Australian Vintage Ltd · ASX:AVG
Australian Vintage — FY2011 Earnings Presentation
31 slides from Australian Vintage's earnings presentation, Aug 24, 2011
Slide 1: 2010/2011 Full Year Results
2010/2011 FULL YEAR RESULTS Improved operating profit in a tough environment 1
Slide 2: Disclaimer
Disclaimer The information in this presentation is general advice, given in good faith and derived from sources believed to be accurate at this date but no warranty of accuracy or reliability is given and no responsibility arising in any other way including by reason of negligence for errors or omis
Slide 3: Index
Index Top Line Result Market Overview Results Summary FY12 Outlook 3
Slide 4: Top Line Result
TOP LINE RESULT AUSTRALIAN VINTAGE LTD
Slide 5: Shareholders Rewarded for Operating Profit Improvement
Shareholders Rewarded for Operating Profit Improvement 1. Net profit (before significant items) up 72% to $10.2m 2. EBIT margin increased 30% to 13% 3. Significant items after tax negative $3.7m including Loxton Winery impairment of $3.1m 4. Net Profit (after significant items) $6.6m v $9m prior yea
Slide 6: Strong Revenue Performance Despite Strong $A Impact
Strong Revenue Performance Despite Strong $A Impact 1. Operating revenues amounted to $225.8m after unfavourable exchange rate movements of $14.4m 2. Operating Cash Flow positive despite $10m investment in bulk wine 3. Net debt increased $18.9m to $161m due to bulk wine purchase and settlement of op
Slide 7: Market Overview
AUSTRALIAN VINTAGE LTD MARKET OVERVIEW
Slide 8: Industry Inventory Problem Being Addressed
Industry Inventory Problem Being Addressed 1. 2011 final crush higher than expected at an estimated 1.6m tonnes taking into account weather conditions 2. Estimated 0.1m tonnes utilised for concentrates to address low baume's reducing final crush to 1.5m tonnes 3. Industry addressing prior period inv
Slide 9: Evidence of Grape Supply Reducing and Prices Increasing
Evidence of Grape Supply Reducing and Prices Increasing 1. Major wine companies continue to reduce supply either by way of contract renegotiation or exit 2. Pockets of Australian wine increasing in price domestically and overseas despite strong Australian dollar 9
Slide 10: Australian Vintage Continues Response to Industry Challenges – Sale of Loxton Winery
Australian Vintage Continues Response to Industry Challenges – Sale of Loxton Winery Delivers Net Proceeds of Approximately $25m 1. Underutilised Loxton Winery sold for net proceeds of approximately $25m in August 2011 incurring a book loss after tax of $3.1m 2. Lenswood winery and adjacent vineyard
Slide 11: Response to Industry Challenges (continued) – Focus on Branded Sales & Cashflow
Australian Vintage Continues Response to Industry Challenges (continued) – Focus on Branded Sales & Cashflow 1. Continued focus on branded sales 2. Continue to control cash flow and expenditure 3. Take advantage of our enhanced reputation as a low cost premium wine producer 11
Slide 12: Results Summary
RESULTS SUMMARY AUSTRALIAN VINTAGE LTD
Slide 13: Branded Sales Drive Revenue
Branded Sales Drive Revenue Full Year Sales Dollar Sales ($’000) 2009/10 2010/11 % Change Domestic Wine Branded Bottled 40,239 42,165 5 Branded Cask 8,516 6,976 (18) Private Label – Bottled 151 - na Private Label – Cask 23,376 23,030 (1) 72,282 72,171 0 Export Wine Branded 74,717 77,361 4 Private La
Slide 14: McGuigan Brand Continues to Outperform
McGuigan Brand Continues to Outperform Domestic branded bottled sales increased by 5% to $42.2m due mainly to the increased sales of the McGuigan product range (up 13%) and Tempus Two (up 31%). Branded cask sales declined as the shift to private label continues. Export branded sales increased by 4%
Slide 15: Loxton Winery $3.1m Impairment Impacts Results
Loxton Winery $3.1m Impairment Impacts Results Change $M 2010* 2011 % EBITDA (before Significant items) 30.7 36.1 18 EBIT (before Significant Items) 23.6 29.3 24 EBIT (after Significant Items) 26.6 22.6 (15) NPAT (before Significant Items) 5.9 10.2 72 NPAT (after Significant Items) 9.0 6.6 (27) * ad
Slide 16: Export and Domestic Bulk Wine and Processing Shine
Export and Domestic Bulk Wine and Processing Shine Change vs $’000 Results 2010 Results 2011 PY Domestic Wine Trading Result 4,907 5,116 4% Export Wine Trading Result 5,572 7,224 30% Cellar Door Trading Result 1,436 1,219 (15%) Domestic Bulk Wine and 7,925 10,481 32% Processing Trading Result Vineya
Slide 17: Austflavour and Contract Processing Benefit from Adverse Weather Conditions
