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
15 August 2024
ASX ANNOUNCEMENT
TWE 2024 Annual Report
Treasury Wine Estates Ltd (ASX:TWE) is pleased to present its Annual Report for the year
ended 30 June 2024, 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:
Media
Investors
Ellie Hewitt
Bijan Taghian
Tel: +61 3 8533 3493
Tel: +61 3 8533 3568
Mob: +61 429 678 771
Mob: +61 433 173 664
1
Final Report in respect
to Treasury Wine Estates Limited
For the year ended 30 June 2024
ABN 24 004 373 862
Key information
Year ended
30 June 2024
$M
Year ended
30 June 2023
$M
% Change
increase/
(decrease)
Amount increase/
(decrease)
$M
Revenue from ordinary activities
2,808.3
2,488.3
12.9%
320.0
Profit attributable to shareholders of Treasury Wine Estates Limited
98.9
254.5
(61.1)%
(155.6)
Net profit after tax before material items and SGARA
407.5
376.1
8.3%
31.4
Earnings before interest, tax, SGARA and material items
658.1
583.5
12.8%
74.6
1. Results for announcement to the market
Earnings per share
Year ended
30 June 2024
Cents per share
Year ended
30 June 2023
1
Cents per share
Basic earnings per share
12.7
34.9
Basic earnings per share, adjusted to exclude SGARA, material items
52.3
51.6
Dividends (distributions)
Cents per share
Franking %
Final dividend – year ended 30 June 2024 (determined subsequent to balance date)
2
19.0 cents
70%
Interim dividend – half year ended 31 December 2023
17.0 cents
70%
Final dividend – year ended 30 June 2023
17.0 cents
100%
1. Earnings per share for the year ended 30 June 2023 has been restated, in accordance with AASB 133, for the dilutive effects of the rights issue executed during the current financial year to ensure consistency period on
period.
2. The record date for determining an entitlement to receipt of the final dividend is 29 August 2024 and the Company expects to pay the dividend on 1 October 2024. 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 30 August 2024 at 5pm (AEST).
2. Final financial statements
Please refer to pages 100 through 155 of this report wherein the following are provided:
•
Consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2024;
•
Consolidated statement of financial position as at 30 June 2024;
•
Consolidated statement of changes in equity for the year ended 30 June 2024;
•
Consolidated statement of cash flows for the year ended 30 June 2024;
•
Notes to the consolidated financial statements;
•
Consolidated entity disclosure statement; and
•
Directors’ declaration.
TREASURY WINE ESTATES ANNUAL FINANCIAL STATEMENTS 2024
Appendix 4E
2
Appendix 4E
TREASURY WINE ESTATES ANNUAL FINANCIAL STATEMENTS 2024
Final Report in respect
to Treasury Wine Estates Limited
For the year ended 30 June 2024
ABN 24 004 373 862
3. Net tangible asset backing
Net tangible asset backing per ordinary share
Year ended
30 June 2024
$
Year ended
30 June 2023
$
Net tangible asset backing per ordinary share
2.99
3.40
Investments in Associates and Joint Ventures
Year ended
30 June 2024
$M
Year ended
30 June 2023
$M
Investments accounted for using the equity method
-
-
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 17 October 2024.
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 Annual Report.
Further information can be obtained from:
4. Associates and Joint Ventures
Media:
Ellie Hewitt
Tel: +61 3 8533 3493
Mob: +61 429 678 771
Investors:
Bijan Taghian
Tel: +61 3 8533 3568
Mob: +61 433 173 664
TREASURY WINE ESTATES ANNUAL REPORT 2024
ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Contents
About Treasury Wine Estates
4
At a glance
8
Chairman and Chief Executive Officer’s report
9
Operating and Financial Review
14
Profit report
28
Sustainability
53
Inclusion, equity and diversity
56
Board of Directors
60
Corporate governance
62
Code of Conduct reporting
68
Directors’ report
69
Auditor’s independence declaration
72
F24 remuneration report
74
Consolidated statement of profit or loss and other comprehensive income
100
Consolidated statement of financial position
101
Consolidated statement of changes in equity
102
Consolidated statement of cash flows
103
Notes to the consolidated financial statements
104
Directors’ declaration
155
Independent auditor’s report
156
Details of shareholders, shareholdings, and top 20 shareholders
162
Shareholder Information
163
3
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
www.asx.com.au.
This report contains information that is based on
projected and/or estimated expectations, assumptions
or outcomes. 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:
•
Changing conditions in TWE’s key markets including
China;
•
Changes in economic conditions which impact
consumer demand;
•
Changes to TWE’s production cost base, including
impact of inflation;
•
Global difficulties in logistics and supply chains;
•
Risks in relation to the acquisition of DAOU;
•
Foreign exchange rate impacts given the global
nature of the business;
•
Vintage variations; and
•
The Company’s continuing exposure to geopolitical
risks.
