Good morning. Welcome everyone to the Naked Wines Interim Results for Fiscal 2023. Thank you very much for everyone joining us early in the morning. I imagine there'll be a number of our investors out in North America will be picking this up on record later. Wanna take you through today the results from the first half of the year ending September and talk a little bit about the positioning of Naked and our longer term plans in light of that. As a reminder, a lot of you be very familiar with Naked as a business. Obviously, we exist to solve a set of problems in the wine industry and solve problems on behalf of both winemakers and wine consumers and we. I've been thrown by doing this, you know, virtually with kinda no presentation in front of me. Was kind of expecting to have the things on screen. Not the slickest start. What we wanna talk about first of all today, just give you a little bit of an overview of the key themes we're gonna cover in today's presentation. Obviously, we talked to you all recently in October, where we outlined the strategic pivot Naked was making towards profitability. I think the key message today is a chance to show a little bit more of the underlying business performance that sits behind that. I think you can see from the first half of the year that our results put us very much on track to deliver that pivot to profitability. We're gonna talk to you about the steps we've taken to secure liquidity, and James will take you through the state of the balance sheet. We can show you the results from the first half of the year. In particular, you'll see that we are materially delivering on that level of profitability. I will talk to you a little bit more about our business model and the long-term opportunity. I'm gonna keep it pretty short and hand over to James, who I'm very pleased to have back alongside me. Our other update for today is that James has agreed to return on a full-time basis this year. Thank you very much, James. Very pleased to have you here. I will hand over to you. Thank you, Nick. Good morning, everybody. You know, the summary I'm gonna walk through is a set of slides that really demonstrate how the performance in H1 is supportive of the change in approach that we've outlined and demonstrates that the pivot to profitability is being delivered. We see solid revenue and adjusted profit performance, shows the benefits of an international footprint, in particular, given currency changes. Got a balance sheet that supports the strategy, in particular, following the covenant renegotiation. We're demonstrating an ability to drive up value per order and mitigate inflation, which, you know, everyone is challenged by at the moment. We're beginning to enhance paybacks. We're getting them back towards what we think of as the Goldilocks zone around 2 times payback, and we're actually seeing that LTV benefit that supports that within the current cohort economics. Cost base has been reconfigured to reduce going forward. We expect our Standstill EBIT measure to converge with Adjusted EBIT over the course of the next 12-18 months. Looking at the results for H1, sales were up by 4% on a reported basis. That's -3% constant currency. That is the benefit of having businesses in the U.S. and Australia, which are obviously translating back favorably with the weaker pound year-on-year. As you know, we reduced investment in new customers, almost halving year-on-year as we moderated that investment to drive paybacks up. G&A costs have continued to increase in the half. That will moderate going forward. That increase reflects a combination of us spending money on what we call R&D brand building investment and also annualization of roles from prior years, as well as the translation impact of the FX rates and inflation in salaries. The net of all of that is that Adjusted EBIT increased to GBP 4.6 million for the half, which is a nearly four-fold increase year-over-year on a reported basis and a three-fold increase at a constant currency basis. We closed the half with net cash of GBP 23 million. That means that there's GBP 41 million of kinda credit facility capacity above that total liquidity, GBP 64 million. Moving forward onto slide 10. I think important to note that we set out guidance in October as we announced the pivot to profitability about an inventory reduction of GBP 40 million, and really wanted to demonstrate the deliverability of that. As of the end of November, what this chart is showing is what our forward inventory commitments look like. The blue section of the bar is the kinda legally committed purchase orders. The gray piece is the uncommitted but in negotiation. You can see that there's considerable headroom versus the dashed line on the left, which is our indicative COGS for the remainder of FY 2023 and FY 2024. The difference between those two lines would represent a destock. Therefore, you know, very clear that having consumed cash to build inventory and expecting to continue to do that somewhat in H two, we would expect to see that unwind in an orderly way during Fiscal 2024. We're reiterating the guidance we've given previously of targeting somewhere of the order of GBP 145 million of inventory at the end of FY 2024. On the following page 11, wanted to look at another driver of the balance sheet, which is our Angel funds, which are an important source of funding for the business. Several people have asked whether or not we're seeing redemptions in those increases as a result of, you know, any of the press about the business. The answer is no. We're actually seeing the lowest levels of redemptions when you look at the percentage of that balance, which is being redeemed on a monthly or even on a rolling six monthly basis. That is that it's lowest because of two reasons. It's A, we've been doing less new customer recruitment. New customers have the highest churn rate, and therefore you get kind of a faster cycle time of balances going into accounts and being withdrawn. We're also doing higher quality recruitment, and we'll demonstrate that a little bit in payback in a moment. When you get higher quality recruits, you get people who stick around for longer, they build balances in their accounts, and as a result, you see a lower level of withdrawals of those Angel funds. Moving on to page 12, really wanted to demonstrate how in a high inflation environment, we've been able to increase order contribution, and how have we done that. Our average repeat order value is trending upwards around 6%. We are seeing some uplift in