Australian Vintage Ltd - Appendix 4E

Preliminary final report for the year ended 30 June 2021 as required by listing rule 4.3A

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Revenue and net profit

Movement %

Amount

(All comparisons to year ended 30 June 2020)

$'000

Total operating revenue

Up

2.6%

273,960

Net profit

Up

79.0%

19,603

Dividend information

Date dividend paid /

Amount per security

Amount franked at 30%

payable

¢

tax rate

Final dividend - year ended 30 June 2021 (determined

17

December 2021

2.7

60%

subsequent to balance date) (1)

Final dividend - year ended 30 June 2020

6

November 2020

2.7

63%

  1. The record date for determining an entitlement to receipt of the final dividend is 26 November 2021. The Australian Vintage Ltd Dividend Re- investment Plan is not in operation for the 30 June 2021 final dividend (2020: not in operation).

2021

2020

$

$

Net tangible assets per security (1)

0.87

0.81

  1. The net tangible assets for the year ended 30 June 2021 include right-of-use assets as defined by AASB 16 Leases.

Additional Appendix 4E disclosure requirements can be found in the Financial Report which contains the Director's Report and the 30 June 2021 Financial Statements and accompanying notes.

This Appendix 4E is based on the 30 June 2021 Financial Statements which have been audited by Ernst & Young.

Appendix 4E for the year ended 30 June 2021

Australian Vintage Ltd

- 1 -

FINANCIAL REPORT FOR THE YEAR ENDED

30 JUNE 2021

(ACN: 052 179 932 ASX REFERENCE: AVG)

Financial report for the year ended 30 June 2021

Australian Vintage Ltd

- 2 -

Directors' report

For the financial year ended 30 June 2021

The Directors of Australian Vintage Ltd submit herewith the annual financial report for the financial year ended 30 June 2021. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows:

Directors

The names and particulars of the Directors of the Company during or since the end of the financial year are:

Current directors

Richard H Davis B. Ec, Age 65

(Chairman - appointed 1st June 2015, Non-Executive) Director since 5 May 2009.

Mr Davis is Chairman of Monash IVF Group Limited and a non-executive director (and previously CEO) of InvoCare Limited where he spent almost 20 years growing and managing the business. Mr Davis holds a Bachelor of Economics and has a background in venture capital and as an accounting partner for a leading national accounting firm.

Mr Davis has been a non-executive director of the Company since 2009 and currently holds the position of Chairman of Australian Vintage Limited.

Craig Garvin, Age 54

(Chief Executive Officer) Director since 21 November 2019

Mr Garvin was appointed as Chief Executive Officer and Executive Director in November 2019. He has extensive FMCG experience, having spent nine years as the Australian CEO of global dairy business Parmalat, overseeing some of the country's most-recognised brands, including Pauls, Oak and Vaalia. Prior to his time at Parmalat, Mr Garvin worked in the gaming industry, spending three years as the Managing Director of Star City Casino. His consumer goods and retail experience also includes executive positions at Campbell Arnott's, where he was the General Manager and six years in senior leadership roles at Lion Nathan.

John D Davies FCA, Dip. Bus S, Age 68 (Non-Executive) Director since 28 January 2015

Offering the board both industry and financial experience, Mr Davies is a Fellow of the Institute of Chartered Accountants and has had a 36 year career with Ernst & Young. Mr Davies was elected to Ernst & Young's Asia Pacific Board of Partners for a six year period until his retirement from the firm in 2011. During his career, Mr Davies provided professional services to many of Australia's leading wine companies, and he also owns a 150 acre vineyard in Heathcote, Victoria.

Mr Davies is Chairman of the Audit Committee and member of the Risk and Sustainability Committee.

Naseema Sparks AM, Age 68 (Non-Executive) Director since 28 January 2015

Offering the board expertise in fast growth consumer-facing businesses, Ms Sparks has strong experience at both operational and board level in marketing, branding and customer targeting, with her most recent executive career as Managing Director and Global Partner of M&C Saatchi in Australia. Ms Sparks has been a professional non-executive director since 2007, serving on boards of a diverse range of companies including ASX listed and private companies, Government statutory authorities, not-for-profit arts, health and education boards. Ms Sparks is Chair of Open Markets Group Ltd, and a director of Knight Frank Australia and Murray River Organics (ASX:MRG). She is also Chair of Sydney Living Museums. Ms Sparks' qualifications include an MBA from The University of Melbourne and she is a Fellow of the Australian Institute of Company Directors.

