Chapel Down Group Plc ($CDGP)

Good afternoon, and welcome to the Chapel Down Group Plc Annual Results Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to play a short video before we begin. [Presentation]

I would now like to hand you over to CEO, James Pennefather. Good afternoon to you, sir.

Thanks, Alex. With spring having very much arrived and an amazing English summer clearly on its way, we thought we'd start our FY '25 annual results presentation with that lovely video to remind shareholders what a wonderful experience it is to visit our brand home in Tenson and to encourage you to book your visits down to see our scant. Forward bookings for this year are already strong, so please do book early. And a very warm welcome to all our shareholders who are joining this call to hear about Chapel Down's annual results for the financial year 2025. I'm James Pennefather, and I'm joined by Louan Mouton, our CFO. And today, we're representing the leadership team of this business. and our 85 colleagues to take you through a reminder of our strategic objectives and value creation plan and the progress that we're making against them. We expect the presentation to take 40 minutes, after which there will be a chance for questions. Please do type in any questions, and we will try to get through all of them today. And if not, we will put on our shareholder part of our website all the answers to the questions we didn't get around to. We wanted to start by sharing the key headlines from today's results announcement. This morning, we reported strong momentum with growth of 19% in net sales revenue and 25% in adjusted EBITDA. We have a clear value creation plan, which we're going to take you through shortly, and we're making good progress against that. And that momentum has continued into Q1 of 2026, giving us confidence in our full year guidance. 2025 was an exceptional year of delivery for Chapel Down. Our top line sales were almost GBP 20 million with a growth of 19% and traditional method sparkling wines, which is our core strategic focus, up 28%. If you look at the 3-year trend, that is an equivalent 9% annual top line growth rate and strong EBITDA profit delivery, up 25% from last year to GBP 3.7 million. Thanks to a good growing season, our 2025 harvest delivered a strong yield of exceptional quality. And the first traditional method sparkling wines from the 2025 harvest are likely to be available for sale in 2029. We achieved our highest ever brand awareness score of 49% and grew our market share by 1% in the important off-trade channel in a category which grew by 12% over the year. Underpinning our confidence in the future growth of the category is the fact that not only that sparkling wine as a category is still relatively underdeveloped compared with other markets such as France, with only 47% penetration compared with 78% in France, but also the quality perceptions are higher than ever, rising 10 percentage points in the past 5 years and now almost at the same level as Champagne. These are strong results and thanks to the strength of our business model, combined with exceptional work by our team and partners for which I am very grateful. One of the strengths of Chapel Down is that we are very clear about how we create value, and that is illustrated in our purpose statement. Chapel Down creates value in the world of consumers celebrations where they are happy and happy to spend good money on a good bottle of sparkling wine to commit those happy memories moments to memory. I've been struck by the huge amount of goodwill there is towards this category in U.K. amongst consumers and customers who want us to succeed. And that goodwill really rubs off on our team of 85 people who are united behind the mission to change the way the world thinks about English wine, and that gives us an energy and drive to deliver exceptional results every day. And we have set an ambitious goal to deliver an equivalent 1% share of the global champagne market by 2035, which would effectively establish us as one of the world's great sparkling wine brands. This is an ambition we can achieve. Our first were planted in 1977, and we now have over 1,000 acres planted. We have over 25 years of brand building of the Chapel Down brand itself. We have 10,000 retail shareholders who are our biggest ambassadors, and we dispatched 1 million bottles of traditional method sparkling wine for the first time in 2025, effectively a 0.4% equivalent share of champagne. So there are 5 charts on this page that show the choices that have been made as the business has been built over the years. So top left shows our vineyards breakdown by grape variety. Back in the 1970s, we planted Geranic still wines. As the climate conditions warmed, so we were able to ride on the champagne trio of grapes, Chardonnet, Pino and PinoMagnier, which now make up over 80% of our planting. The next one, vineyards by sole type. Our first lines in Tenterton were planted on clay soil, but then we started to look for something that recreated the growing conditions found in the Champagne region. And in 2008, we bought a plot of 100 acres in the chork terwir of Kent dams called Kit Coty, and that soil has been the primary focus of all our recent planting. So now 75% of our land of our vineyards are planted in And lastly, on this top row, we favor leasehold because it helps us manage cash flows and deliver better returns for our shareholders. Turning now to our NSR split first by channel and then by segment. In terms of the channel split, you can see that we have good diversification of revenues with 70% of our sales via off-trade and e-commerce going for home consumption, which is where most of our target celebration occasions are taking place. And as a result of that, 70% of our total sales last year were through the high-margin traditional method sparkling wine sector, which is our strategic focus. And we're growing sales and market share because we are clear about the sector of the market we are targeting. We presented this 2x2 grid before, which plots all the different segments of the GBP 26 billion global sparkling wine market. High-perceived quality at the top, low perceived quality at the bottom, occasions on the X-axis from informal on the left to formal occasions on the right. So you can see champagne, high-perceived quality formal occasions and you come down through Cremont and Cara to Prosecco, which is produced in a different method and more consumed on informal occasions such as brunches and girls and night outs. We are being successful targeting this white space, which is the same quality credential as champagne, but a more approachable positioning. And excitingly, that is the area that's attracting millennials and Gen Z, and this is why we are winning share against other categories. And here, you can see our range of traditional method sparkling wines, which meet all levels of the pricing ladder from GBP 31 for our non-vintage got up to GBP 126 for our single vintage Kids Coty Curkuve. This is an exceptional range of award-winning wines, and we are confident that they stand shoulder to shoulder in quality against the very best in the world. And let's look at the 3 ways that Chapel Down is differentiated. Firstly, on