Good afternoon, everyone. On behalf of the board, I'm pleased to welcome you here today to the 16th 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. I can confirm that we do have a quorum present, and given the time is now 2 P.M., I declare the meeting open for business. Today's meeting is being held online via the Computershare Online Meeting platform. This allows shareholders, proxies and guests to attend the meeting virtually. All attendees can watch a live webcast of the meeting and read the company documents associated with the meeting. In addition, shareholders and proxies have the ability to ask questions and submit votes.
If you have a question to submit during the live meeting, please select the Q&A tab on the right half of your screen anytime. Type your question into the field and press Send. Your question will be immediately submitted. Should you require any assistance, you can type your query and one of the Computershare team will assist you with the chat function and reply to your query. Alternatively, you can call Computershare on 0800- 650-0 34. Please note that while you can submit questions from now on, I will not address them until the relevant time of the meeting. Please also note that your question may be moderated, or if we have received multiple questions on the topic, amalgamated together.
Finally, due to time constraints, we may run out of time to answer all your questions. If this happens, we will answer them in due course via email. Voting today will be conducted by way of a poll on all items of business. In order to provide you with enough time to vote, I will shortly open voting for all resolutions. The question of voting, online platform voting. At that time, if you are eligible to vote at this meeting, you will be able to cast your vote under the Vote tab. Once the voting is opened, the resolutions will allow votes to be submitted.
To vote, simply select your voting direction from the options shown on screen. You can vote for all of the resolutions at once or by each resolution. Your vote has been cast when the tick appears. To change your vote, simply select Change Your Vote. You have the ability to change your vote up until the time I declare voting closed. I now declare voting open on all items of business. The resolutions will now be open in the Vote tab. Please submit your votes at any time. I will give you a warning before I move to close voting.
Let me now introduce you virtually to my fellow board members. Today we have on call Graeme Lord, Acting Managing Director. Rose Delegat. Dr. Alan Jackson, Chair of Audit and Risk Committee, and Phillipa Muir, Chair of Remuneration Committee. Also in attendance is Murray Annabell, the Group's Chief Financial Officer, who will act as our minute secretary and moderator. I also would like to welcome our Audit Partner, Andrew Dick, from Deloitte to the meeting.
Apologies. To open, I'm not aware of any apologies anyone would like to advise the meeting of. If there are, please type in the apology and Murray Annabell will ensure these are promptly recorded in the minutes. Notice of meeting. The notice of meeting has been sent to all shareholders together with the annual report. I propose that together with the agenda, they be taken as read.
Minutes of the previous meeting. Minutes of the 15th Annual Meeting held on the November 25th, 2020, have been approved by the directors, and Murray Annabell is holding a copy should any shareholder wish to receive one to view.
The agenda for the day. Firstly, I will address the annual report, incorporating the directors report, financial statements and unqualified audit report covering the year to June 30th, 2021. I will then provide a brief overview of our investment in future growth and board succession planning before handing the meeting to the Acting Managing Director, who will cover the 2021 performance in more detail and the group's future sales growth plans.
Following Mr. Lord's remarks, I will ask if there are any discussion on the annual report, Executive Chairman's and Acting Managing Director's presentation, before moving on to the formal business of resolutions.
My 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.
It has been a challenging but successful year. The year-end of June 30, 2021, was a challenging but successful year for the group. Delegat achieved global case sales of 3,178,000 cases in the year 2021, 3% lower than the prior year. The group generated record Operating Net profit After Tax of NZD 65.5 million, up 8% on the prior year, and achieved an Operating Return on Capital Employed of 13.8%. Strong cash flows from operations of NZD 74.7 million were delivered.
Accordingly, your board considered it appropriate to declare a fully imputed dividend of NZD 0.20 per share, up 18% on the prior year. Your board remains cognizant of both dividends to reward shareholders and the need for reinvestment for long-term growth. The results achieved in the 2021 are testament to the strength of the Delegat Group's business model and are a credit to our great wine people around the world.