Ms Sparks is Chair of the People, Remuneration & Culture Committee and member of the Audit Committee.

Peter J Perrin, Age 64

(Non-Executive) Director since 28 March 2017

Mr Perrin brings a wealth of high level wine industry experience as a past Manager and Director of a number of large listed, private and boutique wine companies in Australia, the United States and New Zealand over a 40 year wine career that focused on sales and marketing both in Australia and overseas. Mr Perrin is a trustee and honorary life member of the Wolf Blass Foundation.

Mr Perrin is Chairman of the Risk & Sustainability Committee and member of the People, Remuneration & Culture Committee.

Jiang Yuan (Dixon), Age 44

(Non-Independent,Non-Executive) Director since 7 June 2017

Mr Yuan is the founder of www.yesmywine.com, the largest imported wine platform in the world, based in China. Well known for pioneering data analytics and an innovator in imported wines in China, Mr Yuan brings to the board considerable experience in distribution and selling of wine into that region.

Financial report for the year ended 30 June 2021

Australian Vintage Ltd

- 3 -

Directors' report

For the financial year ended 30 June 2021

Directorships of other listed companies

Directorships of other listed companies held by Directors in the 3 years immediately before the end of the financial year are as follows:

Name

Company

Period of Directorship

Richard H Davis

InvoCare Limited

Since 2012

Monash IVF Group Limited

Since 2014

Naseema Sparks

Murray River Organics Ltd

Since 2019

Arq Group (previously known as Melbourne IT Limited)

2012 to 2020

IncentiaPay

2017 to 2019

Company Secretary

Alicia Morris (Kinlay) (appointed 1 July 2020)

Alicia joined the Company in 2010 and is currently General Counsel. She holds a Bachelor of Laws and Legal Practice (Hons), Bachelor of Behavioural Science (Psychology), a Graduate Diploma of Applied Corporate Governance and is a fellow member of the Governance Institute of Australia.

Michael H Noack (appointed 23 November 2005, resigned as Company Secretary 1 July 2020)

B Accountancy (University of South Australia), Fellow of ASCPA, Graduate Diploma in Systems Analysis (University of South Australia) and Fellow of the Chartered Secretaries Australia. Michael has been with Australian Vintage Ltd since the merger in 2002 and was previously Chief Financial Officer and Company Secretary of Simeon Wines Limited. Michael has been the Chief Financial Officer since 2002. Michael resigned from the Company Secretary on 1 July 2020 and continues on as Chief Financial Officer.

Principal activities

The consolidated entity's principal activities in the course of the financial year were wine making, wine marketing and vineyard management.

Changes in state of affairs

During the financial year there was no significant change in the state of affairs of the consolidated entity other than that referred to in the financial statements or notes thereto.

Environmental regulations

The consolidated entity holds licences issued by the Environmental Protection Authorities in various states which specify limits associated with the discharge of winery waste. There have been no known breaches of the licence conditions.

Dividends

In respect of the financial year ended 30 June 2021, a 60% franked dividend of 2.7 cents per share has been declared and will be paid on 17 December 2021. In respect of the financial year ended 30 June 2020, a 63% franked dividend of 2.7 cents per share was paid on the 6 November 2020.

Review of operations and future developments

Key financial highlights:

  • Net Profit after tax (NPAT) up 79% to $19.6 million
  • EBIT (Earnings before tax and interest) up 59% to $30.4 million
  • EBITS (earnings before tax, interest and SGARA) up 48% to $31.2 million
  • Total Revenue up $6.8 million to $274.0 million
  • Cash flow from operating activities up $22.8 million to $45.0 million and net debt reduced by $24.5 million to $42.8 million
  • Sales of our 4 key brands, McGuigan, Tempus Two, Nepenthe and Barossa Valley Wine Company (BVWC) up 12%
  • Earnings per share up 79% to 7.0 cents per share
  • ROCE (Return on Capital Employed) improved by 70% to 7.5%
  • Total Shareholder Return ('TSR') of 83% over FY21
  • Final dividend of 2.7 cents per share, franked to 60%

A very strong performance in Australian Vintage Limited's (ASX: AVG) core UK and Australian businesses together with improved production efficiencies enabled AVG to record a 79% Net Profit after tax improvement for the 12 months to June 2021. The result is the highest AVG has achieved over the last 10 years.

