DGL - Full Year Results for the year ended 30 June 2008
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Delegat's Group Limited (DGL) | 8:38 am, Thursday 28 August 2008 | DGL | 2.000 |
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DELEGAT'S GROUP LIMITED
Results for announcement to the market
Reporting Period 12 months to 30 June 2008
Previous Reporting Period 12 months to 30 June 2007
Amount (000s); Percentage change
Revenue from ordinary activities $165265; 23%
Profit from ordinary activities after tax attributable to shareholders
$19148; 77%
Net profit attributable to shareholders $19148; 77%
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 Full Year Review appended.
Dividends
Cents per share Imputed Cents per share
Final Dividend for the year ended 30 June 2008 6.00 cents 2.9552 cents
Record date 10 October 2008
Dividend Payment Date 24 October 2008
Net Tangible Assets per share
Current Year Previous corresponding year
Net Tangible Assets per share $1.43 $1.28
Delegat's Annual Report 2008
Performance Highlights 2008
2008 has again been a year of record sales performance, profit and market
share milestones.
Delegat's Group Limited:
- Achieved record global sales of 1,449,000 cases.
- Achieved record total revenue of $165.3 million.
- Achieved record net profit of $19.1 million.
- Achieved 5% increase in average case price realisation to $112.
- Achieved export case sales growth of 20% against industry growth of 17%.
- Achieved increased share of total New Zealand wine exports to 13.3%.
- Led the New Zealand wine industry with the Oyster Bay brand being the
number one selling New Zealand wine brand in the United Kingdom, Australia
and Canada.
- Gained momentum in the United States market with Oyster Bay achieving the
fastest growth of major New Zealand wine brands.
- Celebrated Oyster Bay being awarded 'Brand of the Year 2007' at the
Australian Liquor Industry Awards, and "Premium White Wine of the Year" for
the third consecutive year.
CHAIRMAN'S REPORT
On behalf of the Board of Directors I am pleased to present to you the
financial results of Delegat's Group Limited (Delegat's) for the year ended
30th June 2008. This is our third report as a publicly listed entity and is
the first full year result reported under New Zealand equivalents to
International Financial Reporting Standards (NZ IFRS). To enable
comparability, the results for the fiscal year ended 30th June 2007 have been
restated under NZ IFRS.
It is a pleasure to report that the Group continues to deliver strong sales
and financial performance that again demonstrates the strength of our
business model and the heightened global demand for the Group's Oyster Bay
brand, all of which position the Group well for future growth.
Results
Total revenue for the year under review is $165.3 million compared to $134.8
million in the 2007 year - an increase of 23%.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) at
$55.4 million is 46% ahead of last year.
Net profit for the year of $19.1 million is 77% ahead of the 2007 year of
$10.8 million.
Impact of NZ IFRS
For the Group the most significant changes as a result of the transition to
NZ IFRS pertain to the valuation of biological assets and financial
derivatives, their deferred tax implications and the carrying value of
inventories. Importantly the different accounting treatments have had no
impact on cash flow and the Group reports a significant cash inflow from
operations at $8.3 million compared to a $0.4 million outflow in the previous
year.
Governance
The Board meets regularly, as does the audit and compliance committee. It is
thoroughly aware of the need for transparency and the requirements of good
governance. As a global company, the need to be responsive to each of the
regulatory environments in which the Group operates becomes paramount and
appropriate use is made of professional advisors to ensure compliance. The
Group continues a rigorous currency management policy as part of a global
centralised treasury.
Dividend
I am pleased to advise that given the profit level achieved, your Directors
have approved a fully imputed dividend payout of 6 cents per share
(representing 31% of the after tax profit). The dividend for the year ended
30th June 2008 will be paid on 24th October 2008 to Shareholders on record at
10th October 2008.
This dividend is both a function of the desire to reward Shareholders while
at the same time creating a fund to support the growth aspirations of the
company for Shareholder wealth creation.
Our People
I wish to take this opportunity to acknowledge the contribution of Delegat's
staff. The Board places on record its appreciation to each of them, whether
they are in New Zealand, Australia, the United Kingdom, Canada or the United
States of America.
The Future
The Board's priority is to grow Shareholder value. We will continue to seek
all opportunities that are wealth accretive and to ensure Delegat's
sustainable growth continues.
I look forward to reporting on our progress at the Annual Meeting on Tuesday,
2nd December 2008.
