DGL 2017 Annual Meeting – Address to Shareholders

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 Cuvée 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 €10. Barossa Valley Estate
Shiraz and Grenache Shiraz Mourvèdre are the top selling Australian wines in their
respective varietal categories above €12.

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;
• 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.
• Oyster Bay Marlborough Sauvignon Blanc 2015 was awarded a double gold medal
at the San Francisco International wine competition, USA.
• 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.
• Delegat Awatere Valley Sauvignon Blanc 2015 was awarded a Gold Medal at the
San Francisco International Wine competition, USA.
• Barossa Valley Estate Cabernet Sauvignon 2015 was awarded a Gold Medal at the
Sydney International Wine Competition, Australia.
• Oyster Bay Chardonnay 2016 was awarded a gold medal and 90 Points at the San
Francisco International wine competition, USA.
• 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.


I move Jim Delegat be re-elected as a director.
Is there a seconder? Thank you.
Is there any discussion? Thank you.
If there are no further questions, I put the motion that Jim Delegat be re-elected as a director.
Would those in favour, please raise a hand?
Would those against, please raise a hand?
I declare the motion carried.


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.



I move Robert Wilton be re-elected as a director.
Is there a seconder? Thank you.
Is there any discussion? Thank you.
If there are no further questions, I put the motion that Robert Wilton be re-elected as a director.
Would those in favour, please raise a hand?
Would those against, please raise a hand?
I declare the motion carried.

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 canapés 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.