15 August 2023
ASX ANNOUNCEMENT
2023 Annual Report
Treasury Wine Estates Ltd (ASX: TWE) is pleased to present its Annual Report for the year
ended 30 June 2023, which includes the Company’s full year financial statements and
Appendix 4E.
For the purposes of ASX Listing Rule 15.5, TWE confirms that this document has been
authorised for release to the market by the Board.
Contacts / Further information:
Investors
Bijan Taghian
Tel: +61 3 8533 3568
Mob: +61 433 173 664
Media
Mel Ward
Tel: +61 3 8533 3915
Mob: +61 437 959 228
T R E A S U R Y W I N E E S T A T E S L I M I T E D
A B N 2 4 0 0 4 3 7 3 8 6 2
L E V E L 8 , 1 6 1 C O L L I N S S T R E E T
M E L B O U R N E V I C 3 0 0 0 A U S T R A L I A
W W W . T W E G L O B A L . C O M
TREASURY WINE ESTATES ANNUAL FINANCIAL STATEMENTS 2023
Appendix 4E
Final Report in respect
to Treasury Wine Estates Limited
For the year ended 30 June 2023
ABN 24 004 373 862
1. Results for announcement to the market
Key information
Revenue from ordinary activities
Profit attributable to members of Treasury Wine Estates Limited
Net profit after tax before material items and SGARA
Earnings before interest, tax, SGARA and material items
Year ended
30 June 2023
$M
Year ended
30 June 2022
$M
% Change
increase/
(decrease)
Amount increase/
(decrease)
$M
2,488.3
2,531.8
254.5
376.1
583.5
263.2
322.6
523.7
(1.7)%
(3.3)%
16.6%
11.4%
(43.5)
(8.7)
53.5
59.8
Earnings per share
Basic earnings per share
Basic earnings per share, adjusted to exclude SGARA, material items
Dividends (distributions)
Final dividend – year ended 30 June 2023 (determined subsequent to balance date)
1
Interim dividend – half year ended 31 December 2022
Final dividend – year ended 30 June 2022
Year ended
30 June 2023
Cents per share
Year ended
30 June 2022
Cents per share
35.3
52.1
36.5
44.7
Cents per share
Franking %
17.0 cents
18.0 cents
16.0 cents
100%
100%
100%
1. The record date for determining an entitlement to receipt of the final dividend is 1 September 2023 and the Company expects to pay the dividend on 3 October 2023. The Company’s Dividend Reinvestment Plan will be
in operation for the final dividend. The last date for receipt of election notices for participation in the Dividend Reinvestment Plan is 4 September 2023 at 5pm (AEST).
2. Final financial statements
Please refer to pages 80 through 132 of this report wherein the following are provided:
•
•
•
•
•
Consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2023;
Consolidated statement of financial position as at 30 June 2023;
Consolidated statement of changes in equity for the year ended 30 June 2023;
Consolidated statement of cash flows for the year ended 30 June 2023;
Notes to the consolidated financial statements; and
•
Directors’ declaration.
1
TREASURY WINE ESTATES ANNUAL FINANCIAL STATEMENTS 2023
Appendix 4E
Final Report in respect
to Treasury Wine Estates Limited
For the year ended 30 June 2023
ABN 24 004 373 862
3. Net tangible asset backing
Net tangible asset backing per ordinary share
Net tangible asset backing per ordinary share
4. Associates and Joint Ventures
Investments in Associates and Joint Ventures
Investments accounted for using the equity method
Year ended
30 June 2023
$
Year ended
30 June 2022
$
3.40
3.31
Year ended
30 June 2023
$M
Year ended
30 June 2022
$M
-
-
Investments in associates and joint venture partnerships are accounted for in the consolidated financial
statements using the equity method of accounting.
5. Annual General Meeting
The Annual General Meeting of the Company will be held on 16 October 2023.
6. Further information
Additional Appendix 4E disclosure requirements can be found in the notes to the year-end financial report and the ASX announcement lodged
with this document.
Further information can be obtained from:
Media:
Mel Ward
Tel: +61 3 8533 3915
Mob: +61 437 959 228
Investors:
Bijan Taghian
Tel: +61 3 8533 3568
Mob: +61 433 173 664
2
Annual
Report
2023
TREASURY WINE ESTATES ANNUAL REPORT 2023
TREASURY WINE ESTATES ANNUAL REPORT 2023
We’re striving to be the world’s
most admired premium wine
company, and we’re boldly leading
change in the world of wine
Contents
About Treasury Wine Estates
At a glance
Chairman and Chief Executive Officer’s report
Operating and Financial Review
Profit report
Sustainability
Inclusion, equity and diversity
Board of Directors
Corporate governance
Code of Conduct reporting
Directors’ report
Auditor’s independence declaration
F23 remuneration report
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors’ declaration
Independent auditor’s report
Details of shareholders, shareholdings, and top 20 shareholders
Shareholder Information
4
8
9
12
24
40
42
46
48
53
54
57
58
80
81
82
83
84
132
133
140
141
Important information
This report is in summary form and is not necessarily complete. It should be read
together with the Company’s other announcements lodged with the Australian
Securities Exchange, which are available at asx.com.au.
This report contains information that is based on projected and/or estimated
expectations, assumptions or outcomes. Forward-looking statements can generally
be identified by the use of forward-looking words such as, ‘expect’, ‘anticipate’,
‘likely’, ‘intend’, ‘could’, ‘may’, ‘predict’, ‘plan’, ‘propose’, ‘will’, ‘believe’, ‘forecast’,
‘estimate’, ‘target’, ‘outlook’, ‘guidance’, ‘goal’, ‘ambition’ and other
similar expressions.
Forward-looking statements are subject to a range of risk factors. The Company
cautions against reliance on any forward-looking statements, particularly in light
of the current economic climate and potential impacts on consumer demand,
the impact of continued high inflation on business outcomes, global difficulties in
logistics and supply chains, exchange rate impacts given the global nature of our
business, vintage variations and the evolving nature of global geopolitical dynamics.
At the date of this report, the Company believes that there are reasonable grounds
for these forward-looking statements. While the Company has prepared this
information with due care based on its current knowledge and understanding and
in good faith, there are risks, uncertainties and other factors beyond the Company’s
control which could cause results to differ from projections. The Company will not
be liable for the correctness and/or accuracy of the information, nor any differences
between the information provided and actual outcomes, and reserves the right to
change its projections from time to time. The Company undertakes no obligation to
update any forward-looking statement to reflect events or circumstances after the
date of this report, subject to disclosure obligations under the applicable law and
ASX listing rules.
Certain market and industry data used in this report has been obtained from
research, surveys or studies conducted by third parties, including industry or general
publications. Neither TWE nor its representatives or advisers have independently
verified any market or industry data provided by third parties or industry or
general publications.
References to ‘TWE’, ‘Company’, ‘Group’, ‘we’, ‘us’ and ‘our’ are to Treasury Wine
Estates Limited and/or, except where the context otherwise requires, its subsidiaries.
All currency referred to in the report is in Australian dollars, unless otherwise stated.
3
About Treasury Wine Estates
70+
Countries
Consumers in more than 70 countries
enjoy our iconic wines, available in
major retailers, premium wine outlets,
restaurants, bars, and online channels.
2,500
Team members
4
Our world-class team has a presence
across Australia, New Zealand, Asia, the
Americas, the United Kingdom, Europe,
the Middle East, and Africa.
TREASURY WINE ESTATES ANNUAL REPORT 2023 Brand portfolio
divisions
3
Penfolds, Treasury Premium Brands,
and Treasury Americas are supported by
centralised business services, supply,
and corporate functions.
10,100
Hectares
Our global multi-regional sourcing model
is at the heart of our business. It includes
vineyards and production assets in some
of the world’s best wine regions.
5
TREASURY WINE ESTATES ANNUAL REPORT 2023 Tatachilla, McLaren Vale, South Australia.
Photo by Darrel Sim, Vineyard Operator.
6
TREASURY WINE ESTATES ANNUAL REPORT 2023 7
TREASURY WINE ESTATES ANNUAL REPORT 2023 At a glance
1
• F23 EBITS2 increased 11.4% to $583.5 million; EBITS margin up 2.9
percentage points to 24.1%
• EPS (before material items and SGARA) up 16.6% to 52.1 cents per share
• Return on Capital Employed increased 0.6ppts to 11.3%
• Final dividend of 17 cents per share (fully franked); bringing F23
annual dividend to 35 cents per share, an increase of 12.9% on the prior period
• Full-year cash conversion of 60.6%
EBITS
EPS (Before material items and SGARA)
(Earnings before interest, tax, material items and SGARA)
(Earnings per share) (cents)
(A$ million)
.
7
4
6
6
.
6
2
1
5
.
3
0
1
5
.
7
3
2
5
.
5
3
8
5
11.4%F23 INCREASE
.
2
7
5
1
.
2
5
7
.
1
4
.
9
2
4
.
7
4
4
16.6%F23 INCREASE
F19 F20 F21
F22 F23
F19 F20 F21
F22 F23
ROCE
(Return on Capital Employed)(%)
%
6
3
1
.
%
8
0
1
.
%
7
0
1
.
%
2
0
1
.
%
3
.
1
1
0.6PPTS
F23 INCREASE
Market capitalisation
(A$ million)
14.92
9
2
7
0
1
,
10.48
11.68
11.35 11.23
3
7
3
8
,
3
9
1
,
8
6
0
1
,
8
4
5
5
7
,
1%F23 DECREASE
F19 F20 F21
F22 F23
F19 F20 F21
F22 F23
Share pice
($ at 30 June)
Barossa Valley, South Australia.
Photo by David Dahlenburg, Maintenance Scheduler.
8
1. Unless otherwise stated, all figures and percentage movements are stated on a reported currency
basis and are subject to rounding.
2. Earnings before interest, tax, SGARA and material items
TREASURY WINE ESTATES ANNUAL REPORT 2023
TREASURY WINE ESTATES ANNUAL REPORT 2023
Chairman and Chief
Executive Officer’s report
This year marked the halfway point of
our five-year strategy, TWE2025. While
the external environment continued to
present challenges in some markets,
the fundamentals of our strategy
remain sound, with strong demand
in the luxury wine segment driving
progress towards our ambition of being
the world’s most admired premium
wine company.
wine certification through re-corking clinics to Penfolds House events
around the world that bring together the best of wine, music, and
design. Underpinning the brand’s appeal in established and emerging
markets is the focus on quality; the renowned Penfolds House Style.
A new tier in the Penfolds range – ‘One by Penfolds’ – was launched
in September 2022 as a dynamic way of engaging the ‘new luxurian’
consumer with wines from the US, France, and for the first time - China.
One by Penfolds leverages the brand as a hallmark for heritage, and
realises our long-held ambition to make wine in China. The China
red blend, featuring grapes from the Ningxia region of China, is now
available alongside the US and French wines after the Hong Kong
launch in early F24.
Enhancing production capacity to satisfy growing global demand for
Penfolds informed our acquisition of a majority stake in the historic
Château Lanessan in Bordeaux, France, which completed in F23. The
acquisition has doubled the production capacity for French-sourced
Penfolds, and we have been collaborating closely with the Château’s
winemakers and the Bouteiller family, which retains a minority stake.
Plans are underway for the transformation of the historic site, founded
in the late 18th century, into a cohesive blend of Penfolds storied
history of almost 180 years and the brand’s future focus in Europe, in
the heart of France’s premier winemaking region.
With the increasing consumer interest in lighter red wines, we also
completed the acquisition of Beenak Vineyard in Victoria’s Yarra
Valley, which has significant plantings of cool-climate varieties
including Pinot Noir and Chardonnay. We also made the difficult
decision to close the Karadoc commercial winery in Victoria, Australia,
in F24. Wines made at the Karadoc site will continue to be produced
locally through third party partnerships, allowing us to continue to
focus our capital investment into premium and luxury winemaking.
This year, Treasury Premium Brands has grown demand across
Asia, in particular south-east Asia, with priority brands Pepperjack,
Squealing Pig, 19 Crimes, and Rawson’s Retreat strengthening
consumer engagement. Wynns has also continued to make inroads
into established European markets with the Wynns John Riddoch
Cabernet Sauvignon listing for the third year at famed Bordeaux
wine retailer La Place de Bordeaux, joining Penfolds alongside the
world’s finest wines. Squealing Pig’s colourful and inclusive consumer
engagement approach was in full flight for the second year of the
brand’s partnership with Sydney Gay and Lesbian Mardi Gras, which
this year included the 17-day Sydney WorldPride event.
Dear shareholders,
We are pleased to present the 2023 Annual Report for Treasury Wine
Estates Limited.
This has been a year of continued profit and EBITS margin growth
despite difficult global economic and geo-political circumstances.
While the challenging environment has continued the trend of recent
years, our clear strategy, diversified business model and disciplined
execution has seen our iconic brands continue to grow in key markets
in Asia (excluding Mainland China), the Americas, Australia, Europe,
and further afield.
Guided by our TWE2025 strategy while being agile and proactive
in responding to shifts in the external environment, we continue
to leverage the opportunities before us. Our activity this year has
focused on investment behind our priority brands and innovation
agenda, expanding our multi-country of origin portfolios, optimising
our global asset footprint, and making organisational change that
allows us to improve our efficiency. The re-allocation of investment
to where it will best support growth in the current and future
commercial environment has, and will continue to, deliver cost
and structural benefits.
With our brand portfolio operating model now firmly in place, we’ve
seen a clear focus on execution from each division: Penfolds, Treasury
Premium Brands, and Treasury Americas. The premiumisation trend
has continued across all our markets, informing our approach to
attracting new consumers into the category and expanding the
occasions that our portfolio satisfies for existing ones.
Penfolds has cemented its position as a global luxury icon, continuing
the tradition of engaging wine lovers and new consumers in
innovative ways: from premium after-sales experiences including
Treasury Americas has continued to lay the platform for growth in
in the premium and luxury segment, with Frank Family Vineyards
and its portfolio of luxury wines now firmly part of the broader
9
Chairman and Chief Executive Officer’s report (continued)
Treasury Americas family. Shifts in consumer preferences such as
in addition to constrained luxury portfolio availability from the
the decreasing demand in the commercial segment have played
lower yielding 2020 Californian vintage. Improved portfolio mix,
out particularly acutely in the US as the world’s largest wine market.
successful implementation of price increases on key brands and
Recent investment in 19 Crimes as a global growth brand has started
improved COGS and CODB supported EBITS margin growth.
to bear fruit: the brand’s ambassadors in Snoop Dogg and Martha
On a constant currency basis, NSR declined 18.4% and EBITS
Stewart continue to recruit a new demographic into the wine category,
declined 0.3%.
with 36% of consumers buying 19 Crimes Cali Red and Cali Rosé
being new to drinking wine.
• Treasury Premium Brands reported a 5.4% decline in EBITS to
$81.7 million and an EBITS margin of 10.4%, in line with F22.
With changes to our operations underway and our diversification
Reduced NSR for the commercial portfolio in the UK and Australia,
across sourcing regions, markets and brands well entrenched, we’re
in addition to unfavourable foreign exchange movements, were
poised to take advantage of luxury and premium category growth
partly offset by 7.8% NSR growth in priority premium brands
over the long term.
including 19 Crimes, Squealing Pig and Pepperjack, as well as
improved COGS and CODB. The combined premium and luxury
Recognising the growing health and wellness trend informing
portfolios delivered double-digit gross profit growth in F23. On a
moderation, we continued to invest in our portfolio of no alcohol
constant currency basis, NSR declined 4.7% and EBITS increased
and low alcohol offerings. With world-class winemakers, cutting-
4.0%.
edge technology, and a wealth of consumer insights, we’re taking
a leadership position in this growing segment. On the heels of the
Balance sheet strength and dividend
award-winning Wolf Blass Zero range, the latest product in the
TWE maintains financial metrics that are consistent with an
portfolio to tap into the moderation trend, Pepperjack mid-strength,
investment grade credit profile. The Company’s balance sheet
leverages the brand recognition of Australia’s favourite Shiraz with
continues to be strong, efficient, and flexible. Net debt/EBITDAS was
half the alcohol content at 7% ABV. We also launched our first Alcohol
1.9x in F23, up from 1.8x in F22, and below TWE’s ‘through the cycle’
and Health Policy, setting out our position and commitments on issues
target of up to 2.0x.
such as product transparency, reducing harmful consumption and
responsible marketing.
Total capex for the year was $141.2 million comprising maintenance
and replacement capex of $102.1 million, the purchase of a
In F23, Group EBITS increased 11.4% to $583.5 million, while our EBITS
previously-leased vineyard in the US for $25.4 million and growth
margin strengthened 2.9 percentage points to 24.1%. TWE’s long-term
capex of $13.7 million.
financial objective remains to deliver sustainable top-line growth,
high single digit average earnings growth and Group EBITS margin
Cash conversion was 60.6%; excluding the net change in non-current
target of 25%+.
luxury and premium inventory, cash conversion was 76.2%, below
the annual target of 90% or higher, reflecting the timing of shipments
Throughout the year, NSR declined 2.2% to $2,423.0 million, reflecting
in Asia in 4Q23, in addition to the timing of supplier payments and
volume declines in the premium portfolio in Treasury Americas and
promotional spend in Treasury Americas and Penfolds. TWE expects
commercial portfolio volume declines in Treasury Premium Brands,
cash conversion to be delivered in line with the annual target in F24.
partially offset by strong luxury portfolio growth for Penfolds. NSR per
case increased 12.7%, reflecting the luxury-led portfolio mix shift and
Earnings per share increased 16.6% to 52.1 cents per share and return
price rises across several key brands.
on capital employed was up 0.6 ppt to 11.3%, driven by higher EBITS
and demonstrating our disciplined approach to capital allocation.
The premium and luxury portfolios contributed 85% of Group NSR,
continuing its growth trajectory of recent years, and up from 83%
For F23, TWE is pleased to declare a final dividend of 17 cents per share,
in F22.
fully franked, bringing the total dividend for F23 to 35 cents per share,
an increase of 12.9% on the pcp. The 67% payout is at the upper end of
Key elements of the result are detailed below.
TWE’s long-term dividend policy range.
• Penfolds reported a 14.2% increase in EBITS to $364.7 million and
Sustainability
an EBITS margin of 44.5% (in line with F22). Strong NSR growth of
Continuing our focus on achieving sustainability leadership, we made
14.3% was delivered through Asia, Australia and EMEA, reflecting
strong progress against our targets and commitments, with highlights
the continued momentum behind the Penfolds strategy to
detailed below.
build distribution and grow consumer demand. In addition, the
successful launch of One by Penfolds and growth of the multi-
• The decarbonisation of our business was accelerated through a
country of origin portfolio contributed to NSR growth, particularly
range of energy efficiency initiatives, as well as the installation
in Asia. On a constant currency basis, NSR and EBITS increased
of on-site solar across a number of our operational sites in
13.8% and 15.5%, respectively.
Australia and Europe. A total of 21 projects were completed,
including Australia’s largest winery solar installation. We also
• Treasury Americas reported a 14.0% increase in EBITS to
announced plans for America’s largest solar winery on-site
$203.9 million and an EBITS margin of 24.8% (up 5.6ppts).
system, expected to be complete in the coming year.
Strong performance of key luxury brands including Frank Family
Vineyards and Beaulieu Vineyard, the continued growth of
• Collaboration with our growers supported them in achieving
Matua, and favourable foreign exchange rates were partly
region-relevant sustainability certification, using our scale and
offset by shipment declines in 19 Crimes and Sterling Vineyards,
10
TREASURY WINE ESTATES ANNUAL REPORT 2023
TREASURY WINE ESTATES ANNUAL REPORT 2023
technical expertise to drive broader change across the industry.
experienced teams, sees us well positioned to navigate these macro
In Australia, 86% of fruit sourced from growers is certified, as
and industry headwinds to achieve our objectives of delivering
is 100% in New Zealand, with progress in other regions well
quality earnings growth, efficient capital utilisation and sustainable
underway.
shareholder returns.
•
Improving health, safety and environment metrics, including a
Our network of suppliers, customers, and partners, together with our
significant reduction in the serious incident frequency rate of 1.2
talented global teams, are integral to our long-term growth ambitions.
percentage points to 0.2 as a result of the concerted focus on
The ongoing success of our business relies on our experienced and
safety during the year, including our leader-led campaign ‘Build
dedicated teams around the world. We thank the people in each of
safe together’, as well as a range of mental wellbeing initiatives.
our markets for their effort and commitment, and the way they live our
cultural code, our TWE DNA, in everything they do.
In F23, our Sustainability Linked Loan arrangement continued to
reward performance against a range of milestones.
We also welcome John Mullen to the Board. He joined in May 2023,
and is a highly credentialled Chairman and Director with extensive
We’re proud of our achievements in sustainability this year. This will
executive and strategy experience in ASX-listed and international
remain a key focus in the years ahead, acknowledging that cultivating
companies, and the right skills to steer the Company to continued
a brighter future depends on empowerment and collaboration across
growth. The Board has appointed Mr Mullen Chairman elect, to
many areas of our business, as well as broad engagement with
become Chairman at the conclusion of the Annual General Meeting,
external partners including our network of growers and suppliers.
subject to his election.
Our 2023 Sustainability Report will be available at tweglobal.com/
Looking to the opportunities ahead and the work that’s been done to
sustainability in October 2023.
Our thanks
position the Company for ongoing growth, we also acknowledge the
continued support and investment of our shareholders - thank you.
Our goal remains clear: to deliver top line growth and high single-
Kind regards,
digit average earnings growth over the long term. We will continue
to strengthen the premium and luxury focus of our portfolio; grow
distribution, demand and availability of our priority brands; proactively
manage cost; and lead innovation in wine production and marketing.
With recent years characterised by change and challenge, the work
we have done in F23 has ensured we remain in a strong position.
Our global footprint, diversification strategy and portfolio-led
operating model, together with the strong capability of our
A note from the Chairman
As outgoing Chairman, I am particularly pleased with what’s been
achieved since I joined the Board when TWE was floated off from
Foster’s Group in May 2011. Our share price has risen, despite the loss
of the majority of the China business, more than 250% from $3.30 on
listing to $11.70 at the time of writing.
Paul Rayner
Chairman
Tim Ford
Chief Executive Officer
present, who without exception have played a major role in these
achievements. I’d also like to thank the three Chief Executive Officers
that TWE has had since its inception: David Dearie, who launched the
company with a bold vision, and then Mike Clarke, who transformed
the company into a far more efficient and stronger operation, as well
as leaving an excellent successor in the current CEO, Tim Ford. Tim
has taken the business up another level, despite the headwinds of the
COVID pandemic and Chinese government decision to impose tariffs
on Australia-sourced wine in China. I firmly believe that as a result
of the steps Tim and his management team have taken to diversify
our sources of production and markets following this decision, the
company is now in a far better position for long-term growth.
Apart from the individuals listed above, I’d like to acknowledge many
others I’ve worked with, who have contributed to TWE’s growth.
Executives and team members in each of the regions where we
This growth is a reflection of a much stronger, more collaborative
operate have played an instrumental role in building the successful
global management team, a more robust portfolio of brands focused
company we have today, and I thank them for their efforts.
on the premium and luxury end of the market, a more efficient and
diversified global vineyard and winemaking footprint, and stronger
market positions in most markets around the world.
I look forward to tracking the company’s ongoing success following
my retirement from the Board at the conclusion of the 2023 Annual
General Meeting.
There are a number people who’ve enabled this growth that I would
like to thank. Firstly, my fellow Non-Executive Directors, past and
Paul Rayner
11
TREASURY WINE ESTATES ANNUAL REPORT 2023
Operating and Financial Review
Treasury Wine Estates (TWE) is a
premium focused, global leader in
wine, listed on the Australian Securities
Exchange (ASX). The Company is
focused on delivering shareholder value
through the production, marketing
and selling of quality wine brands to
consumers around the world.
global, multi-regional sourcing model which includes world class
vineyard and production assets in internationally acclaimed
winemaking regions including Barossa Valley and Coonawarra
in Australia, Napa Valley in the United States, Marlborough in New
Zealand, Bordeaux in France and Tuscany in Italy.
TWE employs a global team of approximately 2,500 people.
TWE’s organisational structure
TWE has operated under a revised global business model since July
2021 with three standalone divisions.
The following Operating and Financial Review contains details of
the significant changes in TWE’s state of affairs that occurred
• Treasury Americas – representing sales of US sourced brands,
as well as those imported from Australia and New Zealand, in
during the year ended 30 June 2023.
the Americas
TWE’s business activities
TWE is a vertically integrated wine business focused on portfolio
premiumisation supported by innovation, brand building
investment and global sales and marketing execution.
TWE’s brand portfolio is represented across the luxury, premium,
and commercial
1
price segments and sold in more than 70
countries around the world. At the heart of the business is TWE’s
• Penfolds – representing global sales of the Penfolds brand
portfolio
• Treasury Premium Brands – representing the sale of TWE’s
diverse range of predominantly Australia and
New Zealand sourced brands globally
1. TWE participates in three price segments; luxury (A$30+), premium (A$10-A$30) and commercial
(A$5-A$10). Segment price points are retail shelf price.
12
TREASURY WINE ESTATES ANNUAL REPORT 2023
Our operating model
Focus and accountability to unlock our long-term growth potential
Penfolds
Treasury
Premium
Brands
Treasury
Americas
Supply
US Supply
Treasury Business Solutions
Corporate functions
13
Operating and Financial Review (continued)
TWE’s business model
TWE is a vertically integrated wine business with three
Wine production
TWE owns world-class wine production and packaging facilities.
principal activities:
• grape growing and sourcing
• wine production
• wine marketing, sales and distribution
•
In Australia, TWE owns and operates seven wineries and one
packaging facility with wines primarily produced in South
Australia and Victoria.
•
In New Zealand, TWE owns one winery located
Grape growing and sourcing
in Marlborough.
TWE accesses grapes and bulk wine from a range of sources
including Company-owned and leased vineyards, grower vineyards
and the bulk wine market varying by region as shown in Figure 1.
•
In the US, TWE has seven wineries and one packaging facility
in California’s North and Central Coast regions.
•
In Europe, TWE owns one winery in Italy and three wineries
2
Figure 1: TWE’s regional sourcing model
in France.
Australia
30%
51% 19%
Marketing, selling and distribution of TWE wine
TWE generates revenues and profits from the production,
marketing and sale of its portfolios of branded wine in more
than 70 countries, with its route-to-market model reflecting regional
California
37% 54% 9%
insights and opportunities.
New Zealand
21%
55%
24%
Italy
23%
18%
59%
The Company has taken deliberate action to embed greater
balance across its regional earnings mix and sourcing models.
TWE’s profitability continues to be increasingly driven by the luxury
and premium segments, as well as improved profitability across
France
14% 32%
54%
all segments.
China
19%
81%
TWE OWNED / LEASED
GROWER CONTRACTS
THIRD PARTY PRODUCED WINE
Figure 2 shows the net sales revenue (NSR) and earnings before
interest, tax, SGARA and material items (EBITS) contribution by
division in F23.
Figure 2: TWE’s business performance by division in F23
A global sourcing model diversified across geographic regions,
Net sales revenue ($m)
varietals and price segments supports growth and limits exposure to
vintage variation risk as well as grape and bulk wine pricing during
periods of grape shortages and surpluses.
3
($m)
EBITS contribution
Earnings before interest, tax,
material items and SGARA
This diversification and flexibility also enables TWE to react to
changes in consumer and customer preferences to support growth.
TWE owns and leases 7,364 planted hectares of vineyards in
Australia and New Zealand and is the custodian of sought-after
viticultural assets in renowned winemaking regions, including
Australia’s Barossa Valley and Coonawarra, and Marlborough
in New Zealand.
The Company also owns and leases 2,393 planted hectares in key
viticultural regions in California, including Napa Valley, Sonoma
County, Lake County and Central Coast. In Europe, TWE owns and
leases 175 planted hectares in France’s Bordeaux region and 166
planted hectares in Tuscany, Italy.
TWE optimises its inventory holdings to support portfolio
premiumisation and continues to focus on increasing access to
luxury and premium fruit from multiple countries of origin through
vineyard acquisitions, vineyard leasing, and supply contracts with
third-party growers. For commercial grade wine, TWE prioritises
sourcing from the bulk-wine market.
14
PENFOLDS 34%
TAM 34%
TPB 32%
PENFOLDS 56%
TAM 31%
TPB 13%
2. Regional sourcing is historical data for the northern hemisphere 2022 vintage and the southern
hemisphere 2023 vintage.
3. Excludes corporate costs of $66.8 million
TREASURY WINE ESTATES ANNUAL REPORT 2023
Global wine consumption
Global wine category growth is driven by the premium and luxury price segments – a trend expected to continue. TWE’s portfolio structure
and premiumisation strategy are well aligned to benefit from these attractive category fundamentals with 85% of F23 NSR contributed
by the premium and luxury portfolios.
4
Figure 3: Global wine category growth trends
Luxury
Premium
7.5%
2.8%
3.7%
2.3%
Commercial
0.5%
0%
HISTORICAL GROWTH (CAGR 2013 — 2022)
FORECAST GROWTH (CAGR 2022 — 2027)
The top 10 markets for premium and luxury wine represent approximately 80% of global consumption. The United States is the clear leader,
with approximately 35% share of global consumption and strong forecast growth.
5
Figure 4: Key premium and luxury wine markets and forecast five-year compound annual growth rate (CAGR) in wine consumption
)
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4. IWSR 2022, still and sparkling wine only, A$ equivalent, portfolio price points per IWSR
segmentation, value growth shown.
5. IWSR 2022, still and sparkling wine only, A$ equivalent, portfolio price points per IWSR
segmentation, value growth shown. Emerging markets include key markets in Asia, MEA and
Latin America.
15
TREASURY WINE ESTATES ANNUAL REPORT 2023
Operating and Financial Review (continued)
TWE Ambition and Game Plan
TWE’s strategic vision and strategic imperatives are set out below
16
TREASURY WINE ESTATES ANNUAL REPORT 2023 TREASURY WINE ESTATES ANNUAL REPORT 2023
Strategic imperative
ood understanding Working knowledge
Progress against initiative in F23
World class talent
• Continued to put our DNA at the heart of everything we do, including further embedding our Leadership
Attributes (which are underpinned by and reinforce our DNA).
• Elevated our senior leader capability, through an immersive leadership program that helped leaders
articulate a compelling future and create a high-performance culture.
• Maintained our focus on building organisational growth capabilities and companywide learning through
our TWEforME Academy, as well as building our pipeline of diverse senior leaders.
• Consolidated our collective commitment to Inclusion, Equity & Diversity by integrating it into our ways of
working, our leadership development and assessment processes and our commitment to ‘whole of self’
wellbeing across the enterprise.
• Conducted our 3rd all employee Engagement and Inclusion Survey, seeing an 8% increase in
participation, a 2% increase in inclusion and a 1% increase in overall engagement. TWE saw significant
improvement in commitment to sustainability, taking action to improve engagement, and commitment
to being courageous.
• Recognised externally by the Australian Financial Review as one of the Best Places to Work for the third
year in a row and certified as a Great Place to Work in the UK. TWE Americas was recognised as the
Healthiest Employer in the San Francisco Bay Area (and in the Top 100 Healthiest Workplaces in America)
while our recognition program “Cellarbrate” was awarded the winner of the ‘Best Reward and Recognition
Program’ at the Australian Human Resources Awards.
Consumer focused
premium brand portfolio
• The expansion of Penfolds multi-country of origin portfolio with the 2022 Penfolds Collection launch
including the release of wines from three countries of origin: Australia, the US, and the inaugural release
from France. One by Penfolds has sold over 100,000 cases in China and has achieved excellent distribution
across flagship Penfolds online stores, major retail chain and independent liquor stores and restaurants.
• Treasury Americas launched Matua Coolers in a can, following the highly successful launch of Matua
Lighter, tapping into the strong consumer trend towards refreshment and further supporting the
performance of the fast-growing Matua brand.
• Treasury Premium Brands evolved its portfolio by successfully introducing new countries of origin and
emerging varietals to its priority brands, including Pepperjack, Squealing Pig and Rawson’s Retreat.
Multi regional and
multi-channel selling
models
• Penfolds delivered strong distribution growth in Asia, Australia and EMEA, reflecting Penfolds focus on
building penetration across priority growth markets.
• Treasury Americas’ luxury selling platform is in great shape after distribution expansion across the US
in F23.
• Treasury Premium Brands’ distribution expansion delivered solid depletions growth in Asia for its priority
brand portfolio.
Deep, long-term
partnerships and
networks
• TWE continued to invest in partnerships and events that connected consumers with our brands, including
those outlined below.
•
•
•
Penfolds sponsorship of the Victoria Racing Club Derby Day and Australian Open tennis tournament.
Treasury Premium Brands’ Squealing Pig activations at the Australian Open and Sydney WorldPride.
Treasury Americas’ new partnerships with global brands to support the launch of the new
19 Crimes brand platform in F24.
Sustainable and
multi-regional sourcing
and winemaking models
• Pleasing progress with the sustainability agenda including Investment in water saving and solar
infrastructure across our sites globally, promoting sustainable water and energy management practices.
• Acceleration of our no and low alcohol wine development program, including new product development
and investment in infrastructure with a focus on preserving the taste and quality of low alcohol wines.
• Ongoing expansion of our multi-COO sourcing strategy with the purchase of Château Lanessan in
Bordeaux providing additional vineyard and production assets and integration initiatives across our
French sites supporting our French growth strategy.
•
Initiatives in key wine-producing countries Chile, Spain and South Africa to enhance TWE’s operational
efficiency and productivity.
• Sourcing strategy on track with innovative new grower partnerships in the New Zealand market to
increase the supply of Sauvignon Blanc grapes.
17
Operating and Financial Review (continued)
Future prospects
TWE’s long-term financial objective remains to deliver sustainable
1
and
top-line growth, high single-digit average earnings growth
• Demand for commercial wine is likely to remain challenged
in both Australia and the UK, with further volume declines
a Group EBITS margin target of 25%+. Supporting this objective
expected in this segment for Treasury Premium brands.
will be continued portfolio premiumisation, growth in distribution,
demand and availability for TWE’s priority brands, cost
• Mix-adjusted COGS per case are expected to remain broadly
optimisation and category leading, consumer-led innovation.
in line with F23 (which was also broadly in line with F22),
• TWE is well positioned to deliver growth in F24, supported
vintage, reduced commercial portfolio volume expectations
by continued strong trends for luxury wine and resilient
and continuing high inflationary costs which will offset
category dynamics for premium wine, the strength of its
incremental benefits from the global supply chain
global brand portfolio, its diversified business model and the
optimisation program and transition to the higher yielding,
benefits of key asset base and cost optimisation initiatives.
lower cost 2021 (luxury) and 2022 (premium) vintages.
reflecting impacts from the lower yielding 2023 Australian
• Consumer demand for luxury wine is expected to remain
• TWE notes the continued improvement in relations between
strong globally, with top-line growth to be led by Penfolds
Australia and China, which may have the potential for a future
through continued execution of the focused strategy to build
review of tariffs on Australian wine. In light of this, TWE will take
distribution and grow demand for its portfolio in key markets.
a measured approach to the phasing of Penfolds shipments
Luxury portfolio growth for Treasury Americas will be modest
across all markets to retain the flexibility of its global
in F24 through the release of the 2021 Californian vintage,
distribution and pricing model, which is planned to result in
laying the platform for a step-up in growth from F25 when
Penfolds EBITS being weighted to the second half in F24.
the higher volume 2022 vintage will be released.
• Consumer demand for premium wine is expected to
remain consistent, with Treasury Americas and Treasury
Premium Brands performance to be supported by continued
investment and innovation across key priority brands and,
for 19 Crimes, the launch of the new global brand platform
through 1H24.
1. Organic, pre material items and on a constant currency basis
18
TREASURY WINE ESTATES ANNUAL REPORT 2023 TREASURY WINE ESTATES ANNUAL REPORT 2023
Material business risks
Various risks could have a material impact on the achievement
of TWE’s strategies and future prospects. Below are those risks that
TWE considers of greatest materiality to the business, and existing
mitigations against these risks.
Our material risks have not fundamentally changed in F23,
however, the risks listed below remain elevated in focus.
• Pricing and investment execution and cost management
impacting margin outcomes, due to increased global
inflationary pressures.
• Misaligned supply and demand for region, variety, and
grade of grapes, due to ongoing decline in commercial
wine category.
Risk
ood understanding Working knowledge
Description
Mitigation
Changing
consumer
preferences and
market trends
Unanticipated changes
in consumer demand or
preferences can have adverse
effects on the business’ ability
to either capture growth
opportunities or manage
supply. These changes could
be caused or accelerated by
changes in economic outlook.
Changing
geopolitical
environment
Instability in the markets
in which we operate could
impact consumer demand,
ability to trade, access to new
markets, disruption to global
supply chains, and other
barriers to the movement
of people and goods across
international borders.
• We maintain a global diversified portfolio of brands and products balanced
between commercial, premium, and luxury segments and at different stages of
the brand lifecycle.
• Strategic focus on premium and luxury categories, which have a longer ageing
process before being released, providing greater flexibility to respond to changes
in demand.
• Brand portfolio and product strategy, including portfolio rationalisation, brand
prioritisation and targeted investment in consumer marketing.
• A dedicated consumer insights and innovation team tracking consumer trends and
researching new opportunities.
• Global business planning processes, including portfolio reviews and global volume
alignment processes.
• Continue to grow our diversified portfolio of products and markets including
Australia, the US, Europe, Middle East, and Asia.
• We respect local laws wherever we operate and have implemented a robust
compliance framework.
• Relationships and engagement (where relevant) with key government, industry
advocacy and regulatory bodies.
• Flexible supply chain practices.
• Crisis management and business continuity plans.
• Seek opportunities for strategic investment from, and into, key markets to capture
new growth opportunities and enhance connection to key markets.
Changing
regulatory
environment
TWE operates in a regulated
industry in many of the
markets it makes and sells
wine in. Each of these markets
has differing regulations that
govern many aspects of
TWE’s operations. Changes
to regulatory requirements
are broad ranging and
include taxes, health and
labelling guidelines as well as
climate and environmental
requirements. Remaining
compliant with and abreast
of additional regulations and
changes to existing regulations
requires diligent and ongoing
monitoring by the business.
• Company-wide policies, standards and procedures.
• TWE Compliance Framework.
• Specialised and experienced resources and teams.
• Executive Leadership Team oversight via the Risk, Compliance and Governance
Committee.
• TWE Risk and Assurance Framework, including targeted reviews by external and
internal audit and other specialist providers.
• Relationships and engagement (where relevant) with key government, industry
advocacy and regulatory bodies to understand emerging issues and opportunities,
and collaborate on advocacy strategies.
19
TREASURY WINE ESTATES ANNUAL REPORT 2023
Operating and Financial Review (continued)
Risk
Cyber and
information
security
Health,
safety and
wellbeing
Description
Mitigation
Cyber and information
security is essential to protect
business-critical intellectual
property and privacy of
data. Continuing advances
in technology, systems, and
communication channels
mean increasing amounts of
private and confidential data
are now stored electronically.
This, together with increasing
cyber-crime, heightens the
need for robust data security
measures.
• Defined Cyber-Security Strategy and Governance.
•
Information Security Policy, supporting framework and specialised resources.
•
IT Asset Management to manage our asset security throughout the lifecycle.
• Program to monitor and detect cyber threats across the enterprise network.
• Vulnerability management program to identify and remediate susceptible high-risk
areas within the enterprise environment.
• Restricted and segregated management of sensitive business/supplier/customer data.
• Regular employee training and alerts to ensure secure handling of sensitive data.
The health, safety and
wellbeing of the TWE team and
everyone who touches our
business remains our highest
priority. TWE recognises the
importance of ensuring our
people stay safe through
closely managing existing
risks and being proactive with
emerging risks.
Growing grapes, processing
fruit and packing wine involves
the use of complex equipment
and processes that pose a
risk and could result in death,
serious injury, or illness leading
to a financial, operational, and
reputational impact.
• Regular user access and general system penetration testing.
• Crisis, business continuity and disaster recovery plans.
• Formally defined Health, Safety and Wellbeing (HS&W) policy, standards, procedures
and tools.
•
Induction/onboarding and ongoing training programs including: safe work
procedures, permit to work system, safety leadership programs, and Destination
Zero Harm Global Commitments.
• Preventative repair and maintenance programs, and facility and equipment
inspection programs.
• Employee surveys and safety conversations, with a HR complaints and whistleblower
service that captures feedback from employees and external stakeholders on the
effectiveness of our HS&W initiatives.
• Monitoring of safety performance and incidents through regular reporting,
investigations, and corrective action plans.
• TWE Mental Health and Wellbeing Framework, including employee mental health
surveys and membership of the Corporate Mental Health Alliance Australia, to
improve understanding and support for mental health in the workplace.
•
Internal and external support mechanisms in place to create a healthy and safe
workplace, including Employee Assistance Programs and a dedicated mental and
emotional healthcare provider for our American-based team members.
Impacts of
climate-
related change
on TWE’s ability
to grow, make
and market
quality wines
We are exposed to threats
and opportunities posed
by climate change. As the
climate changes, our ability
to grow, make and market
quality wines will be affected
by more frequent extreme
weather events and changing
temperatures that affect the
yield and quality of vineyards.
Further, it could lead to
decreases in water availability
or quality and/or an increase
in the cost of water.
In addition, there are related
transition risks arising from
policy, legal, technology,
market and reputation
changes associated with the
transition (or lack of) to a
low-carbon economy.
