Delegat's 2007 Annual Results Announcement

Delegat's Group Limited 2007 Annual Results Announcement

Summary Of Preliminary Full Year Announcement

Name of Listed Issuer: Delegat's Group Limited
Results for announcement to the market
Reporting Period: 12 months to 30 June 2007

Previous Reporting Period: 12 months to 30 June 2006 The financial statements attached to this report have been audited by Ernst & Young and are not subject to a qualification. A copy of the audit report applicable to the full financial statements is attached to this announcement.

CONSOLIDATED OPERATING STATEMENT
Current Full Year NZ$'000; Up/Down %; Previous Corresponding Full Year NZ$'000

OPERATING REVENUE:
Trading revenue: $133,105; up 56%; $85,384

OPERATING SURPLUS BEFORE TAX:
$23,394; up 190%; $8,062 Less tax on operating profit: $7,374; up 160%; $2,841

NET SURPLUS AFTER TAX ATTRIBUTABLE TO SHAREHOLDERS OF LISTED ISSUER:
$16,020; up 207%; $5,221

Net surplus attributable to minority interest
$1,119; up 6116%; $18

NET SURPLUS AFTER TAX FOR THE YEAR
$14,901; up 186%; $5,203

Earnings per share**:
Basic
14.90 cps; up 112%; 7.02 cps
Diluted***
12.85 cps; up 129%; 5.60 cps

Net tangible assets per share**:
$1.27; up 12%; $1.13

Final Dividend 4.5 cps; Record Date: 26 October 2007 Date Payable: 12 October 2007 Appendix 7 is attached.

** Earnings and Net tangible assets per share is calculated using the weighted average number of Ordinary shares issued and fully paid during the period.

*** Diluted earnings per share is calculated using the weighted average number of Ordinary shares issued and fully paid during the period, adjusted for the number of ordinary shares that would be issued if the company had converted the capital notes to equity.

Detailed information: The Preliminary Full Year Announcement is attached

Chairman's Report

On behalf of the Board, I am delighted to present to you the financial results of Delegat's Group Limited ('Delegat's') for the year ended 30 June 2007. This is our second report as a publicly listed entity and it is a pleasure to confirm that the Group has continued to over-deliver on the projections contained in the March 2006 Investment Statement and Prospectus.

The Group has positioned itself to achieve significant growth. This year the results really do speak for themselves.

Results

Group operating revenue of $133.1 million is 56% higher than the previous year and $10.6 million or 9% higher than the projection.

Earnings before interest and taxes, depreciation and amortisation (EBITDA) at $43.0 million is 106% ahead of last year and 3% higher than projection.

Net Surplus for the year of $14.9 million is 186% ahead of the 2006 year of $5.2 million and 8% higher than the projection of $13.8 million.

The Group's strategy as a market led, global wine business, underpinned by its investment in brands, distribution, grape supply and winemaking, has resulted in this outstanding performance.

Governance

The Board, while small in number, meets regularly as does the dedicated audit and compliance committee. It is thoroughly aware of the increasing need for transparency and the requirements of good governance. As a global company the need to be responsive to each of the regulatory environments in which the Group operates becomes paramount and appropriate use is made of professional advisors to ensure compliance. The Group continues a rigorous currency management plan as part of a global centralized treasury.

Dividend

I am pleased to advise that given the profit level achieved, a fully imputed dividend payout of 4.5 cents per share (representing 30.3% of the after tax profit) will be paid for the year ended 30 June 2007. The dividend will be paid on 26 October 2007 to shareholders on record at 12 October 2007.

Delegat's 'Great Wine People'

I wish to take this opportunity to acknowledge the contribution of Delegat's staff. Their commitment and dedication is unconditional and the Board places on record its appreciation to each of them whether they are in New Zealand, Australia, United Kingdom, Canada or the United States of America.

The Future

The Board's priority is to grow Shareholder value. We will continue to seek all opportunities that are wealth accretive and to ensure Delegat's growth continues to outperform the industry as a whole.
I look forward to reporting on our progress at the Annual Meeting on Monday 10 December 2007.

Robert Wilton
Chairman

Performance Highlights 2007

Delegat's Group Limited:

* Outperformed the financial targets as outlined in the March 2006 Investment Statement and Prospectus.

* Achieved record global sales of 1,237,000 cases

* Achieved record operating revenue of $133.1 million

* Achieved a record net surplus of $14.9 million

* Achieved export sales growth of 58% against a New Zealand wine industry average of 28%

* Increased its share of total New Zealand wine exports to 12.7%

* Achieved a New Zealand wine industry first, with Oyster Bay Sauvignon Blanc becoming the biggest selling bottled still wine by value in Australia

* Officially opened its state-of-the-art Marlborough winery

* Celebrated 60 years of winemaking in New Zealand

Managing Director's Report

The valuable niche the Group has established for its Oyster Bay brand in the global Super-Premium wine market, supported by the continued expansion of its global distribution network, has enabled the Group to outperform its industry counterparts and spearhead the growth of New Zealand wine globally.

