Announcement

GENERAL: DGL: DGL 2019 Annual Meeting - Address to Shareholders 01:35p.m. 
DGL  
03/12/2019 13:35  
GENERAL  
PRICE SENSITIVE  
REL: 1335 HRS Delegat Group Limited  
 
GENERAL: DGL: DGL 2019 Annual Meeting - Address to Shareholders  
 
Delegat Group Limited - 2019 Annual Meeting Addresses  
Annual Meeting of Shareholders  
2 pm, Tuesday, 3 December 2019  
 
Slide 1 - Title Slide  
1. Welcome and Introductions  
Ladies and Gentlemen, On behalf of the Board, I am pleased to welcome you  
here today to the 14th Annual Meeting of Delegat Group Limited since listing  
in April 2006. My name is Jim Delegat and I have the privilege of chairing  
your Board of Directors. There is a quorum present and given the time is now  
2p.m. - I declare the meeting open for business.  
 
Slide 2 - Welcome and Introductions  
Let me first introduce you to my fellow Board Members, John Freeman (Managing  
Director), Rose Delegat, Robert Wilton, Dr. Alan Jackson (Chair of Audit &  
Risk Committee) and Shelley Cave (Chair of Remuneration Committee). Also on  
the dais is Murray Annabell, the Group's Chief Financial Officer, who will  
act as our minute secretary. I also would like to welcome our auditors, Ernst  
& Young, to the meeting and our legal counsel, David Jones from Heimsath  
Alexander.  
 
2. Apologies  
To open, are there any apologies anyone would like to advise the meeting of?  
 
3.Notice of Meeting  
The notice of meeting has been sent to all shareholders, as has the Annual  
Report, and I propose that, together with the agenda they be taken as read.  
 
4.Minutes of Previous Meeting  
The minutes of the 13th Annual Meeting held on 4 December 2018 have been  
approved by the Directors, and Murray Annabell is holding a copy for  
inspection should any shareholder wish to see them.  
 
Slide 3 - Agenda  
5.Procedure  
Firstly, I will address the Annual Report incorporating the Directors Report,  
Financial Statements and unqualified Audit Report covering the year to 30  
June 2019. I will then provide a brief overview of our key investment  
projects before handing the meeting to the Managing Director who will cover  
the FY2019 performance in more detail and the Group's future growth plans.  
Following Mr Freeman's remarks I will open the floor for discussion on the  
Annual Report and Executive Chairman's and Managing Director's presentation  
before moving on to the formal business of the resolutions.  
 
Executive Chairman's Address  
 
Slide 4 - Executive Chairman's Address  
As Executive Chairman my focus is on the strategic direction of the Group and  
monitoring performance to ensure successful delivery of Board approved  
business plans. I invest a significant amount of my time on capital  
investments and growth initiatives.  
 
Slide 5 - Another Year of Record Performance  
On behalf of the Board of Directors of Delegat Group Limited, I am pleased to  
report another year of record performance. Delegat achieved record global  
case sales of 3,008,000 in the FY2019 year, up 10% on the prior year. This  
key milestone represents another step in our journey building a leading  
global Super Premium wine company. We are now one of the largest and most  
successful wine companies in Australasia, recognised both globally and within  
New Zealand for our positive contribution to the wine industry.  
Two key highlights of this strong growth was 7% sales growth in North America  
which is our largest market and 30% sales growth in UK, Ireland & Europe,  
associated with new distribution listings.  
A record Operating Net Profit After Tax of $51.4 million was generated, up  
14% on the prior year, continuing the Group's strong track record of  
profitable growth.  
Your Board, being cognisant of both dividends to reward shareholders and the  
need for reinvestment for a growth company, declared a fully imputed dividend  
of 17 cents per share which represents an increase of 13% over the prior  
year.  
 
