Delegat Group Limited (DGL.NZ) Earnings Call Transcript & Summary

Good afternoon, everyone. It seems like the weather is keeping a lot of our shareholders at bay. Well done. It's now 2:00, and I will now open the Annual Shareholders Meeting for business. On behalf of the Board, I am pleased to welcome you here today to the 20th Annual Meeting of Delegat Group Limited since listing in April 2006. My name is Jim Delegat, and I have the privilege of chairing your Board of Directors. I can confirm that we do have a quorum present. And given that the time is now, as I said, 2:00 p.m., I will declare the meeting open for business. It's great to be meeting both in person today as well as the meeting being held online via the Computershare online meeting platform. This allows shareholders, proxies and guests to attend this meeting virtually. For those not present, there is a live webcam for the meeting available, and you will be able to read the company documents associated with the meeting on the NZX announcement platform. In addition, as shareholders and proxies, you will have the ability to ask questions and submit votes. If you have a question to submit during the live meeting, please select the Q&A tab on the right half of your screen at any time. [Operator Instructions] Your question will immediately be submitted. Should you have -- should you require any assistance, you can type your query and one of the Computershare team will assist with the chat function and reply to your query. Alternatively, you can call Computershare on the 0-800 number. Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. Please also note that your questions may be moderated, or if we receive multiple questions on one topic, amalgamated together. Finally, due to time constraints, we may run out of time to answer all of your questions. If this happens, we will answer them in due course via e-mail. Voting today will be conducted by way of a poll on all items of business. In order to provide you with enough time to vote, I will shortly open the voting for all resolutions. The online platform regard voting -- at that time, if you are eligible to vote at this meeting, you will be able to cast your vote under the votes tab. Once the voting has opened, the resolutions will allow votes to be submitted. To vote, simply select your voting direction from the options shown on the screen. You can vote all resolutions at once or by each resolution. Your vote has been -- once your vote has been cast that will appear with the tech. To change your vote, simply select Change Your Vote. You have the ability to change your vote up until the time I declare voting closed. I now declare voting open for all items of business. The resolutions will now be open on the vote tab. Please submit your votes at any time. I will give you a warning before if I move to close voting. Let me introduce my fellow Board members. Today, we have Murray Annabell, Chief Executive Officer; to my left, Rose Delegat; Dr. Alan Jackson; Phillipa Muir, Chair of the People, Culture and Safety Committee, and Doug McKay. Also in attendance is Riki Maden, the Group Financial Officer, who will act as the minute Secretary. I would also like to welcome our audit partner, Andrew Dick from Deloitte to the meeting; and our legal adviser, David Jones from Heimsath Alexander. We have an apology today from Gordon MacLeod, Director and Chair of our Audit and Risk Committee, and who is standing today for reelection as our director. He tendered his apologies for this meeting as Gordon has had recent health issues, which are on a positive pathway to resolution but unfortunately unable to be here with us today. I am not aware of any other apologies anyone would like to advise the meeting of. If there are, please type in the apology and Riki Maden will ensure that they are appropriately recorded in the minutes. The notice of meeting has been sent to all shareholders together with the annual report. And I propose that together with the agenda, they be taken as read. The minutes of the previous meeting of the 19th Annual Meeting held on the 27th of November 2024, have been approved by the directors, and Riki Maden is holding a copy should any shareholder wish to receive one to view. The procedure today is that I will address the annual report incorporating the directors' report, financial statements and unqualified audit report covering the year to 30th of June 2025. I will then comment on Delegat's group's strategic goals and key success factors before handing the meeting to the Chief Executive Officer, who will cover the 2025 performance in more detail and the group's future growth plans. Following Murray Annabell's remarks, I will ask if there are any discussion on the annual report and Chair's and Chief Executive Officer's presentation before moving on to the formal business of the resolution. In terms of my address, I will address the credible performance of the 2025 year. Together, our global team has delivered a credible operating net profit after tax of $51.1 million. This has been achieved against the backdrop of uncertainty in what has been a challenging global market environment. The group achieved record operating cash flows of $105.7 million, which enabled the repayment of debt of $31.5 million. The group has a strong balance sheet and successfully refinanced its existing $420 million syndicated banking facility in June 2025. These results reflect the hard work and resilience of our Great Wine People as they build Delegat into a leading global Super Premium wine company. The directors considered that the underlying operational performance and continued strong cash flows justified maintaining the dividend payout in line with last year. Accordingly, the directors approved a fully imputed dividend payout of $0.20 per share. Your Board remains cognizant of both dividends to reward shareholders and the need for reinvestment for long-term growth. The results achieved in 2025 are testament to the strength of the Delegat business model and the caliber of our people. Your Board would like to take this opportunity to thank our Delegat Great Wine People around the world. Our global team have once again shown great resolve during a challenging year. We take immense pride in the unique culture our people have cultivated, founded on our values of aim high, mastery and winning together. The commitment and talent of our global team underpins our success. And as a market leader, as a market-led wine business, the group's focus remains on category premiumization and value growth, aligning with the long-term trends of Super Premium wine consumption. The strength of our category-leading Super Premium brands, end market sales teams, distribution and networks and strong consumer demand has proved necessary -- has provided the necessary resilience in these challenging times on a solid foundation, which positions Delegat well for future sales growth on our journey to building a leading Super Premium wine company. I shall now ask Murray Annabell, the group's Chief Financial (sic) [ Executive ] Officer, to provide a more fulsome report on the 2025 year and the group's future growth plans.

