Challenger Limited · ASX:CGF
Challenger — Challenger Wine Trust — FY2009 Earnings Presentation
29 slides from Challenger's earnings presentation, Aug 6, 2009
Slide 1: Challenger Wine Trust Results for year ended 30 June 2009 (FY09)
Challenger Wine Trust (ASX:CWT) Results for year ended 30 June 2009 (FY09) Nick Gill Fund Manager 6A Augustt 2009
Slide 2: Important notice
Important notice Information contained in this publication is current as at 6 August 2009 unless otherwise specified and is provided by Challenger g Listed Investments Limited ((ABN 94 055 293 644)) ((AFSL 236887)) ((“Challenger”), g ) as Responsible p Entity y of the Challenger Wine Trust (“Trust”)
Slide 3: Key points
Key points ¾ Operating performance remains strong – Net property income of $32.6 million – up 3% on prior year – Profit from operating activities after tax of $16.1 million (FY08: $16.0m) or 9.5 cpu – Occupancy p y 98.5%;; WALE 5.0 yyears with no lease expiries p in FY10 – 4Q09 distribution of 1.2 c
Slide 4: Financial results
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Slide 5: Operating profit holding firm
Operating profit holding firm ¾ Profit from operating activities after tax $16.1 million or 9.5 cpu – up 0.8% – Net property income up $1.0 million (3.3%) to $32.6 million – Finance costs up $0.6 million (4.8%) to $13.1 million ¾ FY09 distributions: 7.1 cents per unit (cpu) ¾ FY09 Property revaluati
Slide 6: NIV at 66c
NIV at 66c ¾ Reduction in NIV mainly due to revaluation decrement on properties (22 cpu) and mark-to-market movement on interest rate swaps (8 cpu) ¾ NIV includes water rights at independent valuation – reflects real value to CWT ¾ Water W rights i h are treated d as iintangible ibl assets h held ld
Slide 7: NIV at 66 cents per unit
NIV at 66 cents per unit ¾ NIV at 66 cpu as at 30 June 2009 - Impacted by revaluation decrements on investment properties and mark-to-market (mtm) movement on interest rate swaps 110 100 +9 -7 90 nts per unit - 22 80 cen 70 94 -6 -2 60 66 50 NIV at 30 June Operating profit Distributions to Revaluati
Slide 8: Financial position as at 30 June 2009
Financial position as at 30 June 2009 ¾ Gearing1 at 54.0%; − Majority of interest rate2 exposure hedged for duration of lease terms ¾ New Zealand borrowings provide natural currency hedge for NZ assets ¾ Weighted average cost of borrowings 8 8.04% 04% at year end 30-Jun-09 30-Jun-08 Total assets (at
Slide 9: Finance secured to 2011
Finance secured to 2011 ¾ Total drawn liabilities of $149 million (from 2 Australian banks) – $2.2m facility expiry on 31 July 2009 covered by cash on deposit – No further facility expiries until May 2011 Borrowing facilities & swap maturity profile 140 Facilities 120 Swaps 100 80 $m m 60 40 20 0 20
Slide 10: Financial covenants & headroom
Financial covenants & headroom ¾ $7.1m borrowings repaid in FY09 ¾ LVRs1 apply to borrowing facilities from banks ¾ All covenants complied with during FY09 CWT Headroom on Facility Covenant position at security value2 30 June 2009 1 Debt to security value < 57% 53.5% 6.1% Debt (including net fair va
Slide 11: Portfolio update
P tf li update Portfolio d t
Slide 12: Regional map of CWT's eastern portfolio
Regional map of CWT’s CWT s eastern portfolio SA/WA cool region: •Miamba •Summers Hill •Corryton Park •Schuberts Schuberts •Chapel Central NSW: •Richmond Grove & Lawsons •Hermitage Road Winery + •Dalswinton1 •Sirens (WA) •Poole’s Rock Winery •Cowra Murrumbidgee: •Whitton •Stephendale •Cocoparra C •B
Slide 13: Revaluations impact by net $40.5m in FY09
Revaluations impact by net $40 $40.5m 5m in FY09 ¾ 20 of 24 properties revalued (18 independently) as at 30 Jun 09 (90% of portfolio value) − Remaining properties last independently revalued as at 31 December 2008 Portfolio by region % Fair Value at Fair Value pre Change Change of 30 Jun 09 revaluat
Slide 14: Portfolio snapshot at 30 June 2009
