Q2 2026 Chapel Down Group PLC Earnings Call

September 23, 2026

Speaker #2: Entering webinar of attendee.

Speaker #3: Good afternoon, and welcome to the Chapel Down Group Q3 Interim Results and Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode.

Operator: Good afternoon, and welcome to the Chapel Down Group PLC interim results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. Before we begin, I would like to submit the following poll, and I would now like to hand you over to CEO James Pennefather. Good afternoon.

Speaker #3: Questions are encouraged, and they can be submitted at any time using the Q&A tab situated in the right-hand corner of your screen. Simply type in your questions and press send.

Speaker #3: Before we begin, I would like to submit the following poll. I would now like to hand you over to CEO James Pennyfeather. Good afternoon.

Speaker #4: Great, thank you, Alex. And a warm welcome to all our shareholders who are joining this call to hear about Chapel Down's interim results for the first half of the financial year 2026.

James Pennefather: Great. Thank you, Alex, and a warm welcome to all our shareholders who are joining this call to hear about Chapel Down's interim results for the H1 of the financial year 2026. I am James Pennefather, and I am joined by Louan Mouton, our CFO, and we are representing the leadership team of the business today and our amazing 87 colleagues to take you through a reminder of our strategic objectives and value creation plan and the progress that we are making against them. Louan and I are joining you from our offices in London, but the real action is happening in Kent, where we are midway through our harvest, which is keeping 20 people busy in our winery and over 120 in our vineyards. This lovely Indian summer weather is certainly helping with the logistics of the harvest, and we will be providing a full update on the harvest next month.

Speaker #4: I'm James Pennyfeather, and I'm joined by Lowen Mouton, our CFO. We're representing the leadership team of the business today, along with our amazing 87 colleagues, to take you through a reminder of our strategic objectives and value creation plan, and the progress that we are making against them.

Speaker #4: Lowen and I are joining you from our offices in London, but the real action is happening in Kent, where we are midway through our harvest.

Speaker #4: Which is keeping 20 people busy in our winery, and over 120 in our vineyards. This lovely Indian summer weather is certainly helping with the logistics of the harvest.

James Pennefather: This lovely Indian summer weather is certainly helping with the logistics of the harvest, and we will be providing a full update on the harvest next month. We expect today's presentation to take 30 minutes, after which there will be a chance for questions. Please type in any questions, and we will get through all of them. Chapel Down has a clear mission to change the way. We have refocused our strategy in recent years to be focused on sparkling wine as our core focus and are leading the creation of this profitable new category. We would describe our fresh approach as having the same quality credentials as Champagne, but a more approachable positioning.

Speaker #4: And we will be providing a full update on the harvest next month. We expect today's presentation to take 30 minutes, after which there will be a chance for questions.

James Pennefather: We expect today's presentation to take 30 minutes, after which there will be a chance for questions. Please type in any questions, and we will get through all of them. Chapel Down has a clear mission to change the way. We have refocused our strategy in recent years to be focused on sparkling wine as our core focus and are leading the creation of this profitable new category. We would describe our fresh approach as having the same quality credentials as Champagne, but a more approachable positioning. This leads to our ambition to achieve an equivalent 1% share of the global Champagne market by 2035. We have the vineyards and the winery in place to achieve this exciting ambition. I am going to hand over to Louan now to take us through the key headlines from today's results announcement.

Speaker #4: Please type in any questions, and we will get through all of them. Chapel Down has a clear mission to change the way. We've refocused our strategy in recent years to be focused on sparkling wine as our core focus, and we are leading the creation of this profitable new category.

Speaker #4: We would describe our fresh approach as having the same quality credentials as Champagne, but with a more approachable positioning. This leads to our ambition to achieve an equivalent 1% share of the global Champagne market by 2035.

James Pennefather: This leads to our ambition to achieve an equivalent 1% share of the global Champagne market by 2035. We have the vineyards and the winery in place to achieve this exciting ambition. I am going to hand over to Louan now to take us through the key headlines from today's results announcement.

Speaker #4: We have the vineyards and the winery in place to achieve this exciting ambition. I'm going to hand over to Lowen now, who will take us through the key headlines from today's results announcement.

Speaker #5: Good afternoon, everyone. Turning to our performance in the first half of '26, I'm pleased to report another strong set of results. We delivered net sales revenue growth of 19% to £9.4 million.

Louan Mouton: Good afternoon, everyone. Turning to our performance in the H1 2026, I am pleased to report another strong set of results. We delivered net sales revenue growth of 19% to GBP 9.4 million, representing our seventh consecutive quarter of growth, with wine sales increasing by 18%. Importantly, this growth continues to be driven by our strategic focus on premium traditional method sparkling wines, which now account for 74% of total wine sales revenue, up from 70% a year ago. This premiumization continues to translate into improved profitability, with gross profit increasing by 28% to GBP 4.7 million and gross margin improving by 3.5 percentage points. We also saw a significant improvement in operating cash flow and continue to invest in maturing wine stocks, which underpins our future growth ambitions.

Speaker #5: Representing our seventh consecutive quarter of growth, with wine sales increasing by 18%. Importantly, this growth continues to be driven by our strategic focus on premium, traditional method sparkling wines.

Speaker #5: These now account for 74% of total wine sales revenue, up from 70% a year ago. This premiumization continues to translate into improved profitability, with gross profit increasing by 28% to £4.7 million, and gross margin improving by 3.5 percentage points.

Speaker #5: We also saw a significant improvement in operating cash flow, and continue to invest in maturing wine stocks, which underpins our future growth ambitions.

Speaker #4: Thank you, Lowen. I'm going to turn now to the category opportunity for English sparkling wine. And I'm going to show you eight charts, which show why we remain so optimistic about the category.

James Pennefather: Thank you, Louan. I am going to turn now to the category opportunity for English sparkling wine, and I am going to show you eight charts which show why we remain so optimistic about this category. We have often talked about how English sparkling wine currently only represents 4% of the annual consumption of the 200 million bottles of sparkling wine consumed each year in the UK. Underlying this, we continue to see clear structural tailwinds which underpin our confidence in sustained growth potential. The first of these, top left, is the generational shift into English sparkling wine by millennials, who now represent 57% of English sparkling wine drinkers, which bodes well for the future growth of the category. The second is that we are creating a subcategory that is distinct from Champagne.

Speaker #4: We've often talked about how English sparkling wine currently only represents 4% of the annual consumption of the 200 million bottles of sparkling wine consumed each year in the UK.

Speaker #4: But underlying this, we continue to see clear structural tailwinds, which underpin our confidence in sustained growth potential. The first of these, top left, is the generational shift into English sparkling wine by millennials, who now represent 57% of English sparkling wine drinkers.

Speaker #4: Which bodes well for the future growth of the category. The second is that we are creating a subcategory that is distinct from Champagne. Champagne has spent 300 years successfully establishing itself as the drink of choice for formal celebration occasions.

James Pennefather: Champagne has spent 300 years successfully establishing itself as the drink of choice for formal celebration occasions, as seen here in red, whereas Chapel Down, seen here in blue, has created a new accretive consumption space on less formal celebration occasions, such as summer drinking occasions, festivals, and live music events. English sparkling wine has given consumers positive reasons to trade up into these new occasions. Turning to the third chart here, bottom left, you can see that the English sparkling wine category remains a growing category with value sales up 14% over the past 12 months. Lastly, we still believe that there is further room for sparkling wine to grow in the UK because penetration is still low amongst UK adults at only 47%, compared with 78% in France.