Thank you, Mr. Chair. Good afternoon, everyone. It is a genuine privilege to be here today standing as the new Chief Executive Officer of Delegat Group. As I reflect on my 20 years with this remarkable company, I'm reminded of the journey we have all shared. One that began when Delegat listed in 2006 and has since seen us grow into a global recognized leader in the Super Premium wine. I look around the room and I see many familiar and well-known shareholders that I have had the opportunity to speak to over the many years. And in those 2 decades, I have witnessed firsthand the transformation of Delegat. Our journey has been marked by ambition, resilience and relentless pursuit of excellence. We've navigated industry challenges, we've embraced innovation and consistently delivered value to our shareholders. Up until my appointment, I was the CFO of Delegat, a role I was extremely proud of. And today, Delegat stands as a testament to what can be achieved when a team is united by purpose and driven by passion. So now as the CEO, I am deeply aware of the privilege and the great responsibility that comes with leading this company and supporting nearly 500 dedicated employees, both here in New Zealand and Australia and around the world. Every day -- and it's every day I come to work, surrounded by colleagues who are not only passionate and committed but also embody our core values, as Jim said, of aim high, mastery and winning together. Their focus on delivering and growing shareholder value is unwavering, and it is with that energy and expertise that we continue to propel Delegat forward. I'm very grateful for the strong support of the Board, and I'm committed to continuing the visionary leadership that was set by Jim and Rose whose guidance and foresight I have been instrumental -- have been instrumental in shaping Delegat's success and culture. So as we look to the future, I'm excited to lead Delegat on the next stage of our journey together, continuing to build on the strong foundation, embracing definitely new opportunities and ensuring that the company remains one which we can all be very proud of. So turning to the year that has been. The group's results in 2025 represents another key milestone in our journey to build a leading global Super Premium wine company. Thanks to the dedicated efforts of the entire global team, the group did deliver a credible operating net profit after tax of $51.1 million. Credible result given the challenging market environment, including the imposition of tariffs in the U.S., supply chain disruptions and distributor and retailer inventory rebalancing. We executed decisive actions to align with evolving market conditions, ensuring we remain well balanced to deliver sustainable, long-term growth and shareholder value, including implementing price increases and specific markets aligned with our premiumization strategy, expanding our global distribution, managing our inventory, reducing our costs, rephasing our capital expenditure and repaying debt. Reported net profit after tax of $49 million was 56% higher than the previous year. This was primarily due to 2 accounting requirements. One was the New Zealand IFRS requirement to revalue biological assets at their market value rather than at their cost to grow, and that resulted in a $9.4 million write-up adjustment. This is higher than the previous year, which was actually a write-down of $5 million due to the lower yields. This results in overall a year-on-year increase in reported profit of close to $20 million. Second, tax legislation changes in the prior year removed the ability to depreciate commercial buildings for tax purposes, which resulted in a one-off adjustment to increase the deferred tax liabilities and at the same time, increase the FY '24 tax expense by $13 million, which was nonrecurring. The group achieved record operating cash flows of $105.7 million, which enabled the repayment of debt of $31.5 million. The group does have a strong balance sheet, and as Jim said, successfully financed its $420 million syndicated banking facilities. As this slide shows, Delegat's is a long-term growth story extending back over many years. In 2025, the group achieved global sales of 3,188,000 cases, which was a decline of 12% from the prior year. Why was that? The U.S. tariffs in March 2025 resulted in the market uncertainty that's probably well publicized by everyone here in the room. And it required the group to revise its current year global case sales guidance at that time. This year result was then in line with that revised guidance of 3,182,000 cases. This is a solid result in comparison to the broader industry where total New Zealand packaged wine export volumes declined by 16% year-on-year. This performance is a testament to the strength of our brands, enduring relationships with our distributor partners and the effectiveness of our entire global team. Our end market sales team remain a strength of the business, and they have