Slide 6 - Investing for Growth  
Delegat is investing for growth to support its strategic goal to build a  
leading global Super Premium wine company. During the year under review the  
Group generated cash flows from operations of $55.4 million which more than  
funded the $33 million invested in growth assets including development of the  
Group's wineries, land acquisition and vineyard development in New Zealand  
and the Barossa Valley.  
Delegat will invest an additional $44 million in FY2020 to provide earnings  
growth in the years ahead. This capital investment supports the Group's plan  
to grow sales by more than 643,000 cases to 3,651,000 cases by FY2022 and  
will provide for further growth beyond that period.  
Slide 7 - Vineyard Development  
The Group planted 142 hectares of new vineyard in FY2019 and is developing  
another 119 hectares in the current year. The Group has a further 619  
hectares of viticultural land which will be planted progressively from FY21  
onwards. The Group now has 4,031 net hectares of vineyards and viticultural  
land, 3,566 hectares in New Zealand and 465 hectares in Australia. Of this  
area 76% is owned or managed by the Company and 24% is from our grower  
partners.  
 
Slide 7 - Sustainability  
Recognition and respect for the environment are reflected in the strong  
leadership role the Group plays in the practice and promotion of sustainable  
wine growing and wine production. As a leader in the New Zealand wine  
industry and as a founding member of Sustainable Winegrowing New Zealand  
(SWNZ) since 2002, the Group takes its responsibilities to respect and  
protect the environment very seriously. The Group's New Zealand vineyards and  
wineries are 100% accredited by the independently audited SWNZ Sustainability  
Programme. The Group applies many of these same principles in the Barossa  
Valley, again as a leader of sustainable wine growing practices within the  
Australian wine industry.  
 
Slide 8 - Funding Growth  
The Group has a strong balance sheet with shareholders' equity of $374.5  
million, net bank debt of $270.3 million and undrawn syndicated bank debt  
facilities of $59.7 million. The Group's retained earnings and syndicated  
bank debt facilities provide appropriate funding for our capital investment  
programme and growth plan.  
 
Slide 9 - Executive Chairman Concluding Remarks  
The record results achieved in the year under review are testament to the  
strength of the Group's business model. And being another year closer to  
realizing our vision of becoming one of the world's leading Super Premium  
wine companies.  
The Group has invested heavily in its brands and distribution channels and  
established in - market sales offices. This unique infrastructure of  
in-market sales offices delivers high quality distribution, enduring business  
relationships, market knowledge and focus.  
The Group's wines have a history of winning awards and being acclaimed by  
leading wine critics.  
Growth is underpinned by substantial vineyard plantings in pre-eminent wine  
regions and the Groups winemaking is undertaken in technologically advanced,  
state-of-the-art wineries.  
I continue to be excited about your company's performance and strategy, all  
of which supports substantial future sales and earnings growth.  
I am also delighted to inform you that your company has been nominated as one  
of three finalists for company of the year at the 2019 Deloitte Top 200  
Business Awards. Deloitte said, "chosen from New Zealand's top companies,  
this year's finalists have been recognised for their focus on shaping the  
future, companies that are thriving on the opportunities presented by  
innovation and globalization". Delegat won this award previously in 2008.  
This year's winner will be announced at the award's gala dinner later this  
week. Whilst we do not yet know who the winner will be, we're very proud of  
having been recognized as a finalist.  
 
Your Board would like to take this opportunity to acknowledge our Delegat  
Great Wine People around the world. Our global team have once again shown  
great resolve and set new performance records. It is inspiring to work with  
such a talented team who are committed to winning together.  
 
John Freeman, the Group's Managing Director, will now provide a more fulsome  
report on the 2019 year and our plans for the future.  
 
Managing Director's Address  
 
Slide 10 - Managing Director's Address  
Good afternoon Ladies and Gentlemen. It is a privilege to be with you today  
and it will be my pleasure to share and discuss the performance and growth  
plans of the company.  
FY2019 was another year of record performance and continuing to build the  
foundations for long term-growth. As noted by the Executive Chairman, in  
2019 the Group achieved record global case sales of 3,008,000 cases, record  
Operating Net Profit After Tax of $51.4 million, and another year of strong  
net cash flows from operations.  
 