• Climate-adaptive business strategy including a multi-region sourcing model to
mitigate over-reliance on a single region.
•
Investment in key production assets to manage for compressed vintages, which are
becoming more frequent with climate change.
• Climate and water risk assessments allow us to understand what opportunities
and risks may emerge as a result of climate change and to inform our adaptation
responses.
• Continued improvement of our data and weather forecasting abilities as well
as investment in areas such as optimised irrigation and innovative agronomic
practices.
• Collaborating with a range of partners, such as universities, industry, and suppliers
to improve our understanding of climate change and improve our practices.
• We continue to monitor and understand emerging trends, policy developments, and
our emissions profile.
20
TREASURY WINE ESTATES ANNUAL REPORT 2023
Risk
Description
Mitigation
Incident leading
to negative
coverage in
traditional or
social media
Technology
and business
infrastructure
supporting
growth
Misaligned
supply and
demand for
region, variety,
and grade of
grapes
Partner
performance
and market
concentration
The strength of TWE’s portfolio
of brands is key to the
success of the business. If we
experience misrepresentation,
negative or critical coverage in
either traditional and/or social
channels, this could result in
damage to TWE’s reputation
and to its brands. This can
be driven by a number of
performance and operational
factors, as well as commentary
and opinions about issues and
trends that have the potential
to impact the business, its
brands, and people.
The business relies on IT
infrastructure, systems,
and processes to support
ongoing business growth.
Where such infrastructure
cannot efficiently support
the changing needs of
the business, there is risk
of process inefficiency
and/or error, which includes
increased costs and
processing times
and/or damage to
business reputation.
TWE’s ability to balance
supply to demand can
become challenged by
several factors, including
restricted availability of
quality grapes or bulk wine,
supply pricing, changes in
consumer preference (drinks
category, wine style, region
or varietal) or other shifts in
demand.
The misalignment of supply
can lead to shortage, which
in turn can limit growth
and revenue potential.
Alternatively, misalignment
can generate excess supply
that needs resolution
through supply sales,
asset re-alignment and/or
reallocation of wine.
As a result, our ability to
manage COGS, grow revenue
and achieve EBITS targets
could be affected, both in the
year of harvest and in future
periods.
TWE’s ability to achieve
our objectives is directly
tied to the performance
of our partners (suppliers,
distributors, and retailers).
The sub-optimal
performance of these
partners, and/or their market
concentration and power,
could have a significant
impact on TWE’s market
share and/or margins.
• Code of Conduct, Responsible Marketing Guidelines, Responsible Consumption
Program, Responsible Procurement Code, Environment Policy and Standard, Media
Policy, Social Media Policy, and incident management procedures.
• Active media monitoring and social listening including community engagement,
product reviews, and public posting relating to TWE brands with ability to escalate
core issues.
• Global reputation research to understand current stakeholder perceptions and
influence future engagement.
• Brand and intellectual property protection strategies.
•
Defined technology roadmap and strategy.
•
A global Enterprise Resource Planning System and reporting capability.
• Global Shared Services Model including Continuous Improvement Framework.
•
IT policies and supporting procedures (security, change management, project
management, etc.).
•
Documentation and mapping of key processes and controls across the business.
•
Semi-annual key control self-assessment process.
• Multi-regional growing and sourcing.
• Balanced grape intake between owned/leased vineyards and third-party suppliers.
• Long-term vintage planning and ongoing demand planning processes, to align our
supply with our insights from monitoring changing consumer preferences.
• Strong grower relationships and defined service level agreements.
• Ongoing customer/distributor relationship management to understand changes in
demand and achieve alignment with our current and future portfolio of products.
•
Innovative agronomic practices to improve vineyard yield.
• Global wine allocation process for constrained products to maximise value from
products where supply is unable to meet demand.
• Multi-regional and diversified supplier, distributor and retailer base.
• Responsible Procurement Code to define our broader requirements of our suppliers,
including expectations related to human rights, safety, and the environment.
• Defined and pre-approved terms of engagement.
•
Investment in strong and multi-faceted key partner relationships.
• Joint business planning processes with customers and distributors to support and
align their interests with our objectives.
• Regular performance reviews.
21
TREASURY WINE ESTATES ANNUAL REPORT 2023
Operating and Financial Review (continued)
Risk
Description
Mitigation
• Ongoing management of our key cost drivers, closely monitoring their potential for
volatility and assessing their impact on TWE earnings.
• Ongoing global pricing oversight and monitoring across markets, including key
competitor pricing and promotional activity.
• Brand portfolio and product strategy (including pricing guidelines).
• Controls over product price changes.
• Monthly brand/product sales performance reporting versus budget.
• Active foreign exchange hedging strategy.
• Continued focus on working capital, including cash conversion as a core
financial metric.
• Product quality policies, procedures and controls, coordinated and overseen by the
central TWE Technical Services team.
• Product quality analytical control testing including chemical and microbiological
testing.
• Third-party audits and accreditation of processes and controls, including Hazard
Analysis and Critical Control Points.
• Supplier Service Level Agreements and specifications for Quality and Supplier
Quality Assurance for packaging dry goods.
• Crisis management and product withdrawal and/or recall plans.
•
Intellectual Property (IP) protection including trademark, copyright, design and
other IP registrations. Strict IP agreements and guidelines, including for licensing
arrangements, such as branded retail stores.
• Collaborative alliances and working relationships with online marketplaces and
other key industry bodies.
• Regular internal counterfeit/copycat awareness training and clear customer
communication policies regarding complaints/enquiries.
• Brand Protection Program focusing on online and offline enforcement (including
maximising criminal enforcements).
• Copycat enforcement strategy focusing on high-priority targets.
•
IP due diligence - detailed checks on partners/retailers and ongoing supply
chain audits.
• Crisis, business continuity and disaster recovery plans, training and resources.
• Dedicated Health and Safety team oversight, audit programs, and training.
• Preventative repair and maintenance program.
• Multi-regional sourcing and production capability.
• Multi-regional sales diversification.
• Comprehensive insurance program.
• Global business planning processes.
• Financial risk management (refer to page 115).
Pricing and
investment
execution
and cost
management
impacting
margin
outcomes
Product
quality defects,
contamination,
and counterfeit
Where pricing and
investment execution are
not appropriately aligned to
both the brand and product
vision and strategy as well as
external competitor activity,
there is an increased risk to
TWE of loss of market share,
decreasing margins and/or
brand damage.
Developments in the
global economy, including
inflationary pressures and
foreign exchange rate
movements could add costs,
impact TWE’s earnings, and
impact margins.
If we sell wine with a
significant product quality
defect, or deliberate
contamination, it could
have significant impacts on
TWE’s corporate and brand
reputation. It may also add
costs through product
write-offs or recall.
As the reputation and value
of TWE’s brands increase, so
does the risk of counterfeit
and copycat products, which
may impact profitability and
brand reputation.
Business
disruption
and/ or
catastrophic
damage or loss
TWE’s scope of operations
exposes it to a number
of business disruption risks,
such as environmental
catastrophes, natural and
man-made hazards and
incidents, or politically
motivated violence.
Significant business
disruption could result in
TWE sites or people being
harmed or threatened, loss
of key infrastructure, inability
to trade, inventory shortages,
excess or loss, customer
dissatisfaction, or financial
and reputational loss.
22
22
TREASURY WINE ESTATES ANNUAL REPORT 2023
TREASURY WINE ESTATES ANNUAL REPORT 2023
Risk
Turnover
of key talent
Description
Mitigation
TWE’s ability to deliver
on strategic targets is
reliant on attracting and
retaining experienced,
skilled, and motivated talent
in core functions such as
winemaking, sales, and
marketing.
It also requires strong,
resilient, and effective
leaders as the business
grows at pace.
Inability to retain key talent
can impact relationships with
TWE’s key partners, result
in lost business knowledge,
increase risk of employee
burnout, and hamper the
business’s ability to deliver
on key initiatives.
We aim to make TWE a great place to work with an inclusive culture and a compelling
Employee Value Proposition. To differentiate TWE from competitors in the market, we
provide a place where our people come together to spark innovation, fuel human
connection, create belonging, and promote wellbeing through a range of employee
programs such as:
• strategically aligned and targeted learning and development
• strategic workforce planning
• talent review and succession planning processes
• employee health, safety and wellbeing, including mental and physical health and
resilience, market competitive remuneration and benefits, and incentive and reward
aligned to the achievement of TWE’s financial and business goals and
demonstration of the right behaviours
• a culture, enabled by our DNA values, which celebrates diversity, courage
and collaboration.
23
TREASURY WINE ESTATES ANNUAL REPORT 2023
Profit report
Announcement highlights1
• Reported EBITS grew 11.4% to $583.5 million driven by strong
luxury top-line growth from Penfolds, successful price
increases across several brands and cost savings from the
global supply chain optimisation program.
• Premiumisation trends continue across the wine category,
with demand for luxury wine remaining strong in TWE’s key
• Strong progress was made towards implementation of
the new Treasury Premium Brands operating model and
restructuring of the Australian commercial wine supply chain.
A total net program cost of up to $90 million (including $30
million of cash costs) will be incurred across F23 and F24.
Ongoing benefits of the program will exceed the cash cost
and mitigate the impact of rising cost of goods as a result of
global markets and a resilient premium wine segment despite
lower portfolio volumes.
the tightening economic environment.
• NSR per case increased 12.7% led by premiumisation and price
rises delivered across all divisions.
• EBITS margin strengthened 2.9ppts to 24.1%, with progression
towards the long-term Group target of 25%+, delivered in an
environment of elevated cost inflation.
A$m (unless otherwise stated)
Net Sales Revenue (NSR)
NSR per case (A$)
Earnings Before Interest, Tax, SGARA and Material items (EBITS)
EBITS Margin
Net Profit After Tax
Earnings Per Share (A$ cents)
Net Profit After Tax before Material Items and SGARA
Earnings Per Share before Material Items and SGARA (A$ cents)
•
In F24, TWE is well positioned to deliver growth, supported
by luxury portfolio growth, the strength of its global brand
portfolio, its diversified business model and the benefits of
key asset base and cost optimisation initiatives.
F23
2,423.0
109.7
583.5
24.1%
254.5
35.3
376.1
52.1
% Chg.
reported
% Chg. constant
currency
(2.2)%
12.7%
11.4%
(4.9)%
9.6%
8.6%
2.9ppts
3.0ppts
(3.3)%
(3.3)%
16.6%
16.6%
(5.1)%
(5.1)%
13.8%
13.8%
• NSR declined 2.2% to $2,423.0 million, driven by premium
• ROCE 11.3%, up 0.6ppt versus the pcp driven by higher EBITS and
portfolio volume declines in Treasury Americas and commercial
continued capital allocation discipline.
portfolio volume declines in Treasury Premium Brands, partly
offset by strong luxury portfolio growth for Penfolds; on a
• Cash conversion 60.6%; excluding the net change in
constant currency basis NSR declined 4.9%.
non-current luxury and premium inventory, cash conversion
• NSR per case improved 12.7%, reflecting the luxury-led portfolio
reflecting the timing of shipments in Asia within 4Q23 in
mix shift and price increases across several key brands. The
addition to the timing of supplier payments and promotional
contribution of the luxury and premium portfolios is now 85% of
spend in Treasury Americas and Penfolds. TWE expects cash
Group NSR, up from 83% in the pcp.
conversion to be delivered in line with the annual target in F24.
was 76.2%, below TWE’s annual target of 90% or higher,
• EBITS increased 11.4% to $583.5 million and EBITS margin
• Net Debt to EBITDAS 1.9x (1.8x in the pcp), in line with TWE’s
increased 2.9ppts to 24.1%.
through the cycle target, with flexibility retained to support
continued investment in growth and the delivery of shareholder
• NPAT and EPS both improved 16.6% to $376.1 million and 52.1
returns.
cents per share respectively.
• A post-tax material items loss of $76.0 million was recognised,
total dividend for F23 to 35 cents per share, an increase of 12.9%
primarily related to implementation of the new Treasury
on the pcp. The 67% payout is at the upper end of TWE’s long-
Premium Brands operating model and restructuring of the
term dividend policy range.
• The final dividend of 17 cents per share, fully franked, brings the
Australian commercial wine supply chain (F23 material items
cash inflow of $34.5 million).
1. Unless otherwise stated, all figures and percentage movements within commentary are stated on
a reported currency basis versus the prior corresponding period, are pre-SGARA and material items
and are subject to rounding. NPAT and EPS exclude earnings attributable to non-controlling interests.
24
A$m (unless otherwise stated)
NSR
Penfolds
Treasury Americas
Treasury Premium Brands
Group
Luxury and premium (%NSR)
EBITS
Penfolds
Treasury Americas
Treasury Premium Brands
Corporate
Group
EBITS Margin (%)
F23
819.7
820.9
782.4
2,423.0
85.0%
364.7
203.9
81.7
(66.8)
583.5
24.1%
% Chg.
reported
% Chg.
constant
currency
14.3%
(11.7)%
(5.7%)
(2.2)%
1.7ppts
14.2%
14.0%
(5.4)%
(9.9)%
11.4%
13.8%
(18.4)%
(4.7%)
(4.9)%
1.3ppts
15.5%
(0.3)%
4.0%
(9.1)%
8.6%
2.9ppts
3.0ppts
• Penfolds reported a 14.2% increase in EBITS to $364.7 million
• Corporate costs increased 9.9%, driven by investment in
and an EBITS margin of 44.5% (in line with F22). Strong NSR
cloud-based technology and higher employee expenses.
growth of 14.3% was delivered through Asia, Australia and
EMEA, reflecting the continued momentum behind the
• The global supply chain optimisation program delivered COGS
Penfolds strategy to build distribution and grow consumer
savings of approximately $62 million in F23, with mix-adjusted
demand. In addition, the successful launch of One by
COGS per case in line with F22 despite supply chain cost
Penfolds and growth of the multi-country of origin portfolios
inflationary pressures and the inclusion of the higher cost 2020
contributed to NSR growth, particularly in Asia. On a constant
Australian and Californian luxury vintages. The program is on
currency basis, NSR and EBITS increased 13.8% and 15.5%,
track to deliver incremental benefits in F24 and the full run-
respectively.
rate of $90 million+ in annual savings by F25.
• Treasury Americas reported a 14.0% increase in EBITS to
• TWE has implemented a range of initiatives within the Treasury
$203.9 million and an EBITS margin of 24.8% (up 5.6ppts).
Premium Brands operating model aimed at delivering greater
Strong performance of key luxury brands including Frank
operational and strategic flexibility to enable continued
Family Vineyards and Beaulieu Vineyard, the continued
growth of its premium and luxury portfolio, including those
growth of Matua, and favourable foreign exchange rates
detailed below.
were partly offset by shipment declines for 19 Crimes and
Sterling Vineyards in addition to constrained luxury portfolio
•
Adjusting the Treasury Premium Brands operating model
availability from the lower yielding 2020 Californian vintage.
and organisational structure to align with the future scale
Improved portfolio mix, successful implementation of price
of the business, to reduce fixed costs and increase focus
increases on key brands and improved COGS and CODB
on priority brands.
supported EBITS margin growth. On a constant currency
basis, NSR declined 18.4% and EBITS declined 0.3%.
•
Implementing changes to the commercial wine supply
chain, including the exit of future sourcing arrangements,
• Treasury Premium Brands reported a 5.4% decline in EBITS
with a focus on improving total network cost to improve
to $81.7 million and an EBITS margin of 10.4% (in line with
future cost of goods sold.
F22). Reduced NSR for the commercial portfolio in the UK
and Australia, in addition to unfavourable foreign exchange
•
The divestiture and/or rationalisation of selected assets,
movements, were partly offset by 7.8% NSR growth for
including the closure of Karadoc winery, write down
priority premium brands including 19 Crimes, Squealing Pig
of several commercial wine brands, and the divestiture of
and Pepperjack, as well as improved COGS and CODB. The
commercial vineyards.
combined premium and luxury portfolios delivered
double-digit gross profit growth in F23. On a constant
currency basis, NSR declined 4.7% and EBITS increased 4.0%.
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Penfolds
About Penfolds
Since 1844, historic blends, significant milestones and heritage
vineyards have been honoured by a lineage of custodians whose
courage and imagination have ensured Penfolds remains true to its
original values while continuing to innovate and move forward.
Penfolds commitment to quality has been underpinned by a
consistent and recognisable ‘House Style’; the ultimate expression
of Penfolds time-honoured tradition of sourcing the best fruit from
the best regions. Today, this philosophy extends beyond Australia,
as Penfolds explores the bountiful soils of California, Napa Valley,
Bordeaux, and China.
Bringing two hemispheres together with a partnership between
Penfolds and Dourthe
This partnership between Penfolds and one of Bordeaux’s most
respected winemaking groups, Dourthe, was born from a shared
desire of two winemakers to express quality through a harmonious
blend of traditional French winemaking techniques and time-
honoured Australian winemaking methods. Combining the creativity,
direction and vision of Penfolds Chief Winemaker Peter Gago and
Dourthe Chief Winemaker Frédéric Bonnaffous, the two houses
collaborated to craft a wine that spans Northern and Southern
Hemispheres, blending grapes from Bordeaux (71%) and South
Australia (29%). Made from the 2019 vintage, the final wine was
blended and bottled in South Australia by Penfolds winemakers – and
released as part of The Penfolds Collection 2022.
Excellence in Chardonnay with Penfolds V
In February 2023, Penfolds unveiled its first multi-vintage Chardonnay
– Penfolds V. A special blend of five of the best Yattarna vintages (2011,
2012, 2014, 2016 and 2021), Penfolds V began as a white winemaking
‘what if’ that turned into a ‘why not’, sensitively selected and blended
by Penfolds Chief Winemaker Peter Gago and White Winemaker
Kym Schroeter. Penfolds Yattarna was first released in 1995 after 144
winemaking trials. A wine of meticulous refinement, generations of
Penfolds winemakers inspired the creation of this white wine that went
on to earn a reputation as one of Australia’s finest. Today, we see
2019 Penfolds French Winemaking Trial 585
the patience, courage, and evolution of Penfolds white winemaking
The second of two inaugural French wines launched in August 2022
endeavours personified in this new multi-vintage blend.
as part of the 2022 Penfolds Collection, the 2019 Penfolds French
Winemaking Trial 585 is a trial Bin wine made of Cabernet Sauvignon,
One By Penfolds
Merlot and Petit Verdot at Cambon la Pelouse Winery. Since 2018, a
In September 2022, Penfolds announced a new range of wines made
number of blends were tasted throughout the classification process
in France, America and China under a new tier: One by Penfolds.
where comprehensive and focused wine trials marked the beginning
Launched in China as a prelude to the global launch in mid-2023,
of this new chapter for Penfolds in France.
the first release included four wines from France, America and China,
expanding on Penfolds multi-country of origin approach. For this
inaugural release, Penfolds partnered with artist Ori Toor to create
unique illustrations on each wine label that creatively capture the
local communities of the three winemaking regions where the One by
Penfolds China grapes are sourced from.
27
Divisional performance overview
1
Penfolds
A$m (unless
otherwise stated)
Volume (m 9Le)
NSR (A$m)
ANZ
Asia
Americas
EMEA
NSR per case (A$)
EBITS (A$m)
EBITS margin (%)
Reported currency
Constant currency
F23
2.3
819.7
235.9
467.4
51.5
65.0
354.4
364.7
44.5%
F22
2.2
717.3
199.2
407.2
54.3
56.6
332.2
319.3
%
7.1%
14.3%
18.4%
14.8%
(5.2)%
14.9%
6.7%
14.2%
44.5%
(0.0)ppts
F22
2.2
720.2
199.1
407.0
58.7
55.3
333.5
315.7
43.8%
%
7.1%
13.8%
18.5%
14.8%
(12.4)%
17.4%
6.3%
15.5%
0.7ppts
Financial performance
Volume and NSR increased 7.1% and 13.8% respectively, driven by:
Division insights
Key F23 execution highlights are detailed below.
• Continued strong momentum across key Asian markets,
• Strong distribution growth in Asia, Australia and EMEA, reflecting
growth in the multi-country of origin and Bin and Icon
Penfolds focus on building penetration in target accounts
portfolios in addition to the successful launch of One by
across priority markets.
Penfolds in Mainland China
• Excellent progress in Australia, with gains delivered across
focused on growing consumer demand, including continued
independent retail, national accounts and on-premise
execution of Penfolds ‘Venture Beyond’ thematic, Penfolds
House activations in seven global locations, and sponsorship
• Growth in key EMEA markets including the UK and Germany,
of the Victoria Racing Club Derby Day and Australian Open
and in travel retail
tennis tournament.
• Successful activation of key brand-building platforms
• Partly offset by declines in the Americas due to reduced
• The expansion of Penfolds multi-country of origin portfolio
shipments in Latin America, while depletions continue to grow
with the 2022 Penfolds Collection launch including the release
in the US
NSR per case increased 6.3% reflecting improvement in mix, as well
as price increases on luxury Cabernet Bins.
COGS per case increased 15.1% reflecting the release of wine
from the lower yielding 2020 Australian vintage and increased
contribution from the higher cost US and French portfolios.
of wines from three countries of origin: Australia, the US and
the inaugural release from France. This was followed by the
successful launch of Chinese-sourced and produced One by
Penfolds in September 2022. A global launch followed in
July 2023.
• Trends for distribution and volume growth are expected to
remain consistent across Penfolds priority markets in F24,
with top-line growth to reflect continued momentum for the Bin
CODB increased 2.0%, driven by increased brand building investment
to accelerate the momentum of distribution and demand growth in
and Icon portfolio in addition to expansion of the
newly-launched One by Penfolds tier.
Penfolds key global markets.
EBITS increased 15.5% to $364.7m and EBITS margin increased
0.7ppts to 44.5%.
1. Unless otherwise stated, all figures and percentage movements from prior periods are
pre-material items on a constant currency basis versus the prior corresponding period and are
subject to rounding.
28
• TWE notes the continued improvement in relations between
Australia and China, which may have the potential for a future
review of tariffs on Australian wine. In light of this, TWE will take
a measured approach to the phasing of Penfolds shipments
across all markets to retain the flexibility of its global distribution
and pricing model, which is planned to result in EBITS being
weighted to the second half in F24.
• EBITS margin is expected to remain stable in F24, and delivered
in line with the revised division target of approximately 45%
(replacing the previous target range of 40-45%).
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TREASURY WINE ESTATES ANNUAL REPORT 2023
Treasury Premium Brands
About Treasury Premium Brands
A premium wine business with a portfolio of outstanding wine
brands, global viticultural assets and world-class production
facilities, Treasury Premium Brands caters to a diverse range of
consumer needs and occasions. With a range of priority brands,
the division is focused on premium portfolio expansion and
consumer-led innovation.
Setting trends in wine
We were crowned Trend Leader of the Year by one of our largest
Australian customers at the Endeavour Group Supplier Awards, in
recognition of our innovative Squealing Pig and Wolf Blass
Bagnums – a format that offers convenience, affordability and
sustainable packaging rolled into one. The 1.5 litre lightweight,
easy-to-carry ‘magnum in a bag’ has seven times lower carbon
emissions than a traditional 750ml glass bottle, launching in time for
Pepperjack, Squealing Pig and Wynns continue their
the southern hemisphere’s spring picnic season.
global expansion
Pepperjack launched in the UK, while the unconventional Squealing
A music icon Down Under: Snoop visits TWE HQ
Pig was introduced to our consumers in China. Wynns continues
Our Melbourne team had a truly unforgettable experience, with
to grow its presence on luxury channels including the internationally
Snoop dropping in at TWE HQ during the Melbourne leg of his ‘I
renowned fine wine marketplace La Place de Bordeaux, reaching
a network of international fine wine buyers and collectors in over
100 countries.
Wanna Thank Me’ tour. To commemorate Snoop’s visit, renowned
artist Matty Te Paea created a street mural in Melbourne’s famous
Hosier Lane, inspired by the 19 Crimes label and photorealistic urban
street art. Shehan Ananthakumar, Global Senior Brand Manager for
Treasury Premium Brands, stepped away from his day job to be DJ for
an afternoon of classic tunes and conversation with a music legend.
Snoop fans attending his sellout concerts in Melbourne and Sydney
could sip on an exclusive 19 Crimes Snoop Cali Rosé Frosé.
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TREASURY WINE ESTATES ANNUAL REPORT 2023
Treasury Premium Brands (continued)
Innovation in no and low alcohol wine
Hot on the heels of the award-winning Wolf Blass Zero range, our
latest offering in no and low alcohol wine goes one step further:
blending an iconic brand with an emerging consumer preference for
moderation. At 7% alcohol by volume, Pepperjack mid-strength Shiraz
has half the alcohol of the original while staying true to the character
that’s made it Australia’s #1 Shiraz for value and the country’s
favourite steak accompaniment. Lighter in alcohol expressions of key
varietals gives consumers more choice: they might be moderating
their alcohol intake because they’re more health conscious, or they
might just be driving home. The growing alternatives in this popular
category allow consumers to continue being part of social occasions
with friends and family, with complex aroma and mouthfeel that
replicates the character of full-strength wine counterparts.
32
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Celebrating love with every sip
Squealing Pig marked the ’Summer of Love’ as the official wine of the
Australian Open tennis tournament in Melbourne, as well as Sydney
Gay and Lesbian Mardi Gras, and Sydney WorldPride 2023 - the
biggest event in the southern hemisphere since the Sydney 2000
Olympics. The Summer of Love campaign celebrated diversity across
our communities and Squealing Pig’s exclusive Pride Labels were the
talk of the town. Developed in collaboration with the global Treasury
Wine Estates Pride employee resource group and the Australian
not-for-profit workplace inclusion organisation Pride in Diversity, the
labels celebrate diverse groups in the LGBTQIA+ community: lesbian,
gay, bisexual, queer or non-binary, transgender, intersex, asexual,
pansexual and other gender-diverse identities.
Divisional performance overview
Treasury
Premium
1
Brands
A$m (unless
otherwise stated)
Volume (m 9Le)
NSR (A$m)
ANZ
Asia
Americas
EMEA
NSR per case (A$)
EBITS (A$m)
EBITS margin (%)
Reported currency
Constant currency
F22
16.0
829.8
382.1
72.7
33.8
341.2
52.0
86.4
10.4%
%
(10.4)%
(5.7)%
(3.9)%
0.4%
(18.9)%
(7.8)%
5.2%
(5.4)%
(0.0)ppts
F22
16.0
820.7
381.4
73.3
32.5
333.5
51.5
78.6
9.6%
%
(10.4)%
(4.7)%
(3.7)%
(0.5)%
(15.5)%
(5.6)%
6.3%
4.0%
0.9ppts
F23
14.3
782.4
367.2
73.0
27.4
314.8
54.7
81.7
10.4%
Financial performance
Volume and NSR declined 10.4% and 4.7% respectively, reflecting:
Division insights
Key F23 execution highlights are detailed below.
• Reduced commercial portfolio volumes in the UK and Australia
• Solid performance of the priority premium portfolio, where NSR
• Asia performance in line with the pcp, with strong growth in
Pig and Pepperjack. 19 Crimes NSR increased 8.3%, driven by
South-East Asia offset by pandemic-related decline in
distribution growth in EMEA and the benefits of price increases.
grew 7.8% led by key brands including 19 Crimes, Squealing
Mainland China
NSR per case increased 6.3% reflecting the benefit of price increases
and improved portfolio mix, with the premium and luxury portfolios
• The delivery of double-digit gross profit growth from the
premium and luxury portfolio.
now contributing 61% of NSR (up from 58% in F22).
• Category-leading innovation in the no and low alcohol
COGS per case increased 4.8% driven by the portfolio mix shift
and partly offset by benefits from the global supply chain
optimisation program.
segment with the launch of several new products, including
Pepperjack mid-strength, with $10 million planned capital
investment in supporting technology, reflecting TWE’s focus on
becoming the global category leader in no and low
alcohol wine.
CODB improved 3.2%, reflecting the gain on sale of assets of
$5.9 million in 1H23 and re-alignment of brand investment due to
• TWE has implemented a range of initiatives in the Treasury
reduced volume, partly offset by employee expenses.
Premium Brands operating model aimed at delivering greater
EBITS increased 4.0% to $81.7 million, and EBITS margin improved
0.9ppts to 10.4%.
operational and strategic flexibility to enable continued
growth of its premium and luxury portfolio.
• A focus on continued top-line growth of the priority premium
brand portfolio, in addition to cost optimisation initiatives,
is expected to deliver modest EBITS margin growth in F24
towards the revised divisional mid-teens target (from high-
teens previously).
1. Unless otherwise stated, all figures and percentage movements from prior periods are
pre-material items on a constant currency basis versus the prior corresponding period and are
subject to rounding.
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Frank Family Vineyards harvest, Napa Valley, California.
Photo by Marisa McCann, Brand Manager.
TREASURY WINE ESTATES ANNUAL REPORT 2023
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Treasury Americas
About Treasury Americas
A consumer-led wine business with disruptive marketing, strong
e-commerce capability, and an innovation focus, Treasury Americas
leads change in the Americas wine market.
Celebrating 30 Years of Frank Family Vineyards
Welcomed into the Treasury Americas family in 2021, Frank Family
Vineyards celebrated 30 years of winemaking this year and
unveiled a new hospitality space, the Miller House, which will host
exclusive events for larger groups. What better way to mark the
occasion than with a new addition to the sparkling wine portfolio?
Rich and Leslie Frank toasted to Frank Family Vineyards’ legendary
winemaker, Todd Graff, with the new 2015 Lady Edythe Reserve
Brut Rosé named in honour of Rich’s mother. In the Napa Valley
Register’s Napa Valley Finest Awards, Frank Family Vineyards also
BV recognised for value
took out awards for ‘Best Winery’ and ‘Best White Wine’, reflecting
the winery’s incomparable hospitality experience and exceptional
Chardonnay the brand is famous for.
Beaulieu Vineyard was named Wine Spectator’s ‘Value Wine of
the Year’ for the 2019 Napa Valley Cabernet Sauvignon. The award
recognises wine that over-delivers on quality for its price. Senior
Editor James Molesworth noted the 92-point wine’s characteristics
as "fresh, direct, and focused, with red currant and cherry coulis
notes that race through, dotted with savory floral and tobacco
accents. Judicious toast lets the fruit play out, and there's solid
energy throughout."
Matua Coolers and Matua Lighter
Matua Lighter, a top 10 better-for-you SKU in the US, offers
consumers the same quality and approachable wine style as
the core Sauvignon Blanc. Both beverages deliver on consumers’
desires to enjoy better-for-you products with lower alcohol,
calories, and sugar. With a mix of crisp Matua Sauvignon Blanc,
sparkling water, and a splash of kiwi in a can, Matua Coolers is
a new innovation for summertime pool parties, barbeques, and
country clubs.
19 Crimes Launches Snoop Dogg’s Cali Gold
Snoop Dogg’s Cali Gold was named the No. 1 Sparkling Wine
Innovation for 2022, the No. 3 innovation in the sparkling category,
and outperformed all top sparkling launches over the last five
years. The brand continues to disrupt the industry, attracting new
consumers into wine in ways unlike any other brand including
through augmented reality that created the first-ever rapping wine
label. In Snoop’s words, “Glasses up, let’s make a toast to success
and nothing less.”
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TREASURY WINE ESTATES ANNUAL REPORT 2023
Divisional performance overview
Treasury
1
Americas
A$m (unless
otherwise stated)
Volume (m 9Le)
Reported currency
Constant currency
F23
5.5
F22
7.3
%
(25.4)%
F22
7.3
%
% Organic
(25.4)%
(25.4)%
NSR (A$m)
820.8
929.6
(11.7)%
1,005.8
(18.4)%
(23.1)%
ANZ
Asia
Americas
EMEA
NSR per case (A$)
EBITS (A$m)
EBITS margin (%)
—
—
820.8
—
150.0
203.9
24.8%
—
—
—
—
—
—
—
—
—
—
929.6
(11.7)%
1,005.8
(18.4)%
(23.1)%
—
126.7
178.9
19.2%
—
18.4%
14.0%
5.6ppts
—
137.1
204.5
20.3%
—
9.4%
—
3.1%
(0.3)%
(10.3%)
4.5ppts
3.2ppts
Financial performance
Volume and NSR declined 25.4% and 18.4% respectively driven by:
Division insights
Key F23 execution highlights are detailed below.
• Premium portfolio shipment declines, led by 19 Crimes and
Sterling Vineyards, partly offset by growth for Matua
• Strong luxury portfolio strategy execution in a year of
constrained availability, laying a strong platform for future
growth from F25.
• Reduced luxury wine volume availability from the lower
yielding 2020 California vintage
• Excluding NPD, depletions exceeded shipments by approximately
0.6m cases, reflecting increased focus on inventory management
by distributors and retailers
NSR per case increased 9.4% reflecting the portfolio mix shift towards
luxury and price increases on several portfolio brands.
COGS per case was in line with F22, with portfolio mix shift
impacts largely offset by savings from the global supply chain
optimisation program.
CODB reduced 8.8% driven by lower discretionary overhead costs.
EBITS declined 0.3%, with EBITS margin increasing 4.5ppts to 24.8%;
on an organic basis EBITS declined 10.3%.
Note: TWE’s Canadian operations have been reorganised to better
reflect the way brands are being managed. The results of Canada
have been re-stated within Treasury Americas and Treasury
Premium Brands.
• Double-digit price rises delivered on a number of key brands
while selling through all the available vintage.
• Frank Family Vineyards delivered a strong result, exceeding
expectations in its first full year as part of Treasury Americas
and with increased availability to support growth from 4Q24.
• Good momentum across cellar doors and wine clubs, with NSR
increasing by 10% in F23.
• The total 19 Crimes franchise remained in growth across
scan channels during F23, up 1% outperforming the premium
segment2 which declined slightly.
• Premium portfolio performance in F24 will be supported by
the launch of the new brand platform for the 19 Crimes
Classics tier through 1H24, continued innovation for 19 Crimes
and Matua and the reopening of the Sterling Winery.
• The availability of key luxury portfolio brands will remain
relatively constrained in F24, albeit delivering growth, ahead of
a return to normalised availability from F25.
• EBITS margin is expected to be delivered in the range of
22-23%, reflecting higher COGS and increased investment
behind 19 Crimes.
1. Unless otherwise stated, all figures and percentage movements from prior periods are
pre-material items on a constant currency basis versus the prior corresponding period and
are subject to rounding.
2. IRI Market Advantage, Total MULO+C, US$8-20 table and sparkling, Value, 52 weeks ending
2 July 2023.
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TREASURY WINE ESTATES ANNUAL REPORT 2023
Vintage update
Australia
Vintage 2023 was characterised by cooler and wetter conditions,
France
Conditions in the south of France are supporting a good quality
resulting in below-average industry volumes across most regions.
2023 vintage with industry tonnage expected to be in line with
Despite the challenges, overall quality remained impressive and
the long-term average. In the Bordeaux region disease pressure
TWE’s multi-regional and flexible sourcing strategy ensured a
remains a risk but a warm summer forecast should help manage
consistent supply of high-quality grapes. TWE’s total intake was
this risk. In TWE’s own vineyards, yield is expected to be favourable,
down compared to vintage 2022 and on a relative basis, vintage
benefiting from the recent vineyard investment program, including
2023 was a high-cost vintage.
the acquisition of Château Lanessan. TWE’s strong partner network
in Bordeaux is continuing to support growth in the intake of high
California
quality fruit.
Early growing conditions for the 2023 California season are positive,
with high winter rainfall setting up the season for larger yield and a
Italy
later harvest. All regions and varieties have benefited from increased
Current expectations are for a smaller vintage 2023 in many regions
water availability. TWE’s luxury intake is expected to be higher than
of Italy after heavy rains created disease pressure across many
vintage 2022 due to the favourable conditions to date.
regions. TWE’s intake is expected to meet demand from a quality
New Zealand
and volume perspective, with the combination of a favourable
summer forecast, proactive management of disease pressure and
Vintage 2023 was of average volume and high quality, similar to
TWE’s flexible sourcing strategy mitigating the vintage risk.
vintage 2022, returning the industry to a balanced supply position
after several years of undersupply. TWE’s yield was above average
and delivered great varietal flavours. TWE is collaborating with
China
Conditions to date in TWE’s key wine production regions in Mainland
new growers in the New Zealand market to increase the supply of
China - Yunnan and Ningxia - are expected to deliver below average
Sauvignon Blanc grapes, a varietal where global demand continues
harvests. TWE continues to work with growers in both regions to
to grow.
upgrade vineyards to produce higher quality fruit and expects intake
in vintage 2023 to increase, supporting Penfolds China country of
origin growth ambitions.
Castello di Gabbiano, Tuscany, Italy.
Photo by Francesco Caselli, Head of Agriculture and Site Manager,
and Silvia Botelli, Public Relations Specialist.
37
TREASURY WINE ESTATES ANNUAL REPORT 2023
Reconciliation of key performance measures
Metric (A$m unless
otherwise stated)
Management calculation
Statutory net profit
Income tax expense
EBITS
Net finance costs
Material items (gain)/loss
SGARA (gain)/loss
EBITS
EBITS
EBITDAS
Depreciation and Amortisation
1
EPS
EBITDAS
Statutory net profit
Material items (gain)/loss
Tax on material items
SGARA
Tax on SGARA
NPAT (before material items and SGARA)
Weighted average number of shares (millions)
EPS (cents)
EBITS (LTM)
Net assets
SGARA in inventory
Net debt
ROCE
Capital employed – Current year
Net assets (CFX)
SGARA in inventory (CFX)
Net debt (CFX)
Capital employed – Prior year (CFX)
Average capital employed
2
ROCE
1. Excludes earnings attributable to non-controlling interests.
2. F22 includes impacts from divested and acquired portfolio brands in Treasury Americas.
38
F23
254.3
82.8
72.7
109.2
64.5
583.5
583.5
147.3
730.8
254.5
109.2
(33.2)
64.5
(18.9)
376.1
721.8
52.1
583.5
F22
263.2
109.7
71.4
45.5
33.9
523.7
523.7
148.6
672.3
263.2
45.5
(10.5)
33.9
(9.5)
322.6
721.8
44.7
523.7
3,879.1
3,789.0
(37.8)
1,386.2
(45.0)
1,254.3
5,227.4
4,998.3
3,875.7
3,690.0
(44.9)
1,285.2
(30.3)
1,130.0
5,116.0
4,789.7
5,171.7
4,894.0
11.3%
10.7%
TREASURY WINE ESTATES ANNUAL REPORT 2023
39
TREASURY WINE ESTATES ANNUAL REPORT 2023 TREASURY WINE ESTATES ANNUAL REPORT 2023
Sustainability
In the face of a changing world and
challenging market conditions we
continue to make good progress on our
sustainability agenda. We continue to
build a more resilient business, produce
sustainable wine, and prioritise the
wellbeing of our people, communities,
and consumers.
Through this commitment to sustainability we aspire to shape a
We continue to invest to improve our data, processes and systems
positive future for everyone who touches our business, from grape
to support this transition, ensuring that sustainability is embedded
to glass.
into our business and decision making.
Our approach
Our approach to sustainability is embedded in our Ambition and
Our sustainability strategy and programs are informed by best
practice initiatives and guidance including the Global Reporting
Game Plan, and is driven by our DNA. It reflects a clear commitment
Initiative, the United Nations Global Compact and the UN
to innovation, partnership and taking a leadership role not just
Sustainable Development Goals and are evolving to holistically
across the global wine sector, but looking to those leading the
meet the requirements of the recently released standards from the
beverages sector more broadly.
International Sustainability Standards Board (ISSB).
This bold ambition requires an integrated approach to sustainability
with a focus on long-term value creation and leading collective
action to effectively manage risks and make the most of new and
emerging opportunities.
Cultivating a brighter future
F O S T E R I N G H E A LTHY AND
I N C L U S I V E C O MMUNITIES
C O N S U M E R
H E A L T H A N D
R E S P O N S I B L E
D R I N K I N G
INCLUSION,
EQUITY AND
DIVERSITY
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Our sustainability agenda has three focus areas:
Building a resilient business. We want to
ensure our business is resilient in the face of
increasing uncertainty, complexity
Fostering healthy and inclusice
communities. We want to foster safe,
sociable and connected communities where
Producing sustainable wine. We want
every consumer to experience wine that is
sustainably grown, made and packaged.
and change.
40
our brands are promoted, and our wine is
consumed, safely and responsibly.
TREASURY WINE ESTATES ANNUAL REPORT 2023
TREASURY WINE ESTATES ANNUAL REPORT 2023
Progress
Notable performance callouts over the year are included below.
Governance and reporting
In F23 management continued to focus on the execution of our
• We completed 21 solar installations at nine sites, generating
sustainability agenda. Progress against strategic roadmaps for
6,000 MWh per year – enough to power 1,000 homes.
each of our public commitments, alongside key enablers such
• We continued to invest significantly in the no and low alcohol
to executive sponsors, with regular reporting to the Executive
as communications, reporting and data was reported monthly
category, with new products including Squealing Pig no and
Leadership Team (ELT).
low alcohol options and Pepperjack mid-strength Shiraz
joining existing lighter options from Lindeman’s and the
The Board oversees TWE’s approach to, and management
award-winning Wolf Blass Zero range.
of sustainability (or ESG) matters and receives updates on
• Collaboration with growers and bulk wine providers
specialist training for Directors was conducted on key ESG trends,
accelerated adoption of region-relevant certification, with
with particular insights on climate risk, nature and
sustainability and the status of key priorities and initiatives. In F23
86% of fruit sourced from Australian growers now certified by
water stewardship.