Speaker #4: As seen here in red, whereas Chapel Down, seen here in blue, has created a new accretive consumption space on less formal celebration occasions, such as summer drinking occasions, festivals, and live music events.

Speaker #4: English sparkling wine has given consumers positive reasons to trade up into these new occasions. Turning to the third chart here, bottom left, you can see that the English sparkling wine category remains a growing category, with value sales up 14% over the past 12 months.

Speaker #4: And lastly, we still believe that there is further room for sparkling wine to grow in the UK, because penetration is still low amongst UK adults at only 47%, compared with 78% in France.

Speaker #4: As quality credentials continue to grow, as shown here by the 50% figure, we believe that this penetration will also continue to increase. Within the category, Chapel Down continues to reinforce its leadership position.

James Pennefather: As quality credentials continue to grow, as shown here by the 50% figure, we believe that this penetration will also continue to grow. Within the category, Chapel Down continues to reinforce its leadership position. Research shows that brand awareness is the number one driver for purchase in high-value sparkling wine categories. The role high-value sparkling wine plays in consumers' lives is to make occasions more memorable when celebrating with friends or family, and choosing a recognized brand certainly helps achieve that. Chapel Down has established itself as the clear brand leader in the UK with 46% brand awareness, albeit still with headroom for growth against the leading Champagne brand, Moët, and has won 2 percentage points of market share in the off-trade channel over the past year.

Speaker #4: Research shows that brand awareness is the number one driver for purchase in high-value sparkling wine categories. The role high-value sparkling wine plays in consumers' lives is to make occasions more memorable when celebrating with friends or family, and choosing a recognized brand certainly helps achieve that.

Speaker #4: Chapel Down has established itself as the clear brand leader in the UK with 46% brand awareness, albeit still with headroom for growth against the leading champagne brand, Moet, and has won two percentage points of market share in the off-trade channel over the past year.

Speaker #4: Bottom right now, basket-switching data from a top-three retailer in the UK shows that 88% of shoppers switching into Chapel Down from another sparkling wine are trading up from lower-value categories of sparkling wine, which shows how Chapel Down is successfully helping to premiumize the whole category.

James Pennefather: Bottom right now, basket switching data from a top 3 retailer in the UK shows that 88% of shoppers switching into Chapel Down from another sparkling wine are trading up from lower value categories of sparkling wine, which shows how Chapel Down is successfully helping to premiumize the whole category. In summary, the board remains optimistic in the future growth potential for Chapel Down within the growing English sparkling wine category. I am now going to provide a progress update in terms of how we are doing against our three strategic priorities. Firstly, a reminder of what these three priorities are. The first of these is that we have built a really strong brand, and will continue to enhance it, remembering that there is no value attached to it at the moment on our balance sheet.

Speaker #4: In summary, the Board remains optimistic about the future growth potential for Chapel Down within the growing English sparkling wine category. I'm now going to provide a progress update in terms of how we're performing against our three strategic priorities.

Speaker #4: Firstly, a reminder of what these three priorities are. The first of these is that we have built a really strong brand, and will continue to enhance it.

Speaker #4: Remember that there is no value attached to it at the moment on our balance sheet. The second area is to leverage our position as brand leader in an emerging category for commercial benefit, both in the UK and internationally.

James Pennefather: The second area is to leverage our position as brand leader in an emerging category for commercial benefit, both in the UK and internationally. The third, disciplined capital management, reflects that the board is keen that we leverage our own resources as we expand over the medium term. These in turn generate five priority value creation initiatives, the first four of which relate to the commercial side of our business, building the brand, single vineyard, expanding our UK market footprint, and international expansion. Starting with the brand, I am proud of the progress that we have made so far during 2026. We continue to strengthen the brand by engaging with consumers in memorable ways and introducing our wines to more people.

Speaker #4: The third discipline, capital management, reflects that the board is keen for us to leverage our own resources as we expand over the medium term. These, in turn, generate five priority value creation initiatives.

Speaker #4: The first four of which relate to the commercial side of our business: building the brand, single vineyard, expanding our UK market footprint, and international expansion.

Speaker #4: Starting with the brand, I'm proud of the progress that we have made so far during 2026. We continue to strengthen the brand by engaging with consumers in memorable ways and introducing our wines to more people.

Speaker #4: We have strengthened our partnerships with iconic British associations, such as Royal Ascot, where sales increased 45% compared with the previous year, as well as signing two new partnerships with the Jockey Club and the Royal Philharmonic Orchestra.

James Pennefather: We have strengthened our partnerships with iconic British associations such as Royal Ascot, where sales increased 45% compared with the previous year, as well as signing two new partnerships with The Jockey Club and the Royal Philharmonic Orchestra. In London, we ran a pop-up bar during English Wine Week in Covent Garden, and continued our program of experiential sampling at Pub in the Park and Big Feastival. We get 50,000 visitors each year to our brand home in Tenterden and have upgraded our tourism experience there with The Hythe tasting room. We are now the leading site on TripAdvisor for UK wine tourism and won the WineGB trophy for best cellar door, alongside 13 gold medals for quality in that and other international competitions this year.

Speaker #4: In London, we ran a pop-up bar during English Wine Week in Covent Garden and continued our program of experiential sampling at Pub in the Park and Big Feastival.

Speaker #4: We get 50,000 visitors each year to our brand home in Tenterden, and we have upgraded our tourism experience there with the new Hyde Tasting Room.

Speaker #4: We're now the leading site on TripAdvisor for UK wine tourism, and won the WineGB Trophy for Best Seller Door, alongside 13 gold medals for quality in that and other international competitions this year.

Speaker #4: To help attract more Millennials and Gen Z to our brand home in Tenterden, we ran our first Magnum festival earlier this year—in fact, earlier this month.

James Pennefather: To help attract more Millennials and Gen Z to our brand home in Tenterden, we ran our first Magnum Festival earlier this year, in fact earlier this month, which was a sunny weekend of live music and great food and wines attended by over 600 guests. Transport from the local station and back was provided by us, and this helped us attract more people from a much wider area. We were very pleased with how our inaugural festival went and will continue to work on how we can use this model to run more of them in a way that remains consistent with the peaceful ambiance of the village in which our brand home is situated.

Speaker #4: It was a sunny weekend of live music, great food, and wines, attended by over 600 guests. Transport to and from the local station was provided by us.

Speaker #4: And this helped us attract more people from a much wider area. We were very pleased with how our inaugural festival went, and will continue to work on how we can use this model to run more of them in a way that remains consistent with the peaceful ambiance of the village in which our brand home is situated.

Speaker #4: Sharp Hyde shareholders will already have noticed some changes to our brand livery on our stills and carbonated wines, which have injected more personality. I would encourage you to track down a bottle of our 'A Touch of Sparkle Bacchus' limited edition, which is currently available in our retail shop or on our website.

James Pennefather: Sharp-eyed shareholders will already have noticed some changes to our brand livery on our stills and carbonated wines, which have injected more personality. I would encourage you to track down a bottle of our A Touch of Sparkle Bacchus limited edition, which is currently available in our retail shop or on our website. The impact of this increased marketing investment has reinforced our brand leadership position. Compared with the same period last year, we remain at 46% brand awareness and have increased our affinity score. However, we have seen a slight drop-off in penetration, which appears to be from regions outside the Southeast. If we look at two of our core focus areas, London and affluent millennials, you can see continued growth in awareness. Clearly, we want to replicate this growth in all regions of the UK.

