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 Rosé both
achieved good growth in the region, as did Barossa Valley Estate Grenache Shiraz

 
Mourvédre.
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 Rosé 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
Mourvédre are the leading Australian wines above €12 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.
I move that the Director’s be authorised to fix the auditor’s remuneration.

 
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.
I move that the Company’s new constitution is adopted.

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.
As I mentioned earlier, I invite all shareholders to post their voting papers in the ballot boxes
being held by Computershare staff as you leave the meeting. I can confirm to the meeting that
Directors and others held proxies and postal votes in favour of Resolution 1 - 4 for

86,777,024
shares, representing 85.81% of the share capital of the Company.

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.