Full Year 2026 Treasury Wine Estates Ltd Earnings Call

August 13, 2026

Speaker #1: Thank you for standing by, and welcome to the Treasury Wine Estates FY26 full-year results. All participants are in listen-only mode. There will be a presentation followed by a question-and-answer session.

Operator: Thank you for standing by, and welcome to the Treasury Wine Estates FY26 full year results. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Sam Fischer, Managing Director and Chief Executive Officer. Please go ahead.

Operator: Thank you for standing by, and welcome to the Treasury Wine Estates FY 2026 full-year results. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Sam Fischer, Managing Director and Chief Executive Officer. Please go ahead.

Speaker #1: If you wish to ask a question, you will need to press the star key, followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Sam Fisher, Managing Director and Chief Executive Officer.

Speaker #1: Please go ahead.

Speaker #2: Good morning, and thank you for joining Treasury Wine Estates' 2026 full-year results briefing. Joining me on the call today is Justin Pepito, our Interim Chief Financial Officer.

Sam Fischer: Good morning, and thank you for joining Treasury Wine Estates' 2026 full year results briefing. Joining me on the call today is Justin Pipito, our interim Chief Financial Officer. As Justin and I, and other members of our team shared with you in some detail at our recent investor day, in FY26, we took decisive action to ensure the health of our brands and channels and commenced our comprehensive Project Ascent transformation program focused on reshaping TWE for future success. While this decisive action has impacted financial performance in the short term, I am confident we will emerge a more focused and financially strong company capable of sustained attractive returns. You can see this story of these actions reflected throughout today's announcement, including our key messages, which I will turn to now. FY26 EBIT of AUD 492 million was ahead of our guidance, driven by Penfolds performance in the Q4.

Sam Fischer: Good morning, and thank you for joining Treasury Wine Estates' 2026 full-year results briefing. Joining me on the call today is Justin Pipito, our interim Chief Financial Officer. As Justin and I, and other members of our team shared with you in some detail at our recent Investor Day, in FY 2026, we took decisive action to ensure the health of our brands and channels and commenced our comprehensive Project Ascent transformation program focused on reshaping TWE for future success. While this decisive action has impacted financial performance in the short term, I am confident we will emerge a more focused and financially strong company capable of sustained attractive returns. You can see this story of these actions reflected throughout today's announcement, including our key messages, which I will turn to now. FY 2026 EBIT of AUD 492 million was ahead of our guidance, driven by Penfolds performance in the Q4.

Speaker #2: As Justin, other members of our team, and I shared with you in some detail at our recent Investor Day, in FY26 we took decisive action to ensure the health of our brands and channels, and commenced our comprehensive Ascent transformation program focused on reshaping TWE for future success.

Speaker #2: While this decisive action has impacted financial performance in the short term, I am confident we'll emerge a more focused and financially strong company, capable of delivering sustained, attractive returns.

Speaker #2: And you can see this, and you can see this story of these actions reflected throughout today's announcement, including our key messages, which I'll turn to now.

Speaker #2: FY26 EBITs of $492 million were ahead of our guidance, driven by Penfolds' performance in the fourth quarter. Statutory NPAT was a loss of $1.1 million, driven by the non-cash impairment of US assets.

Sam Fischer: Statutory NPAT was a loss of AUD 1.1 million, driven by the non-cash impairment of US assets. This includes the additional AUD 558 million impairment relating to US supply chain rebalancing initiatives that we announced on Monday, which has been recognized in the H2. We are reiterating our guidance for FY27 EBIT, which are expected to be at least equivalent to FY26. Importantly, the underlying performance of our key brands remains strong, with depletions growth continuing for Penfolds, led by China and our Asia markets. In the US, depletions returned to growth nationally for the year despite the impact of California distributor transition in the H1. We progressed our previously announced initiatives to ensure brand and channel health, including action to significantly reduce parallel imports into China.

Sam Fischer: Statutory NPAT was a loss of AUD 1.1 million, driven by the non-cash impairment of US assets. This includes the additional AUD 558 million impairment relating to US supply chain rebalancing initiatives that we announced on Monday, which has been recognized in the H2. We are reiterating our guidance for FY 2027 EBIT, which are expected to be at least equivalent to FY 2026. Importantly, the underlying performance of our key brands remains strong, with depletions growth continuing for Penfolds, led by China and our Asia markets. In the US, depletions returned to growth nationally for the year despite the impact of California distributor transition in the H1. We progressed our previously announced initiatives to ensure brand and channel health, including action to significantly reduce parallel imports into China.

Speaker #2: This includes the additional $558 million impairment relating to US supply chain rebalancing initiatives that we announced on Monday, which has been recognized in the second half.

Speaker #2: And we are reiterating our guidance for FY27 EBITs, which are expected to be at least equivalent to FY26. Importantly, the underlying performance of our key brands remains strong, with depletions growth continuing for Penfolds, led by China and our Asia markets.

Speaker #2: And in the US, depletions returned to growth nationally for the year, despite the impact of the California distributor transition in the first half. We progressed our previously announced initiatives to ensure brand and channel health, including action to significantly reduce parallel imports into China.

Speaker #2: We also progressed with the planned reduction of customer inventory, and we're on track to complete this effort in both China and the US within the two-year time frame that I communicated last December.

Sam Fischer: We also progressed with the planned reduction of customer inventory, and we are on track to complete this effort in both China and the US within the two-year timeframe that I communicated last December. Retaining the strength of our capital structure remains a key priority. We reported leverage at 2.8x, and we expect this to be the peak ahead of our return to our target of below 2x by the end of FY28. We have also made substantial progress with Project Ascent. As we shared at our Investor Day in June, we have a clear vision, and we are taking deliberate actions to focus where we will win, transform our operating model, and shape a future fit supply chain to make it happen. We are currently finalizing our organizational structure ahead of our transition to a regional operating model on the 1st of October.

Sam Fischer: We also progressed with the planned reduction of customer inventory, and we are on track to complete this effort in both China and the US within the two-year timeframe that I communicated last December. Retaining the strength of our capital structure remains a key priority. We reported leverage at 2.8x, and we expect this to be the peak ahead of our return to our target of below 2x by the end of FY 2028. We have also made substantial progress with Project Ascent. As we shared at our Investor Day in June, we have a clear vision, and we are taking deliberate actions to focus where we will win, transform our operating model, and shape a future fit supply chain to make it happen. We are currently finalizing our organizational structure ahead of our transition to a regional operating model on the 1st of October.

Speaker #2: Retaining the strength of our capital of our capital structure remains a key priority. We reported leverage at $2.8 times, and we expect this to be the peak ahead of our ahead of our return to our target of below two times by the end of F28.

Speaker #2: We have also made substantial progress with Ascent. As we shared at our Investor Day in June, we have a clear vision, and we're taking deliberate actions to focus where we will win, transform our operating model, and shape a future-fit supply chain to make it happen.

Speaker #2: We are currently finalizing our organizational structure ahead of our transition to a regional operating model on the 1st of October. We are on track to realize our cost savings of $100 million per annum in full by FY29, with approximately $40 million to be realized in FY27.

Sam Fischer: We are on track to realize our cost savings of AUD 100 million per annum in full by FY29, with approximately AUD 40 million to be realized in FY27. Our global supply chain transformation has commenced, and processes to divest a number of non-priority brands and assets are underway with a pleasing response to date. As announced in June, we are also undertaking a strategic and operational review of our US business. This process is also underway with advisors appointed to review all available options. The decision to reduce US vintage makes from 2026 reflects the type of clear and decisive actions we will be taking to ensure that we improve shareholder returns from the Americas. That is a high-level summary of the result and our transformation agenda.

Sam Fischer: We are on track to realize our cost savings of AUD 100 million per annum in full by FY 2029, with approximately AUD 40 million to be realized in FY 2027. Our global supply chain transformation has commenced, and processes to divest a number of non-priority brands and assets are underway with a pleasing response to date. As announced in June, we are also undertaking a strategic and operational review of our US business. This process is also underway with advisors appointed to review all available options. The decision to reduce US vintage makes from 2026 reflects the type of clear and decisive actions we will be taking to ensure that we improve shareholder returns from the Americas. That is a high-level summary of the result and our transformation agenda.

Speaker #2: Our global supply chain transformation has commenced, and processes to divest a number of non-priority brands and assets are underway, with a pleasing response to date.

Speaker #2: As announced in June, we are also undertaking a strategic and operational review of our U.S. business. This process is also underway, with advisors appointed to review all available options.

Speaker #2: The decision to reduce U.S. vintages starting from 2026 reflects the type of clear and decisive actions we will be taking to ensure that we improve shareholder returns from the Americas.

Speaker #2: So, that's a high-level summary of the result and our transformation agenda. While I am acutely aware that there is still a lot of work to do, I am pleased with the progress we have made since I joined the business last October, and both transformational change and operational momentum have gathered pace throughout the year.

Sam Fischer: While I am acutely aware that there is still a lot of work to do, I am pleased with the progress we have made since I joined the business last October, and both transformational transformation and operational momentum has gathered pace throughout the year. Turning now in more detail to our financial performance, which was impacted by a number of factors, including the moderation of category trends, our deliberate initiatives to protect brand and channel health, and the cycling of elevated shipments in the prior period. NSR per case fell 3%, reflecting portfolio mix and, in particular, the impact of our actions to reduce parallel activity and inventory in China. EBITS margin decreased to 19%, driven by the decline in NSR and accompanied by higher costs of doing business. ROCE declined to 7.9%, driven by decline in EBITS.

Speaker #2: Turning now in more detail to our financial performance, which was impacted by a number of factors, including the moderation of category trends, our deliberate initiatives to protect brand and channel health, and the cycling of elevated shipments in the prior period.

Speaker #2: NSR per case fell 3%, reflecting portfolio mix and, in particular, the impact of our actions to reduce parallel activity and inventory in China. EBITs margin decreased to 19%, driven by the decline in NSR and accompanied by higher costs of doing business.

Speaker #2: ROCE declined to 7.9%, driven by a decline in EBITs. Pre-material items net profit after tax was $275 million, and EPS was $0.34, or 34 cents per share.

Sam Fischer: Pre-material items, net profit after tax was AUD 275 million, and EPS was AUD 0.34 per share. Our dividend program remains suspended. This is a temporary, yet important measure as we reprioritize our focus on returning leverage to target. Turning now to divisional performance, where pleasingly momentum has improved in the H2. Penfolds delivered EBITS of AUD 404 million, supported by continued depletions growth in China, in Asia ex China, and Australia. However, earnings were moderated by the deliberate reductions we have made in inventory cover and restrictions of shipments contributing to parallel import activity into China. It is terrific to see the continued progress Penfolds is making across its key markets, with first-class brand building and execution continuing to translate into increased consumer awareness and demand for the Penfolds brand.

Speaker #2: And our dividend program remains suspended. This is a temporary, yet important measure as we reprioritize our focus on returning leverage to target. Turning now to divisional performance.

Speaker #2: We're pleased that momentum has improved in the second half. Penfolds delivered EBIT of $404 million, supported by continued depletions growth in China, in Asia ex-China, and Australia.

Speaker #2: However, earnings were moderated by the deliberate reductions we've made in inventory cover and restrictions of shipments contributing to parallel import activity into China. It is terrific to see the continued progress Penfolds is making across its key markets, with first-class brand building and execution continuing to translate into increased consumer awareness and demand for the Penfolds brand.

Speaker #2: More on this shortly, but I am extremely pleased with how the team is showing up in market to consistently drive this growth. Treasury Americas delivered EBITs of $90 million.

Sam Fischer: More on this shortly, but I am extremely pleased with how the team is showing up in market to consistently drive this growth. Treasury Americas delivered EBITS of AUD 90 million. The result reflected softer market conditions, disruption arising from the Californian distribution transition in the H1, and cycling the excess of shipments to depletions in the prior period. Despite these challenges, we were pleased to see depletions returning to growth in California in the H2, which supported the return to depletions growth nationally. Underlying brand for our key brands in the US remains strong and ahead of category. Having finalized the transition of distribution away from RNDC in several markets, we now turn our attention to reducing customer inventory levels through FY27, targeting completion in the H1 of FY28.

Speaker #2: The result reflected softer market conditions, disruption arising from the California distribution transition in the first half, and cycling the excess of shipments to depletions in the prior period.

Speaker #2: Despite these challenges, we were pleased to see depletions returning to growth in California in the second half, which supported the return to depletions growth nationally.

Speaker #2: The underlying brand strength for our key brands in the US remains strong and ahead of the category. Having finalized the transition of distribution away from R&DC in several markets, we now turn our attention to reducing customer inventory levels through FY27, targeting completion in the first half of FY28.

Speaker #2: Treasury Collective delivered EBITs of $68 million, which was in line with expectations in Australia and AMEA, with positive momentum behind focus brands and continuing declines in the commercial portfolio.

Sam Fischer: Treasury Collective delivered EBITS of AUD 68 million, which was in line with expectations in Australia and EMEA, with positive momentum behind focus brands and continuing declines in the commercial portfolio. In the US, performance was again impacted by declines in the premium portfolio led by 19 Crimes. Turning now in more detail to depletions, which are the clearest view of underlying consumer demand across our portfolio and markets. Importantly, we saw improved momentum for Penfolds and Treasury Americas in the H2. Penfolds continues to achieve strong depletions in China. This is a result of the strength of our brand and encouraging trends in consumer demand. Performance in the Q4 relative to prior year and the benefit of transitioning volumes previously parallel imported into our authorized distribution channels, which contributed approximately half of the depletions growth.

Speaker #2: In the US, performance was again impacted by declines in the premium portfolio, led by 19 Crimes. Turning now in more detail to depletions, which are the clearest view of underlying consumer demand across our portfolio and markets.

Speaker #2: Importantly, we saw improved momentum for Penfolds and Treasury Americas in the second half. Penfolds continues to achieve strong depletions in China; this is a result of the strength of our brand and encouraging trends in consumer demand.

Speaker #2: Performance in the fourth quarter relative to the prior year, and the benefit of transitioning volumes previously parallel imported into our authorized distribution channels, which contributed approximately half of the depletions growth.

Speaker #2: Outside of China, depletions remain strong in several markets including Thailand, Malaysia, and Indonesia. Penfolds is well known among Chinese communities in these countries, and the wine category continues to develop.

Sam Fischer: Outside of China, depletions remain strong in several markets, including Thailand, Malaysia, and Indonesia. Penfolds is well-known among Chinese communities in these countries, and the wine category continues to develop. So we believe there's a substantial long-term growth opportunities for the Penfolds brand in these markets. In Australia, strong execution through Chinese New Year and other key activations drove momentum in independent retail channels. Within Treasury Americas, total US depletions were positive, driven by growth from DAOU, Frank Family Vineyards, and Stags' Leap. While California was impacted by the distribution transition during the H1, the business returned to growth in the H2 with strong momentum demonstrating improving execution. The depletions growth was driven by ongoing distribution gains with Frank Family Vineyards in particular, expanding its reach in the on-premise.

Speaker #2: So, we believe there's substantial long-term growth opportunities for the Penfolds brand in these markets. In Australia, strong execution through Chinese New Year and other key activations drove momentum in independent retail channels.

Speaker #2: Within Treasury Americas, total U.S. depletions were positive, driven by growth from Daou, Frank Family Vineyards, and Stags' Leap. While California was impacted by the distribution transition during the first half, the business returned to growth in the second half, with strong momentum demonstrating improving execution.

Speaker #2: The depletions growth was driven by ongoing distribution gains, with Frank Family Vineyards in particular expanding its reach in the on-premise. In Treasury Collective, Squealing Pig, Pepperjack, and Wynns led the Australian depletions performance, supported by strong execution with key partners and innovation.

Sam Fischer: In Treasury Collective, Squealing Pig, Pepperjack, and Wynns led the Australian depletions performance, supported by strong execution with key partners in innovation. In the UK, pricing actions taken to offset higher alcohol duties impacted volumes while in the US, 19 Crimes continued its above category declines. Declines in the commercial portfolio were also driven by the UK. Overall, the key takeaway is that depletion trends are strengthening across many of our priority brands and markets, giving us confidence in our core strategy and the underlying health of the business. This makes us well-positioned to return to NSR growth from F28 once we have completed inventory rebalancing. Penfolds continues to strengthen its position as one of the world's most recognized luxury wine brands. Over the course of the year, we increased investment behind activations designed to enhance brand awareness, luxury credentials, and deepen consumer engagement.

