of those 2 businesses. And then the finance expenses associated with the debt service and interest on the borrowing. In terms of the balance sheet position, I think I'll reference those positions that have moved from the prior year rather than going through the whole balance sheet and the 2 main movements are associated with noncurrent assets and trade and other payables. So for the noncurrent assets, there are 2 main items here that moved. First is the carrying value of the goodwill and intangibles of the Switchback business, which we said -- we commented last year at the half year we were impairing. And then alongside that, there is the pension assets. So in the prior year, it was valued on an accounting basis. And for the year-end in '25, having gone through the buy-in process, we value it on a buyout accounting basis. This is a different basis for the calculation of the liabilities. That's reduced the asset down to GBP 7.6 million, but it also gives an indication only an indication of the stage of what the overfunding position will be on a buyout basis. In terms of trade and other payables, be some contract liabilities. The 2 positions within there that have moved our value of customer deposits for the held at the end of the year and the value of trade payables, both are associated with timing and value of projects that go in through our order book and the stage of completion they're at as they progress through our operating model. So the deposits are lower, reflecting timing of order intake, especially compared to the prior year. And trade payables, it reflects the timing of projects and where we are procuring against the build of those projects to the business. It's resulted in an increase in working capital. Move on to comment on the cash bridge. So this reference is the opening gross cash of GBP 18.2 million to the closing gross cash of GBP 9.6 million. So the main drivers to the movement here we've spoken about the EBITDA off the back of revenue growth supported by the acquired businesses and strong margin, there's GBP 22.3 million of EBITDA. Offsetting that is the increase in working capital, which I've just referred to, mainly relating to customer deposits and trade payables. Pension contributions for 2025, we're still making payments, albeit we announced previously, they have been diverted to an escrow account. And at the point we get to wind up they will be returned to the company, the value in escrow. So that should be considered as a nonrecurring cash outflow when you consider '26 onwards. CapEx was GBP 4.4 million. Of that, the vast majority, GBP 4.1 million was associated with new product development and that ties very closely into our prospect pipeline and projects and opportunities that we expect to close in '26 and '27 and upfront investment to support closure of those opportunities. Mentioned the higher debt interest on the cash flow that's GBP 4.2 million outflows for debt interest, tax, cash tax was GBP 1.9 million, mainly associated with businesses in the Netherlands. And alongside that, we had ongoing lease payments mainly related to facilities of GBP 2 million. In terms of reorg and other, you said there was GBP 2.7 million of non-underlying cash payments, that's where that's reflected. And then there's foreign exchange exposure to bring it back to the GBP 4.1 million Considering the position going forward, Yes. The GBP 2.5 million pension payments and the GBP 2.7 million of cash nonunderlying items, we don't expect to be recurring. So gives an indication of how cash profile should look going forward. The analysts are currently guiding to net debt of GBP 40 million or just below the end of the year. That will bring us down to GBP 1.7 million EBITDA, well within the covenant of 3x and well within providing adequate headroom over the facility to support the group going forward. So with that, I'll hand back over to Adam.