COGS around 3%, because we have a kinda long-term sourcing model. We have been somewhat cushioned against some of the inflationary impact you could have seen in COGS. As a result, our gross profit per order is trending upwards around about 9% group wide. Fulfillment costs are where we have seen the biggest and sharpest impact of inflation, and they've been trending up around about 15% on a per order basis. It's a combination of logistics costs, fuel surcharges, higher labor costs in warehouse sites, things like that. By taking the action we've taken to try and drive order values up, which is a combination of pricing and merchandising, approach, actually that drops through to repeat contribution per order being about 4% higher year-on-year. I think there's potentially more to come here. We are holding excess stock that is generating incremental warehousing costs, because we had planned some of the distribution footprint for higher volumes than we're now generating. We will be, you know, realizing kind of underutilization charges, if you will, within that footprint. We expect to be able to unwind some, if not all of these over the next 12-18 months, so there's potential for further enhancements here. That's the repeat side of the business. Looking at the growth investments on page 13, I think interesting to look over an extended period at what's happened to our growth investment patterns. The gray bars show spend. You can see how spend increased significantly as we went through the start of the pandemic around about March 2020. The blue line shows the payback on that investment, and the payback sharply moved upwards at the start of the pandemic as customers started shopping online almost in an unprompted way. As we continue to invest through those high levels and as we've continued to reassess the value of the customers that we recruited there, you can see that payback's dropped significantly during kind of the middle of 2021. You know, recognizing that, recognizing the drivers of that in terms of fulfillment cost inflation, normalization of consumer behavior is what has triggered us to take the pivot towards profitability that we've undertaken. You just see at the right-hand side of that chart that our payback metric, and it's shown here on a rolling three-month basis, is starting to tick back upwards towards the 2x that we have always said would be the Goldilocks zone for this business. If we move to page 14, we can get a little bit more granular about that. On the left-hand side, you can see our paybacks by month for the prior year and the current year. Always a bit spiky, but you can certainly see at the right-hand side of that chart an uplift to north of 2x in some months of our payback during Q2. Yeah, that's what drove our payback in Q2 to an average of 1.9x versus 1.5x in the first half, Q1 rather. Getting beneath the drivers of that, you know, payback is a result of two things. How much does it cost to acquire a new customer, and what is the expected value of that customer? Of the 0.4x improvement in payback we've generated, about 0.3x of that comes from a lower cost per joiner. That's a number which is kind of bankable, baked in. 0.1x of that comes from enhanced LTV, lifetime value per joiner, our expectation that a customer is gonna be worth more than they were. Moving to page 15, recognizing that that's a forecast for a lifetime value, we are demonstrating how we're beginning to see some improvement in the realized value of those customers. Comparing Fiscal 2022 and Fiscal 2023 revenue per joining customer, you can see that the blue line as it goes through 60, 90, and 120 days, the early purchasing patterns of a customer beginning to diverge, we are seeing materially higher sales per joining customer than we were a year ago. With margins being relatively stable, you see on the right-hand side exactly the same trend emerging in the contribution we're realizing from those customers, with a substantial enhancement in the contribution per joiner by 120 days year-on-year. That gives us confidence that the forecast we're seeing for enhanced LTV, which underpins some but not all of the enhanced payback, is becoming real. Final area to look at on page 16 is the cost base. You know, we announced this with our pivot to profit in October, we have taken action to moderate the increases that we've been seeing in the cost base. We removed 32 roles during the first half. We're continuing to review costs with longer lead times, things like office expenditure. But the run rate that we're now seeing supports a lower cost base in terms of total SG&A in H2. We are also eliminating from the SG&A base the R&D spend, which is our kind of brand marketing trial budget. Any marketing activity we undertake of that nature going forwards will be embedded into our growth investment or our repeat contribution and will not be called out as a separate cost. We'll be measuring payback on that going forwards. Moving to page 17 and bringing all of that together, and looking at Adjusted EBIT and what we call Standstill EBIT. For those of you who may not be as familiar with Standstill EBIT, it's a KPI we've used over the years to try and estimate what the profitability of the business would be if we were only investing in growth such that our repeat contribution was held flat. It's one of many subscription KPIs that, you know, we look at. We need to determine whether we need it going forwards, if we're in a more kind of stable, profit-driven focus. We felt it worth addressing it because it's not delivering an attractive number in this half. Worth understanding why that is. If we look at the history of Standstill EBIT, you could see that our Adjusted EBIT was negative in Fiscals 2019 through 2021. We were saying that this business had potential to deliver strong Adjusted EBIT if we weren't investing so much in growth. That Standstill EBIT potential appeared very, very strong while the pandemic was influencing the KPIs that go into this calculation. Then as that unwinds in Fiscal 2023, we see a rapid reversal in Standstill EBIT, which is really driven by the FY 2022 investment returns being poor. Calculation says if we had to invest to replenish the contribution we lose to churn at the investment paybacks we were delivering in FY 2022, it would require a substantial investment in order to do that. As I've just shown, as payback is improving, we expect that payback to change. I expect these numbers to reverse again in Fiscal 2024. Actually, with our guidance for improving