Verbio Se

Good day ladies and gentlemen and a warm welcome to today's earnings call of Verbio SEA following the publication of the full year figures 2025-2026. CEO Claus Sauter and CFO Olaf Troeber will speak in a moment and guide you through the presentation and the numbers. After the presentation we will move on to a Q&A session where you will be allowed to place your questions directly to the management. We are looking forward to the presentation and with that I hand over to you Mr. Sauter.

Thank you very much. Thank you everyone for joining us today. Today Olaf and I will take you through the results of the financial year 2025-2026. and our outlook for the new financial year 2026-2027. The financial year developed more positively than we had originally anticipated. Market conditions improved over the course of the year. while the regulatory environment moved in the right direction. At Verbio, we continued to improve our operations and moved important projects forward. The past year also highlighted another development. After many years of Political hesitation, biomass is increasingly being recognized as part of the solution for energy security, affordable energy supply, de-fossilization. I will come back to this topic later. Let me now start with a brief overview of the financial year before handing over to Olaf for our fourth quarter performance. Production reached new record levels with slight growth in biodiesel and bioethanol production and a significant increase in biomethane output. This was supported by the continued ramp up in Nevada and improved utilization across our production facilities. Our EBITDA increased to 193.9 million. The improvement was primarily driven by the normalization of the greenhouse gas quota market, improved bioethanol market spreads, and higher utilization rates in North America. In addition, the result benefited from the reversal of impairments on greenhouse gas quota inventories and the absence of the negative one-off effects we had recorded in 2024-2025. This earnings recovery translated into a strong cash generation. Operating cash flow increased to €164.6 million and free cash flow reached €78 million despite continued investments in our Specialty Chemicals project in Bitterfeld and the South Bend site in Indiana. As a result, net debt declined substantially to 91.5 million euro and our balance sheet strengthened further with the equity ratio increasing to 59.7%. Importantly, the improvement in profitability also translated into returns with a row C recovering to around 12%. Let me now look at one of the key drivers behind this improvement in profitability. The slide shows the development of our gross margin per ton of biodiesel and bioethanol sold. The reference spread reflects the difference between biofuel prices and feedstock prices and represents the value available to all market participants. As you can see in the development of the reference spread, Thank you very much. improve our production processes and create additional value through our CO2 savings. You can also see this in our CO2 handprint. It increased to a record of 4.7 million tons driven by higher production volumes and improved CO2 efficiency. Let me briefly explain the progression in quarterly EBITDA during the year. As shown on this slide, EBITDA increased steadily from 15.4 million in the first quarter to 88.2 million in the fourth quarter. A key factor behind this development was the implementation of the RED3 in Germany. The elimination of double counting from January 2026 removed a significant market distortion and contributed to a more level playing field in the greenhouse gas quota market. As a result, market conditions improved progressively over the course of the year, supporting earnings across our biofuels activities. In addition, third quarter EBITDA benefited from seasonal quota sales, While fourth quarter earnings were supported by the reversal of the impairment on greenhouse gas quota inventories. Looking ahead, the regulatory framework is expected to strengthen the market integrity further. From 2027 onwards, market participants will no longer be able to rely on private certification claims alone. Let me now turn over to Olaf. He will take you through our first quarter performance, the strongest quarter of the financial year. Olaf, the floor is yours.

Thank you, Claus, and good afternoon, everyone. Before moving into the individual segments and our quarter-over-quarter discussion, let me briefly put the fourth quarter into perspective. Group EBITDA increased to EUR 88 million in the fourth quarter, compared with a loss of EUR 8 million in the prior year quarter. As shown on this slide, the bioethanol and biomethane segment was the main driver behind this improvement, increasing EBITDA from a loss of €26 million in Q4-24-25 to a profit of €55 million in Q4-25-26. Now compared with the prior year, bioethanol market spreads improved in both Europe and North America. The greenhouse gas quota market also recovered from market distortions in the previous year. And in addition, our North American operations benefited from higher utilization rates. It should be noted that the year-on-year comparison was also supported by the reversal of the impairment on greenhouse gas quota inventories recorded in the prior year, as well as by the absence of several negative effects that waited on Q4-24-25. Biodiesel also contributed positively. However, The bioethanol and biomethane segment was clearly the main driver of the improvement at group level. With that, let me now turn to the quarter over quarter performance of the individual segments, starting with biodiesel. Production volumes increased from 145,000 tons in the third quarter to 172,000 tons in the fourth quarter. In Europe, production reached another record level, confirming the strong operational performance of the segment. Production in Canada also increased compared with the previous quarter, following the planned winter shutdown. Our revenues rose significantly to Euro 280 million from Euro 202 million in the third quarter. This was driven by higher sales volumes and higher biodiesel selling prices. In Europe, Demand benefited from the implementation of the RID3, which increased demand for physical biodiesel. At the same time, low water levels on the Rhine created logistical challenges for some market participants. We as Verbio, on the other hand, were able to continue serving our customers through our established rail and truck deliveries. Despite weaker benchmark spreads in Europe, which we will look at in a minute, our cross-margin improved significantly compared to the previous quarter. Higher biodiesel prices supported profitability thanks to our beneficial feedstock sourcing. In North America, Higher utilization rates, increased sales volumes and improved efficiency provided additional support. As a result, EBITDA increased to EUR 32 million from EUR 18 million in the previous quarter. Now for some market context, let's now take a look at the reference charts. These charts show the development of the biodiesel spreads, which are defined as the difference between biodiesel prices and rapeseed oil prices. As always, they do not reflect Our specific sourcing strategy but provide a useful indication of broader market developments. Looking specifically at the fourth quarter, benchmark market spreads deteriorated significantly and as you can see from the dark green light on the left of the chart turned slightly negative towards the end of the financial year. The chart on the right helps explain this development. Both biodiesel and rapeseed oil prices increased during the quarter. However, rapeseed oil prices rose much more strongly than biodiesel prices, putting significant pressure on the benchmark market spreads. The increase in rapeseed oil prices was primarily driven by stronger vegetable oil markets and improved market demand expectations for renewable fuels. A key driver of these improvement expectations was the EPA's final renewable fuel standard decision in March this year. which provided greater regulatory certainty and supported market confidence in future renewable fuel demand. Biodiesel prices also moved higher, supported by the ongoing recovery of greenhouse gas quota markets and stronger demand following the implementation of RAD3. However, while RAD3 is improving demand fundamentals, additional biodiesel volumes remain constrained by the blending war. In addition, elevated diesel prices associated with the conflict with Iran rated on overall diesel demand further limiting the ability of biodiesel prices to keep pace with rising feedstock costs. Despite the weaker benchmarked environment, we achieved a significantly stronger result than implied by the reference market spreads. This was supported by our favorable feedstock sourcing Higher greenhouse gas quota prices and additional value creation for our integrated biorefinery model. Now let's move on to the bioethanol and biomethane segment. Biomethane production reached another record level of more than 370 gigawatt hours supported by the continued ramp up of our Nevada facility. Bioethanol production also increased. The main driver was higher output in North America. Bioproduction in Europe recovered following the temporary biological disruptions in fermentation process that affected the previous quarter. Our revenue increased to Euro 243 million from Euro 236 million in the third quarter. Higher bioethanol prices as well as increased sales volumes supported revenue growth. Now, while greenhouse gas quota prices also increased further, revenues from greenhouse gas quota business in Europe are below the level of the seasonally strong third quarter. Course margin improved compared with the previous quarter, large market spreads