I'm just eating a lozenge because I was in fear of losing my voice as I'd just been in Australia last week and brought one of their viruses back. But happily, I haven't. So I'd just like to say that it's now 2:00 P.M. We should bring the meeting to order. And I'd like to say welcome and greetings to you all. On behalf of the board, I'm pleased to welcome you here today for the 19th 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 that the time is now 2:00 P.M., we're open for business. It's great to be meeting both in person today, as well as meeting being held online with the Computershare Online Meeting Platform.
This allows shareholders, proxies, and guests to attend this meeting virtually. For those not present, there is a live webcast of the meeting available, and you will be able to read the company documents associated with the meeting on the NZX announcement platform. In addition, as shareholders and proxies, you will 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 the 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 the chat function and reply to your query. Alternatively, you can call Computershare on the 0800 number.
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 questions may be moderated, or if we receive multiple questions on the topic, amalgamated together. Finally, due to time constraints, we may run out of time to answer your questions. If that happens, we will answer them in due course via email. Voting today will be conducted by way of a poll on all items of the business. In order to provide you with enough time to vote, I will shortly open the voting for all resolutions. The online voting platform. At that time, you will be eligible to vote at this meeting. You will be able to cast your vote under the Vote tab. Once the voting has opened, the resolutions will allow votes to be submitted.
To vote, simply select your voting direction from the options shown on the screen. You can vote for all 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. It's quite an exercise, isn't it, running a virtual meeting? Let me now introduce my fellow board members.
Today, we have Steven Carden, managing director, Rosemari Delegat, Dr. Alan Jackson, Gordon MacLeod, Chair of the Audit and Risk Committee, and Phillipa Muir, Chair of the People, Culture, and Safety Committee, and Doug McKay. Also in attendance is Murray Annabell, the group's Chief Financial Officer, who will act as our minutes secretary. I also would like to welcome our audit partner, Andrew Dick from Deloitte, to the meeting, and our legal advisor, David Jones, from Heimsath Alexander. Apologies. To open, I am 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 that these are appropriately recorded in the minutes. Or if you are present here and you would like those to be recorded on your behalf, Murray is available. Thank you, Warren. Any further apologies? Good, thank you. Notice of meeting.
The notice of meeting has been sent to all shareholders together with the annual report, and I propose that, together with the agenda, they be taken as read. Minutes of the previous meeting. The minutes of the 18th Annual Meeting held on 23 November 2023 have been approved by the directors, and Murray Annabell is holding a copy should any shareholder wish to receive one to view. Today's agenda. Firstly, I will address the annual report incorporating the director's report, financial statements, and unqualified audit report covering the year to 30 June 2024.
I will then comment on Delegat's strategic goals and key success factors and board succession planning before handing the meeting over to the managing director, who will cover the 2024 performance in more detail and the group's future growth plans. Following Mr. Carden's remarks, I will ask if there is any discussion on the annual report and the chairs' and managing directors' presentations before moving on to the formal business of the resolutions.
We would say that FY2024 was a solid performance year, and thanks to the dedicated efforts of our entire global team, the group delivered a solid operating net profit after tax of NZD 59.7 million. In the context of current global conditions, the group's results in 2024 are very, very good. Strong cash flows from operations of NZD 56.9 million were delivered. This result reflects the hard work and resilience of our great wine people as they build Delegat into a leading super premium wine company. The directors considered that the underlying operating performance and continued strong cash flows justified maintaining the dividend payout in line with last year.
Accordingly, the directors approved a fully imputed dividend payout of NZD 0.20 per share. Your board remains cognizant of both dividends to reward shareholders and the need for reinvestment for long-term growth. Board succession. Over the last few years, we have undertaken a board review process balancing depth of experience within our business and ensuring that we have the benefit from a broader range of governance experience and competencies. In August this year, Delegat was delighted to welcome Doug McKay onto the board as a non-executive director. Doug is an exceptional leader with over 30 years of experience, managing FMCG export and international markets as CEO of Sealord and Independent Liquor and managing director of Lion Breweries. Doug's corporate governance experience includes present and past chair and director appointments with Vector, Bank of New Zealand, Fletcher Building, IAG New Zealand, National Australia Bank, Goodman Fielder, Genesis Energy, and Ryman Healthcare.
In 2015, Doug was made an officer of the New Zealand Order of Merit for Services to Business and Local Government. Doug is a Chartered Fellow of the Institute of Directors. Doug is standing today as a non-independent director. May I provide some additional comments in respect to Doug's non-independence? Excuse me. Doug, five years ago, provided professional consultancy services as one of the projects, as a one-off project to the Delegat Family Office pre-COVID. The board has discussed Doug's independence at length, and while Doug has satisfied himself to be independent, in an abundance of caution, we determined Doug to be non-independent. This decision will be reviewed in the new year in consultation with our corporate legal team. The board currently comprises of seven directors, including the managing director and six non-executive directors, of whom three are independent directors.
The group's three independent directors are Philippa Muir, Chair of People, Culture, and Safety Committee, Gordon MacLeod, Chair of the Audit Risk Committee, and Dr. Alan Jackson. Alan has been a director since 2012, and despite his 12 years of service, the board has unanimously determined that he continues to demonstrate a high level of independence in both thought and action. The key reasons for this conclusion are set out in the notice of the annual meeting, which you have all received. Rosemari Delegat, Steve Carden, and Doug McKay and myself are not deemed independent. In respect to directors' independence, I'm also aware of the corporate governance code's recommendations for boards to have a majority of independent directors. Delegat has always complied with the NZX listing rules, which require a minimum of two directors to be independent.