Investing for growth. Delegat continues to invest in assets to support our growth strategy. During the year under review, the group generated cash flows from operations of NZD 74.7 million, as mentioned, which more than funded the NZD 62.2 million invested in growth assets, including development of the group's wineries, land acquisition, and vineyard developments.
Delegat will invest an additional NZD 29.7 million in the financial year 2022 to provide earnings growth in the years ahead. This capital investment supports the group's plan to grow sales by 25% to 3,976,000 cases by the financial year 2024, and will provide for further growth beyond that period.
Vineyard development. The group planted 192 hectares of new vineyards in the financial year 2021 and is developing another 245 hectares in the current year. The group has a further 639 hectares of viticultural land, which will be planted progressively from 2023 onwards. The group now has 4,469 net hectares of vineyards and viticultural land, 4,129 hectares in New Zealand and 340 hectares in Australia. Of this area, 81% is owned or managed by the company, and 19% is from our grower partners.
Funding growth. The group has a strong balance sheet with shareholders' equity of NZD 454.4 million, net bank debt of NZD 249.1 million, and undrawn syndicated bank debt facilities of NZD 80.9 million as of the June 30th, 2021. The group's retained earnings and syndicated bank debt facilities provide appropriate funding for our capital investment program and growth plans.
I can also announce that the group today signed a new bank debt facility ranging between three-five years with the incumbent syndicate bankers consisting of Westpac, Bank of New Zealand, China Construction Bank, and Hongkong and Shanghai Banking Corporation for NZD 333 million, reinforcing our well-established and enduring relationship.
Manging director and board succession. As previously announced, Delegat is delighted that Steven Carden will be joining the group as Managing Director from February 1, 2022. Steven's career to date includes working for McKinsey in New York, General Manager of PGG Wrightson in Australia, and his current role as Chief Executive Officer of Pāmu Landcorp Farming Limited.
Steven's strategic thinking capability, expertise in growing international businesses, and focus on creating an environment where people can achieve their potential is an ideal match for Delegat Group as we embark on the next stage of our journey to build a leading global Super Premium wine company.
Last month, the group announced governance succession planning changes. Alan Jackson will become independent chair of your company in February. Alan is currently an independent director of Delegat Group and has contributed to our success in this capacity since 2012. Prior to his governance career, Alan Jackson was Chairman Australasia of the Boston Consulting Group, and he headed the firm's consumer goods and retail practice in Australasia and the Pacific.
Alan Jackson's nine years experience with Delegat Group as an independent director, combined with his expertise in strategy and consumer goods, makes him an ideal independent Chair of Delegat Group.
I will continue to be actively involved with our business as Executive Director, providing input into strategic direction and contributing to key projects, in addition to undertaking my board governance responsibilities. I remain very passionate about our business and our great wine people around the world.
Rose Delegat and Phillipa Muir will continue to serve in their respective Non-Executive Director and Independent Director roles. Graeme Lord will revert to his previous Non-Executive Director role when he completes his acting Managing Director assignment in February. The group plans to appoint a third independent director who will succeed Alan Jackson as Chair of the Audit and Risk Committee.
With these changes, your company is well-placed with a managing director and board with the expertise and experience to build on our success to date, grow substantial earnings, and deliver all for our stakeholders. As per the meeting agenda, both Alan Jackson and Rose Delegat are seeking re-election at today's annual shareholder meeting with the full support of the board.
As I noted earlier, the results achieved in the year under review are testament to the strength of the group's business model. Against a backdrop of uncertainty caused by the disruption of COVID-19, Delegat has continued to build category-leading Super Premium brands, excel on quality, develop supply to underpin growth, and establish a strong global distribution footprint.
Your board would like to take the opportunity to acknowledge our Delegat great wine people around the world. Our global team has once again shown great resolve and resilience to deliver success in a challenging year. The workload and operating environment endured this year have asked a great deal of our teams around the world, and they have responded magnificently. Our people have built a unique culture founded on our values of aim high, mastery, and winning together.