Robert Wilton
Chairman
Managing Director's Report
Oyster Bay has not only led the New Zealand wine category in major export
markets, it is a significant brand in the global Super Premium wine market,
and for many global wine consumers, is their wine brand of choice.
Our strategic goal remains unchanged 'To lead New Zealand category growth and
establish Oyster Bay as one of the world's great super premium wine brands'.
This year the Group continued to make excellent progress towards realising
this goal and the potential of the business.
2008 has again been a year of record sales performance and market share
milestones. These results are testament of a proven and robust global
business strategy in action.
The Group achieved global sales of 1,449,000 cases, 17% higher than the
previous year. Total revenue generated was $165.3 million, 23% ahead of the
previous year and a net profit of $19.1 million is 77% ahead of the 2007
year.
The Group has continued to maximise the potential of the valuable niche it
has established for the Oyster Bay brand globally. Oyster Bay's brand
footprint has continued to grow in its major export markets.
The Oyster Bay brand holds the number one New Zealand wine category position
in the important markets of the United Kingdom, Australia and Canada.
The sustained global growth in the Super Premium segment and the strength of
the Oyster Bay brand has enabled the Group to maximise its in-market price
realisation and focus on delivering value and volume growth.
New Zealand Wine Industry Review
New Zealand's reputation and status as a world-class producer of sauvignon
blanc, chardonnay, pinot noir and merlot has never been stronger and global
consumers continue to demand New Zealand's elegant and flavourful wine
styles.
In 2008 the New Zealand wine industry achieved record export sales of $800
million - a 14% increase in line with export projections.
Fine weather during flowering and favourable spring conditions resulted in a
record 2008 industry vintage of 285,000 tonnes - 39% higher than the previous
year. The increase in grape supply means that the industry is on track to
continue its long-term-sales growth trend and achieve $1 billion of export
sales by 2010. Industry participants with leading brands, powerful
established distribution networks, and an uncompromising focus on quality,
are well placed to utilise the increase in supply from the 2008 vintage to
meet growing global demand for Super Premium New Zealand wine.
Global Sales Performance
In 2008 the Group achieved global sales of 1,449,000 cases, 17% higher than
the previous year.
The Group has leveraged and grown its highly-effective global distribution
network to achieve growth and cement its market leading position. The Group's
aim is to be as close as possible to its consumers, distributors and retail
partners. The global in-market sales teams comprising more than 65 people
have enabled us to achieve this success by focusing exclusively on our
brands, nurturing business relationships and identifying and building
high-quality retail distribution.
The Group achieved export case sales growth of 20% for the year versus wine
industry export growth of 17%. Export case sales represent 88% of the Group's
total case sales.
The Group has once again demonstrated its ability and competitive strength to
grow export market share. This success has been achieved beyond New Zealand's
principal offering of sauvignon blanc, in which it also commands a leading
export share. The Group has continued to achieve strong export growth and
category leadership in chardonnay, merlot and pinot noir.
Price Realisation
During the year the Group increased its in-market price realisation resulting
in an average of $112 per case, 5% of ahead of the previous year. This
represents a premium of 38% against industry export earnings of $81 per case.
This price premium is underpinned by the strength of the Oyster Bay brand,
its Super Premium positioning and the Group's vertically integrated business
model.
Global Strategy
The Group's strategy is to lead New Zealand wine category and establish
Oyster Bay as one of the world's great Super Premium wine brands.
The Group has established itself as a global marketer of Super Premium wines.
It continues to invest in its brands, distribution channels and global sales
capability to support substantial future sales growth. This is the Group's
demonstrated competitive advantage.
Branding and Communications
The Super Premium segment continues to show strong growth across our global
markets. This trend is driven by consumers 'trading up' to stand-out brands
from the leading wine regions of the world. As a global marketer, the Group
recognises the importance of brand equity as a source of competitive
advantage and sustainable long-term earnings.
The Group's strong marketing orientation, brand management disciplines and
in-market promotional execution continues to strengthen Oyster Bay's market
position as New Zealand's leading Super Premium wine brand globally.
The Group's leading market share, high average rate-of-sale, in-market price
realisation and leading share of New Zealand sauvignon blanc, chardonnay,
pinot noir and merlot exports are all strong indicators of Oyster Bay's
exceptional brand strength.
In recognition of its popularity and sales performance, Oyster Bay was voted
Brand of the Year at the Australian Liquor Industry Awards 2007. Oyster Bay
also continues to receive consumer choice accolades from around the world.