In respect of the board's composition, the board considers it is appropriate given the business of Delegat and its shareholding profile. In October, the group announced that after three years in the role, Steve Carden has resigned as managing director. Steve's last day will be on the 31 January 2025. I would like to wish him well in his future endeavors and to take this opportunity to thank Steve for his contribution to the company. Murray Annabell, CFO, will take the position of acting CEO while the search is undertaken for a replacement. My concluding remarks. The results achieved in 2024 are a testament to the strength of the Delegat business model and the caliber of our people. Your board would like to take this opportunity to thank our Delegat Great Wine People around the world.
Our global team have once again shown resolve during a challenging year on our journey to building a leading global super premium wine company. We take immense pride in the unique culture of our people that have cultivated, founded 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 its future growth plans. That concludes the portion of my opening remarks. I'll now call upon Steve, our managing director, who will provide you a more fulsome report on the 2024 year and the group's future growth plans.
Good afternoon, everyone. The group's results in 2024 represent another important year in our journey to build a leading global super premium wine company. Thanks to the dedicated efforts of our entire global team, the group delivered a strong operating net profit after tax of NZD 59.7 million. It is just worth touching on the fall in the reported net profit after tax result of NZD 31.4 million, which was down 52% on FY2023. This was primarily due to two accounting requirements.
One was a New Zealand IFRS requirement to value biological assets at their market value as opposed to their cost to grow. The low-yielding 2024 vintage meant the market value of biological assets was lower than their cost to grow, resulting in a write-down adjustment of NZD 5 million. This compares to a write-up of NZD 20.9 million in FY2023 and results in a year-on-year reduction of reported net profit after tax of NZD 25.9 million. Second, tax legislation changes during the course of the year removed the ability to depreciate commercial buildings for tax purposes.
The impact of this change for Delegat resulted in a one-off adjustment to increase deferred tax liabilities as well as the FY2024 tax expense by around $13 million. Turning now to the story of growth. As this slide shows, Delegat is a long-term growth story extending back over many years. In FY2024, the group achieved global case sales of 3,614,000 cases, a 2% decrease over the prior year. This is a solid result in comparison to the broader industry where total New Zealand packaged wine export volumes during the period were down 16%. The performance is a testament to the strength of our brands, the enduring relationships with our distributor partners, and really the effectiveness of the entire global team. Our in-market sales teams remain a strength of the business, and they've engaged productively with customers and distributors throughout the year, providing valuable market knowledge and focus.
As you can see from the slide, sales continue to be well diversified by market with 48% in North America, 33% in the United Kingdom, Ireland, and Europe, and 19% in Australia, New Zealand, and the Asia-Pacific region. I'll now provide a summary of our performance across each of the major markets represented on the graph. Firstly, North America. The group achieved sales of 1,725,000 cases in North America. That's down 1% on the previous year. The North American market, which we talk about often, remains a key focus for growth. The United States, with over 60 million premium wine consumers, is the group's largest market and our most significant opportunity for future growth. The demand for premium New Zealand wine continues to grow, and New Zealand is the fastest-growing country of origin in premium U.S. wine.
Oyster Bay is the category-leading New Zealand wine brand in the U.S. market, and incredibly, Oyster Bay Sauvignon Blanc is a top five white wine by value. Our focus remains on expanding our share of the growing Sauvignon Blanc category while also focusing on growing our Pinot Noir, Pinot Grigio, and Chardonnay varietals. This will involve further investment in improving our rate of sale across our distribution footprint and reaching new consumers with our digital marketing program. Oyster Bay Pinot Grigio has become the fastest-growing premium Pinot Grigio in US retail, backed by 1,160 additional points of distribution over the course of the 2024 financial year. In Canada, Oyster Bay has maintained its position as a category-leading premium wine brand. This success is underpinned by a strong distribution presence across each of Canada's provincial liquor boards, supported by long-term investment in consumer communications throughout the market.
Oyster Bay Sauvignon Blanc remains a leading white wine in the country, and Oyster Bay Chardonnay, Pinot Grigio, and Pinot Noir are in the top-selling premium wines in their respective varietal categories, regardless of origin. In Alberta and British Columbia, Barossa Valley Estate Grenache Shiraz Mourvèdre and Cabernet Sauvignon are both in the top five selling Australian premium wines in their respective varietal categories. Turning now to the United Kingdom, Ireland, and Europe. Sales in the United Kingdom, Ireland, and Europe grew to 1,183,000 cases, which is 4% lower than the previous year. Oyster Bay continues to outperform the premium wine category in the United Kingdom and has maintained a premium category leadership position through targeted price increases. Oyster Bay Merlot continues to lead the varietal category above GBP 8, regardless of origin.
This reflects the power of the group's brands and distribution platform alongside successful promotional programming with our key national account customers. In Ireland, the group has had a successful year with sales increasing by 11% over last year. Oyster Bay remains the number one premium New Zealand wine brand. Oyster Bay Sauvignon Blanc, Chardonnay, Merlot, and Pinot Noir remain the top-selling wines in their respective varietal categories above EUR 9. Turning closer to home, we have the established markets of New Zealand and Australia. The group delivered growth in the Australia, New Zealand and Asia-Pacific regions during this period, increasing sales volumes by 2% to 704,000 cases. In Australia, Oyster Bay Sauvignon Blanc remains the top-selling wine by value. Oyster Bay Merlot is the top-selling premium Merlot, while Oyster Bay Chardonnay and Pinot Gris are among category leaders.
Barossa Valley Estate Grenache Shiraz Mourvèdre maintained its leadership position in its premium varietal category. In New Zealand, all Oyster Bay wines remain in the top five selling premium wines in their respective varietal categories. This leadership is particularly impressive considering the introduction of a price increase in the market during the course of the year. In China, the group again experienced very strong growth, up 51% over the last year, as wine consumption patterns in that country continue to evolve. Oyster Bay is now New Zealand's top wine brand by volume in China, and it represents a long-term growth opportunity for the company. The Asia-Pacific and the Middle East regions also remain growth markets for the group. As the slide shows, Oyster Bay is the flag bearer for premium Sauvignon Blanc globally.