Sustainable Winegrowing Australia and 100% of New Zealand
volume certified by Sustainable Winegrowing New Zealand –
TWE established a Board Wine Operations and Sustainability
with progress in other regions well underway.
Committee in F22 for greater focus on strategic, long-term
planning and operational issues in winemaking, sustainability,
• Development of a climate risk assessment framework for our
and supply chain in its own operations and relationships with the
viticultural assets, acknowledging the impact of a changing
sector in different winemaking regions. The Wine Operations and
climate on our key growing regions.
Sustainability Committee continued to meet regularly over F23,
engaging on a broad range of topics related to our performance
• A significant reduction in the serious incident frequency rate of
including climate risk and adaptation, Net Zero emissions, and
1.2 percentage points to 0.2 as a result of the concerted focus
water stewardship.
on safety during the year, including our leader-led campaign
‘Build safe together’, as well as a range of mental health
TWE’s reporting on sustainability or ESG topics is captured in the
initiatives including ‘Mental health first aid’ and ‘Mental health
Company’s annual Sustainability Report, which provides updates on
awareness’ information sessions.
progress and performance. The Board has oversight of our key ESG
• We launched our first Alcohol and Health Policy, setting out
our position and commitments on issues such as product
transparency, reducing harmful consumption and responsible
marketing.
disclosures, including the Sustainability Report.
Taskforce on climate related financial
disclosures (TCFD)
As a global viticultural business, TWE is exposed to both physical
and transitional climate risks. The physical impacts of climate
• Overall gender diversity improved to 42.8% (a 1.3% increase
change include more frequent extreme weather events, but
from F22), but the proportion of females in senior management
importantly for our business, the long-term risks arising from
roles decreased to 44.5% (a decrease of 0.4% from F22).
changes in climate patterns such as increased temperature and
While we are pleased with our performance over the year we
water security.
acknowledge that we have more work to do. We remain focused
Transitional risks and opportunities arise from political, legal,
on improving the quality of our data and supporting systems,
technological, and market responses to the challenges posed by
deepening the integration of sustainability considerations across our
climate change and the transition to a lower carbon economy.
business and supporting collaborative action on key issues in our
We continue to monitor these emerging trends, together with
operating markets.
changing consumer preferences and expectations.
A fulsome overview of progress against our strategic focus areas
We are seeking to increasingly align our climate disclosures with the
and public commitments will be available in our 2023 Sustainability
recommendations of the TCFD and in line with the requirements of
Report, released later this year.
the recently-released ISSB Standards, as well as preparing for future
mandatory reporting requirements.
In F23 we continued to refine our climate risk model (for our
viticultural sites) that uses localised data to enable more specific
projections. The outcomes will inform the range of risk mitigation
and adaptation responses that we might consider at our
viticultural sites.
41
TREASURY WINE ESTATES ANNUAL REPORT 2023
Inclusion, equity
and diversity
Our commitment to inclusion,
equity and diversity
TWE’s inclusion, equity and diversity (IE&D)
strategy is underpinned by a commitment
to upholding the International Bill of Human
Rights, as well as the United Nations Guiding
Principles on Business and Human Rights,
and Modern Slavery Acts. TWE benefits from
the diversity of our people, with their variety
of backgrounds, ideas, cultures, ethnicities,
talents, genders and voices.
Our inclusive, supportive and collaborative culture attracts and
retains the best talent, with an environment where people from
diverse backgrounds can bring their unique perspectives and
contribute to the organisation’s success.
The Board has committed to reviewing and assessing progress
against TWE’s IE&D objectives annually. The Company is pleased to
report progress in F23, together with the F24 measurable objectives.
The Company’s IE&D policy can be found at tweglobal.com.
F23 diversity target and objectives
Recommendation 1.5 of the ASX Corporate Governance Principles
and Recommendations states that a company’s board or board
F23 progress towards the IE&D Strategy
The Company’s IE&D plan is built on the foundations established in
recent years and focuses on IE&D being leader-led, integrated into
the way that we work and inclusive of all employees. Highlights of
progress against the F23 plans are detailed below.
F23 progress on diversity targets
44.5%0.4% DECREASE
Females in
leadership roles
42.8%1.3% INCREASE
Females in
all roles
committee is to set the measurable objectives for achieving
Leaders who model our DNA
gender diversity. The targets that have been set by the Board are
• To support leaders to integrate IE&D into everyday interactions
laid out below.
and experience the power of empathy and perspective
through storytelling, we led ‘Belonging conversations’ with
1. To increase female representation in leadership roles to 50%
members of the Global Leadership Group. This experience
by 2025, while continuing to foster an inclusive culture.
reinforced our leadership attributes and was an opportunity
for leaders to practice creating a greater sense of belonging
2. To increase female representation across the total TWE
and develop a deeper appreciation of the role of connection
workforce to 42% by 2025.
in building an inclusive culture.
The three pillars of our refreshed IE&D strategy
Leaders who model our DNA: developing leaders who steadfastly
role model and lead inclusion.
• To build future leaders, Empower Me, TWE’s development
program for females and non-binary employees, was
expanded to include new and emerging leaders from
Engaged employees, consumers and communities: achieving
meaningful outcomes from employees who bring their whole
under-represented groups across the business. During 2023
a total of 30 employees were enrolled in the program and
are encouraged to take leadership roles within Employee
selves to work, and consumers who recognise our commitment to
Resource Groups (ERGs) and represent TWE publicly.
inclusion and diversity through our brands.
Employer of choice: creating industry-leading policies and work
processes that maximise inclusion and minimise bias.
Engaged employees, consumers and communities
• To position IE&D within Supply in Australia as business critical
and an intrinsic part of our Employee Value Proposition, as well
as encouraging the involvement of Supply employees, a Supply
The CEO and all ELT members had a Diversity and Inclusion Key
IE&D governance structure was established. This structure is
Performance Objective (KPO) to deliver the objectives in F23.
led by the Chief Supply Officer and members of the Supply
Leadership Team, who review and support plans to build
engagement. For example, members of the Supply Leadership
Team led an ERG roadshow, visiting all Supply sites and providing
education sessions to show how IE&D is relevant to all employees
irrespective of location, and how ERGs can support employees
to feel a sense of belonging. In the US, IE&D and the ERG topics
have been included in front line supervisory training for new and
developing front line leaders.
43
TREASURY WINE ESTATES ANNUAL REPORT 2023
TREASURY WINE ESTATES ANNUAL REPORT 2023
Inclusion, equity and diversity (continued)
• To promote Reconciliation with Aboriginal and Torres Strait
• We were recognised as an employer of choice with
Islander peoples, a Reconciliation Action Plan (RAP) working
these accolades:
group was established. Under the guidance of the Chief Supply
and Sustainability Officer, the Chief People Officer and Chief of
•
Recognised by the Australian Financial Review as one of
Staff, and with the support of an external consultant, the working
the Best Places to Work
group has commenced the development of a Reflect RAP, with
activities planned against each element, and with specific focus
on increasing understanding, value and recognition of Aboriginal
and Torres Strait Islander cultures, histories, knowledge and rights
•
•
Certified as a Great Place to Work in the UK
TWE Americas was recognised as one of the Healthiest
through cultural learning and establishing and strengthening
Employers of the Bay Area for the mid-sized company
mutually beneficial relationships with Aboriginal and Torres Strait
category, taking out first place, up from fourth in F22
Islander stakeholders and organisations.
• To celebrate and raise awareness of the diversity of LGBTQIA+
communities, TWE and Squealing Pig sponsored the Australian
Open tennis tournament in Melbourne and Sydney
WorldPride 2023.
• To raise awareness of a diverse range of causes and
communities, we hosted or participated in events including 16
days of Activism against Gender Based Violence, International
Women’s Day, A Taste of Harmony, Pride Month, Indigenous
walks of Melbourne and Culture Days. We also participated in
F24 objectives and initiatives
TWE continues to strive towards the targets listed below.
•
•
Increase female representation in leadership roles to 50%
by 2025.
Increase female representation across the total TWE
workforce to 42% by 2025.
• Continue to foster an inclusive and equitable culture.
The following high priority initiatives are planned to build on the
industry events including The Black Food & Wine Experience
Company’s achievements in F24.
in the US, as well as Black Business Week and Diversity &
Inclusion in Grocery LIVE! In the UK.
• Support ongoing executive sponsorship of ERGs to lift their
impact and sustain a culture of inclusion and belonging.
Employer of choice
• To enable us to understand how we impact different groups
•
Increase IE&D engagement with Supply through education
of employees over time and to be data-led in our IE&D
plans for the future, we piloted the collection of personal
demographic data (non-anonymised) in the UK. This followed
significant employee consultation and engagement, and an
in-depth data protection impact assessment to ensure all
necessary controls were implemented to protect individual
privacy. Employees are encouraged to voluntarily disclose
demographic data including racial or cultural background,
disability, caring status, gender including a non-binary
and partnerships with ERGs.
• Continue to evolve our approach to our talent pipeline and
onboarding to drive an increase in female representation in
areas with <40% current female representation.
• Evolve data collection and analysis to measure diversity of
factors other than gender.
option and veteran status. Data collection will be extended to
employees in other countries during F24 and questions will be
The CEO and all ELT members have a Leadership, Inclusion, Equity
and Diversity Key Performance Objective (KPO) to deliver the above
extended to include sexuality.
objectives in F24.
• To sustain our culture and business performance we evolved
our approach to hybrid work in our Melbourne office. Our
focus is to encourage employees to come into the office more
often than not, and in doing so provide employees with the
autonomy to decide the right days to come in, the opportunity
to build capability and to connect with each other, developing
a sense of purpose and belonging, and of contributing to
something bigger.
Board diversity objective
The Board is committed to ensuring it is comprised of individuals
with appropriate skills, experience and diversity to develop and
support the Company’s strategic imperatives. The importance of
cultural, geographic and gender diversity is reflected in the Board’s
membership, with three Non-Executive Directors based offshore in
regions in which the Company operates. Females represent 37.5%
of the Board as at the date of this report.
• To ensure remuneration equity globally, we reviewed our
gender pay gap to determine the difference between male
and female earnings, irrespective of role or seniority.
Five adjustments to remuneration were made as a result of
this analysis.
44
TREASURY WINE ESTATES ANNUAL REPORT 2023 Organisational gender profile
The Company makes the following diversity disclosures in relation
to Recommendation 1.5 of the ASX Corporate Governance Principles
and Recommendations.
Recommendation 1.5 requirement
Proportion of females in the whole organisation
As at 30 June 2023, 42.8% of the Group’s employees were female.
Proportion of females in senior executive1 positions
within the Group
As at 30 June 2023, 36.4% of senior executive positions within the
Group were held by females.
Proportion of females on the Board of the Company
As at 30 June 2023, 37.5% of the Company’s Board of Directors
(including Executive Directors) were female.
The Board is committed to ensuring that it is comprised of
individuals with appropriate skills, experience, and diversity to
develop and support the Company’s strategic aims.
The Board’s objective is that at least 30% of its Directors will be
of either gender, to maintain gender diversity in its composition.
Further details are set out in the Corporate Governance section
of the Annual Report.
As an Australian based business, the Company complies with the Workplace Gender Equality Act which requires annual filings to the
Australian Workplace Gender Equality Agency (WGEA) disclosing ‘Gender Equality Indicators’. This report, covering the 12-month period
ending 31 March, was published on the WGEA and TWE websites in June 2023: tweglobal.com/careers/diversity-inclusion
Our global workforce by geography
AUSTRALIA AND NEW ZEALAND 55%
AMERICAS 27%
ASIA 9%
EMEA 9%
1 For the purposes of this disclosure, the Company has defined ‘senior executive’ as the Chief
Executive Officer and his/her direct reports. To note, using the TWE definition of leader, 44.5% of roles
were held by females as at 30 June 2023.
45
TREASURY WINE ESTATES ANNUAL REPORT 2023 Board of Directors
Paul Rayner
B.E.C, MAdmin, FAICD
Chairman
Member of the Board since
May 2011 and Chairman of the
Board and the Nominations
Committee since September
2012.
Mr Rayner is an independent
Director and is an Australian
resident.
He brings to the Board extensive
international experience in
markets relevant to Treasury
Wine Estates including Europe,
North America, Asia, as well
as Australia. He has worked in
the fields of finance, corporate
transactions and general
management in the consumer
goods, manufacturing and
resource industries. His last role
as an executive was as Finance
Director of British American
Tobacco plc, based in London,
from January 2002 to 2008.
Mr Rayner is also a Director
of Murdoch Children’s Research
Institute (since December
2014 and where he also serves
as Chairman of the Audit,
Finance and Risk Committee).
Mr Rayner is a former Director
of Boral Limited (September
2008 to June 2023) and a
former Director of Qantas
Airways Limited (July 2008 to
November 2021).
Tim Ford
BBus, MBA
Managing Director and
Chief Executive Officer
Member of the Board since
July 2020.
Mr Ford is an Australian resident
and TWE’s Chief Executive
Officer.
Since joining TWE in February
2011, Tim has held key roles
across the business’s global
operations, including Director,
Global Supply and Managing
Director Europe, South East Asia,
Middle East and Africa, and
Deputy Chief Operating Officer
with responsibilities for Asia,
Europe and the ANZ regions.
In January 2019 Tim was
appointed Chief Operating
Officer with responsibility for
TWE’s global operations, and
took the helm as Chief Executive
Officer on 1 July 2020.
Tim has more than 20 years’
experience in the wine, food and
beverages sectors, with a strong
track record for disciplined
execution of strategy, driving
growth, and building high
performing and connected
teams. Prior to joining TWE, he
held senior management roles
with National Foods and CUB.
Ed Chan
BA/Ec, MS
Non–Executive Director
Garry Hounsell
B.Bus (Acc), FCA, FAICD
Non–Executive Director
Member of the Board since
September 2012 and a
member of the Audit and Risk
Committee.
Mr Chan is an independent
Director and a Hong Kong
resident. He is currently a
Director of Hong Kong-listed LINK
REIT (since February 2016).
Mr Chan is a former Partner at
Gaorong Capital (from July 2020
to June 2022), a former Director
of Yum China Holdings, Inc (from
October 2016 to May 2021), a
former Operating Partner of
SoftBank Investment Advisers
(from June 2019 to June 2020),
the former Vice Chairman of
Charoen Pokphand Group (from
January 2012 to February 2018)
and a former Director of Hong
Kong-listed CP Lotus (from April
2012 to February 2018). From
2006 to 2011, Mr Chan was the
President and CEO of Wal-Mart
China. He has also held senior
positions with Dairy Farm,
including his last position as
North Asia Regional Director,
as well as leading the
Bertelsmann Music Group
business in Greater China. Mr
Chan began his career as a
consultant with McKinsey & Co
working in both Hong Kong and
the United States.
Member of the Board since
September 2012, Chairman
of the Wine Operations and
Sustainability Committee
and a member of the Audit
and Risk Committee, Human
Resources Committee and the
Nominations Committee.
Mr Hounsell is an independent
Director and is an Australian
resident.
He is currently Chairman of
Helloworld Travel Limited (since
October 2016), Hiro Brands
Limited formerly known as
Wellness and Beauty Solutions
Limited (since December
2021), the Commonwealth
Superannuation Corporation
Limited (since July 2021, and a
Director since July 2016) and
Electro Optic Systems Holding
Ltd (since November 2022).
Mr Hounsell is also a Director
of Findex Group Limited (since
January 2020).
Mr Hounsell is a former
Chairman of PanAust Limited
(from July 2008 to August 2015),
Myer Holdings Limited (from
November 2017 to October 2020,
and a Director from September
2017 to October 2020), Spotless
Group Holdings Limited (from
February 2017 to August 2017,
and a Director from March 2014
to August 2017) and a former
director of Qantas Airways
Limited (from January 2005
to February 2015), Integral
Diagnostics Limited (from
October 2015 to March 2017)
and Dulux Group Limited (from
July 2010 to December 2017),
and has held senior positions at
both Ernst & Young and Arthur
Andersen.
46
TREASURY WINE ESTATES ANNUAL REPORT 2023 Colleen Jay
B.BA (Hons)
Non–Executive Director
Antonia Korsanos
BEc, CA, GAICD
Non–Executive Director
John Mullen
BSc
Non–Executive Director
Lauri Shanahan
JD Business Law, BS Finance
Non–Executive Director
Member of the Board since April
2018, a member of the Human
Resources Committee and a
member of the Wine Operations
and Sustainability Committee.
Ms Jay is an independent
Director and an American
resident.
Ms Jay has extensive experience
in the fast-moving consumer
goods industry, acquired
over a long and successful
career at Procter & Gamble
(P&G, NYSE: PG), an American
multinational consumer goods
company, between 1985 and
2017. She has held a number of
senior leadership roles at P&G,
including President of Global
Retail Hair Care & Colour and
her most recent position as
President of the US$5 billion
Global Beauty Specialty
business, where she also led
a complex transition and
divestiture of several businesses.
Ms Jay has significant global
experience having lived and
worked in the United States,
Europe, China and Canada.
Her leadership experience
includes significant global line
operational leadership, strategy
creation and execution, global
brand building, new business
development, transformational
innovation and M&A.
Ms Jay is currently an
independent Non-Executive
Director of The Cooper
Companies (NYSE: COO) and
Beyond Meat (NASDAQ: BYND).
Mr Mullen is an independent
Director and is an Australian
resident. Member of the Board
since May 2023.
Mr Mullen has extensive
experience in international
transportation and logistics,
with more than two decades
in senior positions with some
of the world’s largest transport
and infrastructure companies.
He has lived or worked in 13
countries. From 2011 to 2017
Mr Mullen was Chief Executive
Officer of Asciano, Australia’s
largest ports and rail operator.
Prior to this Mr Mullen spent 15
years with DHL Express, a US$20b
company employing over
100,000 people in 220 countries,
serving as the global Chief
Executive Officer from 2005 to
2009.
Prior to DHL, Mr Mullen spent 10
years with the TNT Group with
four years as the Chief Executive
Officer of TNT Express Worldwide
based in the Netherlands.
Mr Mullen is also Chairman of
Telstra Group Ltd (since 2016
and a Director since 2008),
Chairman of Brambles Ltd (since
2020), a Director of Brookfield
Infrastructure Partners L.P. (from
2021 and previously 2017-2020),
and Chairman of the Australian
National Maritime Museum
(from 2019).
Former Directorships and
appointments include Chairman
of Toll Holdings (2017-2022),
the US National Foreign Trade
Council in Washington (2008-
2010), and Member of the UNICEF
Task Force on Workplace Gender
Discrimination and Harassment
(2018-2019).
Ms Korsanos is an independent
Director and an Australian
resident.
Ms Korsanos has extensive
senior executive, strategy, M&A,
financial, global supply chain
and governance experience,
acquired over a successful
career as Chief Financial Officer
of ASX-listed Aristocrat Leisure
Limited between 2009 and
2018, where she also served as
Company Secretary from 2011.
During her career with Aristocrat,
Ms Korsanos gained a significant
understanding of the US market
and regulatory environment, and
led a number of transformational
cross-border technology
acquisitions.
Prior to joining Aristocrat, Ms
Korsanos held senior leadership
roles in the fast-moving
consumer goods industry for a
period of 10 years, including at
Goodman Fielder and Kelloggs.
Ms Korsanos commenced her
career with accounting firm
Coopers & Lybrand (now PwC)
and has been a Chartered
Accountant since 1994.
Ms Korsanos was elected as
Chair of SciPlay Corporation
(NASDAQ: SCPL) in August 2022,
and was appointed to the Board
of Light & Wonder, Inc. (formerly
known as Scientific Games
Corporation) (NASDAQ: LNW) in
September 2020, and elected
as Executive Vice Chair of Light
& Wonder Inc. Ms Korsanos
is a former Director of Crown
Resorts Limited (from May
2018 to October 2021), Ardent
Leisure Group Limited (from
July 2018 to June 2020) and
Webjet Limited (from June 2018
to March 2021). In the private
sector, in 2019 she co-founded
a Growth Equity Fund (Ellerston
JAADE Fund) which invests in
private Australian technology
companies.
Member of the Board since
November 2016, Chair of the
Human Resources Committee
and a member of the
Nominations Committee.
Ms Shanahan is an independent
Director and an American
resident.
Ms Shanahan has extensive
retail, hospitality, consumer
brand, e-commerce,
sustainability and governance
experience. She has held senior
executive positions, including as
Chief Administrative Officer, Chief
Legal Officer and Corporate
Secretary with The Gap Inc,
where she was involved in
leading the company’s domestic
and global expansion and had
direct oversight responsibility
for key strategic initiatives
as well as for operating,
administrative and sustainability
functions worldwide. Ms
Shanahan also founded the
consulting practice Maroon
Peak Advisors of which she is a
Principal.
Ms Shanahan is currently a
Director of Deckers Outdoor
Corporation (NYSE: DECK) and
CAVA Group Inc (NYSE: CAVA).
Ms Shanahan is a former Director
of Cedar Fair Entertainment
Company (NYSE: FUN) and G
Squared Ascend (NYSE: GSQD.U).
Ms Shanahan is a former
member of the California State
Personnel Board (December 2012
to March 2022).
47
TREASURY WINE ESTATES ANNUAL REPORT 2023 TREASURY WINE ESTATES ANNUAL REPORT 2023
Corporate governance
The Board believes good corporate governance and transparency in
corporate reporting is a fundamental part of the Company’s culture
and business practices.
During the year, the Board continued to govern the Company
Introduction
through the execution of its strategy. Key governance issues for
the Board during the year included:
• Overseeing the Company’s sustainability agenda and
progress, including approval of TWE’s sustainability
commitments and annual Sustainability Report and TWE’s
Statement on Human Rights and Modern Slavery as well as
oversight of performance under TWE’s public sustainability
commitments and against performance milestones of the
sustainability linked loan.
• Providing input into and approval of the majority acquisition
The Board is committed to conducting the Company’s business
ethically and responsibly and in accordance with high standards
of corporate governance. This is essential for the long-term
performance and sustainability of the Company and to protect the
interests of its stakeholders.
To this end, the Board regularly reviews the charters and key policies
that underpin the Company’s corporate governance practices to
ensure they remain appropriate, reflect high standards of governance
and meet regulatory requirements. During the financial year, the
Company’s governance practices complied with the fourth edition
of the ASX Corporate Governance Principles and Recommendations
of Château Lanessan, Bordeaux, France.
(ASX Principles and Recommendations).
• Continued development of Board composition and
succession plans including the appointment of Mr Mullen
on 1 May 2023.
This Corporate Governance section provides an overview of the
Board’s operations, details on the governance framework and the key
governance focuses of the Board for the financial year.
• Overseeing Company culture including the continuation of
Companywide initiatives to embed the TWE DNA, being the
Company’s core values.
• Continued commitment to the governance of workplace
health, safety and wellbeing performance, and developing a
The full Corporate Governance Statement, which outlines the key
aspects of the Company’s corporate governance framework and
practices for the year ended 30 June 2023, together with the Appendix
4G Key to Disclosures – Corporate Governance Council Principles
and Recommendations and key governance documents, including
the constitution, charters and policies, are available on our website at
culture of leadership on safety across the business.
tweglobal.com/investors/corporate-governance.
• Providing input into, and approval of, the TWE F24-F28
Strategic Plan, approving the annual financial budget, and
monitoring corporate performance and the implementation
Board of Directors
Members of the Board
of strategy and policy.
• Oversight of management’s continued commitment to a
culture of high performance and ethical and responsible
conduct and setting remuneration policy to attract and
retain talent and reward high performance and conduct that
exemplifies the Company’s DNA.
• Maintaining effective governance to facilitate high-quality
processes and internal controls.
The Board is committed to ensuring it is comprised of individuals with
appropriate skills, experience and diversity to develop and support
the Company’s ambition to be the world’s most admired premium
wine company, having regard to the five pillars of its Game Plan.
The Board utilises a skills matrix to assist in assessing the mix of
skills, experience and diversity on the Board, and to identify areas of
focus to supplement the mix of skills and experience as part of Board
succession planning. Each Director annually rates their skills, expertise
and experience from 1 to 3 for each competency identified in the
Board skills matrix (1 = working knowledge, 2 = good understanding,
and 3 = expert). The self-assessment ratings are subsequently
calibrated and included in the Board skills matrix.
The Board considers that its members collectively possess the
appropriate competencies and attributes that enable the Board to
discharge its responsibilities effectively, contribute to the Company’s
strategic direction and oversee the delivery of its corporate objectives.
The Company’s Game Plan is set out in Table 1. A summary of the
Company’s Board skills matrix is included in Table 2.
48
48
TREASURY WINE ESTATES ANNUAL REPORT 2023
Table 1 – TWE Game Plan
TWE Game Plan
Customer
focused premium
brand portfolio
Multi-regional
and multi-channel
sales models
World-class talent
Sustainable and
multi-regional sourcing
& winemaking
Deep, long-term
partnerships and
networks
Table 2 – TWE Board skills matrix
Board skills and experience
Expert
Good understanding Working knowledge
No. of Directors (total of 8)
Industry
Expertise and experience in the wine or alcohol industry, consumer
marketing or supply and distribution
Business strategy development and M&A
Demonstrated ability to build, develop, implement and deliver
strategic business objectives, including sustainability objectives
and/or experience in corporate transactions and joint ventures
Finance and business
Proficiency in financial accounting and reporting, corporate finance
and internal controls, corporate funding, capital management and
associated risks
Governance, regulatory and human capital
Expertise identifying and managing legal, regulatory, governance,
public policy and corporate affairs issues; experience in complex
human capital and remuneration issues and understanding of the
link between strategy, performance and remuneration outcomes
Risk management
Experience anticipating and identifying risks and monitoring the
effectiveness of both financial and non-financial risk
management frameworks and controls; extensive experience with
complex workplace health, safety, environmental and community
risks and frameworks
Technology
Expertise and experience in the adoption and implementation of new
technology, including IT infrastructure; understanding of key factors
relevant to digital disruption, including opportunities to leverage
digital technologies and cyber security; and understanding the use
of data and analytics
Innovation
Expertise in and understanding of key factors relevant to innovation;
experience in the creation and delivery of new ways of working and
commercial initiatives
International
Relevant experience in regions and countries related to the
Company’s strategy and activities, including USA, Asia, and EMEA
Board or senior management experience
Chairman – Listed company
CEO/Senior management
4
6
4
2
4
0
2
5
4
2
4
6
4
7
5
3
YES
4
8
0
0
0
0
0
1
1
0
NO
4
0
49
TREASURY WINE ESTATES ANNUAL REPORT 2023
Corporate governance (continued)
The Board recognises
the importance of cultural,
geographic and gender
diversity among its
members, which is reflected
in the current representation
on the Board, with three
Non-Executive Directors
based offshore in regions in
which the Company operates.
Role of the Board
The responsibilities of the Board as set out in the Board Charter
include the following.
Strategic guidance and effective oversight of management
• Providing input into, and approval of, the Company’s
corporate strategy, performance objectives, and business
plans as developed by management.
• Appointing the CEO and managing succession planning,
as well as overseeing changes to the Executive Leadership
Team, with a view to ensuring senior management has the
appropriate resources to enable implementation of the
Company’s strategic initiatives.
The Board considers that it also has an appropriate mix of Director
• Directing, monitoring and assessing the Company’s
tenure, with its members ranging from newly appointed to longer
performance against strategic and business plans.
standing Directors. As at June 2023, the average tenure for the
Company’s Non-Executive Directors was 6.5 years. The Board has
• Approving and monitoring capital management, including
clear succession plans in place to ensure continued Board renewal.
major capital expenditure, acquisitions, and divestments.
The length of service of each Director is set out in the Directors’
Report contained in the annual report.
Risk assessment and management
In order to maintain gender diversity in the composition of the
• Reviewing and evaluating the integrity of the Company’s
Board, in 2019 the Board set itself a measurable objective that at
systems of risk management (for both financial and non-
least 30% of its Directors will be female going forward. Since John
financial risks), legal compliance, and internal compliance
Mullen joined the Board on 1 May 2023, women represent 37.5% of
and control.
the Board. To maintain gender diversity into the future, in 2023 the
Board has set itself a measurable objective to maintain at least
• Reviewing and approving the Company’s risk
30% of its Directors being female going forward.
appetite statement.
The Board is committed to ensuring its performance is enhanced
Obligations to stakeholders
through its Director induction and ongoing education program.
The Board’s ongoing education incorporates site visits and
• Monitoring and reviewing processes aimed at ensuring
presentations given by management and external parties
integrity of financial and other reporting.
concerning developments impacting, or likely to impact,
• Monitoring compliance with adopted strategies, procedures
and standards, including corporate governance standards.
the business.
Independence
The Board, having reviewed the position, interests and relationships
of all Non-Executive Directors currently in office, considers that all
Non-Executive Directors are independent.
During the year, Non-Executive Directors met periodically without
the presence of management to have the opportunity to discuss
key matters among the Non-Executive Directors.
Annual Director elections
Under the Constitution of the Company, Non-Executive Directors
are required to retire and may seek re-election, at least every
three years. However, having regard to the global nature of the
Company, emerging governance requirements in key markets, the
inherent benefits for Board renewal and to ensure accountability of
Directors, in 2019 the Board adopted a policy pursuant to which all
Non-Executive Directors will seek re-election annually.
50
TREASURY WINE ESTATES ANNUAL REPORT 2023
Board Committees
Four standing Board Committees have been established to assist the Board in fulfilling its responsibilities.
Board of Directors
Audit and Risk
Committee
Nominations
Committee
Human Resources
Committee
Wine Operations and
Sustainability Committee
Oversees: financial reporting, risk
management and internal controls,
external and internal audit, capital
management, and compliance.
Oversees: Board composition,
performance of the Board,
Board Committees and individual
Directors, as well as succession planning.
Key focuses for F23
Key focuses for F23
• Overseeing Board composition
and succession plans including
changes to Committee
composition.
• Assessing the competencies
of the Directors to ensure the
appropriate range of skills
and expertise amongst Board
members.
• Review of the Board skills matrix.
• Overseeing the internally
facilitated review of the
performance of individual
Directors, the Board as a whole
and the operation of the Board
Committees.
• Assessing the independence
of Directors and suitability
of Director candidates for
re-election.
• Reviewing the scope of the
annual internal and external
audit programs and overseeing
the conduct and coordination
of those programs, as well
as assessing the internal and
external auditors and
their independence.
• Undertaking a tender of the
external audit services.
• Reviewing significant
accounting and financial
reporting related matters raised
by management and
the auditors.
• Reviewing compliance matters
across the Company.
• Reviewing whistleblower matters
reported across the Company.
• Monitoring the Company’s
insurance renewal program.
• Reviewing and recommending
to the Board for approval
the full year and interim
financial reports.
Oversees: training, development
and succession planning for senior
management, Company’s inclusion,
equity and diversity policy, evaluation
of senior executive performance, and
remuneration, and Non-Executive
Directors’ fees.
Key focuses for F23
Oversees: wine making operations in
the various regions in which the
Company operates, expansion
opportunities in winemaking areas,
supply chain sustainability and the
Company’s sustainability reporting.
Key focuses for F23
• Reviewing and monitoring
progress against the Company’s
sustainability targets and the
implementation of initiatives to
reach these targets.
• Overseeing Company initiatives
to ensure industry and
community engagement.
• Reviewing workplace
health, safety and wellbeing
performance and initiatives.
• Overseeing wine asset
management and strategy.
• Monitoring global vintage
variations and outcomes.
• Reviewing remuneration
practices for F23 to ensure
alignment with the Company’s
DNA and to provide for the
attraction, incentives, rewards
and retention of key talent.
• Reviewing and approving the
fixed remuneration and incentive
compensation arrangements
for senior executives, including
reviewing the attainment of
short term incentive and long
term incentive performance
conditions.
• Reviewing and recommending
to the Board for approval the
Company’s F23 Remuneration
Report.
• Approving the terms
of engagement of the
remuneration consultant.
• Overseeing the Company’s
inclusion, equity and diversity
initiatives and progress
against targets.
• Overseeing and monitoring the
Company’s culture.
Governance policies
The Company has a number of governance policies which guide how it does business, including the following.
• Code of Conduct, which recognises that the Company’s
reputation is one of its most valuable assets, founded on
the ethical and responsible behaviour of the people who
represent the Company.
• Disclosure Policy, which recognises the importance of timely
disclosure of the Company’s activities to shareholders and
market participants so that trading in the Company’s shares
takes place in an informed market.
• Anti-bribery and Corruption Policy, which supports the
Company’s commitment to countering bribery and corruption
in all forms and confirms that the Company does not tolerate
any form of bribery and corruption.
• Whistleblower Policy, which promotes and supports the
Company’s culture of honest and ethical behaviour, by
encouraging the reporting of potential misconduct or any
other matter that may contravene the Company’s Code of
Conduct or other policies or the law.
• Potential Conflicts of Interest Policy, which guides the
disclosure and management of potential conflicts of interest.
• Share Trading Policy, which prohibits trading in the Company’s
shares by Directors and employees if they are in possession of
‘inside information’ and provides further restrictions on trading
by ‘Restricted Persons,’ including prohibiting trading during
blackout periods, and requiring prior approval before trading
at any other time.
• Risk Management Policy, as well as a Risk Management
Framework, which provide guidance and direction on
the management of risk in the Company and state the
Company’s commitment to the ongoing development of
a strategic and consistent companywide approach to risk
management, underpinned by a risk-aware culture.
51
TREASURY WINE ESTATES ANNUAL REPORT 2023
Barossa Winery and Production Centre,
Barossa Valley, South Australia.
Photo by: David Dahlenburg, Maintenance
Scheduler.
52
TREASURY WINE ESTATES ANNUAL REPORT 2023 Code of Conduct reporting
At TWE, we believe each of us has a responsibility to do the right thing. Our Code of
Conduct outlines our expectations in how we do business. Like everything we
do at TWE, our Code is underpinned by our DNA. Through our DNA, we seek to nurture
a physically and psychologically safe environment where our people have
the confidence and support to speak up if they see or experience any
inappropriate behaviour.
Code of Conduct matters reported
UNSUBSTANTIATED, 17
THEFT OF COMPANY INFORMATION, 16
BULLYING, HARASSMENT OR WORKPLACE MISCONDUCT, 14
PERFORMANCE, 8
UNDERPAYMENT OF WAGES/BENEFITS, 5
BREACH OF POLICY, 6
FRAUD, 3
SEXUAL HARASSMENT, 2
We appreciate our employees speaking up about their concerns
and encourage everyone to do the same. Processes are in place
to ensure that reports of inappropriate behaviour are logged,
investigated and that appropriate action is taken. Measures are in
place to ensure complaints are treated confidentially, consistent
with legislative protections.
Investigations into HR compliance matters are conducted by the
People and Culture team or external third parties as appropriate,
with matters reported to the HR Committee biannually.
Breaches of governance policies and other core policies are
reported to the Audit and Risk Committee, including a high level
overview of Health and Safety and HR Compliance matters. Details
of Health and Safety performance are reported via the Wine and
Operations Sustainability Committee and are published in our
annual Sustainability Report.
People-related compliance
During F23, a total of 71 matters were reported, representing 2.8%
of our workforce. Of these, five were received anonymously via
our external whistleblower service. Of the reported people-related
matters, 35 (76%) were fully or partially substantiated.
Actions taken in response to substantiated matters include those
listed below.
• 24% resulted in coaching, counselling or training intervention.
• 33% resulted in formal written warnings (including final
written warnings).
• 31% resulted in end of employment.
This information is provided as part of our ongoing commitment
to transparency, accountability and sustainable performance.
We are committed to improving our performance and our reporting
year on year. We welcome feedback from our stakeholders on
how we may continue to build and preserve trust in our business
consistent with our ambition to be the world’s most admired
premium wine company.
53
TREASURY WINE ESTATES ANNUAL REPORT 2023 Directors’ report
The Directors of Treasury Wine Estates Limited (the Company)
present their report together with the financial report for the
Directors
The Directors of the Company during the financial year and up to
Company and its controlled entities (the Group) for the financial
the date of this report are:
year ended 30 June 2023 and the auditor’s report.
The following sections of the Annual Report are part of, and are
to be read in conjunction with, this Directors’ Report:
Warwick Every-Burns3
Paul Rayner
Ed Chan
Garry Hounsell
Lauri Shanahan
Colleen Jay
Antonia Korsanos
Tim Ford (Chief Executive Officer)
John Mullen
• Operating and Financial Review (OFR)
• Board of Directors
• Remuneration Report
Principal activities
The principal activities of the Group during the financial year
were viticulture and winemaking, and the marketing, sale and
distribution of wine.
Statutory information
The Group’s consolidated financial statements have been presented
for the financial year ended 30 June 2023 and appear on pages 80
to 132..
Directors meetings
The number of Board and Board Committee meetings and the
number of meetings attended by each of the Directors of the
Company during the financial year are listed below:
Meetings held during 2023 financial year
Date of appointment
9 May 2011
9 May 2011
1 September 2012
1 September 2012
1 November 2016
1 April 2018
1 April 2020
1 July 2020
1 May 2023
Board meetings1
Audit and risk
committee meetings
Human resources
committee meetings
Nominations
committee meetings
Wine operations and
sustainability
committee meetings
Additional
meetings2
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Paul Rayner
Tim Ford
Ed Chan
Warwick Every-Burns3
Garry Hounsell
Colleen Jay
Antonia Korsanos
John Mullen
Lauri Shanahan
12
12
12
3
12
12
12
3
12
12
12
12
3
12
11
12
3
12
—
—
4
—
4
—
4
—
—
—
—
4
—
4
—
4
—
—
—
—
—
1
4
4
—
—
4
—
—
—
1
3
4
—
—
4
7
—
—
6
7
—
7
—
7
7
—
—
6
5
—
7
—
7
—
—
—
—
4
4
—
—
—
—
—
—
—
4
4
—
—
—
5
5
—
—
2
—
4
—
—
1. Shows the number of meetings held and attended by each Director during the period that
the Director was a member of the Board or Committee. Directors who are not members of Board
Committees do attend Committee meetings from time to time. The above table reflects the meeting
attendance of Directors who are members of the relevant Committee(s).
2. Reflects the number of additional formal meetings attended during the financial year by each
Director, including Committee meetings (other than Audit and Risk Committee, Human Resources
Committee, Nominations Committee or Wine Operations and Sustainability Committee) where any
two Directors are required to form a quorum.
3. Mr Every-Burns retired from the Board on 18 October 2022.
54
TREASURY WINE ESTATES ANNUAL REPORT 2023 Directors’ interests in share capital
Events subsequent to balance date
The relevant interest of each Director in the share capital of
On 15 August 2023 the Group announced that Paul Rayner will retire
the Company as at the date of this report is disclosed in the
from the Company’s Board as Chairman and independent Non-
Remuneration Report.
Company Secretary
Executive Director effective from the conclusion of the Company’s
Annual General Meeting, to be held on Monday 16 October 2023.
The Board has appointed John Mullen as Chairman elect, to
Alexandra Lorenzi BA, LLB (Hons) was appointed Company Secretary
become Chariman subject to Mr Mullen’s election at the Annual
on 3 July 2023. Ms Lorenzi is an experienced corporate lawyer with
General Meeting.
deep commercial, legal, and governance expertise. Ms Lorenzi has
been a member of the TWE team since April 2020. Prior to joining
Other than as disclosed above and in the financial statements, the
TWE, Ms Lorenzi was a Senior Associate at leading global law firm
Directors are not aware of any matters or circumstances that have
Herbert Smith Freehills, where she advised senior management and
arisen since the end of the financial year which have significantly
Boards of Australia’s largest listed companies.
affected or may significantly affect the operations of the Group,
the results of those operations or the state of affairs of the Group in
As Ms Lorenzi is on maternity leave, Christine Harman BA, LLB (Hons)
subsequent financial years.
MBA has been appointed to act in the role of Company Secretary
from 3 July 2023 until Ms Lorenzi’s return from leave.
Sustainability
Dividends
Matters of environmental and social significance to the Group
are primarily addressed within the Group’s sustainability strategy.
Interim dividend: The Company paid an interim dividend of 18 cents
This strategy addresses the material topics for the Group, and the
per ordinary share on 4 April 2023. The dividend was fully franked.
Executive Leadership Team actively monitors progress against our
strategic roadmaps and public targets.
Final dividend: Since the end of the financial year, the Directors have
approved a final dividend of 17 cents per share, fully franked and
Further detail on the Group’s sustainability strategy, initiatives and
payable on 3 October 2023. The record date for entitlement to this
achievements are detailed in the Sustainability section of this Annual
dividend is 1 September 2023.
Report and the Company’s most recent Sustainability Report.
In summary:
Dividend per share
$M
Environmental regulation
The Group is subject to various environmental laws and regulatory
frameworks governing energy, water, waste and greenhouse gas
reporting for its operations globally. Management of environmental
Interim dividend paid on
18 cents
$129.9
issues and risks is a core element of the work program delivered by
1 April 2023
Final dividend payable on
17 cents
$122.7
sustainability and technical teams and is detailed in the relevant
material business risks outlined in the OFR.
3 October 2023
Total
35 cents
$252.6
management of its environmental impacts and its business
The Group recognises the direct link between effective
The Company paid shareholders a final dividend in respect of the
2022 financial year of $115.5 million.
Review and results of operations
Information on the operations and financial position for TWE is set
out in the OFR accompanying this Directors’ Report.