profitability versus FY 2023 in FY 2024, we should see convergence between this Standstill EBIT measure and the Adjusted EBIT measure next year. That brings us to guidance. Fairly simple slide because what it says is there's no change to the guidance from that we gave in October. Still expecting revenue between GBP 340 million and GBP 360 million. Still targeting new customer acquisition investments of GBP 20 million-GBP 24 million. Our G&A costs, excluding share-based payments in R&D, should be GBP 42 million-GBP 44 million for the year. As mentioned earlier, the R&D cost will go away into FY 2024. The other SG&A costs should remain at a similar level in FY 2024. As a result of all of that, Adjusted EBIT for this Fiscal Year of GBP 9 million-GBP 13 million is expected. We expect that to improve further in FY 2024. October and November trading, which is profitable, is supporting that and in line with our expectations. That concludes the financial section. Gonna hand over to Nick, who's gonna talk about our long-term opportunity. Thank you very much, James. I think you can see from that set of numbers that we're well on track to deliver the pivot to profit that we've outlined. I want to talk a little bit more in this section about how you should think about business Naked over the medium to long- term. Turning to page 20. On page 20 we have, we just outlined I think a simple framework to think about the long-term differentiation in Naked as business. At its core, the investment thesis I think remains similar to that which we outlined pre-pandemic, but I think it's an important element actually fundamentally strengthened by the level of scaling that the business has experienced over the course of the last 2.5 years. In terms of market outlook, you know, we retain the attractive exposure to multiple markets. Now over 50% of group revenue is delivered in the US, our biggest market, and a market that structurally is very attractive for our business. We're able to deliver a combination of exceptional value to consumer in that market, at the same time delivering far higher contribution margins given our ability to operate as a winery and disintermediate distribution and retail tiers in the US. All of that means we've been able to build scale within that market, and we'll show you how that scale has progressed over the course of the last few years. We are the world's largest purely online direct-to-consumer wine business, and we've got a number one position in that sector in our key American market. I wanna talk a little bit more in detail about our winemaker relationships. I think ultimately when you compare Naked to a peer group of online wine companies, the thing that really sets this business apart is that we were founded with a genuine mission to change and make more efficient the way that wine is produced. That's manifested in a set of very long-term, very deep and very valuable relationships with winemakers and suppliers. Now unquestionably, we're in a period where we are overstocked and we're having to work to address that. Within that we've been able to maintain those relationships and I think they're a really important part of what sets us apart from our competitors. What those relationships give you is a business with a set of exclusive and valuable brands, and we have been growing those brands and increasingly getting recognition from consumers and from industry bodies for the quality of wine that we're producing. I wanna talk to you a little bit about that as well. Underpinning that and the benefit of operating now for over 10 years in the U.S. and Australia and for, you know, nearly 15 years in the U.K., we have an unparalleled set of proprietary data about our consumers, our products, that is something that enables us to deliver, you know, a more efficient business and it helps our winemakers to make better and better wine more efficiently to meet our consumers' needs. You know, you see that reflected in the very high buy it again ratings our products get. It also powers our investment model, and lets us underpins the business where ultimately, as James outlined, we're investing money based on a data-driven prediction and belief in how valuable customers are likely to be. To make that business model work. You need a few things to be true. You need to have a highly sticky customer base. You need to create real advocacy and loyalty amongst your customers to give you predictable long-term value. Again, I think you can see that we continue to do that. The long-term thesis that this is a business with very satisfied customers experiencing great value and translating into high loyalty remains very much intact. If we move to page 21, we're just gonna go through a little bit of the proof points behind this. I think, you know, the revenue share is self-explanatory. Something additional that we're highlighting here is with an increased focus on profitability, we're giving a view on the segmental profitability of the business. You can see that in terms of Adjusted EBIT delivery, the US is equally the most important part of the business. If you start to think about this over a medium term and what is potentially a sustainable net margin for the business, you can see that the higher contribution margins we're able to deliver in the US ultimately translate through to an opportunity to deliver a business as we are increasing our rate of US that is materially profitable alongside, and that creates with it some opportunities, right? To choose how much profitability we drop through in a year and how much of that we reinvest back into future growth. On the next page, you're able to take a look at how our share has developed in that key American market. You can see that there's been a little bit of year-to-year variation, but it's a pretty steady progression through to us having built, you know, around a 13.5%, 14% volume share in 2019. We then had a one-off rebasing step change it up to 20% through the pandemic. We've been able to maintain that 20% volume share in the U.S. market, and that makes us, you know, by far and away by volume, the largest participant in that D2C space. That has a number of important advantages, you know, especially in a world where increasingly, like a lot of businesses, we are having to deal with cost pressure in areas like logistics and distribution. You know, fundamentally, that scale advantage is important. Turning to the next page, I thought it would be helpful to share a little bit of data about our supply base. Whilst we work with over 