quality. We have the viticulture and winemaking expertise to create wines of exceptional quality that really represent a sense of place, in our case, cool climate, Chardonnay onshore. One of our viticulture team, Ian Button, has spent over 40 years working in English vineyards, and our winemaker, Josh Donahespire, has spent over 15 years with us. Last year, we won 30 awards for quality. And in 2024, our non-vintage rosé was awarded to Cantor Awards best-in-class against 268 other global sparkling roses. Secondly, on brand, we've invested in creating a brand which stands for the best in modern Britain, associated with iconic institutions such as the Boat Race, England Cricket, Royal Ascot and Royal Philharmonic Orchestra and served at modern English events such as Soundbites and Pub in the Park. And thirdly, our brand plays a clear role in consumers' lives, elevating more informal occasions to become memorable celebrations, and we ensure that we have the availability to be able to be purchased for those occasions as shown here by our 36% share of the key sales channel at the off-trade. So the first few slides I presented show where we've come from and the next few show where we are going. I'll start with our 3 strategic priorities. The first of which is that we've built a really strong brand and we'll continue to enhance it, remembering that there is no value attached to it at the moment on our balance sheet. The second area is to leverage our position as brand leader in emerging category for commercial benefits, both in the U.K. and internationally. And the third, which we have called disciplined capital management reflects that the Board is keen that we leverage our own existing resources as we expand over the medium term. And I'm now going to take you through the 5 priority value creation initiatives that we are focused on. And the first value creation initiative is called -- is under brand value enhancement, and that is to further increase our brand awareness behind proven growth drivers. We know that brand awareness is a key driver in consumer choice of a high-value sparkling wine. And we know that we have to date driven steady growth in brand awareness, rising from 32% in 2022 to 49% in 2025. So we intend to increase our reinvestment rates behind these proven growth drivers, leveraging our assets such as our 54,000 visitors a year to our brand name in Tenson, the 120,000 consumers on our relationship marketing database and of course, our 10,000 retail shareholders. And there's still plenty of headroom for growth to get to the levels of the market leader, Westehandong, which has 89% brand awareness. And we also know from our data that our marketing is helping to recruit younger consumers, urban affluent millennials into the brand, which will help guarantee future growth for Chapel Down. And our marketing team has made some really impressive progress with our brand proposition and awareness. We launched the next installment of our Fresh Away to celebrate media campaign, which has generated strong levels of return on advertising spend. Our brand partnerships continue to perform well. Our sales at Royal Asset grew by 13% last year, and we outperformed leading champagne brands in certain bars there. Hopefully, you saw the amazing coverage we got at this year's boat race, and we're now the official sparkling wine for the Royal Philharmonic Orchestra. And lastly, we are adding a new tasting room in Tentetton to address our tour capacity issue, which should be ready in time for the summer season. The second priority for value creation within brand value enhancement is to better leverage our single vineyard portfolio. In Kit's Coty, we have one of England's finest vineyards. We have never put any meaningful support behind it as a sub-brand. This is something we will be doing in 2026. Excitingly, we have 2 new single vineyards, Boxley Abbey and Buckwell, which are not yet in full production. Investing in building these luxury sub-brands will build a premium halo for Chapel Down and help deliver further growth in our traditional method sparkling focus and average selling price. We're making good progress on this with strong growth in our luxury sparkling wine portfolio and distribution gains in the important luxury on-trade market. Turning now to sustainable channel expansion. In the U.K., we have a strong proposition to expand our distribution into outlets, which serve less formal celebration occasions because we know that our brand over-indexes compared with champagne on these occasions. And we are also successfully trading consumers up from lower-priced sparkling wines such as entry-level champagne and Prosecco rather than downtrading drinkers from higher-priced champagne, as shown by the shopper basket data, which shows that 80% of switching into Chapel Down is trade up. We're already seeing strong distribution growth in the U.K. as a result, including recently into some of the major multiple grocer convenience faces such as little Waitrose and our English summertime campaign will celebrate homegrown flavors. And we're making good progress in international markets with 49% growth delivered during financial year 2025. We are particularly pleased with the progress being made in traditional method sparkling wine in the U.S.A., where our import partner, Jackson Family Wines, has reported that Chapel Down as a cool climate sparkling wine is gaining strong market interest. A PR stunt by Fred in New York found that 67% of Americans samples preferred the fresh taste of Chapel Down to a leading champagne brand. We're now available in 23 states there. And Norway is also proving to be a strong performer for us. And in terms of disciplined capital management, we are clear that we have the vineyard acreage, the winery capacity and the ERP systems we need for this next phase of growth. Our plan in this area is to continue to build maturing wine stocks to support our increasing demand, which will see a rise in working capital in the short term, which will then normalize in the medium term, resulting in sustained annual positive cash flows from the early 2030s. Our growth is underpinned by a revolving credit facility of GBP 20 million and an opportunity to increase this should we need. And the company continues to make progress on our sustainability program. Not only is this the right thing to do for the planet and our values, it is also something that is valued by our target consumers, too, for whom sustainability considerations are one of the differentiators between choosing shuttle down rather than sparkling wines from another wine region abroad. We have initiatives around reducing our carbon footprint, for example, by electrifying vehicles where possible, improving habitat creation, for example, by planting more heteroes and soil health, where we are currently part of the one Block challenge where we are running parts of our vineyard under regenerative soil principles to build a case study for wider rollout. All 3 of our strategic initiatives have clear KPIs, which we will track. And I look forward to updating shareholders on our progress against them during our future reporting. So I'm now going to pass over to Louan to take you through our financial results in more detail.

