Purcari Wineries Public Company Limited (WINE) Earnings Call Transcript & Summary

Hello to everyone. I hope everyone is well and in good health given the situation. And I'd like to welcome you to the presentation of financial results for the 9 months of 2021 for Purcari Wineries Plc. [Operator Instructions]. So I think many of you are familiar with this presentation. I'll go quickly through to the results, and I'll try to jump as quickly as possible to the question-and-answer section so that we still have some topics that you may find more interesting. So quickly, my name is Eugeniu Comendant. I'm the Chief Operating Officer at Purcari Wineries Group. With me, I have Eugeniu Baltag, who's heading the Investor Relations area. We also have Vasile Tofan, Chairman of the Board; Victor Arapan, CFO; and Mr. Victor Bostan, the CEO and Founder of the Purcari Wineries Group. I'll go through some quick slides on the group. Perhaps some of you are more new. Some of you know our group better. I'll just do sort of a quick intro of the group. And we have here a slide that sort of combines the key aspects and messages when it comes to what our group is. You see here that, at the bottom of the chart -- or the bottom of the slide, in fact, you see that we have five companies that are part of the Purcari Wineries Group. In previous slides, we had four companies. We had Purcari as the premium brand, with Crama Ceptura as sort of a brand that extends from mainstream into premium. We have Bostavan, the sort of the mainstream to medium premium brand. And we have Bardar, the premium brandy producer. Purcari, Bostavan and Bardar are in Moldova and Crama Ceptura is our winery in Romania. Now we've added to this list, a new company, and that's Domeniile Cuza. It's a newly founded company. I'll get into perhaps more details in a bit. But basically, the purpose of this company is to create a new brand and launch a new series of premium wines that are focused on capitalizing on our ability to create really fantastic wines at our wine making platforms in the south of Moldova. Quickly through the other points on this slide. So we're very proud to say that in 2021, Purcari Wineries, in fact Viorica de Purcari, part of Purcari Wineries, has become the most awarded winery in the world. And here, we're speaking about the most important wine competitions in the world, such as Decanter, Mundus vini and similar. And when we speak about medals and awards, we're also very proud to say that in the year of -- in the period of 2015 to 2021 Chateau Purcari remains the most awarded winery in the Central and Eastern Europe at Decanter, which we call it the Olympics of wine. We remain a fast-growing winery in the Central and Eastern Europe. We dominated the premium segment in Romania. And I think what's also important for other investors is to see that we have top-tier investors as part of our group of shareholders. Mr. Bostan is the shareholder with 20%. And after that, we have Horizon Capital, Fiera Capital, Conseq, East Capital, Paval Holding, Franklin Templeton, SEB and other similar top-tier investors. Currently, as we stand, the sales mix is, as is shown in the chart at the top right. So Romania holds 53% of the group sales. Moldova has recovered this year, with now 19% of the sales of the group, Poland is at 8%. And then we have other markets, such as Czechia, Slovakia, Ukraine, China and other markets covering the rest of the sales. And you can see that in the chart that shows the hectares -- the kilo hectares or vineyards per region, you can see that our group is situated in the region, which ranks fourth in the whole Europe after France, Italy and Spain. And it ranks first in the Central and Eastern Europe when it comes to the availability of vineyards, and of course, raw materials. So from that perspective, if -- we do have that vision of becoming the champion in the Central and Eastern Europe in the business of wine, then we have definitely started in the right place. Very quickly on the -- on what I mentioned, the medals. So we still -- we see this as an important aspect of proving the quality of our wines. So here, we sort of see what the experts and the judges, I think of our wines. So from left, you see that Purcari remains the most awarded winery in Central and Eastern Europe in the period of 2015 to 2021 at Decanter. And on the right, you see that we are year-over-year we are increasing the number of medals that we received, a top 5 wine competitions in the world. That would be Mundus Vini, Concours Mondial de Bruxelles, Challenge -- International du Vin in Bordeaux, International Wine and Spirit Competition and Decanter. So we do see this as an important chart because on one hand, we do want to increase sales and increase revenues. But at the same time, we are aware that we have a promise to keep to every customer that chooses a bottle of Purcari, and with that, we need to maintain not only, but even increase the quality of our wines as volumes grow. And you can imagine that doing this is not something that comes easy. That's why we do see that we have a competitive advantage here when we compare to our competitors, in the fact that we're able to sell more increased volumes, but also keep increasing the quality of our wines. So that was what the experts think of us. This is what the consumers think of us. I'll start with the right side of the chart. One, the platform that we like to benchmark against is Vivino. Many of you probably know, it is the leading wine rating platform in the world that many consumers use where a consumer can just scan a bottle and we'll receive the information about the