The commitment and talent of our global team underpins our success and positions the group well to deliver on future growth plans. I continue to be excited about our company's performance and strategy, all of which support substantial future sales and earnings growth. Graeme Lord, the group's Acting Managing Director, will now provide a more fulsome report on the 2021 year and the group's future sales growth plans. Thank you very much. Graeme.
Thank you, Jim. Good afternoon, everyone. It's great to connect with you all virtually. As noted by the Executive Chairman, in 2021, the group achieved global case sales of 3,178,000 cases and record Operating Net Profit After Tax of NZD 65.5 million in a year impacted by the COVID-19 pandemic and associated supply chain disruption. The 3% decline in sales volume was primarily due to the impact of global port congestion, compounded by constrained shipping line capacity on all of our major trade lanes.
The ongoing pandemic-related lockdowns and social distancing requirements have limited field sales activities and reduced sales in on-premise channels. Despite this, our in-market sales team re-engaged productively with customers and distributors throughout the year. In this environment, consumers have gravitated to established brands that they know and trust, and Oyster Bay has continued to flourish as a leading Super Premium wine brand. The group sales continue to be well-diversified by market, with 47% in North America, 34% in the U.K., Ireland and Europe, and 19% in Australia, New Zealand and Asia Pacific region.
Sales in North America grew by 3.3% to a record 1,487,000 cases, albeit our sales volumes were constrained by port congestion and reduced shipping line capacity. The United States remains one of the world's most attractive wine markets, demonstrating sustained premium category growth and strong demand for imported wines, including Marlborough Sauvignon Blanc. This makes it a major growth market opportunity for the group.
The Oyster Bay brand continued to achieve strong distribution and rate of sale for point of distribution growth across the country. Oyster Bay Sauvignon Blanc is a top five white wine over $10 by value in the U.S. The group is well-positioned to continue building momentum through its strong relationships with its distributor partners. A key factor in driving the success of Oyster Bay and Barossa Valley Estate.
In Canada, a strong base of distribution has been established in each of the major provinces. Oyster Bay has grown to become one of the leading Super Premium wine brands in the market, with success being achieved across the range, including number two Chardonnay and top 10 Pinot Noir in Canada above CAD 14.
Sales in the United Kingdom, Ireland, and Europe region were 1,074,000 cases, 2% lower than the prior year, largely due to supply chain constraints. Oyster Bay has maintained its Super Premium category leadership in the U.K., with Sauvignon Blanc, Chardonnay, and Merlot continuing to be the top-selling wines above GBP 8 in their individual varietal categories, irrespective of origin. Barossa Valley Estate sales were adversely affected by the impact of lockdowns and social distancing requirements on customers in the hospitality sector.
In Ireland, Oyster Bay continues to achieve success as a leading Super Premium wine brand. Oyster Bay Chardonnay, Merlot, and Pinot Noir remain the top-selling wines in their respective varietal categories above EUR 9. In the established New Zealand and Australia markets, Oyster Bay is a category-leading brand. The Australia, New Zealand, and Asia Pacific region achieved sales of 618,000 cases, 16% lower than the previous year, as the group focused on optimizing long-term value growth in preference to short-term volume growth. While sales in Australia were also impacted by port congestion and reduced shipping line capacity.
In Australia, Oyster Bay Sauvignon Blanc continues to lead the category as the top-selling Sauvignon Blanc and bottled white wine by value. Oyster Bay Chardonnay remains the top-selling Chardonnay above AUD 13, and Oyster Bay Pinot Gris has become a top three product in its varietal category above AUD 13. During the year, the group again experienced strong growth in China. While China is currently a relatively small emerging market for the group, it continues to represent a valuable long-term growth opportunity.
The group's goal is to establish Oyster Bay and Barossa Valley Estate as leading brands in the Super Premium wine category globally. Based on wine consumption patterns, the group classifies markets as established, growth, or emerging. Understanding the level of maturity of our markets is essential for setting business strategy. Market activities are then tailored to the specific needs of each market and phases of brand development. The group is investing in marketing programs designed to grow consumer awareness and affinity, supporting distribution and rate of sale growth.