Significant changes in the state of affairs
The Company announced the next step in the evolution of its
premiumisation strategy in May 2023, intended to strengthen
the operating model and reduce the cost base of its Treasury
Premium Brands division. The range of initiatives aim to deliver
greater operational and strategic flexibility to enable continued
growth of the premium and luxury portfolio, and include adjusting
the division’s operating model and organisational structure,
success. To this end, the Group’s environment policies, procedures
and practices are designed to ensure that the Group maintains
focus on resource efficiency and continuous improvement, and
that environmental laws and permit conditions are complied with.
Compliance with these regulatory and operational programs has
been incorporated into relevant business practices and processes.
The Group monitors its operations through a Health, Safety and
Environment (HSE) Management System, overlaid with a risk
management and compliance system overseen by the Audit and
Risk Committee. Although the Group’s various operations involve
relatively low inherent environmental compliance risk, matters of
non-compliance are identified from time to time and are corrected.
Where required, the appropriate regulatory authority is notified.
Under the compliance system, the Audit and Risk Committee
and the Board receive six-monthly reports detailing any matters
involving non-compliance and potential non-compliance. These
implementing changes to the Commercial wine supply chain, and
reports also detail the corrective action that has been taken.
divestment and/or rationalisation of selected assets.
Business strategies, prospects and likely developments
The OFR sets out information on TWE’s business strategies
and prospects for future financial years and refers to likely
developments in the Company’s operations and the expected
results of those operations in future financial years.
Under the National Greenhouse and Energy Reporting Act 2007 (Cth)
(NGER Act), the Company is required to report on its Australian
operations that exceed specific greenhouse gas emissions or
energy-use thresholds. The Company submitted its annual NGER
Act report by the prescribed reporting date of 31 October 2022.
During the financial year, the Group has not been convicted of any
significant breaches of environmental regulation.
55
TREASURY WINE ESTATES ANNUAL REPORT 2023 Directors’ report (continued)
Proceedings on behalf of the company
Rounding
There are no proceedings brought or intervened in, or applications
Treasury Wine Estates Limited is a company of the kind referred
to bring or intervene in proceedings, on behalf of the Company by
to in ASIC Corporations (Rounding in Financial/Directors’ Reports)
a member or other person entitled to do so under section 237 of the
Instrument 2016/191 and, except where otherwise stated, amounts in
Corporations Act 2001 (Cth).
the statutory financial statements forming part of this report have
been rounded off to the nearest one hundred thousand dollars or
Non-audit services and auditor independence
to zero where the amount is $50,000 or less.
KPMG is the Company’s auditor, appointed with effect from 23
October 2013.
This report is made on 15 August 2023, in accordance with a
resolution of the Directors.
Paul Rayner
Chairman
Tim Ford
Chief Executive Officer
The Group may decide to engage the auditor, KPMG, on
assignments additional to their statutory audit duties where such
services are not in conflict with their role as auditor and their
expertise and/or detailed experience with the Company may allow
cost efficiencies for the work.
The Board has considered the position and, in accordance with
advice received from the Audit and Risk Committee, is satisfied that
the provision of non-audit services by KPMG is compatible with the
general standard of independence for auditors imposed by the
Corporations Act 2001 (Cth). The Board also notes that:
• the engagements for all non-audit services have been
reviewed by the Chief Financial Officer, and where relevant,
the Chair of the Audit and Risk Committee in accordance with
the Committee’s rules of engagement regarding the provision
of non-audit services by the External Auditor contained in the
Committee Charter to ensure they do not impact the actual or
perceived impartiality and objectivity of KPMG
• none of the services provided by KPMG undermine the general
principles relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants.
During the financial year, the fees paid or payable for non-audit
services provided by KPMG and its related practices totaled $81,735.
Amounts paid or payable for audit and non-audit services are
disclosed in note 32 of the Financial Statements.
A copy of the auditor’s independence declaration is set out on
page 57 and forms part of this report.
Indemnities and insurance
Rule 40 of the Company’s Constitution provides that the Company
must, to the extent permitted by and subject to the Corporations
Act 2001 (Cth), indemnify each officer, Director and Company
Secretary of a Group company in respect of any liability, loss,
damage, cost or expense incurred or suffered or to be incurred
or suffered by the officer, Director or Company Secretary in or
arising out of the conduct of any activity of the relevant Group
company or the proper performance of any duty of that officer,
Director or Company Secretary.
Each Director of Treasury Wine Estates Limited has entered into
a Deed of Indemnity, Insurance and Access (Deed) with the
Company. No Director or officer of the Company has received
a benefit under an indemnity from the Company during the period
ended 30 June 2023 or to the date of this report.
In accordance with the Company’s Constitution and the Deed,
the Company has paid a premium in respect of an insurance
contract that covers Directors and officers of the Group companies.
56
TREASURY WINE ESTATES ANNUAL REPORT 2023
Auditor’s independence
declaration
57
TREASURY WINE ESTATES ANNUAL REPORT 2023 TREASURY WINE ESTATES ANNUAL REPORT 2023
F23 remuneration
report
Contents
Executive remuneration
1. Key messages
2. Remuneration strategy and framework
3. Performance and remuneration outcomes
Non-Executive Director remuneration
4. Framework and outcomes
Other remuneration information
5. Governance
6. Further information
62
63
68
74
76
78
58
Executive remuneration
Introduction from the Chair of the Human Resources Committee
Dear Shareholders,
On behalf of the Human Resources Committee and Board, I am
pleased to present our F23 remuneration report for which we will
seek your approval at our Annual General Meeting in October
2023. The remuneration report is designed to demonstrate strong
alignment between our Company’s performance, our executive
reward framework, our strategic objectives and shareholder interests.
This is my first letter to Shareholders as the Chair of the Human
Resources Committee. I would like to acknowledge Warwick
Every-Burns’ contribution to the Board and leadership of the Human
Resources Committee from May 2011 to October 2022.
F23 performance
We are very pleased with the overall momentum of the business
and the progress toward delivering our long term strategies under
our CEO Tim Ford’s leadership. Despite challenging economic and
trading conditions globally, all divisions continued to build quality
distribution, expand in key markets, and drive consumer demand.
The management team demonstrated exceptional leadership,
resilience, agility and tenacity, consistently turning challenges into
opportunities while positioning the Company for future growth.
Notably, the team’s continued efforts to premiumise our business
have paid off, with 85% of our revenues now coming from our
premium and luxury portfolios.
In F23, Management delivered EBITS of $583.5m, an 11.4% increase
on the prior year, and EBITS margin improved 2.9 percentage points
to 24.1%. Net Sales Revenue (NSR) per case increased 12.7% led by
premiumisation and price rises delivered across all divisions. TWE
delivered Earnings per Share (EPS) of 52.1 cents per share (before
material items and SGARA), up 16.6% from F22. ROCE increased from
10.7% in F22 to 11.3% in F23, driven by higher EBITS and continued
capital discipline.
With a solid foundation in place, we have great confidence in the
ambition, strategy and executional discipline of our leadership team
that will enable TWE to deliver sustainable growth and outperform
the market over the long term.
F23 executive remuneration outcomes
In F23, all executives received a 3% increase to fixed remuneration.
The Board also approved a 3% increase to Board Chair and Member
base fees and a moderate increase to Committee fees effective
from 1 July 2022. Short Term Incentive Plan (STIP) outcomes reflect
the level of business performance and range between 35%-72% of
fixed remuneration, and 30%-40% of maximum opportunity. The F21
Long Term Incentive Plan (LTIP) had an adjusted vesting of 78.75% of
the total target grant value.
In 2022 and 2023, I participated in numerous meetings with investors
(representing over 60% of capital) and proxy advisors to discuss
whether our programs were fit for purpose and working as intended,
particularly in light of several material, one-off events entirely
outside of management’s control that materially impacted financial
results. Beyond the COVID-19 pandemic, supply chain disruptions,
and wildfires in California which reduced our access to luxury supply,
the imposition of tariffs on Australian wine in 2020 effectively closed
the China market – our largest and most profitable market at the
time - overnight. In the face of these extraordinary events, executives
were once again tasked in F23 with aggressive stretch goals to
pivot the business and mitigate impacts by driving growth in other
markets and focusing on delivering quality growth in earnings.
Despite their tremendous successes in F23 and over the past three
years, it has proven virtually impossible to achieve alignment
between pay, TWE’s strategic objectives, financial performance
and shareholder returns. Outcomes for our executives - and for our
shareholders - have not reflected alignment with what we believe to
be outstanding performance by our team. The cumulative impact
of these external headwinds directly resulted in no STIP payments for
F20, and nil vesting of the LTIP for three straight years in a row (2020,
2021 and 2022).
While we believe that STIP outcomes in F23 appropriately reward our
executives, the impacts of these events have once again impacted
both the relative Total Shareholder Return (rTSR) and Return on
Capital Employed (ROCE) measures in the F21 LTIP, resulting in a
significantly reduced rTSR payout and what would otherwise be
a fourth year of a nil payout on ROCE. I was very encouraged to
hear once again during our investor meetings in 2023 that our
shareholders overwhelmingly agreed with our assessment regarding
the team’s performance, and also agreed that a compelling
rationale warranted action by the Board to reward performance and
remedy the otherwise inequitable outcome under the existing plan
in place.
Principled approach to adjusting the ROCE outcome in the F21 LTIP
As outlined in this report, after careful consideration of numerous
alternatives and factors, extensive consultation throughout this
process with our independent consultant, and in light of the
compelling results and the imperative to retain and motivate our
leadership team, the Board made the unanimous decision to adjust
only the ROCE outcome (and not rTSR), and moreover, to adjust
the ROCE outcome only for the direct impact of the imposition of
China’s Ministry of Commerce (MOFCOM) tariffs (and to exclude the
other material, unanticipated events including the pandemic and
wildfires). The resulting payouts are at 39% for the rTSR component
(unadjusted and weighted at 25%) and 92% for the ROCE component
(as adjusted for the MOFCOM tariffs only and weighted at 75%), with
total vesting of the F21 LTIP at 78.75% of the target grant value.
First off, we determined that the F21 LTIP was the appropriate vehicle,
given this plan includes the entire leadership team in place who
were tasked in F22 and F23 with aggressive stretch goals to pivot
the business and mitigate these impacts. Moreover, the F21 LTIP is
the final plan which did not account for the MOFCOM tariffs. While a
compelling rationale existed to adjust for other material, unforeseen
events outside the control of management, we ultimately decided
to focus exclusively on the MOFCOM tariffs, with an eye toward both
acknowledging the impacts on our investors as well as balancing
the interests and outcomes of all stakeholders. In addition, focusing
exclusively on the MOFCOM tariffs in our analysis enabled us to
undertake a robust, objective, and comprehensive evaluation of the
direct impacts of the tariffs since 2020 as well as the direct results of
aggressive mitigation strategies. Finally, we strongly believe that this
award has been earned by the team.
Rest assured, this decision was not taken lightly. The circumstances
surrounding these events and the direct impact the tariffs had on
the performance of the Company were carefully considered over
the course of many months, as well as the impact on shareholder
returns. As opposed to merely ‘balancing’ executives’ and
shareholders’ interests, we strongly believe that the decisions we
have taken directly align the best interests of our executives and
shareholders alike. After much deliberation, the Board and Human
Resources Committee unanimously concluded that this was simply
the right thing to do - for all of our stakeholders.
F23 activities of the Human Resources Committee
During the year, we developed and formalised TWE’s Executive
Remuneration Framework and Strategy and also focused on
remuneration policies and initiatives throughout the organisation.
Beyond remuneration, the Committee invested significant time on
oversight of other critical, Company-wide Human Resources matters,
including culture, diversity and inclusion, talent development and
succession, and employee engagement. Our overall objective
is to utilise these levers collectively and holistically to ensure we
attract, retain and motivate the highest calibre talent across the
organisation and consistently deliver on the Company’s strategic
objectives over the near and longer term.
Ongoing engagement
The team and I have found the time spent with our investors to be
productive, informative and impactful. As an example, we modified
our metrics in our LTIP going forward as a direct result of our
engagement. Our dialogue also directly informed and impacted
our decisions taken on the F21 LTIP. In addition, we have enhanced
our disclosures in the report regarding how we set objectives and
determine outcomes for STIP. It remains our intention to proactively
engage in and encourage open dialogue with our shareholders
and other stakeholders. Accordingly, we welcome any feedback
and comments you may have on these topics generally and more
specifically, on the enclosed Remuneration Report.
Yours sincerely,
Lauri Shanahan
Human Resources Committee Chair
59
TREASURY WINE ESTATES ANNUAL REPORT 2023 F23 remuneration report
1. Key messages
This report details the F23 remuneration framework and outcomes
b) Fixed remuneration
for the Key Management Personnel (KMP) of the Company which
TWE’s global platform continues to experience significant growth,
includes Non-Executive Directors. In this report, ‘executives’ refers to
increasing the responsibility and complexity of executive roles.
executives identified as KMP excluding the Non-Executive Directors. It
Moreover, the executive team has been crucial to ensuring the
is prepared in accordance with the requirements of the Corporations
successful navigation of the COVID-19 pandemic and the tariffs
Act 2001 (Cth) and all references are to Australian dollars ($) unless
imposed on Australian wine by MOFCOM. The reward, retention and
otherwise specified.
development of this team is a key consideration of the Board.
KMP
Executive KMP at TWE during F23 are as follows:
Executives (as at 30 June 2023)
Current KMP
As reported in the Company’s F22 Remuneration Report, Mr Ford’s
remuneration was increased by 3% to $1,622,250, Mr Young’s
remuneration was increased by 3% to $772,200, and Mr Boxer’s
remuneration increased by 3% to $712,700, all effective from 1
September 2022. For F24, the Board has approved a further 3%
increase to Mr Ford’s, Mr Young’s and Mr Boxer’s remuneration,
effective 1 September 2023.
TM Ford
Chief Executive Officer (CEO)
Full Year
c) Short-term incentives in the year
MJ Young
Chief Financial Officer (CFO)
Full Year
SR Boxer
Chief Strategy and Corporate
Development Officer (CSCDO)
Full Year
a) Financial results for F23
As in previous years, targets set for F23 STIP included aggressive,
stretch goals such as driving growth in other markets to mitigate
the ongoing impact of severely reduced shipments to Mainland
China and to focus on delivering quality growth in earnings. Despite
continued supply chain and cost headwinds, and changing
consumer and market dynamics, the Company has achieved solid
performance against the F23 STIP targets. The continued focus on
luxury wine and premiumisation has enabled strong EBITS and EBITS
margin growth, despite a decline in NSR driven by premium portfolio
F23 saw TWE continue to deliver earnings and margin growth, driven
volume declines in Treasury Americas and commercial portfolio
by strong luxury top-line growth from Penfolds, successful price
volume declines in Treasury Premium Brands, partly offset by strong
increases across several brands and cost savings from the global
luxury portfolio growth for Penfolds.
supply chain optimisation program. The premiumisation trends
continue across the wine category with luxury wine continuing
The market trends and consumption outlook for commercial wine,
strong growth trends in all of TWE’s key global markets. Management
however, remains challenged, most notably in Australia and the UK.
executed strongly during the year and our diversified business model,
In recent years, this has led to further declines in Treasury Premium
together with the benefits of key asset base and cost optimisation
Brands’ lower margin commercial portfolio volumes, a market
initiatives, have resulted in a resilient premium wine category despite
dynamic that is expected to continue in the future. In addition, the
the tightening economic environment.
ongoing inflationary environment, particularly for packaging materials,
is expected to place upward pressure on TWE’s cost of goods in F24.
In F23, Management delivered EBITS of $583.5m, an 11.4% increase
Notwithstanding, TWE expects to be well positioned in F24 to capture
on the prior year, and EBITS margin improved 2.9 percentage points
luxury category growth and manage the uncertain environment
to 24.1%. Net Sales Revenue (NSR) per case increased 12.7% led by
through the diversification of its brand portfolio and priority
premiumisation and price rises delivered across all divisions.
markets. We will continue to pursue opportunities to enhance the
TWE delivered Earnings per Share (EPS) of 52.1 cents per share (before
fundamentals of our business with a mindset of prioritising long-term
material items and SGARA), up 16.6% from F22. ROCE increased from
success over short-term outcomes.
10.7% in F22 to 11.3% in F23, driven by higher EBITS and continued capital
discipline.
As a result of the Company’s performance in F23, the F23 Balanced
Scorecard multiplier for executives will be paid at 0.6x. Taking into
Despite continued supply chain and cost headwinds, and changing
account each executive’s Individual Performance Multiplier based
consumer and market dynamics, consumer demand for luxury wine
on the level of achievement of their respective Key Performance
remains strong in all markets globally, with luxury sales in the Penfolds,
Objectives (KPOs) and demonstration of the Company’s DNA, the
Treasury Americas and Treasury Premium Brands divisions in line
Board has determined that the F23 STIP outcomes are 35.9% of
with expectations. Penfolds, in particular, continues to deliver strong
fixed remuneration for Mr Young and 47.9% of fixed remuneration
momentum in building distribution and consumer demand across a
for Mr Boxer. The CEO received an F23 STIP outcome of 72% of
number of key global markets.
fixed remuneration.
d) Long-term incentives in the year
The F21 LTIP grant, covering a performance period of 1 July 2020 to 30
June 2023, was offered to our CEO and management team, including
our KMP, on the following terms: 25% of the Performance Rights were
subject to achievement of a rTSR performance hurdle and 75% were
subject to achievement of a ROCE performance hurdle.
‘
60
TREASURY WINE ESTATES ANNUAL REPORT 2023 Performance for rTSR was assessed by an independent service
strength and resilience of our global business and management’s
provider, Orient Capital. The Group’s rTSR performance was at the 51st
ability to navigate the complex and changing economic, consumer
percentile of its peer group, driving an unadjusted outcome of 39%
and market dynamics with agility and tenacity. Finally, the Committee
vesting for this component of the LTIP (weighted at 25%).
and Board strongly believe that the intent and integrity of the plan
could not otherwise be maintained, and that this award has been
With respect to ROCE performance, however, and despite
earned by the team.
management’s successes in pivoting the business and driving
sustainable earnings, aggressive cost management and operational
Over the course of many months, the Committee continued to
effectiveness, the impacts of the pandemic, the wildfires in the US and
seek advice and guidance from our independent remuneration
the introduction of the MOFCOM tariffs, without otherwise adjusting
advisors, PwC, on the relevant considerations and factors as well
for any of these factors, resulted in the ROCE component falling once
as the potential approaches and alternatives. The HRC and Board
again below threshold.
also continued to evaluate and incorporate feedback from our
investors and proxy advisors. The Committee and Board considered a
Given the clear disconnect between the underlying assumptions
number of alternatives, including a one-off grant of restricted and/or
made when targets were originally set in 2020 and what thereafter
performance shares over a future timeframe, and increasing the F24
transpired (ie the COVID pandemic, wildfires and imposition of
LTIP grant. However, it was ultimately determined that adjusting the
MOFCOM tariffs in China), the Committee and Board ultimately
ROCE outcome for the F21 LTIP was the most appropriate alternative
concluded that a clear and compelling rationale existed to warrant
as we were able to focus exclusively on the impacts of the MOFCOM
an adjustment to the ROCE outcome to ensure that the intent and
tariffs and reward current executives for the actual results of their
integrity of the plan was maintained.
aggressive mitigation strategies. As outlined in my letter earlier in this
report, ensuring we continue to retain and motivate executives is of
The Committee and Board has undertaken a comprehensive analysis
great concern to the Board, and we believe that this decision is in the
of a number of identified principles which we believe were pertinent
best interests of all stakeholders. Aside from the fact that a forward-
to our analysis, including: (a) whether the intent and integrity of
looking award would not be aligned with rewarding management
the plan, while ensuring fair outcomes for Management, could be
for earned, past results, we also took into account the potential for
maintained; (b) whether external business and economic factors
unintended consequences with forward looking grants that might
beyond the control of Management which have materially impacted
potentially result in a windfall gain to management and prove not to
performance have occurred; (c) whether unforeseen, non-recurring
be in the best interests of shareholders.
factors occurred during the performance period which have
materially impacted performance; (d) management’s efforts and
At the direction of the Committee and Board, management
results to mitigate the impacts of the factors outlined above; (e) the
conducted a ‘look back’ review on ROCE outcomes of the F21 LTIP to
longer-term, sustainable impact of decisions and actions made by
quantify the impact of the imposition of MOFCOM tariffs, as well as the
management in the short-term; (f) whether budgetary assumptions
mitigation initiatives put in place. The assumptions and calculations
made when setting performance targets were accurate and remain
made by management were thereafter internally audited.
appropriate, and whether conditions are potentially better or worse
when compared with those assumptions; (g) the degree of difficulty
Accordingly, the Board made the unanimous decision to adjust only
and complexity associated with achieving the targets, as related to
the ROCE outcome (and not rTSR), and moreover, to adjust the ROCE
both the internal and external environment; and (h) alignment with
outcome only for the direct impact of the imposition of MOFCOM
the interest of shareholders.
tariffs and related mitigation strategies. Other material, unanticipated
events including the pandemic and wildfires were excluded, as were
While a compelling rationale existed to adjust for other material,
the impacts of acquisitions and divestments during the period. The
unforeseen events outside the control of management, the
resulting payout is 92% for the ROCE component (weighted at 75%).
Committee and Board ultimately decided to focus exclusively on the
Total vesting of the F21 LTIP was 78.75% of the target grant value.
MOFCOM tariffs and the success of mitigation initiatives, with an eye
toward both acknowledging the impacts on our investors as well as
e) Changes for F24
balancing the interests and outcomes of all stakeholders. In addition,
F24 LTIP
focusing exclusively on the MOFCOM tariffs enabled us to undertake
From F23, and after engagement with our investors, an additional
a robust and objective evaluation of the direct impacts of the tariffs
measure of EPS, before material items and SGARA, was introduced
since 2020 as well as the direct results of aggressive mitigation
into the LTIP. Both ROCE and relative TSR metrics were retained. Prior to
strategies.
this, the performance measures had remained largely unchanged for
seven years. An EPS measure is aligned to our growth strategy while
The unanticipated introduction of the MOFCOM tariffs clearly
ensuring remuneration outcomes are aligned to shareholder returns.
constitutes an external business and economic factor beyond the
control of management which materially impacted performance.
The weighting of the three metrics for the F24 LTIP will be the same as
Moreover, this event was unforeseen and non-recurring in nature, and
F23 - relative TSR weighted at 20%, ROCE weighted at 40%, and EPS
budgetary assumptions made when setting performance targets
weighted at 40% of the plan. The following targets have been set for
were no longer rendered accurate or appropriate. Management, has
the F24 LTIP. The Board considers that the Company’s F24 targets are
been highly successful in aggressively mitigating these impacts by
realistic but challenging and an appropriate level of performance is
executing both near term strategies as well as sustainable, strategic
required to justify full vesting of each portion of the LTI award.
initiatives for the longer term. Given that budgetary assumptions
made when setting targets proved to be inaccurate, the intent
and integrity of the F21 LTIP was clearly compromised such that fair
outcomes could not be achieved without an adjustment. Moreover,
the results achieved in the face of multiple obstacles highlight the
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TREASURY WINE ESTATES ANNUAL REPORT 2023 F23 remuneration report
ROCE growth will be measured against the F23 ROCE base of 11.3% and will vest according to the following schedule.
ROCE baseline
11.3% (F23)
% points ROCE growth
ROCE result
% of performance rights
subject to ROCE measure which vest
Less than 1.0
Less than 12.3%
1.0 to 1.7
1.7 to 2.1
12.3% to 13.0%
13.0% to 13.4%
At or above 2.1
At or above 13.4%
0%
35-75%
75-100%
100%
EPS Compound Annual Growth Rate (CAGR) will vest according to the following schedule.
EPS
vesting schedule
EPS1 CAGR %
% of performance rights subject to
EPS measure which vest
Less than 6%
6% to 10%
At or above 10%
0%
35-100%
100%
The relative TSR vesting schedule for the F24 LTIP is unchanged from F23.
Relative TSR
vesting schedule
Relative TSR ranking
% of performance rights subject to
relative TSR measure which vest
Below 50th percentile
50th to 60th percentile
60th to 75th percentile
At or above 75th percentile
0%
50-70%
70-100%
100%
The peer group for relative TSR comprises companies within the S&P/
ASX 200 Index, excluding companies from the energy, metal and
mining, real estate and finance sectors.
The Board maintains discretion to adjust hurdles or vesting outcomes
•
•
•
Mr Ford: opportunity of 175% of fixed remuneration at maximum,
66.5% at threshold, 0% below threshold.
Mr Young: opportunity of 150% of fixed remuneration at
maximum, 57% at threshold, 0% below threshold.
Mr Boxer: opportunity of 150% of fixed remuneration at maximum,
to ensure that executives are neither penalised nor provided with a
57% at threshold, 0% below threshold.
windfall benefit arising from material, non-recurring items.
Offers of performance rights under the F24 LTIP are subject to the
General Meeting for the F24 LTIP offer to the CEO.
satisfaction of performance conditions, as outlined above, over the
performance period from 1 July 2023 to 30 June 2026. LTIP awards to
F24 Non-Executive Director fees
KMP are at the absolute discretion of the Board. For the F24 LTIP the
The Board has approved a 3% increase to Board Chair and Member
following awards will apply:
base fees effective 1 October 2023. No changes will be made to
The Company will seek shareholder approval at the 2023 Annual
Committee fees.
1. Earning per Share before material items and SGARA
62
TREASURY WINE ESTATES ANNUAL REPORT 2023
2. Remuneration strategy and framework
a) Remuneration strategy
TWE’s remuneration strategy sets the direction for the remuneration
The Board believes that remuneration of executives should include
framework and drives the design and application of remuneration
a fixed component and at-risk or performance-related components,
programs across the Company, including for executives. The strategy
including both short-term and long-term incentives. Executive and
aims to attract, retain and reward the best talent while building a
stakeholder interests are aligned through share ownership. The
performance-oriented culture. It sets out principles and processes
weighting of the at-risk remuneration components for each executive
to ensure remuneration practices attract and motivate the highest
reflects the Board’s commitment to performance-based reward.
calibre employees to achieve TWE’s business and financial objectives.
Section 3 of this report describes performance outcomes over the
past five years, and how they have impacted remuneration outcomes.
The remuneration strategy is designed to achieve five key objectives.
1.
2.
Attract, motivate and retain the highest calibre executives.
Provide incentives and rewards that drive both our short and
long-term strategic objectives.
3. Directly align the interests and outcomes of our executives with
our shareholders.
4. Create a performance-driven culture.
5. Deliver results that reinforce our culture and are sustainable
over the long-term.
b) Remuneration framework
Remuneration strategy
Attract, motivate and
retain the highest
calibre executives
Drive both our short
and long-term
strategic objectives
Align the interests
and outcomes of our
executives with our
shareholders
Create a
performance-driven
culture
Deliver results that
reinforce our culture
and are sustainable
over the long-term
Components
Performance measures
Details
Remuneration framework
Fixed remuneration
Base salary, superannuation
and other benefits
Further information is included
in section 3 (d)
Short-Term Incentive Plan (STIP)
An annual award of cash and/or equity
may be received based on:
Group, team and individual financial,
strategic and operational performance,
measured by way of the Balanced
Scorecard; and
Agreed individual key performance
objectives (including the TWE DNA)
measured by way of the Individual
Performance Multiplier.
Further information is included in
section 3 (e)
Considerations in setting fixed
remuneration include:
•
•
•
External market benchmarking
against the ASX21-75 peer group, and
other industry and competitive data
Internal equity
The executive’s skills, experience and
responsibilities
• Complexity and location of the role
• The executive’s performance
The STIP Balanced Scorecard is consistent
across all executives and includes
measures such as global EBITS, quality
growth in sales volume, brand contribution
margin, cash conversion and ROCE.
The Balanced Scorecard can drive a
multiplier outcome between 0 and 1.2.
The Individual Performance Multiplier
is derived from the level of each
executive’s achievement of individual
Key Performance Objectives (KPOs) and
demonstration of the Company’s DNA.
The Individual Performance Multiplier can
drive a result of 0 to 1.5.
Fixed remuneration is reviewed
annually. The Company looks at
industry and general market peer
groups, with key criteria applied such
as market capitalisation and revenue.
Both Australian and global peers are
considered, reflecting the complexity
of roles in a global business and the
Company’s international lens
on talent.
The annual STIP opportunity is at the
absolute discretion of the Board. In F23,
the following STIP opportunities applied:
Target:
•
•
Executives 66.5% of FR
CEO 100% of FR
Maximum:
•
•
Executives 120% of FR
CEO 180% of FR
One-third of the STIP award for executives
is deferred into Restricted Equity in the
Company. Of this Restricted Equity,
one-half (i.e. one-sixth of the overall
STIP award) will vest after one year, and
one-half (i.e. one-sixth of the overall STIP
award) will vest after two years.
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TREASURY WINE ESTATES ANNUAL REPORT 2023 F23 remuneration report
Components
Performance measures
Details
Remuneration framework (continued)
Long-Term Incentive Plan (LTIP)
The LTIP is designed to reward executives
for long-term performance and value
creation for shareholders.
It is delivered in the form of Performance
Rights that vest at the end of the
performance period if the performance
and vesting conditions are met. The
performance period is a 3-year period
aligned with TWE’s financial year (1 July
to 30 June).
Further information is included
in section 3 (f)
Relative Total Shareholder Return (rTSR)
(20% weighting).
Relative to S&P/ASX 200 Index, excluding
companies from the energy, metal and
mining, real estate and finance sectors.
Return on Capital Employed (ROCE)
Growth (40% weighting).
Calculated as EBITS divided by average
capital employed (at constant currency).
Capital employed is the sum of average
net assets (excluding SGARA) and average
net debt.
Earning per Share (EPS) Compound Annual
Growth Rate (CAGR)(40% weighting).
Basic EPS is calculated as Net Profit (or
Loss) After Tax (NPAT) excluding SGARA
and material items, divided by the
weighted average number of shares.
LTIP awards are at the absolute discretion
of the Board. In F23, the following awards
applied:
•
•
CEO: 175% of FR
Other executives: 150% of FR
The number of performance rights
allocated is based on face value using the
90-day Volume Weighted Average Price
(VWAP) preceding 1 July at the start of the
performance period. If the performance
conditions are met at the end of the three-
year performance period, rights vest and
executives receive a share for each vested
performance right.
No amount is payable on the vesting
of the performance rights or on their
conversion into shares. Any rights that
do not vest, lapse.
c) Total remuneration
Executive total remuneration (TR) comprises fixed remuneration
(FR) and variable (‘at-risk’) remuneration in the form of STIP
and LTIP. The diagram below illustrates the mix of remuneration
components for current executives in F23, firstly as a percentage of
total remuneration (TR) at target, and then as a proportion of total
maximum potential remuneration.
Total remuneration with STIP at Target and LTIP at threshold
Total remuneration with both STIP and LTIP at maximum
25%
12%
38%
25%
CEO
25%
10%
20%
45%
39%
22%
26%
13%
27%
40%
22%
11%
Executives
CEO
Executives
FR
STIP CASH (AT TARGET)
STIP DEFERRED EQUITY (AT TARGET)
LTIP (AT THRESHOLD)
FR
STIP CASH (AT MAXIMUM)
STIP DEFERRED EQUITY (AT MAXIMUM)
LTIP (AT MAXIMUM)
64
TREASURY WINE ESTATES ANNUAL REPORT 2023
d) Fixed remuneration
e) Short-term incentive plan (STIP)
For Australian-based executives, total fixed remuneration is inclusive
The STIP drives an annual at-risk component of remuneration and
of superannuation and other benefits.
links business results for the fiscal year, executive performance and
Fixed remuneration is reviewed annually and set at a market-
performance measures while the individual performance for each
competitive level reflective of the executive’s skills, experience and
executive is derived from the level of each executive’s achievement
responsibilities, and taking into account complexity of role, location
of individual Key Performance Objectives (KPOs) and demonstration
and performance. Any changes to fixed remuneration are effective
of the Company’s DNA: We bring our whole self, We are courageous,
reward. The STIP uses a balanced scorecard approach for company
from 1 September. The Company looks at industry and general
and We deliver together.
market peer groups, with key criteria applied such as market
capitalisation and revenue. Both Australian and global peers are
The STIP Balanced Scorecard measures are designed to support
considered, reflecting the complexity of roles in a global business
the financial health of the organisation and shareholder return in
and the Company’s international lens on talent. When comparing
terms of dividends and share price - this year and over time. Hurdles
executives’ remuneration to the market, the ASX 21-75 peer group
and stretch targets are set for each metric and the sustainability of
is used and peer groups are reviewed regularly for accuracy and
growth and returns is non-negotiable.
alignment with the nature of the business.
The individual KPOs include a combination of strategic and
operational objectives specific to each executive (50%), and
objectives relating to leadership, inclusion, equity and diversity, and
wellbeing and sustainability (50%). Demonstration of the Company’s
DNA relates to specific behaviours of each executive and how the
KPOs were achieved and is weighted equally with the individual KPOs.
The calculation of any STIP award for an executive is dependent on the
following key factors listed below.
A.
B.
Fixed Remuneration as at 30 June of the performance year.
Individual short-term incentive (STI) opportunity: expressed as
a percentage of Fixed Remuneration.
C. Balanced Scorecard (BSC) multiplier: based on the
performance of the Group Balanced Scorecard measures.
D.
Individual performance multiplier (IPM): based on the
executive’s achievement of individual Key Performance
Objectives (KPOs) and demonstration of the Company’s DNA.
Overall F23 STIP structure
Fixed
Based on level of skill
and responsibility
Fixed
Based on role and level of
role within the Company
Variable
Based on Balanced
Variable
Based on individual
Scorecard performance
performance
STIP award $
(A) Fixed
remuneration $
(B) STIP opportunity %
X
(C) Balanced
Scorecard multiplier
(0 to 1.2)
X
X
(D) Individual
multiplier (0 to 1.5)
=
RESTRICTED EQUITY 1/3
CASH 2/3
65
TREASURY WINE ESTATES ANNUAL REPORT 2023 F23 remuneration report
Global EBITS (50%)
Growth in sales volumes (15%)
Brand contribution margin (15%)
Cash conversion (10%)
STIP measures
(C) F23 Balanced Scorecard measures (multiplier 0 to 1.2x)
The EBITS metric focuses and rewards executives for the overall health and profit-
producing ability of the Company. It is designed to ensure TWE products are available
in the right quantities and retail locations and to reward executives for levels of earnings
that will benefit shareholders and provide capital that can be further invested by the
Company for future growth.
This growth metric aims to reward executives for delivering sales volumes in our priority
brands to drive a steep trajectory in top line growth globally. Delivery of this metric drives
executives to explore wider opportunities for the Company to grow beyond existing
products, markets, consumers and customers.
Executives delivering margin accretion are rewarded for delivering growth from quality
brand contribution through premiumisation of the Company’s portfolio, optimising
investment and making risk-managed, smart decisions.
This metric rewards executives for the delivery of quality growth and strong planning
operations as measured by improvements in the balance sheet, operating cash flow and
forecast accuracy, all critical to delivering ROCE metric and financial returns for investors.
ROCE (10%)
This metric aims to incentivise executives to grow profits by increasing revenue or
efficiency and optimise the Group’s asset base.
(D) F23 Individual KPOs and Company DNA (multiplier 0 to 1.5x)
Strategy and operations
•
Individual strategic KPOs based on functional responsibility
Leadership, inclusion, equity and diversity
All executives:
•
•
•
Role model inclusive leadership and deliver on all global (and where relevant, local)
diversity, equity and inclusion commitments.
Continue to champion and embed the TWE DNA and drive an increase in
overall engagement.
Strengthen capability and depth of talent within own team and across all of TWE.
Wellbeing and sustainability
All executives:
•
•
•
Reduction in serious safety incidents through active participation in the
Destination Zero Harm program
Employee mental wellbeing
Execution of Sustainability strategy - delivering on F23 targets and associated
initiatives, and demonstrating progress towards F25 and F30 targets
Company DNA
• We bring our whole self
• We are courageous
• We deliver together
f) Long-term incentive plan (LTIP)
The LTIP is designed to reward executives for long-term performance
and value creation for shareholders. Offers are approved by
the Board and made to select executives and senior leaders as
nominated by the CEO. For F23, the Board awarded the CEO an LTIP
opportunity of 175% of fixed remuneration.
The performance period for the F23 LTIP is 1 July 2022 to 30 June 2025
and the plan is detailed on the following page.
66
TREASURY WINE ESTATES ANNUAL REPORT 2023
LTIP measures
F23 LTIP measures and vesting schedules
Relative Total Shareholder
Return (rTSR) (20%)
Relative to S&P/ASX 200 Index, excluding
companies from the energy, metal and
mining, real estate and finance sectors.
Relative TSR ranking
Below 50th percentile
50th to 60th percentile
60th to 75th percentile
At or above 75th percentile
% of performance rights subject to
relative TSR measure which vest
0%
50%-70%
70%-100%
100%
Return on Capital Employed (ROCE) (40%)
ROCE percentage points growth
(from F22 ROCE baseline 10.7%)
ROCE result
% of performance rights
subject to ROCE measure
which vest
Calculated as EBITS divided by average
capital employed (at constant
currency). Capital employed is the
sum of average net assets (excluding
SGARA) and average net debt.
Less than 2.8
2.8 to 3.2
3.2 to 4.0
At or above 4.0
Earnings per Share (EPS) (40%)
EPS1 CAGR %
Basic EPS is calculated as Net Profit (or
Loss) After Tax (NPAT) excluding SGARA
and material items, divided by the
weighted average number of shares.
0 – 7.5%
7.5% - 15%
At or above 15%
Less than 13.5%
13.5% to 13.9%
13.9% to 14.7%
At or above 14.7%
0%
35%-75%
75%-100%
100%
% of performance rights subject to
EPS measure which vest
0%
35%-100%
100%
g) General employee share plan (Share Cellar)
The Company has a broad-based employee share plan, Share Cellar,
which operates by way of after-tax employee payroll contributions
payback of proceeds from the sale of vested awards and/or reset or
alter the performance conditions applying to any award.
(minimum $250 to maximum $5,000) to acquire shares in the
Leavers
Company. The Company delivers one matched share for every
The Board has absolute discretion as to whether participants retain
purchased share held at the plan vesting date (approximately two
their unvested equity upon ceasing employment, taking into account
years), subject to continued employment. An equivalent cash plan
the circumstances of their departure. In general if an executive ceases
operates in countries where, due to local laws, it is not practicable to
employment with the Company, they forfeit their entitlement to cash
offer shares to employees.
or equity under the Company’s incentive plans.
Shares were acquired in F23 under the 2022 Share Cellar offer and
In exceptional circumstances (such as redundancy, death or
a subsequent offer to participate in the 2023 Share Cellar Plan was
disability), the Board, in its discretion, may determine that a portion of
made during the year. The first share purchases in the 2023 Share
the award is retained having regard to performance and time lapsed
Cellar Plan occurred in July 2023 (F24).
to date of cessation (or that an equivalent cash payment be made).
h) Global Leadership Group Long-term incentive plan (GLG LTIP)
and restricted equity plan (REP)
In addition to the LTIP for executives, the Company also now offers
an LTIP to leaders below the executive leadership team, including
the Global Leadership Group (GLG), along with a REP which allow the
Board (and CEO through delegation) to make offers of Deferred Share
Rights or Restricted Shares for the purpose of attracting, retaining and
motivating key employees throughout the Company. Participation in
the GLG LTIP is open to senior managers (excluding executives eligible
for LTIP) and is subject to performance conditions and continued
employment. There were no awards granted to, or vested for,
executives under the GLG LTIP or REP in F23.
i) Other key information
Board discretion and clawback
Retained awards will generally be subject to post-employment
vesting, where the participant must continue to hold the relevant
Performance Rights until the end of the performance period, and be
subject to the performance conditions under the plan.
Dividends and voting rights
Plan participants granted restricted shares are entitled to dividends
and voting rights. Participants holding time-restricted rights or
performance rights are entitled to neither dividends nor voting rights.
Change of control
In the event of a change of control, unless the Board determines
otherwise, the transfer restrictions imposed on the shares will be lifted,
but only insofar as to permit the executive to participate in the change
of control event. Any shares that do not participate in the change of
The Board will exercise discretion to ensure any cash or equity
control event will continue to be subject to restrictions until the end of
outcomes are appropriately aligned to the Company’s underlying
the applicable restriction period.
performance and the interests of shareholders. The Board maintains
the discretion to clawback any vested or unvested equity should
Hedging
a clawback event arise, which was not apparent at the time the
To ensure the variable components of the Company’s remuneration
equity was awarded. This may include (but not limited to) material
structure remain ‘at-risk’, employees may not hedge against the risk
misstatement of financial results, material reputational damage to the
inherent in arrangements such as the LTIP or any other equity-based
Company, or where there was serious misconduct by a participant.
incentive plans. Awards will be forfeited if the policy is breached.