wine. And we'll have the opportunity to give a score to the wine that he or she just tried. And here, we're proud to say that in Romania, which is the, let's say, the market with the majority of our sales, Purcari is leading with over 4.1 rating -- average rating for the winery, and statistically, very significant with close to 60,000 scores given by customers. Then on the left, as much as we believe that at the core of our success lies the quality of the wine that we produce and particularly the ratio quality to price, we also understand that consumers like to associate with brands. And we believe that we are good at creating vibrant and attractive brands. And in the chart on the left, we see that the mentions of Purcari is leading on Instagram comparing to other wineries, which is Instagram because for now, we believe this is where all brands are present, and this is where the cool stuff is happening. Probably, in some future presentations, we'll have to switch to TikTok, we'll have to see about that. Remaining on Vivino. We are proud again, to say that from the top 25 wines in the premium segment, 30 to 61 in Romania, Purcari is taking the majority position with 12 out of this 25. And we've been keeping sort of this presence for the past years, and we're planning to continue to do so. And again, on Vivino, a very nice chart showing the different geographies where there's an adoption and perhaps a loyalty and advocacy conversion of Purcari wines. And when we speak about worldwide, Chateau Purcari has an average score of 4.26 out of 5. Now you can imagine, this is an incredible high score, ranking us top 1% in the world. And out of these scores, 83% of these scores are 4 or higher. And just in this -- just this year, in the first 9 months, there were 78,000 scans of Purcari wines, which is, of course, incredible. That's a 32% increase from the same period of last year. And just to give you another sort of perception on this, our wines have been scanned in more than 1,200 cities across the world. So we'll move to the more juicy part, so we'll go into the operational results. Again, I'll try to be -- and to the point. And I'm expecting good Q&A session after that. So we're very happy to report the results. We are showing 20% increase in sales in the first 9 months versus the same period of last year. EBITDA has grown 32%. We are now reaching an EBITDA margin of 35%. And net income has grown 55%, or RON 39.8 million now with a margin of 24%. Of course, we are -- on one side, we are aware that we are comparing to relatively poor, so to say, at least in our eyes, a relatively poor period of last year due to pandemic. We had the first time in a very long history, a quarter, which was the second quarter of 2020, which showed a decrease year-over-year. We had markets such as Moldova and China pretty much closing. So we know that we're comparing with a relatively modest year last year. Nonetheless, we do see these figures as very strong. What's incorporated also in these figures is the, let's say, the fact that last year, there was a more or less an unprecedented drought in Moldova. So the yield of the vineyards very low, not only for us but for other grape producers. And for that, last year, we have incurred a loss when reevaluating the fair value of biological assets. This year, we have sort of a positive effect when comparing to last year's. So that's incorporated here at the EBITDA level. And the net profit level, it's incorporated here, the effect of receiving another close to EUR 1 million from the sale of Glass Container Company, the year before that. Just quickly to cover this slide. I will not go into every line because, in fact, I'm covering many of these comments in the slides to follow, but perhaps a few things to mention here is that we continue to have a very solid balance sheet. The net debt to EBITDA, in this case, we're calculating the net debt to the last 12 months, EBITDA is at 0.67x. This is a very good number, especially comparing to the -- our internal benchmark of 1.5x. Just a reminder that we've done in the third quarter was a dividend of RON 0.65 per share. We did it on the 9th of September, and it accounted at the time of announcement as 5% yield. We've also offered the -- and we've issued the bond shares. So one bonus share for every share that was held. And we kept on working with -- we continue working with market makers. And in fact, we continue working with the BRK Financial Group, and we extended the coverage of the market-making services with Raiffeisen Central Bank starting in September. And in fact, this has led to an increase in liquidity of 8.2x compared to the period that preceded the -- our cooperation with market makers. And I think it's also worth to mention that Purcari is in the top 5 among the companies listed on the Booker Stock Exchange when it comes to delivering with the yield generated by its stock with our -- the price of our stock having increased by 40.91% from the beginning of this year. Just one slide to add a bit of clarification because since we have some new entities as part of the group, we thought it was appropriate to add a slide and to mention a few things about each of the companies that now are considered part of the group, and we are consolidating their results. So the first one was Domeniile Cuza. I've already mentioned that this is -- it's an important project for us. It's a project of premiumization of the wines produced at our wine making facilities in the south of Moldova. And these are really the creme de la creme, the best of the wines from that region. And so far, they are being in the process of being