This is underpinned by its reputation and acclaim for consistent high quality and driven by an enduring global trend for lighter, fresher, and elegant wine styles. The strength of the Oyster Bay brand, combined with the group's significant global distribution footprint, are key enablers for the Oyster Bay brand to achieve leadership across its range of super premium cool climate wines. This performance across a range of varietals in a cross-section of big markets is a testament to the strength of the Oyster Bay brand. Very few premium wine brands globally have achieved such success across so many markets and so many varietals. Based on sales performance across its major markets, the Oyster Bay brand is now ranked as the number three premium wine brand in the world. This is a clear indicator of the consumer enthusiasm for the Oyster Bay brand and range of wines.
It is a story of success for New Zealand as the only New Zealand-owned wine brand on that list of the top 10 premium wine brands in the world. Turning to the U.S., the U.S. is the market that has the highest potential for future volume growth, as mentioned. As you can see in the slide, both New Zealand wine and Oyster Bay's share of premium wine consumers is lower compared to our more established markets such as the United Kingdom, Australia, and Canada. Our focus is on attracting more than one million new consumers to Oyster Bay by raising an awareness of the brand, principally through our online consumer communications program on Facebook and Instagram. As a side comment, some uncertainty exists around the trade policies likely to be pursued by the incoming Trump administration.
While a tariff on New Zealand wine imports into the U.S. would raise prices somewhat for U.S. consumers of Oyster Bay wine, it is really too early to say definitively what impact it will have given the uncertainty around timing, scope, and the application of any potential tariffs. We also need to be driving increased rate of sale performance in store. The success of the brand is no better illustrated in our performance across the retail stores we currently sell through. As the graph on the screen shows, Oyster Bay leads the country's top wine brands in the U.S. for its sell-through in store. This accomplishment reflects both the power of the brand in attracting U.S. wine consumers and the effectiveness of our in-store merchandising, an example of which is shown to the right. Turning now to the 2024 harvest.
As you'll know, the 2024 harvest, although light, yielded excellent quality fruit across all three of our wine regions. The group harvest of 34,150 tons was down about 25% from the 2023 harvest. Marlborough, Hawke's Bay, and Barossa Valley all experienced cooler growing conditions, resulting in a significant region-wide reduction in yield for the 2023-2024 growing season. The group has appropriate inventories to achieve the 2025 forecast case sales. So far to date, we've had a favorable growing season in both Hawke's Bay and Marlborough, and early indications are that we're on track for a good harvest in [2025]. Delegat continues to invest in expanding our supply of wine. On the left of the screen is Birch Hill Vineyard development in the Wairau Valley, which will, on completion, cover 520ha . This development alone will produce over 650,000 cases of wine annually when it is in full production.
On the right is the addition of new 160,000-liter storage tanks that are being constructed and installed in our Marlborough winery. The group plans to invest an additional NZD 44 million in 2025 to provide earnings growth in the years ahead. This includes significant investment in our wineries in the Hawke's Bay and Marlborough and vineyard developments across New Zealand. This capital investment supports the group's plan for future growth. The group has a long-standing commitment to sustainable wine growing, with Delegat as a founding member of the Sustainable Winegrowing New Zealand program established in 1995. Over the last 12 months, Delegat has made further progress on its sustainability program. The company utilizes a sustainability framework that you can see to the right of the screen, focusing on three key areas.
Number one, building an enduring business, which addresses climate risk and greenhouse gas emissions, shareholder value, risk and governance, and water stewardship. Number two, ensuring our people and community thrive, which encompasses health and safety and well-being, diversity and inclusion, and engagement, employment, and collaboration. Number three, crafting wine with care, which covers biodiversity, packaging and waste, and sustainable viticulture and winemaking. This framework drives various initiatives aimed at promoting positive environmental, social, and governance outcomes throughout the business. In October, the group published its first climate statement under the Aotearoa New Zealand Climate Standards. This report looks at the group's exposure to the impact of climate change on its business operations and discusses the initiatives the company is pursuing to lower its carbon emissions. Those interested are encouraged to read the report on the investor relations page of the Delegat website.
Our people, as always, are at the heart of the company and the key to our success, and we're very proud of the progress we are making across a range of initiatives to support our people. Attracting both permanent and seasonal staff remains an important part of our people program, with competition for talented staff as intense as ever. Delegat remains a sought-after employer, and the caliber of our team across the board continues to improve. We've undertaken a range of initiatives from work health and safety programs, diversity and inclusion initiatives, and expanding leadership and training programs to further enhance our staff's experience within the company. In terms of outlook, the group is maintaining its guidance range and operating net profit after tax of between NZD 55 and 60 million for the year ending June 2025.
In respect of future years, the group is confident it will continue to grow profitably in all markets. The outlook for the business remains positive. To conclude, and coming back to an earlier point, our people are key to the company's performance over the last year and to realizing the group's future goals. We were indebted to their hard work and appreciative of all the ways our people again brought to life our core values of winning together in what was a very challenging year. Your company is well positioned to grow sustainable earnings through value and volume growth globally in the years ahead, and I wish to thank you, our shareholders, for your ongoing commitment and support. Finally, as Jim announced earlier, I'll be leaving the company at the end of January to pursue other opportunities.
It has been a privilege to help lead the Delegat business over the last three years, and I look forward to watching the company's ongoing success in the years to come. Thank you very much.