Speaker #4: The impact of this increased marketing investment has reinforced our brand leadership position. Compared with the same period last year, we remain at 46% brand awareness and have increased our affinity score; however, we have seen a slight drop-off in penetration, which appears to be from regions outside the Southeast.

Speaker #4: If we look at two of our core focus areas—London and affluent millennials—you can see continued growth and awareness. Clearly, we want to replicate this growth in all regions of the UK.

Speaker #4: Turning now to our premiumization strategy, I am delighted that in Q4 we will be launching the Chapel Down Single Vineyard Series, starting with our much-loved Kit Coty, which will soon be available.

James Pennefather: Turning now to our premiumization strategy, I am delighted that in Q4, we will be launching the Chapel Down Single Vineyard Series, starting with our much-loved Kit's Coty, which will soon be available and Coeur de Cuvée. You will need to wait until next month before this variant is revealed to the world. The proposition of our Single Vineyard Series is to reveal the intense truth of micro terroirs in Kent's North Downs. You will see the visual idea here of the single vineyard highlighted in gold on a map design. Shareholders should feel confident in the quality credentials of what Josh and his team are achieving at Kit's Coty, with an unprecedented six gold medals won this year across six different prestigious competitions.

Speaker #4: And Curt Acubi, you will need to wait until next month before this variant is revealed to the world. The proposition of our single vineyard series is to reveal the intense truth of micro terroirs in Kent, North Downs.

Speaker #4: And you will see the visual idea here of the single vineyard highlighted in gold on a map design. Shareholders should feel confident in the quality credentials of what Josh and his team are achieving at Kit Coty, with an unprecedented six gold medals won this year across six different prestigious competitions.

Speaker #4: Excitingly, once we've established Kit's Coty as our first in the single vineyard series, we then have two further single vineyards, Boxley Abbey and Buckwell, to explore.

James Pennefather: Excitingly, once we have established Kit's Coty as our first in the Single Vineyard Series, we then have two further single vineyards, Boxley Abbey and Buckwell, to explore. Investing in building these luxury sub-brands will build a premium halo for Chapel Down and help deliver further growth in our traditional method sparkling focus and average selling price. We are proud of the progress our small commercial team has made in the UK under the leadership of Tom Hepworth-Bond, both in terms of distribution wins and in-outlet activations. We have successfully activated across major retailers with a 'Here's to Summertime' campaign, the on-trade version of which was more gastronomy-led under the banner of Taste of England.

Speaker #4: Investing in building these luxury sub-brands will create a premium halo for Chapel Down and help drive further growth in our traditional method sparkling focus and average selling price.

Speaker #4: We're proud of the progress our small commercial team has made in the UK under the leadership of Tom Hepworth Bond, both in terms of distribution wins and in-outlet activations.

Speaker #4: We have successfully activated across major retailers with a "Here's to Summertime" campaign, the on-trade version of which was more gastronomy-led under the banner of "Taste of England."

Speaker #4: We've won new listings across both channels, including some prestigious accounts such as the Gordon Ramsay Group and Hand Picked Hotels in the on-trade.

James Pennefather: We have won new listings across both channels, including some prestigious accounts such as the Gordon Ramsay Group and Hand Picked Hotels in the on-trade, including 16% growth of by the glass listings, and grew our direct-to-consumer e-commerce channel by 12% in the H1. We still see a significant footprint for growth in the UK market. Internationally, we have made significant progress in building a scalable platform for future growth. Revenue in this channel increased by 66% to GBP 0.8 million, driven primarily by continued momentum in the United States with our importer, Jackson Family Wines. Distribution in the US expanded from 11 states a year ago to 31 states during the period, and Chapel Down secured a significant listing in 250 Whole Foods stores.

Speaker #4: Including 16% growth of Buy the Glass listings, and grew our direct-to-consumer e-commerce channel by 12.5%. We still see a significant footprint for growth in the UK market.

Speaker #4: Internationally, we have made significant progress in building a scalable platform for future growth. Revenue in this channel increased by 66% to $0.8 million, driven primarily by continued momentum in the United States with our importer, Jackson Family Wines.

Speaker #4: Distribution in the US expanded from 11 states a year ago to 31 states during the period. And Chapel Down secured a significant listing in 250 Whole Foods stores.

Speaker #4: You can see a photo here of some of the Jackson Family team who visited the UK to learn more about Chapel Down at the start of the summer.

James Pennefather: You can see a photo here of some of the Jackson Family team who visited the UK to learn more about Chapel Down at the start of the summer. In addition, we continue to see good progress in Norway, as well as in the travel retail channel, including a new by the glass listing in Cunard's fleet of four ships, and we have also launched in Portugal, Mexico, and Western Canada. In terms of disciplined capital management, we are clear that we have the vineyard acreage, winery, and ERP systems we need for this next phase of growth. Boxley Abbey is now in full production, and Buckwell Vineyards is on track to be fully productive for the 2027 harvest. We do not intend to plant any new vineyards in the medium term.

Speaker #4: In addition, we continue to see good progress in Norway, as well as in the travel retail channel, including a new Buy the Glass listing in Cunard's fleet of four ships.

Speaker #4: And we've also launched in Portugal, Mexico, and West Canada. In terms of disciplined capital management, we're clear that we have the vineyard acreage, winery, and ERP systems we need for this next phase of growth.

Speaker #4: Boxley Abbey is now in full production, and Buckwell is on track to be fully productive for the 2027 harvest. We do not intend to plant any new vineyards in the medium term.

Speaker #4: To improve quality credentials from our existing vineyards, Tenterden is now focused as our center of excellence for traditional method sparkling wines. We have installed some additional tanks at the winery this year to enable us to hold back more reserve wines for future blending into non-vintage wines, which will help Josh and the team deliver year-on-year consistency of our house style.

James Pennefather: To improve quality credentials from our existing vineyards, Tenterden is now focused as our center of excellence for traditional method sparkling wines. We have installed some additional tanks at the winery this year to enable us to hold back more reserve wines for future blending into non-vintage wines, which will help Josh and team deliver year-on-year consistency of our house style. Further CapEx was spent on enhancing our tourism offer at Tenterden with the construction of The Hythe tasting room. We are extremely pleased with this development and would encourage all our shareholders to come and visit it when you have a chance. Before I hand over to Louan, I want to remind shareholders of the KPIs that we have set against our three strategic priorities.

Speaker #4: Further capex was spent on enhancing our tourism offer at Tenterden with the construction of the Hyde Tasting Room. We're extremely pleased with this development and would encourage all our shareholders to come and visit it when you have a chance.

Speaker #4: Before I hand over to Lowen, I want to remind shareholders of the KPIs that we have set against our three strategic priorities. Of the six KPIs, we have made good progress in this half on three of them.

James Pennefather: Of the six KPIs, we have made good progress in this H1 on three of them, with two flat, which are brand awareness and net debt to EBITDA, and the sixth, share of Champagne, only measurable once a year, so we will not be able to update this for six months. I would like to thank the whole Chapel Down team for all the work they have done to drive this level of progress for our business.

Speaker #4: With two flat, which are brand awareness and net debt to EBITDA, and the sixth, a share of champagne, only measurable once a year, so we will not be able to update this for six months.

Speaker #4: And I'd like to thank the whole Chapel Down team for all the work they have done to drive this level of progress for our business.

Speaker #2: Thanks, James. Turning now to our financial results, the first thing to highlight is that the growth we delivered in the first half was broad-based across the business.