The Delegat brand is one of New Zealand's most highly-respected wine brands
and part of the pioneering spirit of the New Zealand wine industry. The Group
sees great potential in this brand to deliver long-term value growth,
particularly in the New Zealand market. The Group has undertaken a strategic
brand review and developed a comprehensive brand communications platform,
including world-class packaging and compelling advertising to position the
brand in growing consumer segments of the market.
United Kingdom
No.1 New Zealand brand by volume and value in multiple grocers
No.1 New Zealand Sauvignon Blanc
No.1 New Zealand Chardonnay
No.1 New Zealand Merlot
No.1 New Zealand Pinot Noir
Source: AC Nielson MAT 12th July 2008
No.15 ranked still white wine (all categories)
Source: AC Nielson MAT 26th Jan 2008
Substantial growth was achieved with existing customers and by broadening
distribution. During the year the Group successfully improved its price
realisation, thereby increasing the profitability of the United Kingdom
market. Oyster Bay is a top-selling over ?5 wine brand in the United Kingdom
and remains well placed to capitalise on the long-term growth of the Super
Premium wine category. It is of particular note that the success of Oyster
Bay Merlot is by far the most successful New Zealand red wine in the United
Kingdom market.
Australia
No. 1 New Zealand brand by volume and value
Oyster Bay Sauvignon Blanc is the largest selling still white wine by value
No. 1 New Zealand Sauvignon Blanc, No. 1 New Zealand Chardonnay, No. 1 New
Zealand Merlot
Source: AC Nielsen MAT to 30th Jun 2008
The Group increased distribution significantly, with an estimated 7,500
retail customers stocking the Oyster Bay Brand at year end. Oyster Bay
Sauvignon Blanc is the biggest selling still white wine by value in
Australia. Oyster Bay is transcending the sauvignon blanc-led New Zealand
category with Oyster Bay Chardonnay becoming the biggest selling and
fastest-growing Chardonnay above AU$15 in Australia (AC Nielsen, 30th Jun
2008).
The Group continues to build its in-market sales team including the
appointment of sales personnel in Western Australia and Tasmania to complete
full distribution development and focus on the long-term growth prospects
that these two important states offer.
United States
Fastest growing major New Zealand Wine Brand. 88% value growth, and 78%
volume growth
No. 3 New Zealand wine brand over US$10 by value and volume
No. 4 New Zealand Sauvignon Blanc, No. 2 New Zealand Chardonnay, No. 2 New
Zealand Merlot, No. 2 New Zealand Pinot Noir
No. 11 Imported Wine Brand over US$10
Source: AC Nielsen MAT 26th July 2008
During the year the Group made significant progress in establishing the
foundation for long- term growth in the United States. Key initiative
included improving price realisation and the appointment of significant
distributors, who are aligned with the sales and marketing goals of the
Group's business.
The Group now has an in-market sales team of 19 people and a distribution
network covering more than 90% of the US wine consuming market. Oyster Bay is
now a leading New Zealand wine brand in the United States and has become the
number 12 imported wine brand by value over US$10. There is significant scope
to increase the distribution and sales of Oyster Bay in the important United
States market over the long-term.
Canada
Consistently the No. 1 New Zealand brand for over 15 years
No. 1 brand in Ontario over CA$15
Source: ACD & CVA Database MAT 30th Jun 2008
Oyster Bay continues to retain its leadership position in Canada with strong
performances in all provinces. The Group has high quality distribution
through provincial Liquor Boards and key retail customers. A highlight during
the year was a new listing for Oyster Bay Merlot with Soci?t? des Quebec in
the key red wine market of Quebec. The Group continues to focus on realising
significant growth opportunities in Canada.
New Zealand
No.4 white wine brand $15 - $19.99 segment, 50% growth
No.10 red wine brand $15 - $19.99 segment, 48% growth
Source: Synovate Aztec MAT 3rd Aug 2008
The Group achieved strong retail sales volume and value growth with the
Oyster Bay brand in what is currently a flat and fragmented market. Oyster
Bay is a top four ranked Super Premium brand and the Delegat brand is
recognised for its quality and heritage. The Delegat brand will be
repositioned in the coming year and the Group's focus will be on delivering
value growth.