listed in Romania, and we're looking at listing them in other markets too. Purcari Wineries Ukraine. This is an entity that we created in Ukraine. And the purpose of it is to provide to the group sales and marketing activities. So we have now a team that is hired, in a way, by this entity. We have team members in the marketing, every team member in sales and team members of the trade marketing area. And this is important because we do see Ukraine as an important market to generate a new platform for growth in the future. So it was natural that if you want to really take our presence to the next level is that we have a local team. And the idea behind opening these local entities or starting building our teams is that the ability of us to grow exports into markets where we don't have a presence may have -- maybe not a limit, but we'll have some friction over time when we're not -- we don't have the presence in the field and in the market. So in a way, we are looking to replicate the formula of Romania, where a very strong local team has produced fantastic results and keeps producing them today. We have Ecosmart. This is a company who's major is providing waste recycling management services. We were -- Purcari Wineries through Crama Ceptura was a 27% shareholder in this company, starting March 2017. We have increased our participation in this company to currently 65.75%. And one of the main reasons for this is that as the EU regulation and the EU requirements towards everything that has to do with sustainability, with waste management, is increasing. We know that cost on this side will increase. Manufacturers will be forced to make use of such companies more and more in the future. And with the increase of this importance, we decided to increase our participation in this company and take more control of the process of how our waste is being managed. And Bostavan, I'm mentioning it here just because we had a sort of, call it, a little cleanup. And we moved from 99.54% ownership -- to 100% ownership. And we've paid a nominal fee to the party that was holding that small share of Bostavan. Okay. So let me see. So that's the next slide. So now going point to the grids of the -- of our results. Again, we're very happy to post these numbers, 20% increase in revenue. Cost of sales increasing slower than revenues at 16%, which have resulted in the gross profits increasing by 24%, now with a gross profit margin of 51%. The -- one of the main reason for the increase in margin was the increase in -- well, I'd say, the change of the sales mix, with sales more profitable sales being -- we're taking a higher share of our overall group sales. So for example, China, for us, it's a very profitable market. And as we started selling more in China, and particularly more Purcari wines because, in fact, there has been a shift now where more and more premium wines are being demanded in China, that has, for example, had a positive effect. And other effects such as launching the Nocturne series with Purcari. It was launched in Romania and in Moldova, and HORECA being a more profitable channel than other channels. This has had also a positive impact. So overall, these different shifts in the sales mix have led to this improvement in the gross margin. On the SG&A, so we have SG&A, an increase of 29%. There's a few things that are incorporated in the SG&A. We have some -- we still have some reallocation from G&A to marketing and selling, but we also have the impact of the stock option plan that was approved by the AGM earlier this year and it's incorporated as an expense in the SG&A. Nonetheless, it's worth to mention that we -- yes, we have increased our marketing efforts this year in order to support the recovery in the markets such as Moldova, but also to make sure that we protect our market share and increase it further in markets such as Romania. When it comes to the next year, I can mention that we do see the portion of the marketing expenses going further up because we, as you've seen here, and I'll show you later, we have some important projects that require some marketing expense injection to make sure that we ramp up sales, and we create success out of that. Also here, the adjustment of the fair value of biological assets that I've mentioned before. It's at 0.4 versus 3.1. So we have sort of a positive effect there when it comes when we go down to EBITDA. So EBITDA up 32% to RON 58.2 million and net profit of 55%, up RON 39.8 million. Again, in the network, we have -- also, the effect of the -- of another close to RON 1 million received from the sale of Glass Container Company, and this cash was received for the 30th of July this year. Okay, so I think that slide is covered. So now moving on, just cue cover the -- each market separately. I've mentioned that for Romania, an important effect was the launch of Nocturne, the new series. It has had a tremendous success in the HORECA channel. And in fact, the fact that Nocturne, the series, but also the channel, is more profitable than our regular series. This has also led in contribution to the profitability. Was worth to mention here perhaps is that we do have a certain issue with Lidl. Lidl has some members of the little management in Romania have tried to get us into the discount game, and we have refused that because we -- of course, we understand that our brand is worth more than just generating some short-term sales. And that has led to some, let's say, some halts in deliveries to Lidl, Romania. Unfortunately, this also has effect on Poland. So some of the decrease, minus 20% that you see in Poland, also is from the fact that the halt in