In 2022, the group is investing in consumer communications campaigns targeting more than 500 million consumer impressions amongst premium wine consumers globally, with half of these in the key United States market. The group uses a mix of media channels, both online and offline, to attract and engage premium wine consumers and build its brands.
The group also works closely with its retail partners to develop highly effective in-store activations and support rate of sale growth and nurture long-term brand affinity. In recognition of its market performance and reputation, Oyster Bay continues to be recognized as a Blue Chip Brand by New York's Impact Magazine, a status reserved only for brands of substantial size and sustained growth over many years.
Oyster Bay was also recognized by Impact Magazine as a Hot Brand for the eleventh consecutive year. The 2021 harvest delivered exceptional quality fruit across all three of our wine regions. The group harvest of 37,400 tons was 2% lower than the prior vintage and lower than forecast due to unseasonal cool spring weather during flowering, both in Marlborough and Hawke's Bay.
The 2% decline relative to the prior year was favorable relative to the wider New Zealand industry, which was down by 19%. The vintage outcome has delivered excellent quality wines, and the group has appropriate inventories to achieve the 2022 forecast sales of 3,490,000 cases, as noted in the annual report. The group continues to operate in an environment of elevated uncertainty arising from the ongoing pandemic and supply chain disruption.
Performance over the last year is testament to the strength and resilience of the group's business model in this environment. Delegat plans to grow sales by 25% to 3,976,000 cases over the next three years. Primary driver of the planned growth is Oyster Bay sales in North America. With respect to the year to June 2022, the group is on track to achieve our plans to grow sales by 8% to 3,419,000 cases. The group continues to forecast the 2022 operating profit results will be in the range of NZD 57 million-NZD 61 million.
The forecast Operating Net Profit After Tax is lower than this year's result due to the impact of the lower yielding 2021 vintage and higher grape prices, resulting in an increased cost of goods per case, unfavorable exchange rate movements, higher freight costs, and the recurrence of some operating expenses that were suspended due to COVID-19 restrictions.
The group will continue to closely monitor and manage the potential impact of ongoing supply chain disruption and cost inflation, noting that these factors present some risk to the achievement of forecast sales and profit in 2022. We are very proud and appreciative of the way our people brought to life our core value of winning together in a challenging year.
Our people are the key to realizing the group's future goals, and have collectively built a high-performance team culture that is unique in the global wine business. I would like to take this opportunity to thank each and every one of our people around the world. Your company is well-positioned to grow sales and achieve sustainable earnings growth in the years ahead on our journey to build a leading global Super Premium wine company. Lastly, I would like to thank you, our shareholders, for your ongoing commitment and support. Thank you.
Thank you very much, Graeme, for your presentation. At this stage of the meeting, we would ask if there's any questions in respect to the annual report, my Executive Chairman's presentation, or the Acting Managing Director's presentation. If you would like to ask a question, please select the Q&A tab on the right half of your screen, type your question into the field, and press Send.
We will take a few moments to see if there are any questions sent before moving on to the next item on the agenda. Please note that if there are questions raised of a similar nature, we may cover these off together. Please go ahead and send us any questions. Just pause for a few moments now. Thank you. Just give it another 30 seconds, I think.
Mr. Chairman, there was one question asked. The question that was asked was, today you announced a renewal of your banking facilities. What will the increase in finance costs be for FY 2022?
Perhaps, Graeme, would you like to address that question?
Certainly. The interest rate on the new facilities is similar to that on the expiring facilities, although the tenure of the new facilities is longer. We see that as a favorable outcome.
Thank you, Graeme. No further questions, Murray?
No further questions, Mr. Chairman.
There have been no further questions. Well, thank you. I will record that the 2021 annual report has been received and considered. We will now proceed to the Ordinary Business on the Agenda. Voting. As mentioned earlier, the resolutions are open to the Vote tab on all items of business. These resolutions are outlined in the voting papers that were mailed to you with the notice of meeting and annual report, and we have four resolutions to discuss and vote on today.
Again, to vote, simply select your voting direction from the options shown on screen. Please select by clicking on the radio button for either For or Against or Abstain. You can vote for all four resolutions at once or by each resolution. Your vote has been cast when the tick appears. To change your vote, simply select Change Your Vote. You have the ability to change your vote up until the time I declare voting closed.