Sam Fischer: In Treasury Collective, Squealing Pig, Pepperjack, and Wynns led the Australian depletions performance, supported by strong execution with key partners in innovation. In the UK, pricing actions taken to offset higher alcohol duties impacted volumes while in the US, 19 Crimes continued its above category declines. Declines in the commercial portfolio were also driven by the UK. Overall, the key takeaway is that depletion trends are strengthening across many of our priority brands and markets, giving us confidence in our core strategy and the underlying health of the business. This makes us well-positioned to return to NSR growth from FY 2028 once we have completed inventory rebalancing. Penfolds continues to strengthen its position as one of the world's most recognized luxury wine brands. Over the course of the year, we increased investment behind activations designed to enhance brand awareness, luxury credentials, and deepen consumer engagement.

Speaker #2: In the UK, pricing actions taken to offset higher alcohol duties impacted volumes, while in the US, 19 Crimes continued its above-category declines.

Speaker #2: Declines in the commercial portfolio were also driven by the UK. Overall, the key takeaway is that depletion trends are strengthening across many of our priority brands and markets.

Speaker #2: Giving us confidence in our core strategy and the underlying health of the business. This makes us well-positioned to return to NSR growth from FY28, once we have completed inventory rebalancing.

Speaker #2: Penfolds continues to strengthen its position as one of the world's most recognized luxury wine brands. Over the course of the year, we increased investment behind activations designed to enhance brand awareness, luxury credentials, and deepen consumer engagement.

Speaker #2: These initiatives continue to drive demand and power growth across our key markets. Our global Grange campaign is a great example. This has created a halo for the brand as a whole, reinforcing Penfolds' luxury positioning with consumers around the world.

Sam Fischer: These initiatives continue to drive demand power growth across our key markets. Our Global Grange campaign is a great example. This has created a halo for the brand as a whole, reinforcing Penfolds luxury positioning with consumers around the world. At the same time, market specific activations such as From Penfolds to the World in Bangkok, demonstrates how we are creating culturally relevant experiences that bring the brand to life. I really want to get across that these initiatives are not simply marketing investments. They not only underpin the sustained, strong depletions growth Penfolds is delivering, but they are also building long-term brand equity. As outlined at Investor Day, our portfolio is focused on three pillars, and these represent the most attractive market segments where we have conviction in our right to win.

Speaker #2: At the same time, market-specific activations, such as 'From Penfolds to the World' in Bangkok, demonstrate how we are creating culturally relevant experiences that bring the brand to life.

Speaker #2: And I really want to get across that these initiatives are not simply marketing investments. They not only underpin the sustained, strong depletions growth Penfolds is delivering, but they are also building long-term brand equity.

Speaker #2: As outlined at Investor Day, our portfolio is focused on three pillars. These represent the most attractive market segments where we have conviction in our right to win.

Speaker #2: During the year, we continued to strengthen our leadership in our first pillar of luxury red wine. And while Penfolds remains central to that ambition, Dow delivered another year of strong category depletions growth in the US.

Sam Fischer: During the year, we continued to strengthen our leadership in our first pillar of luxury red wine. While Penfolds remains central to that ambition, DAOU delivered another year of strong category depletions growth in the US. Second, with an elevated focus, we saw encouraging growth in luxury white wine with depletions accelerating in the Penfolds white wine portfolio led by Yattarna, Bin 51, and Bin 311. This gives us confidence that there will be a very promising future for Penfolds in luxury white wine. Third, we are building an excellent position in modern refreshment. Matua is a clear example of this strategy in action, delivering yet another year of growth in the US, both in the core range and in the continued success of Matua Lighter.

Speaker #2: Second, with an elevated focus, we saw encouraging growth in luxury white wine, with depletions accelerating in the Penfolds white wine portfolio led by Yattarna, Bin 51, and Bin 311.

Speaker #2: And this gives us confidence that there will be a very promising future for Penfolds in luxury white wine. And third, we're building an excellent position in modern refreshment.

Speaker #2: Matua is a clear example of this strategy in action, delivering yet another year of growth in the US, both in the core range and through the continued success of Matua Lighter.

Speaker #2: So, you can already see some of the benefits of us focusing our attention behind our best opportunities, and there will be more to come as we accelerate our investment behind our power brands and regional heroes in the future.

Sam Fischer: You can already see some of the benefits of us focusing our attention behind our best opportunities, and there will be more to come as we accelerate our investment behind our power brands and regional heroes in the future. During the year, we also made significant progress against our previously announced brand and channel health initiatives. In China, customer inventory cover reduced by approximately 200,000 cases, approximately halfway towards our previously communicated target, with the rebalancing expected to be completed in F27. Strong depletions in China through Q4 allowed us to finish ahead of expectations on this front, which is very pleasing. We also continued our efforts to minimize parallel import activity in China. Availability of unauthorized product reduced materially during H2, with recapture into authorized channels on track and reflected in the China depletions, as I mentioned earlier.

Sam Fischer: You can already see some of the benefits of us focusing our attention behind our best opportunities, and there will be more to come as we accelerate our investment behind our power brands and regional heroes in the future. During the year, we also made significant progress against our previously announced brand and channel health initiatives. In China, customer inventory cover reduced by approximately 200,000 cases, approximately halfway towards our previously communicated target, with the rebalancing expected to be completed in FY 2027. Strong depletions in China through Q4 allowed us to finish ahead of expectations on this front, which is very pleasing. We also continued our efforts to minimize parallel import activity in China. Availability of unauthorized product reduced materially during H2, with recapture into authorized channels on track and reflected in the China depletions, as I mentioned earlier.

Speaker #2: During the year, we also made significant progress against our previously announced brand and channel health initiatives. In China, customer inventory cover reduced by approximately 200,000 cases, which is about halfway towards our previously communicated target, with the rebalancing expected to be completed in FY27.

Speaker #2: Strong depletions in China through the fourth quarter allowed us to finish ahead of expectations on this front, which is very pleasing. We also continued our efforts to minimize parallel import activity in China.

Speaker #2: Availability of unauthorized product reduced materially during the second half, with recapture into authorized channels on track and reflected in the China depletions, as I mentioned earlier.

Speaker #2: While they have significantly reduced, we have identified some further sources of unauthorized shipments in recent months and taken corrective action. As I have said previously, managing this will require continued vigilance to ensure it remains under tight control, and we are absolutely committed to staying on top of it.

Sam Fischer: While they have significantly reduced, we have identified some further sources of unauthorized shipments in recent months and taken corrective action. As I have said previously, manage this will require continued vigilance to ensure it remains under tight control, and we are absolutely committed to staying on top of it. Importantly, our action to date has helped stabilize online pricing, and we are seeing pleasing signs of pricing improvement for key bins in July. In the US, customer inventory cover remains stable. We repurchased inventory from RNDC in California and have sold approximately 40% of that back into the market at nil margin. The RNDC transition is now largely complete, with our residual exposure now immaterial at less than 3% of Treasury Americas NSR, and our new distribution partners are performing to expectations in the transitioned markets.

Speaker #2: Importantly, our actions to date have helped stabilize online pricing, and we're seeing pleasing signs of pricing improvement for key bins in July. In the US, customer inventory cover remained stable.

Speaker #2: We repurchased inventory from RNDC in California and have sold approximately 40% of that back into the market at new margin. The RNDC transition is now largely complete, with our residual exposure now immaterial at less than 3% of Americas NSR.

Speaker #2: And our new and our new distribution partners are performing to expectations in the transitioned markets. We now shift our attention to completing the planned 300,000 case inventory reduction ex California progressively over the next 18 months.

Sam Fischer: We now shift our attention to completing the planned 300,000 case inventory reduction ex-California progressively over the next 18 months. We are continuing to make meaningful progress against our four ASCENT priority areas, focused on the bright future we are seeing for TWE as a more focused, market-centered, simpler, and financially strong wine company. I am really pleased with the progress we are making, and I have already touched on a number of these key highlights in today's presentation. We look forward to continuing to provide our investors with regular updates as we progress this journey. I will now hand over to Justin, who will cover the financial results in more detail.

Speaker #2: We are continuing to make meaningful progress against our four Ascent priority areas, focused on the bright future we are seeing for TWE as a more focused, market-centered, simpler, and financially strong wine company.

Speaker #2: I'm really pleased with the progress we're making, and I've already touched on a number of these key highlights in today's presentation. We look forward to continuing to provide our investors with regular updates as we progress on this journey.

Speaker #2: I will now hand over to Justin, who will cover the financial results in more detail.

Speaker #1: Thanks, Sam. And good morning, everyone. Starting first with material items—a post-tax material charge of $1.3 billion was recognized for the full year. This includes $458 million recognized in the second half, relating to initiatives to accelerate the rebalancing of the US supply chain, and a further $100 million impairment of US brands, predominantly Dow, Frank Family, and Bollywood Vineyard.

Justin Pipito: Thanks, Sam, and good morning, everyone. Starting first with material items. A post-tax material charge of AUD 1.3 billion was recognized for the full year, which includes AUD 458 million recognized in the H2, relating to initiatives to accelerate the rebalancing of the US supply chain, and a further AUD 100 million impairment of US brands, predominantly DAOU, Frank Family, and Beaulieu Vineyard, recognized as a result of the year-end impairment review process. We are taking proactive steps to address the structural misalignment in the US, including, among other things, a reduction in North Coast vintage make sizes from vintage 2026 to rebalance our supply chain. The material item recognized reflects asset impairments from lower future utilization across the network, the write-off of capitalized costs already incurred in vintage 2026, and a write-down of predominantly bulk wine inventory, which will help accelerate sales in the open market.

Justin Pipito: Thanks, Sam, and good morning, everyone. Starting first with material items. A post-tax material charge of AUD 1.3 billion was recognized for the full-year, which includes AUD 458 million recognized in the H2, relating to initiatives to accelerate the rebalancing of the US supply chain, and a further AUD 100 million impairment of US brands, predominantly DAOU, Frank Family, and Beaulieu Vineyard, recognized as a result of the year-end impairment review process. We are taking proactive steps to address the structural misalignment in the US, including, among other things, a reduction in North Coast vintage make sizes from vintage 2026 to rebalance our supply chain. The material item recognized reflects asset impairments from lower future utilization across the network, the write-off of capitalized costs already incurred in vintage 2026, and a write-down of predominantly bulk wine inventory, which will help accelerate sales in the open market.

Speaker #1: Recognized as a result of the year-end impairment review process. We are taking proactive steps to address the structural misalignment in the U.S., including, among other things, a reduction in North Coast Vintage make sizes from Vintage 2026, to rebalance our supply chain.

Speaker #1: The material item recognized reflects asset impairments from lower future utilization across the network. The write-off of capitalized costs already incurred in Vintage 26 and a write-down of predominantly bulk wine inventory, which will help accelerate sales in the open market.

Speaker #1: These actions are intended to accelerate and improve the Americas region profitability over the medium term. Additional material items include Ascent-related restructuring and redundancy costs, and the RNDC settlement to compensate TWE for the impact of RNDC's closure in California.

Justin Pipito: These actions are intended to accelerate an improvement in the Americas region profitability over the medium term. Additional material items include ASCENT-related restructuring and redundancy costs and the RNDC settlement to compensate TWE for the impact of RNDC's closure in California. This amount is net of amounts incurred by TWE to execute the buyback. Note, the cash portion shown includes the buyback of inventory at original sales value, net of the cash realized on resale of the inventory in the H2, which is included in ordinary cash flows in the statement of cash flows. Other items includes the sale of supply chain assets in Australia, write-down of assets held for sale outside of the ASCENT program, and the non-cash H1 accounting associated with the contingent DAOU earnout. Turning to an update on ASCENT's one-off costs, following the additional US initiatives announced earlier this week.

Speaker #1: This amount is net of this amount is net of amounts incurred by TWE to execute the buyback. And note, the cash portion shown includes the buyback of inventory at original sales value net of the cash realized on resale of the inventory in the second half, which is included in ordinary cash flows in the statement of cash flows.

Speaker #1: Other items include the sale of supply chain assets in Australia, write-down of assets held for sale outside of the Ascent program, and the non-cash half one accounting associated with the contingent DOW earn-out.

Speaker #1: Turning to an update on Ascent one-off costs, following the additional US initiatives announced earlier this week. Ascent will give rise to a number of one-off material items, with the majority of P&L and cash impacts expected to be recognized by FY28.

Justin Pipito: ASCENT will give rise to a number of one-off material items, with the majority of P&L and cash impacts expected to be recognized by F28. Our expected one-time costs remain consistent with what was shared at the Investor Day. To these costs, we have added the costs associated with the US strategic review announced earlier this week to reflect a revised, updated total expectation for the ASCENT program. On a cash basis, we continue to expect ASCENT to be cash positive on a post-divestment basis. Moving now to the balance sheet. Net assets decreased AUD 1.3 billion on a reported currency basis, with AUD 187 million of this decrease due to foreign currency movements and AUD 1.3 billion due to write-downs associated with the US.

Justin Pipito: ASCENT will give rise to a number of one-off material items, with the majority of P&L and cash impacts expected to be recognized by FY 2028. Our expected one-time costs remain consistent with what was shared at the Investor Day. To these costs, we have added the costs associated with the US strategic review announced earlier this week to reflect a revised, updated total expectation for the ASCENT program. On a cash basis, we continue to expect ASCENT to be cash positive on a post-divestment basis. Moving now to the balance sheet. Net assets decreased AUD 1.3 billion on a reported currency basis, with AUD 187 million of this decrease due to foreign currency movements and AUD 1.3 billion due to write-downs associated with the US.

Speaker #1: Our expected one-time costs remain consistent with what was shared at the Investor Day. To these costs, we have added the costs associated with the US strategic review announced earlier this week, to reflect a revised, updated total expectation for the Ascent program.

Speaker #1: On a cash basis, we continue to expect Ascent to be cash positive on a post-divestment basis. Moving now to the balance sheet. Net assets decreased by $1.3 billion on a reported currency basis, with $187 million of this decrease due to foreign currency movements and $1.3 billion due to write-downs associated with the US.

Speaker #1: Excluding these, the key balance sheet movements overall were a decline in payables—with reduced vintage intake a key driver of that reduction—and a reduction in inventory, which I'll talk about more shortly.

Justin Pipito: Excluding these, the key balance sheet movements overall were a decline in payables, with reduced vintage intake a key driver of a reduction, and a reduction in inventory, which I will talk about more shortly. Net borrowings were broadly unchanged, with reduction of interest-bearing debt from cash in the H1. Turning to inventory in more detail. Against the prior corresponding period, total inventory decreased in value by 7%, with the major drivers being the US inventory write-downs and foreign currency movements. On a current non-current basis, current inventory decreased AUD 182 million, reflecting the moderated sales expectations in Treasury Americas and Treasury Collective. Non-current inventory increased AUD 7 million, driven by the transfer of inventory from current and partly offset by inventory write-downs. In Australia, we made good progress towards our focus on rebalancing supply and demand.

Speaker #1: Net borrowings were broadly unchanged, with a reduction of interest-bearing debt from cash in the first half. Turning to inventory in more detail, against the prior corresponding period, total inventory decreased in value by 7%, with the major drivers being the U.S. inventory write-downs and foreign currency movements.

Speaker #1: On a current and non-current basis, current inventory decreased by $182 million, reflecting moderated sales expectations in Treasury Americas and Treasury Collective. Non-current inventory increased by $7 million, driven by the transfer of inventory from current, and partly offset by inventory write-downs.

Speaker #1: In Australia, we made good progress towards our focus on rebalancing supply and demand. In the US, as mentioned earlier, we are taking action to rebalance our inventory position, starting with Vintage 2026, where we will follow a number of North Coast vineyards to reduce grape intake.

Justin Pipito: In the US, as mentioned earlier, we are taking action to rebalance our inventory position, starting with vintage 2026, where we will fallow a number of North Coast vineyards to reduce grape intake. Turning now to cash flow and net debt. Net operating cash flow before interest, tax, and material items was AUD 535.3 million for the period, a decrease of AUD 34.7 million on the prior comparative period. Driven by the lower top line, cash conversion was 81.4%, reflecting cash costs associated with intake and production from the F26 vintages. Capital expenditure was AUD 113.4 million and included maintenance and replacement CapEx of AUD 70.7 million and growth CapEx of AUD 42.7 million. This growth CapEx related to the redevelopment of the BV Cellar Door in Napa, with that project now complete and the new site opening in July.