Thank you, James. 2025 was an exceptional year for Chapel Down, resulting in double-digit growth on the top line and adjusted EBITDA profitability. I'll now take you through some of our financial highlights in the next few slides. Firstly, let's have a look at the top line performance. Distribution gains across our trade and international channels, good momentum in H2 in e-commerce and more normalized off-trade retailer stockholding supported strong growth of 19% year-on-year. Let's have a look at each channel in a bit more detail. In the off-trade, Chapel Down grew at 38% year-on-year. Approximately 1/3 of this growth was due to lapping a period in '24 where retailers reduced their stock holding. Positively, as mentioned in the half year results update, we continue to see much more normalized stockholding levels from retailers. Notwithstanding the lapping of a softer summer in '24, Chapel Down sales were up 16% in value through the retailer tools according to Nielsen data, outperforming the wider English sparkling wine category growth, which was at 12%. We also extended our leading market share to 36%. Alongside increases in rate of sale, Chapel Down also increased its distribution footprint by 5%, which included the new listing of Rosé in Tesco. The on-trade channel grew 5% year-on-year, although this should be considered against a difficult economic backdrop for hospitality. As mentioned also in the half year results, '25 is lapping a period of strong pipe fill in H1 '24. H2, however, has shown good momentum with growth of 7% year-on-year, meaning our full year growth was 5%. The modest annual growth is also not reflective of the strong distribution gains achieved in the year. We increased the number of unique outlets by 12%, which meant Chapel Down is now listed in over 2,700 unique outlets across the U.K. We also built momentum with by the Glass listings, which increased 29% year-on-year and Chapel Down now has almost 6,000 expression listings across the on-trade in the U.K. Quality of distribution was further enhanced by listings across premium and luxury hotels like The Pig, The Rosewood, The Safford and also the Ambassador Theater Group. International delivered strong top line growth of 49%. The successful new distribution partnership with Jackson Family Wines was the main driver behind the growth. Chapel Down's U.S. distribution has now been expanded from 10 states in '24 to 23 states today. Other international markets are also gaining momentum, especially Norway through the Nora Group distribution partnership. And Global Travel Retail has also performed well. Chapel Down is now in 40 key travel hubs across the U.K. and key food and beverage operator wins included the listing of Bakers on Virgin Atlantic and a selection of wines on SeaDream Yacht Club. Direct-to-consumer, which is almost 1/3 of our business, showed a modest gain of 1% for the full year. However, prior year comparatives still included some of the discontinued spirit sales. If these are excluded, DTC growth was 3%. Our e-commerce channel performed really well in H2 on the back of strong summer trading and a successful Black Friday campaign, which meant a 6% increase across the wider D2C business in H2. Our brand home continues to receive over 50,000 visitors a year and consistently received award from the travel and hospitality industry, including the TripAdvisor Travelers' Choice Award for the fourth consecutive year. Over some key trading periods in the year, we operate at full capacity across tours and experiences. This has been one of the inhibiting factors in growing our revenue. As James mentioned earlier, we are in the process of building a new tasting room to be operational by the summer. This should increase our footfall capacity for tours and experiences. You will also note a strong performance for our traditional method sparkling wines, for which revenue increased 28%. Higher-margin traditional method sparkling remains a core strategic focus for Chapel Down in the longer term. And as expected, traditional method Sparkling accelerated its proportion of overall revenue in H2, meaning on a full year basis, it now accounted for 74% of the overall wine revenue. As a reminder, due to the long maturity cycle, we continue to invest behind future demand for our maturing traditional method sparkling wines, as you will note in the upcoming slides on the balance sheet review with the increase in stock values. Gross margin, as expected, temporarily reduced in 2025. This was caused by a few factors. Firstly, an increase in revenue mix towards the off-trade channel. Secondly, slightly lower average selling prices for TMS in the year. However, this was in line with the broader promotional changes across the wider English sparkling wine and champagne categories. And finally, the most dilutive -- most notable dilution was from the sale of the higher cost '22 vintage traditional method sparkling wines. You will recall these wines were made during a period of severe macro inflation pressure subsequent to the COVID pandemic and the conflict in Ukraine. In 2026, however, we will be selling more of our lower cost '23 vintage traditional method sparkling wines, meaning you can expect an improvement in