Thank you, Will. Okay. Let's turn our attention to strategy. If I look first back at 2025, when we think about what we've delivered in our 5 strategic pillars, which have been stable for a long time, going for growth, outstanding customer service, innovation, people and operational excellence. I've covered quite a bit about growth already. In operational excellence, in 2025, Will has mentioned, we consolidated our North American facilities. We started the year with 3 facilities in North America, and we've finished the year with 2. That consolidation saved about GBP 1 million in overhead cost on an annualized basis going forward. But importantly, we also benefited there from the synergies enabled by the acquisition of BCA in the prior year. That change also allowed us to establish a single spare parts fulfillment center in Boston for our customers in the U.S., providing a single place that our customers can now have parts dispatched from right across the country. In 2025, we also launched the new Brisa, a mid-range cartoning machine designed specifically for the frozen pizza market and we secured orders for that machine in quarter 4. Really importantly, one of those orders was for one of those 7 new strategic customers, a breakthrough product for them and it really underpins why we do innovation. There are moments when a customer is looking for a solution that they can't get from anyone else on the planet. And if we can find a way to solve those problems, it gives us a route to win that new customer. And in this example, that was exactly how we found our way in. During the year, we also launched the new Mpac Replay system, it captures real-time video linked to machine [ forkcodes ]. For our customers' operations teams, that means that they can learn from downtime events and improve uptime and production efficiency. We secured the first 5 sales for Mpac Replay systems during the year. Our Horizon top load cartoner also won a prestigious Red Dot Design Award. That's an international award, the previous winners include companies like Apple and Ferrari so it's absolutely fantastic to see Mpac held in such high steam. The judges particularly picked out the way that our interface, the user interface have been redesigned by our engineers to make it very, very intuitive to use. Just the same as picking up an iPhone, for example, without a training manual or a single days training, you can operate at your phone and why shouldn't the machine be just the same for our operators whom turnover of personnel within their factories can often be a factor. 2025 also saw the rollout of our new HR information system. We deployed the [ Safety Cube ] Safety Management System, and we did that not just in our pre-acquisition businesses, but in the acquired businesses, bringing all of our people together onto a single system across the whole group for the first time. I'd like to take a moment just to thank the incredible team at Mpac for their progress in delivering on our 2025 group strategy. Thank you. Now to summarize, 2025 was a record year for revenue, profit and margin. It was a year of challenging market conditions, conversations dominated by U.S. tariffs, pressures and uncertainty in consumer demand but also significant progress by the Mpac team in responding to these conditions and taking prompt strategic action. Looking ahead to 2026, the group remains in line with current expectations, which, as we've seen before, will be second half weighted. Now it is really difficult to predict the full impact of the conflict in the Middle East. Particularly in terms of the impact on timing of our customers' capital investment decisions. The order book was at the end of quarter 1 flat from the start of the year and provide, as Will has said, 2/3 of the revenue coverage that we need for the year, with further orders to come in the short-cycle service business remaining resilient. We've seen increasing price competition, particularly in original equipment orders, resulting in pressure on gross margins. We've mitigated that by the cost reductions that we completed last year and by additional actions that we took during quarter 1 to further reduce cost. And we're going to continue to take action to respond to our near-term challenges, to manage cash and to position the group to respond strongly when market conditions improve. And at that point, Casey, I'd like to turn it over to our questions.

[Operator Instructions] Firstly, an investor asked how large is the growth opportunity from here? Where could you see the business being in 5 to 10 years' time?

Okay. Well, I'll pick that question up. We described in one of our charts that the total market for packaging machinery, for example, is about $60 billion. We do not play in all aspects of that market. We have to be clear about the bits that we -- our companies provide. We've talked in detail about cartoning, case, packing, palletizing, raw food handling and so on. So I won't go back over that. If we scale it down to our addressable market, we have about a 2% share of our addressable market today. So there's a huge opportunity for us to grow our business in future years.

Another question is around what do you think investors most misunderstand about Mpac?

Okay. Look, I think at its heart, that question is really asking me to comment on the share price because the share price is the market's understanding of the value of the Mpac Group and I'm not going to do that. My role as Chief Exec is not to comment on the share price. My role is to drive the business performance and trust that our market will look after the valuation of our business on the public market today.

There's been a question around the debt increased about how the debt increased to GBP 48 million last year. How much headroom do you have? And is the group trading within its component agreements? And what actions are management taking to reduce it?

Okay. Will, if I turn to you first.

Sure. So yes, as I mentioned earlier, GBP 15 million of headroom over the year-end debt compared to the facility and the year-end debt weighted 2x EBITDA versus a covenant of 3x. So adequate headroom to continue trading against that facility and a very supportive relationship with our bank who are -- we're in regular dialogue with and continue to be very supportive. In terms of what we can do, well, fundamentally, this comes down to continued focus on cash management, management of working capital, okay, it's increased at the end of the year, that's a byproduct of timing of where projects are within the organization of those projects are delivered and new projects come in with the new deposits, we will see development of working capital based on our modeling and based on our analysis, the current consensus in the market for deleveraging down to just below GBP 40 million is absolutely aligned with the profile of projects as they come in. So that's the position at the end of the year, and that's how we'll trade through to positioning into '26, which would reduce leverage down to 1.7x EBITDA.

