DGL - Results for half year ending 31 December 2009

Delegat's Group Limited Ordinary Shares | 8:00 am, 26 Feb

DGL
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Market Announcement
Type:HALFYR

DGL - Results for half year ending 31 December 2009

DELEGAT’S GROUP LIMITED
Results for announcement to the market
Reporting Period 6 months to 31 December 2009
Previous Reporting Period 6 months to 31 December 2008

Amount (000s) Percentage change
Revenue from ordinary activities $134,921 6%
Profit from ordinary activities after tax attributable to shareholders $13,847 (12%)
Net profit attributable to shareholders $13,847 (12%)

Audit The financial statements attached to this report have not been audited.

Comments Refer to the Chairman’s Report appended.

Interim Dividend Cents per share Cents per share (imputed)
Not Applicable Not Applicable

Net Tangible Assets per share
Current Year Previous corresponding year
Net Tangible Assets per share $1.71 $1.52

CHAIRMAN’S REPORT FOR THE 6 MONTHS ENDED 31 DECEMBER 2009

On behalf of the Board of Directors I am pleased to report the unaudited results for Delegat’s Group Limited for the six months ended 31 December 2009.

The Group grew its global case sales to 1,135,000 cases; 20% up on the same period in the previous year. The Group maintained its in-market, foreign currency price realisation across all markets, which was consistent with the same period of the previous year. The high value of the New Zealand dollar has continued to significantly impact upon the Group’s sales revenue. Total Sales Revenue for the period under review is $128.9 million, an increase of 10% on the $117.0 million generated in the same period last year.

Earnings before interest, taxation, depreciation and amortisations (EBITDA), at $27.5 million is 20% below the same period last year at $34.5 million. Net profit for the period of $13.8 million is 12% behind the $15.7 million earned in the same period last year. As a result of ongoing sales and promotional programming the Group’s operating costs were 16% higher. Unfortunately, included in the increased operating costs was the need for the provision of a significant doubtful debt in respect of a major United Kingdom retailer, which was placed into administration.

The Group generated $17.8m in cash from operations, and whilst down on last year this reflects the phasing of receivables as is evidenced by the higher accounts receivable balance reported.

2010 FULL YEAR OUTLOOK

The Board of Directors continues to hold the view that the current challenging business environment is likely to prevail through the remainder of the 2010 reporting year.

Global case sales for the full year are forecast to be 1,927,000 cases, a 11% increase on the previous year. We remain confident that we can preserve the in-market, foreign currency price realisation and will continue to mitigate the impact of the high value of the New Zealand dollar through effective treasury management.

The New Zealand wine industry supply imbalance is expected to have the effect of lowering grape prices for the 2010 harvest. The resulting impact on fair values of vineyards, and more specifically the biological assets, in addition to the fair value assessment on costs incurred up to the harvest are difficult to forecast with accuracy. However, it is anticipated that lower grape prices will result in a fairly significant negative impact on reported performance.

Accordingly, the Directors now forecast the Group will achieve a 2010 profit that is between 30 – 40% lower than the result in 2009. On balance the Directors remain confident of maintaining the current dividend distribution.

The Group’s stock to sales ratio and expected harvest yields are in line with current and long-term sales projections. As at the date of this report, the early growing conditions in the 2010 season have been mixed and have resulted in reduced berry set and projected yields in many of the Chardonnay and Pinot Noir blocks. The Sauvignon Blanc vineyards have been less affected and are projected to be within target yield.

The Group is confident that long-term consumer trends continue to favour our wine styles and that the Oyster Bay brand will continue to deliver on the long-term growth potential of the business.

In December 2009 the Company celebrated being awarded the prestigious Most Improved Company of the Year Award in the Deloitte / Management Magazine Top 200 Awards, and which follows on from the Company of the Year Award received in 2008, a significant achievement.

RL Wilton
Chairman
26 February 2010