2024 Annual Report

Contents

JAMES WILLIAMSON

Interim Chairman and Interim CEO

Mr Williamson has over 28 years of experience in financial markets including significant experience in covering global alcoholic beverages as an analyst based in London

for Societe Generale and is the Co-Founder and Chief Investment Officer of Wentworth Williamson Management, a substantial shareholder of the Company. Wentworth Williamson Management is a private Australian- based value fund manager with both equity and private credit funds. Prior to Wentworth Williamson, Mr Williamson worked for Allan Gray Australia and prior to that he was Portfolio Manager of the Investec Australian Equity Fund. Mr Williamson holds a Bachelor of Commerce, a Graduate Diploma of the Securities Institute of Australia and is a Senior Associate of FINSIA.

MARGARET ZABEL

Non-Executive Director

Margaret Zabel is a specialist in customer centred business transformation, brand strategy, innovation, communications, customer experience and change leadership. She has 20 years senior executive experience working across major companies and brands in FMCG, food and beverage, technology and communications industries including multinationals, ASX 100 and not-for-profits. Her previous roles include National Marketing Director Lion, VP Marketing for McDonald's Australia and CEO and Board Director of The Advertising Council of Australia. Margaret has also served as a Non-Executive Board Director for the mental health charity R U OK? and Fairtrade AUNZ, and is currently a Non-Executive Director on the Boards of G8 Education, Select Harvests, The Reject Shop and Collective Wellness Group.

There are three main objectives that the Company is set up to deliver:

1. Grow the top line and earnings of the Company;
2. Enable the Company to achieve consistent sustainable positive free cash flow; and
3. Grow the share price to close the gap to its net tangible assets per share.

A multi prong strategy has been implemented to achieve these objectives, through:

• Driving top line growth:
  o Investing in category leading, and margin accretive, brands and innovation;
  o Leveraging existing export capability to position for new market expansion across China, rest of Asia and the Americas;
  o Utilising industry leading ESG credentials to deliver a point of difference; and
  o Investing inventory into markets and categories, without discounting pillar brands, where it currently does not compete.
• Continuing the focus on the operational footprint and reducing the cost base:
  o Reducing fixed grape supply and increasing flexibility of grape sourcing (e.g. Balranald lease termination);
  o Improving inventory churn from an average of two years to one-and-a-half years;
  o Driving further operational efficiencies; and
  o Sweating the assets whilst optimising the overall operational footprint.

• Maximising utilisation of AVG's modern processing facilities that have capacity to support planned growth and/ or industry partnership/ consolidation opportunities.

Implementation of this strategy is targeted to deliver a free cash flow neutral position by the end FY25, free cash flow generation of +$10 million to +$20 million in FY26, and +$20 million per annum in free cash flow generation by end of FY27. Note, FY25 is targeted to be cash flow neutral as 70% of the contracted grapes purchased for vintage 2024 are paid in FY25, in line with industry norms. ROCE of +8% is targeted by the end of FY27 and earnings more closely aligned to free cash flow. All targets are subject to consumer market dynamics, agricultural risk and foreign exchange.

Overview of the FY24 Result

Given the trading environment, and challenging industry conditions, the Company has been able to improve revenue and earnings over the prior year in contradiction to industry trends. A relentless focus on efficient brand investment, innovation and cost out measures have seen earnings and cash flow improvement. In all key markets inflation continued with competitive aggression deflating overall shelf price and increasing the cost of doing business. Double digit underlying earnings improvement, in line with guidance, has increased EBITDAS to $29 million, EBITS to $13 million and NPATS to $5 million, 12%, 25% and 26% respectively higher than the prior year.

AVG has continued to maintain, and improve, market share across key geographies, delivering increased revenue to $261 million. The branded business is in growth, with pillar brand sales maintained at 78% of total revenue (65% in FY 20). Investment into pillar brands has resulted in a 4% compound annual growth rate (CAGR) since FY20. Over that time, key pillar brands have grown in value, with a CAGR of Tempus Two +7%, Nepenthe +13%, Barossa Valley Wine Company +6% and McGuigan +1%.

In emerging markets, North America has grown by +28% over the prior year whilst previous growth in Ireland has been maintained. China commenced re-ordering in the second half of the financial year whilst the partnership with COFCO has been renewed with the signing of the ten-year extension of the partnership agreement. Rest of Asia has been a challenging market for Australian exporters with inflationary pressures impacting discretionary spend.

Innovation is key to revenue and margin growth and is a core strength of AVG. Premiumisation and innovation now represent 26% of revenue and 35% of margin, a significant increase from 7% and 10% respectively in FY19, prior to the launch

of McGuigan Zero. Innovation launched in FY24 includes Not Guilty, McGuigan Mid, Tempus One and McGuigan Gold. AVG are the global leaders in no-and-low with the McGuigan Zero product number 1 in the UK, Ireland, Australia and NZ. Globally, AVG has increased the revenue contribution from the no-and-low wine category by +20% over the prior year.

Normalised free cash flow (pre capital raise, asset sales and dividends) has improved by +$6 million over the prior period. Working capital was impacted by timing of sales in the UK, timing of sales receipts, and higher inventory due to higher processing of grapes and Red Sea impacts.

Other balance sheet

In May 2024, AVG's financiers extended existing facilities to March 2027 with increased covenant flexibility. Over and above the facility extension, the financier provided an

incremental $15 million of facilities, with $5 million to be paid back in November 2025 and the residual $10 million to be paid back in November 2026, securing AVG's liquidity.

AVG completed a $14 million capital raise ($15 million raise net of $1 million in fees) increasing the number of shares in AVG to ~328 million. The combination of these factors and free cash flow has resulted in a net debt balance of ~$56 million, and a net debt/ underlying EBITDAS of 1.9 times.

AVG has been actively working to increase the flexibility of its grape sourcing whilst removing assets that are not core to growth. Key to this strategy was the sale of the Yaldara vineyard in May 2024 and early termination of the Balranald Vineyard lease in July 2024, a vineyard producing 11 - 13 ktonnes of grapes, predominantly red, per annum.

Sustainability

Sustainability is important to the future of AVG. AVG is proactive in continuing the journey to be net positive in everything it does, showcased through the achievement of the B Corp Certification. AVG is pleased to have made good progress against its commitments. All sites are now powered by 92% renewable energy, over 1.5 million kilograms in weight have been reduced from dry goods procured, over 311, 000 kilograms of waste has been saved from landfill and total emissions have reduced by 13% from FY22.

The lead safety TRIFR statistic for FY24 was 26, in line with the prior year.

Mr James Wiliamson

Interim Chairman

KEY HIGHLIGHTS

Revenue increased to

Underlying EBITS