Slide 11 - Global Sales Performance  
The Group's investment in developing its own in-market sales teams in New  
Zealand, Australia, the United Kingdom, the United States, Canada and China  
continues to deliver strong performance in a highly competitive global  
marketplace. We have grown global case sales by twenty-fold since 2002.  
Reaching 3 million cases in annual sales represents another milestone in our  
journey building a leading global Super Premium wine company.  
 
Slide 12 - Global Sales Performance  
Whilst it may sound great to say that we sold 3 million cases, I find it is  
more rewarding to consider that last year, 180 million glasses of Oyster Bay  
were enjoyed by wine lovers around the world. That represents 343 glasses  
every minute of every day.  
 
Slide 13 - Global Sales Performance  
Our record global case sales continue to be well diversified by market, with  
44% in North America, 26% in the Australia, New Zealand and Asia Pacific  
region, and 30% in the United Kingdom, Ireland, and Europe region.  
 
Slide 14 - Global Sales Performance (AU/NZ/APAC focus)  
Case sales in the Australia, New Zealand and Asia Pacific region were 780,000  
cases for the year. In the established New Zealand and Australia markets,  
Oyster Bay continued to perform strongly as a category leading Super Premium  
wine brand.  
In Australia, Oyster Bay Sauvignon Blanc remains the top selling Sauvignon  
Blanc and number one bottled white wine by value. Oyster Bay Pinot Gris and  
Oyster Bay Rose both achieved good growth in the region, as did Barossa  
Valley Estate Grenache Shiraz Mourvedre.  
 
Slide 15 - Consumer Advertising Campaign, Australia  
On the screen you will see examples of our Consumer Advertising campaign in  
Australia. The Group continues to invest significantly in the established  
markets of Australia and New Zealand in order to build and maintain high  
brand affinity among current and target consumers. The Group is increasingly  
utilising digital media as an effective means by which we can segment,  
target, and engage with Super Premium wine consumers. We're confident that  
this investment will continue to be repaid in the form of sustainable  
high-quality earnings from these key markets.  
 
Slide 16 - Global Sales Performance (AU/NZ/APAC focus - repeat)  
Still looking at the Asia Pacific region, the Group continues to achieve  
healthy sales growth each year. We are developing a deeper understanding of  
how to drive meaningful traffic to the Group's flagship store within the  
T-Mall e-Commerce platform and we continue to see China as an attractive  
long-term opportunity.  
 
Slide 17 - Global Sales Performance (North America focus)  
Turning to North America, the Group again delivered strong growth, increasing  
sales volumes by 7% to a record 1,332,000 cases. North America remains our  
largest opportunity to grow sales in the short to medium term.  
In the United States, the Oyster Bay brand continued its strong growth,  
gaining distribution and rate of sale across multiple channels. Oyster Bay  
is now a top 5 white wine over USD $10 by value. The Barossa Valley Estate  
brand continued to perform well, particularly within the on-premise channel,  
supporting the Group's goal of increasing awareness and affinity in this  
large market for Super Premium red wine brands. Highlights for the year  
included rapid growth for Oyster Bay Pinot Gris, and the launch of Oyster Bay  
Rose in the market.  
In Canada, Oyster Bay has delivered consistent strong performance, with  
Oyster Bay holding category-leading positions with major government monopoly  
liquor retail networks.  
 
Slide 18 - Global Sales Performance (Europe focus)  
The Group achieved standout performance in the important United Kingdom,  
Ireland, and Europe region, growing 30% over the course of the year. This  
growth was due in part to increased rate of sale within large UK Grocery  
retail chains, and also benefited from significant distribution gains within  
the convenience retail sector. Additionally, both Oyster Bay and Barossa  
Valley Estate grew sales within the on-premise channel.  
In Ireland, Oyster Bay has maintained its category-leading position. Oyster  
Bay Sauvignon Blanc, Chardonnay, Merlot, and Pinot Noir are the top-selling  
New Zealand wines in their respective varietal categories, and Barossa Valley  
Estate Shiraz and Grenache Shiraz Mourvedre are the leading Australian wines  
above EUR12 in their respective categories.  
 
