Australian Vintage Ltd · ASX:AVG
Australian Vintage — Shareholder Meeting (November 2008)
38 slides from Australian Vintage's shareholder meeting presentation, Nov 26, 2008
Slide 1: Annual General Meeting 26 November 2008
For personal use only ANNUAL GENERAL MEETING 26 NOVEMBER 2008 1
Slide 2: Disclaimer
Disclaimer For personal use only 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 neglige
Slide 3: Today's Agenda
Today’s Agenda For personal use only Performance Summary Ian Ferrier Business Update Dane Hudson Formal Proceedings Ian Ferrier 3
Slide 4: FY08: Another tough year for Australian wine industry
FY 08: Another tough year for Australian wine industry • Vintage 08, 50% higher than forecast For personal use only Australian Grape Harvest (Tonnes ‘000s) 2000 1500 Forecast 1000 500 Source: Australian Wine and Brandy Corporation, August 2008 0 2003 2004 2005 2006 2007 2008 • AUD at historic highs
Slide 5: Delivered on strategy: Focus on profit vs sales
Delivered on strategy: Focus on profit vs sales For personal use only 1. Build Exports and Brands 9 Branded product sales up 10% 9 Margins 7 points ahead of last year 9 Non branded/bulk sales down 2. Asset Base Restructured 9 Sold assets in Griffith and Hunter Valley, yielding $20 million 9 Selling
Slide 6: AVL delivered strong turnaround in challenging market
In the 2008 financial year: AVL delivered strong turnaround in challenging market For personal use only Full Year Change Result Sales $265.0m Ð $21.7 million EBIT (before Significant Items) $19.1m Ï $13.9 million NPAT (before Significant Items) $5.5m Ï $8.2 million NPAT (after Significant Items) $1.
Slide 7: Outlook
Outlook For personal use only • The global industry will continue to undergo structural change – Global slowdown – Competition from new world wine countries increasing – UK economy – 35% of total AVL sales • Chancellor unexpectedly increased duty on alcohol by 11p/bottle from 1 December • Uncertaint
Slide 8: Review
Review For personal use only • AVL Board and management to review and refine strategies to respond to challenges – Asset utilisation – Cost efficiency – Brand assessment – Completed March 2009 8
Slide 9: Business Review
For personal use only BUSINESS REVIEW DANE HUDSON 9
Slide 10: Topics for Review
Topics for Review For personal use only 1. Market Overview 2. 2008 Scorecard 3. Progress against Strategic Priorities 10
Slide 11: Industry continues to be in oversupply
Industry continues to be in oversupply – simple analysis For personal use only 2004 2005 2006 2007 2008 Crush/Production (m tonnes) 1.9 1.9 1.9 1.4 1.8 Crush/Production (m litres) 1,425 1,425 1,425 1,050 1,350 Sales: Domestic (m litres) 414 426 435 449 425 Export (m litres) 575 657 725 805 693 989 1
Slide 12: Significant change around the globe impacting Australian wine producers
Significant change around the globe impacting Australian wine producers UK/Europe North America For personal use only •Weak economy •Weak economy •Retailers/consumers demanding •Consumption growing, but so is value, in face of higher excise duty local production and imports •Greater focus on alcohol
Slide 13: Demand for Australian wine declining
Demand for Australian wine declining Volume & Value Change vs Prior Year For personal use only (12 months to Oct ’08) 0% N/A -5% -3% -3% -10% -11% -15% -12% -13% Volume -16% Value -20% -20% -25% -25% -28% -30% UK USA Canada Australia AVL * * 12 months to 30 June 2008
Slide 14: Industry headwinds remain
Industry headwinds remain • Softening demand for Australian wine for the last 12 months For personal use only • Weak global economies and recent unforecast UK duty increase • Vintage 2008 significantly higher than expected, Vintage 2009 also expected to be large • Drought and water availability will
Slide 15: AVL financial scoreboard: Strategies improving profitability
AVL financial scoreboard: Strategies improving profitability For personal use only Change vs PY Change vs PY in Constant $’000 Currency** Branded wine division 3,071 +4,661 Private Label wine division (2,659) Bulk wine and processing 10,387 Vineyards 4,518 Unallocated* (4,324) Total 10,993 Tax impac
Slide 16: Strategy scoreboard: Significant progress achieved
Strategy scoreboard: Significant progress achieved across whole business For personal use only Strategic Priorities Recent Results • Grow Export and 9 • Export branded sales +22% Build (and Buy) • Domestic branded sales -3.7% but margins up +10 points Defendable Brands • Introducing new innovative b
Slide 17: Branded strategy is working with exports up in key markets
Branded strategy is working with exports up in key markets For personal use only Branded Sales Growth vs Prior Year 44% 38% 32% 32% Overall +22% 24% -16% UK Europe Asia USA Canada NZ 17
Slide 18: Australian business profit well up on last year
Australian business profit well up on last year For personal use only • Traded off sales versus margin: GM +10pts above last year • Growth of brand McGuigan – Black Label +17%; highest in at least six years – New higher priced ranges contributing to sales and shifting mix • Nepenthe and Tempus Two c
Slide 19: Australian performance enhanced by double digit sales growth with chains