It's been a very busy 2024 financial year, and thank you, Steve, for your presentation. At this stage of the meeting, we would ask if there are any questions in respect to the annual report, my chair's presentation, or the Managing D irector's presentation. If you have any questions, please raise your hand, and we'll do our best to answer your questions. And while that's going on, for those online, I would also add that if you would like to ask a question, please select the Q&A tab on the right-hand side of your screen, type in your question, and press send. Thank you. Questions? Thank you, sir.
I'm just curious on that. I have several questions. Well, one is, do you think. Find the record that the 77% of the consumer? The other thing is that I was a bit disappointed of how the managing director didn't address the problem of the huge crash of the global wine price. I think that should be mentioned about the movement of the global wine price, especially the recent crash, and how to encounter and deal with it properly.
So, for example, whether the expensive land in the West Auckland Delegat Estate is maybe suitable for wine tourism and have a bit of hotel to diversify it, because if you are planning to increase the production so much, given that the wine price is even lower than the 2020 level for lockdown time, so I'm not too sure how those make sense. I'll give a chance for other shareholders to ask other questions too.
Thank you.
Thank you for your questions. Steve will attempt to answer your questions. Which do you want to address first, the global wine price?
I wanted to ask the question about the number of directors. Specifically, it depends on the global wine price.
We've made a pretty sustained effort across most of our established markets to look to actually lift our price over time, particularly in the last 12 months. That's a reflection both on the quality of the Oyster Bay brand and consumers' ongoing willingness to support the brand at elevated prices, and also as a reflection of the growing costs that we are incurring as a business in this still relatively heightened inflationary environment.
So that's very much our focus in that premium category is to continue to look at opportunities to lift price to reflect the value that consumers see in the Oyster Bay brand, which remains very strong.
Are you satisfied with that?
Oh, here's the other one. The size of the wine. Regarding, for example, in the area where there are high land values, for example, are they better to be developed for maybe wine tourism hotel than producing so much maybe wine? I mean, as a point of diversification and increasing maybe other potential revenue.
Yeah. Perhaps I could answer that since that's the spiritual home of the Delegat family. We're there on a limited occupation basis as a winery because the location of the Auckland winery is, in fact, high-density residential.
While over the years we have inquired from time to time at what additional we could use, we could put that property to, the first thing is that that winery operates 24 hours a day, six days a week, mostly. So we have a huge traffic count and a health and safety issue to consider when admitting people to the property. Given that our sales are 97% plus export and that New Zealand is relatively insignificant, our customer base is the international markets, and therefore we find it more appropriate to invest in markets, the growth markets such as Canada, the U.S., etc. So I think that you could be happy with that as a rationale. Thank you.
I will add that our Hawke's Bay winery is operating. It has been operating for some four years now, and there is a cellar door activity to yet be completed in the next 18 months where we will actively pursue wine tourism in the Hawke's Bay region. Hawke's Bay is a favored province for domestic wine tourism. It caters for more than 25% of domestic wine tourism, and of course, more recently, there has been the cruise lines, etc., so we anticipate that having an activity in that Hawke's Bay and be part of that region would be an accretive activity in the sense of cost versus awareness for increased demand. I think if I recall your question, it was about the size of the board, the number of directors. I think it would be appropriate if I asked Philippa Muir to please comment on that.
Hopefully, you can hear me. What I would say, first of all, is that we have seven directors on the board, including the managing director, and we have three independent directors currently, and we're going to be reviewing Doug MacKay's position as non-independent in the new year. We are compliant with the NZX listing rules, and we exceed those, and we're continuing to monitor it and to look at the caliber and mix of directors going forward.
Yes, sir.
Alex Ball, New Zealand Shareholders Association, proxy holder. My comments won't come as a surprise to the chair or the board because they've been well communicated in advance, and these are really comments.
In a majority-owned public limited company, we do generally anticipate that there'll be one, an independent chair, two, a majority of independent directors, and three, regular rotation and refreshment of independent directors through robust succession planning. I acknowledge the chair's comments in his opening address, and I acknowledge Philippa's comments about compliance with the listing rules. Page 76 of the corporate governance statement of the annual report outlines that this company strives to adopt best practice. Best practice is for things like regular refreshment of independence through succession planning that is disclosed. It requires best practice, a board skills matrix that is disclosed, that is leading practice, and a number of directors on this table are on boards that do that. There are boards that individually disclose the actual skills that individual directors have.
So for a number of these reasons, the NZSA will not vote for the resolution around Rose Delegat being re-elected, nor will it vote for Alan Jackson being re-elected, while it acknowledges the good reasons that are in the notice of meeting around Alan's re-election after 12 years tenure. We also note that the recommendation in the Code of Corporate Governance is that 12 years should be a maximum, and beyond that, it does cause potential independence criteria issues. And in our view, while there are some strong reasons for Alan to be re-elected, they're not going to outweigh our requirement around that regular refreshment and renewal of the independence on a board where even after the managing director has stepped down and Doug has been elected, until Doug's independence is reviewed, it will be parity between independent directors and non-independent directors.
So for all those reasons, we will vote against the first two resolutions, but we acknowledge Doug's incoming strong governance and executive experience, and we're very, very happy to see that coming onto the board as part of the independent directors. So we will be obviously voting for that as well.
Thank you very much. Good question. Yes, I'm very aware of the New Zealand Shareholders Association's governance interpretations and the best practices that you rightly have addressed. I have given an undertaking to Simon Mander, your Chief Executive, just recently, that in the new year, we will review our position on a number of those issues that you have raised. Whether we adopt some or all of them is yet for discussion, but we are appreciative of the New Zealand Shareholders Association's interest in Delegat and the heightening awareness of what is required in their view for best governance.
I think that that will be fairly good, and thank you for your interest again. Any more questions from the floor? Thank you.
Julie Meiklejohn, shareholder. Given what seems to be an increasing market in low alcohol and no alcohol wines, is that something that Delegat is looking at moving into at all?