gross margin compared to '25. Dilutive factors were partially offset by the improvement in product mix. As mentioned earlier, traditional method sparkling is now making up a larger proportion of our overall revenue, meaning as the mix increases further, it should have an accretive impact on gross margin. Bringing this all together into the P&L. The strong top line growth, combined with good cost control and overheads resulted in strong underlying operating profit improvement of 39% and adjusted EBITDA growth of 25%. Firstly, I want to point out that the noncash fair value adjustment to biological produce resulted in a gain of nearly GBP 600,000 due to the high-quality above-average yield of 2025. This compares to a lower-than-average yield in 2024, which resulted in a loss. A gain in '25 also led to a profit before tax position, which compares to a loss in the prior year. As you can see, this adjustment is highly volatile. And due to the volatility of this noncash adjustment, going forward, we will present adjusted EBITDA, excluding the fair value to biological produce. This is a change from prior years. However, by excluding this volatile noncash adjustment, we believe this better reflects the underlying profitability comparison year-on-year. Now regarding the cost base. In the year, we invested 11% of net sales revenue into marketing initiatives that increased brand awareness by 7 percentage points in the year to 49% and further increasing consumer purchase. For 2026, the Board has taken the decision to increase marketing investment levels to between 13.5% and 14.5% to further increase market share and reinforce gross margin. Other overheads increased 12% as we continue to invest modestly in headcount and operational support to underpin future growth. Overheads as a percentage of net sales revenue has improved from just under 30% in 2024 to 28% in 2025. Depreciation increased only marginally at 3% due to the limited productive assets being capitalized with our 2 new vineyards becoming productive in 2026 and 2027, respectively. Share-based payment expense compares to a gain in '24 when certain vesting criteria was not met, and exceptional items were for the final expenses relating to the 2024 strategic review. As mentioned in half year results, there are no more expenses expected regarding this review. In this slide, I will talk you through some key balance sheet and cash flow metrics. Let's start with the balance sheet. The net asset value per share increased 2% to 19.3p per share. This might seem modest. However, as a reminder, our assets are valued according to IFRS accounting standards and might not reflect potentially higher market values. The Board believes for some of these assets, the market values to be higher than our book values at year-end. And again, to remind everyone, as per James' earlier point, there is no value accounted for in our balance sheet for brand intangibles. Stocks increased 15% due to the higher '25 harvest yield. The higher tonnage will deliver approximately 2.6 million bottles of wine in 2026, an increase of approximately 53% from '24 harvest. This will support our strategic priority to increase our maturing stocks of traditional method sparkling wines, some of which can take up to 7 years post harvest before becoming sellable. Increasing our maturing stocks in a controlled manner also mitigate against years where we might have a lower yield harvest. Other working capital remained largely flat as we continue to manage our customer and supplier payment terms efficiently. Now let's look at how we allocated capital in the year. Firstly, underlying cash flow improved 55% year-on-year to almost GBP 400,000. This compares to underlying operating growth -- operating profit growth of 38%, as mentioned earlier in the P&L slide. This means Chapel Down improved its conversion of underlying profits into cash for the year. However, we need to continue investing ahead to underpin future growth. For this, we use our GBP 20 million facility with PNC Bank. We also have a pre-agreed accordion option to extend this facility by a further GBP 10 million, subject to credit approval. In the year, we increased our net debt by GBP 3.3 million, resulting in a closing position of GBP 12.4 million at year-end. Most of the funding from our revolving credit facility was used to invest in maturing traditional method sparkling wines to underpin future growth and CapEx. The latter mostly used for the finalization of our newly planted vineyards Boxley Abbey and Buckwell. These vineyards will be productive in '26 and '27, respectively, after which only minimal CapEx would be required on an ongoing basis. Interest was expected to increase as we utilize more of our RCF facility. And as mentioned earlier, exceptionals related to historic initiatives for which there should not be any further expenses going forward. In closing, as we demonstrated in 2025, we remain disciplined in our capital allocation and laser focused to execute against our strategic investment priorities being maturing stocks to underpin future growth and investment into existing high-quality assets. We will do so whilst continuing to deliver profitable growth and improve our underlying cash flow.

