Saturday, 18 August 2018

Announcement

GENERAL: DGL: DGL 2017 Annual Meeting - Address to Shareholders

05 Dec 2017 13:36NZX
Delegat Group Limited - 2017 Annual Meeting Addresses
Annual Meeting of Shareholders
2 pm, Tuesday, 5 December 2017

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 12th 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, Graeme Lord (Managing
Director), Rose Delegat, Robert Wilton, Dr. Alan Jackson (Chair of Audit &
Compliance Committee), Shelley Cave (Chair of Remuneration Committee), along
with John Freeman, Managing Director Designate. 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 and the
Group''s legal counsel, Heimsath Alexander to the meeting.

2. Proxies
I can advise the meeting that Directors and others are holding proxies and
postal votes in favour of Resolution 2 and 3 for 87,526,872 shares,
representing 86.55% of the share capital of the Company.

3. Apologies
To open, are there any apologies anyone would like to advise the meeting of?
Thank you - those apologies will be recorded in the minutes.

4. Notice of Meeting
The notice of meeting has been sent to all shareholders together with the
Annual Report, and I propose that, together with the agenda they be taken as
read.

5. Minutes of  Previous  Meeting
The minutes of the 11th Annual Meeting held on 6 December 2016 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
6. Procedure
Firstly, I will address the Annual Report incorporating the Directors Report,
Financial Statements and unqualified Audit Report covering the year to 30
June 2017.  I will then provide a brief overview of our key investment
projects before handing the meeting to the Managing Director who will cover
2017 performance in more detail and the Group''s future growth plans.
Following Mr Lord''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 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 2,656,000 in the 2017 year, up 10% on the prior year.  A
highlight of this strong growth was 12% sales growth in North America which
is our largest and fastest growing market.

A record Operating Net Profit After Tax of $38.5 million was generated, up 6%
on the prior year, continuing the Group''s strong track record of profitable
growth.

The Group generated record cash flows from operations of $59.2 million, up
28% on the prior year.

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 13 cents per share which represents an increase of 8% 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.  As noted earlier the Group
generated record cash flows from operations of $59.2 million in the current
year which more than funded the $40.5 million invested in growth assets,
including development of wineries, land acquisition and vineyard development
in New Zealand and the Barossa Valley.

Delegat will invest an additional $46.2 million in 2018 to provide earnings
growth in the years ahead. This capital investment supports the Group''s plan
to grow sales by more than 1,000,000 cases to 3,685,000 cases by 2022, and
will provide for further growth beyond that period.

Slide 7 -Vineyard Development
The Group planted 75 hectares of new vineyard in FY2017 and is developing
another 230 hectares in the current year.  The Group has a further 588
hectares of viticultural land which will be planted progressively from FY19
onwards.  The Group now has 4,198 net hectares of vineyards and viticultural
land, 3,628 hectares in New Zealand and 570 hectares in Australia.   Of this
area 72% is owned or managed by the Company and 28% is from our grower
partners.

Pictured on screen is the Group''s new vineyard development in the Crownthorpe
region of Hawke''s Bay, which is a world class viticulture region based on its
ideal soil types and climate.  This vineyard development adjoins an existing
Delegat vineyard and will enable the Group to meet strong growth in global
demand for its Super Premium wines, including Oyster Bay Pinot Gris.  The
Group has planted 125 hectares of vineyard at Crownthorpe in November 2017.

Slide 8 - Crownthorpe Reservoir
This is a photograph of the reservoir under construction at the new
Crownthorpe vineyard.  When completed the reservoir will store up to 300
million litres of irrigation water and service a vineyard area of up to 450
hectares.

Slide 9 - Funding Growth
The Group has a strong balance sheet with shareholders'' equity of $307.1
million, net bank debt of $278.0 million and undrawn syndicated bank debt
facilities of $72.0 million. The Group''s retained earnings and long term
syndicated bank debt facilities provide appropriate funding for our capital
investment programme and growth plan.