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.
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.
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
5
4
70+
Countries
Consumers in more than 70 countries enjoy our iconic
wines, available in major retailers, premium wine
outlets, restaurants, bars, and online channels.
About Treasury Wine Estates
2,600
Team members
Our world class team has a presence across Australia,
New Zealand, Asia, the Americas, the United Kingdom,
Europe, the Middle East, and Africa.
3
Brand portfolio divisions
10,000
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.
Penfolds, Treasury Premium Brands, and Treasury
Americas are supported by centralised business
services, supply, and corporate functions.
6
7
Vines at Magill Estate vintage 2024 harvest, South Australia
Photo by Truc Pham, Analytical Services Manager
9
TREASURY WINE ESTATES ANNUAL REPORT 2024
Dear shareholders,
We are pleased to present the 2024 Annual Report for
Treasury Wine Estates Limited (TWE).
This year TWE delivered NSR and EBITS growth before
material items which reflects the excellent momentum
we continue to build behind our luxury brand portfolios
in Penfolds and Treasury Americas (TAM).
We made substantial progress in executing our
strategy, delivering significant milestones across the
organisation. Underpinning everything we do at TWE,
is ensuring the health, safety and wellbeing of our
teams and everyone who touches our business. Nothing
is more important than this. Pleasingly, we achieved a
39% reduction in the three-year rolling Serious Safety
Incident Frequency Rate as a result of the ongoing focus
and continued success of TWE’s Build Safe campaign.
Paving the way for TWE to provide expanded luxury
consumer experiences was the completion of the
transformative acquisition of DAOU on 12 December,
2023. This acquisition accelerates our luxury growth
strategy and cements TWE’s position as a global luxury
wine leader. With the acquisition of DAOU, TAM is now
home to an unrivalled portfolio of luxury brands which
also includes Frank Family Vineyards, Stags’ Leap,
Beringer, and Beaulieu Vineyards.
This transaction unlocks a significant value creation
opportunity, leveraging the organisational strengths
of DAOU and TAM, while building on TWE’s broader
capabilities and scale across portfolio innovation,
distribution, winemaking and a truly world class team.
It has also enabled the creation of two focused teams
within TAM – Luxury and Premium, with distinct portfolios
and differentiated priorities and approaches to market.
In a year that celebrates Penfolds 180th anniversary,
Penfolds continued on its journey of becoming a global
luxury icon, building on its rich heritage and tradition
of excellence. The success of Penfolds multi-country of
origin strategy now sees consumers having access to
an unrivalled portfolio of globally sourced luxury wines
from the world’s most revered wine regions including
Australia, America, France and more recently China.
Following the successful launch of the new tier in the
Penfolds range in 2022 “One by Penfolds”, Penfolds
launched its first China sourced luxury wine in August
2023, Chinese Winemaking Trial 521 (CWT 521). It was
released globally in limited quantities from August
2023 to the acclaim of wine critics and collectors.
This milestone presents an incredible opportunity
to drive further connection and engagement with
consumers in China, and to become a global
ambassador for Chinese luxury wine.
Treasury Wine Estates (TWE) continued to deliver value for our shareholders through the
strong execution of our strategy in the 2024 fiscal year, delivering organic earnings growth
and continued premiumisation led by our portfolio of luxury brands. This was enabled
by our relentless focus on connecting more consumers with our brands across more
occasions, producing exceptional quality wines in the world’s most revered winemaking
regions and maintaining a disciplined focus on innovation and investment to underpin
TWE’s future growth.
Chairman and Chief Executive Officer’s report
At a glance1
8
TREASURY WINE ESTATES ANNUAL REPORT 2024
•
F24 EBITS2 increased 12.8% to $658.1 million; EBITS margin down 0.1 percentage
points to 24.0%
•
EPS (before material items and SGARA) up 1.4% to 52.3 cents per share
•
Return on Capital Employed down 0.4ppts to 10.9%
•
Final dividend of 19 cents per share (70% franked); bringing F24 annual dividend
to 36 cents per share; a 16% increase in value on the prior period
•
Full-year cash conversion up 21.4 percentage points to 82.0%
•
NSR increased 13.1% to $2.7 billion, with $1 billion NSR delivered in both Penfolds and Treasury Americas
for the first time.