Do you want to answer?
We look at that on a fairly frequent basis in terms of understanding the market. Clearly, there have been a lot of companies that have jumped into low or no alcohol, particularly in Sauvignon Blanc, particularly in the U.S.. It's still a very small percentage of overall Sauvignon Blanc sales at the moment.
While we'll continue to monitor its progress, our view at the moment is that most of that growth currently is coming at the expense of the full alcohol versions of those products for the respective brands that have introduced low or no alcohol. The wellness category, and better for you, is a growing category in most food and beverage markets. We are cognizant of it, but at this stage, don't have any specific plans to introduce a low or no alcohol product.
Thank you. Good question. Sir?
My question is, why would the volume of the wine go down? Because I think it said that somewhere it is written that it is 16% down, sales down. Has the volume gone down or the price, because of the market forces, prices have gone down? That's the reason the revenue has gone down from because it is written somewhere that overall there is a 16% reduction, while the company is only 2% reduction.
Yeah, that's correct. So a 16% reduction in packaged exports out of New Zealand over the course of the last 12 months. We're back 2%. So I think that reflects the fact that we are comfortable and confident that we are gaining share in our respective markets. I think what you're seeing is some struggles in the industry more broadly, particularly those who serve either the bulk wine market or those brands that are not as strong and are struggling in the current economic climate across most of the major markets.
Oyster Bay is a very strong brand, and we've actually seen growth in our share in most of those major markets over that period, despite the fact that conditions are challenging for the wine industry currently.
I have a second question. I just quickly went through the various statements. My question is, when the retained earnings are 10 times of the share capital, why would you go for different types of debts? Because I was seeing it's some NZD 50 million, and then there is the retained earning, it's around NZD 500 something. Statement of changes in equity. It says NZD 49 million is your share capital, and retained earning is for NZD 95 million. Is there any use of that retained earning? Or why 10 times retained earning is maintained?
Murray, could you give us a steer on that, please?
So if I understand the question, you're saying our share capital is NZD 49 million and our retained earnings is 10 times as much. Why are we retaining that rather than paying it out as dividends? That's your question. I mean, it's a good question, and I think, as we say in the board, looking at dividends, they're always looking for future growth through capital expenditure. You don't want to be paying out dividends and then having to go and borrow for capital expenditure. Look back at Delegat over the last 20 years. We've invested heavily in New Zealand, Australia, particularly in buying Barossa land and developing that and investing it into productive vineyards. So I think your answer is, it's a good question around it.
Our dividend distribution is at 30%, and the 70% is really retaining for long-term growth because we're saying that this is a business that we believe can do that and do that without having to go and borrow or call upon shareholders to finance that.
That's a very good question. If I could just add to that, it's very important that we continue to invest and achieve the category growth in order to be a number one, two, or three brand in the global market, which then relies back on the fact that it's a must stock by retailers. And of course, as you know, that globally we've got retailer consolidation, so we have fewer retailers to sell to because they're becoming larger, such as Foodstuffs South Island, Foodstuffs North Island.
It's important that we outperform the industry on volume and price in order to earn our place on the shelf. As Murray said, those retained earnings are doing just that, investing. Admittedly, the share price hasn't reflected that, but that's a function of other issues within the share market. Thank you.
I've got a question about tariffs. Does New Zealand wine at the moment attract tariffs in the United States or any other countries? And if so, how much?
I think Steve's a good one for that, and he'll answer that. Yeah.
I'm not aware that there are tariffs on New Zealand wine currently into the U.S. at the moment. No.
Does New Zealand wine attract tariffs in Europe or China?
No. No, not across our other major markets.
Okay. Thank you.
Yeah. I'll just inquire, Murray, do we have any questions online? No questions. No questions online.
Very good. So there have been no further questions. Thank you. I'm sorry. Yes, sir.
John Hulme, shareholder. We talked about the dividend being NZD 0.20 and we were original shareholders when you listed. And last year, I suggested to you that to try and stop the price of the shares falling between now and your next dividend was to pay an interim dividend, and you replied to that was, "We don't know what our profit's going to be." Well, you've just indicated what your profit hopes to be for next year. And rather than have the share going tanking for the next six months and then building again back to the next dividend, why don't you pay an interim dividend? And if you can't match it when it comes to the final dividend, you reduce the next dividend.
I think that would stabilize your price from troughing from between now and the next six months before you get to the next dividend. Are you able to consider that?
It has been a discussion at board level. I think I'd ask Gordon MacLeod to reflect on that, given the board's view.
Yes, we actually talked about that question last year, John, as John, isn't it, after you raised it? One of the things we talked about last year was that we actually have a significant amount of costs and so on in preparation for the vintage going in the first six months the way that the annual cycle of the business works.
And so it actually makes more sense from a capital management point of view to actually just pay the dividend once a year after the vintage has been fully sort of planted, harvested, and all those costs have been had so that we know what the final capital expenditure and cost positions are. Because we not only have to think about the profit, we also have to think about all of our total expenditure as well.
I would think, though, that you've been there long enough to be able to envisage that on the way through what you expect for CapEx. And that's why I think it would be good for the shares to be a more balanced level rather than dropping so much and then coming back up to the dividend because there's no incentive to buy the shares if you're not going to get a dividend in the next six months.
Look, I think it's something that we will always continue to consider. And at the moment, the way that we are undertaking capital management is that it is an annual dividend. However, we can't rule out that position changing in the future, particularly if the earnings profile changes over time as well.
Further questions? All right. Well, thank you. There have been no further questions. I will record that the 2024 annual report has been received and considered. Now we will proceed to the ordinary business on the agenda. Slide 25 will indicate the online platform for voting.
