Challenger Limited · ASX:CGF
Challenger — Challenger Wine Trust — FY2008 Earnings Presentation
30 slides from Challenger's earnings presentation, Aug 7, 2008
Slide 1: Challenger Wine Trust (ASX:CWT) Results for the year ended 30 June 2008
Challenger Wine Trust (ASX:CWT) Results for the year ended 30 June 2008 Nick Gill Fund Manager 7 August 2008
Slide 2: Important notice
Important notice Information contained in this publication is current as at 7 August 2008 unless otherwise specified and is provided by Challenger Listed Investments Limited (ABN 94 055 293 644) (AFSL 236887) (“Challenger”), as Responsible Entity of the Challenger Wine Trust (“Trust”). This document
Slide 3: Highlights
Highlights ¾ Strong ongoing financial performance – Revenue of $32.7 million – up 11% on FY07 – Profit from operating activities of $16.0 million – up 12% – Net profit of $13.5 million – up 72% – FY08 distribution per unit of 9.4 cents – up 3.3% – Debt refinanced – no expiries until 2011 ¾ High qual
Slide 4: Financial results
Financial results
Slide 5: Solid financial performance
Solid financial performance ¾ Profit from operating activities $16.0 million – up 12% on FY07 – Net property income up $2.7 million (9%) to $31.6 million – Other income up $0.6 million to $1.1 million – Finance costs up $0.9 million to $11.6 million – Operating expenses up $0.1 million to $1.3 milli
Slide 6: NIV reflects full & fair value of CWT
NIV reflects full & fair value of CWT ¾ Access to water is critical for successful grape growing ¾ Water rights are treated as intangible assets held at cost ¾ NTA excludes water rights; NAV includes water rights at cost ¾ NIV includes water rights at independent valuation – reflects real value to C
Slide 7: Distributions up 3.3%
Distributions up 3.3% ¾ Distributable income $16.0 million – up 12% ¾ Distribution per unit 9.4 cents – up 3.3% ¾ Ratio of distributions to NIV increased to 10.0% in FY08 10.0 10.0% DISTRIBUTIONS cents per unit 9.8% RATIO Distributions-to-NIV 9.5 9.40 9.10 9.6% 9.06 9.0 9.4% 8.5 9.2% 8.0 9.0% FY06 F
Slide 8: Financial position
Financial position ¾ Gearing 49.0% at 30 June 2008 (within preferred range 45-55%) ¾ Interest rates effectively 100% hedged for duration of lease terms ¾ New Zealand borrowings provide 92.4% natural foreign exchange hedge 30-Jun-08 30-Jun-07 Change Total assets ($m) 316.2 297.6 6.2% Borrowings ($m)
Slide 9: All debt successfully refinanced
All debt successfully refinanced ¾ Total facilities of $166 million refinanced – Providing greater flexibility and longer maturity – No facility expiries before 2011 – Only exposure in FY09 is on $9.5 million swap expiring in line with lease expiries Borrowing facility & swap maturity profile 140 12
Slide 10: Financial covenants & headroom
Financial covenants & headroom ¾ LVRs apply to borrowing facilities from banks (NAB & ANZ) ¾ LVRs vary by bank and tranche - Range 55% to 60% - Weighted average 58.6% ¾ Property security of $307.2 million with debt of $155.0 million (50.5% LVR) ¾ LVR headroom of $55 million1 equivalent to an 18% fal
Slide 11: Portfolio update
Portfolio update
Slide 12: Regional map of CWT's eastern portfolio
Regional map of CWT’s eastern portfolio SA/WA cool region: •Miamba •Summers Hill •Corryton Park •Schubert’s •Chapel Central NSW: •Bethany & Vine Vale •Hermitage Winery •Richmond Grove & Lawsons •Inglewood + •Sandy Hollow •Sirens (WA) •Poole’s Rock •Cowra Murrumbidgee: •Whitton •Stephendale •Cocoparr
Slide 13: Portfolio activity: supporting re-alignment
Portfolio activity: supporting re-alignment ¾ Re-alignment from Riverland (SA) on Murray River to Griffith (NSW) region on Murrumbidgee River with high security water ¾ Acquisitions total $39.4 million1 – Stephendale Vineyard (Griffith, NSW) – Miamba Vineyards (Barossa Valley, SA) – Final 2 of 13 lo
Slide 14: All properties revalued in FY08