This includes discretion to reduce, forfeit or reinstate awards, require
1. Earning per Share before material items and SGARA
67
TREASURY WINE ESTATES ANNUAL REPORT 2023 F23 remuneration report
3. Performance and remuneration outcomes
a) Overview of Company performance
the Penfolds strategy to build distribution and grow consumer
Company performance during F23 saw earnings and margin growth,
demand. Treasury Americas reported a 14.0% increase in EBITS and
driven by strong luxury top-line growth from Penfolds, successful
EBITS margin increased by 5.6 percentage points, led by strong
price increases across several brands and cost savings from the
performance of key luxury brands including Frank Family Vineyards
global supply chain optimisation program. The premiumisation
and Beaulieu Vineyard and continued growth of premium brands,
trends continue across the wine category with luxury wine continuing
including Matua. This was partly offset by declines for 19 Crimes
strong growth trends in all of TWE’s key global markets. Management
and Sterling Vineyards in addition to constrained luxury portfolio
executed strongly during the year and our diversified business model,
availability from the lower yielding 2020 Californian vintage. Treasury
together with the benefits of key asset base and cost optimisation
Premium Brands reported a 5.4% decline in EBITS while EBITS margin
initiatives, have resulted in a resilient premium wine category despite
was in line with F22. Reduced NSR for the commercial portfolio in the
the tightening economic environment.
UK and Australia were partly offset by 7.8% NSR growth for priority
premium brands including 19 Crimes, Squealing Pig and Pepperjack.
TWE delivered EBITS of $583.5m, an 11.4% increase on prior year and
The combined premium and luxury portfolios delivered high
EBITS margin improved 2.9 percentage points to 24.1%. We delivered
double-digit gross profit growth in F23.
EPS of 52.1 cents per share (before material items and SGARA) while
ROCE increased from 10.7% in F22 to 11.3% in F23, driven by higher EBITS
The table below summarises the Company’s financial performance
and continued capital allocation discipline. The Company’s capital
over the last five financial years.
structure remains flexible and efficient. We have retained a strong
balance sheet and investment grade capital structure, with net
debt/EBITDAS of 1.9x .
Due to the outstanding performance from our executives and our
global teams and execution of key strategic priorities, the Company
delivered strong operating momentum in F23. Penfolds reported a
14.2% increase in EBITS and NSR growth of 14.3% was delivered through
Asia, Australia and EMEA, reflecting the continued momentum behind
Table 3.1: Overview of Company performance (reported)
Financial year ended 30 June 2023
EBITS performance (A$ million)
Earnings per share (cents)2
Dividends paid per share (cents)
Franked (%)
Closing share price ($ at 30 June)
Return on capital employed (%)
20191
664.7
57.2
35
100
14.92
13.6
20201
512.6
41.7
40
100
10.48
10.2
2021
2022
510.3
43.0
23
100
11.68
10.8
523.7
44.7
28
100
11.35
10.7
2023
583.5
52.1
343
100
11.23
11.3
1. Prior year results for EBITS, Earnings per share and Return on Capital Employed have been restated
for changes in accounting policies.
2. Before material items and SGARA.
3. The 2023 dividend of 34 cents is comprised of the final dividend in F22 of 16 cents (100% franked)
paid on 30 September 2022 and the interim F23 dividend of 18 cents (100% franked) paid on 4 April
2023. For the final F23 dividend see Note 6 of the Financial Statements.
68
TREASURY WINE ESTATES ANNUAL REPORT 2023 The following graph shows movement in the Company share price against movement in the ASX200 over the last five years.
200%
150%
100%
50%
0%
TWE
ASX200
8
1
0
2
y
u
J
l
9
1
0
2
y
r
a
u
n
a
J
9
1
0
2
y
u
J
l
0
2
0
2
y
r
a
u
n
a
J
0
2
0
2
y
u
J
l
1
2
0
2
y
r
a
u
n
a
J
1
2
0
2
y
u
J
l
2
2
0
2
y
r
a
u
n
a
J
2
2
0
2
y
u
J
l
3
2
0
2
y
r
a
u
n
a
J
3
2
0
2
y
u
J
l
b) Fixed remuneration outcomes
driver EBITS. Despite continued supply chain and cost headwinds,
Market benchmarking and salary reviews are conducted annually
and changing consumer and market dynamics, the Company has
with any changes effective from 1 September. When comparing
achieved strong performance against the F23 STIP targets and F23
executives’ remuneration to the market, the ASX 21-75 peer group
EBITS increased by 11.4% from F22 to $583.5m. As in previous years,
was used. During F23:
targets set for F23 STIP included aggressive, stretch goals such as
driving growth in other markets to mitigate the ongoing impact of
•
The CEO, Mr Ford, received a 3% increase from $1,575,000 to
severely reduced shipments to Mainland China and to focus on
$1,622,250 per annum, effective 1 September 2022.
delivering growth in earnings.
•
The CFO, Mr Young, received a 3% increase from $749,700 to
The continued focus on luxury wine and premiumisation has enabled
$772,200 per annum, effective 1 September 2022.
EPS of 52.1 cents per share (before material items and SAGARA)
•
The CSCDO, Mr Boxer, received a 3% increase from $691,875 to
portfolio volume declines in Treasury Americas and commercial
$712,700 per annum, effective 1 September 2022.
portfolio volume declines in Treasury Premium Brands, partly
and strong EBITS margin growth. NSR declined driven by premium
c) Short-term incentive outcomes
offset by strong luxury portfolio growth for Penfolds. This level of
performance is reflected in the STIP results and the level of payout
Short-term incentives are assessed by achievement against each
for executives.
executive’s Balanced Scorecard and individual KPOs (including
demonstration of the Company’s DNA). The F23 STIP Balanced
Scorecard is heavily weighted to financial metrics, with the primary
Actual results for the Balanced Scorecards are provided in the
next table.
Actual results for the Balanced Scorecards are provided below.
F23 STIP Scorecard
CEO
CFO
CSCDO
Weight
Payment
Weight
Payment
Weight
Payment
Global EBITS
Quality growth in sales volume
Brand contribution margin
Cash conversion
Return on Capital Employed
TOTAL
50%
15%
15%
10%
10%
100%
36%
0%
18%
0%
6%
60%
50%
15%
15%
10%
10%
100%
36%
0%
18%
0%
6%
60%
50%
15%
15%
10%
10%
100%
36%
0%
18%
0%
6%
60%
As outlined in section 2 (e), individual KPOs include a combination of strategic and operational shared objectives specific to the executive,
and shared objectives relating to leadership, inclusion, equity and diversity, and wellbeing and sustainability. Demonstration of the
Company’s DNA relates to behaviours specific to the executive and how the KPOs were achieved and is weighted equally with the individual
KPOs. While the outcomes for the strategic and operational KPOs and demonstration of the Company’s DNA will differ between executives,
outcomes for the inclusion, equity and diversity, and wellbeing and sustainability KPOs are shared objectives among all executives.
69
TREASURY WINE ESTATES ANNUAL REPORT 2023
F23 remuneration report
The table below sets out short-term incentive outcomes for each executive inclusive of the impact of individual performance
multiplier outcomes.
Table 3.2: F23 STIP outcomes
(A) FR1 for
STIP
opportunity
(B) STIP
opportunity
at Target
(% of FR)
STIP
opportunity
at Target
(C) Business
scorecard
multiplier
(D)
Individual
performance
multiplier
STIP
awarded
Total STIP
awarded
(% of FR )
Cash
($)
Restricted
equity
($)
(%)
($)
(%)
120%
1,168,020
72.0%
778,680
389,340
90%
277,297
35.9%
184,865
92,432
120%
341,241
47.9%
227,494
113,747
Total STIP
opportunity
forfeited
(% of
maximum)
(%)
60%
70%
60%
Executive
($)
(%)
($)
TM Ford
1,622,250
100.0%
1,622,250
M J Young
772,200
66.5%
513,513
SR Boxer
712,700
66.5%
473,946
(%)
60%
60%
60%
1. FR is salary as of 1 September 2022.
d) Long-term incentive awards and outcomes
LTIP awarded during the year
Performance rights were allocated to executives under the F23 LTIP
after the 2022 Annual General Meeting and are subject to a three-year
performance period. Any vesting is subject to three hurdles (detailed
on page 67). The performance rights have no exercise price and the
minimum total value of the grant is zero. The maximum value is the
number of awards granted multiplied by the share price at vesting.
Table 3.3: F23 LTIP performance rights
Executive
Grant date
Vesting date
granted
Number of awards
Face value at
grant date ($)1
Fair value at grant
date ($)2
Current (as at 30 June 2023)
TM Ford
MJ Young
SR Boxer
1 November 2022
30 June 2025
251,607
2,838,938
2,906,564
1 November 2022
30 June 2025
102,657
1,158,300
1,185,894
1 November 2022
30 June 2025
94,747
1,069,050
1,094,517
1. The value of LTIP awards granted to executives was the face value of the volume weighted average price (VWAP) of Company shares sold on the Australian Securities Exchange over the 90-day period up
to and including 30 June 2022 ($11.2832 per share).
2. The fair value ($) in the table above is calculated using the valuation method detailed in note 22 of the Financial Statements.
70
TREASURY WINE ESTATES ANNUAL REPORT 2023 LTIP vesting
The F21 LTIP was due to vest at the end of F23. The vesting schedule for the F21 LTIP is provided below.
Relative TSR
vesting schedule
Relative TSR ranking
Below 50th percentile
50th to 60th percentile
60th to 75th percentile
At or above 75th percentile
ROCE baseline
10.6% (F20)
ROCE percentage points growth
ROCE result
% of performance rights
subject torelative TSR
measure which vest
0%
35%-70%
70-100%
100%
% of performance rights
subject to ROCE measure
which vest
Less than 3.0
Less than 13.6%
0%
3.0 to 3.6
3.6 to 5.1
13.6% to 14.2%
14.2% to 15.7%
35%-75%
75%-100%
At or above 5.1
At or above 15.7%
100%
As outlined previously in the report, the Group’s Total Shareholder
consultant, the Board made the unanimous decision to adjust
Return (TSR) performance was at the 51st percentile relative to
only the ROCE outcome (and not rTSR), and moreover, to adjust
its peer group driving 39% vesting for this component of the LTIP
the ROCE outcome only for the direct impact of the imposition of
(weighted at 25%). However, while the Company has focused
MOFCOM tariffs (and to exclude the other material, unanticipated
on sustainable earnings, cost management and operational
events including the pandemic and wildfires). The resulting payout
effectiveness during the pandemic and following the introduction
is 92% for the ROCE component (as adjusted for the MOFCOM tariffs
of the MOFCOM tariffs, the subsequent financial impacts continue
only and weighted at 75%). Total vesting of the F21 LTIP for each
to have a direct impact on the ROCE component which would
executive equated to 78.75% of the target grant value. The F21 LTIP
have once again fallen below threshold unless otherwise adjusted.
vesting outcome by executive is provided at Table 3.4.
After careful consideration of numerous alternatives and factors,
and in consultation throughout this process with our independent
Table 3.4: Vesting/lapsing of F21 LTIP
Executive
Current (as at 30 June 2023)
TM Ford
MJ Young
SR Boxer
Number of
performance rights
granted
Value at grant 1
($)
Number of
rights vested
Value vested 2
($)
Number
of rights
which
lapsed3
Value lapsed2
($)
255,940
2,624,997
201,552
2,263,429
54,388
610,777
139,231
1,427,995
109,644
1,231,302
29,587
332,262
98,719
1,012,492
77,741
873,031
20,978
235,583
1. ‘Value at grant’ is calculated based on $10.2563 which was the volume weighted average price of Company shares sold on the Australian Securities Exchange over the 90 day period up to and including 30
June 2020. This was the price used to calculate the number of performance rights granted under the F21 LTIP as previously disclosed by the Company.
2. The value ‘lapsed’ or ‘vested’ is calculated based on the closing share price on the performance period end date of 30 June 2023, being $11.23.
3. The number of rights which lapsed as they did not vest.
71
TREASURY WINE ESTATES ANNUAL REPORT 2023 F23 remuneration report
e) General employee share plan (Share Cellar)
f) Summary of awards held by executives
During F23, the 2023 Share Cellar Plan was launched. No executives
Table 3.5 sets out the number and movement of awards held by
participated in this plan. The Company has approximately one third
executives. Restricted Shares are generally issued under STIP Deferral
of all eligible employees participating in the Share Cellar Plan and
(Restricted Equity). Performance Rights are issued under the LTIP.
investing their post-tax pay to become shareholders.
Table 3.5: Summary of awards held by executives
Held at the start
of the reporting
period
Granted/
acquired during
reporting period
Received
upon vesting/
exercising1
Lapsed or
forfeited2
Other
change
Held at the
end of the
reporting
period
-
-
-
-
-
-
-
64,963
491,778
22,181
200,646
21,743
187,384
988,695
Name
Current (as at 30 June 2023)
TM Ford
Restricted Shares
Performance Rights
MJ Young Restricted Shares
44,338
496,111
16,842
42,794
(22,169)
-
251,607
(201,552)
(54,388)
13,760
(8,421)
Performance Rights
237,220
102,657
(109,644)
(29,587)
SR Boxer
Restricted Shares
Performance Rights
13,472
191,356
15,007
94,747
(6,736)
-
(77,741)
(20,978)
Grand Total
999,339
520,572
(426,263)
(104,953)
g) Remuneration of executives
Table 3.6 provides details of remuneration for the CEO and executives
for F23, calculated in accordance with statutory accounting
requirements. All amounts are in Australian dollars and relate only to
the portion of the year in which the person occupied the KMP role.
1. Represents restricted shares under the F21 Deferred STIP which became unrestricted during F23.
2. Represents F21 LTIP performance rights which lapsed on 30 June 2023.
72
TREASURY WINE ESTATES ANNUAL REPORT 2023 Table 3.6: Remuneration of executives
TM Ford
MJ Young
SR Boxer
Total
F23
F22
F23
F22
F23
F22
F23
F22
Salary/fees1
1,588,486
1,538,932
743,120
720,182
683,937
665,495
3,015,543
2,924,609
Leave accrual2
75,359
86,759
16,736
35,487
1,400
4,375
93,495
126,621
Non-monetary benefits3
14,422
28,713
12,312
10,499
10,184
10,493
36,918
49,705
Total cash incentive4
778,680
1,148,415
184,865
369,260
227,494
402,738
1,191,039
1,920,413
Other payments
-
(1,856)
-
-
-
-
-
(1,856)
Superannuation /pension
25,292
23,568
25,292
23,568
25,292
23,568
75,876
70,704
Total amortisation value
of LTIP5
1,685,247
696,229
816,323
212,369
647,731
410,773
3,149,301
1,319,371
Other equity6
507,449
181,115
173,634
72,061
169,540
52,249
850,623
305,425
s
t
fi
e
n
e
b
m
r
e
t
-
t
r
o
h
S
s
t
n
e
m
y
a
p
d
e
s
a
b
-
e
r
a
h
S
Total
4,674,935
3,701,875
1,972,282
1,443,426
1,765,578
1,569,691
8,412,795
6,714,992
Performance related %7
64%
55%
60%
45%
59%
55%
Termination benefits
-
-
-
-
-
-
-
-
1. Represents cash salary including any salary sacrificed items such as superannuation and novated
motor vehicles.
at the offer date and is apportioned on a straight-line basis across the expected vesting period after
adjusting at each reporting date for an estimation of the number of shares that will ultimately vest.
2. Includes any net changes in the balance of annual leave and long service leave (i.e. leave
entitlements that accrued during the year but were not used).
3. Includes the provision of car parking, product allocations, executive medical checks, taxation
expenses and Fringe Benefits Tax on all benefits, where applicable.
4. Represents cash payments made under the F23 STIP, excluding the Restricted Equity portion which
will be allocated in September 2023.
5. Includes a proportion of the fair value of all outstanding LTIP offers at the start of the year, or which
were offered during the year. Under Australian Accounting Standards, the fair value is determined as
6. Includes a proportion of the fair value of all Restricted Shares and Deferred Share Rights held under
outstanding Restricted Equity Plans at the start of the year. F22 STIP Restricted Equity was outstanding
at the end of F23. Restricted Equity granted under the F23 STIP is expected to be allocated in September
2023. Under Australian Accounting Standards, the fair value is determined as at the offer date and
is apportioned on a straight-line basis across the expected vesting period after adjusting at each
reporting date for an estimation of the number of shares that will ultimately vest.
7. Represents the sum of incentive and Performance Rights/Restricted Equity as a percentage of total
remuneration, excluding termination payments. No termination payments were made to Executives
during F23.
73
TREASURY WINE ESTATES ANNUAL REPORT 2023
F23 remuneration report
Non-Executive Director remuneration
4. Framework and outcomes
This section of the report refers to the following Non-Executive Directors.
Name
Non-Executive Directors
Position
Dates
Current
PA Rayner
EYC Chan
GA Hounsell
CE Jay
A Korsanos
J Mullen
LM Shanahan
Former
WL Every-Burns
a) Fee pool
Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Full year
Full year
Full year
Full year
Full year
Non-Executive Director
Commenced 1 May 2023
Non-Executive Director
Full year
Non-Executive Director
Retired effective 18 October 2022
b) Non-Executive Director fees
The current maximum aggregate fee pool of $2,500,000 per annum
The level of Non-Executive Directors’ fees takes into account the risks
(inclusive of superannuation) was approved by shareholders at the
and responsibilities of the role, the global reach and complexity of the
2016 Annual General Meeting.
business, Director skills and experience, and market benchmark data
(provided by independent external consultants).
From F23, as disclosed in the 2022 Remuneration report and after no
increases since April 2019, the Board approved a 3% increase to Board
Chair and Member base fees and a moderate increase to Committee
fees effective from 1 July 2022. For F24, the Board has approved a
3% increase to Chair and Member base fees to be effective from 1
October 2023. No changes will be made to Committee fees. Table 4.1
details the new Non-Executive Directors’ fees.
Table 4.1: F23 Non-Executive Director fees
Board/Committee
Board base fee
Audit and Risk Committee
Human Resources Committee
Nominations Committee
Wine Operations and Sustainability Committee
F23 fees per annum,
F24 fees per annum,
effective from 1 July 2022
effective from 1 October 2023
Chair fee ($)
Member fee ($)
Chair fee ($)
Member fee ($)
546,000
46,500
42,500
10,000 1
35,000
198,500
22,500
21,500
5,000
18,000
562,380
46,500
42,500
10,000 1
35,000
204,455
22,500
21,500
5,000
18,000
1. The Chairman of the Board, Mr Rayner, is also the Chair of the Nominations Committee. He does not receive any additional fees for this role.
In addition to the above fees, Non-Executive Directors receive a
wine allowance of $4,000. In order to maintain independence,
Non-Executive Directors do not participate in the Company’s incentive
plans and they do not receive retirement benefits other than the
superannuation contributions disclosed in this report.
74
TREASURY WINE ESTATES ANNUAL REPORT 2023
c) Non-Executive Director outcomes
Details of Non-Executive Director remuneration for F23 and F22 are provided.
Table 4.2: F23 Non-Executive Director remuneration ($)
Non-Executive Director
PA Rayner
EYC Chan
J Mullen2
GA Hounsell
CE Jay
LM Shanahan
A Korsanos
Former
WL Every-Burns3
TOTAL
Year
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
Fees
520,708
506,432
214,792
215,000
29,940
-
250,931
222,878
238,000
222,600
246,000
213,600
226,244
212,425
61,409
217,455
1,788,024
1,810,390
Non-monetary
benefits1
Superannuation
Total
17,363
16,840
4,000
4,000
-
-
7,370
7,547
4,000
4,000
4,000
4,000
7,370
7,547
7,157
7,547
51,260
51,481
25,292
23,568
6,208
-
3,144
-
25,170
22,288
-
-
-
-
23,756
21,242
6,448
21,745
90,018
88,843
563,363
546,840
225,000
219,000
33,084
-
283,471
252,713
242,000
226,600
250,000
217,600
257,370
241,214
75,014
246,747
1,929,302
1,950,714
1. Includes product allocations, entertainment and Fringe Benefits Tax, where applicable. The amounts for Mr Rayner include car parking.
2. Mr Mullen joined the Board effective from 1 May 2023.
3. Mr Every-Burns retired from the Board of Directors as of 18 October 2022.
75
TREASURY WINE ESTATES ANNUAL REPORT 2023 F23 remuneration report
Other remuneration information
5. Governance
a) Role of the Human Resources Committee (HRC)
b) Engagement of remuneration advisors
The HRC provides assistance to the Board in relation to such
In F23, the Board and HRC engaged PwC as an independent advisor
matters as monitoring remuneration principles and frameworks,
to the HRC. Potential conflicts of interest are considered by the HRC,
providing advice on remuneration matters, making remuneration
and the Board and HRC are satisfied that the advice provided by PwC
recommendations for executives, approving incentive plans and
was free from undue influence. Any advice provided by remuneration
reviewing and governing remuneration policies. In addition to its
consultants is used as a guide only and is not a substitute for detailed
remuneration responsibilities and together with the Board, the
consideration of all relevant issues by the HRC. No remuneration
HRC’s duties include overseeing talent management, inclusion, equity
recommendations, as defined by the Corporations Act 2001 (Cth),
and diversity, culture, and leadership development.
were provided.
The Committee ensures that the Company’s policies and frameworks
c) Executive and Non-Executive Director share ownership
aid the achievement of the Company’s strategic objectives, provide
Executives and Non-Executive Directors are encouraged to have
appropriate governance, are aligned with market practice, and
control over ordinary shares in the Company and executives and
fulfil the Board’s responsibility to shareholders. During the year the
Non-Executive Directors are required to hold at least the equivalent
Audit and Risk Committee Chair attended all but one of the Human
of one year’s fixed remuneration or base fees. The guidelines are
Resources Committee meetings as a Committee member. Also, the
expected to be met over a reasonable period of time (approximately
Human Resources Committee Chair typically attends the Audit and
five years). The Company’s variable incentive programs contribute
Risk Committee meetings, providing a link between both Committees
towards executives meeting this guideline. The Director Share
to assist with oversight of non-financial risk.
Acquisition Plan (DSAP) allows Directors to apply after-tax fees to
the acquisition of the Company’s shares on a periodic basis at the
As outlined in Section 4 of the Corporate Governance Statement
prevailing market rate.
disclosed on the Company’s website tweglobal.com, the Company
has procedures in place for the reporting of any matter that may give
Table 5.1 sets out KMP shareholdings.
rise to a conflict between the interests of a Director and those of the
Company. In addition, the Company has adopted a general policy for
employees in relation to the disclosure and management of potential
conflicts of interest (see Section 4 of the Corporate Governance
Statement on tweglobal.com).
76
TREASURY WINE ESTATES ANNUAL REPORT 2023 Table 5.1: KMP shareholdings
F23
Executive
Current (as at 30 June 2023)
TM Ford
MJ Young
SR Boxer
Balance at start
of the year
Received upon vesting/
exercise1
Other changes during
the year2
Balance at end of
year
71,563
31,269
-
223,721
118,065
84,477
-
295,284
(3,993)
-
145,341
84,477
Executive total
102,832
426,263
(3,993)
525,102
F23
Non-Executive Directors
Current (as at 30 June 2023)
PA Rayner
EYC Chan
J Mullen
GA Hounsell
CE Jay
LM Shanahan
A Korsanos
Former
WL Every-Burns5
Non-Executive Director total
Grand total
Balance at start
of the year
Acquired during the year
as part of DSAP3
Other changes during
the year
Balance at end
of year4
297,819
48,280
-
100,000
16,591
20,368
17,500
100,000
600,558
703,390
3,663
189
-
-
-
12,091
-
-
-
15,754
442,017
-
-
-
-
2,000
-
301,671
48,280
-
100,000
28,682
22,368
17,500
(100,000)
-
(97,811)
518,501
(101,804)
1,043,603
1. Includes release of restricted shares under Tranche 2 of F21 Deferred STIP and shares acquired upon auto-exercise of F21 LTIP awards.
2. Includes the purchase/sale of ordinary shares during F23 and for Mr Young, shares received under TWE’s dividend reinvestment plan.
3. Shares acquired by Directors using post-tax fees in TWE’s Director Share Acquisition Plan (DSAP).
4. No changes in shareholdings have occurred for non-executive directors from the balance date to the date of this report.
5 . Mr Every-Burns retired from the Board of Directors as of 18 October 2022. Mr Every-Burns’ balance of shares held as at 30 June 2023 is reduced to nil to reflect his retirement as an Non-Executive Director.
77
TREASURY WINE ESTATES ANNUAL REPORT 2023
F23 remuneration report
6. Further information
a) Executive contracts
There is no fixed term for executive contracts. The Company may
c) Prior years’ equity arrangements
terminate service agreements immediately for cause, in which case
This section summarises all outstanding equity arrangements for
the executive is not entitled to any payment other than the value
executives, as reported in previous Remuneration Reports.
of fixed remuneration and accrued leave entitlements up to the
termination date. On resignation all executives are required to give six
The below equity plans have no exercise price and the minimum
months’ notice. If the termination is Company initiated without cause,
total value of the grant is zero. The maximum value is the number of
all executives have termination provisions of six months’ notice by the
awards granted multiplied by the share price at vesting.
Company plus six months’ severance pay.
b) Other transactions with KMP and their personally related entities
The Company entered into transactions which are insignificant in
amount with KMP and their related parties within normal employee,
customer or supplier relationships on terms and conditions no more
favourable than those available in similar arm’s length dealings which
include payments of salaries and benefits and purchase of Company
products.
Some Directors of the Company are also Directors of public
companies which have transactions with the Company. The relevant
Directors do not believe they have the individual capacity to control
or significantly influence the financial policies of those companies.
The companies are therefore not considered to be related parties for
the purpose of the disclosure requirements of the Corporations Act
2001 (Cth).
Table 6.1: Prior years’ restricted equity
Executive
Plan
Instrument type
Allocation date
Number
Face value
Fair value at
at allocation
date 1
($)
allocation
date 2
($)
Vesting date
TM Ford
F22 LTIP
Performance Rights
1 December 2021
240,171
2,624,997
2,425,127
30 June 2024
MJ Young
F22 LTIP
Performance Rights
1 December 2021
97,989
1,070,990
989,444
30 June 2024
SR Boxer
F22 LTIP
Performance Rights
1 December 2021
92,637
1,012,495
935,402
30 June 2024
1. The value of F22 LTIP awards at allocation date is calculated based on the 90-day VWAP up to and including 30 June 2021 ($10.9297 per share). The vesting schedule is provided in Table 6.2.
2. This LTIP value is calculated using the valuation method detailed in Note 22 of the Financial Statements. All other plans are based on face value.
78
TREASURY WINE ESTATES ANNUAL REPORT 2023 Table 6.2: F22 LTIP vesting schedules
Relative TSR vesting schedule
Relative TSR ranking
% of performance rights subject to
relative TSR measure which vest
Below 50th percentile
50th to 60th percentile
60th to 75th percentile
At or above 75th percentile
0%
50%-70%
70%-100%
100%
ROCE baseline 10.8% (F21)
ROCE percentage points growth
ROCE result
ROCE measure which vest
% of performance rights subject to
Less than 1.8
Less than 12.6%
0%
1.8 to 2.1
2.1 to 2.8
12.6% to 12.9%
12.9% to 13.6%
35%-75%
75%-100%
At or above 2.8
At or above 13.6%
100%
d) Definitions
Term
Definition
Constant currency
An exchange rate that eliminates the effects of exchange rate fluctuations year-on-year.
Earnings per Share (EPS)
NPAT excluding SGARA and material items, divided by the weighted average number of shares.
Adjusted EPS is used to calculate performance outcomes, meaning that the Board retains the
discretion to adjust EPS to ensure that participants are not penalised or provided with a windfall
gain arising from material, non-recurring items.
EBITDAS
EBITS
Earnings before interest, tax, depreciation, amortisation, material items and SGARA
Earnings before interest, tax, SGARA and material items.
EBITS Margin
EBITS divided by Net sales revenue
Key management personnel (KMP)
Those persons having authority and responsibility for planning, directing and controlling the major
activities of the Company and the Group, directly or indirectly, including any Director (whether
executive or otherwise), as listed in the introduction to the Remuneration Report.
Phantom shares
Units which provide the participant with a right to receive a cash payment at the vesting date,
whereby the payment is tied to the market value of an equivalent number of TWE shares.
The amount of the payout will increase as the share price rises, and decrease if the share price
falls, but without the participant actually receiving any TWE shares.
Relative Total Shareholder Return (TSR) The return on investment of a company relative to a peer group of companies.
Restricted equity
Rights or shares granted by TWE that vest upon the satisfaction of certain conditions, such as
continued employment for a period of time or the achievement of particular performance
milestones. The plan participant cannot deal in the equity until it vests and the restriction is lifted.
Return on Capital Employed (ROCE)
EBITS divided by Capital Employed (at constant currency). Capital Employed is the sum of
average net assets (adjusted for SGARA impact) and average net debt.
SGARA
Self-generating and regenerating assets.
SGARA represents the difference between the fair value of harvest (as determined under AASB
141 Agriculture) and the cost of harvest. The fair value gain or loss is excluded from Management
EBITS so that earnings can be assessed based on the cost of harvest, rather than their fair value.
This approach results in a better reflection of the true nature of TWE’s consumer branded and
FMCG business and improved comparability with domestic and global peers.
Total Shareholder Return (TSR)
Total return on investment of a security, taking into account both capital appreciation and
distributed income that was reinvested.
79
TREASURY WINE ESTATES ANNUAL REPORT 2023 Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2023
Revenue
Cost of sales
Gross profit
Selling expenses
Marketing expenses
Administration expenses
Other income/(expenses)
Profit before tax and finance costs
Finance income
Finance costs
Net finance costs
Profit before tax
Income tax expense
Net profit
Net (profit)/loss attributable to non-controlling interests
Net profit attributable to members of Treasury Wine Estates Limited
Other comprehensive income/(loss)
Items that may subsequently be reclassified to profit or loss
Cash flow hedges
Tax on cash flow hedges
Exchange gain /(loss) on translation of foreign operations
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive income for the year attributable to members of
Treasury Wine Estates Limited
Non-controlling interests
Total comprehensive income for the year
Note
3
2023
$M
2,488.3
2022
$M
2,531.8
(1,413.7)
(1,488.5)
24
1,074.6
(231.3)
(157.1)
(183.4)
(93.1)
409.7
79.6
(152.3)
(72.7)
337.0
(82.7)
254.3
0.2
254.5
5.7
(1.3)
80.0
84.4
338.3
0.4
338.7
1,043.3
(235.2)
(136.2)
(148.9)
(78.7)
444.3
51.5
(122.9)
(71.4)
372.9
(109.7)
263.2
–
263.2
59.3
(16.6)
94.6
137.3
400.5
-
400.5
Earnings per share for profit attributable to the ordinary equity holders of the Company
Basic
Diluted
Cents
Per share
Cents
Per share
7
7
35.3
35.1
36.5
36.3
The consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
80
TREASURY WINE ESTATES ANNUAL REPORT 2023 Consolidated statement of financial position
As at 30 June 2023
Note
2023
$M
2022
$M
Current assets
Cash and cash equivalents
Receivables
Inventories
Current tax assets
Assets held for sale
Other current assets
Total current assets
Non-current assets
Inventories
Property, plant and equipment
Right-of-use assets
Agricultural assets
Intangible assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Borrowings
Other current liabilities
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Other equity
Reserves
Retained earnings
Total parent entity interest
Non-controlling interests
Total equity
9
9
9
24
14
9
10
11
12
13
24
9
24
16
18
18
24
19
23
21
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
565.8
607.3
990.3
24.4
32.9
16.5
430.5
564.4
947.9
-
35.6
11.3
2,237.2
1,989.7
1,175.3
1,576.8
389.7
44.8
1,426.7
166.5
74.3
4,854.1
7,091.3
709.7
18.7
101.7
250.7
17.6
1,063.6
1,521.5
435.3
32.9
1,399.8
163.5
57.4
4,674.0
6,663.7
747.2
8.5
76.3
161.5
9.6
1,098.4
1,003.1
1,686.9
383.2
43.9
2,114.0
3,212.4
3,878.9
1,512.2
338.7
20.7
1,871.6
2,874.7
3,789.0
3,280.7
3,280.7
(18.1)
134.5
464.6
3,861.7
17.2
3,878.9
-
48.7
455.5
3,784.9
4.1
3,789.0
81
TREASURY WINE ESTATES ANNUAL REPORT 2023 Consolidated statement of changes in equity
For the year ended 30 June 2023
Balance at 30 June 2021
Profit for the year
Total other comprehensive income/
(loss)
Total comprehensive
income for the year/(loss)
Transactions with owners in their
capacity as owners directly in equity
Share based payment expense
Vested deferred shares and share
rights
Dividends to owners of the Company
Contributed
equity
$M
3,280.7
-
-
-
-
-
-
Balance at 30 June 2022
3,280.7
Profit for the year
Total other comprehensive
income/(loss)
Total comprehensive
income for the year/(loss)
Transactions with owners in their
capacity as owners directly in equity
Share based payment expense
Vested deferred shares and share
rights
Other equity
Non controlling interest of aquisition
Dividends to owners of the Company
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(18.1)
-
-
Other
equity
$M
Retained
earnings
$M
Foreign
currency
translation
reserve
$M
Other
reserves
$M
Non-
controlling
interests
$M
Total
$M
Total
equity
$M
394.4
(22.4)
(65.6)
3,587.1
4.1
3,591.2
263.2
-
-
263.2
-
94.6
42.7
137.3
263.2
94.6
42.7
400.5
-
-
-
-
-
-
263.2
137.3
400.5
10.4
(11.0)
(202.1)
-
-
(202.1)
455.5
-
-
-
10.4
10.4
(11.0)
(11.0)
-
(202.1)
72.2
(23.5)
3,784.9
4.1
3,789.0
254.5
-
-
254.5
(0.2)
254.3
-
79.4
4.4
83.8
0.6
84.4
254.5
79.4
4.4
338.3
0.4
338.7
-
-
-
-
(245.4)
-
-
-
-
-
13.8
13.8
(11.8)
(18.1)
(11.8)
-
-
-
-
-
-
13.8
(11.8)
(18.1)
12.7
-
12.7
(245.4)
-
(245.4)
Balance at 30 June 2023
3,280.7
(18.1)
464.6
151.6
(17.1)
3,861.7
17.2
3,878.9
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
82
TREASURY WINE ESTATES ANNUAL REPORT 2023 Consolidated statement of cash flows
For the year ended 30 June 2023
Cash flows from operating activities
Receipts from customers
Payments to suppliers, governments and employees
Borrowing costs paid
Income taxes paid
Interest paid (net)
Net cash flows from operating activities
8
Cash flows from investing activities
Payments for property, plant, and equipment
Payments for intangible assets
Payments for subsidiaries, net of cash acquired
Proceeds from sale of property, plant and equipment
Net cash flows used in investing activities
Cash flows from financing activities
Dividend payments
Proceeds from borrowings
Repayment of borrowings
Purchase of shares – employee equity plans
Net cash flows used in financing activities
Total cash flows from activities
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on foreign currency cash flows and cash balanc-
es
Cash and cash equivalents at end of the year
9
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
2023
$M
inflows/
(outflows)
2022
$M
inflows/
(outflows)
Note
3,125.8
3,378.3
(2,710.2)
(2,653.9)
(9.7)
(69.8)
(64.1)
272.0
(243.6)
(5.4)
(55.8)
193.4
(111.4)
(245.4)
394.2
(154.1)
(21.9)
(27.2)
133.4
430.5
1.9
565.8
(5.4)
(95.5)
(61.5)
562.0
(102.4)
(9.8)
(439.6)
143.2
(408.6)
(202.1)
335.7
(301.1)
(17.3)
(184.8)
(31.4)
448.1
(9.7)
430.5
83
TREASURY WINE ESTATES ANNUAL REPORT 2023 TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: About this report
For the year ended 30 June 2023
Note 1 - About this report
Treasury Wine Estates Limited (‘the Company’) is a for profit
Capital structure: provides information about the capital
company incorporated in Australia and limited by shares which are
management practices adopted by the Group - particularly how
publicly traded on the Australian Securities Exchange (ASX). The
much capital is raised from shareholders (equity) and how much
consolidated financial statements comprise the Company and its
is borrowed from financial institutions (debt) in order to finance the
controlled entities (collectively, ‘the Group’).
activities of the Group both now and in the future.
The accounting policies that are critical to understanding
Taxation: sets out the Group’s tax accounting policies, the current
the financial statements are set out in this section. Where an
and deferred tax charges, a reconciliation of profit or loss before
accounting policy is specific to one note, the policy is described in
tax to the tax charge or credit and the movements in deferred tax
the note to which it relates.
assets and liabilities.
Basis of preparation
Risk: discusses the Group’s exposure to various financial risks,
The consolidated financial statements are general purpose
explains how these affect the financial position of the Group and
financial statements prepared in accordance with Australian
what is done to manage these risks.
Accounting Standards (AASBs) adopted by the Australian
Accounting Standards Board (AASB) and the Corporations Act
Group composition: explains aspects of the Group’s structure and
2001. The consolidated financial statements comply with the
business acquisitions.
International Financial Reporting Standards (IFRS) adopted by
the International Accounting Standards Boards (IASB). They were
Other: other required disclosures under Australian Accounting
authorised for issue by the Board of Directors on 15 August 2023.
Standards and IFRS.
The financial statements are presented in Australian dollars with
all values rounded to the nearest tenth of one million dollars unless
Key estimates and judgements
otherwise stated, in accordance with ASIC Corporations (Rounding
in Financial/Directors’ Reports) Instrument 2016/191.
In preparing this financial report, the Group is required to
Notes to the financial statements
reported amounts in the financial statements.
The notes include additional information required to understand
the financial statements that is material and relevant to the
These estimates, judgements and assumptions are continually
operations, financial position and performance of the Group.
evaluated, and are based on forecasts of economic conditions
make estimates, judgements and assumptions that affect the
which reflect expectations and assumptions as at 30 June
Information is considered material and relevant if the amount in
2023 about future events that the Directors believe are
question is significant because of its size, nature or incidence or it
reasonable in the circumstances.
helps to explain the impact of significant changes in the business,
for example, acquisitions and asset write-downs.
The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are
Line items labelled ‘other’ on the face of the consolidated
significant to the financial statements:
statements comprise miscellaneous income, expenses, assets,
liabilities or cash flows which individually or in aggregate are not
Note 3:
Revenue
considered material to warrant additional disclosures.
Note 9:
Working capital
Where applicable, comparative periods have been adjusted to
Note 11:
Right-of-use assets
disclose comparatives on the same basis as the current year.
The notes are organised into the following sections:
Note 12:
Agricultural assets
Note 13:
Intangible assets
Note 15:
Impairment of non-financial assets
Earnings: focuses on the financial results and performance of
the Group. It provides disclosures relating to income, expenses,
Note 24:
Income tax
segment information, material items and earnings per share.
Note 35:
Business acquisitions
Working capital: shows the assets and liabilities generated through
trading activity. It provides information regarding working capital
management and analysis of the elements of working capital.
Operating assets and liabilities: provides information regarding
the physical assets and non-physical assets used by the Group to
generate revenues and profits (including associated liabilities).
This section also explains the accounting policies applied and
specific judgements and estimates made by management in
arriving at the value of these assets and operating liabilities.
84
TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: About this report
For the year ended 30 June 2023
Note 1 - About this report (continued)
Principles of consolidation
Tax charges and credits attributable to these exchange differences
The consolidated financial statements include the assets and
are also recognised in equity.
liabilities of Treasury Wine Estates Limited and its controlled
entities as a whole at year-end and the consolidated results and
Average exchange rates used in translating profit and loss items in
cash flows for the year. A list of controlled entities (subsidiaries) is
F23 are:
provided in note 28.
A$1 = US$ 0.673 (F22: US$ 0.726)
A$1 = GB£ 0.559 (F22: GB£ 0.545)
An entity is regarded as a controlled entity when the Company is
exposed to, or has rights to, variable returns from its involvement
Year-end exchange rates used in translating financial position
with the entity and has the ability to affect those returns through
items in F23 are:
power over the entity.
A$1 = US$ 0.662 (F22: US$ 0.688)
A$1 = GB£ 0.525 (F22: GB£ 0.568)
The rights of other investors to the results and equity of the
subsidiaries (called non-controlling interests) are shown
Fair value measurement
separately in the consolidated statement of profit or loss and
The Group measures certain financial instruments, including
other comprehensive income, consolidated statement of
derivatives, and certain non-financial assets such as agricultural
changes in equity and consolidated statement of financial
assets, at fair value at each balance sheet date.
position respectively.
The financial information of the subsidiaries is prepared for the
paid to transfer a liability in an orderly transaction between market
same reporting period as the parent, using consistent accounting
participants in its principal or most advantageous market at the
policies. Intra-group balances and transactions arising from
measurement date. It is measured using the assumptions that
intra-group transactions are eliminated.
market participants would use when pricing the asset or liability,
Fair value is the price that would be received to sell an asset or
A change in the ownership interest of a subsidiary, without a loss of
interest. A fair value measurement of a non-financial item assumes
control, is accounted for as an equity transaction.
it is put to its highest and best use.
assuming that market participants act in their economic best
Functional and presentation currency
The Group uses valuation techniques that are appropriate in
The consolidated financial statements are presented in Australian
the circumstances and for which sufficient data is available to
dollars. Each entity in the Group determines its own functional
measure fair value, maximising the use of relevant observable
currency and items included in the financial statements of each
inputs and minimising the use of unobservable inputs.
entity are measured using that functional currency. The major
functional currencies used throughout the Group include Australian
Accounting standards prescribe a fair value hierarchy, described
Dollar (AUD), United States Dollar (USD) and Great British Pound
as follows, based on the lowest level input that is significant to the
(GBP). Other currencies used include the Canadian Dollar, Euro,
fair value measurement as a whole:
New Zealand Dollar, Singapore Dollar, Swedish Krona, Norwegian
Krone and Chinese Renminbi.