engaged productively with customers and distributors throughout the year, providing valuable market knowledge and focus. As you can see in this slide, sales continue to be well diversified by the market with 47% in North America; 32% in the United Kingdom, Ireland and Europe; and 21% in Australia, China, New Zealand and the Asia Pacific region. I'll now provide a brief summary of the performance across each of the major markets represented on this graph. So North America. The group achieved sales of 1,509,000 cases in North America, down 13% on the previous year. The United States, with over 50 million Premium Wine consumers, is the group's largest market and is our most significant opportunity for future growth. Oyster Bay remains a category-leading New Zealand wine brand with Sauvignon Blanc ranked amongst the top 5 white wines by value. Our brand strategy is yielding strong results with Pinot Grigio amongst now the top 10 within the premium global varietal category. Our focus remains on expanding our share of the growing Sauvignon Blanc category, while also growing our Pinot Noir, Pinot Grigio and Chardonnay varietals. This will involve further investment in improving our rate of sale across our distribution footprint and reaching new consumers with our digital marketing program. Oyster Bay Pinot Grigio has become the fastest-growing premium Pinot Grigio in the U.S. retail, backed by the addition of 1,160 additional points of distribution over the course of the year. In Canada, Oyster Bay has also maintained its position as a category-leading Premium Wine brand with all major varietals ranking within the top 2 of their respective categories. This success is underpinned by strong distribution presence across each of our Canadian provincial liquor boards, supported by sustained investment in consumer communications throughout the market. Oyster Bay Sauvignon Blanc remains a leading white wine in this country with Oyster Bay Chardonnay, Pinot Noir, Pinot Grigio also in the top-selling premium wines in their respective varietal categories regardless of origin. In Alberta and British Columbia, Barossa Valley Estate Shiraz and Cabernet Sauvignon are both in the top 5 selling Australian premium wines and their respective varietal categories. Turning to the United Kingdom, Ireland and Europe. Sales in the United Kingdom, Ireland and Europe were 1,008,000 cases, 15% lower than the previous year. This reduction was due to a combination of price increases implemented at the start of the year and the impact of heavy competitor discounting in the last -- later part of the year. Oyster Bay is a premium New Zealand category-leading brand in these markets with leading consumer awareness and affinity. Oyster Bay continues to outperform the Premium Wine category in the United Kingdom and has maintained a premium category leadership position through targeted price increases. Oyster Bay is among the top 3 rankings within the respective premium categories, supported by targeted promotional programming and strong national account relationships. Oyster Bay Merlot continues to lead the varietal category above GBP 8 regardless of origin. In Ireland, Oyster Bay varietals have strong positions in their respective categories with Oyster Bay Sauvignon Blanc, the leading premium Sauvignon Blanc over EUR 11. Oyster Bay Sauvignon Blanc, Chardonnay, Merlot and Pinot Noir remain the top-selling wines in their respective varietal categories above EUR 9. In closer to home, we have our established markets of New Zealand and Australia, Oyster Bay is a category-leading premium wine brand. Sales in Australia, New Zealand, China and Asia Pacific with 671,000 cases, 5% lower than the previous year, primarily due to the impact of price -- competitive price discounting. In Australia, Oyster Bay Blanc remains the selling -- top-selling wine by value. Oyster Bay Merlot, Oyster Bay Chardonnay and Pinot Grigio also have strong positions among category leaders. And Barossa Valley Estate grew sales value ahead of the premium Australian red wine category. In New Zealand, Oyster Bay Sauvignon Blanc is the category leader with other Oyster Bay varietals remain in the top 5 selling premium wines in their respective varietal categories. This leadership is particularly impressive considering the introduction of price increase in the market during the year. In China, the group again experienced very strong growth, up 41% on last year, with Oyster Bay remaining the top selling New Zealand wine brand by value -- volume. This reflects evolving consumption patterns, expanding distribution channels, broadening the varietals offerings and definitely success of our digital engagement strategy. China represents a long-term growth opportunity for the group. The Asia Pacific and Middle East regions will also remain growth markets for the group going forward. The alcoholic beverage category, including wine, continues to both cyclical and structural shifts driven by a number