Once all four resolutions have been voted, Computershare, our registrar, will collate all the votes cast and shareholders along with the proxy votes, and the company will post the final results on the NZX platform when available. I can confirm that Resolutions 1-4 are all ordinary resolutions. We'll now move to the election of directors.
Re-election item one. Agenda item one, re-election of Rose Delegat as director. In accordance with the rotation provision of the Constitution, Rose Delegat retires from office and being eligible, offers herself for re-election. Rose will now briefly address the meeting. Thank you, Rose.
Good afternoon, everybody. Well, these are very interesting times we find ourselves in, not just in New Zealand, but globally, of course. I trust that you are all well and that you, family, and friends have not been personally affected by this terrible pandemic that we are all suffering and maybe some minor inconvenience. Most of you will know who I am, Rose Delegat. I have enjoyed my time on the board since we floated the company in 2006, which is now coming up 16 years. I feel that I am still extremely relevant and have the great passion for this business.
It's growing. It's very much a global business now with our wonderful global brands of Oyster Bay and Barossa Valley Estate. My interest and my experience as an executive in the past and more recently as a director since 2006, as I've just said, has, I believe, stood me in good stead to contribute and offer a perspective as a director that I feel is still able and very much relevant. These times have caused some disruption in terms of travel, and therefore our ability as directors, all of us, have been somewhat unhinged in respect of actual visits to either markets or vineyards and wineries.
However, with this wonderful virtual technology that we have, and we've all become very competent at using, we find that contact and understanding of the day-to-day operations of the business can still reach the directors at the board table, and that we are able to, as a board, contribute to resolving the future plans in an appropriate way. It is all about the future and the 10-year plans that we have and the ability-
Is there any discussion? Please submit any question you may have in relation to the appointment of Rose Delegat as a Director. We will pause for a few moments to see if the moderator receives any questions. We'll now pause for, say, one minute. Thank you.
No questions, Mr. Chair.
Thank you. If there are no further questions, I put the motion that Rose Delegat be re-elected as the director. Please cast your vote in regard to resolution one using your computer or device now. Thank you very much.
Agenda item number two, re-election of Dr. Alan Jackson as director. In accordance with the rotation provision of the Constitution, Alan Jackson retires from office and being eligible offers himself for re-election. Alan will now briefly address the meeting. Thank you, Alan.
Thank you, Jim. Dear shareholders, it is with pleasure I accept the nomination for a further three-year term on the Delegat Board. Let me share Rose's sentiments, too, that in these difficult times, everyone out there is traveling safe and well. As Jim mentioned, I joined the board in 2012, and the company at that stage shipped 1.85 million cases of wine compared to 3.2 million today and had a market capitalization of approximately a tenth of what it is today.
This result reflects the efforts of a dedicated company-wide team that focuses on excellence in brands, quality, supply, and distribution, and I believe a supportive but challenging b oard. Success in these dimensions continues to evolve given rapidly changing consumer needs and behaviors, increasing competitive and regulatory pressures, and the ongoing global uncertainty in that you sometimes wake up in the morning not sure what will eventuate that day.
Accordingly, I believe I can contribute to Delegat as we continue the journey. This is based on my local and international business experience developed throughout my career. In addition, with some of the transition occurring in the business, it is important that the board and management maintain and build the capabilities the company has developed. Accordingly, I seek your support for my nomination and assure you of my best efforts and attention as we continue the journey to create a leading global Super Premium wine company. Thank you.
Thank you very much, Alan. I move Alan Jackson be elected as a director. I have a seconder. Thank you, Phillipa. Is there any discussion? Please submit any question you may have in relation to the appointment of Alan Jackson as Director. We will pause for a few moments to see if the moderator receives any questions.
No, no questions, Mr. Chairman.
Thank you. There being no further questions, I put the motion that Alan Jackson be elected as a director. Please cast your vote in regard to resolution two using your computer or device now. Thank you.