250 winemakers around the world, we have a number of incredibly important relationships with our top suppliers. What we're highlighting here is the sales by unit volume in the first half of the year compared to the first half of the year in Fiscal 2020, so the financial year before pandemic. You can see for our top 10 suppliers, you know, all of them have seen material volume growth over that period. I think when you average this out, on average, suppliers are seeing 80% higher volumes than they were pre-pandemic. You can also see that, you know, this is a group of suppliers that have built and developed their businesses in partnership with Naked, you know, on average for nearly a decade. This is really important when you think about questions of, you know, what is the impact of us having to make volume commitment reductions or purchase reductions on our long-term relationship. I think the proof here is that Naked is delivering on its premise. We're helping talented independent winemakers build businesses of their own of real substance, scale, and profitability. The truth is, in a tough environment, we continue to offer much better opportunities for independent winemakers than traditional distribution, where when times get tough, you increasingly see access to markets being cut off, and distributors focusing on, you know, inventory efficiency, cash utilization, actually often unwilling to take on any new clients or offer distribution to anyone outside of large producers. I think in the next couple of pages, I wanted to expand on a couple of the things that James talked to in the financials. James gave an overview of the evolution of our contribution per order in the period. I think it's helpful to expand on one of the levers behind that, which has been some of the work that we have taken in the first half of the year around pricing. The benefit of working with independent producers to help them build their own businesses and their own brands of value is that Naked is a business that 95% of what we sell is exclusive to Naked. These are brands we have developed in collaboration with winemakers that are available nowhere else. It also means we have a lot of deep involvement in that production model. We're able to help in terms of the product, the packaging design, and able to manage the cost in that product. We have full ownership of how that goes to market, the sales channels, the mix, the promotional structure. All of that gives us a lot of levers to enable us to balance providing great value to consumers in a time when consumers are being squeezed, but also being able to have really good margin delivery. Turning to the next page, I think it's helpful to maybe illustrate the extent to which we have built real value and equity into these brands, but also how that has enabled Naked to have a good degree of pricing power by focusing in on one of our top brands that we sell in our American market. actually also available in the U.K., and I had a look the other day. It's 23 GBP in the U.K., so if anyone hasn't done their Christmas shopping, I highly recommend some Matt Parish Napa Cab. Get it while you can. Getting off sales mode, right? If you look at this as an illustration, you know, over the course of the last four years, this is a brand that we've been able to treble in terms of sales value, two and a half million dollars worth of sales to members just, you know, purely on a stripping out any mixed case promotion we do on this brand. Through that period of time, you've seen average selling price move from $22 through to, you know, an average in 2022 of $27. I think it's actually selling at around $29 at the end of the year. You can see against that. The buy it again rating has actually increased. Part of this reflects the fact that Matt, the winemaker here, has done a fantastic job. You know, we've been able to put in place long-term sourcing arrangements, drawing great fruit from some of the top suppliers in Rutherford in the heart of the Napa Valley. I think the product, you know, is better than it was four or five years ago. It's showing, you know, all the hallmarks of a real brand. You know, we've been able to grow volume at the same time as taking price, and customers are telling us that they're more satisfied with this product than ever. Turning to the next page, if that's, you know, an example of a single product, what we're illustrating on the next page is just again highlighting our U.S. business. We're showing what's happened in terms of the gray line on here, which is the average change on a basket of like-for-like products this year versus prior year. You can see that, you know, at the end of the period, you know, we're looking at average prices up sort of 7%-8% year-over-year. The blue line reflects that our average price of a bottle of wine sold, you know, is pretty much tracking close to that, up around 6% year-over-year. Underpinning that, what we're seeing is that customers are sticking to the brands that they know and love, and they're broadly accepting the price increases that we've put through. That means that's flowing through obviously to higher gross margin. We've also looked at our shipping threshold and policy in the US, and we're seeing, you know, a net increase in shipping income as a result of that. If you take those two things together, you know, you're probably looking around about a 7% like-for-like price increase and maybe the equivalent of a further 3% through shipping, which has put the economics of the business, I think, on a very strong and sustainable footing. It's enabled us to address some of the cost pressure that we've seen in distribution and logistics, and it means that improving contribution margins are one of the elements that are strengthening our lifetime value of members acquired in the period. Turning to the next page, you know, the lifetime value story, though, is by no means purely a price-led story. We continue to deliver improvements to the overall range and customer experience and proposition. Highlighting on the left here, we're showing the trend in terms of repeat revenue, so sales to our Angel members, per active Angel and how that's evolved over the course of the last six years. I think when you look at this on a full year basis, actually the pandemic FY 2021 wasn't our high point, but just in a first half perspective, it was. If we remember back that period from April 2020 onwards, things did go absolutely crazy in the business. If you compare the first half of 2023 to any other period, you