of trends. Consumers are drinking less but they are seeking recognized quality brands when they do. Moderation continues driven by economic and lifestyle factors as well as health and generation attitudes. Consumers are choosing fewer or lighter drinks. Premiumization has slowed as consumers continue to focus their budgets on necessities. Gen Zs are now showing signs of engaging in the category which is very positive. Globally, white wine is forecast to perform better than any other wine category, aligning with long-term consumer trends for lighter and more refreshing beverage choices to enjoy at home. New Zealand wine is particularly well placed to benefit from these trends through natural advantages, distinctive wine styles and continuing to build premium value with engaged wine consumers. As this next slide shows, Oyster Bay is the flag bearer of premium Sauvignon Blanc globally. This is underpinned by the reputation and a claim for consistent high quality and driven by enduring global trend for lighter, refresher and elegant wine styles. The strength of the Oyster Bay brand, combined with the group's significant global distribution footprint, are key enablers for the Oyster Bay brand to continue to achieve leadership across its range of Super Premium cool climate wines. This performance across a range of varietals in a range of big markets is unprecedented in premium wine, and it's a great testament to the strength of the Oyster Bay brand. Very few premium brands globally have achieved such success across so many markets and so many varietals. The U.S. is the market that has the highest potential for future growth. As you can see on this slide, both New Zealand wine and Oyster Bay share of premium wine consumers is lower compared to our more mature markets such as the United Kingdom, Australia and Canada. Our focus remains on attracting more than 1 million new consumers to Oyster Bay by raising awareness of the brand, principally through our online consumer communications program on Facebook and Instagram. We also need to be driving increased rate of sale in store. The success of the brand is no better illustrated in our performance across the retail stores we currently sell through. As this graph shows, Oyster Bay leads the country's top line brands in the U.S. for its sell-through in store. This accomplishment reflects both the power of the brand in attracting U.S. wine consumers and the effectiveness of our in-store merchandising as an example, which is shown to the right. The 2025 harvest yielded exceptional quality fruit across all 3 of our wine regions. The group harvested 47,461 tonnes, which was up 39% from the 2024 harvest. Marlborough and Hawke's Bay experienced warm weather overflowing fruit set, which was followed by a dry, cooler summer. At the same time, Barossa Valley experienced cooler, wetter spring-growing conditions, resulting in a region-wide reduction in yield. The group does have appropriate inventories to achieve the 2026 forecast case sales. We have had a favorable growing season to date in both Hawke's Bay and Marlborough, and early indications are that we are on track for a good harvest. The Board is confident in the group's ability to prosper and drive sustainable earnings growth over the long term. Over the past 4 years, the group has invested more than $250 million in growth assets and is now well positioned to support future growth. Looking ahead, we expect our capital expenditure to be much lower than what we have seen over the last 3 years, focused mainly on replacing essential infrastructure and productivity initiatives. The group plans to invest an additional $26.2 million in 2026. That's about half of what we've invested this year. The group also has a long-standing commitment to sustainable wine growing, with Delegat as a founding member of the sustainable wine growing New Zealand program, which was established nearly 30 years ago in 1995. Over the last 12 months, Delegat has made a further progress on our sustainability program. We utilize the sustainability framework that you can see on the slide, which focuses on 3 key areas: First, building an enduring business, which addresses climate risk, greenhouse gas emissions, shareholder value, risk in governance and water stewardship. And second, ensuring our people and our communities thrive, encompassing health and safety and well-being, diversity and inclusion and engagement, employment and collaboration. And finally, crafting wine with care. This covers biodiversity, packaging and waste and sustainable viticulture and winemaking. This framework drives various initiatives aimed at promoting positive environmental, social and governance outcomes throughout the business. In September, the group published its second climate-related disclosure report under the Aotearoa New Zealand Climate Standards. This report looks at the group's exposure to the impact of climate change on its business, operations and discusses the initiatives