Thanks, Louan. And now it's time to finish with our 2026 outlook. Chapel Down has made a strong start to financial year '26, trading well ahead of the same period in the prior year across all key channels and delivering gross margin improvement in line with management's expectations. The Board has taken the decision to increase discretionary investments into marketing initiatives that will strengthen the brand, capture further market share and reinforce gross margin. For 2026, the Board expects marketing spend as a percent of net sales to be between 13.5% and 14.5%. In FY '25, that was 11%. New partnerships and initiatives are planned for financial year '26 to amplify brand visibility and consumer engagement. Whilst we're not seeing any immediate impacts on trading from the Middle East war, our proportion of sales in that region is small and U.K. Easter activity generated sales in line with management expectations, we do remain alert to the impact that a rise in fuel and energy costs might have on consumer confidence and disposable income levels as well as on input costs for our viticulture and winemaking operations. Looking ahead, we remain focused on delivering sustained double-digit growth. The Board currently expects financial year '26 results to be in line with market expectations. Right. And now I'd like to invite Alex to put us back on screen for us to go through the Q&A.

Some questions were pre-submitted kindly beforehand. So we're going to -- those are on bits of paper. So we will read from those and then the others are online. So we have quite a few questions to get through, and we will try and get through all of them before the end. So first question, I personally believe that -- and we've had a couple of questions actually about marketing, but I personally believe that the return on investment of the current marketing campaign is not bringing the correct returns. Can you please share data on this matter? Because we now use digital media for a lot of our marketing, we can actually see what the return is that we're getting on our marketing spend and it's positive. Last year, we were getting a return on advertising spend of between 8% and 10% based on those digital metrics, which is well above industry norms. And actually, the results of our marketing can be seen in those brand awareness scores, which have risen from -- in 2022, that was 32% of U.K. sparkling wine drinkers were aware of Chapel Down. That's risen up to 49%. And why that is so important is because when you ask consumers when they're choosing high-value sparkling wine, why they choose a certain house or brand to drink or to purchase, the #1 reason for choosing is because they're aware of the brand already. So this is a critical KPI for us, and we're making good progress in this area. The second question, are you able to provide percentage and numbers of the 3 levels of shareholders? So Rebecca, our shareholder manager, who a number of you would have been in touch with. She has gone through the detail. We have 10% of our shareholders are platinum shareholders, 67% are gold shareholders. So remember, if you are a platinum or a gold shareholder, you're able to get 33% of wines and free tours and silver shareholders, that's 23% of our shareholder base. The third question, are there any plans to develop the Tenson site for overnight accommodation? This will be extremely popular in the area and encourage visitors from further field to attend. We don't have any active plans to develop the site for overnight accommodation. It's quite a constrained site actually is obviously where our winery is. We've looked into this. We think it's too much of a stretch as well from our core strategic focus, which is on production and sales of traditional method sparkling. Talking of winemaking facilities, what are the strategic plans regarding these facilities? I believe the planned new off-site winemaking and bottling facilities are now not planned to progress. That's correct. I think in September or October last year, we announced that we looked at different options for our winemaking production capacity in the medium term to accommodate the additional grades coming from the new vineyards that have been planted over the last 5 years at Boxley Abbey and Buckwell. And we decided not to move forward with a new winery, but instead, we are optimizing our existing winemaking assets at our original winery, making that a center of excellence for the production of traditional method sparkling wines, and that can be achieved without significant CapEx. And in addition, we're using existing spare third-party winemaking capacity in Kent to produce some of our premium still wines. So we have the capacity that we need in winemaking now to accommodate us over that medium term and deliver sustained double-digit growth into the early 2030s at the top line. Is further land acquisition combine planting in the growth plan for future years or is the plan to consolidate existing acreage? We're not planning on planting any new vineyards in the medium term. Currently, we have over 1,000 acres of vineyards, of which 777 are in full production at the moment. And as we get those into full production over the next couple of harvests, that gives us enough vineyards to be able to more than double our existing sales of traditional method sparkling wine. So if you remember, our ambition is to get to a 1% equivalent share of global champagne market by 2035. Last year, we dispatched 1 million bottles of traditional method sparkling for the first time ever, which is equivalent to 0.4%. So you can see how the upside potential based on the vineyards that we have already planted, some of which aren't yet in full production. There's a question, again, on a slight marketing question. Does the company sponsor organizations like planned parenters? So I'll talk a little bit about our sponsorship budget. That is spent on associating with iconic British institutions, which are linked with celebration, the Boat Race, England Cricket, Royal Ascott, Royal Philharmonic Orchestra. But we do also support local cemp causes, and that tends to be arranged locally. Associated to that, has the company made donations to any politician -- political party or election candidates? We haven't made any donations, but we were last Christmas, one of the sponsors, one of the local sponsors of our local MPs Christmas cars, which were very well received and got good branding for Chapel Down as well. We've had a few questions about the share price and whether that is reflective of the valuation of the company. Clearly, it's at a lower level than it was this time last year. And comments has the brand lost its way in the market? Is the marketing strategy correct? I think we would absolutely, as a Board, agree that the current valuation of our shares isn't where we believe the true valuation of the company is. In terms of what our brokers are saying around the market is the consumer stock valuations as a sector have come under pressure recently. And what our focus is as a leadership team is to focus on delivering the quality, delivering sustained profitable growth over the medium term and into the 2030s. And our belief is that this will drive the long-term valuation to where we think it should be. I got a couple of questions now for Louan. Louan, the first one is, could you outline how the business is progressing towards consistent profitability and positive cash generation and what key milestones we should look for along the way?

