DGL
01/12/2015 14:00
ADDRESS
NOT PRICE SENSITIVE
REL: 1400 HRS Delegat Group Limited
ADDRESS: DGL: DGL 2015 Annual Meeting of Shareholders - Addresses
DGL - 2015 Annual Meeting Addresses
Annual Meeting of Shareholders
2 pm, Tuesday, 1 December 2015
Slide 1 - Title Slide
1. Welcome and Introductions
Ladies and Gentlemen, On behalf of the Board, I am pleased to welcome you
here today to the tenth Annual Meeting of Delegat Group Limited since listing
in April 2006. My name is Jim Delegat and I have the privilege of chairing
your Board of Directors. There is a quorum present and given the time is now
2p.m. - I declare the meeting open for business.
Slide 2 - Welcome and Introductions
Let me first introduce you to my fellow Board Members, Graeme Lord (Managing
Director), Rosemari Delegat, Robert Wilton, Jane Freeman (Chair of
Remuneration and Nominations Committee), and Dr. Alan Jackson (Chair of Audit
& Compliance Committee). Also on the dais is Murray Annabell, the Group's
Chief Financial Officer, who will act as our minute secretary.
I also would like welcome our auditors, Ernst & Young and the Group's legal
counsel, Jones Young to the meeting.
2. Proxies
I can advise the meeting that Directors and others hold proxies and postal
votes for 77,673,202 shares, representing 76.8% of the share capital of the
Company.
3. Apologies
To open, are there any apologies? Thank you - those apologies will be
recorded in the minutes.
4. Notice of Meeting
The notice of meeting has been sent to all shareholders together with the
Annual Report, and I propose that, together with the agenda they be taken as
read.
5. Minutes of Previous Meeting
The minutes of the ninth Annual Meeting held on 2 December 2014 have been
approved by the Directors, and Murray Annabell is holding a copy for
inspection should any shareholder wish to see them.
Slide 3 - Agenda
6. Procedure
Firstly, I will address the Annual Report incorporating the Directors Report,
Financial Statements and unqualified Audit Report covering the year to 30
June 2015. I will then provide a brief overview of our key investment
projects before handing the meeting to the Managing Director who will cover
2015 performance in more detail and the Group's future growth plans.
Following Mr Lord's remarks I will open the floor for discussion on the
Annual Report and Executive Chairman's and Managing Director's presentation
before moving on to the formal business of the resolutions.
Executive Chairman's Address
Slide 4 - Executive Chairman's Address
As Executive Chairman my focus is on the strategic direction and monitoring
performance to ensure successful delivery of Board approved business plans. I
invest a significant amount of my time on capital investments and growth
initiatives.
Slide 5 - Another Year of Record Performance
On behalf of the Board of Directors of Delegat Group Limited, I am pleased to
report another year of record performance on our journey to build a leading
Super Premium wine company.
Delegat achieved record global case sales of 2,210,000 in the 2015 year, up
9% on the prior year. This strong growth was driven by 16% sales growth in
North America which is our largest and fastest growing market.
A record Operating Net Profit After Tax of $34.4 million was generated, up
10% on the prior year. Over the last decade the Group has grown Operating Net
Profit After Tax more than tenfold.
Your Board, being cognisant of both dividends to reward shareholders and the
need for reinvestment for a growth company, declared a fully imputed dividend
of 11 cents per share which was paid to shareholders on 9 October 2015.
Slide 6 - Investing for Growth
As outlined last year, the Group is investing for growth. During the 2015
year, $80.6 million was invested in vineyard development in New Zealand and
the Barossa Valley, the extension of the Marlborough winery and commencing
construction of the Hawke's Bay winery. The Group will invest a further
$101.9 million in 2016 to provide earnings growth in the years ahead. This
capital investment supports the Group's plan to grow sales by 43% to 3.17
million cases by 2020.
Slide 7 - Marlborough Winery Expansion
The Marlborough winery was expanded to a capacity of 28,000 tonnes for the
2015 vintage which equates to 2,240,000 nine litre cases of wine. Our
Marlborough winery is regarded as a benchmark Super Premium winery globally
and supports the Group's growth plans for Sauvignon Blanc, Chardonnay and
Pinot Noir. The expansion is consistent with the long term winery master
plan which provides the ability to increase capacity further in the future as
our business grows.
Slide 8 - Hawke's Bay Winery
Construction is well advanced on the Group's new Hawke's Bay winery which
will have a long term capacity of 10,000 tonnes which equates to 800,000 nine
litre cases of wine. This state of the art facility will be purpose built for
the production of Super Premium Merlot, Pinot Gris and Sparkling wine. The
13.4 hectare winery site is on the corner of Evenden Road and Ormond Road
near our vineyards in the famed Gimblett Gravels sub region. Phase 1 will be
completed in time for the 2016 vintage. The winery will be a landmark
winemaking facility in the Hawke's Bay region and an outstanding winery at
the forefront of Super Premium winemaking globally.
Slide 9 - Hawke's Bay Winery
Slide 10 -Vineyard Development
The Group planted 266 hectares of new vineyard in 2015 and is developing
another 118 hectares in the current year.