It has been another year of extraordinary growth and milestone achievements for the company.
In our first full year of trading as a public company, Delegat's has outperformed its financial and growth targets as set out in the Investment Statement and Prospectus dated March 2006.

Total revenue generated was 56% ahead of the previous year and case sales were 53% higher, for the same period. A net surplus of $14.9 million is 186% ahead of the 2006 year.

The Group's focus is to establish itself as a global marketer of New Zealand Super-Premium wines. Its continued investment in its brands, distribution channels and in-market sales offices, is delivering high quality distribution, market knowledge and focus, all of which has resulted in New Zealand wine category leadership and superior quality of earnings.

This is illustrated by Oyster Bay's exceptional global market performance. Oyster Bay Sauvignon Blanc achieved a New Zealand wine industry first by becoming the number one selling bottled still wine by value in Australia. In the competitive United Kingdom market, Oyster Bay is now a number two New Zealand wine brand, and ranked number 17 (up from number 28 in 2006) of all world wine brands sold in multiple grocers/specialist retail channels. In the United States, Oyster Bay has delivered 125% sales growth in the year, making it the fastest growing major New Zealand wine brand.

New Zealand Wine Industry Review

The New Zealand wine industry has cemented its position on the world stage with Sauvignon Blanc and is increasingly proving itself as an exciting, diverse and world-class producer of chardonnay, merlot and pinot noir.

In 2007 the New Zealand wine industry reached record export sales of $700 million, an increase of 36% over the previous year. Total litres exported increased 28% to 76 million litres (8.4 million 9 litre cases).

New Zealand Winegrowers forecasts sales of New Zealand wine to reach $1 billion by 2010.

New Zealand's overall value growth ahead of volume growth is reflected in the average price per litre of New Zealand wine exported, which increased from $8.87 in 2006 to $9.19 for the year ending June 2007. Finite supply has enabled New Zealand's Super Premium pricing and niche position in global markets to be sustained.

Global demand for New Zealand wine continues to outpace supply. The industry experienced a record harvest of 205,000 tonnes, up 11% on the year prior. While the overall quality of the 2007 harvest is considered to be excellent, frosts in Marlborough and a cool December reduced yields in the major wine growing regions, presenting a strong likelihood the industry will experience supply constraints in the coming year.

Global Sales Performance

The Group exceeded its global case sales projections, achieving 1,237,000 cases which was 53% higher than the year prior.

Total revenue generated was $133.1 million, 56% ahead of the previous year and 9% higher than projected in the March 2006 Investment Statement and Prospectus. Importantly, this shows value growth even greater than volume growth.

The Group's share of total New Zealand wine export sales increased to 12.7%, up from 10.3%.

Export case sales represent 87% of the Group's total case sales. The Group continued to lead New Zealand wine category growth and achieve export volume growth of 58% for the year versus industry export volume growth of 28%. The Group achieved strong growth across all its major export markets: 46% volume growth in the UK, 125% in the USA, 39% in Canada and 52% in Australia.

Again the Group showed strong growth across all its exported varietals. The Group grew its export share of New Zealand sauvignon blanc, chardonnay, merlot and pinot noir, demonstrating its competitive strength of driving New Zealand wine category growth across a varietal mix.

The Group achieved 12.5% share of total New Zealand sauvignon blanc exports, 28.1% share of chardonnay, 33.0% share of merlot and 6.2% share of pinot noir.

Price Realisation

The Group achieved an average global price realisation of $107 per case, achieving its projection for the year. This represents a premium of 29% against industry export earnings of $83 per case. This is a consequence of our outstanding quality value offering, brand strength and vertical integration, sustaining our Super-Premium positioning.

Global Strategy

The Group continues to demonstrate its ability to drive New Zealand wine category growth through its powerful global distribution network. As a market-driven wine business, the Group has continued to invest in the development of its global sales division and has 'laid the tracks' for substantial future growth. This year the Group established Oyster Bay Wines (Canada) Limited to support future growth in this valuable market. The Group has previously established in-market offices and supporting sales teams in Australia, the UK and USA, and this year augmented them with additional key personnel.

Of significance is the appointment of a London based, Northern Hemisphere Managing Director. This senior appointment recognises the importance of the USA, Canada, UK, Ireland and EU markets as the engine of earnings growth for the Group.