Yes. So thanks for the question. I think it's quite a fundamental one actually around linking to our strategy over the medium and longer term. But just to firstly remind everyone where we are in our journey at Chapel Down towards 1% of global champagne equivalent market share. Over the last few years, we've invested quite heavily in high-quality assets, most notably our vineyards, technology winery upgrades. And over the next phase that we're moving into now is the conversion phase. And during this phase, we will be focusing on investment in our maturing traditional method sparkling wine stocks, and we will be stock building in order to underpin future growth. So as our demand keeps growing, we need to be investing into stocks today or what we will be selling in 3, 4, 5 years' time from today. And that's why you might -- you will be seeing the stock balance sheet position increasing and further investment in the medium term happening on that front. If you then go forward a little bit in a few years' time, working capital should start normalizing where demand and supply is more comparable. And that's really the point where you should start seeing more free cash flow dropping through and less utilization of our net debt facility. Regarding profitability, the key metrics that we consider is adjusted EBITDA. That adjusted EBITDA improved 25% from last year and roughly about 7% on average over the last 3 years. Adjusted EBITDA normalizes profitability by excluding noncash and volatile adjustments like the fair value adjustment biological produce, share-based payments or exceptionals. So that's the measure to focus on, and we expect to improve that measure over the coming years as our top line growth grows as well as we get leverage over our cost base. And I think the next one. The next question we got is, as the business continues to grow, how are you thinking about funding that growth? And should shareholders expect the current strategy to be supported through existing resources? So in 2024, we agreed a GBP 20 million facility with PNC Bank as a revolving credit facility with pre-agreed terms that we believe is beneficial to the company to be able to extend that by a further GBP 10 million, subject to credit approval upon application. So as I mentioned in the previous question or previous answer to the question, the focus for us now in the medium term is around building maturing stocks, which we intend to leverage our RCF facility for. And at the end of last year, our balance on net debt was GBP 12.4 million. So you can see that there is reasonable headroom available in this facility in order for us to execute on our growth trajectory. Just maybe also linking to the previous answer where I did mention in the medium term, we should see higher free cash flows once working capital normalizes, that also would mean that we'll be less reliant on using our care facility to fund growth.