I think there are really 3 things to just add to that. The first is that every action we take on cost obviously has a benefit to cash management in the future. So we're going to continue to focus on cost. We know that leads to cash benefits. The second piece, I think to say is that there are one-off events like the pension buyout that we can drive hard with our partners to complete and that also helps with the cash, there's one-off kinds of events. And then the third thing is to really point out that we're not managing this business for cash. We are managing cash, but we're not managing the business for cash. We're not making short-term decisions because of cash considerations that would compromise long-term growth or a relationship with the customer in any way. So I think that's important to be said.

Thank you, Adam. Turning to AI. So one has asked how are you maximizing the use of AI in the business?

Okay. very much the topic of the moment, isn't it? We've been using AI in the way we think about our products for quite a long time now. So for us, it's not at all a new thing. Perhaps I'll give you an example from last year. One of our teams has been working on project with a customer in the food industry, they have visual inspection done by people of their products on their production lines. And they came to us and asked us, could we come up with a way of identifying a poor quality piece of food on their production line using -- training an AI algorithm to understand what that would look like because there is no specification for the quality. Their operators just know what they look like and know what a bad one is. We've seen some really good progress with that project during the course of the year. The AI algorithms are working very well and we're looking forward to seeing that system now rolled out across other lines in that customer same factory and other factories around their group. So for us, AI is not a new thing. It is incredibly exciting, and it continues to evolve very, very quickly.

There's a question come in around what is your motivation for leaving, Will? .

Okay. Well, 14 years with the group, 8 years as CFO on the Board, been a fantastic journey. Adam went through some of the key financial KPIs. But alongside that, it's been hugely enjoyable experience for me. But it just feels like now is the right time to move on. Another opportunity came up, is in a different sector. It's a chance to try something different. So I leave the group with a very positive relationship and the opportunity to hand over to an internal successor who has got wealth experience with the group and will step in seamlessly in to take the group forward. So it's a positive outcome for Mpac, is a positive outcome for me. I'm excited for the next opportunity and felt that the right time to move on.

Thanks, Will. And we've got a couple of questions from investors. I'll ask them in 2 parts. The first one is, Will, your order book convert into cash fast enough to bring the debt down to the GBP 38 million target.

So our internal models, yes, that's the reason why we are able to support the current guidance that's out there for deleveraging for debt by the end of the year. And alongside that, there are individual liquidity events associated with return of funds from escrow account, which will help support the deleverage also. So we sit here today with a prospect pipeline, giving us good visibility of order intake. Timing of that is really difficult to predict in the current environment, but the pipeline is there. And with our conservative modeling, it supports orders coming in time to be able to deleverage.

I'm actually skipping to another question. So one has just asked what's the expected order intake for 2026.

Yes. So the expected order intake for 2026 based on developing revenue of GBP 170 million, is it would be within a couple of million of the GBP 170 million. So we expect the year-end order book for '26 to be slightly up, but not significantly up. So similar to the revenue profile for the year.

I think that also slightly covers another question, which is about what the prolonged Middle East crisis. Our order book delays today, the same improved or worsened compared to the start of the crisis.