Louan Mouton: Thanks, James. Turning now to our financial results. The first thing to highlight is that the growth we delivered in the H1 was broad-based across the business. Net sales revenue increased by 19% to GBP 9.4 million, with growth achieved in every major channel. Off-trade and on-trade both grew 18%, while international was our fastest growing channel, up 66%, reflecting the momentum we are seeing in the United States. E-commerce also continued to perform well, growing 12% and bringing more than 3,800 new customers into the Chapel Down brand. Alongside this growth, we continue to see good execution of our strategy to drive premiumization. Traditional method sparkling revenue increased by 26% and now represents 74% of total wine sales, up from 70% last year.

Speaker #2: Net sales revenue increased by 19% to $9.4 million, with growth achieved in every major channel. Off-trade and on-trade both grew 18%, while international was the fastest growing channel, up 66%, reflecting the momentum we are seeing in the United States.

Speaker #2: E-commerce also continued to perform well, growing 12% and bringing more than 3,800 new customers into the Chapel Down brand. Alongside this growth, we continue to see good execution of our strategy to drive premiumization.

Speaker #2: Traditional method sparkling revenue increased by 26% and now represents 74% of total wine sales, up from 70% last year. This is important because it demonstrates consumers increasingly choosing our premium sparkling wines and reinforces the strategic focus we have placed on traditional method sparkling over the last few years.

Louan Mouton: This is important because it demonstrates consumers increasingly choosing our premium sparkling wines and reinforces the strategic focus we have placed on traditional method sparkling over the last few years. Overall, we are growing across the channels, expanding distribution, increasing market share, and improving our sales mix, which provides a strong foundation for future profitability. The benefits of that premiumization can be seen clearly in our gross margin performance. Gross margin increased by 3.5 percentage points to 49.6%, which is one of the most encouraging aspects of these results. The improvement was driven primarily by two factors. Firstly, the increased mix of traditional method sparkling wines, which carry higher margins than our other wine expressions. Secondly, we benefited from the lower production costs associated with sparkling wines due to the exceptional 2023 harvest.

Speaker #2: Overall, we are growing across the channels, expanding distribution, increasing market share, and improving our sales mix, which provides a strong foundation for future profitability.

Speaker #2: The benefits of that premiumization can be seen clearly in our gross margin performance. Gross margin increased by 3.5 percentage points to 49.6%, which is one of the most encouraging aspects of these results.

Speaker #2: The improvement was driven primarily by two factors. Firstly, the increased mix of traditional method sparkling wines, which carry higher margins than other wine expressions.

Speaker #2: And secondly, we benefited from the lower production costs associated with sparkling wines due to the exceptional 2023 harvest. These gains were partially offset by a higher weighting of off-trade sales, some lower-margin non-core bulk wine sales, and marginal increased transportation costs as a result of fuel price increases.

Louan Mouton: These gains were partially offset by a higher weighting of off-trade sales, some lower margin non-core bulk wine sales, and marginal increased transportation costs as a result of fuel price increases. The investments we have made in the Chapel Down brand and in growing demand for premium sparkling wine are now delivering tangible margin benefits. Those margin gains translated into strong improvement in profitability. Gross profit increased by 28% to GBP 4.7 million, ahead of revenue growth as the benefits of premiumization and margin expansion materialized. We continue to invest behind our long-term growth strategy, consistent with the board's previously communicated intention to increase brand investment during 2026. Marketing investment increased to GBP 1.4 million, representing 15% of net sales revenue, as we strengthened brand awareness, activated new partnerships, and supported further distribution expansion. These investments reinforce our brand leadership position and provide the platform for sustained profitable growth.

Speaker #2: The investments we have made in the Chapel Down brand and in growing demand for premium sparkling wine are now delivering tangible margin benefits. Those margin gains have translated into strong improvement in profitability.

Speaker #2: Gross profit increased by 28% to £4.7 million, ahead of revenue growth, as the benefits of premiumization and margin expansion materialized. We continue to invest behind our long-term growth strategy, consistent with the Board's previously communicated intention to increase brand investment during 2026.

Speaker #2: Marketing investment increased to $1.4 million, representing 15% of net sales revenue, as we strengthened brand awareness, activated new partnerships, and supported further distribution expansion.

Speaker #2: These investments reinforce our brand leadership position and provide the platform for sustained profitable growth. While overheads increased as we analyzed prior year investments and absorbed inflationary costs, revenue growth and gross profit growth grew more than growth, sorry, more than offset these increases.

Louan Mouton: While overheads increased as we annualized prior year investments and absorbed inflationary costs, revenue growth and gross profit growth grew more than offset these increases. As a result, underlying operating performance improved meaningfully compared to the prior year. This translated into a 27% increase in adjusted EBITDA to GBP 1.3 million. Adjusted EBITDA is an important measure for the board as it provides a clearer view of the underlying trading performance of the business by excluding non-cash and non-trading items, including the fair value adjustment to biological projects. Based on current harvest expectations, we expect the fair value adjustment this year to be immaterial. I believe this is a particularly encouraging set of results because it demonstrates the operating leverage within the business.

Speaker #2: As a result, underlying operating performance improved meaningfully compared to the prior year. This translated into a 27% increase in adjusted EBITDA to $1.3 million.

Speaker #2: Adjusted EBITDA is an important measure for the Board, as it provides a clearer view of the underlying trading performance of the business. By excluding non-cash and non-trading items, including the fair value adjustment to biological produce based on current harvest expectations, we expect the fair value adjustment this year to be immaterial.

Speaker #2: I believe this is a particularly encouraging set of results because it demonstrates the operating leverage within the business. We have been able to increase investment behind the Chapel Down brand in line with our long-term growth strategy, while still delivering strong growth and profitability.

Louan Mouton: We have been able to increase investment behind the Chapel Down brand in line with our long-term growth strategy, while still delivering strong growth and profitability. I firstly want to remind everyone that our net asset value represents reported book values according to IFRS accounting standards, which for some of our tangible assets are cost minus accumulated depreciation. The board believes the market value of some of our assets to be significantly higher than the reported book value. One of the most pleasing aspects of the H1 was the improvement in cash generation. Operating cash flow was positive at GBP 600,000 compared to an outflow in the prior year, reflecting both stronger underlying profitability and favorable working capital timing during the period. As expected, we continue to invest in the areas which underpin our future growth.

Speaker #2: Firstly, I want to remind everyone that our net asset value represents reported book values according to IFRS accounting standards, which, for some of our tangible assets, are cost minus accumulated depreciation.

Speaker #2: The board believes the market value of some of our assets to be significantly higher than the reported book value. One of the most pleasing aspects of the first half of the year was the improvement in cash generation.

Speaker #2: Operating cash flow was positive at $600,000, compared to an outflow in the prior year, reflecting both stronger underlying profitability and favorable working capital timing during the period.

Speaker #2: As expected, we continue to invest in the areas which underpin our future growth. Inventory is a strategic asset for Chapel Down, and stock levels increased by £3.8 million as we bottled the 2025 harvest and continued to build maturing sparkling wine reserves for future demand.

Louan Mouton: Inventory is a strategic asset for Chapel Down, and stock levels increased by GBP 3.8 million as we bottled the 2025 harvest and continued to build maturing sparkling wine reserves for future demand. Net debt increased to GBP 14 million, which was in line with our expectations and capital allocation approach. Importantly, this reflects investment in maturing stocks and our asset base rather than operating losses. Encouragingly, compared with the prior year, we used around GBP 600,000 less debt, reflecting the improving cash profile of the business. We should however remember that with additional acres becoming productive this year and next year at Boxley Abbey and Buckwell Vineyards, we will likely see an increase in working capital requirements over the medium term as we invest into maturing stocks.