the company is pursuing to lower its carbon emissions. Those interested are encouraged to read the report, which is now on the company's Investor Relations page on the Delegat website. Always at the heart of Delegat is the -- sorry, our people are at the heart of Delegat and are key to our success. We are very proud of the progress we are making on a range of initiatives. Attracting both permanent and seasonal staff remains a very important part of the people program. With competition for talented staff as intense as ever, Delegat remains a sought-after employer, and the caliber of our team continues to improve. We've undertaken a range of initiatives from work, health and safety programs, diversity and inclusion initiatives and expanding leadership and training programs to further enhance our staff experience with the company. And to the outlook, I would like to comment on 2 key global factors: U.S. tariff; and the New Zealand wine industry supply imbalance as -- along with giving an update on the company's trading performance today. The U.S. tariff is a tax imposed on companies importing goods into the United States. Our position is clear: Taxes such as these must be passed on to the market. Absorbing the tariff would result in a significant reduction in profit, which is not sustainable for the business or for our shareholders. As outlined earlier, our 2025 sales in the U.S. were impacted as distributors reviewed their inventory levels and assessed the implications of the tariff. This inventory reset significantly affected our 2025 sales as the distributors adjusted their ordering patterns to manage risk and their stock levels. In response, shipments and sales in the U.S. have been in line with our expectations for 2026. Progressively, over the first quarter of this year, we have implemented a USD 1 retail price increase to offset the impact of the tariff. It remains early days, and we are closely monitoring how consumers respond to the increased shelf price. At the same time, we are seeing some positive developments in Canada, where some sales in some provinces have been stronger than planned. As U.S. brands were removed from their shelves, Oyster Bay has gained increased programming and market share. Through disciplined pricing, proactive engagement with our distributors, Delegat is now managing the impact of the U.S. tariff while maintaining our premium positioning and protecting our shareholder value. The second item was commentary on the wine industry supply imbalance. The New Zealand wine industry is currently experiencing an oversupply, where inventories are at elevated levels across the sector. Industry analysts expect it may take as much as 2 to 3 years for supply and demand to rebalance. This environment has led to deep discounting by many competitor brands at retail as producers seek to clear the excess stock. Oyster Bay continues to outperform the market on premium price realization, maintaining its premium positioning even in a challenging environment. However, to protect market share, we have had to respond with targeted promotional activity. To address the long-term inventory situation, Delegat is taking deliberate steps to moderate harvest levels through disciplined viticulture management. By adjusting our growing programs and focusing on lowering our growing costs, we are able to offset the impact of reduced volumes while maintaining quality and margin. Our approach is focused on sustaining value growth and protecting shareholder returns rather than chasing volume at the expense of profitability. We remain committed to our premiumization strategy and will continue to manage inventory and market activity with discipline. So turning to the trading activity to date. Trading for the year has started well with sales tracking to plan across all markets. We have seen some relief from interest rates and benefited from currency favorable movements, which have supported our financial performance in the near term. These tailwinds are largely covered, and we now continue to monitor market conditions closely. Importantly, there is no update to our guidance at this stage. The group is maintaining its operating range on operating net profit after tax of between $50 million to $55 million for the year ended June 2026. We remain disciplined in our approach and focused on delivering those sustainable results for you, our shareholders. The outlook for the business remains positive. To come back to an earlier point, our people are key to the company's performance over the last year and to realizing the group's future goals. We remain indebted to their hard work and appreciative of the way our people, again, brought to life the core value of winning together in a challenging year. Your company is well positioned to grow sustainable earnings through value and volume growth globally in the years ahead. And I wish to thank you, our shareholders, for your ongoing commitment and your support. Thank you very much.