As I mentioned earlier, the resolutions are open in the vote tab for all items of business. These resolutions are outlined in the voting papers that were mailed to you with the notice of meeting and the annual report, and we have four resolutions to discuss and vote on today. To vote online, simply select your voting direction with the options shown on the screen. Clicking on the radio button for either for or against or abstain. You can vote all resolutions at once or each resolution. Your vote has been cast when the tick appears. To change your vote, simply change your vote and you have the ability to change your vote up until the time I declare voting closed. One of the three resolutions.
Once all three resolutions have been voted, Computershare, our register, will collate all the votes cast by shareholders along with the proxy votes, and the company will post the final results on the NZX platform when available. I can confirm agenda D on the item on the agenda, item D. I can confirm that resolution item one to four are all ordinary resolutions. We'll move now to the election of directors. The re-election of Rose Delegat as a director. In accordance with the rotation provisions of the Constitution, Rose Delegat retires from office and being eligible offers herself for re-election. Rose, thank you. Would you please briefly address the meeting?
Good afternoon, everyone. Thank you for attending today. Look, I take nothing for granted in terms of my position as a director on the board of Delegat Group.
I have had many years of experience and knowledge, and this has also been supported by, I think, a fabulous board that we have with a great degree of diverse skill set. I'd like to acknowledge the great Delegat Wine people, our team, who also support me when I am in the areas of various jurisdiction, whether it's in the vineyards or in the marketplace. I always find that I do learn something else and am well received. I make a point of visiting, as do we all, but at a personal level, our various operational platforms. As a group last year, the directors in the latter part of the year visited Australia, and we visited the Barossa estates. Just in September of this year, I was on a personal holiday in the United Kingdom area, and I took time out to visit our London office.
That was a wonderful experience for me to see everybody performing as they should, but it was also very enlightening to me to see our individual people operating within their own environment. I felt very satisfied. I was very happy to visit that market more in depth as I toured around the country. I couldn't help myself. I was in and out of supermarkets and wine shops and was very pleased to see that our brand was well represented and deserves the positioning in the global marketplace that we have. Over the many years that I have been an executive and a non-executive director of Delegat Group, I have learned a great deal, but I also believe that my skill set over these many years has been appropriate and beneficial to the company.
Needless to say, we grew up born, bred, and raised in the business and in the backyard of the business. And it has been a very personal and very enlightening work experience. I didn't start there at the age of 15 like Jim did, but I did go out into the world, traveled, got my overseas experience as most young men and women do in New Zealand. I earned and learned a number of skills that have complemented my working life. Came back to New Zealand, and in my late 20s, I found myself in New Zealand at home and without a job, having just been overseas for two or three years. I started working back in the business, and at the time, New Zealand wine exports were very fledgling. There are one or two people in the room here that will remember those days.
I started in the area of logistics for the company and human resource management, which has changed dramatically since then. Having done that, I remember the wonderful days of us reaching our first NZD 1 million year, our floating of the Oyster Bay company, the Delegat Group. It has been an amazing experience. I was also the inaugural chair for the New Zealand Wine Institute in the day, now known as New Zealand Winegrowers, for the export committee of sales to the United Kingdom.
I was involved with the certification or the process of certification for wine exports, and I am a member of the Institute of Directors. So I offer myself for re-election. I believe I'm in good health. I have experience. I think I bring a voice of balance to the table through my experience. I'm willing. I'm very committed, and I am totally engaged in this role. So I trust that you will support my re-election, my nomination for re-election, and thank you very much.
Thank you very much, Rose. I will move that Rose Delegat be re-elected as a director. Is there any further discussion? Would you like to raise questions here today? Or please submit your questions that you have in relation to Rose's important appointment as a director. And we will pause a few moments to see if the moderator receives any questions. Thank you very much. A question from the floor. It's coming. It's on its way. Yeah. I would like to speak. Ed.
That's all right. We've got one this time. I would like to speak in support of Rose's reappointment to the board. You've got skin in the game. You've got experience. You speak very well.
I just would like to comment that the Shareholders Association has not been consistent in who they pick that should go after a very long time on certain boards.
Thank you for your comments. Any further questions? Murray? No, I think right. There have been no further questions. Can I have a seconder? You've got the name there, Murray? All right. No further discussion. We'll appoint Rose as successfully being re-elected as a director of Delegat Group. Thank you. In accordance with the rotation provision of the Constitution, Alan Jackson retires from office and, being eligible, offers himself for re-election. Alan, thank you.
Dear shareholders, ladies and gentlemen, let me also apologize for my voice. I've been on a plane as well recently. I'm very pleased to stand in front of you today to offer myself a re-election as a director of Delegat Group Limited.
I recognize I am stepping beyond tenure guidelines, but this is primarily to support the board in director succession planning and implementation and also in some management areas. In addition, the board strongly believes that wine industry and extensive international experience are vital at this stage of the company's growth and performance aspirations. The wine industry, like many internationally competitive industries, is in a state of constant change. Consumers' tastes are changing, have to be understood and met. International distribution and sales are never without challenges. Regulatory expectations are increasing. AI is shaping the future of many aspects of our life. And now there is Donald Trump again. I must admit, reading some of the commentators I respect on the impact of Donald Trump, there are two common themes. We have no idea but expect volatility.
Delegat Group has faced many challenges in the past and succeeded in building an enviable position internationally and continues to do so. This is based on strong brands, effective in-market sales teams, and strong distribution expertise, thereby providing the platform for future growth and prosperity. As some of you will know, I have a background of one of the leaders of the Boston Consulting Group, which is a leading international global advisory business firm. We developed the concept of competitive strategy amongst many other offerings. Through nearly 25 years with BCG, I provided the advice to boards and management to many international New Zealand and Australian companies, some very large worth hundreds of billions, and many whom compete internationally. I continue to keep current through international interaction with international experts and global organizations.