Speaker #2: Net debt increased to $14 million, which was in line with our expectations and capital allocation approach. Importantly, this reflects investment in maturing stocks and our asset base, rather than operating losses.

Speaker #2: Encouragingly, compared with the prior year, we used around $600,000 less debt, reflecting the improving cash profile of the business. We should, however, remember that with additional acres becoming productive this year and next year at Boxley Abbey and Buckwell Vineyards, we will likely see an increase in working capital requirements over the medium term as we invest into maturing stocks.

Speaker #2: To support this future growth, we also increased our revolving credit facility from $20 million to $25 million during the first half. While retaining access to a further $5 million accordion facility, this provides substantial liquidity and flexibility as we continue to execute our growth strategy.

Louan Mouton: To support this future growth, we also increased our revolving credit facility from GBP 20 million to GBP 25 million during H1, while retaining access to a further GBP 5 million accordion facility. This provides substantial liquidity and flexibility as we continue to execute our growth strategy. Overall, our balance sheet remains underpinned by a substantial asset base, growing inventory of maturing wines, and a disciplined approach to capital allocation, leaving us well positioned for the next stage of growth. With that, I will hand back to James to talk about our outlook for the remainder of 2026.

Speaker #2: Overall, our balance sheet remains underpinned by a substantial asset base, a growing inventory of maturing wines, and a disciplined approach to capital allocation, leaving us well positioned for the next stage of growth.

Speaker #2: And with that, I'll hand back to James to talk about our outlook for the remainder of '26.

Speaker #1: Thank you, Lan. And it's now time to finish with our 2026 full year outlook. Our trading performance has shown continued growth momentum into Q3.

James Pennefather: Thank you, Vern. It is now time to finish with our 2026 full-year outlook. Our trading performance. There has been continued growth momentum into Q3. In addition, continued premiumization into TMS and activation plans in place for Q4, including strong distribution gains already confirmed, mean the board now expects stronger growth profits for the full year 2026. The board expects this to translate into a material improvement in adjusted EBITDA, excluding fair value adjustments to biological produce of at least 10% compared to market expectations. Net debt, it is anticipated that trading performance and more effective inventory planning of our maturing sparkling wines should reduce working capital requirements this year, alongside less CapEx than originally planned for. The board therefore expects net debt to be lower at 31 December 2026 compared to market expectations. Lastly, on the harvest.

Speaker #1: In addition, continued premiumization into TMS and activation plans in place for Q4, including strong distribution gains already confirmed, mean the Board now expects stronger growth profits for the full year 2026.

Speaker #1: The Board expects this to translate into a material improvement in adjusted EBITDA, excluding the fair value adjustment to biological produce, of at least 10% compared to market expectations.

Speaker #1: Regarding net debt, it is anticipated that trading performance and more effective inventory planning of our maturing sparkling wines should reduce working capital requirements this year, alongside less capital expenditure than originally planned for.

Speaker #1: The board therefore expects net debt to be lower at 31st of December 2026 compared to market expectations. And then lastly on the harvest, with over 50% of the harvest now completed, the board believes the 2026 vintage will be of high quality and with a yield tons per acre of about 10% lower than the five year average.

James Pennefather: Lastly, on the harvest. With over 50% of the harvest now completed, the board believes the 2026 vintage will be of high quality and with a yield, tons per acre, of about 10% lower than the five-year average. The non-cash uplift from the fair value adjustment to biological produce is therefore likely to be immaterial. A further update on the harvest will be given once final yields are confirmed. That is the end of our presentation. We are now going to invite everyone to input any questions that they might have, some of which have been arriving. How we are going to do this is I will read them out and then either Louan or I will answer them.

James Pennefather: With over 50% of the harvest now completed, the board believes the 2026 vintage will be of high quality and with a yield, tons per acre, of about 10% lower than the five-year average. The non-cash uplift from the fair value adjustment to biological produce is therefore likely to be immaterial. A further update on the harvest will be given once final yields are confirmed. That is the end of our presentation. We are now going to invite everyone to input any questions that they might have, some of which have been arriving. How we are going to do this is I will read them out and then either Louan or I will answer them. The first is, oh, this one looks like it is probably more a question for you as shareholders, but it is: What impact will these latest results have on the share price?

Speaker #1: The non-cash uplift from the fair value adjustment to biological produce is therefore likely to be immaterial. A further update on the harvest will be given once final yields are confirmed.

Speaker #1: So that is the end of our presentation. We are now going to invite everyone to input any questions that they might have, some of which have already been arriving.

Speaker #1: And how we're going to do this is, I will read them out and then either Luan or I will answer them. So, the first is—oh, this one looks like it's probably more a question for you as shareholders, but it is: What impact will these latest results have on the share price?

James Pennefather: The first is, oh, this one looks like it is probably more a question for you as shareholders, but it is: What impact will these latest results have on the share price? Lohan, can you answer?

Speaker #1: So, Luan, can you answer that?

James Pennefather: Lohan, can you answer?

Speaker #2: Yeah, sure. So, just for a recurring question, I'll probably tackle this one first, as there might be a few more of these. Unfortunately, as an AIM-listed company, we're not able to comment on the movements in share price.

Louan Mouton: Yeah, sure. This is a reoccurring question. I will probably tackle this one first, there might be a few more of these. Unfortunately, as an AIM listed company, we are not able to comment on the movements and share price. What we can say is we are delighted obviously with the great set of results for H1, and we will continue to deliver on our progress for the remainder of the year.

Speaker #2: What we can say is we're delighted, obviously, with the great set of results for Q1 and will continue to deliver on our progress for the remainder of the year.

Speaker #1: Okay, second question is: What is the status of the new offsite winemaking facility with reference to planning applications, et cetera? And this question, I think, is a little bit old because we have already announced that we won't be pursuing an additional winemaking facility.

James Pennefather: Okay. Second question is, what is the status of the new off-site winemaking facility with reference to planning applications, et cetera? This question I think is a little bit old because we have already announced that we will not be pursuing an additional winemaking facility. The original plans were to do that at Canterbury, and actually we have the capacity on-site in Tenterden to be a center of excellence for traditional method sparkling wine. So those expansion plans are no longer on the table. Third question, are there any plans to develop the Tenterden site for overnight accommodation? This would be extremely popular in the area and encourage visitors from further afield to attend. The answer to that is no. We have quite a constrained site at the moment, and our core strategic focus is on building our traditional sparkling wine brand.

Speaker #1: The original plans were to do that at Canterbury, and actually, we have the capacity on site in Tenterden to be a center of excellence for traditional method sparkling wines.

Speaker #1: So those expansion plans are no longer on the table. Third question: Are there any plans to develop the Tenterden site for overnight accommodation? This would be extremely popular in the area and encourage visitors from further afield to attend.

Speaker #1: The answer to that is no. We have quite a constrained site at the moment, and our core strategic focus is on building our traditional sparkling wine brand.

Speaker #1: And when we had the Magnum Festival two weekends ago, actually a number of people there were staying overnight in the local area, either in Tenterden or down in Rye, and we think this is really good for the local economy.

James Pennefather: When we had the Magnum Festival two weekends ago, actually, a number of people there were staying overnight in the local area, either in Tenterden or down in Rye, and we think this is really good for the local economy. No plans to move into overnight accommodation of our own. Is the long-term growth strategy focused on higher acreage and volumes, or stabilizing the amount of acreage and focusing on performance of the existing vineyard portfolio? As I think I mentioned a few slides ago, and can I just ask Alex, or if anyone is moving the questions, just to leave them on the screen, please, so that I can answer them, triage them more efficiently. The question here is around, are we going to plant any more acreage?