Slide 10 - Executive Chairman Concluding Remarks
The record results achieved in the year under review are testament to the
strength of the Group''s business model.  I personally am as excited about
your company''s performance, strategy and growth plans as I have ever been.

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.

As previously announced Graeme Lord will step down as Managing Director in
July 2018 and John Freeman has been appointed as the incoming Managing
Director.

On behalf of your Board I would also like to acknowledge the significant
contribution that Graeme has made to the Group.  Graeme first joined the
company in 1999 and has undertaken a succession of leadership roles
culminating in his appointment as Managing Director in April 2014. Graeme''s
leadership and strategic planning has been instrumental in Delegat Group''s
global success and eighteen-fold growth over the last eighteen years.

Your Board is delighted that John Freeman will lead the business as Managing
Director from July.  John has been serving as Managing Director Designate
since the beginning of November and is here with us today. John is an
exceptional business builder who has excelled in his career to date,
including sales leadership and general management roles with Delegat Group
for 10 years from 2005 through to 2015. John brings the ideal experience and
capability to lead the growth of Delegat Group on the next stage of our
journey to build a leading global Super Premium wine company.

Graeme Lord, the Group''s Managing Director, will now provide a more fulsome
report on the 2017 year and our plans for the future.

Managing Director''s Address

Slide 11 - Managing Director''s address
Good afternoon Ladies and Gentlemen, it is a pleasure to meet with you today
to discuss the performance and growth plans of your company.

Thank you Jim, for your kind remarks. It has been a great privilege to be
part of Delegat Group''s growth and success. I have been fortunate to work
with a talented team who have together achieved exceptional growth and are
well on the way to building a leading global Super Premium wine company. I
would like to take this opportunity to offer special thanks to Jim and Rose
Delegat for their outstanding vision and unyielding support over my time with
Delegat Group. I look forward to working with the Board and the global team
for the balance of the 2018 Financial Year.

2017 was another year of record performance and continuing to build the
foundations for long term-growth.  As noted by the Executive Chairman, in
2017 the Group achieved Operating Net Profit After Tax of $38.5 million,
record global case sales and record net cash flows from operations.

Slide 12 - Global Sales Performance
The Group has continued to invest in the development of its own in-market
distribution channels to drive long term growth. The Group''s Sales and
Marketing division has in-market sales teams in New Zealand, Australia, the
United Kingdom, Ireland, the United States, Canada, Singapore and China.

Our record global case sales continue to be well diversified by market with
43% in North America, 30% in the Australia, New Zealand and Asia Pacific
region, and 28% in Europe including the United Kingdom.

Case sales in the Australia, New Zealand and Asia Pacific grew by 11% to
785,000 cases. In the established New Zealand and Australia markets Oyster
Bay continued to perform strongly as a category leading Super Premium wine
brand.

In New Zealand, Oyster Bay was voted most trusted wine brand by consumers in
the Reader''s Digest 2017 awards.

In Australia, Oyster Bay Sauvignon Blanc continues to lead the category as
the top selling Sauvignon Blanc and bottled white wine by value. The ongoing
growth of Oyster Bay Sparkling Cuvee in both markets was a notable highlight
of the year.  Significant distribution and sales growth was achieved with the
Barossa Valley Estate brand in the Australia market.

In the second half Delegat opened a flagship store selling Oyster Bay and
Barossa Valley Estate on the Tmall online market place in China.  The store
enables aspirational consumers throughout China to purchase the Group''s
brands directly from Delegat. Whilst it will take time to build awareness and
develop a significant customer base, this is a promising venture in a growth
market for imported Super Premium wine.

