Foley Family Wines 2018 AGM Presentation

Annual General Meeting 2 0 1 8

FOLEY WINES AGM 2018
Introduction
Formalities
CEO’s presentation
Shareholder questions
Resolutions
Conduct of voting
General business
Meeting close
Agenda
1

FOLEY WINES AGM 2018
Mark Turnbull – Director and CEO
Paul Brock – Director
Tony Anselmi– Director
Jane Trought– CFO
Introductions
2

Annual General Meeting 2 0 1 8 | CEO’s presentation

Case sales
471,000
+ 21%
Bottle sales
revenue
$38m +25.2%
Operating
cash flow
$7.2m
+104.8%
Mt. Difficulty
Conditional
offer accepted
Strategic
partnership
with Lion
announced
FOLEY WINES AGM 2018 | CEO’s Presentation
2018
highlights
3
Continuous momentum

•Operating earnings (before revaluations)
$2.8m vs $5m
•Profit after tax for group $1.8m vs $3.06m
•Bulk sales (9 litre equivalent cases)
102,000 vs 46,000
•Capex $2.12m (in line with previous years
without earthquake influence)
•Dividend of 3 cents per share
(fully imputed) maintained
•Bank debt reduced to $9m.
2018 Results
4
FOLEY WINES AGM 2018 | CEO’s Presentation

•Operating earnings (before revaluations)
$3.16m vs $2.96m +7%
•Profit after tax for group
$2.18m vs $1.43m +52%
Results adjusted
for one-offs
5
FOLEY WINES AGM 2018 | CEO’s Presentation

New Zealand
144,000 cases
+57%
A period of
significant growth
– driven by wine
quality and
accolades.
Australia
113,000 cases
+66 %
Great growth
– we are building
very strong
relationships.
USA/Canada
122,000 cases
-17%
Went backwards
but a strong start
this year.
UK/Europe
73,000 cases
+14%
Continuing to
gain traction
with significant
wins.
Rest of
world
19,000 cases
+5%
Market
overviews
6
FOLEY WINES AGM 2018 | CEO’s Presentation

Where have
we come from
FOLEY WINES AGM 2018

A strong track record of rejuvenating
and growing iconic New Zealand
wineries and brands
The journey
so far
2009
Vavasour and
Goldwater
acquired
2011
Te Kairanga
acquired
2012
Grove Mill
acquired
2014
Martinborough
Vineyard
acquired
2014
Lighthouse
Gin acquired
2018
Mt. Difficulty
TBC
7
FOLEY WINES AGM 2018 | CEO’s Presentation

Making great wine
that people love to drink
around the world.
Our purpose
8
FOLEY WINES AGM 2018 | CEO’s Presentation

Centralisedservices delivering cost
advantages, market access and a
competitive position internationally.
Enabling the wineries to focus on
creating amazing wine.
Our business
model
9
FOLEY WINES AGM 2018 | CEO’s Presentation

Finance, sales, marketing, bottling,
warehousing and logistics
HAND CRAFTEDH AN D C R AF T E D
BATCH DISTILLEDB A T C H D I S T I L L E D
10
FOLEY WINES AGM 2018 | CEO’s Presentation

Economies of scope
(plus economies of scale)
due to our focus on related
diversification.
This model
delivers
11
FOLEY WINES AGM 2018 | CEO’s Presentation

Our strategic
priorities
FOLEY WINES AGM 2018

Continuing to realiseour
premiumisationstrategy
Strategic
priority:
Building brands people love underpinned by excellent
wine quality.
We have the wine quality to sell more at higher price points.
Investing in developing premium brands.
Lifting prices in selected markets.
12
FOLEY WINES AGM 2018 | CEO’s Presentation

A ‘one stop shop’ portfolio of brands across price points
and regions delivering real value to our customers and
distributors.
Our powerful portfolio gives us the ability to choose to
work with partners who will deliver our vision.
Strategic
priority:
Leveraging the power of our
portfolio
13
FOLEY WINES AGM 2018 | CEO’s Presentation

Strategic
priority:
Nurturing strong, long term
relationships in key markets
A collaborative and agile partner delivering real value
for our customers and distributors.
14
FOLEY WINES AGM 2018 | CEO’s Presentation

Cementing our new Lion partnership
Strategic
priority:
Implementing a new sales support structure in New Zealand
giving us access to premium distribution across all channels.
15
FOLEY WINES AGM 2018 | CEO’s Presentation

Focus on process improvement
and delivering cost savings
Strategic
priority:
Scaling up: increasing volume and Mt. Difficulty acquisition.
16
FOLEY WINES AGM 2018 | CEO’s Presentation

These strategic
priorities will
enable us to:
•Sell more
•Sell more of our premium brands
•Realisemore value for our entry level brands
•Reduce costs
Increased returns for Shareholders.
17
FOLEY WINES AGM 2018 | CEO’s Presentation

•First quarter export shipments 93,000 cases
– up 35%
•October Exports 57,000 cases
– FFW record for monthly shipments
•USA shipments up 100% for first four months
•Price increases implemented in NZ, Australia
and the UK
•Three Trophies
•29 Gold Medals
•Wins with Etihad, British Airways and
Air New Zealand
A strong start
to 2019
- Q1 results
18
FOLEY WINES AGM 2018 | CEO’s Presentation

Mt. Difficulty
update
FOLEY WINES AGM 2018

Has been recommended for approval
by OIO and is with Ministers for
final approval.
Current
status:
Previously the Ministers raised issues – which we have
responded to.
FOLEY WINES AGM 2018 | Mt. Difficulty Update
19

Ministerial
Directive Letter
- 28 November
2017
•Jobs
•New technology
•Increased Export Receipts
•Increased processing of primary products
•Oversight and participation by New Zealanders
Critically, when assessing an application the OIO must
look at any benefits from the overseas investment which
are over and above those which would have occurred
anyway.
FOLEY WINES AGM 2018 | Mt. Difficulty Update
20
The Ministerial Directive on
Sensitive Land has five high
relative factors:

Create 10 new jobs – represents a 67% increase in their current
numbers.
Increase exports by 61% over the next 5 years.
Increase Grove Mill processing by 33%, equivalent of 83% of
Mt. Difficulty’s current capacity.
Continue to increase participation by New Zealanders; currently
we have approximately 900 New Zealand shareholders and
100% of New Zealand management is New Zealanders.
Increased Investment for Development Purposes: we will commit
$7.4m over the next three years.
Track record: FFW (and Bill Foley’s other New Zealand
Investment) – we have a strong track record of positive
investment in New Zealand.
High
relative
factors
We w i l l :
FOLEY WINES AGM 2018 | Mt. Difficulty Update
21
Other factors:

Shareholder
questions
FOLEY WINES AGM 2018

FOLEY WINES AGM 2018
1. Auditor’s remuneration
2.Re-election of Tony Anselmi
3.Election of Paul Brock
4.Directors’ fees
5. Adoption of new constitution
Resolutions
22

General
business
FOLEY WINES AGM 2018
THANK YOU