Speaker #1: So, no plans to move into overnight accommodation. Is the long-term growth strategy focused on higher acreage and volumes, or on stabilizing the amount of acreage and focusing on performance of the existing vineyards portfolio?

Speaker #1: As I think I mentioned a few slides ago, a few slides ago, the and I don't can I just ask Alex or if anyone is moving the questions just to leave them on the screen please so that I can answer them triage them more efficiently.

Speaker #1: The question here is around whether we are going to plant any more acreage. The answer to that is we have everything we need for the medium term.

James Pennefather: The answer to that is we have everything we need for the medium-term, so we are not looking to plant any more. We have now planted 1,000 acres of vineyards. That allows us to reach an equivalent 1% share of the global Champagne market by 2035. Last year, we sold 0.4% equivalent of the global Champagne market. As you can see from the vineyards that we have now planted, we still have a long staying double-digit growth every year into the early 2030s. Shareholder new vintage launch events have not happened this year, which has been disappointing. Will these be picked up again? Actually, I think what we have done this year is we have merged our new vintage launches into other events. So when we launched The Hythe earlier this year, that wonderful new tasting room to shareholders, that was the night on which we launched English Rosé.

Speaker #1: So we're not looking to plant any more. We've now planted 1,000 acres of vineyards. That allows us to reach an equivalent 1% share of the global champagne market by 2035.

Speaker #1: Last year, we sold 0.4% equivalent of the global champagne market. So, as you can see, from the vineyards that we've now planted, we still have a long, sustained double-digit growth every year into the early 2030s.

Speaker #1: Shareholder new vintage launch events haven't happened this year, which has been disappointing. Will these be picked up again? Actually, I think what we've done this year is we've merged our new vintage launches into other events.

Speaker #1: So when we launched the Hive earlier this year, that wonderful new tasting room to shareholders, that was an item where we launched English Rose.

Speaker #1: Likewise, when we did the shareholder event up in London at Covent Garden, I think we had three of our new wines available to taste there.

James Pennefather: Likewise, when we did the shareholder event up in London at Covent Garden, I think we had three of our new wines available to taste there. Watch this space for the Kit's Coty new variant launch coming next month as well. So we are ensuring that shareholders get an early look in at any new vintage expressions that are coming. Sixth question, what is the company's plan to capitalize on the growth in wine tourism in the UK? Is Chapel Down on the radar for international tour organizers? We certainly see our wine tourism as a key part of what makes Chapel Down special. The 50,000 visitors that we have every year, a number of them go away as strong advocates for the brand, many of them lifelong customers as well.

Speaker #1: And then watch this space for the Kit Coty new variant launch coming next month as well. So, we are ensuring that shareholders get an early look at any new vintage expressions that are coming.

Speaker #1: Sixth question: What is the company's plan to capitalize on the growth in wine tourism in the UK? Is Chapel Down on the radar for international tour organizers?

Speaker #1: We certainly see our wine tourism as a key part of what makes Chapel Down special. The 50,000 visitors that we have every year—a number of them go away as strong advocates for the brand.

Speaker #1: Many of them are long, lifelong customers as well. So it's key for the two investments we've done this year—the new building of the Hive, but also the Magnum Festival.

James Pennefather: So it is key for the two investments we have done this year that are new, are the building of The Hythe, but also the Chapel Down Magnum Festival. So this absolutely remains a priority for us. Oh, good. I think we have got a question here which looks like Louan can answer it, which is, what is the current status of wine stocks looking on a year-on-year basis over the last five years?

Speaker #1: So, this absolutely remains a priority for us. Oh, good—I think we've got a question here, which looks like Luan can answer it. The question is: What is the current status of wine stocks, looking on a year-on-year basis over the last five years?

Speaker #2: Thanks, James. Yeah, so we don't—I recognize we don't publicly disclose our actual stock holding for our different wine expressions. It's commercially sensitive. What I would say, though, is we are targeting a norm of three to four years' worth of TMS stock holding.

Louan Mouton: Thanks, James. I recognize we do not publicly disclose our actual stockholding for our different wine expressions. That is commercially sensitive. What I would say though is, we are targeting a normal three to four years worth of TMA stockholding, so traditional method sparkling, which is our maturing wines, of course. That underpins, of course, future demand and also protects us a bit against year-on-year volatility in the yield of the harvest. For still wines and carbonated wines, that is usually between one and two years of stockholding. I can say that at H1, we were within those norms. I would say, though, linking back to my earlier point when I spoke about the balance sheet, might expect a small uplift in that over the next few years as, of course, Boxley Abbey and Buckwell Vineyards become fully productive, which delivers additional acreage for us.

Speaker #2: So, traditional method sparkling, which is our maturing wines, of course. And that underpins, of course, future demand and also protects us a bit against year-on-year volatility in the yield.

Speaker #2: Of the harvest. And then, for still wines and carbonated wines, that's usually between one and two years of stock holding. And I can say that at Q2 we were within those norms.

Speaker #2: I would say, though, linking back to my earlier point when I spoke about the balance sheet, we might expect a small uplift in that over the next few years.

Speaker #2: As, of course, Boxley Abbey and Buckwell vineyards become fully productive, which delivers additional acreage for us.

Speaker #1: Fantastic. Next question is, are there any plans to further diversify the portfolio of wine offerings over the current range? The range that we have at the moment.

James Pennefather: Fantastic. Next question is, are there any plans to further diversify the portfolio of wine offerings over the current range? With the range that we have at the moment, as I mentioned earlier, there will be a new range in the Kit's Coty Single Vineyard series or Chapel Down Single Vineyard series coming out next month, and obviously that series will have an exciting future ahead of it. We have the Discovery Series, which is where the winemakers skills are really showcased. I imagine in the coming years, there will be some more interesting wines being launched there as well. I think there is a question further down about bringing back a Pinot Noir variant. I do not know whether that is the same person who I saw at the Magnum Festival a couple of weeks ago.

Speaker #1: As I mentioned earlier, there will be a new range in the Kit Coty single vineyard series of Chapel Down coming out next month.

Speaker #1: And, obviously, that series will have an exciting future ahead of it. We have the Discovery Series, which is where the winemaker's skills are really sort of showcased.

Speaker #1: And I imagine, in the coming years, there will be some more interesting wines being launched there as well. And I think there's a question further down about bringing back a Pinot Noir variant.

Speaker #1: And I think—I don't know whether that's the same person who I saw at the Magnum festival a couple of weeks ago. That's definitely something that we're looking at, but it would only be if we know that Josh would be happy with the quality of it.

James Pennefather: That is definitely something that we are looking at, but it would only be if we know that Josh would be happy with the quality of it. Watch this space, I would say. The shareholder event in London was well-received this year. Was the London pop-up a success, and are there further plans for this for next year? Yes, we had over 100 shareholders attended that, and we were very pleased with how it went. That model of getting shareholders together in sites that are not just in Tenterden is certainly one that we want to continue. Another question, where are the biggest planned growth routes in the next five years?

Speaker #1: So, watch this space, I would say. The shareholder event in London was well received this year. Was the London pop-up a success? And are there further plans for this for next year?

Speaker #1: Yes, we had over 100 shareholders attend that, and we were very pleased with how it went. That model of getting shareholders together at sites that aren't just in Tenterden is certainly one that we want to continue.

