Challenger Limited · ASX:CGF
Challenger — Challenger Wine Trust — H1 FY2007 Earnings Presentation
25 slides from Challenger's earnings presentation, Feb 14, 2007
Slide 1: Challenger Wine Trust Half-year results presentation
Challenger Wine Trust Half-year results presentation Chris Atkins Chief Executive, Challenger Wine Trust 14 February 2007
Slide 2: Important notice
Important notice Information contained in this publication is current as at 14 February 2007 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 docum
Slide 3: Highlights
Highlights • 11.4% uplift in operating profit to $7.2 million • Distribution per unit increase of 1.8% to 4.64 cents • NTA per unit up 2.4% to $0.98 • Sector out performance – six month total return 35.2% • Initiatives underway to improve capital structure • Portfolio maintained low risk, stable sta
Slide 4: Investment performance
Investment performance CWT relative total return performance six months to 31 December 2006 150 140 35.2% 130 26.1% 120 110 100 90 1/7/06 1/8/06 1/9/06 1/10/06 1/11/06 1/12/06 S&P/ASX 300 Property Accumulation Index CWT Accumulation Index 4 Source: IRESS. Base: 1 July 2006 = 100
Slide 5: Agenda
Agenda Financial results 6 Portfolio update 11 Australian vineyard industry conditions 17 Management changes and outlook 21 5
Slide 6: Financial results
Financial results
Slide 7: Financial performance
Financial performance • Profit from operating activities $7.2 million – up 11.4% • Distribution to ordinary unitholders 4.64cpu – up 1.8% 31-Dec-06 31-Dec-05 % $000 $000 Net property income 14,594 14,034 4.0 Profit from operating activities 7,215 6,475 11.4 Net profit 7,865 8,102 (2.9) Adjusted for:
Slide 8: Financial position
Financial position • NTA per unit up 2 cents to $0.98 per unit • 20 assets revalued – $0.65 million net increase in asset values recorded 31-Dec-06 30-Jun-06 Total assets ($000) 305,851 294,584 Net assets ($000) 150,130 145,555 Ordinary units on issue (000) 153,108 151,957 NTA per unit ($) 0.98 0.96
Slide 9: Capital management
Capital management 31-Dec-06 30-Jun-06 Borrowings ($000) 148,662 142,760 Gearing (%) 48.6 48.5 Gearing (excluding PICE units) (%) 44.2 43.8 • Capital management initiatives – suspension of DRPs in August 2006 – compulsory conversion of PICE units on 27 April 2007 • forecast positive impact on ordina
Slide 10: Capital management – hedging
Capital management – hedging • Borrowings have 100% fixed interest rate exposure • Interest rate hedge duration aligned with individual lease terms • NZ dollar borrowings increased to $81.2 million – represents 98.5% of NZ asset value – natural foreign exchange hedge • Weighted average cost of debt
Slide 11: Portfolio update
Portfolio update
Slide 12: Portfolio snapshot
Portfolio snapshot • 100% occupancy • Long term leases with WALE (by income) of 6.5 years • 100% fixed rental review structures • Portfolio yield 9.8% pa • Significant asset, tenant and geographic diversification – Australia 75%/NZ 25% of portfolio – 88% of tenants are wine companies – 70% of Austra
Slide 13: Portfolio composition
Portfolio composition Geographic diversification (by value) Tenant diversification (by value) 31 December 2006 31 December 2006 Pernod Pooles Rock Ricard Pty Ltd VIC Pacific Pty 3% McGuigan 17% Ltd Simeon NSW 14% W ines 28% Limited Evans & Tate 39% Limited 5% NZ WA 25% 3% BH & SE Delegats Booth W in
Slide 14: Portfolio update – McGuigan Simeon Wines
Portfolio update – McGuigan Simeon Wines • CWT and McGuigan Simeon Wines Limited have negotiated lease extensions on four vineyards – rent reductions agreed for duration of extension periods – equivalent to $185,000 in FY08 Vineyard Extension New lease expiry Property yield pa period date (post leas
Slide 15: Portfolio development projects
Portfolio development projects • Development vineyards offer large scale, efficient production facilities - average size 247 hectares • NZ development projects progressing on schedule – Rarangi Vineyard (129ha) • completion date 30 June 2008 • capex to date NZD 13.3 million • capex remaining NZD 0.8
Slide 16: Portfolio focus
Portfolio focus • No expiries in FY07 - only 4.2% of income subject to expiry in FY08 – Burge Corp CWT lease expiry profile (by incom e) at 31 Decem ber 2006 • Summers Hill and Corryton Park vineyards • 1.7% income 2007 0.0% • expiry in February 2008 2008 4.2% 2009 3.4% – McGuigan Simeon Wines Limit
Slide 17: Australian vineyard industry conditions
Australian vineyard industry conditions
Slide 18: Impact of weather on Australian vineyard industry
Impact of weather on Australian vineyard industry • Industry impacted by extreme weather conditions – late season frost damage in cool climate regions of SA, VIC and WA – low rainfall and reduction in water allocations in warm climate regions Frost affected regions Rainfall deficiencies 18 Source: A
Slide 19: Impact on supply and demand for grapes
Impact on supply and demand for grapes • 2007 and 2008 harvest forecasts downgraded to 1.4 million tonnes • Grape prices have risen, particularly in warm climate regions • Wine surplus expected to fall into balance by FY09 Demand/supply projections Current Plus Total Total Stock Surplus/ demand proj
Slide 20: Impact of weather conditions on Australian portfolio
Impact of weather conditions on Australian portfolio • No impact on portfolio income to date • Short-term impact on production for some tenants – frost has impacted 2007 production at cool climate vineyards • Chapel, Lawsons and Richmond Grove vineyards – reduced water allocations at some warm clima
Slide 21: Management changes and outlook
Management changes and outlook
Slide 22: Management changes
Management changes • Appointment of Nick Gill as Fund Manager of CWT – 20 years experience – agribusiness and corporate finance expertise • Chris Atkins to scale-back day-to-day management responsibilities – will continue to provide ongoing strategic input and advice 22
Slide 23: Outlook
Outlook • CWT offers a high level of income security and predictability – 100% occupancy and WALE (by income) of 6.5 years – stable portfolio yield of 9.8% • Initiatives undertaken to improve capital structure • Weather conditions have had no impact on Australian portfolio to date – warm climate reg
Slide 24: Questions
Questions
Slide 25: CWT contacts
CWT contacts: Chris Atkins Chief Executive Tel: 08 8228 3270 Email: catkins@challenger.com.au Nick Gill Fund Manager Tel: 02 9994 7291 Email: ngill@challenger.com.au Susie McPherson Investor Relations Tel: 02 9994 7958 Email: smcpherson@challenger.com.au 25
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