Level 1 - Quoted (unadjusted) market prices in active markets for
identical assets or liabilities.
Foreign group companies
Level 2 - Valuation techniques for which the lowest level input
As at the reporting date, the assets and liabilities of overseas
that is significant to the fair value measurement is directly (i.e. as
subsidiaries are translated into Australian dollars at the rate
prices) or indirectly (i.e. derived by prices) observable.
Level 3 - Valuation techniques for which the lowest level input that
is significant to the fair value measurement is unobservable.
of exchange ruling at the balance sheet date and the income
statement is translated at the average exchange rates for the
period. The exchange differences arising on the translation are
recognised in the foreign currency translation reserve within equity.
When a foreign operation is sold, the cumulative exchange
difference in equity for this operation is recognised in the
consolidated statement of profit or loss and other comprehensive
income as part of the gain and loss on sale.
Transactions and balances
Transactions in foreign currencies are initially recorded in the
functional currency of the relevant entity at the exchange rates
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are subsequently translated at
the rate of exchange ruling at the balance sheet date.
Exchange differences arising are recognised in the consolidated
statement of profit and loss and other comprehensive income,
except for gains or losses arising on assets or liabilities that qualify
for hedge accounting, discussed further in note 26.
85
TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: About this report
For the year ended 30 June 2023
Note 2 - Segment information
The Group’s segments
Segment accounting policies
The Group reports segment information on the same basis as its
internal management reporting structure and consistent with the
Segment assets and liabilities
information used to organise and manage the Group.
Segment assets and liabilities represent those working capital
and non-current assets and liabilities which are located in the
During the current period, the business structure was reorganised
respective segments. Cash and borrowings, other than lease
to better reflect the Group’s management of the Canadian
liabilities, are not considered to be segment assets/liabilities
operations, with a number of brands sold in Canada that are now
as they are managed by our centralised treasury function.
managed by Treasury Premium Brands being remapped from
Consistent with the use of EBITS for measuring profit, tax
Treasury Americas to Treasury Premium Brands. Comparatives
assets and liabilities, which do not contribute towards EBITS,
have been restated to incorporate these changes.
are not allocated to operating segments.
Presentation of segment results
Management EBITS
Corporate charges
Unallocated corporate charges are reported in the
The principal profit metric for internal management reporting is
Corporate/unallocated segment. Net finance costs are not
Management earnings before interest, tax, SGARA and material
allocated to segments as the Group’s financing function is
items (EBITS). Corporate charges are allocated to each segment
centralised through its treasury function.
on a proportionate basis linked to segment revenue, head count
or other appropriate driver depending on the nature of the charge.
Segment loans payable and loans receivable
Segment loans are initially recognised at the amount
SGARA represents the difference between the fair value of
transferred. Intersegment loans receivable and payable that
harvested grapes (as determined under AASB 141 Agriculture)
earn or incur non-market interest are adjusted to fair value
and the cost of harvested grapes. The fair value gain or loss
based on market interest rates.
is excluded from Management EBITS so that earnings can be
assessed based on the cost of harvest, rather than their fair value.
Other
This approach results in a better reflection of the true nature of
If items of revenue and expense are not allocated to
TWE’s consumer branded and FMCG business and improved
operating segments, then any associated assets and
comparability with domestic and global peers. The F23 SGARA
liabilities are not allocated to segments either.
loss of $64.5 million includes the impact of a significant reduction
in tonnage and yield from the 2023 Australian vintage, resulting in
losses of $24.7 million.
The Group has the following reportable segments:
(i) Penfolds
This segment is responsible for the manufacturing, sale and
marketing of Penfolds wine globaly.
(ii) Treasury Premium Brands
This segment is responsible for the manufacturing, sale and
marketing of wine within Australia, Asia, Europe, Middle-East
and Africa.
(iii) Treasury Americas
This segment is responsible for the manufacture, sale
and marketing of wine within North American and Latin
Americas regions.
86
TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: Earnings
For the year ended 30 June 2023
Note 2 - Segment information (continued)
2023
Total revenue comprises:
Net sales revenue
Other revenue
Treasury
Premium
Brands
$M
Penfolds
$M
Treasury
Americas
$M
Total
segment
$M
Unallocated/
corporate
$M
Consolidated
$M
782.4
4.8
819.7
26.7
820.9
2,423.0
28.0
59.5
-
5.8
5.8
2,423.0
65.3
2,488.3
Total segment revenue (excl other income/interest)
787.2
846.4
848.9
2,482.5
Management EBITS
SGARA gain/(loss)
Material items
Management EBIT
Net finance costs
Consolidated profit before tax
81.7
364.7
203.9
650.3
(66.8)
583.5
(27.0)
(33.2)
(4.3)
(64.5)
-
(64.5)
(108.2)
(5.7)
31.6
(82.3)
(26.9)
(109.2)
(53.5)
325.8
231.2
503.5
(93.7)
409.7
(72.7)
337.0
Depreciation of property, plant and equipment and
right-of-use assets
Amortisation and impairment of intangible assets
Assets held for sale
(21.3)
(34.5)
(73.1)
(128.9)
(3.7)
(132.6)
(16.4)
21.3
(0.1)
11.6
(2.1)
(18.6)
(10.5)
(29.1)
-
32.9
-
32.9
Capital expenditure (additions)
(23.2)
(38.6)
(178.5)
(240.3)
(8.7)
(249.0)
Segment assets
Segment liabilities
1,398.5
1,854.9
2,902.6
6,156.0
935.3
7,091.3
(301.4)
(267.2)
(695.7)
(1,264.3)
(1,948.1)
(3,212.4)
2022 Restated
A
Total revenue comprises:
Net sales revenue
Other revenue
Treasury
Premium
Brands
$M
Penfolds
$M
Treasury
Americas
$M
Total
segment
$M
Unallocated/
corporate
$M
Consolidated
$M
829.8
5.6
717.3
4.9
929.6
2,476.7
34.7
45.2
-
9.9
9.9
2,476.7
55.1
2,531.8
Total segment revenue (excl other income/interest)
835.4
722.2
964.3
2,521.9
Management EBITS
SGARA gain/(loss)
Material items
Management EBIT
Net finance costs
Consolidated profit before tax
86.4
(9.8)
(0.1)
76.5
319.3
(12.7)
178.8
(11.4)
584.5
(60.8)
523.7
(33.9)
-
(33.9)
(2.4)
(39.0)
(41.5)
(4.0)
(45.5)
304.2
128.4
509.1
(64.8)
444.3
(71.4)
372.9
Depreciation of property, plant and equipment and
right-of-use assets
Amortisation and impairment of intangible assets
Assets held for sale
(21.9)
(35.6)
(70.9)
(128.4)
(3.6)
(132.0)
(1.8)
7.9
-
4.5
(7.2)
23.2
(9.0)
35.6
(12.9)
(21.9)
-
35.6
Capital expenditure (additions)
(35.6)
(45.3)
(20.0)
(100.9)
(11.3)
(112.2)
Segment assets
Segment liabilities
1,461.8
1,647.2
2,808.2
5,917.2
746.5
6,663.7
(292.5)
(236.8)
(797.5)
(1,326.8)
(1,547.9)
(2,874.7)
A F22 has been restated to reflect brands sold in Canada that are now managed by Treasury Premium Brands being remapped from Treasury Americas to Treasury Premium Brands.
87
Notes to the consolidated financial statements: Earnings
For the year ended 30 June 2023
Note 2 - Segment information (continued)
Geographical segments
The presentation of geographical net sales revenue is based on the location of the selling entity.
Australia
United States of America
United Kingdom
Other geographical locations1
Total
Net sales revenue
2023
$M
1,004.3
922.0
329.4
167.3
2022
$M
985.4
1,035.7
345.6
110.0
2,423.0
2,476.7
1. Other than Australia, United States of America and the United Kingdom, non-current assets of other countries are individually less than 10% of the Group’s net sales revenue.
The presentation of non-current assets is based on the geographical location of the assets.
Australia
United States of America
United Kingdom
Other geographical locations2
Total geographical non-current assets
Other non-current assets3
Consolidated non-current assets
Non-current assets
2023
$M
1,974.7
2,227.0
136.8
282.8
2022
$M
2,041.2
2,113.5
146.0
154.3
4,621.3
4,455.0
232.8
219.0
4,854.1
4,674.0
2. Other than Australia, United States of America and the United Kingdom, non-current assets of other countries are individually less than 10% of the Group’s non-current assets.
3. Other non-current assets include financial derivative assets and deferred tax assets.
88
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Earnings
For the year ended 30 June 2023
Note 3 - Revenue
Revenue
Net sales revenue1
Other revenue
Total revenue
1. Net sales revenue is net of trade discounts and volume rebates.
Net sales revenue – types of products
The Group generates revenue through the sale of branded
wines, principally as a finished, bottled product. The Group’s wine
portfolio includes some of the world’s leading Luxury, Premium and
Commercial wine brands such as Penfolds, Beringer, Lindeman’s,
Wolf Blass, 19 Crimes, Beaulieu Vineyard, Sterling Vineyards and
Stags’ Leap.
The Group distributes wine to a range of customers across the
world, with routes to market tailored by country. Depending on
the geography, wine is sold to distributors, wholesalers, direct
to national retail chains, independent retailers and on-premise
outlets. The Group also has some sales direct to the consumer.
Other revenue
Other revenue of the Group includes contract bottling services to
third parties, sub-lease income and grape and bulk wine sales.
Sales approach
For F23, the Group had no customers whose revenues represented
more than 10% of reported net sales revenue. For F22, there was one
customer in Treasury Americas whose revenues represented 11.4%
of reported net sales revenue.
Financing components
The Group does not have any contracts where the period between
the transfer of the promised product or services to the customer
and payment by the customer exceeds one year. Consequently,
the Group does not adjust any of the transaction prices for the time
value of money.
2023
$M
2022
$M
2,423.0
2,476.7
65.3
2,488.3
55.1
2,531.8
Accounting policies
Revenue is measured based on the consideration specified
in a contract with a customer and excludes amounts
collected on behalf of third parties. The Group’s contracts with
customers generally include one performance obligation.
Revenue from the sale of products or services is recognised
at the point in time when control over a product or service is
transferred to the customer, generally on delivery. Revenue
is recorded net of sales discounts and rebates, duties and
taxes. Payment terms vary by customer. The following specific
criteria are also applied:
Wine
Revenue is recognised in a manner that depicts transfer of
control of goods to customers at the amount that reflects
the consideration the business expects to be entitled to in
exchange for those goods. Sales to national retail chains,
domestic distributors, independent retailers and on-premise
outlets are usually recognised when goods are delivered.
Sales to international customers are recognised based on the
international commercial terms the goods are shipped under,
but typically when goods are despatched. This is also the
case for some national retail chains that manage their own
distribution networks.
Bottling services
Revenue is recognised when the relevant service has
been completed.
Key estimate and judgement
Trade discounts and volume rebates
Products are often sold with volume discounts and other
rebates. Sales are recorded based on the consideration
specified in the sales contracts or terms, net of the estimated
discount or rebate at the time of sale. These discounts or
rebates are considered variable consideration and are
accounted for in determining the transaction price of
a contract. The method used by the Group to estimate
discounts and rebates is the most likely amount. Accumulated
experience is used to estimate and provide for the discounts
and rebates based on anticipated purchases and depletions.
89
TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: Earnings
For the year ended 30 June 2023
Note 4 - Other earnings disclosures
Net foreign exchange gains/(losses)
Salaries and wages expense
Costs associated with cloud computing arrangements
Share based payments expense
Items recognised as material items – refer note 5
Restructuring and redundancy costs
(Write-down)/reversal of write-down of assets
Net profit/(loss) on sale of property, plant and equipment
Transaction and integration costs
Other items
Restructuring and redundancy costs
Insurance income
Net profit on sale of property, plant and equipment
2023
$M
0.5
2022
$M
(0.6)
(386.5)
(342.8)
(9.9)
(13.8)
(82.6)
(55.2)
34.4
(5.8)
(0.3)
22.7
7.3
(7.2)
(10.4)
(9.0)
(3.2)
(20.5)
(12.8)
(0.5)
15.4
0.9
Total other gains and (losses)
(79.5)
(29.7)
Accounting policies
Employee benefits
Employee benefits include wages, salaries, annual leave, bonuses, non-monetary benefits and share based payment expenses.
Further details of Group policy on measuring employee benefits are set out in note 16.
Superannuation
Employees are members of defined contribution superannuation schemes. Superannuation contributions are recognised as an
expense when they are due and payable.
Property, plant and equipment income
Revenue from the sale of property, plant and equipment is recognised when an executed contract becomes unconditional.
Other income
Revenue is recognised on an accruals basis in accordance with the substance of the relevant agreements.
Insurance income
Revenue is recognised when recovery is virtually certain.
90
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Earnings
For the year ended 30 June 2023
Note 5 - Material items
The following individually material items are included within the consolidated statement of profit or loss and other comprehensive income.
Individually material items included in profit before income tax:
Treasury Premium Brands operating model restructure
Restructuring and redundancy (costs)
(Write-down)/reversal of write-down of property, plant and equipment
(Write-down)/reversal of write-down of intangible assets
Divestment of US brands and assets
Restructuring and redundancy (costs)
(Write-down)/reversal of write-down of intangible assets
Net profit/(loss) on sale of property, plant and equipment
South Australian luxury winery expansion
Restructuring and redundancy (costs)
(Write-down)/reversal of write-down of assets
Supply chain restructure
Restructuring and redundancy (costs)
Acquisition of Frank Family Vineyards
Transaction and integration (costs)
Acquisition of Château Lanessan
Transaction and integration (costs)
Total material items (before tax)
Tax effect of material items
Total material items (after tax)
2023
$M
(72.9)
(40.9)
(14.3)
(0.2)
-
34.4
-
-
2022
$M
-
-
-
(0.4)
(5.3)
(20.5)
(4.5)
2.1
(9.5)
(4.1)
(0.4)
(12.8)
(5.4)
(109.2)
33.2
(76.0)
-
(45.5)
10.5
(35.0)
In F23, material items reflect costs relating to the implementation of the new Treasury Premium Brands operating model, the review and
restructure of commercial operations and assets in the Americas, the acquisition of Frank Family Vineyards in the Americas and costs
related to the acquisition of Château Lanessan.
In F22, material items reflect costs relating to the acquisition of Frank Family Vineyards in the Americas, the restructure and review of
commercial operations and assets in the Americas, the costs pertaining to the long-term investment in luxury winemaking infrastructure
in South Australia, and costs relating to the Group’s supply chain restructure.
Material items
Material items are defined as those items of income or expense which have been determined as being sufficiently significant by their
size, nature or incidence and are disclosed separately to assist in understanding the Group’s financial performance.
91
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Earnings
For the year ended 30 June 2023
Note 6 - Dividends
Dividends declared and paid on ordinary shares
Final dividend for 2022 of 16.0 cents per share, 100% franked (2021: 13.0 cents per share, 100% franked)A
Interim dividend for F23 of 18.0 cents per share 100% franked (F22: 15.0 cents per share – 100% franked)B
Dividends approved after balance date
Since the end of the financial year, the Directors approved a final dividend of 17 cents per share
(F22: 16.0 cents) 100% franked (F22: 100% franked). This dividend has not been recognised as a liability in the
consolidated financial statements at year-end.
2023
$M
115.5
129.9
285.4
122.7
2022
$M
93.8
108.3
202.1
115.5
A. The F22 final dividend includes an amount of $5.1 million (F21 final dividend: $4.0 million) for shares issued under the Dividend Reinvestment Plan which were fulfilled by on market share purchase.
B. The F23 interim dividend includes an amount of $6.8 million (F22 interim dividend: $5.0 million) for shares issued under the Dividend Reinvestment Plan which were fulfilled by on market share purchase.
Details in relation to franking credits are included in note 24.
Note 7 - Earnings per share
Basic EPS
Basic EPS (cents) based on net profit attributable to members of Treasury Wine Estates Limited
Diluted EPS
Diluted EPS (cents) based on net profit attributable to members of Treasury Wine Estates Limited
Weighted average number of shares
Weighted average number of ordinary shares on issue used in the calculation of basic EPS
(in thousands)
Effect of potentially dilutive securities
Deferred shares (in thousands)
Weighted average number of ordinary shares on issue used in the calculation of diluted EPS
(in thousands)
Earnings reconciliation
Basic and diluted EPS
Net profit
Net profit attributable to non-controlling interests
Net profit attributable to members of Treasury Wine Estates Limited used in calculating basic
and diluted EPS
Calculation of earnings per share
Earnings per share (EPS) is the amount of post-tax profit attributable to each share.
2023
2022
Cents per share
Cents per share
35.3
36.5
35.1
36.3
Number
Number
721,848
721,848
3,612
3,233
725,460
725,081
$M
254.3
0.2
$M
263.2
-
254.5
263.2
Basic EPS is calculated by dividing the net profit after income tax attributable to ordinary shareholders by the weighted average number
of ordinary shares outstanding during the year.
Diluted EPS is determined by dividing the profit attributable to ordinary shareholders after tax by the weighted average number
of ordinary shares outstanding during the period, adjusted for the effects of dilutive potential ordinary shares in the employee.
Long-Term Incentive Plan and Restricted Equity Plan (see note 22).
92
TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: Earnings
For the year ended 30 June 2023
Note 8 - Net cash flows from operating activities
Reconciliation of net cash flows from operating activities to profit after income tax
Profit for the year
Depreciation and amortisation
SGARA (gain)/loss
Write-down/ (reversal of write-down) of assets
Net profit on disposal of non-current assets
Share based payments expense
Net cash provided by operating activities before change in assets and liabilities
Change in working capital and tax balances, net of effects from acquisition/disposal of
controlled entities
Receivables
Inventories
Derivative financial assets/liabilities
Payables
Net tax balances
Provisions
Net cash flows from operating activities
2023
$M
254.3
147.4
64.5
55.2
(41.7)
13.8
493.5
(38.8)
(132.5)
9.0
(69.9)
(13.0)
23.7
272.0
2022
$M
263.2
148.6
33.9
3.2
10.9
10.4
470.2
88.7
(21.7)
(4.6)
43.2
14.3
(28.1)
562.0
93
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Working capital
For the year ended 30 June 2023
Note 9 - Working capital
Current
Cash and cash equivalents
Receivables (a)
Inventories (b)
Trade and other payables
Total current
Non-current
Inventories (b)
Total non-current
(a) Receivables
Current
Trade receivables
Allowance for expected credit loss
Other receivables
Prepayments
Total current receivables
(b) Inventories
Current
Raw materials and stores
Work in progress
Finished goods
Total current inventories
Non-current
Work in progress
Finished goods
Total non-current inventories
Total inventories
2023
$M
565.8
607.3
990.3
2022
$M
430.5
564.4
947.9
(709.7)
(747.2)
1,453.7
1,195.6
1,175.3
1,175.3
1,063.6
1063.6
2023
$M
448.6
(7.7)
99.7
66.7
2022
$M
427.2
(7.3)
95.2
49.3
607.3
564.4
2023
$M
67.7
253.6
669.0
990.3
872.8
302.5
1,175.3
2,165.6
2022
$M
60.8
345.0
542.1
947.9
815.5
248.1
1,063.6
2,011.5
Inventories of wine stocks are classified between current and non-current based on sales projections for the ensuing year. Inventories
recognised as an expense during the year and included in cost of sales amounted to $1,314.3 million (F22: 1,402.9 million).
In F23, the write-down of inventories to net realisable value is $16.9 million (F22: $22.8 million). Reversals of write-downs amounted to nil (F22: nil).
These amounts are included in cost of sales.
94
TREASURY WINE ESTATES ANNUAL REPORT 2023 TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: Working capital
For the year ended 30 June 2023
Note 9 - Working capital (continued)
Accounting policies
Key estimates and judgements
Cash and cash equivalents
Trade discounts and volume rebates
Cash and cash equivalents consist of cash on hand, deposits
Key estimates relate to the amount accrued for discounts
held at call with banks, cash in transit, short-term deposits and
and rebates. Products are often sold with trade discounts
investments with maturities of three months or less.
and volume rebates. Sales are recorded based on the
price specified in the sales contracts or terms, net of the
Cash assets and cash liabilities are offset and presented as a
estimated discount or rebate at the time of sale. Accumulated
net amount in the consolidated statement of financial position
experience is used to estimate and provide for the discounts
when the Group has a legally enforceable right to offset or
and rebates based on anticipated purchases and depletions.
intent to settle on a net basis.
For the purposes of the consolidated statement of cash flows,
The period over which some wine inventories are converted
cash and cash equivalents are disclosed net of outstanding
from raw materials to finished goods can be a significant
Net realisable value of inventory
bank overdrafts.
Receivables
length of time. Failure to forecast demand effectively may
result in excess inventories or missed revenue opportunities.
Trade receivables are initially recognised at invoice value (fair
Forecast demand and market prices can vary significantly
value) and subsequently measured at amortised cost, less an
over the holding period up to the likely date of sale. Estimating
allowance for expected credit losses.
the most likely conditions at the expected point of sale is
therefore more challenging over the longer term. Non-current
Credit terms are generally between 30 – 120 days depending
inventory is $1,175.3 million (F22: $1,063.6 million) and its
on the nature of the transaction. For trade receivables,
estimated selling price is therefore a key estimate.
the Group applies the simplified approach for expected
credit losses, which requires expected lifetime losses to be
recognised from initial recognition of receivables. Expected
credit losses are calculated by utilising a provision matrix
where loss rates are calculated based on days past due for
groupings of various customer segments that have similar
loss patterns (for example geography, product type and
rating). The provision matrix is initially determined by the
Group’s historical observed loss rates and calibrated for
forward looking information. Loss rates will be updated at each
reporting date based on changes in observed default rates
and changes in forward looking information.
Inventories
Inventories are valued at the lower of their cost (using
weighted average or FIFO basis) or estimated net realisable
value.
The cost of raw materials is their purchase price or, in the case
of grapes sourced from Group owned vineyards, fair value
(see note 12 for further details). The cost of manufactured
goods is determined on a consistent basis and is made up
of the raw materials and direct labour used in manufacture.
It also includes other direct costs and related production
overheads based on normal operating capacity.
Net realisable value represents the estimated selling price
in the ordinary course of business less estimated costs of
completion and estimated costs to be incurred in marketing,
selling and distribution.
Trade and other payables
Trade and other payables including accruals are recorded
when the Group is required to make future payments as a
result of purchases of goods or services. Trade and other
payables are carried at amortised cost.
95
TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: Operating assets and liabilities
For the year ended 30 June 2023
Note 10 - Property, plant and equipment
Land
2022
$M
2023
$M
Freehold
buildings
Leasehold
buildings
Plant and
equipment
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
Total
2022
$M
Cost
475.9
442.8
544.4
540.2
45.1
43.8
1,783.5
1,867.7
2,849.9
2894.5
Projects in progress
-
-
-
-
-
-
72.6
91.4
72.6
91.4
Accumulated depreciation and
impairment
(29.4)
(39.4)
(223.9)
(238.9)
(25.1)
(27.6)
(1,066.3)
(1,158.5) (1,344.7) (1,464.4)
Carrying amount at end of year
446.5
403.4
320.5
301.3
20.0
16.2
789.8
800.6
1,576.8
1,521.5
Reconciliations
Carrying amount at start of year
403.4
305.6
301.3
260.6
16.2
15.8
800.6
740.5
1,521.5
1,322.5
Additions
Business acquisition
(Transfer to)/from
assets held for sale
133.6
19.8
6.5
94.3
(121.4)
(6.8)
13.7
23.4
(1.1)
(Transfer to)/from other asset
classes
1.6
-
(8.0)
10.2
32.9
-
-
-
-
-
6.3
Disposals
(1.4)
(9.0)
(0.1)
(4.2)
(0.2)
(6.2)
-
(0.1)
(Write-downs)/write-downs
reversal
Depreciation expense
Foreign currency translation
(0.7)
-
11.6
-
-
1.2
96.3
1.9
84.5
23.9
243.6
102.4
45.1
151.1
(15.6)
(5.3)
(138.1)
(12.1)
(0.4)
8.0
(0.5)
8.0
(17.0)
(12.7)
(18.7)
(25.9)
(33.9)
-
(40.9)
-
-
-
-
-
-
(11.2)
(8.7)
(2.7)
(1.9)
(61.9)
(65.7)
(75.8)
(76.3)
12.8
8.7
10.5
0.5
1.1
19.8
27.4
40.6
51.8
Carrying amount at end of year
446.5
403.4
320.5
301.3
20.0
16.2
789.8
800.6
1,576.8
1,521.5
Included within plant and equipment are ‘Projects in progress’ of $72.6 million (F22: $91.4 million), which are assets under construction and
therefore not yet depreciated. The cost of construction includes the cost of materials used in construction, direct labour on the project, and an
allocation of overheads. The Group recognised a write down of $40.9 million (F22: nil write-downs) for property, plant and equipment during
the year.
96
TREASURY WINE ESTATES ANNUAL REPORT 2023 Note 10 - Property, plant and equipment
Note 10 – Property, plant and equipment (continued)
Notes to the consolidated financial statements: Operating assets and liabilities
For the year ended 30 June 2023
Accounting policies
Property, plant and equipment is initially recorded at cost and then reduced by accumulated depreciation and any impairment losses.
Plant and equipment is depreciated so that the assets are written down to their residual value over their useful lives, using a reducing
balance or straight-line method depending on the nature of the asset. Assets that relate to leases are written-off over the period of
the lease or useful life, whichever is the shorter. Residual values, useful lives and amortisation methods are reviewed annually and
adjusted when required.
Depreciation expense is included in ‘costs of sales’, ‘selling expenses’ and ‘administration expenses’ in the consolidated statement of
profit or loss and other comprehensive income.
The depreciation rates used for each class of asset are as follows:
Freehold buildings
Leasehold buildings
1.5% - 10.0%
10.0% - 20.0%
Plant and equipment
3.3% - 40.0%
Costs incurred in maintaining agricultural assets are recognised as an expense as incurred.
Derecognition and disposal
When an asset is sold, scrapped or is no longer of use to the business it is derecognised. Any gain or loss arising on derecognition of
the asset (calculated as the difference between the net proceeds and the carrying amount of the asset) is recorded in the period the
asset is derecognised in the consolidated statement of profit or loss and other comprehensive income.
Vineyard resources
Australia
United States
New Zealand
Italy
France
2023
Hectares
2022
Hectares
6,859
2.393
505
185
175
10,117
7,857
2,702
505
154
90
11,308
The area under vine shown above:
•
•
•
Includes 2,719 hectares (F22: 3,000 hectares) under direct leasing arrangements.
19 hectares (F22: 10 hectares) of olive groves in Tuscany, a region of Italy.
Yielded 68,026 tonnes of grapes (F22: 90,002 tonnes).
Harvests generally occur in September - October in the Northern Hemisphere and February - May in the Southern Hemisphere.
97
TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: Operating assets and liabilities
For the year ended 30 June 2023
Note 11 – Right-of-use assets
The Group has leases for vineyards, buildings, equipment and motor vehicles. The Group’s lease arrangements have durations up to 25 years
but may have extension options as described in (d) below.
The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-term leases, including IT
equipment and oak barrels. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over
the lease term.
(a) Right-of-use assets
Land
2022
$M
2023
$M
Leasehold
buildings
Plant and
equipment
2023
$M
2022
$M
2022
$M
2023
$M
2023
$M
39.2
Total
2022
$M
Cost
469.5
483.9
256.3
259.2
39.4
765.0
782.5
Accumulated depreciation and impairment
(225.2)
(209.0)
(131.2)
(116.1)
(18.9)
(22.1)
(375.3)
(347.2)
Carrying amount at end of year
244.3
274.9
125.1
143.1
20.3
17.3
389.7
435.3
Reconciliations
Carrying amount at start of year
274.9
278.3
148.1
155.3
Additions
DisposalsA
8.7
5.8
9.1
(20.5)
(4.2)
(7.7)
2.3
-
17.3
10.1
-
14.8
9.5
435.3
448.4
27.9
-
(28.2)
17.6
(4.2)
Depreciation and impairment expense
(26.7)
(26.3)
(22.3)
(21.9)
(7.8)
(7.5)
(56.8)
(55.7)
Foreign currency translation
Carrying amount at end of year
7.9
21.3
244.3
274.9
2.9
125.1
7.4
143.1
0.7
20.3
0.5
17.3
11.5
29.2
389.7
435.3
A. During F23 the Group purchased and subsequently sold a number of vineyard assets that were previously subject to long term lease arrangements, as a part of the ongoing restructure of supply
assets in America.
(b) Amounts recognised in the statement of profit or loss and other comprehensive income
Interest expense on lease liabilities
Expenses relating to low-value leases, excluding short-term leases of low-value items
Expenses relating to short-term leases
(c) Amounts recognised in statement of cash flows
Total cash out flow for lease liabilities
(d) Extension options
2023
$M
30.1
31.5
0.1
2023
$M
88.0
2022
$M
32.5
35.1
0.1
2022
$M
86.1
Some property and vineyard leases contain extension options exercisable by the Group up to the end of the non-cancellable contract period.
These options are used to provide operational flexibility across the Group. The extension options held are exercisable only by the Group and
not the lessors. The Group has estimated that the potential future lease payments, should it exercise the extension option, would result in an
increased lease liability of $577.4 million (F22: $869.0 million).
(E) Variable lease payments
Variable lease payments not included in lease liabilities
2023
$M
128.4
2022
$M
119.7
98
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Operating assets and liabilities
For the year ended 30 June 2023
Note 11 – Right-of-use assets (continued)
Certain contractual arrangements may contain both lease and
and other operating expenses associated with leased assets. Certain
non-lease components. Non-lease components are distinct elements
grape purchasing arrangements include variable payments based
of a contract that are not related to securing the use of the leased
on actual tonnage and price of grapes that will vary depending on
asset, such as inventory, common area maintenance, and other
certain factors, including weather, time of harvest, overall market
management costs. The Group has elected to measure the amount
conditions, and the agricultural practices and location of the vineyard.
disclosed in relation to variable leases for these arrangements by
combining the lease and non-lease components.
Such variable lease payments are excluded from the calculation of
the right-of-use asset and are recognised in the period in which the
Certain leases include variable lease payments, including payments
obligation is incurred.
that depend on an index or rate, as well as variable payments for
items such as grapes, labour, property taxes, insurance, maintenance,
Accounting policies
At inception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or contains,
a lease if the contract conveys the right to control the use
of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right
to control the use of an identified asset, the Group uses the
definition of a lease in AASB 16 Leases.
The Group recognises a right-of-use asset and a lease liability
at the lease commencement date. The right-of-use asset is
initially measured at cost, which comprises the initial amount
of the lease liability adjusted for any lease payments made at
or before the commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and remove
the underlying asset or to restore the underlying asset or the
site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the
end of the lease term, unless the lease transfers ownership of
• amounts expected to be payable under a residual value
guarantee; and
•
the exercise price under a purchase option that the Group is
reasonably certain to exercise, lease payments in an
optional renewal period if the Group is reasonably certain
to exercise an extension option, and penalties for early
termination of a lease unless the Group is reasonably
certain not to terminate early.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a
change in future lease payments arising from a change in an
index or rate, if there is a change in the Group’s estimate of
the amount expected to be payable under a residual value
guarantee, if the Group changes its assessment of whether it
will exercise a purchase, extension or termination option or if
there is a revised in-substance fixed lease payment.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount
of the right-of-use asset, or is recorded in profit or loss if the
carrying amount of the right-of-use asset has been reduced
the underlying asset to the Group by the end of the lease term
to zero.
or the cost of the right-of-use asset reflects that the Group
will exercise a purchase option. In that case the right-of-use
asset will be depreciated over the useful life of the underlying
asset, which is determined on the same basis as those of
property, plant and equipment. In addition, the right-of-use
asset is periodically reduced by impairment losses, if any, and
adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of
the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease
or, if that rate cannot be readily determined, the Group’s
incremental borrowing rate.
The Group determines its incremental borrowing rate by
obtaining interest rates from various external financing
sources and makes certain adjustments to reflect the terms of
the lease and type of the asset leased.
Lease payments included in the measurement of the lease
liability comprise the following:
• fixed payments, including in-substance fixed payments;
• variable lease payments that depend on an index or
a rate, initially measured using the index or rate as at the
commencement date;
The Group presents right-of-use assets as ‘right-of-use
assets’ and lease liabilities in ‘borrowings’ in the consolidated
statement of financial position.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets
and lease liabilities for leases of low-value assets and
short-term leases, including IT equipment and oak barrels.
The Group recognises the lease payments associated with
these leases as an expense on a straight-line basis over the
lease term.
Key estimates and judgements
Right-of-use assets
The Group has applied judgement in determining the interest
rates used in the discount rate and in determining the term of
a lease, which is based on the likelihood of the Group’s ability
to renew the lease and having regard for terms equivalent to
those that currently exit.
99
TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: Operating assets and liabilities
For the year ended 30 June 2023
Note 12 - Agricultural assets
Agricultural assets
Total agricultural assets
Reconciliations
Carrying amount at start of year
Fair value increase
Transfers to inventory
Foreign currency translation
Carrying amount at end of year
2023
$M
44.8
44.8
32.9
43.7
(32.9)
1.1
44.8
2022
$M
32.9
32.9
33.8
30.8
(33.8)
2.1
32.9
Grape growing and sourcing
The Group has a variety of sources of fruit including owned and leased vineyards, contracted growers and the bulk wine market.
This approach provides flexibility through the economic cycle and assists with managing the risks arising from agricultural factors beyond the
Group’s control such as pests, disease and extreme weather conditions.
The Group’s owned vineyards ensure access to super premium fruit from key viticultural regions including the Barossa Valley and Coonawarra
in Australia, Marlborough in New Zealand, the Napa Valley in California and the Bordeaux region of France. These vineyards contribute to some of
the Group’s most prestigious wines.
Accounting policies
Key estimates and judgements
The agricultural assets of the Group (i.e. grapes) are measured
Fair value of grapes
at their fair value, less estimated point of sale costs.
Key to estimating the value of grapes is the following:
The fair value adjustment during the year is recognised within
• The estimated harvest costs;
‘Other expenses’ in the consolidated statement of profit or loss
• Market prices for grapes; or
• Yield estimates;
and other comprehensive income.
• The quality of grapes, including the impacts on harvested
grapes of weather, agricultural practices and location of
Harvested grapes are transferred to inventory initially at fair
the vineyard.
value and are then subsequently accounted for in the cost of
inventory (see note 9).
Fair value determination
The valuations of agricultural assets are Level 2 fair value
measurements under the Group’s accounting policy
(see note 1), with the principal inputs being:
Grapes prior to harvest
Estimated based on the expected yields per hectare,
estimated harvest costs and the anticipated market price of
grapes..
Harvested grapes
Determined by reference to the weighted district average of
grape prices for each region for the current vintage. Prices
vary with the grade quality of grapes produced in each region.
100
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Operating assets and liabilities
For the year ended 30 June 2023
Note 13 - Intangible assets
Brand names
and licences
IT development
costs
Goodwill
Total
2023
$M
2022
$M
2023
$M
Cost
1,646.4
1,605.0
145.8
Projects in progress at cost
-
-
2.5
2022
$M
130.5
10.1
2023
$M
2022
$M
2023
$M
2022
$M
989.9
963.6
2,782.1
2,699.1
-
-
2.5
10.1
Accumulated amortisation and
impairment
(617.4)
(582.5)
(114.4)
(100.3)
(626.1)
(626.6)
(1,357.9)
(1,309.4)
Carrying amount at end of year
1,029.0
1,022.5
33.9
40.3
363.8
337.0
1,426.7
1,399.8
Reconciliations
Carrying amount at start of year
1,022.5
825.3
Additions
Business acquisitions
Disposal
(Transfers to)/from
other assets classes
-
1.6
-
-
Amortisation and impairment expense
(16.9)
Foreign currency translation
21.8
-
162.2
(0.8)
-
(2.1)
37.9
Carrying amount at end of year
1,029.0
1,022.5
33.9
40.3
5.4
-
-
52.7
9.8
-
-
0.4
(8.0)
(12.2)
(14.5)
0.3
40.3
337.0
277.5
1,399.8
1,155.5
-
17.3
-
-
-
9.5
-
59.0
-
-
(5.3)
5.8
5.4
18.9
-
0.4
(29.1)
31.3
9.8
221.2
(0.8)
(8.0)
(21.9)
44.0
363.8
337.0
1,426.7
1,399.8
Goodwill is allocated to the Cash Generating Units (CGUs) or group of CGUs (see note 15 for further details) that are expected to benefit from the
synergies of the combination. The allocation of intangible assets (other than IT development costs) is as follows:
Treasury Premium
Brands
Penfolds
Treasury Americas
Total
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
2022
$M
Goodwill
Carrying amount at start of year
114.5
115.4
Business acquisitions
Impairment
Foreign currency translation
Carrying amount at end of year
-
-
1.6
116.1
-
-
(0.9)
114.5
91.1
17.3
-
2.6
111.0
90.4
0.8
-
(0.1)
91.1
131.4
-
-
5.3
136.7
71.7
58.2
(5.3)
6.8
131.4
337.0
17.3
-
9.5
363.8
277.5
59.0
(5.3)
5.8
337.0
Brand names and licences
Carrying amount at start of year
265.2
265.8
221.3
221.2
536.0
338.3
1,022.5
825.3
Business acquistions
Disposal
-
-
Amortisation and impairment expense
(15.8)
Foreign currency translation
0.3
-
-
(1.6)
1.0
1.6
-
-
0.1
-
-
-
0.1
-
-
(1.1)
21.4
162.2
(0.8)
(0.5)
36.8
1.6
-
(16.9)
21.8
162.2
(0.8)
(2.1)
37.9
Carrying amount at end of year
249.7
265.2
223.0
221.3
556.3
536.0
1,029
1.022.5
101
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Operating assets and liabilities
For the year ended 30 June 2023
Note 13 - Intangible assets (continued)
Key estimates and judgements
Useful life of brand names
In assessing whether a brand has a finite or indefinite useful
life, the Group makes use of information on the long-term
strategy for the brand, the level of growth or decline of the
markets that the brand operates in, the history of the market
and the brand’s position within that market.
If a brand is assessed to have a finite life, the Group will use
judgement in determining the useful life of the brand including
the period over which expected cash flows will continue to be
derived in making that decision.
Accounting policies
Brand names and licences
IT development and software
Other than in relation to Software-as-a-Service (“SaaS”)
arrangement, costs incurred in developing information
technology (IT) products or systems and costs incurred in
acquiring software and multi-year licenses are capitalised
as intangible IT assets. They include the cost of purchased
software and internal labour and contractors used in the
development of software.
IT assets are carried at cost less any accumulated
amortisation and are amortised over their expected useful life
(2 -10 years) on a straight-line basis. Amortisation is included
in ‘Other expenses’ in the consolidated statement of profit or
loss and other comprehensive income.
SaaS arrangements are service contracts providing the Group
with the right to access the cloud provider’s application
software over the contract period. The following outlines the
Brand names are recognised as assets when purchased
accounting treatment of implementation costs incurred in
individually and (primarily) as part of the allocation of the
relation to SaaS arrangements:
purchase price when the Group acquires other businesses.
Internally generated brand names are not capitalised and
expenditure incurred in developing, maintaining or enhancing
brand names is charged to profit or loss in the year incurred.
Recognise as an operating
expense over the term of the
service contract
Brand names are initially recognised at cost when purchased
individually and at fair value when acquired with a business.
This fair value is determined by reference to independent
valuations.
Recognise as an operating
expense as the service is
received
• Fee for use of application
software
• Customisation costs only
when ‘not distinct’ and
undertaken by SaaS vendor
• Configuration costs
• Data conversion and testing
• Testing costs
• Training costs
Following initial recognition, intangible assets are carried
at cost less any accumulated amortisation and any
Costs incurred for the development of software code that
accumulated impairment losses.
Goodwill
enhances or modifies, or creates additional capability to,
existing on-premise systems and meets the definition of and
recognition criteria for an intangible asset are recognised as
Goodwill arises on the acquisition of businesses and
intangible IT assets.
represents the difference between the purchase price and
share of the net assets of the acquired business, recorded at
fair value.
Following initial recognition, goodwill is measured at cost
less any accumulated impairment losses. Goodwill is not
amortised but is tested for impairment at least annually (see
note 15).
102
TREASURY WINE ESTATES ANNUAL REPORT 2023 Note 14 - Assets and disposal groups held for sale
Assets and disposal groups held for sale
Total assets and disposal groups classified as held for sale
2023
$M
32.9
32.9
2022
$M
35.6
35.6
Assets held for sale comprise property, plant and equipment identified by the Group to be recovered through sale.
Management are committed to a plan to sell a number of surplus assets in Australia, including vineyards and wine making facilities, as well as
the related property, plant and equipment. Accordingly, the vineyards and facilities have been presented as assets held for sale.
Impairment losses relating to the asset and disposal group
Impairment losses of nil (F22: nil) for the write down of the asset and disposal group to the lower of its carrying amount and its fair value less
costs to sell have been included in “other expenses” in the consolidated statement of profit or loss and other comprehensive income. Refer to
note 4 for other earnings disclosures.
Accounting policies
Non-current assets are classified as held for sale if their value will be recovered principally through their sale, rather than through
ongoing use within the business.