Speaker #1: Another question: where are the biggest planned growth routes in the next five years? The value creation strategy that we have is focused on building brand awareness, driving premiumization, expanding our UK market footprint, internationalization, and then doing that with disciplined capital management. The first four of those are the big drivers of growth for us.

James Pennefather: The value creation strategy that we have, which is on building brand awareness, driving premiumization, expanding our UK market footprint, internationalization, and then doing that with disciplined capital management, the first four of those are the big drivers of growth for us. We are very focused on the execution of those. This question, Louan, I am going to pass to you, number 12, which is: It would appear that many of your public shareholders who subscribed initially via Seedrs are finding their shareholdings frozen as a result of the public takeover and move to AIM. What can the company do about this?

Speaker #1: And we're very focused on the execution of those. This is a question, Luan, I'm going to pass to you—number 12—which is: It would appear that many of your public shareholders who subscribed initially via Cedars are finding their shareholdings frozen as a result of the public takeover and move to AIM.

Speaker #1: And what can the company do about this?

Speaker #2: Yeah, James, I'll also see the next question—I'll maybe read it out alongside this one. Will shareholders who bought shares via Seedrs, now Republic, have an opportunity to sell those shares?

Louan Mouton: Yeah, James, I will just give you the next question I will maybe read out alongside this one. Will shareholders who bought shares via Seedrs, now Republic, have an opportunity to sell those shares? As it stands, the investment feels as an investment for shareholder benefits with no prices or plan for exit. There has been a few questions on here around Seedrs and Republic. We have many shareholders that support the Chapel Down through the different raises over the last 10 years or so on the Seedrs platform that is now called Republic. With the move to AIM for Chapel Down, that should not have restricted or should not restrict shareholders from being able to sell their shares. However, the process for following that sits with the shareholders and Republic themselves, and Chapel Down has no influence over that process.

Speaker #2: As it stands, the investment feels like an investment for shareholder benefits, with no process or plan for exit. So, there have been a few questions here around Seedrs and Republic.

Speaker #2: We have many shareholders that support Chapel Down through the different raises over the last 10 years or so, on the Cedars platform that's now called Republic.

Speaker #2: With the move to AIM for Chapel Down, that should not have restricted, or should not restrict, shareholders from being able to sell their shares.

Speaker #2: However, the process for following that sits with the shareholders and Republic themselves, and Chapel Down has no influence over that process. So, in the first instance, I'd encourage everyone who has these questions to reach out to Republic directly.

Louan Mouton: The first instance, I would encourage everyone who has these questions to reach out to Republic directly. However, I do note the feedback, so I will try and reach out to Republic and see if there is anything we can do. But in the first instance, I would encourage everyone to reach out to Republic directly.

Speaker #2: However, I do note the feedback, so I will try and reach out to Republic and see if there's anything we can do. But, in the first instance, I'd encourage everyone to reach out to Republic directly.

Speaker #1: Okay, great. Thanks, Luan. I think there's another question for you, which is about the growing number of vineyards in the UK and what's happening to the average price of fruit.

James Pennefather: Okay, great. Thanks, Louan. I think there is another question for you, which is about the growing number of vineyards in the UK and what is happening to the average price of fruit.

Speaker #2: Yes, so thanks for the question. Firstly, I'd rather not speculate on what the average price of fruit is. The reason why I say that is the market is quite fragmented.

Louan Mouton: Yes. Thanks for the question. Firstly, I would rather not speculate on what the average price of fruit is. The reason why I say that is the market is quite fragmented. There is also, you have got various different factors including, never mind the tonnage that is available for sale. You have also got the different varieties, different quality aspects, and even down to clone levels. So there is a huge amount of variables at stake for pricing. I would speak to Chapel Down strategy, and we have got 20% roughly of our access to acres come from contract growers, so of our supply, essentially. Those are longstanding relationships. Some of them are over 20 years, dating back over 20 years, and they are with really high-quality growers. And we have got longer term contracts in place, with fixed pricing mechanisms around quality and yield, et cetera, that protects us against volatile movements in the market.

Speaker #2: There's also— you've got various different factors, including, never mind the tonnage that's available for sale. You've also got the different varieties, different quality aspects, and even down to clone level.

Speaker #2: So there are a huge number of variables at stake for pricing. I'd speak to Chapel Down's strategy, and we've got roughly 20% of our access to acres coming from contract growers.

Speaker #2: So, of our supply essentially, those are longstanding relationships. Some of them are over 20 years—dating back over 20 years—and they were really high-quality growers.

Speaker #2: And we've got longer-term contracts in place with fixed pricing mechanisms around quality and yield, et cetera. That protects us against volatile movements in the market.

Louan Mouton: And we have got longer term contracts in place, with fixed pricing mechanisms around quality and yield, et cetera, that protects us against volatile movements in the market. That provides us with sufficient capacity in the longer term in order to underpin our growth plan. The moving prices in the market is not something that we are actively looking at the moment with our strategy.

Speaker #2: And that provides us with sufficient capacity in the longer term to underpin our growth plan. So, the movement of prices in the market is not something that we are actively looking at at the moment.

Louan Mouton: That provides us with sufficient capacity in the longer term in order to underpin our growth plan. The moving prices in the market is not something that we are actively looking at the moment with our strategy.

Speaker #2: With our strategy.

Speaker #1: Okay, there's a question here. A shareholder spotted the growth of canned wine being seen in Waitrose and M&S, and is asking what Chapel Down is doing about it.

James Pennefather: Okay. There is a question here. A shareholder has spotted the growth of canned wine being seen in Waitrose and M&S and asking what Chapel Down is doing about it. We have looked at this area. We could not find a compelling business case at the moment. However, it is an area that we will continue to explore if it continues the growth that we are seeing. There are a lot of variables also to consider around quality in that as well, but thank you for spotting that and raising it. I have a question here for Louan around the admin costs are up significantly, some of which is marketing, and a question on what constitutes the rest.

Speaker #1: We have looked at this area. We couldn't find a compelling business case at the moment. However, it is an area that we will continue to explore if it continues the growth that we are seeing.

Speaker #1: There are a lot of variables also to consider around quality in that as well. But thank you for spotting that and raising it. We have a question here for Luan around the admin costs being up significantly.

Speaker #1: Some of which is marketing, and a question on what constitutes the rest.

Speaker #2: Yeah, thanks. So admin costs are significant. £400,000 marketing was the risk. Debt interest? No, it's not debt interest. Debt interest is captured as a separate line as finance cost.

Louan Mouton: Yeah, thanks. Admin costs are up significantly, GBP 400,000 marketing. What is the rest? Debt interest? No, it is not debt interest. Debt interest is captured as a separate line as finance cost. That would be relating to overheads. Overheads, which would constitute all of our operating costs to support our distribution costs, office costs, people costs, et cetera, that would all go through there. As I mentioned earlier, we have annualized some increases from last year around, for example, headcount, as well as absorbed some inflationary increases behind our top-line growth. Therefore, we are getting some leverage, operational leverage compared to on net sales revenue.

Speaker #2: That would be relating to overheads. So, overheads would constitute all of our operating costs to support our distribution costs, office costs, people costs, et cetera.

Speaker #2: That would all go through there. So, as I mentioned earlier, we've annualized some increases from last year around, for example, headcount, as well as absorbed some inflationary increases.

Speaker #2: Behind our top-line growth. So, therefore, we are getting some operational leverage compared to net sales revenue.

Speaker #1: Great, thanks. I'm spotting a few questions that were asked right at the beginning, which got answered over the course of the presentation itself, but there's one here that wasn't.