this commercial freeze that we have with Lidl in Romania has also affected our deliveries of wines to Poland. Moldova, plus 79%. So we're very happy to see this rebound. We are fairly satisfied with the sales. We're still 4% under the pre-COVID year. So 2019, we're still minus 4%. Nonetheless, we do see this as a very positive result because there's still certain restrictions when it comes to HORECA. So for example, even recently, weddings and other events with 50 or more people have been banned. And we -- in fact, we may see some effect of that in the fourth quarter. That we also, will keep the guidance where it is as we've seen in one of the slides that I have prepared later. When we move to Poland, I mentioned Lidl. So Lidl is one effect of this negative number. The second effect is Tesco. So as you know, Tesco was acquired by Netto. And in fact, now the whole acquisition is complete. So all the branding is being -- is happening closer completion. So all the Tesco stores in Poland are now Netto. And we are working now with Netto to reestablish our presence in those points of sale. The other contributor to a negative number here, unfortunately, was a certain reduced commercial activity with Biedronka. A similar situation, Biedronka., there was some pressure on price that already started in late 2020. Earlier this year, some of the SKUs were interrupted. So there were no more acquired and no longer delivered. The good news is that after quite a few months of discussion and renegotiation, Biedronka has agreed to restock again with our full portfolio. So we do see that the fourth quarter should see a positive impact from our partnership with Biedronka. Other partners are all showing growth. So overall, even though Poland is showing a negative number, overall, we do see that our position is fairly strong. Nonetheless, we know that in Poland, we -- the main product that, let's say, the main winery from our portfolio of wine sales to Poland is Bostavan. So these are still lower margins products. And we're working, on one side, by launching new products, but also working with our partners in Poland to slowly increase prices, especially with some sight of inflation in the future. And I'm sure I'll get some questions about that later, so we can go into that in a bit. Asia. So in China, we are still not recovered to the figures of 2019. So we're still minus 43% when we compare to the 9 months of 2019. While we have increased versus 2020, plus 17%, it's still -- China was always a difficult market. And actually, you've heard me saying this before, it's continuous grinding. So it's not the sort of market where you have a few steady importers or distributors. It's continuous work. And we do believe that the team here is doing a really good job in making sure that the sales have been pushed. And as I mentioned, the share of premium wines is increasing in China, which also is a contribution to our gross margin. Czech Republic and Slovakia. In fact, here, we're combining, but we do have some decrease in Slovakia, in particular. That is due to some pressure from competition on price dumping, or was it price reduction and many discounts in this period. But in Czech Republic, in fact, with our partners that are distributing on the territory of Czechia, we do see an increase, but with the effect of Tesco. So if we were to include here Tesco, then we do see a decrease in the numbers. Ukraine, we have a modest plus 7%, but we are actually comparing to a very stronger 2020. So these numbers are -- they could be better, but now with the fact that we have teams on the ground, we do see that -- and it's the long battle that we are after. We do see that the long battle, we'll be fighting it well with the team on the ground. Very quickly on the brands. Now Purcari, 50% share of sales. So it has increased from 44% if I remember correctly, the year before -- the year before that. So Purcari is showing that the adoption of this brand is very high in all markets, and that's a positive thing. Bostavan is a 22% share of sales. It has decreased versus the 9 months of last year with 6%. And in fact, as you can see here, Purcari going up 34%. Bostavan, down 6%. And this mix in our group numbers has also had that positive effect on the gross margin. Similar, we come much at Crama Ceptura and Bardar. Crama Ceptura, up 17% and Bardar, up 37% when compared to last year, but still not fully recovered when we compare to 2019. From this perspective, you can see also the need for new directions and the need for products such as Domeniile Cuza and also products such as Wine Crime, which we have one snippet in one slide, but maybe I'll also show you the product in the slide before the next. And in fact, you have the presentation, so you can see that. Worth to mention, so we are done with the harvest. The harvest was an improvement from last year. So on a group level, we increased our harvest by 42%. But we know that we're comparing, as I mentioned, to a relatively poor year when it comes to the harvest last year because Europe drought and actually the drought has started already in 2019. We have managed to supply ourselves with raw materials enough to supply a very ambitious growth next year and the year after that because for the rest, we have to plan for 2 years in advance. So overall, we are satisfied with the results of the harvest. It's not as good as the harvest, as you can see here from 2019, '18 and '17. But we have, as I said, we've managed to fill up our wineries, and we are prepared to grow in 2022. When it comes to the yield, the irrigation system is an important investment for us. And we are planning