The Group now has supply from 3,318 hectares of vineyard, 2,884 hectares in
New Zealand and 434 hectares in Australia. Of this vineyard supply area 66%
is company vineyard and 34% is from our grower partners.
As previously announced the Group has entered into an agreement to acquire a
further 838 hectares of land in the Crownthorpe region of Hawke's Bay which
is a world class viticulture region based on its ideal soil types and
climate. This land adjoins an existing Delegat vineyard and is a significant
land acquisition which will enable the Group to meet strong growth in global
demand for its Super Premium wines, including Oyster Bay Pinot Gris and
Sparkling wine. Delegat intends to commence planting the property
progressively from spring 2017, enabling incremental sales growth from the
2021 financial year. This land has the potential to produce more than 550,000
cases of Super Premium wine per year when fully producing and is an important
element of Delegat Group's long term growth strategy.
Slide 11 - Funding Growth
As outlined last year, the Group intends to fund its growth plan through
retained earnings and bank debt. The Group has a strong balance sheet with
shareholders' equity of $273 million, bank debt of $202 million and undrawn
syndicated bank debt facilities of $148 million. The Group's retained
earnings and long term syndicated bank debt facilities provide appropriate
funding for our capital investment programme and growth plan.
Slide 12 - Executive Chairman Concluding Remarks
Your company is one New Zealand's great growth stories. It is a pleasure to
celebrate another a year of record performance on our journey to build a
leading Super Premium wine company.
Your Board would like to take this opportunity to acknowledge the commitment,
effort and performance of our Great Wine People around the world. I would
also like to thank the Board for their contribution to the Group's ongoing
success.
Graeme Lord, the Group's Managing Director, will now provide a more fulsome
report on the 2015 year and our plans for the future.
Managing Director's Address
Slide 13 - Managing Director's address
Good afternoon Ladies and Gentleman, it is a pleasure to meet with you today
to discuss the performance and growth plans of your company.
In this address I will report on 2015 performance and the Group's future
growth plans.
Slide 14 - 2015 Vintage
The Group harvested 26,748 tonnes from the 2015 vintage. The New Zealand
harvest was 25,081 tonnes, which was 26% lower than the prior vintage due to
higher than average yields in 2014 and lower than average yields this year
arising from unseasonal cool weather over flowering. The Australia harvest
for Barossa Valley Estate was 1,667 tonnes, which was up 66% on the prior
vintage. The 2015 vintage delivered excellent quality in all regions.
Whilst yields were lower than normal, the Group is well positioned with
inventories to achieve our future sales growth plans.
Slide 15 - Oyster Bay
The Group is focused on establishing Oyster Bay and Barossa Valley Estate as
two of the world's great Super Premium wine brands.
Oyster Bay continues to strengthen its consumer connection across all
established markets. Research shows a strong and growing consumer affinity
for Oyster Bay in its leading markets.
In recognition of Oyster Bay's brand profile and success, it was named one of
the world's most admired wine brands by Drinks International magazine for the
fourth year running, in addition to receiving the 'Hot Brand' award for the
fifth consecutive year from New York's Impact magazine.
The newer wines in the Oyster Bay range, Sparkling and Pinot Gris, continue
to grow rapidly and broaden the brand's connection with Super Premium wine
consumers.
Slide 16 - Barossa Valley Estate
The Barossa Valley Estate brand includes a standout range of elegant red
wines created to appeal to a growing number of aspirational wine lovers
seeking an authentic regional expression from the Barossa Valley.
The three wines in the range, Shiraz, Cabernet Sauvignon and GSM (Grenache
Shiraz Mourv?dre) are the wine styles that made the Barossa Valley great.
Having now launched the Barossa Valley Estate brand in the majority of its
markets, the Group's priority is to create consumer awareness, grow points of
distribution and establish rate of sale velocity.
Slide 17 - Global Sales Performance
The Group achieved record global sales of 2,210,000 cases in the year, up 9%
on the prior year. The Group's sales are well diversified by market with 40%
in North America, 31% in the Australia, New Zealand and Asia Pacific region,
and 29% in Europe including the United Kingdom.
The Group has continued to invest in the development of its own in-market
distribution channels to drive long-term growth. The Group's Sales and
Marketing division has in-market sales teams in New Zealand, Australia, the
United Kingdom, Ireland, the United States, Canada, Singapore, Japan and
China.
Case sales in the Australia, New Zealand and Asia Pacific grew by 1% to
675,000 cases. In the established New Zealand and Australia markets Oyster
Bay continued to perform strongly as a category leading Super Premium wine
brand. During the year the new Barossa Valley Estate brand was launched with
significant distribution achieved in the second half of the year in both
markets. The later than planned launch of Barossa Valley Estate resulted in
sales being lower than forecast for the full year, with sales growing well as
distribution growth was achieved. In the emerging Middle East, Hong Kong and
Singapore markets, the Group achieved record sales performance. Towards the
end of the year Delegat established an office and in-market team in Shanghai,
China. This new team will work with wholesalers and customers to start to
build our business in the Shanghai region.