EBITS
(Earnings before interest, tax, material items and SGARA)
(A$ million)
12.8%
F24 INCREASE
EPS (Before material items and SGARA)
(Earnings per share) (cents)
1.4%
F24 INCREASE
ROCE3
(Return on Capital Employed)(%)
0.4PPTS
F24 DECREASE
Market capitalisation
(A$ million)
24.5%
F24 INCREASE
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
F20 F21
F22
F23
512.6
510.3
523.7
583.5
F20 F21
F22
F23
41.7
42.9
44.7
52.1
F20 F21
F22
F23
10.2%
10.8%
10.7%
11.3%
F20 F21
F22
F23
7,554
8,373
8,193
8,106
10.48
11.68
11.35 11.23
Share pice
($ at 30 June)
F24
658.1
F24
52.3
10.9%
F24
F24
10,094
12.44
3. F24 capital employed has not been adjusted for the impact of the Treasury Premium Brands impairment
John Mullen
Chairman
Tim Ford
Chief Executive Officer
10
11
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
TWE and Penfolds welcomed the positive news
from the China Ministry of Commerce (MOFCOM)
announcing the removal of tariffs from Australian wine
into China, effective 29 March 2024. We are delighted
to be bringing more of TWE’s Australian luxury wines
back to China, at a time when the luxury wine market
presents significant long-term growth opportunities
for Penfolds and the wine category overall. By
leveraging our unique Penfolds brand status to drive
ongoing demand our ambition is clear – to regain our
leadership position as the number one luxury wine
brand in China.
Penfolds continued its investment in France, unveiling
a new Champagne Cuvée Brut in collaboration with
Champagne Thiénot, set to launch from September
2024. Extending this strategic partnership symbolises
the brand’s ongoing commitment to winemaking in
France, enabling us to play a more meaningful role in
more consumer occasions.
While Treasury Premium Brands (TPB) earnings from
several of our commercial brands declined, the
priority brands in the division maintained their positive
momentum, driven by 19 Crimes, Squealing Pig and
Pepperjack. This year we launched our rebellious 19
Crimes brand in Japan, Vietnam, Laos, Cambodia
and India. Our 19 Crimes partnership with Snoop Dogg
continued with the expansion of the Cali by Snoop
range, including Cali Blanc Sauvignon Blanc into the UK
market. Squealing Pig was introduced to consumers in
Canada.
TWE’s winemaking excellence continues to be
recognised far and wide with a list of accolades
both extensive and prestigious, ensuring we have
every reason to be proud of our achievements. For
example, our Devil’s Lair 2022 Margaret River Cabernet
Sauvignon won ‘Best Cabernet Sauvignon’ and the
coveted James Halliday trophy for ‘Best Red Wine’
of Show at the prestigious National Wine Show of
Australia. Penfolds became one of the first All Star
winners at the Golden Vines Awards, taking home Best
Fine Wine Producer in the ‘rest of the world’ category
for the third year in a row, while TAM earned three
prestigious awards at the inaugural Wine Marketing
Awards in California, a celebration of excellence and
innovation in the US wine industry.
We continued to disrupt the market with new product
launches and partnerships to stay ahead of industry
trends and connect with more consumers. TWE
continues to invest strongly in our award-winning no
and low alcohol wine development program, catering
for more consumers who enjoy wine, but who are part
of the growing health and wellness trend informing
moderation and reduced alcohol consumption. Our
range of award-winning no and low alcohol wines,
now includes Squealing Pig, Pepperjack and Matua,
amongst others.
Overview of financial results
In F24, Group EBITS increased 12.8% to $658.1 million, driven
by strong luxury portfolio growth in Penfolds and TAM,
partly offset by lower premium and commercial portfolio
shipments in TPB. NPAT pre SGARA and material items
was up 8.3%.
Group Luxury NSR increased 29.6%, driven by outstanding
execution and consumer demand for luxury wine,
resulting in $1 billion NSR being achieved for both Penfolds
and Treasury Americas for the first time. Key highlights
from each division are detailed below.
•
Penfolds reported a 15.5% increase in EBITS to $421.3
million and an EBITS margin of 42.1% (down 2.4ppts).
The result was driven by strong top-line growth
across all portfolio tiers and price points, with the
weighting of Bin and Icon portfolio shipments
to 2H24 completed as planned. Momentum
accelerated across the portfolio in Asia, particularly
in Hong Kong, Thailand and Taiwan, in addition to
the commencement of Australian COO portfolio
shipments to China in 4Q24 following the removal
of tariffs. The decline in EBITS margin reflected the
step-up of entry-level Australian COO tier shipments
and higher onshore overhead costs in China through
4Q24. On a constant currency basis, NSR and EBITS
increased 21.2% and 16.1% respectively.
•
TAM reported a 13.1% increase in EBITS to $230.5
million and an EBITS margin of 23.0% (down 1.8ppts).