Okay. Thanks, Louan. So we're getting through quite a lot of questions. One is, is future growth more about premium pricing and brand strength or increasing production volumes? And how does that impact margins? Hopefully, that has been explained when we took you through the value creation plan in the medium term, where our 5 value creation initiatives are around brand marketing, premiumization, both of which should improve margins, internationalization, increasing our footprint across the U.K. and then doing that with disciplined capital management. So hopefully, that description I gave earlier has helped answer that. And likewise, the next question was over the next 12 months, what would you point to as proof things are moving in the right direction? And well, first of all, I'd say that I think things are moving in the right direction as shared by our FY '25 results that we've announced this morning. But secondly, the KPIs against our 3 strategic priorities, we will be tracking and reporting against to shareholders moving forward. So that's how we're going to be demonstrating the progress there. So we've got through the pre-submitted questions now. There are a few that have come in online, for which many thanks. There are 2 questions at the start about format. Chapel Down looking to sell in 20 CL bottles or bring back -- back wine in a box. When it comes to format extensions, there are two considerations for us. First of all, can we deliver the Chapel Down quality through them? And secondly, is there enough for the market? And can we make it at the scale that we need from a cost of goods point of view. And that's really the business case side. So we are looking at format extensions continually currently indeed at the moment, but we would only do that if we think we can do it if the size of the opportunity is big enough and to be able to make a decent gross margin from it. The next question is one for Louan around. Do you have a date yet for the AGM? And will it be in person again at Penton?

So do we have a date? We will announce the date for the AGM in May. The AGM will be in June. And yes, it will be in person in Pensedon.

Great. And what are the length of the leases on the land that we grow on?

So we aim to get more than 20 years, closer to 25 years on our leases, which is what we've been managing to achieve on a majority of them. The average leases, we haven't disclosed yet because they haven't for end of last year, that's coming out in our annual report. But if you go on more or less the average from '24 being more or less consistent for '25, it's about 17 years that we've got left outstanding on average across all of those leases.

Great. There's a question here. Do you have a breakdown of the number of bottles of still and sparkling and premium versus non-premium not value at cost as per account? And how that has changed over the recent years? I think you probably got some of that data.

We can probably address this one more properly with online putting the numbers against the question. We can address that one later and putting the numbers.

Okay, Chris. I mean what I do know is in 2025, I think we sold 1.8 million bottles 1 million were traditional sparkling and then 800,000 are split between bottle. And a question here, can you please tell us more about how we should interpret the impressive plus 9% 3-year CAGR quoted? That is a great point, actually. That statistic that we shared of the 9% CAGR. That basically means if you look back over the past 3 years, on average, since 2022, every year, our top line has grown by 9% on average. So actually, in 2024, our top line went back a little bit because of a one-off retailer destocking exercise, but the underlying trajectory of net sales revenue is at 9% based on -- between 2022 and 2025. Will there come a point where Chapel Down phase out still wines and concentrate on sparkling only? The traditional method of sparkling is our core strategic focus. However, we really value our still wine portfolio because it gives us more visibility and footprint on shelf in Waitrose, Majestic, for example, it also really showcases our winemaking team and viticulture team's expertise as well. And you should certainly look out for some really interesting Discovery series additions coming out later this year from the amazing 2025 harvest. So why were the results released a month later than last year? Is it going concern related? I note the accordion option is subject to lender approval. So Louan, what would you like to say on that?