Justin Pipito: In the US, as mentioned earlier, we are taking action to rebalance our inventory position, starting with vintage 2026, where we will fallow a number of North Coast vineyards to reduce grape intake. Turning now to cash flow and net debt. Net operating cash flow before interest, tax, and material items was AUD 535.3 million for the period, a decrease of AUD 34.7 million on the prior comparative period. Driven by the lower top line, cash conversion was 81.4%, reflecting cash costs associated with intake and production from the FY 2026 vintages. Capital expenditure was AUD 113.4 million and included maintenance and replacement CapEx of AUD 70.7 million and growth CapEx of AUD 42.7 million. This growth CapEx related to the redevelopment of the BV Cellar Door in Napa, with that project now complete and the new site opening in July.

Speaker #1: Turning now to cash flow and net debt. Net operating cash flow before interest, tax, and material items was $535.3 million for the period, a decrease of 34.7% on the prior comparative period, driven by the lower top line, while cash conversion was 81.4%, reflecting cash costs associated with intake and production from the F26 vintages.

Speaker #1: Capital expenditure was $113.4 million and included maintenance and replacement capex of $70.7 million and growth capex of $42.7 million. This growth capex related to the redevelopment of the BV Cellar Door in Napa, with that project now complete and the new site opening in July.

Speaker #1: FY27 capex will be reduced to approximately $75 million, reflecting the elevated focus on cash preservation to support deleveraging. And finally, turning to capital management.

Justin Pipito: F27 CapEx will be reduced to approximately AUD 75 million, reflecting the elevated focus on cash preservation to support de-leveraging. Finally, turning to capital management. Leverage was 2.8 times, slightly ahead of the 2.9 times we communicated at the Investor Day, and this is expected to be the peak ahead of a return to target below 2 times by the end of F28. We have a deliberate and disciplined approach to de-leveraging, including an elevated focus on near-term cost control and working capital initiatives to support free cash flow generation, including accelerating TWE ASCENT benefits where possible. Expected proceeds from asset rationalization, namely brand and supply assets, where several sale processes are currently underway. The ongoing rightsizing of CapEx, with this reduction supported by a well-invested asset base and reduced asset footprint, and continued suspension of dividends with the board to consider resumption as leverage trends towards our target level.

Justin Pipito: FY 2027 CapEx will be reduced to approximately AUD 75 million, reflecting the elevated focus on cash preservation to support de-leveraging. Finally, turning to capital management. Leverage was 2.8 times, slightly ahead of the 2.9 times we communicated at the Investor Day, and this is expected to be the peak ahead of a return to target below 2 times by the end of FY 2028. We have a deliberate and disciplined approach to de-leveraging, including an elevated focus on near-term cost control and working capital initiatives to support free cash flow generation, including accelerating TWE ASCENT benefits where possible. Expected proceeds from asset rationalization, namely brand and supply assets, where several sale processes are currently underway. The ongoing rightsizing of CapEx, with this reduction supported by a well-invested asset base and reduced asset footprint, and continued suspension of dividends with the board to consider resumption as leverage trends towards our target level.

Speaker #1: Leverage was 2.8 times, slightly ahead of the 2.9 times we communicated at the Investor Day. This is expected to be the peak, ahead of a return to target below 2 times by the end of FY28.

Speaker #1: We have a deliberate and disciplined approach to deleveraging, including an elevated focus on near-term cost control and working capital initiatives to support free cash flow generation, including accelerating TWE and TWS Ascent benefits where possible.

Speaker #1: Expected proceeds from asset rationalization, namely brand and supply assets, where several sale processes are currently underway. The ongoing right-sizing of capex, with this reduction supported by a well-invested asset base and reduced asset footprint, and continued suspension of dividends, with the Board to consider resumption as leverage trends towards our target level.

Speaker #1: Our liquidity position remains healthy, with available funds of $1.3 billion at June and a well-diversified debt maturity profile. As previously communicated, $300 million in additional commitments was established in March, with strong ongoing support from our lending group.

Justin Pipito: Our liquidity position remains healthy, with available funds of AUD 1.3 billion at June and a well-diversified debt maturity profile. As previously communicated, AUD 300 million in additional commitments was established in March, with strong ongoing support from our lending group. Thank you, and I will now hand back to Sam to talk about the F27 outlook.

Speaker #1: Thank you, and I'll now hand back to Sam to talk about the FY27 outlook.

Speaker #2: Thanks, Justin. As we transition to the regional operating model, the performance of our power brands and regional heroes gives us great confidence in the future of our portfolio.

Sam Fischer: Thanks, Justin. As we transition to the regional operating model, the performance of our power brands and regional heroes gives us great confidence in the future of our portfolio. Currently, these represent around 70% of global NSR and 80% of gross profit. Pleasingly, each of the portfolios delivered depletions growth in F26. From F28, we will be increasing our investment behind the portfolio in line with the overall uplift to group brand investment focused on unlocking the full potential of these brands. As you can see on the slide, our non-priority portfolio declined 14%, most of which was driven by commercial brands decline, showing the divergent trends within the portfolio. We will continue to carefully manage the contribution of these brands to meet customer commitments and maintain production scale in line with our ASCENT strategy. Turning now to our group and regional outlooks.

Sam Fischer: Thanks, Justin. As we transition to the regional operating model, the performance of our power brands and regional heroes gives us great confidence in the future of our portfolio. Currently, these represent around 70% of global NSR and 80% of gross profit. Pleasingly, each of the portfolios delivered depletions growth in FY 2026. From FY 2028, we will be increasing our investment behind the portfolio in line with the overall uplift to group brand investment focused on unlocking the full potential of these brands. As you can see on the slide, our non-priority portfolio declined 14%, most of which was driven by commercial brands decline, showing the divergent trends within the portfolio. We will continue to carefully manage the contribution of these brands to meet customer commitments and maintain production scale in line with our ASCENT strategy. Turning now to our group and regional outlooks.

Speaker #2: Currently, these represent around 70% of global NSR and 80% of gross profit, and pleasingly, each of the portfolios delivered depletions growth in FY26. From FY28, we will be increasing our investment behind the portfolio in line with the overall uplift to group brand investment, focused on unlocking the full potential of these brands.

Speaker #2: Also, as you can see on the slide, our non-priority portfolio declined 14%, most of which was driven by commercial brands' decline, showing the divergent trends within the portfolio.

Speaker #2: We will continue to carefully manage the contribution of these brands to meet customer commitments and maintain production scale in line with our Ascent strategy.

Speaker #2: Turning now to our group and regional outlooks. In FY27, strong depletions-led momentum for our power brands and regional heroes will be offset by the continued progression of channel health initiatives.

Sam Fischer: In F27, strong depletions-led momentum for our power brands and regional heroes will be offset by the continued progression of channel health initiatives. As I have mentioned at the start, we reiterate our expectation for group EBITS to be at least equivalent to F26, with top-line growth for Penfolds and the benefits of Project ASCENT to be offset by declines for non-priority brands. For non-priority brands, distributor inventory rebalancing and the sell-through of remaining nil margin RNDC inventory. While EBITS appear flat due to progression of customer inventory rebalancing, underlying performance shows substantial improvement year on year. For Greater China, F27 EBITS is expected to be in the range of AUD 280 to AUD 310 million, with continued depletion strength for Penfolds to drive growth as customer inventory rebalancing is completed. EBITS will be H2-weighted, primarily due to the phasing of shipments for Bin 407.

Sam Fischer: In FY 2027, strong depletions-led momentum for our power brands and regional heroes will be offset by the continued progression of channel health initiatives. As I have mentioned at the start, we reiterate our expectation for group EBITS to be at least equivalent to FY 2026, with top-line growth for Penfolds and the benefits of Project ASCENT to be offset by declines for non-priority brands. For non-priority brands, distributor inventory rebalancing and the sell-through of remaining nil margin RNDC inventory. While EBITS appear flat due to progression of customer inventory rebalancing, underlying performance shows substantial improvement year-on-year. For Greater China, FY 2027 EBITS is expected to be in the range of AUD 280 to AUD 310 million, with continued depletion strength for Penfolds to drive growth as customer inventory rebalancing is completed. EBITS will be H2-weighted, primarily due to the phasing of shipments for Bin 407.

Speaker #2: As I've mentioned at the start, we reiterate our expectation for group EBITs to be at least equivalent to FY26, with top-line growth for Penfolds and the benefits of Project Descent to be offset by declines for non-priority brands.

Speaker #2: Distributor inventory for non-priority brands was impacted by distributor inventory rebalancing and the sell-through of remaining nil margin R&DC inventory. While EBITs appear flat due to the progression of customer inventory rebalancing, underlying performance shows substantial improvement year on year.

Speaker #2: For Greater China, F27 EBITs is expected to be in the range of $280 to $310 million, with continued depletions strength for Penfolds to drive growth as customer inventory rebalancing is completed.

Speaker #2: EBITs will be second-half weighted, primarily due to the phasing of shipments for Bin 407. For emerging markets, EBITs is expected to be in the range of $95 million to $115 million, with Penfolds continuing to be the driver of regional performance.

Sam Fischer: For emerging markets, EBITS is expected to be in the range of AUD 95 to AUD 115 million, with Penfolds continuing to be the driver of regional performance. As noted on the slide, our ongoing vigilance may see some further transition of shipments from emerging markets to Greater China, which we have accounted for in the outlook ranges. In the Americas, EBITS is expected to be approximately AUD 50 million, reflecting the impact of customer inventory rebalancing, sell-through of remaining RNDC inventory at nil margin, and further premium portfolio declines. EBITS will also be H2-weighted, driven by the phasing of customer inventory rebalancing and the sell-through of RNDC inventory. In ANZ and Europe, F27 EBITS is expected to be in the range of AUD 100 to AUD 120 million, with top-line growth for Penfolds and ASCENT savings driving EBITS growth.

Sam Fischer: For emerging markets, EBITS is expected to be in the range of AUD 95 to AUD 115 million, with Penfolds continuing to be the driver of regional performance. As noted on the slide, our ongoing vigilance may see some further transition of shipments from emerging markets to Greater China, which we have accounted for in the outlook ranges. In the Americas, EBITS is expected to be approximately AUD 50 million, reflecting the impact of customer inventory rebalancing, sell-through of remaining RNDC inventory at nil margin, and further premium portfolio declines. EBITS will also be H2-weighted, driven by the phasing of customer inventory rebalancing and the sell-through of RNDC inventory. In ANZ and Europe, FY 2027 EBITS is expected to be in the range of AUD 100 to AUD 120 million, with top-line growth for Penfolds and ASCENT savings driving EBITS growth.

Speaker #2: As noted on the slide, our ongoing vigilance may see some further transition of shipments from emerging markets to Greater China, which we have accounted for in the outlook ranges.

Speaker #2: In the Americas, EBIT is expected to be approximately $50 million, reflecting the impact of customer inventory rebalancing, sell-through of remaining R&DC inventory at nil margin, and further premium portfolio declines.

Speaker #2: EBIT will also be second-half weighted, driven by the phasing of customer inventory rebalancing and the sell-through of R&DC inventory. In ANZ and Europe, FY27 EBIT is expected to be in the range of $100 to $120 million, with top-line growth for Penfolds and Ascent savings driving EBIT growth.

Speaker #2: Our Ascent initiatives are intended to progressively improve the quality and sustainability of earnings over time, while strengthening our balance sheet and enhancing returns. We thought it would be worth recapping the timeline we shared at our Investor Day.

Sam Fischer: Our ASCENT initiatives are intended to progressively improve the quality and sustainability of earnings over time while strengthening our balance sheet and enhancing returns. We thought it would be worth recapping the timeline we shared at our Investor Day. From F28, with customer inventory having been rebalanced, we expect to return to depletions-led revenue growth driven by our power brands and regional heroes as we continue to manage declines in non-priority brands. Over time, we see a strong pathway to improving profitability with EBITS margin progressing to our long-term target of 25% plus. Driven by the top-line growth and supported by ASCENT cost savings, hitting full run rate by F29. Additionally, the work we are doing across our supply chain in both Australia and the US will support margin delivery over that time horizon.

Sam Fischer: Our ASCENT initiatives are intended to progressively improve the quality and sustainability of earnings over time while strengthening our balance sheet and enhancing returns. We thought it would be worth recapping the timeline we shared at our Investor Day. From FY 2028, with customer inventory having been rebalanced, we expect to return to depletions-led revenue growth driven by our power brands and regional heroes as we continue to manage declines in non-priority brands. Over time, we see a strong pathway to improving profitability with EBITS margin progressing to our long-term target of 25% plus. Driven by the top-line growth and supported by ASCENT cost savings, hitting full run rate by FY 2029. Additionally, the work we are doing across our supply chain in both Australia and the US will support margin delivery over that time horizon.

Speaker #2: From FY28, with customer inventory having been rebalanced, we expect to return to depletions-led revenue growth driven by our power brands and regional heroes, as we continue to manage declines in non-priority brands.

Speaker #2: Over time, we see a strong pathway to improving profitability, with EBITs margin progressing to our long-term target of 25% plus, driven by top line growth and supported by Ascent cost savings hitting full run rate by FY29.

Speaker #2: Additionally, the work we are doing across our supply chain in both Australia and the US will support margin delivery over that time horizon. We also have an elevated focus on ensuring our ROCE returns to an appropriate level, with earnings growth supported by a more disciplined capital allocation focus.

Sam Fischer: We also have an elevated focus on ensuring our ROCE returns to an appropriate level, with earnings growth supported by a more disciplined capital allocation focus. In summary, F26 was a year of decisive action and significant change. We enter F27 with improved momentum and clear priorities, which include continuing above-category depletions growth for our power brands and regional heroes through a disciplined focus on execution in market. Advancing customer inventory rebalancing for completion in F28. Reducing leverage with an elevated focus on cash and working capital. Progressing the TWE ASCENT transformation and completing the Americas strategic review. Thank you again for joining us today. I will now hand over to the operator to take your questions.

Sam Fischer: We also have an elevated focus on ensuring our ROCE returns to an appropriate level, with earnings growth supported by a more disciplined capital allocation focus. In summary, FY 2026 was a year of decisive action and significant change. We enter FY 2027 with improved momentum and clear priorities, which include continuing above-category depletions growth for our power brands and regional heroes through a disciplined focus on execution in market. Advancing customer inventory rebalancing for completion in FY 2028. Reducing leverage with an elevated focus on cash and working capital. Progressing the TWE ASCENT transformation and completing the Americas strategic review. Thank you again for joining us today. I will now hand over to the operator to take your questions.

Speaker #2: In summary, F26 was a year of decisive action and significant change. We enter F27 with improved momentum and clear priorities, which include continuing above-category depletions growth for our power brands and regional heroes through a disciplined focus on execution in-market.

Speaker #2: Advancing customer inventory rebalancing for completion in FY28, reducing leverage with an elevated focus on cash and working capital, progressing the TWE Ascent transformation, and completing the Americas strategic review.

Speaker #2: Thank you again for joining us today. I'll now hand over to the operator to take your questions.

Speaker #3: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two.

Operator: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Michael Simotas with Jefferies. Please go ahead.

Speaker #3: If you're on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Michael Samotis with Jefferies. Please go ahead.

Speaker #4: Good morning, everyone, and well done on all the work you've done so far. My first question is on the FY27 outlook, and I just want to understand your confidence in delivering group EBIT.

Michael Simotas: Morning, everyone, and well done on all the work you have done so far. First question from me is on the FY27 outlook, and I just want to understand your confidence in delivering group EBIT, at least equivalent, or EBITs at least equivalent to FY26. The reason I ask is, you have given ranges for each of the divisions. If we look at the bottom end of those ranges, it would imply something quite a bit below the group level. How should we think about what it would take to land within the ranges for the divisions?

Michael Simotas: Morning, everyone, and well done on all the work you have done so far. First question from me is on the FY 2027 outlook, and I just want to understand your confidence in delivering group EBIT, at least equivalent, or EBITs at least equivalent to FY 2026. The reason I ask is, you have given ranges for each of the divisions. If we look at the bottom end of those ranges, it would imply something quite a bit below the group level. How should we think about what it would take to land within the ranges for the divisions?

Speaker #4: At least equivalent, or EBITs at least equivalent to FY26. And the reason I ask is, you've given ranges for each of the divisions. If we look at the bottom end of those ranges, it would imply something quite a bit below the group level.

Speaker #4: How should we think about what it would take to land within the ranges for the divisions?

Speaker #2: Thanks, Michael. And I might just start this myself and then pass over to Justin, just to give you some confidence around the numbers.