Austflavour and Contract Processing Benefit from Adverse Weather Conditions Around Vintage • The domestic wine segment improved its contribution by $0.2m due to improved branded sales partially offset by reduced contribution from cask sales. • The Export wine segment contribution improved by 30% eve
Slide 18: Significant Items
Significant Items 2010 2011 ’000 $’000 Transaction Costs (3,716) - Provision for onerous contracts – write back 10,527 865 Employment contract payment (1,491) - Impairment of Assets - Impairment of Loxton Winery - (4,425) - Impairment of other Assets (4,591) (3,201) Winery under utilisation costs (2
Slide 19: Impact of Foreign Exchange Movements on Results and Business
Impact of Foreign Exchange Movements on Results and Business • With approximately 60% of our total export sales in GBP, 5% in Euro and 1% in CAD, AVL’s exposure to exchange rates is significant. The balance of our export sales is in AUD. • The average weighted GBP in 10/11 was 62.2 compared to 53.5
Slide 20: Bulk Wine Purchase and Tank Operating Lease Payout Adversely Affect Improved Cash Flow
Bulk Wine Purchase and Tank Operating Lease Payout Adversely Affect Improved Cash Flow 2010 2011 $m $m Operating Activities Receipts from customers 250.4 258.1 Payments to suppliers and employees (231.1) (244.5) Interest and other costs (12.6) (12.8) Other (1.0) 0.5 Net cash from operating activitie
Slide 21: Bulk Wine Purchase and Tank Operating Lease Payout (continued)
Bulk Wine Purchase and Tank Operating Lease Payout Adversely Affect Improved Cash Flow (continued) • Receipts from customers increased by 3% due to timing of cash receipts • Payments to suppliers and employees are higher, even though the vintage tonnes were down, due mainly to the purchase of $10m o
Slide 22: FY12 Outlook
<x O O — kK D O nN > LL AUSTRALIAN VINTAGE LTD
Slide 23: Outlook
Outlook • Industry – will remain very challenging – oversupply exists but problem continues to reduce – competition fierce across Australia and overseas markets – global financial uncertainty continues to impact individual countries and unfortunately this uncertainty is slowing the recovery of the w
Slide 24: Additional Information
Additional Information Ny 24 AUSTRALIAN VINTAGE LTD
Slide 25: Launch of McGuigan The Semillon Blanc
Continued focus on evolving relevant & compelling wine styles – launch of McGuigan “The Semillon Blanc” • A new millennium white burgundy style • Floral, fresh, crisp and lively • Aromatics and lift on the nose • Special commendation award for best launch: Drinks Magazine in UK • Launch of product i
Slide 26: Achieving Growth in Branded Wine Sales Through Remaining Relevant
We are achieving our business objective of “growing branded wine sales” through remaining relevant with consumers McGuigan Bin Range re-launched: • 66% growth on PY by value (domestic) • Bin UK 30% growth on PY by value Tempus Two Varietal Range re-launched: • Sparkling Blanc de Blanc launched and s
Slide 27: Core Brands Perform on the World Stage
Our core brands continue to perform on the world stage across multiple varietals & price points Brand Awards McGuigan Trophy IWC - International Riesling of the Year 2004 The Shortlist Riesling Trophy IWC - Australian Riesling of the Year 2004 The Shortlist Riesling Trophy IWC - Eden Valley Riesling
Slide 28: Award Success Drives 3rd Party Endorsement
Our award success is a critical success factor in driving 3rd party endorsement that flows directly through to the consumer 28
Slide 29: McGuigan Continues Solid Annual Growth Globally
McGuigan continues solid annual growth globally increasing its value sales by $3.5m • Black Label Red No. 1 selling brand by volume in the Australian market • McGuigan is now the 14th largest wine brand in the UK market McGuigan (% Growth) Black Label (% Growth) 60% 53% 30% 25.5% 50% 25% 40% 20% 30%
Slide 30: Results Summary
Results Summary Total result Significant Items Total (excl Signficant) 2011 2010 2011 2010 2011 2010 Revenue 225,777 237,663 225,777 237,663 Other Revenue 3,051 2,573 1,781 2,573 228,828 240,236 227,558 240,236 Gross Profit 65,411 63,027 65,411 63,027 Fair Value of grapes picked 5,036 2,725 5,036 2,
Slide 31: Restatement of 2009/10 results
Restatement of 2009/10 results Original Restatement Revised Significant Pre significant 2010 Tax on leased Reclass of 2010 Items Tanks Int Unwind Revenue 237,663 237,663 237,663 Other Revenue 2,573 2,573 2,573 240,236 240,236 240,236 Gross Profit 63,027 63,027 63,027 SGARA 2,725 2,725 2,725 Other In