Challenger Limited · ASX:CGF
Challenger — Challenger Wine Trust — FY2006 Earnings Presentation
18 slides from Challenger's earnings presentation, Aug 15, 2006
Slide 1: Challenger Wine Trust 2006 annual results presentation
Challenger Wine Trust 2006 annual results presentation Chris Atkins Chief Executive, Challenger Wine Trust 15 August 2006
Slide 2: Disclaimer
Disclaimer Information contained in this publication is current as at 30 June 2006 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 has be
Slide 3: Achievements
Achievements • Trust performance – Net profit $16.1 million – Net operating profit (pre-AIFRS impacts) $14.9 million – Distribution per ordinary unit 9.06 cents – NTA $0.96 per unit • Portfolio performance – Occupancy maintained at 100% – Weighted average lease expiry (by income) of 7 years – Portfo
Slide 4: Financial performance
Financial performance • Net operating profit (pre-AIFRS impacts*) up 8.7% FY06 FY05 Net profit ($m) 16.1 17.8 Unrealised gains on property valuations ($m) (2.9) (4.1) PICE unit interest expense ($m) 1.7 - Net operating profit (pre-AIFRS impacts*) ($m) 14.9 13.7 Distribution per ordinary unit (cents)
Slide 5: Financial position
Financial position • Gearing 43.6% (pre-AIFRS impacts) FY06 FY05 Total assets ($m) 296.3 288.4 Borrowings ($m) 142.8 127.0 Gearing (%) 48.2 44.0 Gearing (excluding PICE units*) (%) 43.6 44.0 Net assets ($m) 145.5 149.0 NTA per unit ($) 0.96 0.96 !"
Slide 6: Capital management
Capital management • NTA $0.96 per unit – consistent with 30 June 2005 Net Assets NTA per unit $m $ Closing balance at 30 June 2005 149.0 0.96 AIFRS adjustment 1 (2.7) Opening balance at 1 July 2005 146.3 Transfer of PICE units to liabilities (16.4) New units issued (net of issue costs) 2 13.3 Profi
Slide 7: Capital management
Capital management • Borrowings have 100% fixed interest rate exposure – Interest rate hedge duration in line with individual lease terms • $53.1 million of borrowings in New Zealand dollars – 82.0% of NZ portfolio value – Natural foreign exchange hedge • Weighted average cost of debt 7.5%
Slide 8: Portfolio highlights
Portfolio highlights • New leases to Pernod Ricard Pacific Pty Ltd over Lawsons and Richmond Grove vineyards – Pernod Ricard Pacific Pty Ltd now occupy 15% of portfolio • In negotiations with McGuigan Simeon Wines Limited for two year lease extension at Hermitage Road Winery – No further portfolio l
Slide 9: Achieving strategic portfolio objectives
Achieving strategic portfolio objectives Objective Current status 1. Maintaining full occupancy 100% occupancy 2. Long term leases - Majority of leases 10yrs with 3 x 5yr options - Weighted average lease expiry (by income) of 7 years 3. Fixed rental review Annual rental reviews structures - 52% to C
Slide 10: Achieving strategic portfolio objectives
Achieving strategic portfolio objectives Objective Current status 4. Preference for warm climate Warm climate vineyards over cool climate vineyards represent 72% of Australian portfolio (by value) 5. Preference for wine Wine companies represent companies over contract 88% of portfolio tenants grower
Slide 11: Achieving strategic portfolio objectives
Achieving strategic portfolio objectives Objective Current status 6. Preference for large scale - 46% portfolio consists of development vineyards development assets - Average size of development vineyard 247 hectares 7. Diversification by: - 33 assets - asset - 12 tenants - tenant - Located across A
Slide 12: Strategic portfolio composition
Strategic portfolio composition Portfolio by rent review type Portfolio by tenant type (by income) (by income) 100% 100% Wine 50% Fixed at 1.5% 50% companies CPI Contract growers 0% 0% 2006 2006 Australian portfolio by vineyard climate Portfolio by asset type (by value) (by value) 100% 100% Developm
Slide 13: Strategic portfolio composition
Strategic portfolio composition Geographic diversification (by value) Tenant diversification (by value) 30 June 2006 30 June 2006 Pernod Pooles Rock Ricard Pty Ltd VIC Pacific Pty 2% McGuigan 18% Ltd Simeon NSW 15% Wines 29% Limited Evans & Tate 40% Limited 5% NZ 22% WA 3% Delegats BH & SE Wine Esta
Slide 14: Portfolio value
Portfolio value • Assets independently revalued in FY06* • Valuation methodology – DCF of rental income streams and estimated terminal value – Adoption of discount rate appropriate to specific tenant and asset – Estimated terminal value calculated using estimated yield and projected district average
Slide 15: Portfolio development projects
Portfolio development projects • 10 development and upgrade projects underway • $17.2 million capital expenditure undertaken in FY06 – Schubert’s vineyard project completed at total cost of $6.3 million • Forecast $30.4 million capital expenditure over next four years – Four development projects to
Slide 16: Portfolio focus
Portfolio focus • No lease expiries in FY07 (post two year lease extension at Hermitage Road Winery) • Only 1.7% of portfolio income subject to expiry in FY08 25% 20% 15% Lease expiry (by income) 10% Lease expiry (by value) 5% 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Slide 17: Portfolio focus
Portfolio focus • Upcoming lease expiries Expiry date Lessee Lessee % income Feb-08 Summers Hill Burge Corp Pty Ltd 0.6% Feb-08 Corryton Park Burge Corp Pty Ltd 1.1% Oct 08 Hermitage Road McGuigan Simeon Wines Limited 1.9% Oct-08 Cowra Vineyard McGuigan Simeon Wines Limited 1.5% Oct-08 Sandy Hollow
Slide 18: Trust strategy and outlook
Trust strategy and outlook • CWT offers a high level of income security and predictability – 100% occupancy and WALE (by income) of 7 years – Strategic portfolio composition with preference for low risk exposures • Active management of portfolio to maintain defensive characteristics – Development of