Sam Fischer: Thanks, Michael. I might just start this myself and then pass over to Justin just to give you some confidence around the numbers. What really gives me confidence in relation to our outlook is the strength of our underlying business and the depletion momentum that I talked through in the presentation. When we look at the execution focus we have got on these power brands and regional heroes and what we did in H2 in relation to building momentum behind that, I think that confidence comes from the strength of those brands and the work our teams have done around the world to support execution. Really that is what is underpinning everything.

Speaker #2: But I mean, what really gives me confidence in relation to our outlook is the strength of our underlying business and the depletion momentum that I talked through in the presentation.

Speaker #2: You know, when we look at the execution focus we've got on these power brands and regional heroes, and what we did in H2 in relation to building momentum behind that, you know, I think that confidence comes from the strength of those brands and the work our teams have done around the world to support execution.

Speaker #2: So, you know, really that's what's underpinning everything. You know, when we look at the ranges, we have talked a little bit about some nuances in relation to the transfer of parallel out of markets and into China, and we've seen a little bit of that this year—and really, really strong China depletions growth.

Sam Fischer: When we look at the ranges, we have talked a little bit about some nuances in relation to the transfer of parallel out of markets and into China, and we have seen a little bit of that this year, and really strong China depletions growth. We are getting strong feedback from China that they are feeling that transition. It is giving them real confidence in the work that we are doing to strengthen that distribution network through controlling that parallel. We recognize that this is a bit imperfect. We are still finding areas of concern, and we are taking strong action in relation to that. Some of that range allows us to move volume from one market to another as we take that proactive action. Really, that is what underpins my confidence. I might pass to Justin just to give a sense of the numbers.

Speaker #2: We're getting strong feedback from China that they're feeling that transition. It's giving them real confidence in the work that we're doing to strengthen that distribution network through controlling that parallel.

Speaker #2: But we recognize that this is a bit imperfect. We're still finding areas of concern, and we're taking strong action in relation to that. And, you know, some of that range allows us to move volume from one market to another, as we take that proactive action.

Speaker #2: So, really, that's what underpins my confidence. I might pass to Justin, just to give a sense of, you know, kind of the numbers.

Speaker #1: Yes. Thanks, Sam. And and good morning, Michael. I I look, I think it's important we anchor to the the expectation that group, EBITs will be at least equivalent to F26.

Justin Pipito: Yeah. Thanks, Sam, and good morning, Michael. I think it is important we anchor to the expectation that group EBITs will be at least equivalent to 2026. That is the guidance, and that is what we are very confident to deliver. On top of the execution momentum that Sam has talked to and the market-facing momentum, the result will be underpinned by the coming through of ASCENT related benefits of at least AUD 40 million. So we have good confidence on that being delivered. The ranges we provided are just to help with the new look of the world under the regional model, more so than being definitive. As I say, start with the group guidance, and that is exactly where we expect to be at the end of the year.

Speaker #1: That's the guidance, and that's what we are very confident to deliver. And on top of the execution momentum that Sam has talked to, and the market-facing momentum, you know, the result will be underpinned by the coming through of Ascent-related benefits of at least $40 million.

Speaker #1: So we've got, you know, good confidence on that being delivered. The ranges we provided, you know, are just to help with the new look of the world under the regional model.

Speaker #1: More so than being definitive. So, as I say, start with the group guidance, and that's exactly where we expect to be at the end of the year.

Speaker #4: Yep, that makes a lot of sense. Thank you. And then my second question is relating to the Americas. You're assuming in your outlook a significant decline in the Americas, down another about $60 million on the new way of looking at things.

Michael Simotas: Yep. That makes a lot of sense. Thank you. My second question is relating to the Americas. You are assuming in your outlook a significant decline in the Americas down another about AUD 60 million on the new way of looking at things. The reasons for that are obvious as you work through the inventory. How should we think about more of a mid-cycle earnings number for that Americas business? If I infer from your written down carrying value, it would suggest an earnings number probably something around the 2026 number or even higher. Is that the right way to think about a base that you can then hopefully grow from once you have cleaned up all of the inventory?

Speaker #4: I mean, the reasons for that are obvious as you work through the inventory. How should we think about more of a mid-cycle earnings number for that Americas business?

Speaker #4: I mean, if I infer from your written-down carrying value, it would suggest an earnings number probably something around the FY26 number, or even higher.

Speaker #4: Is that the right way to think about a base that you can then hopefully grow from once you've cleaned up all of the inventory?

Speaker #2: Yeah, again, I might start, Michael, and then I'll pass to to to to Justin. I I you know, I think that we've been clear that we're we're fixing some structural imbalances in the market.

Sam Fischer: Yeah. Again, I might start, Michael, and then I will pass to Justin. I think that we have been clear that we are fixing some structural imbalances in the market. We are really taking proactive action as it relates to supply chain initiatives, operating model inventory, and trade inventory. So these things are really proactively being addressed right now, and that is clearly having an impact on that comparable earnings number that you reference. We expect and will continue to update the market as we develop these initiatives, that to improve over time. But right now, there is still a whole lot of work in progress. We are addressing those core issues, and that is what is driving the number that you see.

Speaker #2: We're really taking proactive action as it relates to supply chain initiatives—operating model, inventory, and trade inventory. So these things are really proactively being addressed right now, and that's clearly having an impact on that comparable earnings number that you referenced.

Speaker #2: We expect, and we'll continue to update the market as we develop these initiatives, you know, that to improve over time. But right now, there's still a whole lot of work in progress.

Speaker #2: We're addressing those core issues, and that's what's driving the number that you see.

Speaker #1: Yeah, Michael, again, just to build. So I think you're right. On FY27, you know, we expect the headwind from the sell-through of the remaining R&DC stock, the ongoing taking of inventory out of the trade, and then ongoing declines across the premium portfolio, led by 19 Crimes.

Justin Pipito: Yeah, Michael, again, just to build. So I think you are right. On 2027, we expect the headwind from the sell-through of the remaining RNDC stock, the ongoing taking of inventory out of the trade, and then ongoing declines across the premium portfolio led by 19 Crimes. I think from a mid to long-term, that will come back. However, what we talked about a lot at the investor day, that COGS imbalance or that COGS drag that comes through because of the structural misalignment, does weigh on the result in the medium term. So just be careful in terms of how quickly that bounce back happens.

Justin Pipito: Yeah, Michael, again, just to build. So I think you are right. On 2027, we expect the headwind from the sell-through of the remaining RNDC stock, the ongoing taking of inventory out of the trade, and then ongoing declines across the premium portfolio led by 19 Crimes. I think from a mid to long-term, that will come back. However, what we talked about a lot at the Investor Day, that COGS imbalance or that COGS drag that comes through because of the structural misalignment, does weigh on the result in the medium term. So just be careful in terms of how quickly that bounce back happens.

Speaker #1: I think from a mid to long-term, you know, that will come back. however, the, the what we talked about, a lot of the investor day that, that that COGS imbalance, all that that COGS drag that comes through because of the structural imbalance, structural misalignment, does weigh on the result in the mid medium term.

Speaker #1: So just be careful in terms of how quickly that bounce back happens.

Speaker #4: That's helpful. Thank you.

Michael Simotas: That is helpful. Thank you.

Speaker #5: Your next question comes from Michael Turner with RBC. Please go ahead.

Operator: Your next question comes from Michael Turner with RBC. Please go ahead.

Speaker #4: Hi Tim, I have a question on the Asia ex-China depletions data—18.1% growth. I can see that it's adjusted to exclude the estimated value of depletions completely contributing to parallel activity from the region.

Michael Turner: Hi, team. I have a question on the Asia ex China depletions data, 18.1% growth. I can see that it is adjusted to exclude the estimated value of depletions contributing to parallel activity from the region. I would be curious to know what that adjustment number is and how you estimate it, what the methodology is.

Michael Toner: Hi, team. I have a question on the Asia ex China depletions data, 18.1% growth. I can see that it is adjusted to exclude the estimated value of depletions contributing to parallel activity from the region. I would be curious to know what that adjustment number is and how you estimate it, what the methodology is.

Speaker #4: I'd be curious to know what that adjustment number is, and kind of how you estimate it—like, what the methodology is, yeah.

Speaker #2: thanks Michael.

Justin Pipito: Thanks, Michael. It is Justin here. It is approximately 10 percentage points of growth. I think there is a comment around the China depletions growth being approximately half contributed to the parallel capture and an adjustment for Southeast Asia. I think the way the team has looked at that, particularly from a China point of view, where we can cross-reference it to anecdotal feedback from customers, analysis of the e-commerce data, and what we can see coming through cross-border e-commerce. There has been a bit of triangulation work to try to quantify that on the China side, and that has then been applied back to the Southeast Asia side. That is essentially how we have done it.

Speaker #1: It's Justin here. it's approximately 10 percentage points of growth. I think the the the both the there's a comment around the China depletions growth being approximately half contributed to to the parallel capture and an adjustment for Southeast Asia.

Speaker #1: I think the the way the teams looked at that, particularly from a China point of view, you know, where we can cross-reference it to anecdotal feedback from customers, analysis of the e-commerce data and what we can see coming through cross-border e-commerce, there's been a bit of triangulation work to to to try to quantify that on the China side, and that has then been applied back to the to the Southeast Asia side.

Speaker #1: That's essentially how we've done it.

Speaker #4: Okay, thanks. And I thought I might ask Michael's question from earlier, just, I guess, in a slightly different way. I'm curious how big the margin headwind from the R&DC inventory that you repurchased in California was to the second half of 2026.

Michael Turner: Okay, thanks. I thought I might ask Michael's question earlier in just a slightly different way. I am curious how big the margin headwind from the RNDC inventory that you repurchased in California was to H1 2026, just to help us inform that margin drag into FY27 from the remaining 60%, then we can get an understanding of what a true underlying margin might be in FY28.

Michael Toner: Okay, thanks. I thought I might ask Michael's question earlier in just a slightly different way. I am curious how big the margin headwind from the RNDC inventory that you repurchased in California was to H1 2026, just to help us inform that margin drag into FY 2027 from the remaining 60%, then we can get an understanding of what a true underlying margin might be in FY 2028.

Speaker #4: Just to help us, can you inform us about the margin drag into FY27 from the remaining sort of 60%, and then we can get an understanding of what the true underlying margin might be in FY28?

Justin Pipito: Yeah. Sorry, Michael. I think at a total Americas level, the impact is about 4 percentage points of margin. I think we have communicated previously that that buyback of inventory for luxury was approximately AUD 100 million at full sales value. We have noted today that 40% approximately has come through in FY26, with the remaining 60% in FY27. I think if you just apply a standard luxury margin to that, you will work down the EBIT impact.

Justin Pipito: Yeah. Sorry, Michael. I think at a total Americas level, the impact is about 4 percentage points of margin. I think we have communicated previously that that buyback of inventory for luxury was approximately AUD 100 million at full sales value. We have noted today that 40% approximately has come through in FY 2026, with the remaining 60% in FY 2027. I think if you just apply a standard luxury margin to that, you will work down the EBIT impact.

Speaker #1: yeah, sorry. I think the the at a at a total Americas level, the impact's about 4 percentage points of margin. The I I think we we went we we've communicated previously that that buyback of inventory for luxury was approximately $100 million Aussie, at full sales value.

Speaker #1: We've noted today that approximately 40% has come through in FY26, with the remaining 60% in FY27. And I think if you just apply a standard sort of luxury margin to that, you'll work down the EBIT impact.

Speaker #4: Okay, thanks very much.

Michael Turner: Okay. Thanks very much.

Michael Toner: Okay. Thanks very much.

Speaker #5: Your next question comes from Sean Cousins with UBS. Please go ahead.

Operator: Your next question comes from Shaun Cousins with UBS. Please go ahead.

Speaker #6: Thanks. Good morning, Sam and Justin. Maybe just my first question, just around Penfolds and the halting of Bin 407 shipments. Just keen to understand, sort of, why now?

Shaun Cousins: Thanks. Good morning, Sam and Justin. My first question just around Penfolds and the halting of Bin 407 shipments. Keen to understand why now? What does it reflect about, I guess, the level of gray market supply of that product and maybe current pricing trends and the risk that you might have to do this with other product ranges? Thanks.

Speaker #6: What does it reflect about, I guess, the level of gray market supply of that product and maybe current pricing trends, and the risk that you might have to do this with other product ranges?

Speaker #6: Thanks.

Speaker #2: Sure. Hi, Sean. Thanks. Yeah, look, we have taken again some decisive action as it relates to 407. We saw some trade practices in China with 407, that it was being used as a kind of commercial lever to help migrate some of that cross-border trade into that domestic distributor market.

Sam Fischer: Sure. Hi Shaun. Thanks. We have taken, again, some decisive action as it relates to 407. We saw some trade practices in China with 407, that it was being used as a kind of a commercial lever to help migrate some of that cross-border trade into that domestic distributor market. It was having an impact on pricing. We weren't getting the pricing that we wanted. In order to bring that back into control, to preserve the strength of the brand and make sure that that positioning stays intact, that we would take a strong action and reduce shipments again to show everyone in the trade across the region how serious we are in relation to taking control of our route to market in China and in those parallel flows. It's been well-received. I would say that pricing of 407 has stabilized.

Speaker #2: It was having an impact on pricing. we weren't getting the pricing that we wanted. So again, in order to bring that back into control, to preserve the strength of the brand and and make sure that that positioning stays intact, that we would take a strong action and and reduce shipments.

Speaker #2: Again, to show everyone in the trade across the region, you know, how serious we are in relation to taking control of our route to market in China and in those parallel flows.

Speaker #2: So, it's been well received. I would say that pricing of 407 has stabilized. We're starting to see some price rises back to where we would like it to be, in July.

Sam Fischer: We're starting to see some price rises back to where we would like it to be in July. That's really what we're doing. It's really the strength of conviction we have around taking control of our brand in our critical market of China.

Speaker #2: That's really what we're doing, and it's really the strength of conviction we have around taking control of our brand in our critical market of China.

Speaker #6: Great. My second question is just around the Americas and depletion sort of growth. Can you just talk a bit about the fourth quarter '26 depletion trends in the US?

Shaun Cousins: Great. My second question is just around the Americas and depletion. The growth. Can you just talk a bit about the Q4 2026 depletion trends in the US? It seems to have improved. Really how much of that is TWE benefiting from an improving luxury market over there? Or is TWE out-executing the market and hence regaining some of the market share that's been lost in some of that improvement in the back end of fiscal 2026, please?

Speaker #6: It seems to have improved. And really, how much of that is TWE benefiting from and improving the luxury market over there, or is TWE out-executing the market and hence regaining some of the market share that's been lost in some of that improvement in the back end of fiscal '26 plus?

Speaker #2: Yeah, no, look, thanks, Sean. I think that, pleasingly, we have seen the market return to flat to slight growth in Q4, particularly in the above $20 segment, which we so proactively participate in.

Sam Fischer: Yeah. No, look, thanks, Shaun. I think that pleasingly we have seen the market return to flat to slight growth in Q4, particularly the above AUD 20 segment that we so proactively participate in. There's no doubt some of that momentum is starting to be felt. But I've started to talk about execution really since I began and focusing on really strong brand plans, really strong in-market execution, depletions being our core measure, brand health being our core measures. All of those things have really changed the focus of our business onto that in-store, in-market, in-channel execution. No doubt that is having an impact. I think it's a bit of both, but really pleasing H2 performance. Our goal is to take that all the way through 2027 and beyond based on the strength of brands that we all know we've always had. Great. Fantastic.

Speaker #2: So, there's no doubt some of that momentum is starting to be felt. But, you know, I've started to talk about execution really since I began, and focusing on really strong brand plans, really strong in-market execution—depletions being our core measure, brand health being our core measure.

Speaker #2: So all of those things have really changed the focus of our business onto that in-store, in-market, in-channel execution. And, no doubt, you know, that is having an impact.

Speaker #2: So I think it's a bit of both, but really pleasing second half performance and, you know, our goal is to take that all the way through '27 and beyond.

Speaker #2: Based on the strength of brands that we all know we've always had.

Speaker #6: Great. Fantastic. Thanks, Sam.

Shaun Cousins: Thanks, Sam.

Speaker #5: Your next question comes from Craig Wolford with the MST Marquee. Please go ahead.

Operator: Your next question comes from Craig Woolford with MST Marquee. Please go ahead.

Speaker #1: Good morning, Sam and Justin. I think we're all just trying to wrestle with the implications of the de-stocking on earnings, particularly for the Americas.