to do this in 2022 and 2023, primarily for Bostavan and potentially for Purcari as well because we want to, on one hand, protect the yield, protect the vineyards because the ultimate risk is that they die or unfortunately die. So that's where the importance of the irrigation system is. But also I was speaking to a quite prominent wine critic recently. And she has mentioned that -- I've asked about the, is the irrigation of vineyards something that goes in the detriment of the premium? In fact, she actually said the opposite. In fact, it's quite accepted in the esteemed wine critic world for wine for vineyards to have irrigation, specifically because it's also possible to control the way the grapes react to stress. And then you have the more soothing, more palatable wines produced from wines that are irrigated. So that was one of our concern when it comes to putting an irrigation system at Purcari, but we have plans to do it anyway, but we had another information from this person as well. And to mention on the -- on our work with BRK and Raiffeisen for market-making services. And you see sure that we are very happy with the initiation of the cooperation with BRK, and we're happy to add on top of that Raiffeisen Central Bank. We're looking at the efficiency of having two market makers because we are -- we were the first, and I believe is the only issuer or the only listed company of the Booker Stock Exchange that works with two market makers. We do see that in fact, there's quite an efficiency in cost -- structure, the cooperation with both entities. And in fact, we do see an increase from the addition of Raiffeisen as a market maker, we do see an increase in liquidity. And what's important to show here is that when we speak about liquidity as a percentage of the total stock, we understand most company on the Booker Stock Exchange after Teraplast. Of course, when it comes to absolute numbers, perhaps that's not necessarily the case, but we are we speak in relative terms, we're the second most liquid company on the Booker Stock Exchange. And that's important because we do have a sort of a milestone that we want to achieve, and that is the inclusion of Purcari in the FTSE Russell small-cap index. I'll ring the bell one more time. So regarding the world's most awarded winery in 2021. I believe to date, Chateau Purcari has received 367 medals. This is an amazing result. And even though it's perhaps it's not the absolute proof of us being the best of the best in the world, it certainly shows strength of our -- of Purcari and the ability to become a world -- a wine that competes on the world stage. I mentioned marketing. So very important to stay relevant, to stay engaging with our consumers. On one side is to come up with -- or release new products that cater to perhaps different segments. With Domeniile Cuza, we bring a beautiful story of Alexander loan Cuza of creating -- or making the peasants in the village of Alexander Cuza, the only sort of fully Romanian village that is in the Republic of Moldova, in -- so Alexander Cuza, the ruler who has united the precipice of Wallachia and Moldavia in 1864, he has made the peasants owners of their own land. And this is when the beginning of the history of winemaking in that region truly starts to flourish. So it's a beautiful story and a beautiful message that we bring with the series of wines coming from Domeniile Cuza. And we have launched a product called Wine Prime. It's launched on three markets for now. It's Romania, Moldova and Ukraine. It has shown very good -- very positive signals from the market. In fact, we had the sales directors saying the first time that I see the buyers being so excited and aggressive in asking to, for the product to be delivered as soon as possible because we did some teaser campaigns and some presence at events, and the consumers were already engaged and waiting for the product to arrive on the shelves. And also the Nocturne, the launch of this HORECA series has proven a great success, both in Romania, and in Moldova, it's undergoing. In the middle there, the bottom you see we've rebranded the DOR, the brand part of Bostavan winery. The intention is to continue the path of making it a local-national brand. And so far, we see a great potential. And then, of course, we're doing fun stuff such as the Purcari wine run. And we are the sponsor, in this case, you see the sponsor of the National Olympic Committee. So we are supporting, sending athletes -- we have supported sending efforts to Tokyo, but also we're supporting the community in many different ways through our CSR activities. So we're getting to the outlook, basically, the guidance that we have issued at the beginning of the year. At the moment, we will maintain our guidance. So we will continue presenting a guidance towards our 12% to 14% increase in the organic revenue. Now just quick math, that would mean that in the fourth quarter, if we are flat versus the quarter of 2020, then we'll be at 14%. And in fact, we do want to be that precautious. I know we have received questions about this, about are we being too precautious when it comes to our guidance of growth? We prefer to remain precautions because, yes, there's still months.and a half left in this year. But for example, with Bardar, sales relying a lot on events in Moldova and we're still uncertainty of what's going to happen with consumption in HORECA, on-premises consumption in Romania and other markets, we prefer to stay cautious. And we are -- we'll continue with a guidance of 12% to 14%. Similar on the EBITDA margin and the net income, there is still -- we -- yes, we posted strong margins for the first 9 months. But we are still, let's say, relatively precautious when it comes to inflation, to pressure on prices and to necessity to support sales with the trade activities in the fourth quarter of this year. So for now, of course, on the other hand, we don't want to complicate things because in these uncertain times, for us to go into an exercise of trying to model it and fully come up with a new guidance that is well justified, we decided that it's the right approach to just stay with the guidance that we have operated before. So this is from me at the moment. I'd like to thank you for your attention. I'll just quickly show you the product, Wine Prime, which customers are so excited about. And thank you again, and I'd like to open the discussion with some question and answer.

