DGL
27/08/2015 08:38
FLLYR
PRICE SENSITIVE
REL: 0838 HRS Delegat Group Limited
FLLYR: DGL: DGL - Full Year Results 2015
Results for announcement to the market
Reporting Period 12 months to 30 June 2015
Previous Reporting Period 12 months to 30 June 2014
Amount (000s) Percentage change
Revenue from ordinary activities $231,152 (+17%)
Operating Profit from ordinary activities after tax (Operating NPAT) $34.441
(+10%)
Operating Profit from ordinary activities before interest, tax and
depreciation (Operating EBITDA) $69,828 (+9%)
Reported Profit from ordinary activities after tax attributable to
shareholders $32,523 (-24%)
Net profit attributable to shareholders $32,523 (-24%)
Audit The financial statements attached to this report have been audited and
are not subject to a qualification. A copy of the audit report applicable to
the full financial statements is attached to this announcement.
Comments Refer to the Executive Chairman's Report appended.
Dividends
The Directors have declared a final dividend of 11.0 cents per share. The
dividend will be fully imputed and a supplementary dividend of 1.9412 cents
will be paid to overseas shareholders in accordance with Listing Rule 7.12.7.
Cents per share
- Final Dividend for the year ended 30 June 2015 11.0 cents
Imputed Cents per share
- Final Dividend for the year ended 30 June 2015 4.2778 cents
Record date 25 September 2015
Dividend Payment Date 9 October 2015
Net Tangible Assets per share
Current Year Previous corresponding year
Net Tangible Assets per share $2.67 $2.45
Executive Chairman's Report 2015
"Another year of record performance on our journey to build a leading global
Super Premium wine company" says Jim Delegat.
On behalf of the Board of Directors of Delegat Group Limited, I am pleased to
present its operating and financial results for the year ended 30 June 2015.
Performance Highlights
o Record global case sales of 2,210,000.
o Record operating NPAT of $34.4 million.
o Case sales growth of 16% in North America.
o Oyster Bay was named One of the World's Most Admired Wine Brands by Drinks
International magazine.
oEvery Barossa Valley Estate wine received a Gold Medal at major
international wine competitions.
The Group presents its financial statements in accordance with the New
Zealand equivalents to International Financial Reporting Standards (NZ IFRS).
The Directors continue to be of the view that the results reported under NZ
IFRS do not provide adequate insight into the Group's underlying operational
performance, primarily due to a number of fair value adjustments that are
required to be reported on. To better understand the operating performance,
the Group has published an Operating Performance report and reconciliation of
Operating Profit to Reported Profit. This reconciliation eliminates from
each line in the Statement of Financial Performance all fair value
adjustments.
Operating Performance
A record operating NPAT of $34.4 million was generated compared to $31.4
million last year. Operating EBIT of $57.3 million is $5.0 million higher
than last year. Operating expenses (before NZ IFRS adjustments) at $57.1
million are $8.1 million higher compared to last year.
Delegat achieved Operating Revenue of $211.9 million on global case sales of
2,210,000 in the year. Revenue is up $21.7 million on last year primarily
due to global case sales being 9% higher along with a small favourable impact
of foreign exchange rate changes.
NZ IFRS Fair Value adjustments
In accordance with NZ IFRS the Group is required to account for certain of
their assets at 'fair value' rather than at historic cost. All movements in
these fair values are reflected in and impact the Statement of Financial
Performance. The Group records adjustments in respect of three significant
items at the year-end:
o Biological Assets (Vines) - The Group's vineyards have been revalued at the
reporting date, resulting in a higher value attributable to Biological Assets
of $19.3 million in 2015 (2014: $4.4 million);
o Harvest Provision Release (Grapes) - Inventory is valued at market value,
rather than costs incurred, at harvest. Any fair value adjustment is
excluded from Operating Performance for the year, by creating a Harvest
Provision. This Harvest Provision is then released through Cost of Sales
when inventory is sold in subsequent years. This represents the reversal of
prior periods' fair value adjustments in respect of biological produce as
finished wine is sold in subsequent years. In 2015, the market value of the
company grapes exceeded the costs incurred by $5.0 million (2014: $17.6
million). This difference was primarily due to the lower yields for the 2015
vintage (down 30% year-on-year). This write-up, less the impact of prior
year's vintages being sold has resulted in a net write-down of $10.4 million
for the year (2014: write-up of $8.5 million);
oDerivative Instruments held to hedge the Group's foreign currency and
interest rate exposure. The mark-to-market movement of these instruments at
balance date resulted in a fair value write-down of $11.6 million (2014:
write-up of $2.7 million);
These together with minor adjustments in respect of share-based payments, net
of taxation, amount to a write-down of $1.9 million for the year (2014:
write-up of $11.2 million).