Assets are not depreciated or amortised while they are classified as held for sale. They are valued at the lower of their carrying
amount and fair value less costs to sell with an impairment loss recognised for any difference. A gain is recognised for any
subsequent increase in value, but not in excess of any cumulative impairment loss previously recognised. Any gain or loss not
previously recognised by the date of the sale of the non-current asset is recognised at that point. The fair values of the assets based
on independent market appraisals exceed the assets’ carrying values.
Note 15 - Impairment of non-financial assets
In F23 the recoverable amounts of cash generating units (CGUs)
exceed their carrying values and as a result no impairment
has been recognised (F22: nil). There were no indications that
The Group’s CGUs are consistent with the prior period and are:
• Penfolds Americas
• Penfolds ANZ
• Penfolds EMEA
previously recognised impairment losses should be reversed (F22:
• Treasury Americas
nil). The recoverable amount was determined through a value in
• Treasury Premium Brands ANZ
use calculation. The write down of assets disclosed in note 4 relates
• Treasury Premium Brands EMEA
to assets for which their valuation was tested independently of the
• Goodwill is tested for impairment at a divisional level, which is
CGUs in accordance with other accounting policies.
the level it is monitored at.
Accounting policies
Timing of impairment testing
The Group tests property, plant and equipment and intangible
assets for impairment:
• At least annually for goodwill and indefinite life brands; and
• Where there are indications that an asset may be
impaired; or
• Where there is an indication that previously recognised
impairments may have changed.
Impairment losses are recognised in the consolidated statement
of profit or loss and other comprehensive income.
Approach to impairment testing
If the asset does not generate independent cash inflows and
its value in use cannot be estimated to be close to its fair value,
the asset is tested for impairment as part of the CGU to which it
belongs.
When an asset’s (or CGU’s) carrying value exceeds its recoverable
amount, it is impaired. Recoverable amount is the higher of the
asset’s (or CGU’s) fair value less costs of disposal or value in use.
Fair value is determined in accordance with the accounting policy
set out in note 1.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a discount rate that
reflects current market assessments of the time value of money
and the risks specific to the asset or CGU.
Reversals of impairment
If there is an indicator that a previously recognised impairment
loss no longer exists or has decreased, recoverable amount is
estimated. If there has been a change in the estimates used to
determine an asset’s recoverable amount since an impairment
loss was recognised, the carrying value of the asset is increased
to its recoverable amount (limited to the amount that would have
been determined, net of depreciation, had no impairment loss
been recognised for the asset in prior years).
Any reversal is recognised in the consolidated statement of profit
or loss and other comprehensive income with an adjustment
to depreciation in future periods to allocate the asset’s revised
carrying value, less any residual value, on a systematic basis over
its remaining useful life. The Group does not reverse impairments
recognised for goodwill.
103
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Operating assets and liabilities
For the year ended 30 June 2023
Note 15 - Impairment of non-financial assets (continued)
Key estimate and judgement
Exchange rates
Impairment testing key assumptions
The Group has estimated recoverable amount based on value
in use at 30 June 2023. Key estimates and judgements include:
Cash flow forecasts
Cash flow forecasts are based on the Group’s most recent
five-year financial plans approved by the Board. Key
Cash flow forecasts in foreign currency are forecast in that
currency and discounted using the applicable regional
discount rates (predominantly USD and GBP).
Sensitivity analysis
Increases in discount rates or changes in other key
assumptions, such as operating conditions or financial
performance, may cause the recoverable amount to fall below
assumptions in the cash flow forecasts include sales volume
carrying values.
growth, cost of sales and cost of doing business.
For the TPB division, the recoverable amount exceeds the
carrying value by $186 million. A reduction in cash flow
forecasts of more than 26% for all years in the forecast
period and also in the terminal year would reduce the CGU’s
headroom to nil. There are no reasonably possible changes in
the discount rate that would result in an impairment.
For the remaining CGUs, based on current economic
conditions and CGU performance, there are no reasonably
possible changes to key assumptions used in the
determination of CGU recoverable amounts that would result
in an impairment to the Group.
The Group’s assumptions regarding sales volume growth
and costs of doing business are based on expectations of the
market demand and past experience. The assumption on cost
of sales is based on expectation about future vintage costs
which assume continuity of sourcing and access to fruit.
These estimates, judgements and assumptions are based on
forecasts of economic conditions which reflect expectations
and assumptions as at 30 June 2023 about future events that
the Directors believe are reasonable in the circumstances.
Long-term growth rates
Cash flow forecasts beyond a five-year period are
extrapolated using a growth rate range of 2.0% to 3.0% (F22:
2.0% to 3.0%). Growth rates are specific to individual CGUs and
reflect expected future market and economic conditions.
Discount rates
The Group applies a post-tax discount rate to post-tax cash
flows as the valuation calculated using this method closely
approximates applying pre-tax discount rates to pre-tax
cash flows. The post-tax discount rates incorporate a risk-
adjustment relative to the risks associated with the net post-
tax cash flows being achieved. The following pre-tax discount
rates were applied:
Penfolds Americas
Penfolds ANZ
Penfolds EMEA
Treasury Americas
Treasury Premium Brands ANZ
Treasury Premium Brands EMEA
2023
10.4%
10.4%
9.5%
10.0%
10.7%
10.0%
2022
9.0%
11.1%
10.5%
9.4%
11.1%
10.5%
104
TREASURY WINE ESTATES ANNUAL REPORT 2023
Note 16 - Provisions
Current
Employee entitlements
Other
Total current provisions
Other provisions
2023
Carrying amount at start of year
Charged/(credited) to profit or loss
Payments
Foreign currency translation
Carrying amount at end of year
Supply contracts
Restructuring
$M
1.5
31.5
-
0.1
33.1
$M
4.8
26.2
(8.1)
0.1
23.0
2023
$M
39.2
62.5
101.7
Other
$M
27.2
6.1
(27.6)
0.7
6.4
2022
$M
42.8
33.5
76.3
Total
$M
33.5
63.8
(35.7)
0.9
62.5
Other provisions include $5.2 million (F22: $26.2 million) in relation to estimated repair costs for a winery and vineyards that were damaged by
wildfires in the Americas.
Supply contract provisions are held for contracts that have been identified as being surplus to the Group’s needs. The restructuring provision
comprises costs in relation to the Group’s rationalisation and restructure program.
Accounting policies
Restructuring
Provisions are recognised for present obligations (legal,
equitable or constructive) to make future payments (or other
transfer of value) to other entities due to past transactions
or events. They are recognised only when it is probable the
liability will arise and when a reliable estimate can be made of
the amount.
If the effect of time value of money is material, provisions are
determined by discounting the expected future cash flows
at a pre-tax risk-free rate plus, where appropriate, the risks
specific to the liability. Where discounting is used, the increase
in the provision due to the passage of time is recognised as a
finance cost.
Employee entitlements
Liabilities for employees’ entitlements to wages and salaries,
annual leave and other current employee entitlements (that
are expected to be paid within 12 months) are measured at
amounts expected to be paid as at the reporting date.
Liabilities for other employee entitlements, which are not
expected to be paid or settled within 12 months of reporting
date, are accrued in respect of all employees at the present
value of future amounts expected to be paid.
Restructuring provisions are recognised at the point when
a detailed plan for the restructure has been developed and
implementation has commenced. The cost of restructuring
provided is the estimated future cash flows, discounted at the
appropriate rate which reflects the risks of the cash flow.
Termination benefits are payable when employment is
terminated before the normal retirement date or whenever
an employee accepts voluntary redundancy in exchange for
these benefits. The Group recognises termination benefits
when it is demonstrably committed to either terminating the
employment of a current employee according to a detailed
formal plan without possibility of withdrawal or upon the
provision of an offer to encourage voluntary redundancy.
Supply contracts
Supply contracts provisions are measured at the lower of the
expected cost of terminating the contract and the expected
net cost of continuing with the contract (discounted to present
value if material).
105
TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: Capital structure
For the year ended 30 June 2023
Note 17 - Capital management
The Group considers capital to be the combination of shareholders’
In order to optimise the Group’s capital structure and in line with
equity, reserves and net debt. The key objectives of the Group’s
the Group’s strategic objectives and operating plans, the
approach to capital management include:
Company may:
•
Safeguard the Company’s ability to continue as a going
•
Alter the amount of dividends paid to shareholders;
concern
Return capital to shareholders
• Maintaining a credit profile and the requisite financial metrics
that secures access to funding with a spread of maturity dates
and sufficient undrawn committed facility capacity
•
Optimising over the long term, and to the extent practicable, the
weighted average cost of capital to reduce the Group’s cost of
capital while maintaining financial flexibility
•
•
•
•
Issue new shares
Vary discretionary capital expenditure
Draw-down additional debt
Sell assets to reduce debt.
•
To provide returns to shareholders and benefits to other
stakeholders
Note 18 - Borrowings
Total borrowings consist of:
Current
Non-current
Total borrowings
Various financial ratios and internal targets are assessed and
reported to the Board on a regular basis by management to
monitor and support the key objectives set out above. These ratios
and targets include:
•
•
An earnings to net interest expense ratio
A total net indebtedness to earnings before interest, tax,
depreciation, amortisation and self-generating and regenerating
assets ratio
•
Group debt maturity profile.
2023
$M
250.7
2022
$M
161.5
1,686.9
1,512.2
1,937.6
1,673.7
Details of major arrangements
US Private Placement Notes
USPP notes bear interest at fixed and floating interest rates. In
accordance with the Group’s risk management strategy, the Group
US Private Placement (USPP) notes totalling US$575 million
has entered into a combination of fixed to floating and floating to
(unsecured) are outstanding, with maturities ranging from
fixed interest rate swaps to obtain the desired fixed/floating interest
December 2023 to September 2034. The carrying value of USPP
ratio, with interest rate collars also used to manage interest rate
notes at 30 June 2023 is $868.6 million (F22: $472.2 million).
risk. Refer to note 25 for further details.
In September 2022 the Group issued USPP notes totalling US$250
Lease liabilities
million with tranches of US$175 million maturing September 2032
The Group enters into Lease arrangements that meet the
and US$75 million maturing September 2034.
capitalisation requirements under AASB 16 Leases. Current and
Debt facilities
non-current lease liabilities are recognised for the present value
of the lease payments due under the lease contracts and are
During the year the Group repaid and extinguished US$70 million
represented as borrowings.
of drawn syndicated debt facilities. Syndicated debt facilities now
total US$350 million with US$120 million maturing December 2026
At 30 June 2023, the Group recognised current lease liabilities of
and US$230 million maturing in December 2027 which are fully
$63.8 million (F22: $62.2 million) and non-current lease liabilities of
drawn at 30 June 2023. The carrying value of the syndicated debt
$485.1 million (F22: $546.8 million). The Group’s lease arrangements
facility at 30 June 2023 is $528.7 million (F22: $610.2 million).
have durations up to 25 years.
The Group has in place several revolving bank debt facilities with
maturities staggered through to June 2026. As at 30 June 2023
$10.3 million is drawn under the bank debt facilities (F22: nil).
106
TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: Capital structure
For the year ended 30 June 2023
Note 18 - Borrowings (continued)
Financial guarantees
The Group has issued financial guarantees to other persons of
$28.8 million (F22: $28.4 million) that could be called upon at any
time in the event of a breach of the Group’s financial obligations.
No payments are expected to eventuate under these financial
guarantees as the Group expects to meet its respective obligations
to the beneficiaries of these guarantees.
Receivables purchasing agreement
The Group has entered into an uncommitted non-recourse
receivable purchasing agreement to sell certain domestic and
international receivables, from time to time, to an unrelated entity
in exchange for cash. As at 30 June 2023, receivables of $22.9
million had been derecognised under this arrangement (F22: nil).
Accounting policies
Borrowings are initially recorded at fair value of the
consideration received, net of directly attributable costs.
After initial recognition, borrowings are measured at amortised
cost, using the effective interest rate method. Amortised cost
is calculated by considering any issue costs, and any discount
or premium on issuance. Gains and losses are recognised
in the statement of profit or loss and other comprehensive
income if borrowings are derecognised.
All balances translated to AUD
Net debt
Cash and cash equivalents
Loan receivable
Bank loans1
US Private Placement Notes (net of fair
value hedge)
Lease liabilities
Other loan payable
Net debt
Total cash flows
from activities
$M
2022
$M
Additions to
net debt
$M
Debt
revaluation and
FX movements
$M
430.5
0.4
(603.5)
(472.2)
(609.0)
(0.5)
117.0
5.4
83.9
(377.7)
63.8
-
(1,254.3)
(107.6)
-
-
-
-
16.1
-
16.1
18.3
-
(20.2)
(18.7)
(19.8)
-
(40.4)
2023
$M
565.8
5.8
(539.8)
(868.6)
(548.9)
(0.5)
1,386.2
1.
Loans are stated net of capitalised facility finance costs. At reporting date, the balance of bank loans is $546.3 million (F22: $610.2 million) against capitalised facility finance costs of $6.5 million (F22: $6.7
million) to be amortised over the facility period.
Note 19 - Contributed equity
Issued and paid-up capital
721,848,176 (F22: 721,848,176) ordinary shares, fully paid
Own shares held
Contributed equity at the beginning of the period
Shares movements:
Nil shares issued under the Dividend reinvestment plan (F22: nil)
Nil shares issued for vested Long Term Incentive Plan and Share Cellar plan (F22: nil)
Net movement in own shares held
Contributed equity at the end of the period
The shares have no par value.
2023
$M
2022
$M
3,280.7
3,280.7
-
–
3,280.7
3,280.7
3,280.7
3,280.7
-
-
-
-
-
–
3,280.7
3,280.7
107
TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: Capital structure
For the year ended 30 June 2023
Note 19 - Contributed equity (continued)
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of
and amounts paid on the shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax from the proceeds.
Purchase of shares for LTIP plans
The Group engages a third party to purchase shares in the Company to be used to satisfy share-based payment obligations upon vesting
under the Group’s Employee Equity Plans. Historically, such commitments were satisfied by way of treasury share purchases (i.e. the Group
acquiring shares on market directly). There are no treasury shares held at 30 June 2023 (F22: nil).
Under this arrangement during the period, the Group purchased 1.6 million shares ($21.8 million) under the third-party arrangement (F22: 1.4
million shares ($17.3 million). A total of 1.5 million shares (F22: 0.8 million) purchased under the third-party arrangement are available at 30 June
2023 (F22: 0.8 million).
Note 20 - Commitments
Details of the Group’s lease commitments are captured in Lease Liabilities disclosed within Borrowings (note 18) and the impact of short-term
and low value leases is captured in note 11.
Capital expenditure and other commitments
The following expenditure has been contracted but not provided
for in the financial statements:
2023
$M
2022
$M
Capital expenditure
42.2
35.5
Note 21 - Reserves
Cash flow hedge reserve
Share based payments reserve
Foreign currency translation reserve
Total reserves
2023
$M
35.3
(52.4)
151.6
134.5
2022
$M
30.9
(54.4)
72.2
48.7
Cash flow hedge reserve
This reserve records the effective portion of gains or losses from open cash flow hedges.
Share based payment reserve
This reserve records amounts offered to employees under Long-term Incentive Plan (LTIP), Restricted Equity Plan (REP), deferred Short-term
Incentive Plan (STIP) and Share Cellar plan.
Foreign currency translation reserve
This reserve holds exchange differences arising on translation of foreign subsidiaries, as described in note 1.
108
TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: Capital structure
For the year ended 30 June 2023
Note 22 - Employee equity plans
STIP
(restricted shares)
ELT LTIP
(performance
rights)
GLG LTIP
(performance
rights)
MTIP
(performance
rights)
REP
(restricted shares/
deferred share
rights)
Share Cellar
(broad-based
employee share
plan)
Outstanding at the beginning of the year
114,890
1,836,856
-
822,992
335,875
290,581
Granted during the year
141,620
1,030,135
1,170,287
-
27,222
155,345
Exercised during the year
(57,445)
(733,689)
-
(312,666)
(323,375)
(164,748)
Forfeited during the year
-
(197,990)
(17,494)
(348,890)
(12,500)
(24,108)
Outstanding at the end of the year
199.065
1,935,312
1,152,793
160,436
27,222
257,070
Exercisable at the end of the year
–
–
–
–
–
–
The Group operates equity plans as outlined below:
The F23 GLG LTIP grant has three vesting conditions: time-based
(50%), EBITS (25%) and EBITS Margin (25%) over a performance
STIP Restricted Equity
period of 3 years.
One-third of earned STIP is delivered in the form of deferred equity
(Restricted Shares). The key terms of this award are:
Mid-Term Incentive Plan (MTIP)
•
Subject to a mandatory restriction period and continued
the MTIP, employees receive Performance Rights which entitle the
employment. Half of the award is restricted for one year and
participant to receive shares at no cost subject to the achievement
the remaining half for two years from grant date;
of performance conditions and continuing employment. No
•
Holders of Restricted Shares are entitled to dividends and to
dividends are payable to participants prior to vesting and
exercise their voting rights during the restriction;
Performance Rights will generally be forfeited if the executive is
• Will generally be forfeited if the executive is dismissed for
dismissed for cause or resigns. Clawback mechanisms apply.
The Group awarded an MTIP grant in F22 to senior leaders. Under
cause or resigns. Clawback mechanisms apply.
ELT LTIP
The F22 MTIP has 2 equal vesting conditions: time-based (50%),
ROCE (50%) over a performance period of 2 years. For the time-
Under the ELT LTIP, members of the Executive Leadership Team
based conditions, half vested in 1 year (25%) and half in 2 years
receive Performance Rights which entitle participants to receive
(25%). The threshold for the ROCE measure of the F22 MTIP was not
the Company’s shares at no cost subject to the achievement of
met in F23, resulting in nil vesting of this measure.
performance conditions and continued employment. No dividends
are payable to participants prior to vesting and Performance Rights
Restricted Equity Plan (REP)
will generally be forfeited if the executive is dismissed for cause or
Under the REP certain employees receive a grant of restricted
resigns. Clawback mechanisms apply.
The performance conditions are:
•
•
•
Relative Total Shareholder Return (TSR)
Return on Capital Employed (ROCE) growth
Earnings per Share (EPS) compound annual growth rate.
equity awards in the form of Restricted Shares. If Restricted Shares
cannot be awarded (e.g. due to country specific regulation)
Deferred Share Rights are granted. The award is at no cost to the
employee and is subject to a restriction period. Restricted equity
awards require continued employment with the Group through the
restriction period.
Other terms are similar to the STIP terms above.
The F21 – F22 LTIP Performance Rights are subject to TSR and
Restricted equity awards may be granted to compensate
ROCE targets weighted of 25% for TSR and 75% for ROCE over a
employees for foregoing equity compensation in their previous
performance period of 3 years. The F23 LTIP performance rights
organisation as a sign-on award and/or as a retention incentive.
are subject to TSR (20%), ROCE (40%) and EPS (40%) over a
performance period of 3 years. The F21 LTIP partially vested as the
Share Cellar (broad-based Employee Share Plan)
TSR threshold was met, and the adjusted ROCE threshold was met.
Share Cellar is the Group’s broad-based Employee Share Plan and
Global Leadership Group (GLG) LTIP
plan participation is offered annually. The plan was first launched
early in 2015. Participation is voluntary and employees in select
The Group awarded a GLG LTIP grant in F23 to senior leaders
countries are eligible to join the Plan. Share Cellar operates as a
included in the Global Leadership Group. Under the GLG LTIP,
matching plan whereby employees contribute funds to the Plan
employees receive Performance Rights which entitle the participant
from their after-tax pay and shares are acquired by the Group on
to receive shares at no cost subject to the achievement of
their behalf. For employees enrolling in the 2021-2023 plans, the
performance conditions and continuing employment. No dividends
Group will deliver one matched share for every purchased share
are payable to participants prior to vesting and Performance Rights
held at the plan vesting date, subject to continued employment.
will generally be forfeited if the executive is dismissed for cause or
resigns. Clawback mechanisms apply.
Participants are entitled to dividends and to exercise voting rights
attached to the shares purchased under the plan, and matched
shares once they have been allocated.
109
TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: Capital structure
For the year ended 30 June 2023
Note 22 - Employee equity plans (continued)
Accounting policies
Employee equity plans are accounted for as share based payments, whereby employees render services in exchange for the awards.
The fair value of the shares and performance rights that are expected to vest is progressively recognised as an employee benefits
expense over the relevant vesting period with a corresponding increase in equity.
The fair value of shares granted is determined by reference to observed market values. The fair value of the TSR component of
performance rights is independently determined at grant date by an external valuer using a Monte-Carlo simulation. For the non-
market components (ROCE), the fair value is independently determined based on the share price less the present value of dividends.
Non-market performance conditions do not impact the value of shares and performance rights, but rather the estimate of the
number of shares to vest.
At each reporting date the Company revises the estimate of the number of shares and the non-market component of performance
rights that are expected to vest, and the employee benefits expense recognised each period incorporates this change in estimate.
An expense is recognised for the TSR component of performance rights whether or not the TSR hurdle is met. No expense is recognised
if these rights do not vest due to cessation of employment. No expense is recognised for shares and non-market components of
performance rights that do not ultimately vest.
Active share-based payment plans:
Long-term Incentive Plans
The below table outlines the F23 and F22 LTIP plans which have a vesting date post 30 June 2023:
Grant date
Grant date share price
Expected share price volatility (%)
Expected dividend yield (%)
Risk-free interest rate (%)
Fair value estimate at grant date - TSR
Fair value estimate at grant date - ROCE
Fair value estimate at grant date - EPS
The below table outlines the F23 GLG LTIP plan which has a vesting date post 30 June 2023:
Grant date
Grant date share price
Expected dividend yield (%)
Fair value estimate at grant date – EBITS & EBITS Margin
Fair value estimate time-based – Vesting F23: 2025
F23 Plan
1-Nov-22
F22 Plan
1-Dec-21
$13.03
40.0
2.6
3.36
$9.12
$12.16
$12.16
$11.79
42.0
2.7
0.77
$7.39
$11.00
-
F23 Plan
1-Oct-22
$12.57
2.6
$11.70
$11.65
110
TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: Capital structure
For the year ended 30 June 2023
Note 22 - Employee equity plans (continued)
Mid-term Incentive Plans
The below table outlines the F22 MTIP plan which has a vesting date post 30 June 2023:
Grant date
Grant date share price
Expected dividend yield (%)
Fair value estimate at grant date - ROCE
Fair value estimate time-based – Vesting F22: 2022
Fair value estimate time-based – Vesting F22: 2023
Restricted Equity Plans
Grant date
F21 23-Nov-20
F22 1-Oct-21
Note 23 - Non-controlling interest
NCI percentage
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Net assets attributable to NCI
Revenue
Profit/(loss) after tax
Other comprehensive income/(loss)
Total comprehensive income/(loss)
Profit/(loss) allocated to NCI
Other comprehensive income/(loss) allocated to NCI
Cash flows from operating activities
Cash flows from investment activities
Cash flows from financing activities (dividends to NCI: nil)
Net increase (decrease) in cash and cash equivalents
The Group only discloses subsidiaries where there is a material non controlling interest.
The Group has a put option to acquire the non controlling interest in investment ($18.1 million).
F22 Plan
1-Oct-21
$12.37
2.7
$11.80
$12.07
$11.75
Grant date share price
$10.01
$12.37
SAS Domaines Bouteiller
2023
$M
21.4%
62.0
20.1
16.0
4.9
61.2
13.1
0.9
(1.0)
2.8
1.8
(0.2)
0.6
(0.7)
(2.5)
—
(3.2)
111
TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: Taxation
For the year ended 30 June 2023
Note 24 - Income tax
The major components of income tax expense are:
Statement of profit or loss
Current income tax expense
Deferred income tax expense
Total tax expense
Deferred income tax expense included in the income tax expense comprises:
Decrease in deferred tax assets
(Decrease)/increase in deferred tax liabilities
Deferred income tax
Tax reconciliation
2023
$M
57.9
24.8
82.7
1.0
23.8
24.8
2022
$M
83.2
26.5
109.7
41.6
(15.1)
26.5
The amount of income tax expense as shown in the consolidated statement of profit or loss and other comprehensive income differs from
the prima facie income tax expense attributable to earnings. The differences are reconciled as follows:
Profit before tax excluding material items
Material items before tax
Profit before tax
Prima facie income tax expense attributable to profit from operations calculated
at the rate of 30% (F22: 30%)
Tax effect of:
Non-taxable income and profits, net of non-deductible expenditure
Impairment of non-current assets
Other deductible items
Tax losses recognised
Change in tax rate
Foreign tax rate differential
Other
Under/(over) provisions in previous years
Total tax expense
Income tax expense on operations
Income tax benefit attributable to material items
Income tax expense
Deferred income tax relates to the following:
Deferred tax assets
The balance comprises temporary differences attributable to:
Inventory
Property, plant and equipment (including vines)
Right-of-use assets and lease liabilities
Accruals
Provisions
Derivative instruments
Tax losses
Other
Total deferred tax assets
112
446.2
(109.2)
337.0
101.1
1.8
4.3
(2.3)
(4.3)
(0.1)
(10.0)
(4.3)
(3.5)
82.7
115.9
(33.2)
82.7
1.1
-
39.8
32.5
36.7
11.2
37.4
7.8
166.5
418.4
(45.5)
372.9
111.9
3.4
-
(1.9)
(2.2)
1.0
(7.3)
5.6
(0.8)
109.7
120.2
(10.5)
109.7
-
0.2
42.9
36.1
23.1
7.9
40.6
12.7
163.5
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Taxation
For the year ended 30 June 2023
Note 24 - Income tax (continued)
Deferred tax liabilities
The balance comprises temporary differences attributable to:
Inventory
Property, plant and equipment (including vines)
Intangibles
Other
Total deferred tax liabilities
Movements in deferred income tax relate to the following:
Movement in deferred tax assets:
Opening balance
(Charged) to profit or loss
Recognised directly in Equity
Business acquisitions
Balance sheet reclassification
Foreign currency translation
Other
Closing balance
Movement in deferred tax liabilities:
Opening balance
(Credited)/charged to profit or loss
Recognised directly in Equity
Business acquisitions
Transfer (to)/from Assets Held for Sale
Balance sheet reclassification
Foreign currency translation
Other
Closing balance
Amounts recognised directly in equity
2023
$M
2022
$M
13.8
106.1
225.4
37.9
383.2
163.5
(1.0)
(0.8)
1.0
(1.2)
5.6
(0.6)
166.5
338.7
23.8
0.5
8.4
5.4
(1.2)
8.1
(0.5)
383.2
16.5
87.5
221.2
13.5
338.7
183.7
(41.6)
(2.9)
5.1
-
10.9
8.3
163.5
309.6
(15.1)
13.7
6.0
10.0
(0.2)
14.7
-
338.7
Aggregate current and deferred tax arising in the reporting period and not recognised
in net profit or loss but directly credited to equity
(1.3)
(16.6)
Current tax position
Unrecognised tax assets
The current tax asset of $24.4 million and current tax liability of $18.7
There are potential future income tax benefits relating to
million reflect the difference between the timining of installment
accumulated losses in non-Australian group companies, which have
payments made during the year and the estimated final F23 tax
not been brought to account. These possible benefits amount to $34.5
receivable/liability. Current tax assets and liabilities are only offset
million (F22: $31.9 million).
where they relate to the same tax authority.
Franking credits
The Group has carry forward capital tax losses in Australia and the
UK respectively. These losses may be used to offset any future capital
The Australian Tax Consolidation Group has $67.0 million (F22: $113.3
gains derived by activities in these countries. The Group will assess the
million) of franking credits available for subsequent reporting periods.
conditions for deductibility imposed by the tax laws of Australia and
the UK prior to any utilisation of the capital losses.
113
TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: Taxation
For the year ended 30 June 2023
Note 24 -Income tax (continued)
Ongoing tax audits
The Group is subject to ongoing tax audits by taxation authorities
in several jurisdictions covering a variety of taxes. The Group fully
cooperates with these enquiries as and when they arise.
OECD global minimum tax framework
The Group operates in two countries (Japan and the United Kingdom)
which have either enacted or substantively enacted new tax
legislation to implement the Pillar Two global minimum top-up tax
(top-up tax). The Group does not expect to be subject to material
top-up tax in relation to its operations in any of these countries as
the effective tax rate is expected to be greater than 15%. The newly
enacted tax legislation in these countries is effective only from years
commencing from 1 January 2024.
The Group has applied a temporary mandatory relief from deferred
tax accounting for the impacts of the top-up tax and will account for it
as a current tax if it is incurred from 1 July 2024 (see Note 33).
Accounting policies
Current taxes
Current tax assets and liabilities are measured at the amount
expected to be recovered from, or paid to, taxation authorities
at the tax rates and tax laws enacted or substantively enacted
by the reporting date.
Deferred taxes
Deferred income tax liabilities are recognised for all taxable
temporary differences. Deferred income tax assets are
recognised for all deductible temporary differences, carried
forward unused tax assets and unused tax losses, to the extent
it is probable that they will be utilised.
Unrecognised deferred income tax assets are reassessed at
each reporting date and are recognised to the extent that it
will become probable that future taxable profit will allow the
deferred tax asset to be recovered.
The carrying amount of deferred income tax assets is reviewed
at balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available
to utilise them.
Deferred income tax assets and liabilities are measured at the
tax rates that are expected to apply to the year when the asset
is realised or the liability is settled, based on tax rates and tax
laws that have been enacted or substantively enacted at the
balance sheet date.
Key estimate and judgement
Taxation
The Group is subject to income taxes in Australia and jurisdictions
where it has foreign operations. Significant judgement is required
in determining the worldwide provision for income taxes. There
are many transactions and calculations undertaken during
the ordinary course of business for which the ultimate tax
determination is uncertain. Where the final tax outcome of these
matters is different from the amounts that were initially recorded,
such differences will impact the current and deferred tax
provisions in the period in which such determination is made.
Deferred income tax is provided on temporary differences at
balance sheet date between accounting carrying amounts
and the tax bases of assets and liabilities, other than for:
•
•
The initial recognition of an asset or liability in a transaction
that is not a business combination and at the time of
the transaction, affects neither the accounting profit nor
taxable profit or loss or on the recognition of goodwill.
Foreign taxes which may arise in the event of retained
profits of foreign controlled entities being remitted to
Australia as there is no present intention to make any such
remittances.
Deferred tax assets and deferred tax liabilities associated with
indefinite life intangibles such as brand names are measured
based on the tax consequences that would follow from the use
and sale of that asset.
Income taxes relating to items recognised directly in equity are
recognised in equity and not in profit or loss.
Offsetting deferred tax balances
Deferred tax assets and deferred tax liabilities are offset only
if a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred tax assets and
liabilities relate to the same taxable entity and the same
taxation authority.
114
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Risk
For the year ended 30 June 2023
Note 25 - Financial risk management
Financial risk management framework
The Group’s financial risk management policies (‘Group Treasury
The Group holds financial instruments from financing (principally
Policies’) cover risk tolerance, internal controls (including segregation
borrowings), transactions (trade receivables and payables) and risk
of duties), delegated authority levels, management of foreign
management (derivatives) which result in exposure to the following
currency, interest rate and counterparty credit exposures, and the
financial risks, covered by the Group Treasury Policies:
reporting of exposures. These policies are reviewed at least annually
and approved by the Board of Directors.
The centralised Group Treasury function has been delegated
operational responsibility for the identification and management of
financial risks.
•
•
•
•
Liquidity risk
Interest rate risk
Foreign exchange risk
Counterparty credit risk.
The following table outlines how these risks impact Group financial assets and liabilities:
Liquidity
Foreign exchange
Note
18
9
9
9
26
risk
Interest rate risk
(A)
(B)
x
x
x
x
x
Risk
(C)
x
x
x
x
x
Credit
risk
(D)
x
x
x
x
Net borrowings
Receivables
Other financial assets
Payables
Derivative financial assets and liabilities
(a) Liquidity risk
Nature of the risk
The Group is exposed to liquidity risk primarily from its core operating
forecast and actual cash flows, performs sensitivity analysis as well as
activities. The Group’s focus is to ensure it is able to meet financial
monitoring the availability and cost of debt and equity funding.
obligations as and when they fall due.
The Group’s objective is to balance continuity of funding and flexibility
Risk management
by maintaining an appropriately structured debt maturity profile
with a mix of bank and capital (bond) market debt, whilst also
The Group ensures the maintenance, at all times, of an appropriate
monitoring compliance with the Group’s key financial covenants and
minimum level of liquidity, comprising committed, unutilised debt
undertakings.
facilities and cash resources. To facilitate this, the Group monitors
At reporting date, the standby arrangements and unused credit facilities are as follows:
Committed facilities
Available facilities
Amounts utilised
Amount unutilised
The Group is in compliance with all undertakings under its various financing arrangements.
2022
$M
2021
$M
2,216.9
1.909.8
(1,416.0)
(1,082.5)
800.9
827.3
115
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Risk
For the year ended 30 June 2023
Note 25 - Financial risk management (continued)
Level of exposure at balance date
The following tables analyse the maturities of the Group’s contractual undiscounted cash flows arising from its material financial liabilities and
derivative financial instruments.
Maturing in:
6 months
or less
$M
6 months
to 1 year
$M
1 to 2
years
$M
2 to 5
years
$M
Over
5 years
$M
Contractual
total
$M
Carrying
amount
$M
2023
Non-derivative financial liabilities
Bank loans1
Lease liabilities
Other loans
US Private Placement Notes
Trade payables
Other payables
18.4
40.2
-
205.5
339.9
369.8
18.1
45.3
-
11.6
-
-
30.4
89.2
0.5
23.2
-
-
Derivative financial liabilities
Foreign exchange contracts
Interest rate and cross currency swaps
3.6
5.0
3.0
6.7
2.8
10.6
585.5
-
234.8
306.5
-
-
652.4
716.0
0.5
281.9
518.0
1,040.2
-
-
0.4
2.5
-
-
-
0.4
339.9
369.8
9.8
25.2
539.8
548.9
0.5
868.6
339.9
369.8
9.8
20.3
Total financial liabilities
982.4
84.7
156.7
1,105.1
824.9
3,153.8
2,696.7
2022
Non-derivative financial liabilities
Bank loans1
Lease liabilities
Other loans
US Private Placement Notes
Trade payables
Other payables
Derivative financial liabilities
Foreign exchange contracts
Interest rate and cross currency swaps
10.6
40.4
-
9.7
314.9
432.3
2.1
2.0
114.8
46.4
-
9.7
-
-
18.3
89.7
0.5
197.1
-
-
243.9
342.1
250.5
385.1
-
-
247.4
78.2
-
-
1.0
6.8
4.1
17.8
2.5
34.9
-
-
-
2.7
729.7
812.1
0.5
542.1
314.9
432.3
9.7
64.2
603.5
609.0
0.5
472.2
314.9
432.3
9.7
11.3
Total financial liabilities
812.0
178.7
327.5
779.2
808.1
2,905.5
2,453.4
1. Loans are stated net of capitalised facility finance costs. At reporting date, the balance of bank loans is $546.3 million (F22: $610.2 million) against capitalised facility finance costs of $6.5 million (F22: $6.7
million) to be amortised over the facility period..
(b) Interest rate risk
Nature of the risk
A combination of interest rate swaps have been exchanged to obtain
The Group is exposed to interest rate risk principally from floating rate
the desired ratio of fixed and floating interest rates. At 30 June 2023,
bank borrowings. Other sources of interest rate risk include receivable
interest rate swap contracts were in use to exchange fixed interest
purchasing agreements, interest-bearing investments, creditors’
rates to floating rates on $377.6 million (US$250 million) of US Private
accounts offering a discount and debtors’ accounts on which
Placement notes. A combination of floating to fixed interest rate
discounts are offered.
Risk management
swaps and fixed interest rate caps have been used to exchange
the floating rates to fixed on all US Private Placement notes (US$375
million). The swaps mature between December 2023 and June 2029.
We manage interest rate risk by ensuring that the sensitivity of
Cross currency interest rate swaps are used to exchange floating
forecast future earnings to changes in interest rates is within
USD interest on a portion of the USD syndicated debt facility of US$120
acceptable limits. This involves longer term forecasting of both
million into AUD fixed rate of $166.6 million, maturing in December
expected earnings and expected borrowing to determine the
2026. Please refer note 25(a) for the profile and timing of cash flows
tolerable exposure.
116
over the next five years.
TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: Risk
For the year ended 30 June 2023
Note 25 - Financial risk management (continued)
(b) Interest rate risk (continued)
In accordance with the phasing out of the London Interbank Rate
The Group’s exposure to variable interest rate risk results from the
(LIBOR) from 30 June 2023, during the year $1.3 billion of existing debt
following financial instruments at balance sheet date:
facilities with a LIBOR benchmark rate were transitioned to reference
the Secured Overnight Financing Rate (SOFR).
Financial assets
Cash and cash equivalents
Total assets
Financial liabilities
US Private Placement Notes1
Bank loans1
Total liabilities
1. Net of hedged amounts.
Sensitivity analysis
2023
$M
565.8
565.8
75.5
166.2
241.7
2022
$M
430.5
430.5
-
101.7
101.7
The table below shows the impact by currency denomination if the Group’s weighted average floating interest rates change from the year-end
rates of 5.01% (F22: 0.80%) with all other variables held constant.
Sensitivity
Pre-tax impact on profit
2023
2022
2023
2022
Currency
USD
AUD
GBP
+ / - 25bp
+ / - 25bp
+ / - 25bp
+ / - 25bp
+ / - 25bp
+ / - 25bp
+$M
0.3
0.7
-
-$M
(0.3)
(0.7)
-
+$M
0.3
0.3
0.1
-$M
(0.3)
(0.3)
(0.1)
The movements in profit on a consolidated level are primarily a result of interest costs from borrowings. There would have been no significant
impact on equity.
117
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Risk
For the year ended 30 June 2023
Note 25 - Financial risk management (continued)
(c) Foreign exchange risk
Nature of the risk
The focus of the Group’s foreign exchange risk management activities
is on the transactional exposures arising from the sourcing and sale
The Group is exposed to foreign exchange risk through:
of wine.
A proportion of expenses are hedged over time up to a period of
three years.
In determining the amount of hedging required, the Group also
considers the ‘natural hedges’ arising from the underlying net cash
flows in the relevant currency, comprising operating, investing and
financing cash flows.
•
•
•
Transaction exposures including sales of wine into export
markets and the purchase of production inputs, denominated in
foreign currencies other than the respective functional currency
of the specific Group entity;
Exposures arising from borrowings denominated in foreign
currencies; and
Translation exposures including earnings of foreign subsidiaries
and revaluation of monetary assets and liabilities, including
borrowings.
The currencies in which these transactions are primarily denominated
are the Australian Dollar (AUD), United States Dollar (USD) and Great
British Pound (GBP). Other currencies used include the Canadian
Dollar, Euro, New Zealand Dollar, Singapore Dollar, Swedish Krona,
Norwegian Krone and Chinese Renminbi.
Risk management
Details of the Group’s open hedges at balance sheet date are shown below.
Open foreign currency hedges at 30 June 2022
Hedge value
Hedge type
(notional AUD)
Forwards
Options
Total
Forwards
Options
Total
Forwards
Options
Total
$M
20.5
287.9
308.4
64.7
151.3
216.0
32.5
-
32.5
Average
hedge rate
0.7356
0.7008
0.5503
0.5550
0.5718
Currency
AUD/USD
AUD/GBP
NZD/USD
118
TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: Risk
For the year ended 30 June 2023
Note 25 - Financial risk management (continued)
(c) Foreign exchange risk (continued)
Level of exposure at balance date
At the reporting date, the Group’s financial assets and liabilities were denominated across the following currencies:
All balances translated to AUD
2023
Net debt
Cash and cash equivalents
Loan receivable
Bank loans2
US Private Placement Notes (net of fair value hedge)
Lease liabilities
Other loan payable
Net debt
Other financial assets/(liabilities)
Trade receivables (net of allowance for expected credit loss)
Other receivables
Trade and other payables
Net other assets/(liabilities)
2022
Net debt
Cash and cash equivalents
Loan receivable
Bank loans2
US Private Placement Notes (net of fair value hedge)
Lease liabilities
Other loan payable
Net debt
Other financial assets/(liabilities)
Trade receivables (net of allowance for expected credit loss)
Other receivables
Trade and other payables
Net other assets/(liabilities)
2. Includes capitalised borrowing costs of $6.5 million (F22: $6.7 million).
AUD
$M
USD
$M
GBP
$M
Other
$M
Total
$M
292.6
-
1.3
-
(86.6)
(0.5)
196.2
0.3
(522.0)
(868.6)
(447.1)
-
206.8
(1,641.2)
223.1
26.4
80.4
68.9
(334.3)
(232.0)
(84.8)
(82.7)
120.9
-
1.7
-
228.4
0.4
(605.2)
(472.2)
(89.3)
(499.6)
(0.5)
32.8
-
(1,348.2)
208.7
17.3
86.2
75.5
(384.9)
(259.0)
(158.9)
(97.3)
-
-
-
-
(1.6)
-
(1.6)
66.5
-
(60.1)
6.4
77.0
5.5
565.8
5.8
(19.1)
(539.8)
-
(868.6)
(13.6)
(548.9)
-
(0.5)
49.8
1,386.2
70.9
4.4
440.9
99.7
(83.3)
(709.7)
(8.0)
(169.1)
36.1
45.1
430.5
-
-
-
(2.0)
-
34.1
88.8
-
(69.9)
18.9
-
-
-
0.4
(603.5)
(472.2)
(18.1)
(609.0)
-
(0.5)
27.0
(1,254.3)
36.2
2.4
419.9
95.2
(33.4)
(747.2)
5.2
(232.1)
119
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Risk
For the year ended 30 June 2023
Note 25 - Financial risk management (continued)
(c) Foreign exchange risk (continued)
Sensitivity analysis
The following table illustrates the impact of potential foreign exchange movements on profit before tax and the statement of financial
position at 30 June:
Currency
United States Dollar
Great Britain Pound
Euro
Canadian Dollar
New Zealand Dollar
Sensitivity
Assumption3
Pre-tax impact on profit
$M
Impact on equity
$M
2023
2022
2023
2022
2023
2022
+
–
+
–
+
–
+
–
9.9%
12.6%
0.3
(0.4)
0.1
(0.1)
(98.6)
119.5 (36.8)
57.7
8.0%
10.0%
(0.9)
8.0%
10.7%
(1.9)
7.3%
5.6%
9.1%
6.3%
0.0
0.0
1.1
2.2
0.0
0.0
(0.5)
(0.1)
(2.0)
0.0
0.7
0.1
2.4
0.0
(29.2)
32.5 (26.7)
35.4
6.4
0.0
(5.9)
(2.3)
3.9
0.0
2.2
(2.6)
(7.0)
7.9
(7.5)
8.5
3. Australian dollar versus individual currencies. Implied one-year currency volatility at reporting date (Source: Bloomberg).
