Challenger Limited · ASX:CGF
Challenger — Challenger Wine Trust — FY2005 Earnings Presentation
29 slides from Challenger's earnings presentation, August 2005
Slide 1: Challenger Wine Trust Presentation Financial Year Ended 30 June 2005
Challenger Wine Trust Presentation Financial Year Ended 30 June 2005 Presenter: Chris Atkins August 2005
Slide 2: Disclaimer
Disclaimer Information contained in this publication is current as at 30 June 2005 unless otherwise specified and is provided by Challenger Listed Investments Limited (ABN 94 055 293 644) (AFSL 236887) (“Challenger”), as Responsible Entity of the Challenger Wine Trust. This document has been prepare
Slide 3: Key Messages
Key Messages CWT is a portfolio of $288.8m of Australian and New Zealand vineyard and wine property / infrastructure assets (market cap $121m) Historically CWT offers consistent cash yield and diversified lessee and property risk CWT is listed in the property trust sector on the ASX Historic
Slide 4: The Challenger Wine Trust
The Challenger Wine Trust The Trust’s Ö To invest in quality vineyard and wine Investment Strategy infrastructure assets Ö Provides investors with a stable income yield (see page 5) Ö Derived from rental incomes backed by long-term leases to lessees with lessee option to buy back Ö Rental incomes ar
Slide 5: FY05 Result Highlights
FY05 Result Highlights Continued Strong Growth Assets Under Management: UP 13% to $288.8 million Revenue: UP 33% to $26.19 million Operating Profit: UP 32% to $13.7 million NTA on Ordinary Units: $0.9567 cents Ordinary Unit Market Capitalisation*: UP 6% to $123.9 million LVR of 44.1% M
Slide 6: FY05 Result Highlights
FY05 Result Highlights Continued Financial Year 2001 2002 2003 2004 2005 Strong Growth Revenue ($m) 4.49 7.56 10.36 19.69 26.19 Profit ($m) 2.29 4.13 5.34 10.36 13.60 Cents per Unit ($c) 9.54 9.24 9.20 9.01 9.12 Annualised Yld(%)*10.36 10.04 10.00 9.79 9.90 * Per Ordinary Unit @ $0.92 cents
Slide 7: Returns to Investors
Returns to Investors Cash Yield (%) 10.36% 10.04% 10.00% 9.79% 9.90% Property Trust Sector Standout 28% tax deferred income in FY2005 2001 2002 2003 2004 2005 Based on 92 cents Ordinary Unit Price Consistent Cash Yield – Long term leases Diversified Risk – quality lessees, geographical spread an
Slide 8: Top 10 CWT Unitholders
Top 10 CWT Unitholders Challenger Life (21,335,460 – 28,407,526 20.87% J P Morgan Nominees Australia Ltd 15.67%) LUCRF 5,790,303 4.25% National Nominees Limited Challenger Wealth Management 5,720,237 4.20% HSBC Custody Nominees (Australia) Ltd (13,783,037 – 10.12%) SG Hiscock 5,397,643 3.96% Westpac
Slide 9: FY05 Portfolio Breakdown
FY05 Portfolio Breakdown Property and Lessee Location % of Date of Fair Value Planted Investment Interest Portfolio latest Hectares independent valuation Summers Hill Vineyard Burge Corp Pty Ltd Eden Valley, SA 0.55% Oct-04 $1,550,000 18.10 Corryton Park Vineyard Burge Corp Pty Ltd Eden Valley, SA 1
Slide 10: Valuation Policy
Valuation Policy External independent property valuation every 3 years Internal management valuation every 12 months Ongoing monitoring of market conditions Valuation based on Discounted Cash Flow methodology using grape prices and yields per hectare for each individual property Winery bui
Slide 11: Foreign Currency Hedging Policy
Foreign Currency Hedging Policy New Zealand Properties approximately 97% hedged at 30 June 2005 NZ dollar borrowings are 97% of the value of NZ dollar using New Zealand and Australian properties as security Rent received in NZ dollars 11
Slide 12: Portfolio Summary
Portfolio Summary Lessee The Trust’s Lessees as at 30 June 2005 diversification CWT Lessee Profile as at 30 June 2005 Wine companies Evans & Tate Burge >89% 7% Pooles Rock 2% Inglew ood Trillians Hill 2% Investment Interest 2% 1% 0.36% NVFA 1% McGuigan 38% Delegats (NZ) 23% Gundagai Orlando (sub-l
Slide 13: Information on Lessees
Information on Lessees McGuigan Simeon Wines Ltd McGuigan Simeon Wines Ltd (MGW) have the Head Lease over 52.4% of the Trust’s properties Orlando Wyndham (subsidiary of Pernod Ricard) has a sublease of 15% of the Trust’s properties from MGW If MGW was to default the sublease becomes a Head Lea
Slide 14: Information on Lessees
Information on Lessees McGuigan Simeon Wines Ltd Properties — Padthaway $42,686,950 – Orlando sublease 15.2% of Portfolio — Hunter Valley $8,723,234 — Warm Climate $81,632,534 37.2% of Portfolio — Cool Climate $14,440 747 — Total $147,483,465 52.4% of Portfolio 14