The Group again delivered strong growth In North America, increasing sales
volumes by 12% to a record 1,135,000 cases.
In the United States, the Oyster Bay brand continued its strong growth as
consumers are increasingly embracing elegant, cool climate wine styles.  The
Group''s success is underpinned by its well-established in-market sales team
working effectively with leading distributors, retailers and on premise
venues. Oyster Bay Sauvignon Blanc is a top 5 white wine over US$10 by value.
Significant distribution and sales growth was achieved with the Barossa
Valley Estate brand, with the Group continuing its efforts to expand
distribution channels for this range.

Towards the end of the year, the Group expanded its distribution arrangements
with Southern Glazer''s Wines and Spirits, North America''s largest wine and
spirits distributor.  Delegat has worked very successfully with Southern
Glazer''s over the past decade. Southern Glazer''s is now the Group''s exclusive
distributor partner in 32 markets which collectively account for
approximately 70% of wine consumption in the United States.   Extending our
relationship with Southern Glazer''s will provide a powerful distribution
platform to realise the significant growth potential of Oyster Bay and
Barossa Valley Estate in the United States.

In Canada, a strong base of distribution has been established in each of the
major provinces and significant sales growth was achieved.  Oyster Bay has
grown to become one of the most powerful Super Premium wine brands in the
market, with success being achieved across the range including number one
Chardonnay in Canada above C$12.

Another year of growth was delivered in the United Kingdom, Ireland & Europe
region, with sales volumes increasing 6% to 736,000 cases.

In the United Kingdom a price increase was implemented during the year in
response to significant and ongoing weakness in the pound sterling. Oyster
Bay has maintained its Super Premium category leadership position.  Oyster
Bay Sauvignon Blanc, Chardonnay and Merlot are the top selling wines above ?8
in their respective categories. Oyster Bay Pinot Noir is the top selling
Pinot Noir above ?9. Barossa Valley Estate has established quality
distribution with leading National Account customers and this distribution
platform provides significant consumer reach and opportunity to grow the
brand over the long-term.

In Ireland, Oyster Bay has maintained its Super Premium category leadership
position.  Oyster Bay Sauvignon Blanc, Chardonnay, Merlot and Pinot Noir are
the top selling New Zealand wines in their respective varietal categories
above EUR10. Barossa Valley Estate Shiraz and Grenache Shiraz Mourvedre are
the top selling Australian wines in their respective varietal categories
above EUR12.

Slide 13 - Major Awards and Accolades
The Group was awarded a record number of gold medals and received outstanding
acclaim in major international wine competitions, showcasing the world-class
quality of its wines and significance within the Super Premium wine category.
Some of the notable highlights were as follows;
o Oyster Bay was awarded ''Hot Brand'' for the seventh consecutive year by New
York''s Impact Magazine, and named ''One of the World''s Most Admired Wine
Brands'' for the fifth consecutive year by Drinks International Magazine UK.
o Oyster Bay Marlborough Sauvignon Blanc 2015 was awarded a double gold medal
at the San Francisco International wine competition, USA.
o Delegat Crownthorpe Terraces Chardonnay was awarded a gold medal at the New
World Wine Awards, New Zealand, The New Zealand International Wine Show, and
Decanter New World Wine Awards, United Kingdom.
o Delegat Awatere Valley Sauvignon Blanc 2015 was awarded a Gold Medal at the
San Francisco International Wine competition, USA.
o Barossa Valley Estate Cabernet Sauvignon 2015 was awarded a Gold Medal at
the Sydney International Wine Competition, Australia.
o Oyster Bay Chardonnay 2016 was awarded a gold medal and 90 Points at the
San Francisco International wine competition, USA.
o Oyster Bay Marlborough Pinot Noir 2015 was awarded a Double Gold Medal at
the San Francisco International wine competition, USA.