looked at H1 2020, 2019, 2018, you've seen a material step up in terms of that revenue measure. Ultimately, that reflects, I think, a combination of us having a stronger range than we ever have before. I think in all our markets, we've expanded the number of products available to consumers, improved availability. In the U.S. in particular, there's been a focus on offering more choice at luxury price points. In Australia, we've seen some of that as well. In the U.K., there's been a real push to add diversity to the range. You know, both things like launching our first Georgian winemakers, giving customers a chance to get off the beaten path and experiment, but also substantially increasing the range from traditional winemaking heartlands that have been a smaller part of the Naked mix. That means more wines from Burgundy, from Bordeaux, from Spain, from Italy, and consumers have really responded well to that. Equally, we continue to enhance the digital proposition and experience. In the first half of the year, we rolled out a new payments platform powered by Braintree, which saw falling card decline rates. We have added for consumers the ability to self-serve additions to their subscription products. That's auto-recurring shipments of their favorite wines. We see double-digit% of consumers using those to double those orders, which obviously is both driving revenue and favorable contribution economics. We rolled out our Fine Wine Club proposition, which we debuted in the U.K., and is now recruiting members in both Australia and the USA. Honestly, whilst it's not the number one thing we look to, it's always lovely to have a bit of industry recognition. In the period, we've continued to see a combination of Naked's producers winning very large numbers of awards at the biggest, most important industry wine shows, alongside recognition for the work we're doing, things like winning the Decanter Sustainable Green Choice Award in the U.K. and, you know, being voted kind of people's number one wine club in the U.K. and winning the USA Today Awards in the U.S. You know, all of that being recognized by not just our consumers, but also, people external to Naked. If you take all that together, I think you see that Naked as a business, you know, comes through the course of the last three years, which, you know, reflecting back, having three years in the job, there haven't been a lot of normal years in that period of time, but it's a period of time for us as a business which has been very important. We have consolidated our leadership position, in the markets we operate in. We've continued to invest in improving the quality of the customer proposition experience, and most importantly, in partnership with our winemakers, delivering the best wine proposition that Naked's ever had. I think that sets us up very well to look to the future. I think finally it's worth then reflecting, on page 29 on what the next, you know, couple of years are likely to look like for this business. I think here it's important that we are clear that there are a couple of different ways in which the next two years may play out. I think some things we can commit to under any scenario. We intend to run the business profitably, not just this year, but in FY 2024 and 2025. As James had outlined, we have made substantial progress to put in place the conditions to deleverage and destock the business, which means that profitability will translate into material cash generation in both financial 2024 and 2025. I think that leaves the choice being the balance between growth and profitability that we deliver as a business. Our intent will be to look to return Naked, you know, from financial 2024 to a level of growth accompanied by some profitability, but therefore likely a more moderate level of profitability. We will look to do that as long as there are sufficient attractive investment opportunities available. We do wanna be clear, you know, we're not gonna pursue a course of investment at any cost. If the case is it makes sense for us to wait a little longer to return the business to growth, then we're willing to be patient and we're willing to wait. Ultimately, we believe that we have a business that is differentiated. That in terms of, you know, long-term trends, you know, plays to a likely consumer desire to buy more wine online, is really aligned to consumer preference to understand provenance, understand where their products are coming from, to buy from small independent producers. We're very confident that that long-term growth exists. If the consumer environment and market environment means there are not particularly attractive opportunities to scale investment in F24, then we would look to deliver a higher level of profitability and wait to deliver a return to growth. I think that ends the presentation for us and, you know, James, that may be a record for us being a little snappier, which means we've got time to move on and take some Q&A. Okay, guys. Our first question is from Wayne Brown at Liberum. He has two questions. First one is: What is the price and volume mix with regards to revenue growth in the period? Yeah. The second question is. Sorry if I confused- Well, let's do one question at a time. Yeah, one at a time. Perfect. Super, guys. Thank you. Yeah. I'll say that. Well, I don't, I don't have the precise numbers to hand. I think there's actually three elements in there. There's a little bit of market mix, a little bit of shift towards the U.S. which supports those numbers. The U.S. has slightly higher order values on average. There's not going to be a massive degree of product mix in there. The underlying number will be strongly influenced by price. You can probably kinda safely infer that of the 6% average order value increase, there's a bit of market mix. There's probably a fraction of an extra bottle per order where some of our upsell mechanics have helped that. There is a solid kind of mid-single digit price impact, sat at the core of that movement. Great. The next question is: Looking at the Standstill EBIT chart, the fact SS EBIT fell negative so quickly due to one cohort, what does that infer about the underlying rate of customer attrition? Yeah. If you look at, I think, in the RNS and I think on the presentation page. Sorry, let me just flick to it. Actually, I'll point you to the RNS somewhere in the appendix of the presentation. We've bridged out the drivers of the Standstill EBIT reduction. Actually, from GBP 21.2 down to negative GBP 5, you get two and a half net increase