Thank you very much, Murray. At this stage of the meeting, we would ask if there are any questions in respect to the annual report, my Chair's presentation or Murray's Chief Executive Officer's presentation. For the moment, for those online, I would just add that if they would like to ask a question, please select the Q&A tab on the right half of your screen, type your question into the field and press send. Whilst that's happening, we'll take questions from the floor. Please note that if there are any questions raised of a similar nature, we will cover those off together. So please go ahead, those online, and send us your questions. So as I said, the floor is now open for questions.

Hello.

I'm [ Andrew Riu, ] a shareholder. Your inventory was $187 million at balance stage. How many liters of grapes or wine is that?

Murray, would you like to address that question?

It's a very good question. We target -- it's a very good question. If you look at the inventory note, it talks about a combination of the current year vintage as well as the previous year's vintages. So it's a combination of more than one vintage coming through. In respect of the year that we have, we took the equivalent of 3.2 million cases. If you multiply that by 9, you would get the number of liters that is.

That's the sales. But in the inventory how many liters...

No, I said the inventory was balanced to that.

It's about 1.5 years.

Yes, yes. So between all of the vintages we've got, it's about 1.5 years equivalent of sales is our inventory.

So that's $3.1 million by 1.5 by 9.

1.5 years.

1.5 years of sales.

Of 3.1 million cases at 9 liters a case.

Yes.

In your annual report, you've got assets valued at something like $700 million -- $766 million. You talk about valuing at cost. I was wondering what the market value of those assets is or the current value or the replacement value.

Yes. That's, again, another good question. So the only asset on the balance sheet that is recorded at market value is the inventory. All the other assets are at historical cost. We don't choose to take a valuation approach to quantify what you are looking for in terms of valuation. But we know that, obviously, as the company has bought those vineyards over many years, the replacement or the market value of a fully productive vineyard would be significantly in the excess of the carrying value of the land and the infrastructure. But I don't have that number around what that looks like.

Deloitte in its report says the accounts are fairly presented at no material errors. So I mean, if your valuations are not realistic, I mean the country, all my life has run a policy of destroying the value of the dollar. I mean, labor destroyed it at 7%, and it's -- one of its years. What's the point of having a valuation that's irrelevant?

So I guess your question is the company's accounting policies is not to have the assets at value. So the auditors would be expressing an opinion around the historical cost of carrying value. So that's why their report would say it's appropriately reported. In terms of your question, we're not a property company where they would do the valuations you're talking about, because we believe effectively in the long-term carrying value of the assets being appropriate.

I mean, Deloitte is an accounting firm is required to adhere to international accounting standards.

Yes.

I mean, signing off on historic property values. I mean I bought a property in Freemans Bay for $50,000, 40 years ago. It's not worth that today, and it would be irrelevant talking about that value today. I mean I don't know what your value -- I don't know what your land value is, what your land holding is and what the current value we should be applying to that. But obviously, people are selling your shares, trying to use some valuation that doesn't sound anywhere near correct, materially incorrect, in fact, in my view.