So I think the way to do it, either we go and read some comments. How about the Russian market in the near future? All right. So I'll take the first question. That's a very good question. We have started some efforts towards the Russian market. Of course, we have burned twice. So Purcari Wineries has burned twice with the Russian market. One time in 2006, the first embargo. And the second time in 2013. And nonetheless, we cannot neglect this market. It's an important market. It has a potential to create similar sales as the whole Europe. So we are not neglecting. We have a cooperation going, but we're still -- we're yet to see the sales to ramp up. We have made an initial delivery. So the sales have started. But we'll take it in a more, let's say, more paced way. And yes, we'll have to see if our sales pick up in Russia, but we are giving attention to that market as well. What cost inflation are you seeing? So, so far, we have not done any particular modeling on the concentration. We are -- it's not final, but we are looking at somewhere between 5% and 15% increase in costs next year. This is not for -- not official. So this is just our first internal look at how 2022 may look. And we're taking a few things into consideration. Yes, we saw what happened with the situation with this gas crisis, so to speak. We're not a particular gas-intensive producers. So we don't produce a lot of gas. It's quite negligible. But of course, our suppliers of perhaps glass and carton and so on, they may see some pressure. Of course, we are -- we will make sure that we have the right relationships and the right negotiation, not only with one party, but with multiple parties that are supplying these elements of our product to make sure that we do not have a strong impact when it comes to price increases from our suppliers. So in the global inflationary effect, the cost of -- so what is the price policy for the full year period? We need pass through inflation to at the end cartons, how will you account for the inflation heterogeneity, in different markets? So yes, we will have to protect our margins. And most probably, we will have to increase some of the prices. Of course, we will analyze this. It will be a per market basis and per product basis. But overall, the answer is, yes, we are foreseeing some price increase from us to our distributors in 2020. When did this commercial freeze in Lidl start? If I'm not mistaken, it was somewhere in February, the more -- the situation has started. And I think in the last few months, there was a bit of a freeze, yes. Do you see a significant impact on sales in the fourth quarter on -- further on the 2022 due to this freeze? So do we see any impact in the fourth quarter? Now, of course, we value the partnership that we have with Lidl. So to us, this is an important partner. We would want to continue working with Lidl. As any wine producer would say, this is an important chain in the Romanian market, but also has effects for other of our markets. Nonetheless, we need to say on the position when it comes to protecting our brand and to the way our products are being priced. You can imagine that the -- there's quite a competition between the key accounts as well, so between retail chains, when it comes to pricing. So we cannot allow a dis-balance in the price to be in end of the market. So we make sure that the prices that we offer to, one, the retail account is equal to the prices that our partners receive. We do foresee that probably most of the sales that are lost from Lidl will move to other accounts. So in a way, I have to say that probably somewhere, the loss will be more on the side of Lidl because, again, we where -- we've already seeing that some of the sales are moving to other accounts. But we do have -- our hopes are high that we will reestablish the commercial corporation in Romania. So hello. May we get an update on the premiumization of Bostavan? So for example, the product Wine Prime that I mentioned, is a product of Bostavan, primarily from -- when we speak about exports from Moldova to other markets. In Romania, it's actually produced by Crama Ceptura. So it's -- for example, this is a product in the very high segment. So around 1/3 of our sales is in the Rose segment. So in the fairly high segment of Rose, having this relatively high-priced product is important, both for credit premiumization from Bostavan, but also even from Crama Ceptura. So we also hear a lot about price pressures for retailers. Does that relate mainly to Bostavan? Also, other more premium segments? That's primarily Bostavan. So historically, Bostavan has played in this more mass market segment. So even though now, we've done many studies in different markets, I can tell you which in Poland, Czech Republic, Romania and Moldova. And it was obvious that for all of our brands, so