due to having more repeat contribution. You get a GBP 3 million reduction due to lower aggregate retention. You get GBP 14 million reduction due to lower year one payback, you get just under GBP 12 million of reduction due to G&A. The single cohort is what impacts the lower year one payback. The way that metric is calculated and taken into that calculation is on the FY 2022 or the rolling 12 months of investments, the year one payback we realized on, you know, what I think we have to be honest was not a good year in terms of investment performance, is only 46%. That's down from 68%. That single movement is responsible for the majority of that reduction in Standstill EBIT reduction. You know, we could argue that's a flaw in the calculation. I think I'd argue it's a truth in the calculation. It looks at what our latest 12 months of investment performance has been. It doesn't speak to the retention across the overall base. That speaks to only that GBP 3 million reduction, which is the difference between a kinda 80% and a 78% last 12 months sales retention number. In the appendix of the presentation, and we can pick it up individually later, we've got a chart that shows how actually sales retention per cohort based on their tenure has actually improved for all but the most recent cohorts. Yeah, if you've been with us for seven years, we're showing slightly better sales retention year-on-year, ditto for six years, ditto for four years, et cetera, et cetera. It's all about last year's investment returns, and the way that they factor into that calculation. Great. The next question is from Ben Hunt with Investec. How can you ensure that the destocking of your inventory will not affect your sales channels and gross margins going forward? How promotional is the market currently? Yeah, happy to respond to that one, Ben. I think the first one is the way in which we are looking to manage our destocking is very much looking to deliver an orderly destocking process, and that is to try and do a few things. You know, one that enables us to do that collaboratively in partnership with our suppliers and winemakers, and ensure that we preserve their business viability, which is ultimately a key part of our competitive differentiation. It also does a second thing, and it means we are not flooding, you know, any of our own sales channels with, you know, heavily discounted offers and incentives, which will be compromising the long-term value of, you know, brands. You know, things like the Matt Parish and Apothic that I spoke to earlier. One of the mechanics then that we are using alongside, you know, collaborative negotiation with winemakers is looking to have some of that, a decent part of that inventory disposal happen in bulk, i.e., prior to bottling. That typically involves you signing a confidential agreement to sell wine onto a third party. The juice, high quality wine, goes into additional different brands. You don't get an impact of consumers seeing brands you've created being sold in alternative channels at lower prices. That's, you know, one of the key mechanics that we're using in order to make sure we don't have that risk manifested then. Okay, another question from Ben. LFL ASP seem modest, given sales retention in older cohorts remains at healthy levels and you have good value quality credentials, could you recover more margin via price hikes? I think, Ben, this is one where the market environment is probably a shade different in different parts of the business. As you'll recall, we started experimenting and looking at our ability to drive margin through pricing in Australia in the prior year. We saw some good results. As those results embedded in, you know, we haven't seen net impact to retention rates. We moved to take price in the U.K. and the U.S. in the first half of this year. We will take time to look at the data and look at the impact of that and make an assessment as to whether there is any further opportunity. From what we're seeing at the moment, it is likely that we may have more pricing headroom than we previously understood in our U.S. market. I think the consumer outlook and conditions are probably a little tougher in the UK. There may be a little less headroom in the UK market. We're very much taking the approach we normally would of, you know, being iterative to a degree here and giving ourselves an opportunity to create some natural experimentation and then look at the impact that's having on consumer behavior. You know, in the light of that, we'll take a view as to what's possible going forward. Next question is from Wayne Brown with Liberum. There's been a lot of press recently that wine suppliers are expecting glass prices to increase 45%-70% next spring. How are you planning to mitigate this significant increase? Well, Wayne Brown, it's important not to believe everything in the press. I think underpinning this, you've got actually some quite big regional differences in terms of the glass market. I think a lot of that press will relate to a European market where you've got, you know, glass producers, you know, feeling the pain of increasing energy prices with the war in Ukraine. If you remember for our business, the largest part of our business is in the U.S., where actually we're seeing glass pricing fall as we get international trade opening back up and supply into the U.S. market from, you know, places like, Taiwan, Chile, China, starts to flow again. I don't know that we're gonna be seeing that kind of pressure, overall on our business. However, I mean, it's a good opportunity to talk about something that we have been focusing on, which is an opportunity to do both the right thing from a sustainability perspective and for us to take some cost out of the proposition. Which has been focusing on, you know, a program of lightweighting glass and working in collaboration and partnership with our winemakers to deliver, you know, lighter products that are easier to transport, have lower environmental impact, and ultimately, obviously, have exactly the same taste. There's no impact to the juice inside. We will continue to do that, which I think is, you know, the right thing for us to do both commercially and from a sustainable perspective. We have three questions from Thomas Stein from Medium Invest. First is, how much money do you use to fund winemakers, and where is it visible in your balance sheet? Yeah, James here, I'll take that one. The funding that we provide to winemakers is in terms of advanced payment for inventory. It sits within