Craig Woolford: Morning, Sam and Justin. I think we're all trying to just wrestle with the implications of the de-stocking on earnings, particularly for Treasury Americas. But just trying to understand, when you go through the de-stocking, it's both Penfolds and Treasury Americas, are there any other costs other than the COGS? Are there any costs that are avoided? I'm trying to think through the loss either because of de-stocking. Is it just the gross profit, or are there any other cost items that would be impacted by the process of the de-stocking?

Speaker #1: But just trying to understand, when you go through the de-stocking, it's both Penfolds and the Americas. Are there any other costs other than the cost of goods sold?

Speaker #1: Are there any costs that are avoided? I'm trying to think through, you know, the lost EBIT because of de-stocking. Is it just the gross profit, or are there any other cost items that would be impacted by the process of de-stocking?

Speaker #3: Yeah, Craig, it's Justin here. I think the answer's no. It's really just the lost shipments. You know, AMP is there to sort of—that's there to drive depletions in the market.

Justin Pipito: Yeah, Craig, it's Justin here. I think the answer is no. It's really just the lost shipments. AMP is, that's there to drive depletions in the market, so you might get a little bit of tidy up here and there, but by and large, the cost just comes through the shipments line.

Speaker #3: And so you know, you you might get a little bit of tidy up here and there, but you know, by and large, the the cost just comes through the shipments line.

Speaker #4: And I'd add, Craig, that, you know, we've always had two areas of focus here to drive, if you like, the correction of our inventory, and one of those is reducing shipments.

Sam Fischer: I'd add, Craig, that we've always had two areas of focus here to drive, if you like, the correction of our inventory. One of those is reducing shipments. Going back to the previous comment, the second is that focus on driving faster depletions, because, again, that eats away at that inventory and normalizes it faster. So we've got two areas of focus in doing that, principally, driving depletions on the back of brand health and then reducing shipments in a very controlled way so we can bring us back to the levels that we've articulated in the presentation.

Speaker #4: But going back to the previous comment, the second is that focus on driving faster depletions because, again, that eats away at that inventory and normalizes it faster.

Speaker #4: So we've got two areas of focus in doing that. Principally, you know, driving depletions on the back of brand health and then reducing shipments in a very controlled way so we can bring us back to the levels that we've articulated in the presentation.

Speaker #1: Okay, that makes sense. Just a question: I've been—is the 407 issue that you've raised, just more broadly, is the phasing of releases going to be much different to what it has been historically? The Ben 407 seems more of a transitory issue?

Craig Woolford: Okay. That makes sense. Just a question about Bin 407 issue that you've raised. Just more broadly, is the phasing of releases going to be much different to what it has been historically? The Bin 407 seems more of a transitory issue. The reason I'm asking this, just trying to understand what the typical skew of earnings is going to be between the H1 and the H2, which will largely depend on how you choose to release the premier wines.

Speaker #1: The reason I'm asking is that I'm trying to understand what the typical skew of earnings will be between the first half and the second half, which will largely depend on how you choose to release the premium lines.

Speaker #1: Which you want.

Sam Fischer: Yeah.

Craig Woolford: If you want.

Speaker #2: No, I think—look, I don't think we plan on any change. You know, the release dates, which we're right in the middle of at the moment, are working well for us.

Sam Fischer: No, look, I do not think we plan on any change. The release dates, since we are right in the middle of it at the moment, are working well for us. It is a date in everyone's diary. We have got huge activation behind it. Use this as an opportunity just to say how excited I am about this year, our 75th year of Penfolds, and some of the ratings that we got for the wines, particularly white wines, were extraordinary. So, we are excited. The trade waits for this date. We know consumers and customers all around the world are lined up to it, so no change as far as I am concerned, going forward.

Speaker #2: It's a date in everyone's diary. You know, we've got huge activation behind it. I want to use this as an opportunity just to say how excited I am about this year—our 75th year of Penfolds.

Speaker #2: And some of the ratings that we got for the wines, particularly white wines, were extraordinary. So, you know, we're excited. The trade waits for this date.

Speaker #2: You know, we know consumers and customers all around the world are lined up to it. So, no change as far as I'm concerned, going forward.

Speaker #1: So Ben 407 will shift back, once you've sort of recalibrated things?

Craig Woolford: Bin 407 will shift back, once you have sort of recalibrated things.

Justin Pipito: Bin 407 will shift back, once you have sort of recalibrated things.

Speaker #2: Yes.

Sam Fischer: Yes.

Speaker #3: Yeah, correct.

Justin Pipito: Correct.

Speaker #1: Yeah. Got it. Thank you.

Craig Woolford: Yep. Got it. Thank you.

Speaker #5: Your next question comes from Tom Kiraf with Baron Joey. Please go ahead.

Operator: Your next question comes from Tom Kierath with Barrenjoey. Please go ahead.

Speaker #4: morning guys. just on the 200,000, cases of de-stocking you did with Penfolds, can you give us, a bit of a guide on how much revenue that that impact on the revenues and which region that de-stocking occurred in just so we can kind of, I guess, get a bit of a underlying base for for the second half?

Tom Kierath: Morning, guys. Just on the 200,000 cases of destocking you did with Penfolds, can you give us a bit of a guide on how much revenue that, the impact on the revenues and which region that destocking occurred in? Just so we can kind of, I guess, get a bit of an underlying base for the H2.

Speaker #2: Look, look, Tom, I think in relation to which region, that's kind of universal across China, is where that's been reduced. It's also a bit linear across the whole portfolio.

Sam Fischer: Look, Tom, I think in relation to which region, that's kind of universal across China is where that's been reduced. It's kind of also a bit linear across the whole portfolio. We really focused on making sure that the whole portfolio was reduced in line with where we thought that we had too much stock or too much in the market. No nuance really there. From an NSR perspective, it's not something that we would share. We've shared that there was 400,000 cases of stock that we needed to take out of the market to get back to our, what we would consider optimal levels. We're halfway through that. The H2 will be done in this fiscal year.

Speaker #2: We were really focused on making sure that the whole portfolio was reduced in line with where we thought that we had too much stock, or too much in the market.

Speaker #2: So, no no nuance really there. from an NSR perspective, it's not something that that we would share, we we we've shared that there was 400,000 cases of re of stock that we needed to take out of the market to get back to our what we would consider optimal levels where halfway through that, the second half will be done.

Speaker #2: in this fiscal year.

Speaker #4: Okay, cool. And then, secondly, how long will this strategic review take in Americas? Like, you know, the business—kind of, I think a few years ago you were saying it was going to make $400 million.

Tom Kierath: Okay, cool. Secondly, how long will this strategic review take in Americas? The business, kind of, I think a few years ago, you're saying was going to make AUD 400 million, now it's going to make AUD 50. I assume while there's a strategic review going on, it's hard to motivate the troops. Can you give us a bit of a timeline as to when you expect to have some decisions on the future of that business?

Speaker #4: Now it's going to make 50. You know, I assume—well, there's a strategic review going on. It's hard to motivate the troops.

Speaker #4: So, can you give us a bit of a timeline as to when you expect to have some decisions on that—on the future of that business?

Speaker #2: Yeah, look, I think it's as fast as possible. We've started the review. I've been pleased, actually, with how much progress we've made. We've really understood what we need to do in the supply chain and those initiatives we've outlined here.

Sam Fischer: Yeah. Look, I think as fast as possible. We've started the review. I've been pleased, actually, with how much progress we've made. We've really understood what we need to do in the supply chain and those initiatives we've outlined here. Again, we've taken some significant inventory provisions. We shared those on Monday. Again, they help us rightsize that mismatch that we've got across our supply and demand organizations. We've appointed some advisors to look at further options as they relate to brands and assets across the market. We commit to come back to you as they progress. There's nothing more to update you, in relation to that at the moment, except to say that we've been pleased with the response and we expect to give some material updates in the near term.

Speaker #2: Again, we've taken some significant inventory provisions—we shared those on Monday. Again, they help us right-size that mismatch that we've got across our supply and demand organizations.

Speaker #2: And, you know, we've appointed some advisors to look at further options as they relate to brands and assets across the market. We commit to come back to you as they progress.

Speaker #2: there's nothing more to update you, in relation to that at the moment except to say that, you know, we've been pleased with the response and, you know, we expect, to give, some some material updates, in the near term.

Speaker #2: You know, what keeps everyone excited, you know, just picking up on one of your points is is the momentum that we're building in the market around brands and execution and innovation.

Sam Fischer: What keeps everyone excited, just picking up on one of your points, is the momentum that we are building in the market around brands and execution and innovation. I mean, that is exciting. We look at what we are doing with DAOU and Frank Family and some of the innovations that we put into the market in H2 that help support that depletion growth, really, really promising. We are starting to see share gains on the back of that execution, and that is what excites our teams in those markets. Again, we have got great plans for 2027 that give us great confidence that we can continue that momentum.

Speaker #2: I mean, you know, that's exciting. And, you know, we look at what we're doing with DOW and Frank Family and, you know, some of the innovations that we put into the market in the second half that help support that depletion growth—really, really promising.

Speaker #2: You know, we're starting to see share gains on the back of that execution, and that's what excites our teams in those markets. And again, we've got great plans for '27 that give us great confidence that we can continue that momentum.

Speaker #4: All right. Thanks, Sam.

Tom Kierath: Great. Thanks, Sam.

Speaker #5: Your next question comes from Peter Marks with GS. Please go ahead.

Operator: Your next question comes from Peter Marks with GS. Please go ahead.

Speaker #6: Oh, hey guys. I just wanted to talk about China again. Can I just clarify with the depletion number? I think it's about 35%, and you're saying about half of that is driven by, you know, diversion of parallel imports.

Peter Marks: Hey guys. I just wanted to talk about China again. Can I just clarify with the depletions number, I think it is about 35%, and you are saying about half of that is driven by diversion of parallel imports. Can we call it 17% underlying? I guess where I am going with that, do you think you can sustain that level of depletion growth into FY27? Because once you get to FY28, if you can do that level of depletions, it implies like a massive year for Penfolds in FY28 if your sales catches up to where your depletions are. Does that make sense?

Peter Marks: Hey guys. I just wanted to talk about China again. Can I just clarify with the depletions number, I think it is about 35%, and you are saying about half of that is driven by diversion of parallel imports. Can we call it 17% underlying? I guess where I am going with that, do you think you can sustain that level of depletion growth into FY 2027? Because once you get to FY 2028, if you can do that level of depletions, it implies like a massive year for Penfolds in FY 2028 if your sales catches up to where your depletions are. Does that make sense?

Speaker #6: So, can we call it, like, 17% underlying? And I guess where I'm going with that is, do you think you can sort of sustain that level of depletion growth into FY27?

Speaker #6: Because then once you get to FY28, like if you can do that level of depletion, so it implies like a massive year for Penfolds in in FY28 if you if your sales catches up to where you're depletions are.

Speaker #6: Does that make sense?

Speaker #2: Yeah, yeah. I mean, I think I've talked very, very positively about Penfolds almost since I began, and the strength of the brand—it transcends wine, really.

Sam Fischer: Yeah. I think I've talked very positively about Penfolds almost since I began, and the strength of the brand, and it transcends wine really. It's a luxury brand. During our investor day, we outlined areas of opportunity for Penfolds as it relates to Baijiu, recruiting into meal occasion, what we've got for white wine, innovation, gifting. There's still, in my view, huge runway, in China, in the rest of emerging Asia, in Australia, and in Europe, the US. The runway for Penfolds is long, and the portfolio opportunities we've got are also long. I'm not about to give guidance in relation to depletions, but we've got great confidence, in the growth areas, the growth opportunities for Penfolds, and the organization is aligned behind all of them, whether that's the distribution expansion opportunities in China, whether it's innovation, whether it's white wine. The brand's still got huge opportunity.

Sam Fischer: Yeah. I think I've talked very positively about Penfolds almost since I began, and the strength of the brand, and it transcends wine really. It's a luxury brand. During our Investor Day, we outlined areas of opportunity for Penfolds as it relates to Baijiu, recruiting into meal occasion, what we've got for white wine, innovation, gifting. There's still, in my view, huge runway, in China, in the rest of emerging Asia, in Australia, and in Europe, the US. The runway for Penfolds is long, and the portfolio opportunities we've got are also long. I'm not about to give guidance in relation to depletions, but we've got great confidence, in the growth areas, the growth opportunities for Penfolds, and the organization is aligned behind all of them, whether that's the distribution expansion opportunities in China, whether it's innovation, whether it's white wine. The brand's still got huge opportunity.

Speaker #2: It's a it's a luxury brand. You know, when we during our investor day, you know, we kind of outlined, you know, areas of opportunity for Penfolds as it relates to Baidu, recruiting into Miele occasion, you know, what we've got for white wine, you know, innovation, gifting.

Speaker #2: There's still, in my view, huge runway in China, in the rest of emerging Asia, in Australia, and in Europe and the US.

Speaker #2: So, you know, the runway for Penfolds is long, and the portfolio opportunities we've got are also long. So, you know, I'm not about to give guidance in relation to depletions, but we've got great confidence in the growth areas and the growth opportunities for Penfolds.

Speaker #2: And the organization is aligned behind all of them, whether that's the distribution expansion opportunities in China, whether it's innovation, whether it's white wine—you know, the brand's still got huge opportunity.

Speaker #6: Okay, that's great. And then my second one, just on the Americas drivers into FY28, just so I can get my thinking clear.

Peter Marks: Okay, that's great. My second one just on the Americas drivers into FY28, just so I can get my thinking clear. It sounds like RNDC should be done in FY27, so that margin impact should roll out. You'll still have some inventory rebalancing, depressing sales. But that will roll out in FY28, but then FY28 has the COGS per case headwind. I'm just trying to wrap my head around the moving parts there. Is FY28 a year of earnings growth for the Americas business, or is the COGS per case headwind going to offset those tailwinds coming out from RNDC and destocking in 27?

Peter Marks: Okay, that's great. My second one just on the Americas drivers into FY 2028, just so I can get my thinking clear. It sounds like RNDC should be done in FY 2027, so that margin impact should roll out. You'll still have some inventory rebalancing, depressing sales. But that will roll out in FY 2028, but then FY 2028 has the COGS per case headwind. I'm just trying to wrap my head around the moving parts there. Is FY 2028 a year of earnings growth for the Americas business, or is the COGS per case headwind going to offset those tailwinds coming out from RNDC and destocking in 27?

Speaker #6: Like, it sounds like R&DC should be done in FY27, so that margin impact should roll out. You'll still have some inventory, you know, rebalancing, depressing sales.

Speaker #6: So in that, that will roll out in FY28, but then FY28 has the calls per case hit in. So I'm just trying to get my head around the moving parts there.

Speaker #6: Like, is FY28 a year of earnings growth for for the Americas business or is the calls per case head wind going to offset those sort of tail winds coming out from R&DC and destocking in '27?

Speaker #2: Yeah.

Sam Fischer: Yeah. We've been quite transparent on all of those things, the zero margin coming back in from the returned goods. Look, the great news for us is that we've navigated a pretty tricky situation with RNDC really well. We've managed to transition into our new distributor pretty seamlessly, those businesses and those partners doing really well for us. We've taken stock back and offset that, got settlement for various disputes, and now we've got really very small exposure. So that's great news. I did talk about some of those structural mismatches, the imbalance that we've got. We're working on those things now, and the best guidance I can give is that, we do expect our earnings profile to improve over the medium term.

Speaker #4: Yeah, we've been quite transparent on all of those things—the zero margin coming back in from the returned goods. And look, the great news for us is that we've navigated a pretty tricky situation with R&DC really, really well.

Speaker #4: You know, we've managed to transition into, you know, our new distributor pretty seamlessly. Those businesses and those partners are doing really well for us. You know, we've taken stock back and offset that.

Speaker #4: You know, we got settlement for various disputes, and now we've got really very, very small exposure. So, that's great news. You know, I did talk about some of those structural mismatches, the imbalance that we've got.

Speaker #4: You know, we're working on those things now, and the best guidance I can give is that we do expect our earnings profile to improve over the medium term.

Speaker #4: But we will come back with much more material updates as we develop those strategic options, as we've got further into, you know, understanding what value they might bring to us.

Sam Fischer: But we will come back with much more material updates, as we develop those strategic options, as we've got further into understanding what value they might bring to us, so that we can reliably inform you. Justin Pipito, have you got anything to add?

Speaker #4: So that we can reliably inform you. JP, have you got anything to add?