Reconciliation of Reporting to Operating Performance
Accounting for all fair value adjustments under NZ IFRS, the Group's reported
audited financial performance for the year ended 30 June 2015 is reconciled
to operating profit as follows:
Cash Flow
The Group generated Cash Flows from Operations of $36.5 million in the
current year, which is an Increase of $15.7 million on the previous year,
primarily due to higher receipts from customers from higher case sales. A
total of $72.6 million was paid for additional property, plant and equipment
during the year, including vineyard and winery developments. The Group
distributed $11.1 million to shareholders in dividends. Additional
borrowings of $48.0 million were drawn down to fund the increased capital
investment during the year.
The Group has Net Debt of $202.0 million, compared to $153.7 million in 2014
- an increase of 31%.
Dividends
The Directors consider that the underlying operational performance and strong
cash flows justify the maintenance of dividends. Accordingly, the Directors
are pleased to advise they have approved a fully imputed dividend payout of
11.0 cents per share. The dividend will be paid on 9 October 2015 to
Shareholders on record at 25 September 2015.
Investing for Growth
As outlined in previous Annual Reports, the Group in investing for growth to
support its strategic goal to build a leading global Super Premium wine
company. During the year under review $75.9 million was invested in
additional property, plant and equipment, including vineyard development in
New Zealand and the Barossa Valley, extension of the Marlborough winery and
commencing construction of the Hawke's Bay winery. The Group will invest
$101.9 million in 2016 to provide earnings growth in the years ahead. This
capital investment supports the Group's plan to grow sales to 3.17 million
cases by 2020 and provide for further growth beyond that period.
Our Great Wine People
The Board would like to take this opportunity to acknowledge our Great Wine
People around the world. Our multi-national team have once again worked
powerfully together to achieve new performance records on our journey to
build a leading global Super Premium wine company. It is a pleasure and a
privilege to work with such a talented and committed global team.
JIM DELEGAT
Executive Chairman
Managing Director's Report 2015
"2015 was a year of record performance and continuing to build the
foundations for long-term growth" says Graeme Lord.
2015 was a year of record performance and continuing to build the foundations
for long term growth. As outlined in the Executive Chairman's report, the
Group achieved record Operating Net Profit After Tax of $34.4 million and
record case sales of 2,210,000. Commendable as these results are, equally
important were the steps taken to build the foundations for long term growth.
These included land acquisition and vineyard development across our wine
regions, a major extension of the Marlborough winery, commencing construction
of the new Hawke's Bay winery in preparation for the 2016 vintage and the
launch of Barossa Valley Estate in the majority of our international wine
markets.
Global Sales Performance
The Group achieved record global case sales of 2,210,000 cases in the year,
which is 9% higher than the previous 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.
Australia, New Zealand and Asia Pacific
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. By the end of the year Delegat established
a small 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.
North America
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. The Group has
established strong relationships with many of the major wine retailers in the
United States, and has achieved a significant number of on premise listings.
Oyster Bay Sauvignon Blanc became a top 5 white wine over $10 by value.
Oyster Bay 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 in the market. 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.
United Kingdom, Ireland and Europe
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, whilst Oyster Bay Sparkling continues to be
the number one selling sparkling wine brand above ?10 by value excluding
Champagne.
In Ireland, Oyster Bay continues to lead the New Zealand category and is the
number one Super Premium New Zealand Sauvignon Blanc above EUR11.
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.