The Group's complete focus on a single branded portfolio comprising four varietals, and 'best-in-industry' in-market sales teams, has enabled the Group to identify and exploit in-market opportunities and nurture business relationships.

In its established export markets, Oyster Bay is consistently among the leading New Zealand wine brands, delivering top-quartile profitability and achieving a higher rate-of-sale than its industry counterparts. Oyster Bay has reached 'must-stock' status in many of the world's major wine retailers.
Brands and Communications.

As a market-driven, consumer-led wine business, the Group undertakes strict global brand management to ensure correct and consistent application of brand communications via its in-market offices.

The Group recognises a number of global consumer trends driving the growth of Super-Premium wine: global consumers are seeking out the elegant, crisp flavours that characterise New Zealand wines, but are also seeking out brands that position themselves appropriately to their lifestyle needs. Wine is now perceived as an affordable, everyday luxury with a growing female influence in the purchase decision. An increase in overall affluence, high and sustained wealth creation, and an increasing awareness of the world's leading wine regions and varietals, are also contributors to the strengthening of Super-Premium wine demand.

Accordingly, the Group has undertaken significant work to position the Oyster Bay brand based on these consumer dynamics though retail theatre, value-added sales promotion activity, advertising and promotion and enhanced public relations initiatives. The success of Oyster Bay's brand strategy is evident by its market leading position across its entire varietal mix. Oyster Bay's brand strength has motivated consumers to trial varietals such as chardonnay and merlot. In this way, Oyster Bay has not only been a leader in sauvignon blanc and pinot noir growth, but has lead the way in establishing New Zealand's chardonnay and merlot export sales.

Grape Supply

The Group crushed a record 18,385 tonnes of grapes from the Marlborough and Hawke's Bay regions, enabling significant sales growth in the 2008 year.

Viticulture

The 2007 harvest is considered to be one of the best over the past decade for both Marlborough and Hawke's Bay.

Marlborough

Warm September conditions promoted an earlier-than-average budburst, particularly in the upper Wairau Valley vineyards. This was contrasted with cooler-than-average temperatures in December, during the critical flowering period, which delayed subsequent fruit-set across the majority of vineyard blocks and reduced overall yields. The quality of the fruit from Marlborough was of a very high standard.

Hawke's Bay

Weather conditions throughout the growing season were favourable, particularly up to and during harvest. As with Marlborough, overall crop levels were lower than forecasted, however the quality and flavour profiles of the fruit are considered exceptional.

Sustainability

The Group recognises the growing importance of sustainability to its key markets and accordingly uses sustainable viticultural practices to minimise impact on the environment.

The Group is a founding member of Sustainable Winegrowing New Zealand, which provides a framework for companies to continually work towards improving all aspects of their performance in terms of environmental, social and economic sustainability in both the vineyard and the winery.

Winemaking

We are consistently producing some of the most sought after and fastest growing wine styles in the world today and the Group continues to receive recognition for its wines from leading international wine commentators and competitions. In the year past these included:

Oyster Bay Marlborough Pinot Noir 2006 won a Gold Medal at the 2007 San Francisco International Wine Competition.

SAN FRANCISCO, JUNE 2007

Oyster Bay Marlborough Pinot Noir 2005 was awarded Gold in the '2005 Dry Red' category for the second year in a row at The Vintage Cellars National Wine Show of Australia.

CANBERRA, AUSTRALIA, NOVEMBER 2006

Oyster Bay Marlborough Sauvignon Blanc 2006 was awarded a Gold Medal at the Old Ebbitt International Wines for Oysters Competition.

WASHINGTON D.C., USA, JULY, 2006

In February the Group officially opened its state-of-the-art Marlborough winery, which was soon followed by the successful processing of the Group's largest harvest to date. Phase two of the winery development has been completed, with the addition of barrel storage, bulk wine storage and supporting infrastructure.
This world-class facility is widely considered one of New Zealand's largest, most technically advanced and an industry benchmark for Super-Premium large scale wine production.
Our People

We continue to attract and retain world class professionals. Our talented people across the Group globally have again delivered an outstanding performance. This has been achieved through inspirational leadership and a strong performance culture. The ongoing commitment of our people has been vital to our success.

Outlook

The Group is very well positioned to continue to profit from strong global demand for our Super-Premium wine. Continued investment in our brands, supply capability, distribution channels and in-market sales offices will support substantial future sales growth.

It has been a year of considerable achievements for Delegat's Group and we believe that the exceptional 2007 results speak for themselves. I acknowledge the ongoing support of our Shareholders, Grower Partners, customers, suppliers and the Board.

Together, we are building a truly unique wine company to achieve global success.
Jim Delegat
Managing Director
Delegat's Group Limited

ENDS

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