All properties revalued in FY08 ¾ All assets independently revalued during period (100% of portfolio value) Portfolio by region % Fair Value at Pre-valuation Change of 30 Jun 08 Fair Value portfolio $m $m Murray River 21% 65.1 60.5 8% New Zealand 23% 71.0 65.6 8% Murrumbidgee River 26% 80.8 82.4 (2%
Slide 15: Portfolio snapshot at 30 June 2008
Portfolio snapshot at 30 June 2008 New 30 June Australia Total Zealand1 2007 Number of assets 21 4 25 29 Portfolio carrying value ($m) 227.8 71.0 298.8 287.0 Portfolio fair (market) value ($m) 236.2 71.0 307.2 291.2 % total portfolio value (%)2 76 24 100 100 Total area (ha) 4,961 745 5,706 6,222 Are
Slide 16: Portfolio diversification enhanced
Portfolio diversification enhanced ¾ 77% of portfolio (by value) leased to major listed wine companies Geographic diversification (by value)1 Tenant diversification (by value) As at 30 June 2008 As at 30 June 2008 Other Warburn 9% NZ 23% Estate (25%) 9% Australian NSW 32% Vintage (25%) 35% WA 1% (3%
Slide 17: Actively managing lease expiry profile
Actively managing lease expiry profile ¾ 100% portfolio occupancy at 30 Jun 08 (99% as at 7 Aug 08) – Hermitage Road Winery 10% leased ¾ WALE at 5.7 years ¾ 5.5% of portfolio income expiring over next 2 years Weighted Maturity Profile as at 30 June 2008 30% 26.4% FY09 expiries: 25% • Bethany Creek &
Slide 18: Leasing supports proactive management
Leasing supports proactive management ¾ Leasing activity extends WALE to 5.7 years – Cocoparra and Woods Vineyards - to Foster’s Group for 5 years – Grant Burge Wines renewed at Corryton Park Vineyard for a further 5 years – Completed mid-term lease reviews on the Del Rios, Balranald and Qualco prop
Slide 19: Australasian vineyard industry conditions
Australasian vineyard industry conditions
Slide 20: Australian grape production
Australian grape production ¾ 2006 grape harvest was 1.8 million tonnes* ¾ 2007 grape harvest was 1.4 million tonnes* – Impacted by frost and drought – Wine companies use inventory to meet demand ¾ 2008 harvest estimate of 1.8 million tonnes* - higher than expected 2.5 Grape harvest 2.0 1.5 million
Slide 21: Irrigation water current outlook
Irrigation water current outlook: ¾ Southern dams at higher levels than this time last year however large quantity of committed carryover water for irrigators water. ¾ Irrigators with carryover water from 07/08 water year in better position ¾ Grape growers have less incentive to buy expensive tempor
Slide 22: New Zealand wine market remains strong
New Zealand wine market remains strong ¾ Exports up ten-fold in past decade ¾ 2008 harvest forecast up 39% – 205,000 tonnes in 2007; 285,000 tonnes in 2008 – Experienced ideal climatic conditions – Yields 34% higher than long-term average of 7.9 tonnes per hectare ¾ Delegat’s Wine Estate – – number
Slide 23: Outlook
Outlook
Slide 24: Summary
Summary 9 High quality portfolio – Income stream backed by 99%1 occupancy and long term leases to established industry participants – Significant diversification by region, tenant, water source and grape variety 9 Transaction activity focused on: – Enhancing returns – Improving portfolio diversifica
Slide 25: Questions
Questions
Slide 26: Contacts
Contacts Nick Gill Fund Manager Tel: 02 9994 7291 Email: ngill@challenger.com.au Luke Keighery Investor Relations Tel: 02 9994 7633 Email: lkeighery@challenger.com.au 26
Slide 27: Appendices
Appendices
Slide 28: Detailed income statement
Detailed income statement 30-Jun-08 30-Jun-07 Variance $000 $000 $000 % Net property income 31,583 28,925 2,658 9.2 Other income 1,148 505 643 127.3 Finance costs (12,526) (11,627) (899) (7.7) Management fees (2,443) (2,274) (169) (7.4) Operating expenses (1,295) (1,198) (97) (8.1) Income tax expens
Slide 29: Movements in fair value and carrying value
Movements in fair value and carrying value Fair value Carrying value $000 $000 30-Jun-07 291,236 286,989 Acquisitions & upgrades 42,913 42,913 Disposals (17,990) (17,356) Revaluation changes 2,499 2,499 Impairment write-down (1,437) (1,437) Water rights (decrease in carrying value due to recognising
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