Brands and Communications
The Group is focused on establishing Oyster Bay and Barossa Valley Estate as
two of the world's great Super Premium wine brands.
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
Mourvedre) 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.
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 5th year running, in addition to
receiving the 'Hot Brand' award for the third 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.
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.
o Oyster Bay Sauvignon Blanc was awarded 'Premium White Wine of the Year' for
the eighth year at the Australian Liquor Industry Awards.
o 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.
o Oyster Bay Sauvignon Blanc 2014 was awarded a Gold Medal, TexSom
International Wine Competition.
o Oyster Bay Pinot Noir 2013 was awarded a Gold Medal at the Sydney
International Wine Competition.
o Barossa Valley Estate Shiraz 2012 was awarded a Double Gold award and 95
Points the San Francisco International Wine Competition.
o Barossa Valley Estate Cabernet Sauvignon 2013 was awarded a Gold Medal and
91 Points at the San Francisco International Wine Competition.
o Barossa Valley Estate Grenache Shiraz Mourvedre 2012 was awarded a Gold
Medal at the Sydney International Wine Competition.
oDelegat Crownthorpe Terraces Merlot 2013 was awarded a Gold Medal and 93
Points at the San Francisco International Wine Competition.
2015 Harvest
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 a period of 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 the future sales growth goals outlined in this
report.
Sustainability
Recognition and respect for the environment are reflected in the strong
leadership role the Group plays in the practice and promotion of sustainable
wine growing and wine production. As a leader in the New Zealand wine
industry and as a founding member of Sustainable Winegrowing New Zealand
(SWNZ) since 2002, the Group takes its responsibilities to respect and
protect the environment very seriously. The Group's New Zealand vineyards and
wineries are 100% accredited by the independently audited SWNZ Sustainability
Programme.
Investing for Growth
As outlined by the Executive Chairman, the Group is investing for growth to
support its strategic goal to build a leading global Super Premium wine
company. In the 2015 year Delegat invested $75.9 million in capital
expenditure.
During the year the Group entered into an agreement to acquire an 838 hectare
farm in the Crownthorpe region of Hawkes Bay. This region of Hawkes Bay
produces world class Super Premium wine grapes based on its ideal soil types
and climate. The land to be acquired adjoins an existing Delegat vineyard
which has delivered outstanding quality grapes consistently over the last
decade. This significant land acquisition will enable Delegat 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 calendar year 2020 onwards. The land has the potential to produce more
than 550,000 nine litre cases of Super Premium wine per year when fully
producing and is an important element of Delegat Group's long term growth
strategy beyond 2020. In 2015 the Group also undertook significant vineyard
development projects in Marlborough, Hawkes Bay and the Barossa Valley to
support sales growth to 2020 and beyond.
During the 2015 year the Group invested in increasing the capacity of the
Marlborough winery to 28,000 tonnes for the 2015 vintage. In addition,
construction commenced on the Group's new Hawke's Bay winery, phase one of
which will be completed for the 2016 vintage.
Group Outlook
The Group's strategic goal is to build a leading global Super Premium wine
company. The Group will build leading global brands from world leading
regions, focusing on the wine styles for which those regions are
internationally renowned. The Group is investing in significant capital
expenditure to support its growth strategy. 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.
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.
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.
The Group is well positioned to grow sales and achieve sustainable earnings
growth in the years ahead. 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.
Our People
The Group's strategic goal is to build a leading global Super Premium wine
company. To achieve this goal we must build one of the highest performing
organisations in the global wine industry. This is a challenge that our
teams throughout our company accept with relish. Our people aim high, work
hard, focus on attention to detail and support each other in high performing
teams. I wish to personally thank each of our Great Wine People for their
commitment to our business and results they have collectively achieved.
GRAEME LORD
Managing Director
For further information please contact
Jim Delegat - Executive Chairman
DDI (09) 359 7301 or Mobile 021 886 698
or
Graeme Lord - Managing Director
DDI (09) 359 7317 or Mobile 021 860 740
End CA:00269154 For:DGL Type:FLLYR Time:2015-08-27 08:38:20