Probably one for me to pick up. Look, it's really, really hard to predict the impact of the conflicts in the Middle East because the link between that and the customer making a decision on capital investment in a new factory line, is not a direct hard link that you can say, well, here's the number you should track. We can all watch the oil price and comment on how high it is today. We can talk about inflation. But -- and we can talk about the pressure on some of our customers in terms of food pricing and input cost increases in the materials going into production of food, beverage, health care and other FMCG products. I think that all has to be overlaid with the impact that has on our customers. And we've seen an incredible structural change across our customers' industries. Companies like Unilever sell their food business to McCormick. You've got Nestle selling the balance of their ice cream business to [ Froneri ]. Kraft-Heinz demerging after 10 years [ Mars ], finally completing the acquisition of [ CeloNova ] from part of the old Kellogg's business at the end of last year and now going through the process of integrating the [ Miles, Rigley and the CeloNova ] businesses into [ Mars Snacking ]. All of these changes create a very challenging environment for factory managers, for capital investment decisions to be made by our customers and there's definitely the ROI, the return on investment decision-making that goes into those large capital program decisions, is affected by all of those factors and the view, frankly, as to what consumer demand is going to be at the end of that investment process when product starts flying off the line. And some of those programs can take a year or 2 years to deliver. So our customers are trying to make very difficult decisions about what demand is going to be further out and the investment that they're going to make. And I don't envy them in making those decisions. We have definitely seen an impact of the war in the Middle East on the timing of customer decisions in quarter 1. But quarter 1 is always a light quarter for us anyway. I said it many times before now, during quarter 1, we tend to see fewer orders placed than in the balance of the 3 further quarters in the year. Quarter 2 is a much more important quarter for us in terms of order intake and what it's telling us about the balance of the year, and we're going to continue to play close attention to it.

There's a couple of questions around costs. And the first one is looking forward. And do you anticipate any non-underlying costs in full year '26?

Yes, there'll be a nonunderlying charge associated with the amortization of previously acquired intangibles. And as you build us on balance sheet, it's amortized over various time lines. So that GBP 6 million charge for 2025 associated with that position will be pretty similar for 2026. And alongside that, we are still -- have the administration of the pension scheme until we get to wind up. So there will be another year of pension administration charges, which on a net basis will be offset by the pension credit that comes from the account as well. So that broadly is net out in previous years. The impairment will continue of previously acquired intangibles. And outside of that, as of today, we don't see any other nonunderlying charges for the year.

Continuing on the charges just looking back slightly. Someone has asked if there's a few more details around the GBP 1.9 million charge described as contract cancellation and customer dispute?

So I start with that now?

Yes, go for it.

Yes. So this associates with the contract that was taken on 2 years ago, 2.5 years ago. It was for a complex piece of automation. We had a customer that was early in their journey for automation and since then, we spent a lot of time working with the customer to agree the URS, the user requirement specification. That gives -- it specifies what we will be delivering under what criteria. And that's taking a long time. I think it's fair to say the degree of complexity and equipment has also put delays from Mpac side into the project. The customers view of that after a period of time, a different view on where the project was in terms of stage of completion and communicated to the company that they wish to cancel the project. Off the back of legal advice, we feel we're in a very strong position that we were still on track to meet our contractual commitments, and we were on track to deliver against the performance criteria to that contract. However, there was a clear communication from the customer that they wish to cancel. And despite of that legal adviser, we felt it was prudent to reflect the full cost of unwind in the working capital and the deposits off the balance sheet last year. And we remain in contact with the customer in a constructive manner, but we took an extremely prudent view at the end of the year and I didn't want to leave this on the balance sheet as a risk going into 2026. I fully expect that we will be able to come to a more positive solution on the outturn of this project. But we took a view at the end of the year based on communications with the customer at the time that we needed to be prudent in our breach.

Again, we've had a couple of questions around the U.S. The first one is just commenting on revenue from U.S. falling from 43% in 24% to 27% in 2025.

This is primarily the dilutive impact of the acquisition of CSi in 2024. But that business predominantly falls into either EMEA or Central and South America, not into the U.S. per se. So on the back of the fact that, that represents circa 50% of our revenue last year. And isn't as prevalent a sales base into the U.S. market, say, the inclusion of CSi for the full year has meant there is a dilution of revenue into that region. But there's -- alongside that, we spoke about the organic businesses having a challenging year because of tariff disruption. So primarily the first factor, an element of it being the second factor as well, but the other 2 or the 2 drivers to that change.

Really important. I think that the timing of those acquisitions meant that we reduced our dependency on the U.S. market from as Will says in the year prior to the acquisitions, 50% of our business is focused on the U.S. market. The acquisitions reduced that dependency very significantly. We didn't make that decision knowing that U.S. tariffs were going to be introduced after that. We had no insight into that, but one of the benefits of broadening out the business and the way we did was that we were much less exposed to the U.S. tariffs than we would otherwise have been had we not made those acquisitions.