Recent examples include the future of global shipping, which is projected to increase by 60% over the next 20 years at least, which is a big challenge in real terms, a big challenge for New Zealand, changes in retailing internationally, and time with recognized industry leaders in the wine industry. An example being Professor Martin of UC Davis. He's considered the wine expert of the U.S. And when he was talking to her and talking about Delegat, he said, "You guys have got it right. Your model can work." In addition, I have 30 years of interaction in and with the wine industry involving consulting, but also in the U.K., U.S., Australia, and New Zealand, but also with vineyard development, ownership, and balanced consumption. We did own a vineyard down the bottom of the South Island for about 20 years. And it won New Zealand trophies as well.
I think this is directly relevant to Delegat Group as we continue the journey to build this leading super premium wine company. And with that brief overview, recognizing that I am in transition over the next three years or up to the next three years, I seek your support as a candidate for re-election to the Delegat Board to support future and current company performance and the management transition that has been outlined. Thank you.
Thank you very much, Alan. I move Alan Jackson be elected as a director. Can I have a seconder, please? Thank you. Please vote. For those online, please vote with regards to resolution two using your computer device, while we ask for the submission of any questions that you may have in relation to the appointment of Alan Jackson as director. Yes, sir.
Thank you, Chairman. I would like to ask Mr. Alan Jackson to respond related to the criticism from New Zealand Shareholders Association. So I would like to know what you think about the opposition and your relationship to the Delegat family and also, yeah, maybe other things.
Yeah, well, thank you for that question. I did address some of those issues or sought to address them in that thing in that we are in a transition period at the moment. I think it's better to assist during this transition period. I recognize I've stepped over time. I don't do this for the money. It's for real, but I do it to help New Zealand companies. In particular, there are not many that export internationally in food or beverage and who have strong brands and are not simply price takers. So I still think I have something to contribute. I respect the views of the Shareholders Association, but I have put forward an alternate case.
Further questions? Nothing online, Murray? Thank you. The quorum is satisfied. Okay. If there are no further questions, I put the motion that Alan Jackson be elected as a director. All those in favor, it's aye. Raise your hand. Thank you. We have a clear majority on paper, Murray? Okay. So are we in order? Okay. So I can now declare that Alan Jackson is re-elected as a director of Delegat Group Limited. Thank you. In accordance with the rotation provision, the election of Doug McKay as a director and retires from office and offers himself for election. Thank you, Doug.
Thank you, Jim. Good afternoon, fellow shareholders, colleagues, ladies and gentlemen. It is a privilege today to put myself forward for your consideration as a director of Delegat Group Limited.
I believe I am well equipped to contribute strongly as a director on your board. I am a seasoned director bringing deep and diverse governance experience on companies such as Ryman Healthcare early in my governance career, Chair of the Bank of New Zealand for eight years, and on that board for 11years, director of Fletcher Building for six and a half years, Chair of Eden Park Trust for nine years, member of the Genesis board for nearly nine years. And my current boards are National Australia Bank, NAB as it's commonly known, which I retire off this December after three terms. I am currently the Chair of Vector and am on IAG New Zealand's board, New Zealand's largest general insurance company. And I have served 11 years there.
I have ample capacity to fulfill my responsibilities at Delegat and have the skills to operate on any of our committees, having chaired on other boards' audit, risk, HR, and remuneration on numerous occasions. I have also chaired health, safety, and environment committees. Plus, I've been on multiple CEO selection committees. My relevance for Delegat goes further back into my executive career before my last decade, which has been spent in governance. In my younger executive life, I had two substantial stints in the liquor industry, one with Lion Nathan as managing director of Lion Breweries and Lion International, which included all our global exports and establishing on-the-ground operations in China. My second stint in liquor was a private equity investment, and I was executive chair of Independent Liquor, New Zealand's largest manufacturer, marketer, and exporter of RTD products to many of the same customers as Delegat around the world.
One other executive role to note was five years as Chief Executive of Sealord, Australia's largest seafood and fishing company, exporting processed fish and aquaculture globally to retail, commercial, and food service end users. Prior to and including some of this career history, I was trained in and had an extensive executive career path in marketing, doing my first decade in management at one of the world's leading global fast-moving consumer goods companies, Procter & Gamble. I am professionally skilled, trained, and experienced in marketing and understand the value of great brands as we have here at Delegat. Our brands, particularly Oyster Bay, are our company's key assets, perhaps even more valuable than our numerous high-quality physical assets. I have the skills and background to contribute meaningfully to brand development. I would appreciate your support today and thank you in anticipation and are happy to take any questions.
There's a question out in the...
Hi. Given the nature of the shareholding, I was wondering what your view is on the trust and its progress in replacing the management. Given the two Delegat board members are probably in their senior years, I would expect to see a younger Delegat appearing somewhere.
The trust looks after the Delegat shareholding.
The trust controls the company, basically.
The 60-odd% of the shares that are under their control. And that is really for the trustees of the Delegat Trust to make decisions on. It's not for me to comment on what our shareholders may or not be thinking.
With respect, I mean, for the rest of the shareholders who are basically a minority, continuity of management is probably relevant to us.
What I see the board doing and led by Jim is being very conscious of board succession planning, and that has been commented on by a number of people today. Moves are being made, and opportunities are being opened up over the next three years to bring on suitable candidates, which I would hope would give our shareholders the confidence that the future of the company will be in very good hands. That may or may not include Delegat family members. I don't have any visibility of their personal circumstances, but I personally think it would be a wonderful legacy if that was to be the case, but I have no visibility of who or when that might occur. Our job as directors of this board is to make sure the best possible people are appointed to steward your company into the future.
With respect, I mean, skills are learned over time. I would expect a candidate to appear at some point fairly soon.