Slide 15: Information on Lessees
Information on Lessees McGuigan Simeon Wines Ltd Development Vineyards — Australia $57,059,593 - 38.7% of MGW properties Mature Properties/Wineries — Australia $90,423,872 – 61.3% of MGW properties 15
Slide 16: Information on Lessees
Information on Lessees Delegat’s Wine Estate Ltd Delegat’s own the Oyster Bay brand selling 575,000 cases in 2005 worldwide The vineyards leased to Delegat’s are situated as follows: — Marlborough NZ $34.8m — Hawkes Bay NZ $30.8m They are predominantly Sauvignon Blanc, Chardonnay and Pinot Noi
Slide 17: Information on Lessees
Information on Lessees Evans & Tate The Trust has 7% of its properties leased to Evans & Tate as follows: Planted Per ha Cocoparra Griffith NSW 229.7ha $8.46m ($35,338) Woods Vineyard Griffith NSW 36.4ha $1.27m ($34,037) *Gnangara Manjimup WA 101.2ha $6.42m ($56,392) Vineyard Oakridge Estate Yarra
Slide 18: Information on Lessees
Information on Lessees Default Remedies If a lessee default occurs the Trust has the power to terminate the lease and re-enter the property (which the Trust owns) and consider the following action: — Sell the property (possibly to purchaser of the brand) — Rent the property to a third party — Call
Slide 19: Portfolio Summary
Portfolio Summary The Trust’s Properties as at 30 June 2005 Portfolio Diversification by Region as at 30 June 2005 Eden Valley Barossa Valley Riverland 2% 1% 7% Cow ra Langhorne Creek Hunter Valley Wentw orth 1% .36% 7% 2% Coldstream Gundagai 1% 5% Lobethal Sw an Hill 2% 16% Balranald Coonaw arra
Slide 20: Development Vineyards
Development Vineyards Development Vs Existing Vineyards New Vineyards in 2% Australia 25% New Vineyards in New Zealand 52% Existing Vineyards in 21% Australia Existing Vineyards in New Zealand 20
Slide 21: Australian Vineyard Developments
Australian Vineyard Developments Vineyard Developments Cool Climate 27% Warm Climate 73% Warm Climate $51,707,988 Cool Climate $18,674,111 21
Slide 22: Property Mix
Property Mix Development Vineyards — NZ $70,382,099 — Australia $58,947,417 Mature Properties/Wineries NZ — NZ $6,685,326 — Australia $144,313,782 Total Properties $280,328,624 22
Slide 23: CLIL Board of Directors
CLIL Board of Directors Majority of Stephen Gerlach Russell Hooper independent Chairman [Independent] Non Executive Director [Independent] directors with Santos Limited (Chairman) Director – Challenger Financial Services Group strong funds Futuris Corporation Limited (Chairman) management Riverland
Slide 24: Global Demand and Supply Merging
Global Demand and Supply Merging Global beverage w ine production Vs consum ption, 1993/2003 by volume (millions of litres) 31,000 29,000 Global Consumption 27,000 Global Production 25,000 23,000 21,000 1993 1995 1997 1999 2001 2003 Source: Rabobank Global Focus – Australian Wine – The Challenge is
Slide 25: Australia's Export Performance Impressive
Australia’s Export Performance Impressive Exports of Australian Wine A$M 3000 2500 2000 1500 1000 500 0 19 2 19 3 19 4 19 5 96 97 98 99 20 0 20 1 02 03 04 9 9 9 9 0 0 19 19 19 19 20 20 20 Source of figures (not graph): ABS, Australian Wine and Grape Industry 2000 and 2002 Catalogue 1329.0 25
Slide 26: Grape Production
Grape Production Wine Sales from Australia are increasing faster than new plantings Total Vineyard HA Increase since 1997 Vineyard Ha as Additional Export plus Domestic Sales Since 1997 140,000 120,000 Ha of Vineyard 100,000 80,000 60,000 40,000 20,000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006
Slide 27: Vineyard Plantings
Vineyard Plantings 6,000 5,000 4,000 Hectares 3,000 2,000 1,000 - 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Rest of Australia - Red Warm Inland - Red Rest of Australia - White Warm Inland - White Source: Australian Wine & Brandy Corporation 27
Slide 28: Summary
Summary Increase of 33% in revenue and 32% in operating profit in the year Geographically diversified assets Not exposed to agricultural risk Diversified lessee list Largest vineyard and infrastructure trust in the wine industry Triple net lease with access to property at default Conti
Slide 29: Questions?
Questions? Contact Details: Chris Atkins, Chief Executive Simon Jongebloed, Investment Manager Ph: 08 8211 7777 Fax: 08 8212 1661 Challenger Wine Trust (ASX: CWT) Level 1, 212 Pirie Street Adelaide SA 5000 Web: www.challengerwinetrust.com.au