including on them, so if we see -- if we have a chart with the price on the x and quality on the y, then consumers consistently perceive the products that come from Purcari Wineries Group above the average. So it will be above this diagonal line of the average ratio of quality to price. So even Bostavan, even though at lower prices is perceived as a higher quality. So -- but we know that this price stickiness is very difficult to create a price increase per se. So the approach is to come up with new brands that changed the sales mix in the long term rather than just pushing the consumer to pay for the same product at higher price. How much do you sold -- Lidl in Romania? This is confidential. I'm afraid, I cannot mention that. In terms of future capital expenditures, could you provide some details on your guidance? When we speak about CapEx. So for this year, we'll be in line with our budget and forecast. So we were planning around RON 24 million of CapEx investment this year. It will be around that. And for next year, due to the fact that there is the irrigation system projects starting, and we have some investments that are being also subsidized at Crama Ceptura, we will have somewhere around RON 25 million to RON 30 million probably next year in terms of CapEx investment. I'm a bit losing the track. So yes, Domeniile Cuza as an example of premium. Indeed, so Domeniile Cuza is another example of creating premium wines. These are indeed really fantastic wine from the South. It's the same parallel as Bordeaux. So the reds are absolutely amazing, but so the whites -- so we have really high hopes for Domeniile Cuza. Are you considering to reuse the bottles and invest in a facility to wash them in the case of [indiscernible]? Not at the moment. It has not been something that we have taken into consideration because the whole collection may become difficult. But with now being a majority shareholder in Ecosmart, which focuses on recycle on -- waste recycled services, there is one small part of its business. It's also the collection of -- including glass. So this may become a subject where we're actually looking in the option of becoming sort of closing a bit the cycle and collecting the glass and recycling. It's something to be looked at, but we have not looked at this at the moment. So I cannot say even how feasible it is at the moment. What was the effect of the participation in the online site acquisition? So the investment in eight wines that we have done earlier was, on one side, an investment sort of finance investment, because we believe that the company is going to grow and it has a high potential for growth because the purchases of wine, we move more and more to the online channel. And we can see that, for example, even Vivino, being just a platform to rate wines now has moved aggressively into selling wines online. So this is definitely the future, or if not the whole future, it would be a part, an important part of the future. So that's why we are in the company. Secondly, it does give us certain insights in terms of what wines sell, how we sell, average prices, in which markets certain brands are being sold. So it's an insight that may help us in the future. Congrats on the strong results. How do you see EBITDA margins evolve for year 2020? Is it sustainable or expect to revert towards guidance levels? So we definitely -- as I mentioned, we do see some potential pressure on the cost side. So for that, we probably have to remain prudent. Of course, we'll do our best to come up -- to come out with the guidance for our investors. But we will see some pressure on the cost side. So I would remain prudent when it comes to our EBITDA levels. I would say, the EBITDA levels will be what they have been historically for the last couple of years. Can you give an update on the expansion of production at Chateau Purcari? So yes, we have doubled our capacity. So moving from a 5 million bottle capacity, we have now increased to a 10 million bottle capacity. So we are well geared to supply growth, I don't know, for the next, I hope, only a couple of years. So yes, up to 10 million bottles, we're able to produce at Chateau Purcari. Why was the irrigation investment delayed? How much euro is contemplated over what period? So we are looking at between -- we're looking at around EUR 1 million -- between EUR 1 million and EUR 1.5 million for Purcari and around -- between EUR 2 million and EUR 2.5 million at Bostavan, that's the investment. And they will be spread over 2 years, so over 2022 and 2023. Now we do see the investment in irrigation as a relatively high ROI or, let's say, a very quick breakeven point from this investment because if you were to just calculate the delta of yield, if you were to have the irrigation versus if you would not have the irrigation, then you see that, that loss of yield -- grapes, grape yield, then you recover the investment in potentially 2 years or maybe 3, but mostly the 4 years. So it's an investment, but we -- see almost as a no-brainer. Capital structure is conservative. Any major investments or acquisitions, M&A contemplated? So yes, we're very active on the M&A side. Of course, I cannot give you too many details. But what I can say again, is that we're looking at a few areas, Romania and Moldova. These are the home markets we are looking for M&A opportunities here. But you've probably heard also in maybe some interview with Mr. Bostan and also me, mentioning in other presentations, is that we are also looking at Bulgaria and other markets, which are closer to our geography because one approach to becoming the champion in the Central and