the inventory line that we have. That inventory line is a combination of finished goods in the warehouse ready to ship, wine in tank, as Nick suggests, payments that we've made to winemakers, so they have secured grapes, or maybe they've crushed wine and they hold the wine in tank on their site. It all sits within that inventory balance. The funding side of it is a combination of the company's funds, but also the Angel funding balance, which sits as a customer liability on the balance sheet. Great. The next is how much of your wine is made with grapes that are bought versus grown by the winemakers themselves? Yeah. Happy to take that one, Thomas. I mean, I think the reality of the wine trade, especially thinking about, you know, our largest business in the US, is that actually there's relatively limited number of, you know, the real romantic vision of someone who owns a vineyard, grows their own grapes, and makes all their own wine there. We typically tend to have long-term contracts for fruit. You'll have grape growers who are different people to winemakers. We'll have long-term contracts with winemakers who, you know, who then make wine for us. What's important in the business, you know, sometimes we're contracting grapes, sometimes we're contracting for, you know, a finished wine from a winemaker. The thing that's in common is we look to have continuous sourcing from the same location, which gives winemakers the opportunity to progressively iterate based on the feedback that we give them. You know, both quantitative feedback and qualitative feedback. You know, the direct commentary they get through the website and the app from customers. That's what fundamentally lets them deliver and create better product year-over-year. It's that consistent sourcing model with clear line of sight to, you know, where the grape is originally grown. Ultimately, kind of, you know, the legal arrangement and, you know, who's growing what and who owns what, less important. To give you a little bit of insight on how the business works. I guess that would be a contrast versus, you know... A business out there, you know, something like a Winc, which has kind of had more of a view of taking wine as a commodity and saying, "Okay, we will go and buy whatever juice is available on a spot market and put that into a brand that we've created and we own." You know, fundamentally, we believe that to have long-term differentiation in our proposition, we need to work with great winemakers, and we need to give them the tools and the ability to source consistent high-quality product. Next question is: To what degree are you positively impacted by selling wine now that was bought at lower price levels before inflation surged? Hey, Thomas. Me and Nick are looking at each other for who's gonna take that one. Sorry. I'll take it. I think the answer is partly, I think it's worth being aware that, you know, very different in different markets. U.S. has a slightly longer stock position than the U.K., for example. The underlying cost of the juice is more impacted by near-term things like climatic events than it is inflation. Glass, you know, as you've heard, is impacted not just by kind of inflation, energy cost, demand side economics, et cetera. In the U.K., duty is a big component of our selling costs. For anyone looking at the chart that had COGS on, you won't marry it back nicely to the P&L because there's such a big chunk of duty in there. Duty moves with its own cadence based on the Exchequer. There is some benefit. It's hard to unpick. I don't think it's particularly substantial in the bigger picture. There's two other questions from Thomas. What is driving the increase in trade and other payables? Yeah, I'll take that one. It's a combination of some timing differences. You know, in particular, there's some things like timing of U.K. duty payments relating to large packages that we're building ready for Christmas. There's also a recognition in there that, you know, as we've worked with our winemakers to work out how we manage the stock commitments, the route through stock, we found the cheapest viable option. We might take some stock, but agree with the winemaker that we will pay for it later. There's a combination of factors in there. It has been, I think, reflective of the fact that to some degree, our winemakers have helped us as we have managed the stock levels through the system and continue to take stock from them, so they don't have to incur cost of holding it. The final question from Thomas is: Do you see any new one-off cost in the foreseeable future? We've guided to one-off cost up to GBP 12 million for the year. That's implies that there could be further cost in the second half. As we bring in more wine that is committed that may be excess to demand, we can't provide for that until it sits on the balance sheet. There is some timing in terms of how we're thinking about stock provisioning in particular, and there is leeway in the second half for us to incur, you know, potentially another GBP 3 million-GBP 4 million of one-time costs related to stock provisioning. The next question is from Dan Curtis with Navat Capital. What was the total staff headcount at the end of the period, and how does that compare versus 2021 and 2020? Dan, I don't have these exact numbers to hand, if I'm perfectly honest. You know, what we did do is, as we've indicated, we removed 32 roles in the period. We also did not fill a series of roles that we had originally planned. I think if we were to look across the group versus pre-pandemic, say end of FY 2020, we're probably 60%, 70% up on total numbers, including customer-facing staff. A little bit lower than that in terms of the administrative roles, which I think are the ones we generally break out in reporting. Happy to get a number back to you there, offline if you wanna drop us an email address. We've got it apparently. Great. The last question on the webcast so far is from Stefan Winterling from Isar Holding GmbH. What is the current churn rate, and how will it most likely develop? Yeah, look, the churn rate we report, Stefan, is a sales retention rate, so of sales made to repeat customers in the comparable period. What was the level in this period? That was 76% for this half. As we alluded to, we're seeing very kind of stable retention rates comparable to how people performed pre-pandemic based on their tenure with the business. When you look at those and projecting forwards, I would expect us to see high 70% sales retention rates in the