Yeah. Well, there has been quite a meaningful and material move in terms of building future capability. Recent board appointments that I've observed include Gordon, Philippa, and now myself. So there is a process of renewal that I am happy and want to be and be part of. So I think you should take some—I would take confidence from that. Are there any other questions? Thank you.
Thank you, Doug. I'll just elaborate a little more on the Delegat Share Protection Trust's involvement. But in the meantime, in order to allow for questions to come through online, I move that Doug McKay be elected as a director. Can I have a seconder, please? Thank you.
Yes, Delegat Share Protection Trust represents the interests of the Delegat family in terms of the 66% shareholding. The Delegat Share Protection Trust has a family office, and we do have a number of trust advisors that are working with the family in order to ensure that the family, the beneficiaries, and the trustees are well familiar with the values and opportunities that not only the Delegat investment holds, but other investments as well, and it is a point of discussion on our six-monthly trust meetings as to the update on the business and the recommendations to the Share Protection Trust on our continued investment. Without committing ourselves, we see this as an intergenerational investment, and we are satisfied with the information as trustees and beneficiaries that we will, long into the future, remain a majority shareholder. Does that help answer the question somewhat?
Skills are learned over time. I would just expect.
I'm sorry?
Skills are learned over time, and I would expect a candidate presumably from the Delegat family to have appeared.
Well, just to not speak too deeply on that, you can be assured there are two Delegats at the moment out there in the marketplace. One of them at university, and the other one skinning his knees on someone else's balance sheet. They're learning feverishly about business and commerce and making their way in life and have a significant interest in the activities of the Delegat Share Protection Trust.
Thank you.
Any further questions from the floor? Yes, sir.
I'm sorry, Chair. I was a bit confused by how you conduct this meeting. For example, I'm not too sure why you needed to ask seconder and also announce it before all the votes have been counted. So that's a bit, yeah, confusing compared to other meetings. Thank you.
I understand Computershare has the votes on record that have been placed. Is that correct, Murray? And you have a record of the votes for each of the.
Yeah, just for understanding, there will have been proxy votes that will have been submitted through to Computershare before the meeting has happened. And so that's then. And as you rightly point out, the audience will also have the opportunity to vote. And at the end of that, that will all be collated. And effectively, then we will post the announcement in terms of the election. So when Jim says, "Does he need a seconder?" that's the formality of the business. You need a motion. You need someone to second the motion.
And then, to your point, it will be passed upon the notifications at the end of the meeting when all of the votes, including those in the room and the proxies, are combined.
Thank you very much for your question. We welcome questions. There being no further questions, I shall move to agenda item four. That is the fixing of the auditor fees and expenses. In regard to this matter, you will recall from last year's annual meeting, the company advised that Deloitte had appointed an auditor to Delegat Group Limited 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 207 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. It's in order again that I ask, "Do we have a seconder?" Thank you. So once again, for those online, please submit your questions that you have in relation to the appointment of Deloitte as auditor and their remuneration. If there are no further questions, I will put the motion that directors be authorized to fix the auditor's remuneration. Please cast your vote in regards to resolution four using your computer device or in the room completing your voting card. Thank you. Very good. 26, 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? I'm sorry.
Are there any items for general business and items that we could have for discussion? Please submit that once again on your voting poll. And we'd ask that you submit the questions here and pose in the meeting. Thank you, sir.
Two questions. How much land does Delegat have in the Auckland area? I think it's commonly referred to as near urban zoning. And last year, you had a biological loss of NZD 24 million in the accounts. I mean, this year appears to be a lot better growing year. If you look at kiwifruit, things like that, you must have the set on the grapes, so you must vaguely know whether you're going to be down or up or the same harvest as not the last year, but the year before.
Yeah, okay. So the question is the land that we have,
the land in Auckland that might be classed as near urban. How many hectares have you got?
Okay, there's four hectares. Four hectares. Original four hectares or 10 acres in the old language.
Thank you.
And that's intense urban. The second question was our
biological loss last year was NZD 24 million from the cost of the grapes to the inventory value, which basically clipped the profit. This year, it looks to be a lot better growing year, and you must have the set of the grapes now, so you must know more or less what your crop is going to be. Is the harvest going to be back to the not last year, but the previous year? You're not going to take a NZD 24 million biological loss this year.
Yes. Okay. That was a point of discussion this morning at the board meeting.
The biological loss is in relationship to the yield versus the marketplace price for grapes, and therefore the difference is that loss. I think that Steve alluded to the fact that the growing season thus far, so the spring growing season for Marlborough, Hawke's Bay, and Barossa Valley has been very favorable. The inflorescence presently counted on the vines would indicate that if fruit set throughout the month of December or late November, December is supported by consistent ideal spring summer growing, we believe that we should reach budgeted yield this year. We will know better in the February period when we undertake our yield evaluation process. That is where we, in fact, go out into the vineyards, take selected panels, and count the bunches, and multiply that out. We are relatively confident at this moment that the growing season will support target yield.
I would think that it would be, Murray, about 44,000 tons. 44,000ha . It is that much. Yeah, well, if we're talking 4,000ha and we're talking 12 tonnes of the hectare, it's 44,000, 48,000 tons. So that would be up 25% on last year. But I'm going to the vineyards tomorrow into Marlborough to have a look with our viticulturalist. I've not been down there for three months. I would like to see it for myself and also spend time with the management staff in the region.
Thank you.
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. No doubt you people have filled your forms out. Thank you very much.
Murray, I should not close the voting for a moment or two yet. All right. Before I, what we can do is I will continue with the narrative of the meeting and close the voting at the end of the meeting. The results of these votes, one to four, will be released to the stock exchange later today. At the conclusion of this meeting, the board invites you 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 now close the voting. I will declare the meeting closed and thank you for your ongoing interest in Delegat. Thank you.