(d) Credit risk
Nature of the risk
focus on accounts that are greater than 90 days overdue.
Where debt cannot be recovered, it is escalated from the credit
Counterparty credit risk arises primarily from the following assets:
representative to the credit manager to initiate recovery action.
•
•
•
Cash and cash equivalents;
Trade and other receivables; and
Derivative instruments.
For derivatives, the Group transacts under an International Swaps
and Derivatives Association (ISDA) master netting agreement. If a
credit event such as a default occurs, all outstanding transactions
under an ISDA agreement are terminated, the termination value is
assessed and only a single net amount is payable in settlement of all
Risk management
transactions.
The Group’s counterparty credit risk management philosophy is to
limit the Group’s loss from default by any one counterparty by dealing
Level of exposure at balance date
only with financial institution counterparties of good credit standing,
The maximum counterparty credit risk exposure at 30 June 2023 in
setting maximum exposure limits for each counterparty, and taking a
respect of derivative financial instruments was $23.3 million (F22:
conservative approach to the calculation of counterparty credit limit
$22.0 million) and in respect of cash and cash equivalents was $113.9
usage. Where available, credit opinions on counterparties from two
million (F22: $186.2 million). The Group’s authorised counterparties are
credit rating agencies are used to determine credit limits.
restricted to banks and financial institutions whose long-term credit
rating is at or above a Standard and Poors rating of A- (or Moody’s
The Group assesses the credit quality of individual customers prior
equivalent rating of A3), with any exceptions requiring approval
to offering credit terms and continues to monitor on a regular basis.
from the Board. Commercial paper investments are restricted to
Each customer is assigned a risk profile based upon the measurable
counterparties whose short-term credit rating is at or above a
risk indicators for dishonoured payments, adverse information and
Standard and Poor’s rating of A-2 (or Moody’s equivalent rating of
average days late along with the securities and guarantees held. All
P-2). The magnitude of credit risk in relation to receivables is generally
prospective accounts are required to complete a credit application
the carrying amount, net of any allowance for expected credit loss.
and generally a director’s guarantee is required with minimal
exceptions. Failure to provide a director’s guarantee results in either
no credit or a limited level of credit offered. Credit terms may be
reduced or extended for individual customers based on risk.
In F23 the Group, as part of its normal monitoring of the credit quality
of trade receivables, continued frequent telephone contact and
engagement with customers to understand customer trading and
credit circumstances, and supporting them through any short-term
challenges identified. The Group also continued to monitor customer
credit risk assessments across the entire customer portfolio.
Past due accounts are subject to a number of collection activities
which range from telephone contact, suspension of orders through
to legal action. Past due accounts are reviewed monthly with specific
120
TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: Risk
For the year ended 30 June 2023
Note 25 - Financial risk management (continued)
(d) Credit risk (continued)
The ageing of the consolidated Group trade receivables (net of provisions) is outlined below:
Not past due
Past due 1-30 days
Past due 31-60 days
Past due 61 days+
Total
2023
$M
378.5
50.9
5.6
5.9
440.9
2022
$M
387.7
25.4
4.3
2.5
419.9
Trade receivables have been aged according to their due date.
For all other recognised financial assets and financial liabilities,
Terms may be extended on a temporary basis with the approval
based on the facts and circumstances existing at reporting date
of management. The past due receivables shown above relate
and the nature of the Group’s financial assets and financial
to customers who have a good debt history and are considered
liabilities including hedge positions, the Group has no reason
recoverable. There is no collateral held as security against the
to believe that the financial assets could not be exchanged, or
receivables above and there are no other receivables past due.
the financial liabilities could not be settled, in an arm’s length
transaction at an amount approximating its carrying amount.
Note 26 - Derivative financial instruments
At reporting date, there were $556.9 million (Australian dollar
equivalent) net face value of outstanding foreign exchange
contracts at contract rates (F22: $385.4 million), interest rate
swaps of $1,021.1 million (F22: $857.2 million) and cross currency
interest rate swaps of $181.3 million (F22: $174.4 million) and interest
rate collars of nil (F22: $203.4 million). These instruments are
regarded as Level 2 under AASB’s Fair Value measurement hierarchy.
Note 27 - Fair values
The fair value of the US Private Placement Notes is $904.8 million
(F22: $484.1 million) and the fair value of the syndicated debt
facility is $552.7 million (F22: $644.3 million). The fair values of
cash and cash equivalents, financial assets and other financial
liabilities approximate their carrying value. There have been no
reclassifications of financial assets from fair value to cost, or from
cost or amortised cost to fair value during the year.
The fair values of derivative financial instruments are based upon
market prices, or models using inputs observed from the market,
where markets exist or have been determined by discounting the
expected future cash flows by the current interest rate for financial
assets and financial liabilities with similar risk profiles (a Level 2
valuation).
The valuation of derivative financial assets and liabilities reflects
the estimated amounts which the Group would be required to pay
or receive to terminate the contracts (net of transaction costs)
or replace the contracts at their current market rates at reporting
date. This is based on internal valuations using standard valuation
techniques.
As the purpose of these derivative financial instruments is to hedge
the Group’s underlying assets and liabilities denominated in foreign
currencies and to hedge against risk of interest rate fluctuations,
it is unlikely in the absence of abnormal circumstances that these
contracts would be terminated prior to maturity.
121
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Group composition
For the year ended 30 June 2023
Note 28 - Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries:
Entity name
Equity holding of 100% (F21: 100%)
Aldershot Nominees Pty. Ltd.*
B Seppelt & Sons Limited*
Beringer Blass Distribution S.R.L.
Beringer Blass Italia S.R.L.
Beringer Blass Wine Estates Chile Limitada
Beringer Blass Wine Estates Limited
Beringer Blass Wines Pty. Ltd.*
Bilyara Vineyards Pty. Ltd.*
Cellarmaster Wines (UK) Limited
Cellarmaster Wines Holdings (UK) Limited
Cuppa Cup Vineyards Pty. Ltd.
Devil’s Lair Pty. Ltd.
Ewines Pty. Ltd.
FBL Holdings Limited
Frank Family Vineyards LLC
Il Cavaliere del Castello di Gabbiano S.r.l.
Interbev Pty. Ltd.*
Leo Buring Pty. Ltd.
Lindeman (Holdings) Limited*
Lindemans Wines Pty. Ltd.
Mag Wines Pty. Ltd
Majorca Pty. Ltd.*
Mildara Holdings Pty. Ltd.*
North America Packaging (Pacific Rim) Corporation
Penfolds Wines Australia Pty Ltd (formerly known as Treasury Logistics Pty Ltd)*
Penfolds Wines International Limited (formerly known as Coldstream Australasia Limited)*
Penfolds Wines Pty Ltd
Piat Pere et Fils B.V.
Premium Land, Inc.
Robertsons Well Pty. Ltd.
Robertsons Well Unit Trust
Rosemount Estates Pty. Ltd.
Rothbury Wines Pty. Ltd.*
SCW905 Limited*
Seaview Wynn Pty. Ltd.*
Société Civile de la Gironville
A
Société Civile d’Exploitation Agricole Cambon La Pelouse
Southcorp Australia Pty. Ltd. *
Southcorp Brands Pty. Ltd.*
Southcorp International Investments Pty. Ltd.*
Southcorp Limited*
Southcorp NZ Pty. Ltd.*
Country of incorporation
Australia
Australia
Italy
Italy
Chile
UK
Australia
Australia
UK
UK
Australia
Australia
Australia
UK
USA
Italy
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
Australia
Australia
Australia
Netherlands
USA
Australia
Australia
Australia
Australia
Australia
Australia
France
France
Australia
Australia
Australia
Australia
Australia
* Entity is a member of the Closed Group under the Deed of Cross Guarantee (refer to note 30) and relieved from the requirement to prepare audited financial statements by
ASIC Corporations (Wholly owned Companies) Instrument 2016/785.
A This entity was liquidated on 16 June 2023.
122
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Group composition
For the year ended 30 June 2023
Note 28 - Subsidiaries (continued)
Entity name
Southcorp Whitegoods Pty. Ltd.
Southcorp Wines Asia Pty. Ltd.
Southcorp Wines Pty. Ltd.*
Southcorp XUK Limited
T'Gallant Winemakers Pty. Ltd.
The Rothbury Estate Pty. Ltd.*
Tolley Scott & Tolley Limited*
Treasury Americas Inc
Treasury Chateau & Estates LLC
Treasury Wine Estates (China) Holding Co Pty Ltd*
Treasury Wine Estates (Matua) Limited
Treasury Wine Estates (NZ) Holding Co Pty Ltd*
Treasury Wine Estates (Shanghai) Trading Co. Ltd.
Treasury Wine Estates (UK) Holding Co Pty Ltd*
Treasury Wine Estates Americas Company
Treasury Wine Estates Asia (SEA) Pte Ltd
Treasury Wine Estates Asia Pty. Ltd.
Treasury Wine Estates Australia Limited*
Treasury Wine Estates Barossa Vineyards Pty. Ltd.
Treasury Wine Estates Canada, Inc.
Treasury Wine Estates Denmark ApS
Treasury Wine Estates EMEA Limited
Treasury Wine Estates France S.A.R.L.
Treasury Wine Estates HK Limited
Treasury Wine Estates Holdings Inc.
Treasury Wine Estates Japan KK
Treasury Wine Estates Netherlands B.V
Treasury Wine Estates Norway AS
Treasury Wine Estates Sweden AB
Treasury Wine Estates UK Brands Limited
Treasury Wine Estates Vintners Limited*
TWE Finance (Aust) Limited*
TWE Finance (UK) Limited
TWE Insurance Company Pte. Ltd.
TWE Lima Pty Ltd*
TWE Share Plans Pty Ltd
TWE US Finance Co.
TWE USA Partnership
Wolf Blass Wines Pty. Ltd.*
Woodley Wines Pty. Ltd.
Wynn Winegrowers Pty. Ltd.
Wynns Coonawarra Estate Pty. Ltd
Country of incorporation
Australia
Australia
Australia
UK
Australia
Australia
Australia
USA
USA
Australia
New Zealand
Australia
China
Australia
USA
Singapore
Australia
Australia
Australia
Canada
Denmark
UK
France
Hong Kong SAR, China
USA
Japan
Netherlands
Norway
Sweden
UK
Australia
Australia
UK
Singapore
Australia
Australia
USA
USA
Australia
Australia
Australia
Australia
* Entity is a member of the Closed Group under the Deed of Cross Guarantee (refer to note 30) and relieved from the requirement to prepare audited financial statements by
ASIC Corporations (Wholly owned Companies) Instrument 2016/785.
123
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Group composition
For the year ended 30 June 2023
Note 28 - Subsidiaries (continued)
Entity name
Equity holding of less than 100%
Graymoor Estate Joint Venture
Graymoor Estate Pty. Ltd.
Graymoor Estate Unit Trust
North Para Environment Control Pty. Ltd.
Groupment Forestier des Landes de Lanessan
SAS Domaines Bouteiller
Country of
incorporation
% of holding
Australia
Australia
Australia
Australia
France
France
2023
48.8
48.8
48.8
69.9
78.6
78.6
2022
48.8
48.8
48.8
69.9
-
-
Note 29 - Parent entity financial information
(a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Shareholders' equity
Issued capital
Share based payments reserve
Retained earnings
Total equity
Profit for the year
Total comprehensive income
2023
$M
2022
$M
1,370.6
9,476.5
5,863.0
5,863.0
3,613.5
3,280.7
(41.3)
374.1
3,613.5
-
-
1,356.8
9462.8
5,617.6
5,617.6
3,845.2
3,280.7
(55.1)
619.6
3,845.2
548.1
548.1
Current liabilities comprise balances with other entities within the
(d) Capital commitments
Group. These balances will not be called within the next 12 months.
There are no capital commitments for the Company (F22: nil).
(b) Financial guarantees
Refer note 18 for financial guarantees to banks, financiers and other
persons.
(c) Tax consolidation legislation
The Company formed a consolidated group for income tax purposes
with each of its Australian resident subsidiaries on 21 May 2011.
The Company and the controlled entities in the tax consolidation
group continue to account for current and deferred tax amounts
separately. These tax amounts are measured on a ‘group allocation’
approach, under which the current and deferred tax amounts for the
tax-consolidated group are allocated among each reporting entity
in the Group.
124
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Group composition
For the year ended 30 June 2023
Note 30 - Deed of cross guarantee
Under the terms of ASIC Corporations (Wholly owned Companies)
A summarised consolidated statement of profit or loss and other
Instrument 2016/785, certain wholly owned controlled entities have
comprehensive income, retained earnings reconciliation and
been granted relief from the requirement to prepare audited financial
a consolidated statement of financial position, comprising the
reports. It is a condition of the class order that the Company and
Company and those controlled entities which are a party to the Deed
each of the relevant subsidiaries enter into a Deed of Cross Guarantee
of Cross Guarantee, after eliminating all transactions between parties
whereby each company guarantees the debts of the companies
to the Deed, at 30 June 2023 are set out below.
party to the Deed. The member companies of the Deed of Cross
Guarantee are regarded as the ‘Closed Group’ and identified in
note 28.
Extract of the statement of profit or loss and other comprehensive income
Profit before tax
Income tax expense
Net profit after tax
Retained earnings at beginning of the year
External dividends
Retained earnings at end of the year
2023
$M
144.7
(36.2)
108.5
155.4
(245.4)
18.5
2022
$M
252.3
(67.4)
184.9
172.6
(202.1)
155.4
125
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Group composition
For the year ended 30 June 2023
Note 30 - Deed of cross guarantee (continued)
Statement of financial position
Current assets
Cash and cash equivalents
Receivables
Inventories
Investments
Assets held for sale
Other current assets
Total current assets
Non-current assets
Inventories
Investments
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Current tax liabilities
Provisions
Other current liabilities
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
2023
$M
414.4
310.8
394.8
1.8
32.1
20.5
1.174.4
685.8
2,257.5
616.4
74.2
539.4
55.2
46.1
4,274.6
5,449.0
346.0
969.8
(0.7)
80.7
20.0
2022
$M
115.1
315.2
380.7
1.9
12.3
20.8
846.0
686.6
2.257.5
672.8
77.5
542.8
35.8
38.4
4,311.4
5,157.4
383.8
584.1
10.1
34.3
16.8
1,415.8
1,029.0
597.4
130.6
7.2
735.2
2,151.0
3,298.0
3,280.7
(1.2)
18.5
3,298.0
581.4
123.8
9.8
715.0
1,744.0
3,413.4
3,280.7
(22.7)
155.4
3,413.4
Current borrowings include balances with other entities within the Group. These balances will not be called within the next 12 months.
126
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Other
For the year ended 30 June 2023
Note 31 - Related party disclosures
Ownership interests in related parties
Transactions with other related parties
All material ownership interests in related parties are disclosed in note
The Group entered into transactions which are insignificant in amount
28 to the financial statements.
Parent entity
with executives, Non-Executive Directors and their related parties
within normal employee, customer or supplier relationships on terms
and conditions no more favourable than those available in similar
The ultimate parent entity is Treasury Wine Estates Limited, which is
arm’s length dealings.
domiciled and incorporated in Australia.
There were no other transactions with related parties during the
Transactions with entities in the wholly-owned Group
current year.
Transactions between companies within the Group during the current
and prior year included:
•
•
Purchases and sales of goods and services; and
Provision of accounting and administrative assistance.
Key management personnel compensation
The following table shows the compensation paid or payable to the
key management personnel (‘executives’) of the Group.
Transactions with controlled entities are made on normal commercial
terms and conditions.
Short-term employee benefits
Post-employment benefits
Share based payments
Total
2023
$M
2022
$M
4,366,995
5,019,492
75,876
3,999,924
8,412,795
70,704
1,624,958
6,715,154
Additionally, compensation paid to Non-Executive Directors was $1,929,302 (F22: $2,002,965).
Note 32 - Remuneration of auditors
The Audit and Risk Committee has completed an evaluation of the
The Chairman of the Audit and Risk Committee has advised the Board
overall effectiveness and independence of the external auditor, KPMG.
that the Committee’s assessment is that the auditor is independent.
As part of this process, the external auditor has provided a written
statement that no professional engagement with the Group has been
During the year, the following fees were paid or payable for services
carried out which would impair their independence as auditor.
provided by the auditor of the Group, and its related practices:
Audit and review of financial statements and other audit work under the Corporations Act 2001
1,796,637
1,534,555
2023
$M
2022
$M
Associate firms of Auditor
Other assurance services
Audit and review services
Other non-audit services
Total
434,334
102,500
537,206
–
2,333,471
2,071,761
81,735
170,371
2,415,206
2,242,132
The Group engages KPMG to provide other non-audit services where their expertise and experience best qualifies them to provide the
appropriate service and as long as stringent independence requirements are satisfied. In the year ended 30 June 2023, other non-audit services
included fees in respect of compliance and taxation services.
127
TREASURY WINE ESTATES ANNUAL REPORT 2023 TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: Other
For the year ended 30 June 2023
Note 33 - Other accounting policies
New accounting standards and interpretations
Since 30 June 2022, the Group has adopted the following new and amended accounting standards.
Reference
Title
AASB 1, AASB 3, AASB 9, AASB 116,
AASB 137 &
AASB 141
Amendments to Australian Accounting Standards – Annual
Improvements 2018–2020 and Other Amendments
Application
1 January 2022
AASB 2023-2
Amendments to Australian Accounting Standards – International Tax
Reform – Pillar Two Model Rules
1 January 2023
The adoption of these standards did not have a significant impact on the consolidated financial statements.
Issued but not yet effective accounting standards
The following relevant accounting standards have recently been issued or amended but are not yet effective and have not been adopted
for this year-end reporting period.
Reference
AASB 17
AASB 2020-5
AASB 2022-1
AASB 2022-8
AASB 2021-2
AASB 2021-5
AASB 2021-6
AASB 2022-7
AASB 2023-1
AASB 2020-1
AASB 2020-6
AASB 2022-6
AASB 2023-3
AASB 2022-5
AASB 2014-10
AASB 2015-10
AASB 2017-5
Title
Insurance Contracts
Application
1 January 2023
Amendments to Australian Accounting Standards – Insurance Contracts
1 January 2023
Amendments to Australian Accounting Standards – Initial application of AASB 17
and AASB 9 – Comparative Information
1 January 2023
Amendments to Australian Accounting Standards – Insurance Contracts:
Consequential Amendments
Amendments to Australian Accounting Standards – Disclosure of Accounting
Policies and Definition of Accounting Estimates
Amendments to Australian Accounting Standards – Deferred Tax related to
Assets and Liabilities arising from a single transaction
Amendments to Australian Accounting Standards – Disclosure of Accounting
Policies: Tier 2 and Other Australian Accounting Standards
Editorial Corrections to Australian Accounting Standards and Repeal of
Superseded and Redundant Standards
Amendments to Australian Accounting Standards – Supplier
Finance Arrangements
1 January 2023
1 January 2023
1 January 2023
1 January 2023
1 January 2023
1 January 2024
Amendments to Australian Accounting Standards – Classification of Liabilities as
Current or Non-current
1 January 2024
Amendments to Australian Accounting Standards – Classification of Liabilities as
Current or Non-current - Deferral of Effective Date
1 January 2024
Amendments to Australian Accounting Standards – Classification Non-current
Liabilities with Covenants
Amendments to Australian Accounting Standards – Disclosure of Non-current
Liabilities with Covenants: Tier 2
Amendments to Australian Accounting Standards – Lease Liability in a Sale and
Leaseback
Amendments to Australian Accounting Standards – Sale or Contribution
of Assets between an Investor and its Associate or Joint Venture
Amendments to Australian Accounting Standards – Effective Date of
Amendments to AASB 10 and AASB 128
Amendments to Australian Accounting Standards – Effective Date of
Amendments to AASB 10 and AASB 128 and Editorial Corrections
1 January 2024
1 January 2024
1 January 2024
1 January 2025
1 January 2025
1 January 2025
1 January 2025
AASB 2021-7(a-c)
Effective Date of Amendments to AASB 10 and AASB 128 and
Editorial Corrections
128
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Other
For the year ended 30 June 2023
Note 33 - Other accounting policies (continued)
Other accounting policies
Finance income
Finance income is recognised as the interest accrues (using the
effective interest method, which applies a rate that discounts
estimated future cash receipts through the expected life of the
financial instrument) to the net carrying amount of the financial
asset.
Finance costs
Finance costs are recognised as an expense when they are
incurred, except for interest charges attributable to major
projects with substantial development and construction
phases, which are capitalised as part of the cost of the asset.
Financial assets
A financial asset is classified as at fair value through profit or
loss or fair value through other comprehensive income unless
it meets the definition of amortised cost. This is determined on
initial recognition.
Financial assets classified as at amortised cost are measured
initially at fair value and adjusted in respect of any incremental
and directly attributable transaction costs. All other financial
assets are measured at fair value on initial recognition.
Reclassification occurs only if there are fundamental changes
to the Group’s business model for managing financial assets.
Amortised cost
A financial asset is classified as at amortised cost only if
the asset is held to collect contractual cash flows and the
contractual terms of the financial asset give rise to cash flows
that are solely payments of principal and interest.
A financial asset is measured at amortised cost using the
effective interest rate method. Any gains and losses are
recognised through the amortisation process or when the
financial asset is derecognised or impaired.
Impairment of financial assets
The Group recognises an allowance for expected credit losses
(ECLs) for all debt instruments not held at fair value through
profit or loss. ECLs are determined using historical recovery
of contractual cash flows and the amount of loss incurred,
adjusted for current economic and credit conditions.
An impairment loss is based on the difference between the
contractual cash flows due in accordance with the contract
and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest
rate. Impairment losses on assets classified as amortised cost
are recognised in profit or loss when they are expected, not
when they are incurred. If a later event causes the impairment
loss to decrease, the amount is reversed in profit or loss.
Derecognition of financial assets
The derecognition of a financial asset takes place when the
Group no longer controls the contractual rights that comprise
the financial instrument.
This is normally the case when the instrument is sold or all the
cash flows attributable to the instrument are passed through to
an independent third party.
Derivatives
The Group uses derivative financial instruments such as foreign
currency contracts, interest rate swaps and options to hedge
its risks associated with interest rate and foreign currency
fluctuations. Such derivative financial instruments are carried at
fair value and are financial assets when the fair value is positive
and financial liabilities when the fair value is negative.
For derivatives that do not qualify for hedge accounting, any
gains or losses arising from changes in fair value are taken
directly to profit or loss for the year.
Hedge accounting
For the purposes of hedge accounting, hedges are classified
as either fair value hedges when they hedge the exposure to
changes in the fair value of a recognised asset or liability; cash
flow hedges where they hedge exposure to variability in cash
flows that is either attributable to a particular risk associated
with a recognised asset or liability or a forecasted transaction;
or hedges of a net investment in a foreign operation.
Initial recognition
At the beginning of a hedge relationship, the Group designates
and documents the hedge relationship and the related risk
management objective and strategy. The documentation
identifies the hedging instrument and the hedged item as
well as describing the economic relationship, the hedge ratio
between them and potential sources of ineffectiveness. The
documentation also includes the nature of the risk being
hedged and the method of assessing the hedging instrument’s
effectiveness. To achieve hedge accounting, the relationship
must be expected to be highly effective and are assessed on an
ongoing basis to determine that they continue to meet the risk
management objective.
Re-balancing
If the hedge ratio for risk management purposes is no longer
met but the risk management objective remains unchanged
and the hedge continues to qualify for hedge accounting,
the Group will rebalance the relationship by adjusting either
the volume of the hedged item or the volume of the hedging
instrument.
Discontinuation
Hedge accounting is discontinued when the hedge instrument
expires or is sold, terminated or exercised, or no longer qualifies
for hedge accounting. At that point in time, any cumulative
gain or loss on the hedging instrument recognised in equity
is kept in equity until the forecasted transaction occurs. If a
hedged transaction is no longer expected to occur, the net
cumulative gain or loss recognised in equity is transferred to
profit or loss for the year.
Gains or losses recognised directly in equity are reclassified
into profit and loss in the same period or periods the foreign
currency risk affects consolidated profit and loss.
Fair value hedges
For fair value hedges (for example, interest rate swaps), any
gain or loss from remeasuring the hedging instrument is
recognised immediately in the statement of profit or loss and
other comprehensive income. Where the adjustment is to
the carrying amount of a hedged interest-bearing financial
129
TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes to the consolidated financial statements: Other
For the year ended 30 June 2023
Note 33 - Other accounting policies (continued)
instrument, the adjustment is amortised to the statement of
profit or loss and other comprehensive income such that it is
fully amortised by maturity.
Cash flow hedges
In relation to cash flow hedges (forward foreign currency
contracts) to hedge firm commitments, the portion of the
gain or loss on the hedging instrument that is determined to
be an effective hedge is recognised directly in equity and the
ineffective portion is recognised in the statement of profit or loss
and other comprehensive income.
When the hedged item gives rise to the recognition of an
asset or a liability, the associated deferred gains or losses are
included in the initial measurement of the asset or liability.
For all other cash flow hedges, the gains or losses that are
recognised in equity are transferred to the statement of profit
or loss and other comprehensive income in the same period in
which the hedged firm commitment affects the profit and loss,
for example when the future sale actually occurs.
Note 34 – Contingent liabilities
Sale of water entitlements to Duxton Water
On 30 June 2023 the Group agreed to sell 4,770 megalitres of
Australian water entitlements to Duxton Water Limited for cash
consideration of $39.1 million. This agreement includes a call option
whereby the Group can repurchase all, or a portion, of the water
entitlements back from Duxton Water Limited at market price
(subject to a cap and collar) which expires on 30 June 2024. If the
call option is exercised it will result in a payment to Duxton Water
Limited.
Vineyard acquisition
The Group has entered into a contract to purchase vineyard assets
in Australia and New Zealand for approximately $50 million. The sale
is subject to a number of conditions and is due to be completed in
early 2024.
Note 35 – Business acquisitions
Frank Family Vineyards
On 14 December 2021, the Group acquired 100% of the ordinary
shares of Frank Family Vineyards LLC (“FFV”), a Company
incorporated in the US. FFV is highly acclaimed luxury wine business
based in the Napa Valley, California, comprising two vineyards, a
single winery, and a highly renowned tasting room and direct to
consumer wine club model.
From time to time, Companies within the Group are party to various
legal actions as well as inquiries from regulators and government
There have been no changes to provisional values of the assets and
bodies that have arisen in the normal course of business. The
liabilities of FFV at the date of acquisition that were disclosed at 30
Directors have given consideration to such matters which are or
June 2022. The accounting for the acquisition is now final.
may be subject to claims or litigation at year end and are of the
opinion that any liabilities arising over and above already provided
Château Lanessan
in the financial statements from such action would not have a
On 19 October 2022, the Group acquired a 78.6% stake in SAS
material effect on the Group’s financial performance.
Domaines Bouteiller and Groupment Forestier des Landes de
It is not practical to estimate the potential effect of these matters
its production and vineyard assets in the Bordeaux region of France.
Lanessan (collectively referred to as “Château Lanessan”), including
however the Group believe that it is not probable that a significant
liability will arise.
Class actions
Two Australian shareholder class actions have been commenced
against TWE Limited.
The cash consideration of $63.9 million ($55.8 million net of cash
acquired) was funded by a combination of cash resources and
utilising the Group’s cash and debt facilities.
From the date of acquisition, the revenue and profit before tax
contributed by Château Lanessan from continuing operations to
The first action was served on 2 April 2020 by Slater & Gordon (S&G)
the Group is not material. Estimated F23 EBITS that would have been
acting for Brett Stallard as trustee for the Stallard superannuation
earned if the acquisition had occurred at the commencement of the
fund. The second action was served on 1 May 2020 by Maurice
financial year is not material. Transaction costs of $5.4 million were
Blackburn (MB) acting for Steven Napier. The class in both
expensed and are included in administration and other expenses.
proceedings comprise shareholders who purchased shares
between 30 June 2018 and 28 January 2020. The two actions were
consolidated into a single action on 15 October 2020. TWE filed its
Defence on 25 February 2021. On 21 April 2023, the joint plaintiffs
filed an Amended Consolidated Statement of Claim (ASOC). The
proceedings allege that the Company breached its continuous
disclosure obligations under the ASX Listing Rules and the
Corporations Act and that it engaged in misleading or deceptive
conduct in contravention of the Corporations Act and the ASIC Act.
Regarding the claims, the Company strongly denies any and
all allegations made against it and is vigorously defending the
proceedings. Based on the information currently available, the
Company does not know the quantum of the class action.
No provision has been recognised at 30 June 2023 in respect
of the claim.
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TREASURY WINE ESTATES ANNUAL REPORT 2023
Notes to the consolidated financial statements: Other
For the year ended 30 June 2023
Note 35 – Business acquisitions (continued)
Assets acquired and liabilities assumed
The value of the identifiable assets and liabilities of Château Lanessan at the date of acquisition were:
Assets
Cash
Trade and other receivables
Inventories
Property, plant and equipment
Agricultural assets
Intangible assets
Deferred tax assets
Liabilities
Trade and other payables
Borrowings
Deferred tax liability
Total identifiable net assets at fair value
Goodwill arising from the acquisition has been recognised as follows:
Consideration transferred
NCI, based on their proportionate interest in the recognised amounts of the assets and liabilities of
Château Lanessan
Fair value of identifiable assets and liabilities acquired
Goodwill
Analysis of cash flows on acquisition
Cash consideration paid
Net debt acquired as part of the acquisition
Net cash flow outflow on acquisition (included in cash flows from investing activities)
Value recognised on acquisition
(provisional) $M
17.2
3.0
10.5
45.1
3.9
1.6
1.0
82.3
5.5
9.1
8.4
23.0
59.3
63.9
12.7
(59.3)
17.3
63.9
(8.1)
55.8
Note 36 – Subsequent events
Since the end of the financial year, the Directors approved a final 100% franked dividend of 17 cents per share. This dividend has not been
recognised as a liability in the consolidated financial statements at 30 June 2023.
On 15 August 2023 the Group announced that Paul Rayner will retire from the Company’s Board as Chairman and independent
Non-Executive Director effective from the conclusion of the Company’s Annual General Meeting, to be held on Monday 16 October 2023. The
Board has appointed John Mullen as Chairman elect, to become Chairman subject to Mr Mullen’s election at the Annual General Meeting.
The Directors are not aware of any other matters or circumstances that have arisen since the end of the financial year which have significantly
affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent
financial years.
131
TREASURY WINE ESTATES ANNUAL REPORT 2023 Directors’ declaration
For the year ended 30 June 2023
In accordance with a resolution of the Directors of Treasury Wine
Estates Limited, the Directors declare that:
(a) In the Directors’ opinion, the financial statements and notes
(c) There are reasonable grounds to believe that members of the
1 to 36 are in accordance with the Corporations Act 2001,
Closed Group identified in note 28 will be able to meet any
including:
liabilities to which they are or may become, subject because
of the Deed of Cross Guarantee described in note 30.
(i) complying with Accounting Standards, the Corporations
Regulations 2001 and other mandatory professional
(d) Note 1 confirms that the financial statements also comply with
reporting requirements; and
International Financial Reporting Standards as issued by the
(ii) giving a true and fair view of the consolidated entity’s
International Accounting Standards Board.
financial position as at 30 June 2023 and of its
performance for the financial year ended on that date.
(e) The Directors have been given the declarations by the Chief
Executive Officer and Chief Financial Officer as required by
(b) In the Directors’ opinion, there are reasonable grounds to
section 295A of the Corporations Act 2001.
believe that Treasury Wine Estates Limited will be able to pay
its debts as and when they become due and payable.
Paul Rayner
Chairman
15 August 2023
Melbourne, Australia
Tim Ford
Managing Director and Chief Executive Officer
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TREASURY WINE ESTATES ANNUAL REPORT 2023 Independent auditor’s
report
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TREASURY WINE ESTATES ANNUAL REPORT 2023 Independent auditor’s report
134
TREASURY WINE ESTATES ANNUAL REPORT 2023 Independent auditor’s report
135
TREASURY WINE ESTATES ANNUAL REPORT 2023 Independent auditor’s report
136
TREASURY WINE ESTATES ANNUAL REPORT 2023 Independent auditor’s report
137
TREASURY WINE ESTATES ANNUAL REPORT 2023 Independent auditor’s report
138
TREASURY WINE ESTATES ANNUAL REPORT 2023 139
TREASURY WINE ESTATES ANNUAL REPORT 2023 Details of shareholders, shareholdings and top 20 shareholders
Details of shareholders and shareholdings
Holding of securities
Listed securities 12 July 2023
Fully paid ordinary shares
No. of holders
No. of shares
% held by Top 20
84,674
721,848,176
83.62
Size of holding
1 – 1,000
1,001 – 5,000
415,001 – 10,000
10,001 – 100,000
100,001 and over
Total
No. of holders
59,540
21,907
2,210
953
64
83,760
Total % held
3.20
6.41
2.15
2.86
85.39
100
As at 12 July 2023, the number of shareholders holding less than a marketable parcel of $500 worth of shares, based on the closing market price on that date
of $10.89 per share, is 2,106.
Twenty largest shareholders – 12 July 2023
Rank
Shareholder
No. of fully paid
ordinary shares
% of fully paid
ordinary shares
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Citicorp Nominees Pty Limited
National Nominees Limited
BNP Paribas Noms Pty Ltd
HSBC Custody Nominees (Australia) Limited - A/C2
BNP Paribas Nominees Pty Ltd
Merrill Lynch (Australia) Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
HSBC Custody Nominees (Australia) Limited
Argo Investments Limited
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
Buttonwood Nominees Pty Ltd
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
Mutual Trust Pty Ltd
CPU Share Plans Pty Ltd
Netwealth Investments Limited
BNP Paribas Noms (NZ) Ltd
NewEconomy Com Au Nominees Pty Limited <900 Account>
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Total
242,841,941
161,373,209
96,355,350
29,022,843
16,388,537
12,028,953
9,890,843
7,350,565
4,939,495
3,302,617
3,250,000
3,159,448
2,697,076
2,388,941
1,909,332
1,468,313
1,440,247
1,324,515
1,269,854
1,176,080
33.64
22.36
13.35
4.02
2.27
1.67
1.37
1.02
0.68
0.46
0.45
0.44
0.37
0.33
0.26
0.20
0.20
0.18
0.18
0.16
611,442,356
83.62
Substantial shareholders – 12 July 2023
The following shareholders have declared a relevant interest in the number of voting shares at the date of giving the notice under
Part 6C.1 of the Corporations Act 2001 (Cth).
Institution
Capital Group
BlackRock Group
State Street Corporation
140
No. of fully paid
ordinary shares
% of fully paid
ordinary shares
61,037,277
45,713,004
43,951,109
8.5%
6.3%
6.1%
TREASURY WINE ESTATES ANNUAL REPORT 2023 Shareholder information
Annual General Meeting and Director nominations
The Annual General Meeting of the Company will be held at 10:00am
ADR Depositary and Transfer Agent
BNY Mellon Shareowner Services 462 South 4th Street, Suite 1600
on Monday, 16 October 2023 (AEDT). Full details will be contained in
Louisville KY 40202 United States of America
the Company’s Notice of Meeting to be available on the Company’s
website prior to the meeting. All Director nominations for election
Postal address: PO Box 43006
at the 2023 Annual General Meeting are to be received in writing no
Providence RI 02940 – 3078 United States of America
later than 5:00pm (AEST) on Monday, 28 August 2023:
By mail
Company Secretary
Treasury Wine Estates Limited
Level 8, 161 Collins Street
Melbourne, Victoria 3000
Australia
By fax
+61 3 9690 5196
Voting rights
Shareholders are encouraged to participate in the Annual General
Meeting, however, when this is not possible, shareholders may
appoint a proxy to participate in the Annual General Meeting in their
place.
Every shareholder participating in the Annual General Meeting
personally or by proxy, attorney or representative has, on a poll, one
vote for each fully paid share held.
Securities exchange listing
Treasury Wine Estates Limited shares are listed on the Australian
Securities Exchange under the code ‘TWE’.
Treasury Wine Estates Limited ordinary shares are traded in the US in
the form of American Depositary Receipts (ADR) issued by The Bank
of New York Mellon as Depositary.
Share register and other enquiries
If you have any questions in relation to your shareholding, share
transfers or dividends, please contact our share registry:
Computershare Investor Services Pty Limited
Yarra Falls 452 Johnston Street
Abbotsford Victoria 3067
Australia
Telephone: 1800 158 360 (Australia)
International: +61 3 9415 4208
Facsimile: +61 3 9473 2500
Website: investorcentre.com/contact
Please include your securityholder reference number (SRN) or holder
identification number (HIN) in all correspondence to the share
registry.
For enquiries relating to the operations of the Company, please
contact the Investor Relations team on:
Telephone: +61 3 8533 3000
Facsimile: +61 3 9685 8001
Email: investors@tweglobal.com
Website: tweglobal.com
Address: Level 8, 161 Collins Street Melbourne,
Victoria 3000, Australia
Telephone: 1888 269 2377
International: +1 201 680 6825
Email: shrrelations@cpushareownerservices.com
Website: www-us.computershare.com/investor
Electronic communications
The Company has an online share registry facility where
shareholders can:
•
•
•
•
•
•
•
check their current and previous holding balances;
update their address details;
update their bank details;
review their dividend history;
confirm whether they have lodged a TFN/ABN exemption;
elect to receive communications and Company information
electronically and change Annual Report elections; and
download commonly used forms.
To access the online share registry, log on to weglobal.com, go to the
Shareholder Information section located under the Investors menu
and click the ‘online share registry’ icon. For security and privacy
reasons, shareholders will be required to verify their identity before
they can view their records.
Tax file numbers, Australian business numbers or
exemptions
Australian taxpayers who do not provide details of their tax file
number will have any unfranked portions of dividends subjected to
the top marginal personal tax rate plus Medicare levy (if applicable).
It may be in the interests of shareholders to ensure that tax file
numbers have been supplied to the share registry. Shareholders
may request a form from the share registry or submit their details via
the online share registry.
Change of address
It is important for shareholders to notify the share registry
of any change of address. As a security measure, the previous
address should also be quoted as well as your securityholder
reference number (SRN). Shareholders may access the online share
registry to submit their details or download a personalised change of
address form.
Shareholder wine offer
Shareholders in Australia and the US have the opportunity to
purchase the Company’s wines through Cellardoor.co and
TheWineShop.com, respectively.
Cellardoor.co is an exclusive members-only online wine community
for shareholders and family and friends of Treasury Wine Estates.
As proud custodians of awarded and recognised wineries, we invite
Australian shareholders to join Cellardoor.co and establish a direct
connection to our iconic vineyards. By joining Cellardoor.co you will
have 24/7 access to an exceptional range of wines from Treasury
Wine Estates’ award winning wineries at exclusive prices.
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TREASURY WINE ESTATES ANNUAL REPORT 2023 Shareholder information
TheWineShop.com is Treasury Wine Estates’ multi-branded US
shopping experience that highlights historic and recognised wineries
in Napa. TheWineShop.com will continue to evolve and offer more
and more offerings as time goes on. TheWineShop ships to most
states. As a TWE shareholder, we invite you to save 30% off any
purchase you make by using the promo code TWESHARE
at checkout.
Australian shareholders
To become a Cellardoor.co member:
Go to invite.cellardoor.co/twe-shareholder1
and enter Access Code 89374 to register.
US shareholders
Visit: thewineshop.com
Treasury Wine Estates Limited
ABN 24 004 373 862
Company Secretary
Christine Harman BA LLB (Hons), MBA
Registered office
Level 8, 161 Collins Street
Melbourne Victoria 3000 Australia
Telephone: +61 3 8533 3000
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TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes
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TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes
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TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes
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TREASURY WINE ESTATES ANNUAL REPORT 2023 Notes
146
TREASURY WINE ESTATES ANNUAL REPORT 2023 Overlooking Kanuka Vineyard to Wairau Valley, Marlborough, New Zealand
Photo by Grant Udy, Water Treatment Supervisor.
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TREASURY WINE ESTATES ANNUAL REPORT 2023 tweglobal.com