Slide 19 - Oyster Bay Consumer Research  
The Group regularly conducts detailed research into both current and target  
consumers. This year we have been studying these groups in more detail to  
support our planning for future consumer media campaigns and in-store retail  
activation.  
To give you an example, on the screen is a snapshot of the current Oyster Bay  
consumer. These consumers are typically 25-54, with an even gender balance.  
They are likely to be tertiary educated and work in white collar professional  
sectors such as Finance and Sales. They are more likely to be married and  
they enjoy a wide repertoire of premium wines.  
 
Slide 20 - Oyster Bay Consumer Research - High Value Shoppers  
More importantly, we are learning about their purchasing behaviours. Here  
you can see that the typical Oyster Bay Shopper in the USA makes three times  
as many trips per year to purchase wine, and when they do they spend  
approximately 50% more than a typical wine shopper. This means that over the  
course of a year, the Oyster Bay Shopper represents more than four times the  
annual spend of a typical shopper. This information proves extremely  
valuable when our in-market sales teams are working closely with leading  
retailers and on-premise venues to achieve high-quality distribution and  
secure promotions at key times of the year.  
 
Slide 21 - Most Admired  
The result of these efforts is evident in the Group's sales growth, but also  
in Oyster Bay's recognition and regard within the market. In the United  
States Oyster Bay has now been recognised as a 'Blue Chip' brand by New  
York's Impact Magazine, a status reserved only for brands of substantial size  
and sustained growth over more than ten years. In the UK Oyster Bay was once  
again named 'One of the World's Most Admired Wine Brands' by Drinks Trade  
International Magazine, and in New Zealand Oyster Bay was voted 'Most Trusted  
Wine Brand' by consumers in the Readers Digest 2019 awards.  
 
Slide 22 - Barossa Valley Estate Cellar Door and Gardens  
This year the Group opened the Barossa Valley Estate Cellar Door and gardens.  
Set in Australia's largest perennial gardens, this stunning facility  
encourages visitors to Explore the gardens and vineyard, Discover the  
definitive wines of the Barossa, and to Experience E&E Black Pepper Shiraz,  
one of the defining wines of the region.  
Over the coming year we will be developing a programme to promote the estate,  
working closely with Australia Tourism, Barossa Tourism, and key tour  
operators within the region. We're delighted with the feedback to date from  
visitors, and we are excited at the opportunity to establish Barossa Valley  
Estate as one of the ultimate Barossa wine tourism venues.  
 
Slide 23 - 2019 Vintage  
The 2019 harvest was regarded as one of exceptional quality across all three  
of our regions, delivering some of our most expressive wines to date.  
The New Zealand harvest was 35,500 tonnes, down 11% on the 2018 vintage. The  
Australia harvest was 1,600 tonnes. Yields were slightly lower than  
long-term averages due to variable weather conditions during spring  
flowering. Despite these lower yields, the Group continues to have  
appropriate inventories to achieve future sales growth plans.  
 
Slide 24 - Investing in Our People  
A company is represented by the culture and performance of its people, and at  
Delegat we are privileged to have an excellent team of Delegat Great Wine  
People. Each year we conduct an employee engagement survey which provides us  
with valuable feedback and helps us understand how to provide our people with  
a healthy, safe, and supportive workplace. Our goal as an employer is to  
create an environment for success, where our people can achieve or exceed  
their career aspirations. In the year ahead we will invest in our Human  
Resource Information Systems and our Learning and Development programmes. We  
have also formally introduced Diversity and Inclusion planning, which we  
believe not only benefits and supports our people, but also contributes  
positively to the Group's long-term performance.  
 
Slide 25 - Sales Growth FY2020 to FY2022  
The Group's strategic goal is to build a leading global Super Premium wine  
company. The Group will continue to build leading global brands from world  
leading regions, focusing on the wine styles for which those regions are  
internationally renowned. Delegat plans to grow sales by more than 643,000  
cases to 3,651,000 cases over the next three years. The primary drivers of  
planned growth are Oyster Bay varietals in North America, and Oyster Bay  
Pinot Gris and Barossa Valley Estate varietals globally.  
 