The Group continued to achieve strong growth in North America, increasing
sales volumes by 16% to 888,000 cases. In the United States the Group has
worked closely with its Distributor partners to grow both points of
distribution and rate of sale. Oyster Bay Sauvignon Blanc became a top 5
white wine over $10 by value in the United States and remains the Number 1
New Zealand wine brand in a number of markets including California,
Massachusetts, New York, Miami, and Colorado. In Canada, a strong base of
distribution has been established across all the major Provinces. Oyster Bay
has grown to become one of Canada's most powerful Super Premium wine brands.
Success has been achieved across the Oyster Bay range, with the white wines
each showing double digit growth and Oyster Bay Chardonnay maintaining its
position as the leading Premium Chardonnay in Canada.
The United Kingdom Ireland & Europe region returned to growth, achieving
sales of 647,000 cases, an increase of 9% over the prior year. In the
United Kingdom Oyster Bay has continued to grow consumer awareness and brand
affinity, reaching a category leading position. Oyster Bay Sauvignon Blanc,
Chardonnay and Merlot are the top selling wines above ?8 in their respective
categories irrespective of origin. Oyster Bay Pinot Noir is the top selling
Pinot Noir above ?9. In both the United Kingdom and in Ireland, Barossa
Valley Estate has established significant distribution with leading National
Account customers and this distribution platform provides significant
consumer reach and opportunity to grow the brand over the long term.
Slide 18 - Major Awards and Accolades
The Group received outstanding awards and accolades, showcasing the
world-class quality of its wines and significance within the Super Premium
wine category.
Every Barossa Valley Estate wine received a Gold Medal at major international
wine competitions.
Oyster Bay wines continued to receive outstanding accolades around the world
including Oyster Bay Sauvignon Blanc being awarded 'Premium White Wine of the
Year' for the eighth year at the Australian Liquor Industry Awards. Oyster
Bay Pinot Noir 2013 was awarded a Gold Medal at the Sydney International Wine
Competition. Oyster Bay Merlot 2013 was awarded a Gold Medal and 90 Points at
the San Francisco International Wine Competition, and a Blue-Gold Medal at
the Sydney International Wine Competition.
Slide 19 - Sales Growth 2015 to 2020
Delegat plans to grow sales from 2,210,000 cases to 3,170,000 cases by 2020.
This planned growth will be primarily driven through continued sales growth
in North America and by growing the Barossa Valley Estate brand globally.
In the Australia, New Zealand and Asia Pacific region, sales volume is
projected to grow by 36% to 917,000 cases by 2020. Growth in Asia and from
Barossa Valley Estate underpins growth in the region.
North America is the largest Super Premium wine market in the world and will
continue to be the key growth region for the Group over the next five years,
with strong growth projected in both the United States and Canada. The Group
plans to increase sales volume in the region by 71% to 1,522,000 cases by
2020.
Sales volume in the United Kingdom, Ireland and Europe region is planned to
grow by 13% to 731,000 cases over the next five years. The growth in the
region is driven by targeted distribution growth and the development of new
markets in continental Europe.
Slide 20 - Forecast 2016
With respect to the 2016 year, the Group is planning to grow sales by 8% to
2,379,000 cases on our journey to build a leading global Super Premium wine
company.
Based on prevailing currency exchange rates, the Group is on track to achieve
a forecast Operating NPAT of $36 million which is in line with consensus and
5% higher than last year.
Slide 21 - Managing Director Concluding Remarks
The Group is well positioned to grow sales and achieve sustainable earnings
growth in the years ahead.
I wish to personally thank each of our Great Wine People for their commitment
to our business and the record results they have collectively achieved.
Together we are creating a truly remarkable global Super Premium wine
company. Thank you.
Shareholder's Questions and Discussion
Are there any questions in respect of the Annual Report, my Chairman's
presentation or the Managing Director's presentation?
Thank you - I will record that the 2015 Annual Report has been received and
considered.
Now we will proceed to the Ordinary Business on the Agenda.
Election of Directors
The Resolutions numbered Agenda Items 2 & 3 are both ordinary resolutions.
Agenda item 2
Re-election of Rosemari Delegat as Director
In accordance with the rotation provision of the constitution Rosemari
Delegat retires from office and being eligible offers herself for
re-election.
Rosemari will now briefly address the meeting.
Re-election of Robert Wilton as Director
In accordance with the rotation provision of the constitution Robert Wilton
retires from office and being eligible offers himself for re-election.
Robert will now briefly address the meeting.
Agenda item B: General Business
I now look to the final item on the agenda: General Business. Are there any
items of General Business? Is there any discussion? Thank you.
At the conclusion of the meeting the Board invites you all to stay for
canap?s and to taste a selection of your company's fine products. It is also
a time to mix and mingle with your fellow shareholders, board members and
senior management.
With there being no further items of business, I will declare the meeting
closed and thank you for the interest you have in the company.
End CA:00274441 For:DGL Type:ADDRESS Time:2015-12-01 14:00:07