Speaker #3: Yeah, Peter, I think—yeah, well, we're not giving long-term guidance today. I think you're thinking about it the right way in terms of the progressive rundown of the 300,000 nines.

Justin Pipito: Yeah, Peter, I think, while we are not giving long-term guidance today, I think you are thinking about it the right way in terms of the progressive rundown of 300,000 nines. The bulk of that will be done this year, with some carryover into H1 next year. RNDC is a one-time item this year. We do see those things being corrected, and we will eventually get that business into a depletions-led top-line growth position, which should give us revenue growth going forward through 2028, and that should translate to better earnings.

Speaker #3: You know, most of that will be, or the bulk of that will be, done this year, with some carryover into half one next year.

Speaker #3: R&DC is a one-time item this year. So, we do see those things being corrected and we'll, you know, eventually get that business into a depletions-led, top-line growth position, which should give us revenue growth going forward through '28.

Speaker #3: And that should translate to better earnings.

Speaker #6: Makes sense. Thanks, guys.

Peter Marks: Makes sense. Thanks, guys.

Speaker #5: Your next question comes from Brian Raymond with JP Morgan. Please go ahead.

Operator: Your next question comes from Bryan Raymond with JPMorgan. Please go ahead.

Speaker #7: Good morning. My first one's actually just on the Ascent benefits. Just wanted to make sure we have them allocated properly—the $40 million in '27.

Bryan Raymond: Good morning. My first one is just actually just on the Ascent benefits. Just wanted to make sure we have them allocated properly, the AUD 40 million in 2027. I think it was called out in the ANZ and Europe division. Is that where most of it is flowing, or is there a bit of a mix across the four new divisions?

Speaker #7: I think it was called out in the ANZ and Europe division. Is that where most of it's flowing, or is there a bit of a mix across the four new divisions?

Speaker #3: Yeah, hi Brian. It's Justin here. The benefits flow across all divisions, maybe with the exception of Greater China, where we'll be investing in the ongoing growth in that region.

Justin Pipito: Yeah. Hi, Brian. It's Justin here. The benefits flow across all divisions, maybe with the exception of Greater China, where we will be investing in the ongoing growth in that region. As I say, the AUD 40 million is going to come from all divisions, all regions. It probably weights more to where the teams are bigger at the moment, so Australia and the US.

Speaker #3: You know, the $40 million, so as I say, the $40 million is going to come from all divisions, or all regions. It probably weights more to where the teams are bigger at the moment.

Speaker #3: So Australia and the US.

Speaker #7: Right. Okay. And then just maybe on inventory, obviously the write-down in the US you called out earlier this week is contributing to that coming down a bit year on year.

Bryan Raymond: Right. Okay. Just maybe on inventory, obviously the write-down in the US you called out earlier this week is contributing to that coming down a bit year-on-year. Just wanting to understand, let's call it volume or underlying inventory, and that path from 2.8 to 2 times leverage. Just interested as to whether we think underlying inventory has peaked, and it's now just a matter of that coming down, or do you have some more, let's call it historical vintages flowing through that's going to add to that we need to just be mindful of in that path down to 2 times leverage? Thanks.

Speaker #7: I'm just wanting to understand, let's call it, the volume or underlying inventory, and that path from 2.8 to 2 times leverage. I'm interested in whether we think underlying inventory has peaked and it's now just a matter of that coming down, or if you have some more, let's call it, historical vintages flowing through that's going to add to that, that we need to just be mindful of on that path down to 2 times leverage?

Speaker #3: Yeah, I think we touched on this a little bit at the Investor Day, and certainly from where we're sitting at the moment, you know, FY27 will still be another modest increase in working capital. And that's really talking to the speed at which the supply transformations, both in Australia and the US, can take hold.

Justin Pipito: Yeah, I think we touched on this a little bit at the investor day, and certainly from where we are sitting at the moment, F27 will still be another modest increase in working capital, and that's really talking to the speed at which the supply transformations, both in Australia and the US, can take hold. So, whilst not significant, we do expect to see another slight build in inventory, and that's why that pathway to leveraging, yes, we are confident we are at the peak at 2.8, and we will go down from here. That will accelerate in terms of F27 to F28.

Justin Pipito: Yeah, I think we touched on this a little bit at the Investor Day, and certainly from where we are sitting at the moment, FY 2027 will still be another modest increase in working capital, and that's really talking to the speed at which the supply transformations, both in Australia and the US, can take hold. So, whilst not significant, we do expect to see another slight build in inventory, and that's why that pathway to leveraging, yes, we are confident we are at the peak at 2.8, and we will go down from here. That will accelerate in terms of FY 2027 to FY 2028.

Speaker #3: So, you know, whilst not significant, we do expect to see another slight build in inventory, and that's why, you know, that pathway to deleveraging—yes, we're confident we're at the peak at 2.8, and we'll go down from here.

Speaker #3: You know, that will accelerate in terms of FY27 to FY28.

Speaker #4: Should just as a follow-up to that, should we just assume a sort of linear profile, or would it be a bit more, you know, a bit more of a reduction in inventory in in '28 year on year versus '27 year on year?

Bryan Raymond: Just as a follow-up to that, should we just assume a sort of linear profile, or would it be a bit more of a reduction in inventory in 2028 year-on-year versus 2027 year-on-year?

Speaker #3: probably more the latter. Yeah.

Justin Pipito: Probably more the latter. Yeah.

Speaker #4: Okay. Perfect. Thank you.

Bryan Raymond: Okay, perfect. Thank you.

Speaker #5: Your next question comes from Benjamin Gilbert with Jarden. Please go ahead.

Operator: Your next question comes from Benjamin Gilbert with JPMorgan. Please go ahead.

Speaker #7: I'm going to take the first one from me, just in terms of all the work you're doing around inventory realignment. Appreciate it's sort of 9 to 10 months away, but do you think it's going to give you scope to take some price on next year's release, particularly in Penfolds?

Ben Gilbert: Good morning, Sam. Just the first one from me. Just in terms of all the work you are doing around inventory realignment, appreciate it is nine months away, but do you think it is going to give you scope to take some price on next year's release, particularly in Penfolds? In that light, do you think you can grow revenue into fiscal 2027?

Benjamin Gilbert: Good morning, Sam. Just the first one from me. Just in terms of all the work you are doing around inventory realignment, appreciate it is nine months away, but do you think it is going to give you scope to take some price on next year's release, particularly in Penfolds? In that light, do you think you can grow revenue into fiscal 2027?

Speaker #7: And in that light, do you think you can grow revenue into fiscal '27?

Speaker #4: Yeah. Hi, Ben. Look, I think, you know, we've been disciplined in relation to pricing in the past, and usually as a result of, you know, kind of how we're trying to position the brand and kind of the elasticity in market.

Sam Fischer: Yeah. Hi, Ben. Look, I think, we've been disciplined in relation to pricing in the past, and usually as a result of, kind of how we're trying to position the brand and kind of the elasticity in market. Clearly, some of the cost of living pressures of recent have made that more difficult. I think very pleasingly in China, we've seen Moutai and Wuliangye, the sort of number one and two Baijiu players take price. That's kind of decompressed the market a little bit, in China. As we come into future releases, we'll certainly be looking at the role price can play in those releases and how we can position our brands in those markets, in relation to any price movements that have been received during the year. It's certainly part of our thinking.

Speaker #4: Clearly, some of the cost of living pressures of recent have made that more difficult. I think, very pleasingly, in China we've seen Maotai and Wulanyi, you know, the sort of number one and two Baijiu players, take price.

Speaker #4: That's kind of decompressed the market a little bit in China, and as we come into future releases, we'll certainly be looking at the role price can play in those releases.

Speaker #4: And how we can position our PR brands in those markets in relation to any price movements that have occurred during the year.

Speaker #4: So it's certainly part of our thinking. We certainly think that pricing is important to maintain the positioning of our brand, and it'll be considered in future years as it normally would.

Sam Fischer: We certainly think that pricing is important to maintain the positioning of our brand, and it'll be considered, in future years, as it normally would.

Speaker #7: So, do you think you could grow revenue into fiscal '27, then, if you were able to get some price back in on the next vintage?

Ben Gilbert: Do you think you could grow revenue into fiscal 2027 then if you were able to get the price back in on the next vintage?

Benjamin Gilbert: Do you think you could grow revenue into fiscal 2027 then if you were able to get the price back in on the next vintage?

Speaker #4: I mean, I think the goal for us across the business is to grow revenue. You know, we've got some structural things we're dealing with, particularly as it relates to parallel and inventory and other things.

Sam Fischer: I think the goal for us across the business is to grow revenue. We've got some structural things we're dealing with, particularly as it relates to parallel and inventory and other things. Yeah, we do see that price will be a lever for us, across all of the businesses, as we look at year-on-year planning processes. Yeah, I do think price can be a lever.

Speaker #4: But yeah, we do see that price will be a lever for us across all of the businesses as we look at year-on-year planning processes.

Speaker #4: So yeah, I mean, I do think price can be a lever.

Speaker #3: Yeah.

Speaker #7: Right. And just a follow-on from me. Just on your white versus red mix, in Penfolds, obviously white's pretty immature at the moment—pretty materially biased in terms of skewing so far. How quickly can you ramp that up, with a view that obviously you can probably release a little bit more quickly? And have you been out there trying to secure more supply?

Ben Gilbert: Great. Just a final one from me. Just on your white versus red mix in Penfolds. Obviously, white is pretty mature at the moment, pretty materially priced in terms of NSR. How quickly can you ramp that up with the view? Obviously, you can probably release a little bit more quickly and have you been out there trying to secure more supply? I am just trying to get a picture for how materially you could ramp that up, particularly given the demand we are seeing in Asia and China specifically for it at the moment.

Benjamin Gilbert: Great. Just a final one from me. Just on your white versus red mix in Penfolds. Obviously, white is pretty mature at the moment, pretty materially priced in terms of NSR. How quickly can you ramp that up with the view? Obviously, you can probably release a little bit more quickly and have you been out there trying to secure more supply? I am just trying to get a picture for how materially you could ramp that up, particularly given the demand we are seeing in Asia and China specifically for it at the moment.

Speaker #7: I'm just trying to get a picture for how materially you could ramp that up, particularly given the demand we're seeing in Asia, and China specifically, for it at the moment.

Speaker #4: Yeah, it's exciting. I think just about all markets around the world, we're seeing some real momentum in white wine—through female consumption, through refreshment occasions.

Sam Fischer: Yeah, it is exciting. I think, just about all markets around the world, we are seeing some real momentum in white wine, through female consumption, through refreshment occasions. So Matua is doing really well and early signs, our Penfolds white wine collection is doing really well, as I mentioned in the presentation. Actually, white wine in China, also showing some real growth potential. So that is a big opportunity given the strength of the brand. I do think it is going to play a bigger role. We have not given guidance in relation to that mix impact yet, but, at a headline level, we see it as being a significant growth driver.

Speaker #4: So Matou are doing really well. And early signs, you know, our Penfolds white wine collection is doing really well, as I mentioned in the presentation.

Speaker #4: Actually, you know, white wine in China is also showing some real growth potential. So that's a big opportunity, given the strength of the brand. You know, I do think it's going to play a bigger role.

Speaker #4: You know, we haven't given guidance in relation to that mix impact yet, but at a headline level, we see it as being a significant growth driver.

Speaker #7: And then, is there much decent juice or grapes around that you can actually get in the Chardonnays and those sorts of things, or is this a five-year type thing where you've actually got to build it out?

Ben Gilbert: Is there much decent juice for grapes around that you can actually get in the Chardonnays and those sorts of things, or is this a 5-year type thing where you have actually got to build it out?

Benjamin Gilbert: Is there much decent juice for grapes around that you can actually get in the Chardonnays and those sorts of things, or is this a 5-year type thing where you have actually got to build it out?

Speaker #4: Yeah, we've looked at that modeling, Ben, and I think we feel very confident that we've got appropriate supply that underpins our ambition.

Sam Fischer: Yeah, we have looked at that modeling, Ben, and I think we feel very confident that we have got appropriate supply that underpins our ambition.

Speaker #7: Fantastic. Appreciate it.

Ben Gilbert: Fantastic. Appreciate it.

Benjamin Gilbert: Fantastic. Appreciate it.

Speaker #5: Your next question comes from Caleb Wheatley with Macquarie. Please go ahead.

Operator: Your next question comes from Caleb Wheatley with Macquarie. Please go ahead.

Speaker #6: Morning, Sam and Justin. Just wanted to come back to the depletion strength in Penfolds, and particularly in China. You sort of alluded to it a little bit throughout some of the prior questions, but even taking out half of that growth that's relating to parallel importing, the headline numbers are still really, really strong.

Caleb Wheatley: Morning, Sam and Justin. Just wanted to come back to the depletion strength in Penfolds and particularly in China. Sort of alluded to it a little bit throughout some of the prior questions, but even taking out sort of half of that growth that is relating to parallel importing, the headline number is still really, really strong. It seems like most of the sort of industry level or anecdotal feedback coming out of China is still relatively weak and, you mentioned yourself, there are still some kind of areas of concern. Just, yeah, sort of wondering what is sort of happening more specifically on the Penfolds brand and what is really driving what is a, yeah, seemingly really strong depletion number there given those industry anecdotes.

Speaker #6: And it seems like most of the sort of industry-level or anecdotal feedback coming out of China is still relatively weak. And, as I mentioned, there are still some areas of concern.

Speaker #6: Just, yeah, sort of wondering what's happening—more specifically on the Penfolds brands—and what's really driving what is a, yeah, seemingly really strong depletion number there, given those industry anecdotes.

Speaker #3: Yeah. No, I mean, thanks for the question. I think, again, we went into quite a lot of detail during the Investor Day on China and really where the opportunities exist, and they're multiple.

Sam Fischer: Yeah. No, thanks for the question. Look, I think, again, we went into quite a lot of detail during the investor day on China and really where the opportunities exist. There are multiple, some of that is the migration of parallel that we have talked about, but actually in the market, we look at province and sub-provincial distribution opportunities. They are really significant. We look at distributor expansion into third, fourth, fifth-tier cities. We look at portfolio and we say, look, there are lots of opportunities to fill distribution gaps across the portfolio. You look at white wine, festive occasions like Mid-Autumn and Chinese New Year, exceptionally strong, the release. So, add to that kind of migration from Baijiu, and we see some of that happening particularly in restaurants. Moderation trends really favoring kind of the alcohol strength that sits inside of our wine.

Sam Fischer: Yeah. No, thanks for the question. Look, I think, again, we went into quite a lot of detail during the Investor Day on China and really where the opportunities exist. There are multiple, some of that is the migration of parallel that we have talked about, but actually in the market, we look at province and sub-provincial distribution opportunities. They are really significant. We look at distributor expansion into third, fourth, fifth-tier cities. We look at portfolio and we say, look, there are lots of opportunities to fill distribution gaps across the portfolio. You look at white wine, festive occasions like Mid-Autumn and Chinese New Year, exceptionally strong, the release. So, add to that kind of migration from Baijiu, and we see some of that happening particularly in restaurants. Moderation trends really favoring kind of the alcohol strength that sits inside of our wine.

Speaker #3: You know, some of that's the migration of parallel that we've talked about, but actually in the market, you know, we look at province and sub-provincial distribution opportunities—they're really significant.

Speaker #3: We look at distributor expansion into third-, fourth-, and fifth-tier cities. We look at the portfolio and we say, look, there's lots of opportunities to fill distribution gaps across the portfolio.

Speaker #3: You look at white wine, festive occasions like Mid-Autumn and Chinese New Year—exceptionally strong, the release. So, you know, add to that kind of migration from Baiju, and we see some of that happening, particularly in restaurants.

Speaker #3: And moderation trends really favoring, you know, kind of the the the the alcohol strength that sits inside of our wine. And and finally, just you know, again, I keep talking about penfolds the brand that transcends wine.

Sam Fischer: Finally, just, again, I keep talking about Penfolds, the brand that transcends wine. This is a luxury brand in China and that status continues to drive growth. All of that, along with a recovering wine category, give us great confidence that we can continue through the enormous market of China to drive growth. That is what underpins our assumptions.

Speaker #3: This is you know, a luxury brand in China and and and and that status continues to drive growth. So so all of that along with with a recovering wine category give us great confidence that we can continue through the enormous market of China to drive growth.

Speaker #3: And that's what underpins our assumptions.