Eastern Europe is to export from your home markets into all these regions, but also another -- is to also have a foothold in those markets. And the strategy would be to create local champions first. And following that is to create exports from those locations. In terms of credit facilities, do you think that Purcari will continue to finance in RON denomination loans or just in Moldova, USD and euro as in the last period? This is perhaps more a question for our CFO at the moment. I know that the structure that we have is, to a certain extent, is trying to, let's say, do this natural hedging versus our sales. But yes, it could be something to consider. But of course, we would imagine that if we were to have loans in RON, there will be more expensive than what we have in euro. So sure, you have the depreciation of the RONs, so you have the inflation being on your side, but that will be incorporated in the higher cost of the capital. So something to consider. Regarding the dividends, do you have a set dividend policy for the next year? Now I'll not mention about the next year per se, but I will mention that our dividend policy is to pay out up to 50% of the net profits generated by the business. We have made one exception, and that was in 2020, and there was a reason for that because that was the moment of decision for issuing the dividend was just as the pandemic was starting. So it was obvious that the decision was made with your support, of course, to not issue dividends and to make sure that we have a strong balance sheet during the pandemic. But then this year, we have paid a dividend of -- with a yield of 5% at the moment of it being announced. And in the future, we do intend to keep our policy of paying out up to 50% because we understand the necessity of us creating a positive -- a strong yield to our investors. And also, internally the discipline of making sure that we generate cash to be able to pay out such dividend. So overall, we don't have a specific policy for next year, but we are maintaining our policy of paying out up to 50% of the net profits generated. What costs do you expect in the fourth quarter '21 as a percentage of sales? Will the effect of the last year -- be felt in the fourth quarter more notably? Not necessarily the effect of last year's poor harvest in the fourth quarter. It's not particularly that will be noticed in the fourth quarter. We do try to reflect -- so we try, but a portion of the effect of the poor harvest is reflected also to the adjustment of the fair value of biological assets that we do every year. So last year, we had -- if I remember correctly, it was a 3.8 total. If I remember correctly, negative effect, RON 3.8 million negative effect from the revaluation of the fair value -- assets. Overall, yes, these higher costs go into the inventories and then go in COGS. And also, as we sell more red wine, the red wines, they accumulate more cost through the depreciation of the equipment that is being used to -- in the winemaking process. But I do not expect to see a significant COGS movement, unless there is a shift or some kind of change in the sales mix. My last question, do you think the working capital management can be improved? Or the last years could be a relevant proxy for the next years? I would say the previous years is a good proxy for the years to come, especially with the fact that we are -- we keep increasing our stocks due to the fact that we are -- we have to fuel growth. So the ratios of working capital to sales will probably stay the same in the future. Regarding Bulgaria, are you looking at potential candidates at the moment? Why you already working negotiating on a deal? I would say we are in the potential candidates. We're in the potential candidates, but we do have some interested parties. What drove the increase in gross margin in the third quarter '21? What should we expect in terms of sales for Poland going forward? Further one-offs expected for the fourth quarter '21? So I'll start with the last one. I do not foresee any other big one-offs because, for example, the one-offs of biological -- the fair value of biological assets, that was accounted for. The stock option plan, that was accounted for. The cash received from the GC sales, that was accounted for. So we don't see any significant one-offs, unless there's some reallocation. Again, if Victor Arapan, the CFO needs to add perhaps he can add, but I do not see any additional one-offs that will hit us in the fourth quarter. Then when it comes to the gross margin in the third quarter, it was the mix of sales. So sales to China, the launch of Nocturne and the increase in sales of Purcari, this has led to -- and at the same time, unfortunately, some decrease in sales of Bostavan, this has led to a shift in the sales mix and an increase in the margins. And what should we expect in terms of sales for Poland going forward? We do see some increase. So October alone, we do see high double digits versus October of last year. So -- and the fact that we have resumed our, so to say, business as usual with Biedronka, that's also positive. We'll miss the sales from test cost they were before. But as I mentioned, the team is in discussions with Netto to get our presence back in those point of sales. Okay. If there are no more questions, by the way, I also welcome voice questions so that we get to hear each other. If there are no more questions, then I'd like to thank you for your attention today. And just to mention that you can continue on the commitment of the management of the company to continue delivering on your investment in Purcari Wineries. Thank you very much.