James Pennefather: Great, thanks. I was sorting a few questions were asked right at the beginning, which got answered over the course of the presentation itself. But there is one here that was not. Given the increase in climate challenges, much hotter, drier summers, what, if any, mitigations is Chapel Down taking to conserve or retain water? We do not irrigate our vineyards. What we found this year was that at the end of August, the vines were still looking in extremely good shape, the leaves really green, and that is because the vines have very deep roots. They are well adapted to more Mediterranean climates. Our expectation and forecasts are that there will be sufficient rain over the course of a year in order for English viticulture to be very viable for decades to come. So we are not planning to put in additional irrigation at the moment.

Speaker #1: Given the increasing climate challenges with much hotter, dry summers, what, if any, mitigations is Chapel Down taking to conserve or retain water? So, we don't irrigate our vineyards.

Speaker #1: What we found this year was that, at the end of August, the vines were still looking in extremely good shape—leaves really green. And that's because the vines have very deep roots.

Speaker #1: They are well adapted to more sort of Mediterranean climates. And our expectation and forecasts are that there will be sufficient rain over the course of the year in order for English viticulture to be very viable for decades to come.

Speaker #1: So we're not planning to put in additional irrigation at the moment. Is the long-term plan to drop still wines entirely and focus exclusively on sparkling?

James Pennefather: Is the long-term plan to drop still wines entirely to focus exclusively on the sparkling? This would be a disappointment as the Bacchus and Flint wines are excellent. There are no plans to drop still wines at all. They are very much a valued part of our mix. They showcase our winemaker skills and likewise, they give us a really good footprint on shelf and give us exposure to more occasions. They also help with cash flow as well because you sell them the year after the harvest. But what I would say is our core strategic focus and the real value creation for the company comes from the expansion of our traditional method sparkling wine portfolio and becoming one of the world's great sparkling wine houses.

Speaker #1: This would be a disappointment, as the backers and Flint wines are excellent. There are no plans to drop still wines at all. They're very much a valued part of our mix.

Speaker #1: They showcase our winemakers' skills, and likewise, they give us a really good footprint on shelf and exposure to more occasions. They also help with cash flow as well because you sell them the year after the harvest.

Speaker #1: But what I would say is our core strategic focus—and the real value creation for the company—comes from the expansion of our traditional-methods sparkling wine portfolio and becoming one of the world's great sparkling wine houses.

Speaker #1: There's a question, number 27, Luan, around stock levels: £20 million in stock. Does this represent a build-up of unsold inventory?

James Pennefather: There is a question number 27, Louan, around stock levels. GBP 20 million in stock, does this represent a build-up of unsold inventory?

Speaker #2: The question is—oh, sorry. The answer to that is, it's intentional, the way that Chapel Down invests in maturing stock. So, as you might know, we've got a long maturing cycle for traditional method sparkling wine.

Louan Mouton: The answer to that is, it is intentional the way that Chapel Down invests into maturing stock. As you might know, we have got a long maturing cycle for traditional method sparkling wine. So, with aging of the non-vintage expressions being at least 18 months after going through tirage. Harvest in September, October means that tirage in June, July, then 18 months on top of that, then time on cork, then selling through to the different channels, be it through DTC or trade channels. So really we are talking about almost three years since harvest before a non-vintage traditional method like our Brut or Rosé would hit the shelves. Therefore, we need to be investing ahead of our growth curve. Essentially, we need to be putting more into stock today for the volume we will be selling in three years' time, otherwise we will be out of stock.

Speaker #2: So, with aging of the non-vintage expressions being at least 18 months after going through tirage—so harvest in September or October means that tirage is in June or July, then 18 months on top of that, then time on cork, then selling through to the different channels, be it through DTC or trade channel.

Speaker #2: So really, we're talking about almost three years since harvest before a non-vintage traditional method, like our Brut or Rosé, would hit the shelf.

Speaker #2: And therefore, we need to be investing ahead of our growth curve. So, essentially, we need to be putting more into stock today for the volume we'll be selling in three years' time.

Speaker #2: Otherwise, we'll be out of stock. So we've been intentionally investing behind maturing stock, and to do that, we've planted new acreage over the last five years that is now becoming productive.

Louan Mouton: We have been intentionally investing behind maturing stocks. To do that, we have planted new acreage over the last five years that now is becoming productive, and that will help us with that pathway to get to 1% of Champagne by 2035.

Speaker #2: That'll help us with that pathway to get to 1% of Champagne by 2035.

Speaker #1: Okay, I'm conscious we've only got one minute to go. Just a final question here, then. And, as usual, any questions we haven't managed to get to today will be answered.

James Pennefather: Okay. I am conscious we only got one minute to go. Just a final question here then, and all questions will be answered as usual, that we have not managed to get to today, but a question from Peter saying, "Why has the yield per acre dropped?" We plan on an average yield, which is tons per acre, based on the five-year average. In 2025, the yield was 15% higher than that five-year average. This year it is going to be, we think, and we are only halfway through the harvest, about 10% lower than that five-year average. What has driven that has been a frost incident in May that had impacted some of the vines and then in August, slight lack of rainfall at that point. But at a 10% tolerance either way over the course of the two years, that is very manageable for us in terms of our sales forecasts moving forward.

Speaker #1: We have a question from Peter, asking why the yield per acre has dropped. We work, we plan on an average yield, which is tons per acre, based on the five-year average.

Speaker #1: In 2025, the yield was 15% higher than that five year average. This year it's going to be we think and we're only halfway through the harvest about 10% lower than that five year average.

Speaker #1: What's driven that has been a frost incident in May that impacted some of the vines, and then sort of in August, a slight lack of rainfall at that point.

Speaker #1: But a 10% tolerance either way over the course of the two years—that's very manageable for us in terms of our sales forecasts moving forward.

James Pennefather: But at a 10% tolerance either way over the course of the two years, that is very manageable for us in terms of our sales forecasts moving forward. The best news, I suppose, is that the quality of the grapes, both in 2025 but also 2026, is looking excellent as well. I am really excited about our harvest updates, which we will be doing next month once the harvest is over. That is everything from me. I just wanted to thank everyone. Louan and I want to thank everyone for joining today's call. We are very grateful for the support of our shareholders, and we hope to see you at our brand home in Tenterden soon. Thank you, Alex, for running today's IMC presentation.

Speaker #1: And the best news, I suppose, is that the quality of the grapes both in 2025 and also 2026 is looking excellent as well. So I'm really excited about our harvest updates, which we will be doing next month once the harvest is over.

James Pennefather: The best news, I suppose, is that the quality of the grapes, both in 2025 but also 2026, is looking excellent as well. I am really excited about our harvest updates, which we will be doing next month once the harvest is over. That is everything from me. I just wanted to thank everyone. Louan and I want to thank everyone for joining today's call. We are very grateful for the support of our shareholders, and we hope to see you at our brand home in Tenterden soon. Thank you, Alex, for running today's IMC presentation.

Speaker #1: So, that is everything from me. I just wanted to thank everyone. Luan and I want to thank everyone for joining today's call. We're very grateful for the support of our shareholders, and we hope to see you at our brand home in Tenterton soon.

Speaker #1: And thank you, Alex, for running today's IMC presentation.

Speaker #3: Fantastic guys. Thank you so much indeed for updating investors today. Can I please ask investors not to close the session as you now be automatically redirected to provide your feedback which will help the company.

Operator: Fantastic, guys.

James Pennefather: Great.

Operator: Thank you so much indeed for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback which will help the company better.

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Q2 2026 Chapel Down Group PLC Earnings Call

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