Good news, there's absolutely no going concern issues whatsoever. I think it was purely due to having enough time in order to finalize the audit as well as availability and capacity around making sure that we can move through that efficiently and address all the technical points. So going concern is absolutely not an issue whatsoever.

Yes, I think it's fair to say that we planned at the start of the year that this would be the case...

Around capacity.

And timing of Easter as well was a consideration. Should you consider including brand value of Chapel Down as an intangible asset on the balance sheet, thereby increasing balance sheet value of the group? Unfortunately, we can't do that. So IFRS prohibits us from capitalizing internally generated brands. So if we were to, in theory, have acquired the Chapel Down brand, then yes, that would have been on our balance sheet. But because we've made the Chapel Down brand.

We can't capitalize on balance sheet. So that's -- we don't make the rules that IFRS accounting rules.

Okay. There is a comment on touch of Sparkle and the branding of which many thanks. I will pass that on to the marketing team. question, how much was spent on the external winery, which has been abandoned. I think that can be seen in last year's -- the part of last year's exceptional costs. So -- and that -- I'm sorry, and the other things as well. So -- and the strategic review. So that was a '24 cost and not relevant to 2025 results.

And also just to say there's no liability -- further liability for any of those costs.

There's a question around the gross margins in different retailers. I can't really comment on that apart from to say that we are as the category leader, partnering with the big retailers, both in the off-trade and the on-trade to make sure that Chapel Down gets the visibility on shelf and that sort of key celebration occasion as well. There's a question here, is there any opportunity to consider vegan and/or organic production in the future? I think what I'm going to do on that is get more detail on because I think we actually have made some progress in this area in the last couple of years. But rather than tell you something that isn't 100% correct, we'll put that actual technical answer in the comments online. Some more thoughts around doing partnerships with hotels and taxis in the Chapanan area to encourage people to stay overnight and get to the winery more easily. Absolutely, I'll pass that through to our Temston team because I know we have some already, but it's a great point. What are the expected rises in cost of processing the additional production from new vineyards? Will this affect margins?

Yes. So whilst I can't give exact cost increase on this call, it's safe to say that with the larger state, we should get some further operational leverage where a larger portion of our fixed cost gets divided into a larger estate. So yes, in theory, we should get some benefit in the longer term.

And our new vineyards are all big scale vineyards as well. So historically, we might have had 5 acres here, 10 acres there. Now we have 4 big vineyards, all of which are over 100 acres each, and that obviously helps with efficiency too. So I think -- And we've got some really great input here. Rich, I'm going to pass on to the marketing team. I'm going to end up with the final question before we close, which is any further thoughts on the Chapel Down low alcohol line as the market is growing. And certainly, the no low alcohol and about 0.5% ABB market is growing. Also, the English sparkling wine category is growing as well, and we're going to focus on that. We don't believe that we could do zero alcohol in a way that's consistent with our winemaking philosophy. However, the technology is evolving fast, and we're certainly keeping a close ear to the ground on that and doing regular tastings of what is available in the market. Do watch this space later in the year as well for not low midrange, but we will -- we've got something interesting coming in our Discovery series later in the year as well. So with that, I am going to thank all our shareholders for some great questions. We ended up having more time than normal for the Q&A. I hope that was useful for you. I wanted to thank Alex from IMC for organizing this presentation to thank my wider team of 85 employees here at Chapel Down for delivering some phenomenal results in FY '25. And thank you to our shareholders, not only for coming on this call, but for your ongoing support for Chapel Down on this fantastic journey that we are going on to unlock our ambition to become 1% equivalent of the global champagne market by 2035. So thank you, everyone, and I hope you enjoy the rest of the sunny weather and come down and visit us soon in...

Fantastic, James. Thank you once again for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback, which will help the company better understand your views and expectations. On behalf of the management team, we would like to thank you for attending today's presentation, and good afternoon to you.