The record result was very pleasing with continued growth in our portfolio of key brands. During the 12 month period our pillar brands of McGuigan, Tempus Two, Nepenthe and BVWC grew by 12% to $195.1 million. This growth, together with the efficiencies generated from our recent capital spend, investment in our people and the favourable 2020 and 2021 vintages have underpinned the 79% growth in NPAT.

Financial report for the year ended 30 June 2021

Australian Vintage Ltd

- 4 -

Directors' report

For the financial year ended 30 June 2021

Review of operations and future developments (continued)

AVG is committed to our strategic plan, and it is showing positive signs for our future. During the year we have increased the investment in our brands with marketing spend up 46% with most of the increased marketing spend occurring in the second half of FY21. What is also pleasing is that because of increased investment in our staff and our continued focus on our customers, the Company was recently awarded the number 1 wine supplier to the Australian retail industry by the Advantage Survey. This Survey is a comprehensive balance scorecard rating of all suppliers across the marketplace as rated by the customer. On top of that award, we also received the Supply Chain Manager of The Year Award at the Drinks Association Australian Drink Awards. These awards are a significant achievement for AVG's market reputation and credibility.

Covid-19 has had a mixed impact on our business with some increased sales through the major retail chains but has added costs to our production facilities through segregation of shifts and some challenges with supply chain operations. Whilst it is difficult to calculate the impact of Covid-19 on the business, our key strategies should continue growth post Covid-19. Increased distribution, innovation and consumer engagement is key to this growth, and we have seen this in our Australian and UK business where we are working hard with our customer partners to drive our portfolio. The McGuigan Zero range has been an outstanding success and demonstrated the importance of innovation to the portfolio long term. This, together with the benefits from production efficiencies is sustainable for the long-term future and not Covid-19 dependent.

In the UK, our business performance has been very strong, driven by our investment in the McGuigan brand and continued distribution gains in major retail. The growth of sales has been impacted by the change in UK tax on wine product which resulted in a decline in our Shy Pig sales of $12.6 million when compared to prior period. Excluding the decline in Shy Pig sales, the UK segment improved sales by 20% with our four pillar brands growing by 20%.

Profit Result

12 months to ($000)

Change

June 2021

June 2020

$000

%

Australia and New Zealand

9,039

6,118

2,921

48%

UK, Europe and Americas

17,248

11,161

6,087

55%

Asia

31

70

(39)

(56)%

Australasia/North America bulk and processing

4,403

2,431

1,972

81%

Vineyard Management

(72)

(28)

(44)

(157)%

Other income (dividend and fair value change in investment)

525

1,241

(716)

(58)%

EBITS

31,174

20,993

10,181

48%

SGARA

(737)

(1,794)

1,057

59%

EBIT

30,347

19,199

11,238

59%

Finance costs

(2,098)

(3,085)

987

32%

Finance costs (resulting from leases under AASB 16)

(553)

(623)

70

11%

Interest received

33

26

7

27%

Net Profit before tax

27,819

15,517

12,302

79%

Tax

(8,216)

(4,564)

(3,652)

(80)%

Net Profit (after tax)

19,603

10,953

8,650

79%

Trading Summary

UK, Europe and Americas

The UK, Europe and Americas segment has performed exceptionally well with contribution up 55% to $17.2 million. This is despite a $0.4 million negative impact due to the unfavourable GBP when compared to the prior period. The McGuigan brand continues to grow with sales up 17% compared to the prior period. The McGuigan Zero brand has seen significant success with sales growing $5.0 million over the prior period. This brand now represents 5% of all McGuigan brand sales into this segment. As a result of increased investment and distribution in the Tempus Two brand, sales of this brand has increased by 82% from a relatively low base.

The growth in the UK market is not finished with the Company increasing its footprint and brand investment in the UK. Americas remains a challenge with this division reporting a slight loss for the period but an improvement on last year. With changes to the leadership structure of the Americas division and a change in strategy we expect Americas to improve in the next 12 months.

Australia and New Zealand

The Australian and New Zealand segment has also performed very well with contribution up 48% to $9.0 million. The McGuigan brand has grown by 3% due mainly to the performance of the McGuigan Zero range which is outperforming expectation and grew sales by $5.0 million. Tempus Two continues to grow with sales up 15%, Nepenthe grew by 8% and BVWC grew by 19%.

Financial report for the year ended 30 June 2021

Australian Vintage Ltd

- 5 -

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Australian Vintage Limited published this content on 25 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 August 2021 03:33:03 UTC.