Speaker #6: Okay, great. And then just sort of moving forward on the Penfolds side, but I guess more broadly across the brands, just as you shift to the geographic segmentation, I'm just wondering what kind of disclosure we can expect around those major brands. Just conscious the market, you know, clearly focuses quite strongly on Penfolds and will increasingly focus on the sort of three power brands that you're calling out.

Caleb Wheatley: Okay, great. Then just moving forward on the Penfolds side, but I guess more broadly across the brands, just as you shift to the geographic segmentation, just wondering what kind of disclosure we can expect around those major brands. Just conscious the market clearly focuses quite strongly on Penfolds, but will increasingly focus on the three power brands that you are calling out?

Speaker #3: Yeah, I mean, Penfolds is a key driver globally. Clearly, we can see on the back of the strength of the equity of the brand that there are huge opportunities in all markets globally.

Sam Fischer: Yeah. Penfolds is a key driver globally. Clearly, we can see on the back of the strength of the equity of the brand that there are huge opportunities in all markets globally. I have talked about India. I cannot wait to get to India and start to explore the opportunities that exist in that really interesting market. It is nascent at the moment, but has lots of opportunities. Look, I think Matua is an interesting one. We are already getting lots of feedback from Matua in China and the opportunity that exists there, and we will look to spread that more broadly around the world. Early days on DAOU. But we have had DAOU up in China and the emerging markets of Southeast Asia. Early signs are positive, but we have got more work to do in relation to those opportunities. So, it is predominantly led by Penfolds, with Matua and DAOU having opportunities.

Speaker #3: I've talked about India—you know, I can't wait to get to India and start to explore the opportunities that exist in that really interesting market.

Speaker #3: It's nascent at the moment, but has lots of opportunities. Look, I think Matua is an interesting one. You know, we're already getting lots of feedback from Matua in China and the opportunity that exists there.

Speaker #3: And we'll look to spread that more broadly around the world. It's still early days on DAOU, but we've had DAOU up in China and the emerging markets of Southeast Asia.

Speaker #3: Early signs are positive, but we've got more work to do, you know, in relation to those opportunities. So it's predominantly led by Penfolds, with Matua and Dow having opportunities.

Speaker #3: And and look, when we look at some of those regional heroes, we also see, you know, kind of opportunities you know, for brands like Squealing Pig in the UK or or or or Pepperjack, you know, in other markets around the world.

Sam Fischer: Look, when we look at some of those regional heroes, we also see opportunities for brands like Squealing Pig in the UK or Pepperjack in other markets around the world. So, we will continue to look at them in the context of those brand priorities and see whether or not opportunities exist in markets outside of their home markets.

Speaker #3: So, you know, we'll continue to look at them in the context of those brand priorities and see whether or not opportunities exist in markets outside of their home markets.

Speaker #1: Caleb, Caleb's Justin here. Just just to build on on Sam's response in terms of your question about what to expect going forward from a disclosure point of view, you know, geographic segments is obviously how we're going to look at this business going forward and that'll be our primary way of reporting.

Justin Pipito: Caleb, it is Justin here. Just to build on Sam's response, in terms of your question about what to expect going forward from a disclosure point of view, geographic segments is obviously how we are going to look at this business going forward, and that will be our primary way of reporting. We are working through the other stuff that sits around that. At a minimum, we would expect to give pretty strong insights on our power brands as we move forward. As I would emphasize, we are still working through some of that.

Speaker #1: We're sort of working through the other stuff that sits around that, so, you know, at a minimum, we'd expect to give insights—pretty strong insights—on our power brands as we move forward.

Speaker #1: But as I'd emphasize, we're still working through some of that.

Speaker #6: Okay, that's good. Thank you very much.

Caleb Wheatley: Okay, that is clear. Thank you very much.

Speaker #5: Your next question comes from Richard Barwick with CLSA. Please go ahead.

Operator: Your next question comes from Richard Barwick with CLSA. Please go ahead.

Speaker #7: Thank you. Good morning, guys. Can I just pick up a couple of points and draw them together? I think on one of your slides, Justin, you were talking about the Project Ascent being cash-flow positive post-divestments.

Richard Barwick: Thank you. Good morning, guys. Can I just pick up a couple of points and draw them together? I think on one of your slides, Justin, you were talking about Project Ascent being cash flow positive post-divestments. I guess my first question really is, should we be expecting more in the way of one-offs and write-downs? Because right now, you are talking about the cash impact being up to a negative AUD 195 million. Therefore, the divestments have got to be something greater than that. Can I just clarify those points, please?

Speaker #7: So I guess my my first question really is the should we be expecting more in the way of one-offs and write downs? Because right now you're talking about the cash impact being up to a a negative 195 be so therefore if the divestments have got to be something greater than that, can I just clarify those points please?

Speaker #1: Yeah, hi Richard. Yeah, your thinking's right. I'm just trying to find the slide, but I think you asked two questions there in terms of can you expect more one-time items on top of what we've disclosed today.

Justin Pipito: Yeah. Hi, Richard. Yeah, your thinking's right. I'm just trying to find the slide. I think you asked two questions there in terms of can you expect more one-time items on top of what we've disclosed today. I think the work around the Treasury Americas strategic review is still ongoing. We've made good progress to date with what we've been able to do and the decisive actions we've been able to take around supply, but ultimately, we are continuing to do that work. In terms of what's outlaid as the expected cash costs on the remaining elements of the Ascent program, they're estimate of today. I think correct, you take the sum of those and if we're saying cash positive, it means the divestment side is expected to be greater, and that's correct.

Speaker #1: You know, I think the work around the America Strategic Review is still ongoing. So, you know, we've made good progress to date with what we've been able to do and the decisive actions we've been able to take around supply.

Speaker #1: But ultimately, we are continuing to do that work. You know, in terms of what's out later, the expected cash costs on the remaining elements of the Ascent program, they're our estimate as of today.

Speaker #1: I I think correct, you know, take the sum of those and if we're saying cash positive, it means the divestment side is is expected to be greater and that's that's that's correct.

Speaker #1: I would also just draw back then into the leverage comments, you know, and we emphasized this at the Investor Day as well.

Justin Pipito: I would also just draw back then into the leverage comments, and we emphasized this at the Investor Day as well. We see a pathway to 2 times leverage or lower without those divestments in the plan. A couple of things there just to cover off.

Speaker #1: We see a pathway to two times leverage or lower without those divestments in the plan. So, a couple of things there just to cover off.

Speaker #7: Very good. You're saying you can get to two times without divestments?

Richard Barwick: Sorry, just, you're saying you can get to 2 times without divestments?

Speaker #1: Correct, that's right. And that's consistent with what we committed to, or noted, at the Investor Day.

Justin Pipito: Correct. That's right. That's consistent with what we committed to or noted at the Investor Day.

Speaker #7: Let's do our thought, but just the wording today—it actually made me think the opposite, that the two times was reliant on, or included, divestments.

Richard Barwick: That is what I thought, but just the wording today, it actually made me think the opposite, that the 2 times was reliant on or included divestments.

Speaker #1: No, apologies if that's been the way it's been interpreted. That's certainly not the case. The divestments are still part of our capital management plan, and we've been pretty pleased with the response to what we've tried to take to market to date.

Justin Pipito: No, apologies if that has been the way it has been interpreted. That is certainly not the case. The divestments are still part of our capital management plan, and we have been pretty pleased with the response on what we have tried to take to market to date. But we still see a pathway to 2 times or less without those divestments.

Speaker #1: But we still see a pathway to two times or less without those divestments.

Speaker #7: Okay, thank you. And just to round that off, you're saying that there are several divestment processes underway. In terms of the, I guess, the cash contribution, you're sort of flagging there could be brands but also productive assets.

Richard Barwick: Okay. Thank you. And just to round that off, you are saying that there are several divestment processes underway. In terms of the, I guess, the cash contribution, you are flagging there could be brands but also productive assets. Should we be expecting most of the cash to be coming from brand divestments or from the productive assets?

Speaker #7: Is it—should we be expecting most of the cash to be coming from brand divestments, or from the productive assets?

Speaker #1: Oh, it's a mix. It's a mix, Richard. So, you know, without getting into too much detail now, there are a number of assets we've identified across the, you know, the hard assets—vineyards and then production assets—and also brands, and we're working through a number of them at the moment.

Justin Pipito: It is a mix. It is a mix, Richard. Without getting into too much detail now, there is a number of assets we have identified across the hard assets vineyards and then production assets and also brands, and we are working through a number of them at the moment.

Speaker #7: Yeah.

Speaker #3: Yeah, Richard, I think we, you know, we'll come back to the market. I would suspect before the end of the year with an update on that and give some progress around all of the actions we're taking.

Sam Fischer: Yeah, Richard, I think

Richard Barwick: Okay

Sam Fischer: we will come back to the market, I would suspect before the end of the year with an update on that, and give some progress around all of the actions we are taking. I think it is worthwhile in relation to that broader leverage goal and how we are going to get there is a real significant focus on working capital, and trying to ensure that through all of that initiative, we extract cash that we use to obviously drive down our leverage. That is what underpins our confidence that we can get there without divestments. The further we get into that, the more confident we become.

Speaker #3: And I think it's worthwhile, in relation to that broader leverage goal and how we're going to get there, to have a real, significant focus on working capital.

Speaker #3: And trying to ensure that, you know, through all of that initiative, we extract cash that we use to obviously drive down our leverage. And really, that’s what underpins our confidence that we can get there without divestments.

Speaker #3: And the further we get into that, the more confident we become.

Speaker #7: Yep. Okay, that's really helpful. Thank you.

Richard Barwick: Yep. Okay. That is really helpful. Thank you.

Speaker #5: Your next question comes from Phil Kimber with E&P Capital. Please go ahead.

Operator: Your next question comes from Phil Kimber with E&P Capital. Please go ahead.

Speaker #8: Hi guys, just a question around the new divisions—and I don't know if this is the right way to look at it—but if I look at Greater China in the second half, EBIT has jumped about $30 million, and I look at emerging markets in the second half and EBIT has dropped $23 million.

Phil Kimber: Hi, guys. Just a question around the new divisions. I do not know if this is the right way to look at it, but if I look at Greater China in the H2, EBIT has jumped about AUD 30 million, and I look at emerging markets in the H2 and EBIT has dropped AUD 23 million. So it looks like a lot of the EBIT drop is because you have cracked down on the parallel importing, so that effectively shifts profits out of emerging markets into Greater China. I look at your guidance, and I get the Greater China ones, AUD 280 million to AUD 310 million, and you look at the H2, and then you think about the Bin 407 issue, and that, fair enough.

Speaker #8: So it looks like a lot of the EBIT, you know, that drop is because you've switched—you know, you've cracked down on the parallel importing.

Speaker #8: So that effectively shifts profits out of emerging markets into Greater China. And then I look at your guidance, and I get the Greater China one, you know, $280 to $310 million. And you look at the second half, and then you think about the 407 issue, and that's fair enough.

Speaker #8: But I look at emerging markets and I go, you did under $40 million in the second half, and you're saying your full year is going to be, you know, let's call it $100 million.

Phil Kimber: But I look at emerging markets, and I go, you did under AUD 40 million in the H2, and you are saying your full year is going to be, let us call it AUD 100 million. What is changing there? Am I thinking about it wrong and you cannot just annualize the H2? I just wanted to understand that a bit better. Thanks. In particular, around emerging markets.

Phil Kimber: But I look at emerging markets, and I go, you did under AUD 40 million in the H2, and you are saying your full-year is going to be, let us call it AUD 100 million. What is changing there? Am I thinking about it wrong and you cannot just annualize the H2? I just wanted to understand that a bit better. Thanks. In particular, around emerging markets.

Speaker #8: What's changing there? Is there—you know, am I thinking about it wrong, and you can't just annualize the second half? I just wanted to understand that a bit better.

Speaker #8: Thanks, in particular, around emerging markets.

Speaker #1: Yeah, good morning Phil. Hi. Yeah, I I yeah, I I don't think annualizing the second half is is sort of the the right way to to look at it.

Justin Pipito: Yeah. Good morning, Phil. Hi. I do not think annualizing the H2 is the right way to look at it. It has been a bit more nuanced as we have worked into it. I think the other comment to make is within those emerging markets, there are a number of strong domestic markets that still continue to grow and present opportunities. So you have got a bit of a balance of domestic growth, potentially, some trade out of parallel. But that gives us the range we have presented today.

Speaker #1: It's been a bit more nuanced as we've worked into it. And I think the other comment to make is, within those emerging markets, there are a number of strong domestic markets that still continue to grow and present opportunity.

Speaker #1: So, you've got a bit of a balance of, you know, domestic growth, you know, potentially, you know, some trade out in parallel, but that gives us, you know, the range we've presented today.

Speaker #7: Okay, thanks. And if I do sort of assign things in the ANZ Europe business again, I mean, should we assume that to get to the $100 to $120 million, when you look at the second-half run rate?

Phil Kimber: Okay. Thanks. If I do sort of the same thing, in the ANZ and Europe business, again, should we assume that to get to the AUD 100 million to AUD 120 million, when you look at the H2 run rate, you need a lot of those cost savings actually will end up falling in that ANZ business, that will be the bulk of the cost savings because I just sort of could not get it to reconcile otherwise.

Speaker #7: I mean, you need a lot of those cost savings. Actually, a lot of them will end up falling in that ANZ business. That'll be the bulk of the cost savings, because it just sort of couldn't get it to reconcile otherwise.

Speaker #1: Yeah, again, I think you're looking at it pretty well there. A lot of cost savings will be weighted to Q2 and Q4 in Europe.

Justin Pipito: Yeah. Again, I think you are looking at it pretty well there. A lot of Project Ascent savings will be weighted to ANZ and Europe, and that drives a lot of the uptick in that P&L. I think also, as we communicated today, we see ongoing strong depletions growth for Penfolds, and that will play a part. We had 5% experience this year. We will expect growth next year and improved mix supporting that. So there is a couple of drivers, but Project Ascent will be one of the keys there.

Speaker #1: And that drives a lot of the uptick in that P&L. I think also, you know, as we communicated today, we see ongoing strong depletions growth for Penfolds, and that will play a part.

Speaker #1: You know, we had 5% growth this year. We'll expect growth next year and, you know, improved mix supporting that. So there's a couple of drivers, but Ascent will be, you know, one of the keys there.

Speaker #7: Awesome. Thank you.

Phil Kimber: Awesome. Thank you.

Speaker #5: Your next question comes from Sam Teiger with Citi. Please go ahead.

Operator: Your next question comes from Sam Teeger with Citi. Please go ahead.

Speaker #8: Hi Sam, hi Justin. Well done on the progress you've made turning this company around to date. I wanted to ask, what’s the price range you were targeting for Bin 407 in China? And based on the improvements you’re seeing in Bin 407 pricing over the current quarter, what’s the potential that this shipment pause might end earlier?

Sam Teeger: Well done on the progress you have made turning this company around to date. I wanted to ask around what is the price range you are targeting for Bin 407 in China, and based on the improvements you are seeing in Bin 407 pricing over the current quarter, what is the potential that this shipment pause might end earlier? Following on from that, to what extent are your global Penfolds distributors seeing increased demand for Bin 407 right now given the China shipment pause?

Speaker #8: And kind of following on from that, to what extent are your global Penfolds distributors seeing increased demand for Bin 407 right now, given the China shipment pause?

Speaker #7: I'm just hoping I'm understanding this question right. I think what we're looking for in China— we've been trading about 10% below where we would like.

Sam Fischer: I'm just hoping I'm understanding this question right. I think that what we're looking for in China, we've been trading about 10% below where we would like. Your target price is sort of north by about 10%, is what we're targeting from a portfolio perspective. Again, some of these actions are all in service of ensuring that we provide the conditions that will allow us to deliver that and that we organize our route to market across the region, in a way that brings control back into that pricing and how the product flows. Really, this is a complicated system, and it's a little bit imperfect, but that's kind of what we're looking to achieve through all of these programs. That's where we would like it positioned from a brand perspective.

Speaker #7: So, you know, target price is sort of north by about 10%—is what we're targeting from a portfolio perspective. Again, some of these actions are all in service of ensuring that, you know, we provide the conditions that will allow us to deliver that, and that we organize our route to market across the region in a way that brings control back into that pricing. And, you know, really, this is a complicated system and it's quite a little bit imperfect, but that's kind of what we're looking to achieve through all of these programs.

Speaker #7: That's where we would like to be positioned from a brand perspective. You know, across the rest of pricing as it relates to Penfolds, we think about that with each market and then in the context of how those markets can interrelate, and make sure that we've got a coordinated approach that we plan for as we do our brand plans every year.