Australian performance enhanced by double digit sales growth with chains through better operations and appealing consumer promotions Delivered in Full on Time with Coles Liquor Group For personal use only 100% Target 80% 86% DIFOT 60% Monthly Average 40% 20% 0% Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar
Slide 20: Achieving objective of growing branded sales as percentage of business
Achieving stated objective of growing branded sales as percentage of total business For personal use only Revenue 100% 5% 8% 4% Vineyards 80% Bulk Wine & 33% 36% 30% Processing 60% Private 10% Label 15% 14% 40% 43% 46% 55% Branded 20% 0% 2005/06 2006/07 2007/08 20
Slide 21: Achieving third strategy of maintaining low cost position
Achieving third strategy of maintaining low cost position and leveraging assets For personal use only • Controlled winery costs in a smaller than average vintage - - $3 million below prior year • Obtained 15,000 incremental tonnes of contract processing • Captured price increases on some contract pr
Slide 22: And exiting under-utilised assets
… And exiting under-utilised assets For personal use only Cash Loxton Winery $60m $6m non-refundable deposit received. $0.4m in expenses covered from original to new settlement date. Remainder to be received April 09 Hunter Assets $20m and Griffith Winery $80 million 22
Slide 23: Recently executed further changes to reduce cost
Recently executed further changes to reduce cost For personal use only • Discretionary cuts and organisational changes will yield over $3 million in savings over the next 12 months • Closed and placed Adelaide Hills winery for sale. Production moved to our premium Barossa winery • Reduced capital ex
Slide 24: Innovation critical to AVL's sales and profit momentum
Innovation critical to AVL’s sales and profit momentum For personal use only • Participate in high growth segments • Market research based new products and repackaging • Offer truly differentiated products • Execute unique UK/Australia promotions and communication 24
Slide 25: New sparkling product example of new capabilities
is an example of our new capabilities Solidly Researched Professional Presentation Retailer Acceptance For personal use only 120% 100% Agreed listings in 80% over 3,000 stores 60% in two months Growth 40% 20% 0% Existing New Total Entrants Sparkling -20% 25
Slide 26: Billyrock cans off to solid start
Billyrock cans off to solid start “Those cheerful Aussie iconoclasts did it For personal use only again, breaking another taboo by packaging wine in cans. Fortunately, the resulting product is right up to standard with no signs of having sacrificed quality or flavour. The latest I have tasted are go
Slide 27: London City Vineyard
For personal use only London City Vineyard 27
Slide 28: Summary
Summary For personal use only 1. Strong turnaround in challenging market 2. Strategy is delivering better than system performance 3. Delivered on margins and strengthened financial position 4. Market difficult but winning with innovation 5. Global industry will not go back to ‘normal’ 6. Strategic r
Slide 29: Formal Proceedings
For personal use only FORMAL PROCEEDINGS IAN FERRIER 29
Slide 30: Accounts
Accounts For personal use only “To consider and receive the Financial Report, the Directors’ Report and the Auditor’s Report of the Company for the year ended 30 June 2008.” 30
Slide 31: Resolution 1
Resolution 1: For personal use only • To consider and, if thought fit, pass as an ordinary resolution: • “That David Clarke is re-elected as a director of the company.” 31
Slide 32: Resolution 2
Resolution 2: For personal use only • To consider and, if thought fit, pass as an ordinary resolution: “That the Remuneration Report of the Company for the year ended 30 June 2008 be adopted.” 32
Slide 33: Resolution 3
Resolution 3: For personal use only • To consider and, if thought fit, pass the following resolution as a special resolution: • “That the following issue of shares to Brian J. McGuigan (non- executive Director) for the financial year ending 2009 be approved for the purposes of Listing Rule 10.14 of
Slide 34: For personal use only
For personal use only 34
Slide 35: Proxy position Resolution 1
Proxy position Resolution 1: For personal use only • Resolution 1: • That David Clarke is re-elected as a director Total votes For Against Open lodged 63,795,953 49,655,450 12,867,797 1,272,706 77.8 % 20.2 % 2.0 % 35
Slide 36: Proxy position Resolution 2
Proxy position Resolution 2: For personal use only • Resolution 2: • That the Remuneration Report of the Company for the year ended 30 June 2008 be adopted Total votes For Against Open lodged 64,414,829 61,613,408 1,556,337 1,245,084 95.7 % 2.4 % 1.9 % 36
Slide 37: Proxy position Resolution 3
Proxy position Resolution 3: For personal use only • Resolution 3: • That 11,000 shares (not subject to a performance hurdle) and 5,500 shares (subject to a performance hurdle) be issued to Brian J. McGuigan for the financial year ending 2009. Total votes For Against Open lodged 62,828,469 60,742,87
Slide 38: For personal use only
For personal use only 38
Australian Vintage — Shareholder Meeting (November 2008) on 6ix