I shall now move to agenda item three, increase in directors' fee pool. The resolution is numbered agenda item three and is an ordinary resolution. Directors seek approval to increase the directors' fee pool from NZD 400,000- NZD 495,000 to ensure a remuneration level which reflects both the growth of the company, its associated increase in governance responsibilities, and to bring the pool into line with similar listed companies as benchmarked in the Institute of Directors' August 2021 published directors' fee report.
No increase in the pool has been made since 2016 and is outlined in the explanatory notes to the notice of annual meeting. Among other reasons, the increase in the fee pool accommodates the appointment and remuneration of the independent chair from February 2022. Neither the directors nor the associates who hold shares will be exercising any votes in respect of this resolution, as required by NZX Listing Rules.
I move that the directors' fee pool be increased from NZD 400,000- NZD 495,000. I have a seconder. Thank you, Alan. Is there any discussion? Please submit any question you may have in relation to the increase in directors' fee pool.
No question, Mr. Chairman.
No further questions. I put the motion that the director fee pool be increased from NZD 400,000 - NZD 495,000 . Please cast your vote in regard to resolution three using your computer or device now. Thank you.
Shall now move to agenda item four, fix auditor's fees and expenses. In regard to this matter, you will recall from last year's annual meeting, the company advised that Deloitte had been appointed as auditor for Delegat Group and subsidiaries, with Andrew Dick being the lead partner.
In accordance with the Companies Act 1993, the company's auditor, Deloitte, is automatically reappointed at the annual meeting. Section 207S of the Companies Act 1993 provides that the auditor's remuneration be fixed in such a manner as the company determines at the annual meeting. The board proposes, consistent with commercial practice, that shareholders approve that the directors be authorized to fix the auditor's remuneration.
Accordingly, I move that the directors be authorized to fix the auditor's remuneration. I have a seconder. Thank you, Alan. Is there any discussion? Please submit any question you may have in relation to the appointment of Deloitte as auditor and their remuneration. I will pause for a few moments to see if the moderator receives any questions.
No questions, Mr. Chairman.
There are no further questions. I put the motion that directors be authorized to fix the auditor's remuneration. Please cast your vote in regard to resolution four using your computer or device now. Thank you.
Now, discuss agenda item E, general business. I now look to the final item on the agenda, being general business. Are there any items of general business? If there is any discussion, please submit your question you may have in relation to any other business. We will pause for a few moments to see if the moderator receives any items or questions. Ladies and gentlemen. I'm sorry. I'll just pause now for a few moments.
No questions, Mr. Chairman.
Okay. No questions of general business. Ladies and gentlemen, this concludes our discussion on the items of business. In a minute, I will close the voting system. Please ensure that you have cast your vote on all resolutions. I will now pause to allow you time to finalize those votes.
Mr. Chairman, there has been one question come through. What is the main focus of capital development in the coming year?
Graeme, would you please take that question?
Certainly. In the coming year, the main focus of capital development is vineyard development, particularly in Marlborough, where we have significant land holdings, and we are developing vineyards to meet future sales growth demand. That is the primary focus. There is also capital investment in other parts of the business, including winery development and upgrades. As noted earlier, the main focus is vineyard development in the Marlborough region.
There's a second question that's just come in, Mr. Chair. 2022 for the company is the seventy-fifth year anniversary. Is there anything special planned to happen?
Well, that's a very good question, isn't it? It's something that's very close to our hearts. We have been discussing that over the months and with the pandemic and wondering what the future of this would be to enable us to celebrate the 75 years. Rose and I are especially fond of marking that anniversary. We will be limited to some extent, but we will be thinking of our shareholders and our great wine people throughout the business and our customers.
I'm sure over the coming months we'll record it in one manner or another. Be it virtually or in writing or in some form. Yes, we're thrilled that the business is on the doorstep of 75 years. The time has now arrived. The voting is now closed.
Thank you very much to all shareholders. The results of these votes will be released to the stock exchange later today. With there being no further items of business, I declare the meeting closed and thank you for your joining us and for the continuing interest you have in the company. Thank you very much. I wish you a good afternoon.