Sam Fischer: Across the rest of pricing as it relates to Penfolds, we think about that with each market and then in the context of how those markets can interrelate and make sure that we've got a coordinated approach that we plan for as we do our brand plans every year. As I mentioned earlier, we're always looking to take price to support that positioning, and we look at that when we develop the brand plan. We'll continue to do that going forward. I hope that answers the question.

Speaker #7: As I mentioned earlier, you know, we're always looking to take price to support that positioning and and and we look at that when we we develop the brand plans.

Speaker #7: So, you know, we'll continue to do that going forward. I hope that answers the question.

Speaker #3: Yeah, no, thanks. And given the growth we're seeing in Chinese wines, could you please give us an update around the Ningxia Stone and Moon Winery?

Sam Teeger: Yeah. Thanks. Given the growth we are seeing in Chinese wines, could you please give us an update around the Ningxia Stone & Moon Winery? When might we see increased products coming from here?

Speaker #3: When might we see increased products coming from here?

Speaker #7: Yeah, I mean, when we continued to be excited about you know, our investment in Ningxia the we've we've we've now looked at developing grapes that we can put into our China source Penfolds products and we've had, you know, kind of a lot of exchanges with Chinese winemakers and our winemakers really developing capability that would allow some of that grape to go into Penfolds.

Sam Fischer: Yeah, Sam, we continue to be excited about our investment in Ningxia. We've now looked at developing grapes that we can put into our China-sourced Penfolds products, and we've had a lot of exchanges with Chinese winemakers and our winemakers really developing capability that would allow some of that grape to go into Penfolds. The Stone & Moon brand continues to be sourced from there, and again, we continue to execute that in the market. But the opportunity for us is to start to develop a Chinese-sourced grape variety for Penfolds. I think that we're progressing well as it relates to that investment. I would also say that we have a strong relationship with the government there that continues to support us as well. That investment is playing a huge role in how we develop the overall industry in China, and I'm excited about that.

Speaker #7: The Stone and Moon brand continues to be sourced from there, and again, we continue to execute that in the market. But you know, the opportunity for us is to start to develop a Chinese-sourced grape variety for Penfolds.

Speaker #7: And you know, I think that we're progressing well as it relates to that investment. I would also say that, you know, we have a strong relationship with the government there that continues to support us as well.

Speaker #7: So, you know, that investment has played a huge role in how we develop the overall industry in China, and I'm excited about that.

Speaker #3: Great, thank you.

Sam Teeger: Great. Thank you.

Speaker #5: Your next question comes from Mark Southwell-Keely with Select Equities. Please go ahead.

Operator: Your next question comes from Mark Southwell-Keely with Select Equities. Please go ahead.

Speaker #8: Hey guys, thanks for taking my call. I have two questions. Just firstly, I'm interested, Sam, perhaps in terms of what learnings you take from the wholesale pricing of grains at the moment.

Mark Southwell-Keely: Hey, guys. Thanks for taking my call. I have two questions. Firstly, I am interested, Sam perhaps, in terms of what learnings you take from the wholesale pricing of Grange at the moment. You have reduced allocations of Grange. You have also spent or invested significantly in the global Grange campaign, and yet wholesale pricing continues to deteriorate and be soft. Just wondering what your learnings are from that.

Speaker #8: So, you've reduced allocations of grains, you've also spent or invested significantly in the global grains campaign, and yet wholesale pricing continues to deteriorate and be soft.

Speaker #8: I’m just wondering what your learnings are from that?

Speaker #7: Yeah, I mean, I think all of the work we're doing on grains is to continue to support the role that it plays at a brand level, which is the pinnacle.

Sam Fischer: Well, I think all of the work we are doing on Grange is to continue to support the role that it plays at a brand level, which is the pinnacle. This is what everyone aspires to buy. Again, the limitation of what we make is all about bringing more scarcity into that equation, making it sought after globally. I think the response to that has been really fantastic. The campaign, again, just reinforcing that aspirational, inspirational positioning. I feel like we are on the track to ensuring and protecting the critical role that it plays inside the portfolio. I am conscious at release that there is often lots of noise around wholesale pricing. In fact, my feedback from the release has been that some of that noise has been significantly reduced coming into this release, and the pricing is more stable than it has been in the past.

Speaker #7: This is what everyone aspires to buy, and again, the limitation of what we make is all about bringing more scarcity into that equation—making it sought after.

Speaker #7: you know, globally and and I think the response to that's been really fantastic. The campaign again just reinforcing that aspirational inspirational positioning. So, you know, I feel like you know, we're on the track to ensuring and protecting you know, the critical role that it plays inside the portfolio.

Speaker #7: And you know, I’m conscious at release that there’s, you know, often lots of noise around wholesale pricing. In fact, my feedback from the release has been that some of that noise has been significantly reduced coming into, you know, this release, and the pricing is more stable than it has been in the past.

Speaker #7: So again, another anecdotal data point to say all of these actions are really kind of supporting the role that we want grains to play.

Sam Fischer: Again, another anecdotal data point to say all of these actions are really supporting the role that we want Grange to play. The learnings are that the actions that we are taking are really strengthening the propositioning and its positioning. I am quite pleased.

Speaker #7: So, the learnings are that the actions that we're taking are really strengthening the propositioning and its positioning. So, you know, I'm quite pleased.

Speaker #8: My second question is in relation to the pause on the shipments of Bin 407. I'm just wondering if you can explain the logic, or the consistency of the logic perhaps, in terms of on the one hand you're saying to the trade that you're temporarily suspending the shipment of the product.

Mark Southwell-Keely: My second question is in relation to the pause on the shipments for Bin 407. I am just wondering if you can explain the logic or the consistency of the logic, perhaps, in terms of, on the one hand, you are saying to the trade that you are necessarily temporarily suspending the shipment of the product for a three-month period. But on the other hand, you are telling the market essentially that you are guaranteeing a certain product volume over a 12-month period. Can you just maybe reconcile those two logics?

Speaker #8: And on the, for a three-month period, but on the other hand, you're telling the market, essentially, that you're guaranteeing a certain product volume over a 12-month period.

Speaker #8: Can you maybe just reconcile those two logics?

Speaker #7: Yeah, I think, you know, what we've seen happening at a market level with 407 was concerning. You know, I would say it was kind of being used as a lever for trading and facilitation of trading.

Sam Fischer: I think, what we had seen happening at a market level with 407 was concerning. I would say it was being used as a lever for trading and facilitation of trading, and we have just sent a message by suspension that that is not on, that we will not put up with that we cannot have such a critical component of our Penfolds brand being used to facilitate trading activities. It is the best way I can describe it. If that continues, specific customers will be targeted, and they will not have access to 407 or other parts of the brand. It is really just a signal to the market about the conviction we have got of bringing our route to market as it relates to Penfolds back into control and the role that we need it to play in the development and support for the brand. I think that message has been received.

Speaker #7: And we've just sent a message by suspension that that's not on, that we won't put up with that, that we can't have, you know, such a critical component of our Penfolds brand being used to facilitate trading activities.

Speaker #7: It's the best way I can describe it. And if that continues, specific customers will be targeted, and they won't have access to 407 or other parts of the brand.

Speaker #7: So, it's really just a signal to the market about the conviction we've got of bringing our route to market, as it relates to Penfolds, back into control.

Speaker #7: And the role that we needed to play in the development and support for the brand. And, you know, I think that message has been received.

Speaker #7: It's not been done before. It's a strong message, and it says if you don't adhere to the conditions that you sign up to when you become a partner of ours, there are ramifications.

Sam Fischer: It has not been done before. It is a strong message, and it says, "If you do not adhere to the conditions that you sign up to when you become a partner of ours, there are ramifications." Longer term, we have set that standard, and we have said, "Right, we can go back to normal trading as long as you adhere to those conditions," and that is why the allocation has remained the same. That is the psychology of it. It is really about sending a strong message on the back of trading activities to our partners in our distribution chain. Does that make sense?

Speaker #7: Longer term, you know, we've set that standard and we've said, right, we can go back to normal trading as long as you adhere to those conditions, and that's why the allocation has remained the same.

Speaker #7: So, that's kind of the psychology of it. It's really about sending a strong message, on the back of trading activities, to our partners in our distribution chain.

Speaker #7: Does that make sense?

Mark Southwell-Keely: Not really, but thank you.

Speaker #8: Not really, but thank you.

Speaker #7: Okay.

Sam Fischer: Okay.

Speaker #5: Your next question comes from Michael Simoches with Jefferies. Please go ahead.

Operator: Your next question comes from Michael Simotas with Jefferies. Please go ahead.

Speaker #9: Oh, hi. Thanks for taking another one. Just an accounting question if I can, relating to the impairments and write-downs that were announced earlier in the week.

Michael Simotas: Hi. Thanks for taking another one. Just an accounting question, if I can, relating to the impairments and write-downs that were announced earlier in the week. So there should be a P&L tailwind from less depreciation on physical assets, less lease depreciation on the written-down right of use assets, and then maybe some implications from written-down inventory as well. Appreciate that a lot of that will be tied to COGS, but just want to understand how that will flow through the P&L in terms of phasing and also, whether there will be a little bit of a cash versus earnings mismatch as that starts to come through, presumably not for a year or two.

Speaker #9: So, there should be a P&L tailwind from less depreciation on physical assets, less lease depreciation on the written-down right-of-use assets, and then maybe some implications from written-down inventory as well.

Speaker #9: I appreciate that a lot of that will be tied to COGS, but I just want to understand how that will flow through the P&L in terms of phasing, and also whether there'll be a bit of a cash versus earnings mismatch.

Speaker #9: Has that started to come through? Presumably, not for a year or two?

Speaker #7: Yeah, hi Michael. I think when you said "accounting query," that was coming straight to me. You're right—there will be some lease and depreciation savings as a result of the write-downs we made or announced on Monday.

Justin Pipito: Yeah. Hi, Michael. I think when you said accounting query, that was coming straight to me.

Michael Simotas: Right.

Justin Pipito: You are right, there will be some lease and depreciation savings as a result of the write-downs we made, or announced on Monday. That flows 100% into our vintage costing and will be capitalized into our vintage 2026. Or it is captured as part of our vintage 2026 COGS process. In a normal year, that would take two to three years to flow through the P&L. Albeit, we are working through some elevated levels of inventory, so that flow through will probably take a little bit longer. So, there is a benefit as a result, but it does take time to realize, and I think that is probably the key point. Remind me, what was the second part of your question on the inventory?

Speaker #7: That flows 100% into our vintage costing and will be capitalized into our vintage '26, or it's captured as part of our vintage '26 COGS process.

Speaker #7: So, in a normal year, that would take two to three years to flow through the P&L. You know, albeit we are working through some elevated levels of inventory, so that flow through will probably take a little bit longer.

Speaker #7: So, there is a benefit as a result, but it does take time to realize. And I think that's probably the key point.

Speaker #7: Remind me, what was the second part of your question on the inventory?

Speaker #9: Oh, that's helpful, thank you. And then by the time we get out there, as the benefit comes through the P&L, will cash match it, or will there be a bit of a cash shortfall? Given you— I mean, even if you look at something like leases, your cash outflow might be bigger than what your P&L shows.

Michael Simotas: That is helpful. Thank you. Then by the time we get out there as the benefit comes through the P&L, will cash match it, or will there be a bit of a cash shortfall given, even if you look at something like lease, your cash outflow might be bigger than what you are taking through the P&L?

Justin Pipito: I am not sure I understand fully, Michael. Let us come back to you on that one, if that is okay.

Speaker #7: I'm not sure I fully understand, Michael. Let us come back to you on that one, if that's okay.

Speaker #9: Okay, all right. We'll follow up later. Thank you.

Michael Simotas: Okay. All right. We will follow up later. Thank you.

Speaker #7: Yeah.

Speaker #5: Your next question comes from Brian Raymond with JP Morgan. Please go ahead.

Operator: Your next question comes from Bryan Raymond with JPMorgan. Please go ahead.

Speaker #8: Thanks for taking a follow-up. Just another one—I think Justin was just following up on Ansie's point made earlier in the call, just around being cautious about the bounce back in the US from the $50 million base in '27. We've gone through a number of times, and a lot of the short-term impacts are sort of driving the number down to that level.

Bryan Raymond: Thanks for taking a follow-up. Just another one, Justin, just following up on what Anthony made earlier in the call. Just around to be cautious around the bounce back in the US from the AUD 50 million base in 2027. We have gone through a number of times a lot of the short-term impacts that are driving the number down to that level. Given how low it is, I just want to understand if there is something I am missing even in 2028 and beyond that would not make it bounce back a bit more quickly. It just seems like such a low baseline. Is there something out there that we need to be cognizant of that is going to stop that recovery to a more normalized level of EBITs in the Americas? Thanks.

Speaker #8: Given how low it is, I just want to understand if there's something I'm missing—beyond even in '28 and beyond—that would not make it bounce back a bit more quickly.

Speaker #8: It just seems like such a low baseline. Is there something out there that we need to be cognizant of that's going to stop that recovery to a, you know, more normalized level of EBITs in the Americas?

Speaker #8: Thanks.

Speaker #7: Yeah, hi Brian. It's you know, I I when we get out of this year, we we do expect revenue to grow, but you know, the the key drag is the the structural mis misalignment and what that does to our COGS line.

Justin Pipito: Yeah. Hi, Bryan. When we get out of this year, we do expect revenue to grow, but the key drag is the structural misalignment and what that does to our COGS line. I think also as we go through the next few years, we do have a bit of an ongoing portfolio transition as we pivot away from the non-core brands, and there is a bit of decline on those into the power and the regional heroes. So they are the only two core left, I think, that give a bit of pause on how quickly to expect it to get back.

Speaker #7: I think also, as we go through the next few years, we do have a bit of an ongoing portfolio transition as we pivot away from the non-core brands, and there's a bit of decline on those.

Speaker #7: into the into the power and the regional heroes. So that that they're the only sort of two core lets I think that sort of give a bit of pause on sort of how how quickly to expect.

Speaker #7: It to get back.

Speaker #8: Okay. Okay. And then just a final one if I can, just on the dividend coming back it's obviously suspended for now. If you get to two times leverage, would that is that kind of a benchmark that you'd be looking at to to reinitiate the deal for the board to decide to bring the dividend back?

Bryan Raymond: Okay. Then just the final one, if I can, just on the dividend coming back. It is obviously suspended for now. If you get to 2x leverage, is that a benchmark that you would be looking at to reinitiate the deal for the board to decide to bring the dividend back?

Speaker #9: Yeah. I mean, I think that's certainly when we'll start having the discussions with the Board about, you know, an appropriate time. It depends on how everything looks going forward.

Sam Fischer: Yeah. I think that is certainly when we will start having the discussions with the board about an appropriate time. It depends on how everything looks going forward. Our goal right now is to focus hard on delivering us back into the target range in that timeframe, and that is when we would expect that conversation to start happening again with the board.

Speaker #9: Our our goal right now is to focus hard on on on delivering us back into the target range in that timeframe and and and that's when we would expect that conversation to start happening again with the board.

Bryan Raymond: Okay.

Speaker #9: And on just on the previous question, I would just say that, you know, some some of these structural options that we're looking at have have the potential of a material impact on those earnings.

Sam Fischer: On the previous question, I would just say that some of these structural options that we are looking at have the potential of a material impact on those earnings. We do expect to have earnings progression going forward from this point. Exactly what they look like depend quite materially on some of the outcomes of the discussions we are having inside of those structural options that are being reviewed at the moment. Look, we will commit to come back to you as soon as we start to get more clarity around those on a very regular basis.

Speaker #9: I mean, we do expect to have earnings progression going forward from this point. exactly what they look like depend quite materially on some of the outcomes of the discussions we're having inside of those structural those structural options that that that that are being reviewed at the moment and and look, we will commit to come back to you as soon as we start to get more clarity around those.

Speaker #9: on a very regular basis.

Speaker #8: Okay. Thanks.

Bryan Raymond: Okay, thanks.

Speaker #5: There are no further questions at this time. I'll now hand back to Sam Fisher for closing remarks.

Operator: There are no further questions at this time. I will now hand back to Sam Fischer for closing remarks.

Speaker #7: Okay, thank you very much, everybody. We appreciate your time today, and we appreciate your support in this ongoing journey. We look forward to coming back to you in the near term.

Sam Fischer: Okay. Thank you very much, everybody. We appreciate your time today, and we appreciate your support in this ongoing journey. We look forward to coming back to you in the near term. Thank you.

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