That -- clearly, yes, you've got a position around whether in the valuation, but the valuation is not attempting to value it at market rates for those assets that you're talking about.

How can you be a public listed company and publish shareholders' funds that you know are not true?

I'm not sure if I agree with you it's not true. It's effectively reported correctly at the valuation we've done, and it's not attempting to say it's not at fair value.

Thank you.

Further questions? Very good. Any online questions, Riki? No online questions? No further questions? Yes, sir.

You mentioned the pathway for growth is particularly through states or the U.S.A. Sorry, you mentioned the pathway for growth is by sales in the states. I understand you have many thousands of distribution points throughout the states. Are you there in terms of -- how do you get there in terms of saturation of distribution? Is that one of the ways you're going to achieve this growth? Or how do you expect to achieve the growth in the states with the number of distribution points, et cetera, that you have?

Well, there's 2 areas. The first -- that's a good question. That's what we go to work for every day is to increase our distribution in the marketplace through distribution at retail level. But the U.S. market is what we call a growth market. So we are attracting more consumers to our brand every week, and established consumers have a high rate of sale. So we see the U.S. as a growth market through distribution growth and rate of sale growth. In the United Kingdom and Ireland, countries like that, there are established markets, but we see them also as value growth markets where we introduced Pinot Grigio, but we also have value growth in terms of retail premium price positioning. So China is an emerging market, and therefore, that's a distribution game and more so than a premium positioning game. So there are many avenues of approach depending on the positioning of the markets.

And one other question, Jim, is how has the market responded to the price increase in the States so far?

Well, that's a very good question. We were very careful on that. And when the 10% tariff was announced in March, I think it was, we spoke with distributors, and we looked at our competitor pricing. And we were particularly interested in not only the New Zealand competitor pricing, but also the Californian wine industry, which is 90% of America's wine production. And we found that we were very competitively priced. And the tariff was passed on resulting in a price increase of $1 per bottle. And to date, we haven't noticed any resistance in terms of retail sales. We are, in January, going to have data to hand for 6 months to December, and we will have a look at what that has done and comparatively with competitor brands as well. Those also being with the French, Italian, Californian and New Zealand. So it's a very detailed analysis, but we are confident that we could -- hopefully, we're very confident that we could pass on the additional 5%, which would be roughly another $0.50 on a retail bottle and maybe even include something of a price rise at the same time. So you might say, if you are having just a conversation, how does $2 a bottle price increase over 18 to 24 months down to the consumer, and I think that it's very likely that it will be well accepted. But maintaining a rate of sale and distribution is key. And that's what we have 155 people in our offices around the world and their focus every day is on maintaining distribution and the rate of sale. That's, after all, what drives the revenue statement. Thank you. No further questions? All right. Well, there being no further questions, I will record that the 2025 annual report has been received and considered. Thank you very much. We will now proceed to the ordinary business on the agenda. And for those online, as I mentioned earlier, they will need to simply manage their voting by the options on the screen. The resolutions were outlined in the voting papers and were mailed to you in the notice of the meeting and the annual report, and we have 2 resolutions to discuss and vote on today. Each resolution, you will vote -- your vote has to be cast online as it appears. Those online, if they wish to simply change their vote, they have the ability to change their vote up until the time I declare voting closed. Once the 2 resolutions have been voted, Computershare, our registrar, will collate all the votes cast by shareholders along with proxy votes, and the company will post the final results on to the NZX site. Under the NZX listing rules, the company's constitution rotation provision requires that Gordon MacLeod retires from office and, being eligible, offers himself for reelection. As I mentioned earlier, unfortunately, Gordon has not been able to be with us today to address the meeting, but I will, therefore, read his biography from this notice of meeting. Gordon MacLeod has been a Nonexecutive Director of Delegat Group Limited since February 2022. Gordon is a professional director and was, until recently, a Director of Spark New Zealand Limited and a trustee of Breast Cancer Foundation New Zealand. Gordon is also a Board advisory chair to 2 privately held family businesses. Gordon previously worked for 15 years with Ryman Healthcare until October 2021 as Chief Executive Officer, and before that, as Deputy Chief Executive Officer and Financial Officer, all for Ryman Healthcare. He has been a corporate finance partner with PwC and was the Finance Director of a London-based high-tech engineering company. Gordon has a bachelor of commerce degree and is a fellow of chartered accountants in Australia and New Zealand. He is a member of the Institute of Directors. Gordon MacLeod stands for election with the support of the Board. I move -- I will now move that Gordon MacLeod be reelected as a director. Can I please have a seconder? Thank you, sir. Thank you very much. Is there any discussion? No further discussion. Thank you. For those online, please submit your questions you may have in relation to the appointment of Gordon MacLeod as Director. We will pause the meeting for a few moments to see if the moderator receives any questions regarding Gordon MacLeod's reelection. Okay. If there are no further questions, I put the motion that Gordon MacLeod be elected as a director. Please cast your vote in regard to resolution 1 using the computer device or now -- and those in the room by completing your voting card. Thank you very much. [Voting]