Slide 14 - 2017 Vintage
The Group achieved a record harvest of 37,355 tonnes from the 2017 vintage.
The New Zealand harvest was 34,595 tonnes, up 4% on the 2016 vintage. The
Australia harvest for Barossa Valley Estate was 2,760 tonnes, which is up 6%
on the prior year. The New Zealand harvest is of very good quality albeit
that the onset of harvest was delayed due to late season rains. The Barossa
Valley harvest is one of the best of recent times.  Delegat''s investment in
world-class vineyard and winery assets was evident in the quality outcomes
achieved in the 2017 vintage. The Group has appropriate inventories to
achieve our future sales growth plans.

Slide 15 - Sales Growth FY2017 to FY2022
The Group''s strategic goal is to build a leading global Super Premium wine
company.  The Group will 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 1 million
cases to 3,685,000 cases over the next five years.  The primary drivers of
planned growth are Oyster Bay sales in North America and Barossa Valley
Estate sales globally.

In the Australia, New Zealand and Asia Pacific region, sales volume is
projected to grow by 16% to 913,000 cases by 2022.  Growth in the region will
be driven by expanding distribution of products in the Oyster Bay range,
increasing sales of Barossa Valley Estate and market development in Asia.

Sales volume in the United Kingdom, Ireland and Europe region is planned to
decrease slightly to 725,000 cases over the next 5 years.  The Group expects
a sales decline of 8% in 2018 due to the price increase implemented in the
second half of 2017 and ongoing weakness in the United Kingdom economy as the
Brexit process unfolds.  Delegat remains focused on maintaining and enhancing
its Super Premium category leadership in this important region.
North America is the largest Super Premium wine market in the world and will
continue to be the key growth region for the Group over the next five years.
Delegat plans to increase sales volume in the region by 80% to 2,047,000
cases by 2022. The growth in the region will be driven by rising wine
consumption per capita, consumers trading up to Super Premium wines, the
increasing popularity of Marlborough Sauvignon Blanc and the strength of the
Group''s brands.
Slide 16 - Forecast 2018
With respect to the 2018 year, the Group is on track to achieve its full year
goal to grow case sales by 5% to 2,782,000 cases.  When the full year result
was announced in August the Group provided guidance that forecast 2018
operating profit would be at least in line with last year at $38.5 million.
With strong trading performance to date and the recent weakening of the New
Zealand dollar relative to key trading currencies, the Group is today
updating guidance for forecast 2018 operating profit to $40.7 million in line
with market consensus.

Slide 17 - Managing Director Concluding Remarks
The Group is well positioned to grow sales and achieve sustainable earnings
growth in the years ahead.  It is our people that bring our plans to life and
make a difference. I wish to personally thank each of our Great Wine People
for their efforts to aim high, pursue mastery and win together.  Our teams
have achieved another year of record performance in 2017 and have positioned
Delegat to deliver enduring success.  Thank you for your ongoing support.

Shareholder''s Questions and Discussion
Are there any questions in respect of the Annual Report, my Executive
Chairman''s presentation or the Managing Director''s presentation?

Thank you - I will record that the 2017 Annual Report has been received and
considered.
Now we will proceed to the Ordinary Business on the Agenda.

At this time it is appropriate to hand the meeting to Dr Alan Jackson to
carry out this part of the process. Thank you, Alan.

Election of Directors
The Resolutions numbered Agenda Items 2 & 3 are both ordinary resolutions.

Agenda item 2
Re-election of Jim Delegat as Director

In accordance with the rotation provision of the constitution Jim Delegat
retires from office and being eligible offers himself for re-election.

Jim will now briefly address the meeting.

Thank you, I will now hand the meeting back to Mr Delegat.

Agenda item 3
Re-election of Robert Wilton as Director

In accordance with the rotation provision of the constitution Robert Wilton
retires from office and being eligible offers himself for re-election.

Bob will now briefly address the meeting.

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?  Thank you.

At the conclusion of the meeting the Board invites you all to stay for
canapes and to taste a selection of your company''s fine products.  It is also
a time to mix and mingle with your fellow shareholders, board members and
senior management.

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:00311432 For:DGL    Type:GENERAL    Time:2017-12-05 13:36:35
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