future. Great. We have one question via the conference call, gonna pass across to our operator, Diana, who will open the line. Thank you. The question is coming from Grace Gilberg with Jefferies. Hey, guys. Thanks for taking my call. The first point or first question I have is on sales per new customer, 'cause you guys have that up around 24%, and you're still giving a lower discount on joining, plus those new cohorts are still becoming more loyal. My question is why is your long-term value only 0.1 year-on-year? Surely there's more upside to that. There could be, Grace. I think, you know, the model we have uses something like 20 to 30 different predictive data points. Only one of those is kind of near-term purchasing behavior, and retention. We'll see how that ages out. I would love to think with my optimistic hat out that the history we have of cohorts being upgraded in value over time will play out with this latest cohort. Right now, you know, we're seeing those kind of numbers, but it's only translating into a, you know, 0.1x improvement due to LTV. I mean, to be clear, LTVs are up by more than 10%, for example. Gotcha ... I think the model is genuinely quite cautious at most times, but it got battered by some of the short-term trends we saw during the pandemic. I think maybe the only other thing I'd add to that, James, I guess on page 14, we're showing the bridge from Q1 to Q2. Yeah, true. If we thought about that on a year prior year to this year basis, we would see a greater increase in lifetime value than that. You can start to infer some of that from the data we're showing on page 15. I think we may also show a little bit more in the appendix that starts to highlight that year-over-year, we are driving some pretty substantial increases in lifetime value. I think that's important, right? Because ultimately, over the long- term, you know, for us to have a good set of quality opportunities to return this business to growth, we need to be generating higher lifetime value per member. That ultimately gives us the foundation to go and compete with not just other wine businesses, but, you know, other D2C businesses and frankly, other people who are interested in people's attention, in different marketing channels to customers. The year-over-year trend will be more positive than implied by the bridge look. Gotcha. No, no, very, very clear. Then just one more, if I may, and I apologize if potentially you've already touched on this a little bit. In regards to payback metrics, if it reached actually the 2.5 times that we saw at pre-pandemic levels, what could that actually add to your Standstill EBIT? Or maybe even just more relevant to the EBIT margin itself. Nick and I are looking at each other to try and do some difficult math in our heads and probably failing. I'll give you a quick something, that'll let James do a bit of his magic math in his head. I think a couple of things are important. You know, number one, long- term, we've typically tried to operate the business at around a two times payback. Actually, if you go back before the pandemic, you know, that's roughly what we normally reported. Now, over a period of time, we have done some things like consistently expand contribution margins, that has tended to mean that now when you look back, it looks like all our cohorts before the pandemic were delivering on average two and a half times. Actually, there's a little bit of over time, we have operated well as a business, and the past looks better now than it did at the time. I think getting back to around two, you know, really reflects delivering a similar level of performance against our investment goals that we have over the long- term. In terms of quantifying, you know, what is a half turn of payback worth in terms of maybe kind of sustainable long-term profitability, you know, I'm looking to the man on my right now and seeing whether he's willing to give you an answer on the fly. Yeah. I mean, Grace, I think indicatively, the number that's driving the low Standstill EBIT is a 46% year one payback that we're seeing from last year's recruitment. Historically, that's been more like a kinda 66%-67%, which is what I believe we will revert to during FY 2024. What it's worth, just doing a quick calculation on the fly, the difference between a 65% and a 70% year one payback is about GBP 2 million-2.5 million of Standstill EBIT. I think that kinda gives you an indication of the magnitude that it will change by based on that, but I'd be unwilling to try and do anything more certain than that on the fly. No, no. understood. I appreciate it. Thank you. Okay. I think that's us done. Back to Nick, I think. Any closing words? Very good. Okay. Look, I think overall, you know, the message here is that we are very much delivering in line with the update that we gave in October. Been really pleasing to see trading through the first half of the year supporting the strong balance sheet we have now. Pleased to see resolution of issues around going concern, and pleased to see that we are on track for delivery of our profitability goals through the first half of the year, and as we've indicated, continue to trade profitably in the months subsequent to the end of the interim reporting period. That sets us up well looking to the long- term. I think we've got a business that is clearly differentiated in the space. I think you can see from the information we've shared today that that differentiation is very much intact. We continue to have a loyal customer base that is valuing the quality of wine and product we're offering, the differentiated experience, the direct connection to winemakers, that sets us up well looking to the longer- term. The bit we remain sanguine about is that there remains quite a lot of uncertainty and unknown in the outlook, both from an inflationary cost perspective, but also from a consumer perspective. In that context, we're very much focused on giving ourselves a series of choices. At their heart, you know, those good choices come from having strong liquidity, a business that is profitable, therefore is not reliant on any funding from elsewhere. That gives us a chance to choose, at what point we return this business to growth, and make sure we do that alongside continued delivery of profitability. You know, James and I and the team are very focused on delivering against that. Thank you all very much for your time this morning. I'm sure we'll get a chance to talk to you, a few of you one-on-one over the course of the days to come. Thank you very much.