We now come to the item, the second agenda item, to fixing the auditors' fees and expenses. In regard to this matter, you will recall from previous annual meetings, the company advised that Deloitte was appointed as an auditor for Delegat Group and subsidiaries in 2020 with Andrew Dick being the lead partner. As signaled last year, this is Andrew's fifth year as signing partner, and the audit partner rotation requirements within the NZX listing rules require that Andrew Dick's last year will -- as lead partner, and he will be replaced by Jason Stachurski next year. Andrew and Jason are both in the meeting here. Feel free to engage with them at any time. In accordance with the Companies Act 1993, the company auditor Deloitte is automatically reappointed at the Annual Meeting. Section 207 of the Companies Act 1993 provides that the auditor's remuneration be fixed in such a manner as the company determines at the annual meeting. The Board proposes consistent with commercial practice that shareholders approve that the directors be authorized to fix the auditor's remuneration. Accordingly, I move that the directors be authorized to fix the auditor's remuneration. Can I have a seconder, please? Thank you, sir. Thank you. Is there any question from the floor? For those online, please submit any questions you may have in relation to the appointment of Deloitte as auditor and their remuneration. We'll just pause for a few moments to see whether the moderator has any questions coming through. I'm told that there are no further questions. I put the motion that directors be authorized to fix the auditor's remuneration. Please cast your vote in regards to resolution 2 using your computer device and now for those in the room by completing their voting card. Thank you. Thank you very much. [Voting]

Items of general business. I'll now look to the final item on the agenda: General business. Are there any items of general business? Are there any -- is there any discussion required? Some questions on general business?

We just have one online question.

Yes.

So it's from [ Grant Dugel ] who is the New Zealand Shareholders' Association proxy.

Speak into your microphone.

It's from [ Grant Dugel ], who is the proxy for the New Zealand Shareholders Association. His question is, we are pleased that the Board now has a majority of independent directors. How will this impact Board succession planning, in particular, the Chair?

Do we have a view on that, fellow directors?

I think the fellow directors are very comfortable, speaking as an independent director, with the format and structure of -- and composition of the Board at the moment and with the Chair.

Thank you, Phillipa. There being no further questions online or from the floor, ladies and gentlemen, that concludes our discussion on the items of business. Thank you very much for your participation. In a minute, I will close the voting system. Please ensure that you've cast your vote on all resolutions. I will now pause to allow a few extra moments regarding the votes. [Voting]

Thank you for handing in your voting cards to the Computershare team. I see that's underway now. That brings to conclusion the formal discussion on the meeting. At the conclusion of the meeting, the Board invites you all to mix and mingle with fellow shareholders, the Board members and senior management where tea will be served. There being no further business -- items of business, I declare the meeting closed, and I thank you for your ongoing interest in Delegat Group. And we wish you all the very best for the festive season. Thank you very much. We have some complementary wine there to take with you and enjoy over the period.