Asia Pacific and Other Markets
Group case sales in Asia Pacific and other markets for the year were 58%
higher than the previous year. Highlights included strong growth in Ireland,
Hong Kong, Singapore and the Middle East.
Grape Supply
The 2008 harvest amounted to 26,680 tonnes, 20% above budgeted yields and
representing an increase of 45% on the 2007 vintage.
Viticulture
The increased harvest is a result of new plantings coming into production and
favourable growing conditions throughout the summer period, which led to
early flowering and an abundant fruit-set. Marlborough sauvignon blanc, the
Group's most demanded wine globally, made up the principal increase in
tonnage.
Marlborough Growing Season
The 2008 Growing Season in Marlborough was warmer than the long-term-average.
Although the season started with a cool September, warm temperatures over the
following months accumulated more Growing Degree Days (heat summation) than
the long-term-average. These conditions were ideal over the flowering period
(late November and early December) and resulted in good fruit-set across all
varietals. A reduction in wind across the Marlborough region during this
period benefited the younger vines. The fruit from Marlborough is considered
to be of very good quality.
Hawke's Bay Growing Season
The 2008 Hawke's Bay Growing Season was slightly cooler than the
long-term-average. Overall, each month accumulated higher-than-average
Growing Degree Days with the exception of a cool December. Frost events in
September, which occurred before flowering, resulted in reduced yields across
most of the vineyard blocks. The La Nina weather pattern provided long
sunshine hours over the flowering period and generally promoted good fruit
set. Overall bunch and berry sizes were small, with very good fruit
concentration and high-quality across all varieties.
Sustainability
The Group considers sustainability an integral part of the future of New
Zealand wine production. As a founding member and strong proponent of
Sustainable Winegrowing New Zealand, the Group is committed to the ongoing
improvement of all aspects of sustainable practices in its vineyards and
wineries.
Group Winemaking
The Group commissioned a new 4,000 tonne, state-of-the-art winery in Hawke's
Bay. This is an exclusive arrangement with prominent New Zealand winery
facility provider, Indevin Limited. This winery, which is wholly managed and
staffed by Delegat's, processed the Group's entire 2008 Hawke's Bay harvest.
An extensive barrel cooperage of 5500 barrels has also been established on a
neighbouring site. We are very excited about these new facilities given their
efficiency and proximity to our Hawke's Bay vineyards.
The Group has continued to add processing capacity to its Marlborough winery
over the last three seasons and this significant facility continues to
deliver the benefits of large scale Super Premium wine production. The Group
is well positioned to increase its processing capacity as new vineyard
plantings progressively come into production.
The Auckland winery is operating at full capacity as the Group's production,
packaging and global distribution facility.
Major Awards and Accolades
We are proud to continue to receive major awards and accolades from the
worlds leading wine commentators and competitions.
Oyster Bay Marlborough Chardonnay 2007 was named 'Best Import' and awarded
91/100 points by leading Australian wine writer Huon Hooke, Sydney Morning
Herald, 13th May 2008, Australia.
Delegat's Reserve Hawke's Bay Cabernet Sauvignon Merlot 2006 won a gold medal
at 2007 Air New Zealand wine awards.
Delegat's Reserve Hawke's Bay Chardonnay 2006 won a gold medal at 2008 Royal
Easter Show Awards, New Zealand.
Oyster Bay Marlborough Sauvignon Blanc 2007 received the top score in
Newsweek Magazine, April 2008, USA.
Oyster Bay Marlborough Sauvignon Blanc 2007 won the 2008 Good Housekeeping
Magazine 'Top Wine Under ?10' Readers' Choice Award, January 2008, United
Kingdom.
Our People
To meet the challenges of our rapidly growing global organisation we realise
the importance of attracting and retaining world-class professionals. Through
all of our growth we maintain and build a strong culture of performance
combined with a can-do attitude that supports the right people working
together as a team to deliver world-class outcomes.
Group Outlook
The results from the past year are testament to the disciplined execution of
our global strategy and position the Group well for the coming year.
The Group will continue to focus on its established strategy and leverage its
market leading position in the strong growth Super Premium wine segment
globally. This will ensure that our market lead business continues to deliver
sustainable volume and value growth.
I acknowledge the ongoing support of our Shareholders, grower partners,
customers, suppliers and the Board. Together we are building one of the
world's truly great wine companies.
Jim Delegat
Managing Director
For further information please contact:
Jim Delegat
Managing Director
Delegat's Group Limited
(09) 359 7300