And just unlocking a bit more forward in their comment about how emerging markets are booming. Do you think this could help to secure growth now the U.S.A. markets are low?

Yes. I mean I think the key point I would probably come back to is the market share opportunity we have. With the 2% share of the addressable market, we've got opportunity to grow share in our current markets that we start into as well as to drive growth along with the market in regions that are booming. And as you say, there are those opportunities out there. It was a very deliberate move to set up the engineering team in Malaysia. We know that broadening out our geographical base is important for the long-term growth of our group, and we're going to continue to pay attention to it.

Thank you. An investor has asked if you could please provide an explanation to the Cleveland site and why it was closed. And how do you plan to integrate this site within the wider business?

Yes. Announcing a change of staffing or a factory closure is not a decision that should be taken likely and we didn't. We saw a very significant impact on orders starting in the U.S. and then increasingly around the world, but starting in the U.S. as a result of U.S. tariffs being announced. And simply because it meant that we did not have sufficient demand to keep 3 factories fully loaded in the North America region during 2025. It's probably worth taking a step back and saying, it's probably unusual, I think, to have 3 factories, all supplying very similar product into the U.S. market based in North America. And so we took the difficult and painful decision that consolidating from 3 facilities down to 2 was the right step for the group. It was the only step that made any sense to us when we thought strategically about where we were going. But it was also important for us to do it in a way that did not disrupt customers. We had projects that were live in that Cleveland business at the time that we announced the planned closure. And it's really important to me to be able to say that we transferred those projects. We either completed them in situ in Cleveland or we transferred them to our facilities in Boston or in Mississauga, Canada for completion. And the field service support to the existing Switchback product range across the U.S. as well. We will make sure that, that was able to be picked up by the teams across the rest of our North American base outside of Cleveland. Not an easy decision to make but absolutely the right decision. And going forward, we'll continue to supply the Switchback product into the U.S. market from those other sites.

Thanks, Adam. I know you mentioned earlier about share price and kind of your comments on that and someone has asked about having 2 brokers with the target of more than double the share price. What do you think you can do to improve the rating of the company and just the risk of takeover M&A?

Okay. So this is our brokers who have analyst reports that set a share price target higher than the current share price. My role is to drive the performance of the group. I can't change marketing conditions. I can respond to them. I can try and anticipate them. We can have scenarios and plans in place to deal with whatever might come our way. And it's not my place to comment on the share price, and I'm simply not going to do it.

We've just got a handful more questions, so we see if we can do that in the next kind of final 10 minutes. So there's just a question around saying that the anticipated around 20% reduction in sales in the full year and onto order book at the end of the year and representing 66% of 2026 sales. And so there's just a question around that.

Yes, I think that's -- just for clarity, that 66% was in the position to be in the March. So we had 52% coverage based on the GBP 90 million order book, and that -- so therefore, sort of aligns with the expectation of GBP 170 million to GBP 175 million revenue for the full year, '26.

I think what the question has missed was the revenue achieved during quarter 1 in addition to the order book at the end of quarter 1.

Someone asked and you mentioned earlier about the -- what's the likely impact from the Kraft-Heinz demerger and Unilever [indiscernible], which competitors are price discounting? And if you have really good products in business, how is that kind of relating into the winning of the businesses?