We will also continue to invest for future long-term growth and earnings by  
developing and executing high-quality consumer communication campaigns in key  
markets. You can expect to see this again this Christmas here in New Zealand  
as an example.  
 
Slide 26 - Forecast FY2020  
With respect to the FY2020 financial year, the Group is on track to achieve  
its full year goal to grow case sales by 8% to 3,240,000 cases. The Group  
forecasts the FY2020 operating profit result to be in line with market  
consensus of $52.4 million.  
 
Slide 27 - Managing Director Concluding Remarks  
In conclusion, as mentioned by the Executive Chairman, your company is well  
positioned to grow sales and achieve sustainable earnings growth in the years  
ahead. This continued success hinges on our great staff here in New Zealand  
and around the world. I wish to personally thank each of our Great Wine  
People for their achievements in 2019, and for their continuing efforts to  
aim high, pursue mastery and win together. Lastly, I would like to thank  
you, our shareholders, for your commitment as we have worked hard to build  
your company, and for your ongoing support in the future.  
 
Shareholders' Questions and Discussion  
Are there any questions in respect of the Annual Report, my Executive  
Chairman's presentation or the Managing Director's presentation?  
 
Now we will proceed to the Ordinary Business on the Agenda.  
 
As covered by the new Listing Rules, all resolutions will be conducted by way  
of poll with those shareholders entitled to vote. A voting paper was either  
mailed to you or provided to you at the registration desk. If you do not have  
a voting paper please see ComputerShare at the back of the room and they will  
assist you with this matter. I will address each Resolution and will then  
instruct you to mark your voting paper for that resolution. After all  
resolutions have been voted on, I will then close the meeting and invite all  
shareholders to post their voting papers in the ballot boxes being held by  
Computershare staff. The Computershare staff will then perform the poll and  
the Company will post the final results onto the NZX platform later in the  
day.  
 
Agenda item 1  
This is Resolution numbered Agenda Items 1 and is an ordinary resolution.  
 
Auditor's remuneration  
In accordance with the Company's Act 1993, the Company's auditor Ernst &  
Young is automatically re-appointed at the annual meeting. In regards to the  
matter of the auditor's remuneration being fixed, in line with commercial  
practice, the resolution seeks approval that Shareholders approve the  
directors to be authorized to fix the auditor's remuneration.  
 
Is there any discussion?  
 
Election of Directors  
The Resolutions numbered Agenda Items 2 & 3 are both ordinary resolutions.  
Agenda item 2  
Re-election of John Freeman as Director  
In accordance with the rotation provision of the constitution John Freeman  
retires from office and being eligible offers himself for re-election.  
John will now briefly address the meeting.  
 
Agenda item 3  
Re-election of Shelley Cave as Director  
In accordance with the rotation provision of the constitution Shelley Cave  
retires from office and being eligible offers herself for re-election.  
Shelley will now briefly address the meeting.  
 
Agenda item 4  
New Constitution  
The Company's existing Constitution was adopted on listing on the NZX in 2006  
and incorporated the requirements of the then current Listing Rules. Since  
that time the Listing Rules themselves have been amended several times. A  
substantial change to the Listing Rules took effect from 1 July 2019, subject  
to a six month transitional period. The Company is transitioning to these  
new rules by the adoption of a new Constitution as required by the new  
Listing Rules. A copy of the new Constitution was available on the company  
website and Murray Annabell is holding a copy for inspection should any  
shareholder wish to see this today.  
The explanatory notes that accompanied your notice of meeting outlined the  
key matters of change and confirmed that the Company's solicitor's Heimsath  
Alexander, have provided a legal certificate on that the new Constitution  
complies with the requirements of the Listing Rules.  
 
Agenda item B: General Business  
I now look to the final item on the agenda: General Business. Are there any  
items of General Business? Is there any discussion?  
 
At the conclusion of the meeting the Board invites you all to mix and mingle  
with your fellow shareholders, board members and senior management where a  
tea service will be provided.  
With there being no further items of business, I will declare the meeting  
closed and thank you for the interest you have in the company.  
End CA:00345366 For:DGL Type:GENERAL Time:2019-12-03 13:35:41  

Click here to view related attachments.