Portfolio snapshot at 30 June 2009 New 30 June 2009 30 June 2008 Australia Z l d1 Zealand Total Total Number of assets 20 4 24 25 Portfolio carrying value $m 190.5 66.6 257.1 298.8 Portfolio fair (market) value $m 201.5 66.6 268.2 307.2 % total portfolio value2 % 75 25 100 100 Total area ha 4 828 4,
Slide 15: Portfolio diversification
Portfolio diversification ¾ 94% of portfolio (by fair value) leased to wine companies Geographic diversification (by fair value) Tenant diversification (by fair value) as at 30 June 2009 as at 30 June 2009 Oth 8% Other, Warburn NZ, 25% Australian Estate, 9% NSW, 32% Vintage, 34% WA 1% WA, Delegat's
Slide 16: Lease expiry profile and activity
Lease expiry profile and activity ¾ 98.5% portfolio occupancy at 30 Jun 09 (98.4% at 31 Dec 08) ¾ WALE at 5.0 years (5.3 years at 31 Dec 08) ¾ No expiries in FY10 and 15.1% of portfolio by income expiring in FY11 Weighted Maturity Profile as at 30 June 2009 27.8% 25.6% 15 1% 15.1% 9.5% 8.4% 7.8% 4.2
Slide 17: Australasian vineyard industry conditions
A t l i vineyard Australasian i d iindustry d t conditions diti
Slide 18: Australian production and sales
Australian production and sales ¾ 2009 grape intake: 1.7 million tonnes – Impacted by drought and January heatwave – 2008 grape intake: 1.83 million tonnes ¾ 2009 wine sales forecast to be 1.7million g grape p tonnes equivalent q * Source: ABS and WFA Source : AWBC 18
Slide 19: Currency trending higher - grape prices trending lower
Currency trending higher - grape prices t di llower trending ¾ Since S 2003 AUD has been strengthening against the GBP and USD ¾ There was a short term reprieve in late 2008/ early 2009 as AUD weakened, but since then has reversed ¾ Not all “New World” wine export countries exchange rates have stren
Slide 20: Over-supply of grapes
Over supply of grapes Over-supply ¾ Unprofitable bulk wine markets have led to lower demand for grapes ¾ 50m litres of wine (circa 9,000 ha of Australian vineyards) sold at under $1 per litre ¾ M Market k t changes h have h lled d tto an estimated ti t d 20,000 20 000 h ha over-supply l off vineyard
Slide 21: New Zealand
New Zealand ¾ 2009 grape production was 8% lower than the large 2008 harvest as limits on grape yields were enforced ¾ Sauvignon Blanc represents 76% of exports (LHS) (RHS) ¾ UK and Australia are NZ’s largest markets as Sauvignon Blanc continues its popularity ¾ CWT’s NZ tenant, Delegat’s Group rece
Slide 22: Summary
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Slide 23: Summary
Summary ¾ Operating performance remains strong – Net property income of $32.6 million – up 3% on prior year – Profit from operating activities after tax of $16.1 million (FY08: $16.0m) or 9.5 cpu – Occupancy p y 98.5%; WALE 5.0 yyears with no lease expiriesp in FY10 – 4Q09 distribution of 1.2 cpu; F
Slide 24: Questions
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Slide 25: Contacts
Contacts Nick Gill Fund Manager Tel: 02 9994 7291 Email: ngill@challenger.com.au Luke Keighery Investor Relations Tel: + 61 (0)2 9994 7633 Email: lkeighery@challenger lkeighery@challenger.com.au com au Website www.challenger.com.au/cwt 25
Slide 26: Appendices
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Slide 27: Detailed income statement
Detailed income statement FY09 FY08 Variance $000 $000 $000 % Net property income 32,620 31,583 1,037 3.3 Other income 712 1,148 (436) (38.0) Finance costs (13,122) (12,526) (596) (4.8) Management fees (2,350) (2,443) 93 3.8 Operating expenses (1 356) (1,356) (1 295) (1,295) (61) (4 7) (4.7) Profit
Slide 28: Movements in fair value and carrying value
Movements in fair value and carrying value Fair value C Carrying value $000 $000 30-Jun-08 307,229 298,851 Acquisitions & upgrades 933 933 Disposals (2,708) (2,601) e a uat o cchanges Revaluation a ges (36,950) (36,950) Water rights fair value increment - (2,765) Impairment of assets (813) (813) Dep
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