Okay. So these are -- I mean, these are complex questions to try and answer. Let me try and do them a step at a time. I suppose the first thing to say is when you see a change of structure in your customer base, what we expect happens during that is that the employees in our customers' organization find it hard to make decisions. If you're a buyer or an engineer designing a new capital equipment line to produce product on the line, and you're not quite sure what the reporting lines are going to be in your new organization or the investment priorities are for your Board. It's very, very hard for those people to make informed decisions about what might be going, what to invest in and how to plan their developments. We see that behavior. So there's almost always a direct result of those changes is a slowdown in customer decision-making for capital projects. That doesn't mean those capital projects go away. Those projects, they still exist in the pipeline of ideas that the customer wants to do. And once the customer settled down and the new organization has taken shape, sometimes those projects get -- become a real priority because now they're behind the curve in terms of when they intended to invest and they need to catch up. We're seeing that pipeline of new projects planned by customers continues to grow in our business. We will continue to track that. It's a really important metric for the future. That doesn't beat counting order intake right now because it's orders that we satisfy in our business, not to the pipeline. So that's the impact we see, which competitors are price discounting. I suppose the thing to say here is that we're seeing the pressure in Original Equipment orders, not perhaps so much in the Service business. But in our Original Equipment business, we've seen an impact in all of our sectors, food and beverage and health care and the other FMCG sectors that we support. And we've seen a response from all of our competitors because we're all in the same market trying to compete for the trickle of orders that are coming through from customers that are able to make decisions. So the level of price competition is much higher than we've seen in previous cycles. And the only way we win business is by continuing to perform better than our competitors. So it's really important we continue to invest in innovation. It's really important we continue to best in our people and deliver the other strategic activities that we know lead to new business. If we stopped doing that, our order book would not have been flat through the second half of last year and into quarter 1 this year. It would continue to decline. So that is a direct result of the actions that we're taking, and we're going to continue to do so.

And just the penultimate question about how they understand the integration is still ongoing. But what have the 2024 acquisitions brought to the group?

It's quite a complex question, isn't it because it brings an awful lot of opportunity for us. So I'm absolutely delighted with the way that our -- for example, our Netherlands and Romania-based teams have collaborated to move, build of some of our standard products from the Netherlands into Romania. If the team in the Netherlands haven't done that, they would not have had the bandwidth to take on some of the more complex, first-of-a-kind and highly legislative projects that we're doing in our Netherlands facilities today. We just simply wouldn't have had the staffing to be able to cope. So the way that they collaborated to manage both, I think, is absolutely superb. And it really demonstrates what can be done by teams in different regions. In the North American market, the response last year to be able to consolidate the businesses. Again, we couldn't have done that without the teams working together from pre- and post-acquisition businesses. Looking ahead, the thing I'm most excited about in the long run is the sales synergy opportunity. The opportunity to work with customers from one business and cross-sell from all of our businesses into those customers. In the long run, that is the long-term driver of growth. But in the short term, there are cost opportunities for us to work on with the team.

And just a final question is about the full-line solution that you've spoken about. How did that come about?

Okay. So this is the -- this was the example of a Langen carton and case pack with the CSi palletizer and AMR. You may have heard me say before in previous presentations that our customers often make decisions at the start of their process. And if you think about sort of walking down a factory line from the input to the end of the actually the output at the end of the factory. They start often making decisions at the front end. And for us, the start of that is a Langen cartoner. And the Langen team had built a really good relationship with that customer. We've sold previous projects of Langen machines to that same customer in the past. And in this particular project. It was the Langen team that then introduced the CSi team to that opportunity, and we were able to collaborate and offer a combined Langen and CSi system. For the CSi team, I don't think they would have had the opportunity to start that conversation without the Langen team. But also by combining together, we were able to offer something that perhaps just a palletizing business competing with CSi couldn't do because they couldn't offer the cartoning and case packing in Langen. So it's a really good example of how sales teams can collaborate and share opportunities and not just improve each other's prospects, but create something that's really unique and compelling for the customer that perhaps other competitors can't offer. We're going to continue to focus on that.

Well, thanks for your time today. That's the end of the questions. Adam, if you could just provide some final remarks before we end the presentation.

Thank you, Casey. Look, I'm going to go back over some of the things I've said, but I think they're really important. 2025 was a record year for revenue for profit and for margin. The group remains in line with current expectations for 2026 and which we have seen before, will be second half weighted, and it's really difficult to predict the full impact of the conflict in the Middle East, particularly on the timing of customers' capital investment decisions. For us, what we're going to do is continue to take action in response to the near-term challenges, to manage cash and to position the group to respond strongly when market conditions improve. Thank you.

Perfect guys. If I may just jump back in at this point. And thank you very much indeed for updating investors this afternoon. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback. On behalf of the management team of Mpac Group plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.