The result was driven by the 2H24 contribution of
DAOU and 14.1% NSR growth across TAM’s other
Luxury portfolio brands, supported by increased wine
availability, particularly for Stags’ Leap and Frank
Family Vineyards. Across the remainder of TAM’s
brand portfolio, NSR declined 3.4%, driven by the 19
Crimes Modern tier, with the NSR for the 19 Crimes
Classic tier stabilising to be modestly below the pcp.
On an organic basis, NSR was broadly in line with the
pcp while EBITS declined 9.2%, with lower EBITS margin
driven by higher COGS from the wildfire impacted
2020 Californian vintage, with improvement in 2H24
upon transition to the sale of the 2021 vintage.
•
TPB reported a 7.0% decline in EBITS to $76.0 million
and an EBITS margin of 10.3% (down 0.1ppts).
The result was driven by reduced Premium and
Commercial portfolio shipments, reflecting soft
consumption trends in the below $15 (or equivalent)
price points in addition to underperformance
relative to the category, particularly in Australia
and the UK through 2H24. TPB’s’ priority Premium
brands maintained their positive momentum, with
NSR up 4.6%, driven by 19 Crimes, Squealing Pig and
Pepperjack. On a constant currency basis, NSR and
EBITS decreased 8.9% and 16.7% respectively.
The Group also recognised material items loss of
$318.1 million after tax, primarily relating to a non-cash
impairment charge of $290 million after tax in relation
to the TPB division and costs associated with the DAOU
acquisition. The TPB impairment related primarily to
the write-down of goodwill and brands, predominantly
Commercial brands including Wolf Blass (acquired 1996),
Yellowglen (acquired 1996), Lindeman’s (acquired 2005)
and Blossom Hill (acquired 2015). Given ongoing market
trends and the performance of our Commercial brands,
coupled with the premiumisation of our TPB portfolio, TWE
also announced the decision to divest these brands.
While NPAT pre SGARA and material items grew at 8.3%,
statutory NPAT, inclusive of SGARA and material items,
declined 61.1% to $98.9 million.
Balance sheet strength and dividend
TWE maintains financial metrics that are consistent
with an investment grade credit profile. The Company’s
balance sheet continues to be strong, efficient, and
flexible. Net debt/EBITDAS was 2.0x in F24, up from 1.9x in
F23, and in line with TWE’s ‘through the cycle’ target of
up to 2.0x, despite completing the acquisition of DAOU
during the year.
Total capex for the year was $190.1 million comprising
maintenance and replacement capex of $100.7
million, and growth capex of $75.2 million including the
purchase of a vineyard in Marlborough, New Zealand.
Capex related to DAOU totalled $14.2 million. Ongoing
expectation for maintenance and replacement capex is
approximately $100 million per financial year with up to
$50 million of growth investment expected in F25.
Cash conversion was 82.0%; excluding the change
in non-current luxury and premium inventory, cash
conversion was 94.6%. The re-commencement of
shipments to China in 4Q24, where there was a high
proportion of cash sales, contributed to the stronger
than expected cash conversion outcome. In F25, TWE
expects full year cash conversion to be approximately
80%, excluding the change in non-current Luxury and
Premium inventory, reflecting underlying growth and a
moderation in the proportion of sales to China that are
on cash terms
Earnings per share decreased 63.6% to 12.7 cents
per share adversely impacted by the impact of the
impairment of goodwill and Commercial brands within
the Treasury Premium Brands division. Earnings per share
before Material Items and SGARA increased 1.4% to 52.3
cents per share. Return on capital employed was down
0.4ppt to 10.9%; excluding the impact from the acquisition
of DAOU, ROCE was 12.0%.
For F24, TWE declared a final dividend of 19.0 cents per
share, 70% franked; full year dividend of 36.0 cents per
share, or 72% NPAT, a 16% increase in value on the pcp.
Sustainability
Since launching our refreshed sustainability strategy in
2021, we have taken bold steps towards sustainability
leadership, right across the value chain, reflecting our
ambition to cultivate a brighter future for everyone
who touches our business and our products, and the
communities in which we operate.
During the 2024 financial year we made strong
progress on our commitments in key areas such
as water stewardship, reducing carbon emissions,
adapting to respond to climate change impacts and
seeking efficiency with technological innovation in our
vineyards and packaging centres. Highlights include:
•
Reducing our greenhouse gas emissions around 66%
since F21 (Scope 1 and 2)
•
Continuing to switch to renewable electricity, ~80% of
our total electricity usage1 over F24 was from certified
renewable sources. We have now completed 24 solar
projects across our global footprint.
•
Installing smart water meters in >90% of sites
operating in high-risk catchments as well as
completing a number of water preservation projects.
•
Continuing to build a resilient business by developing
a deep understanding of climate risk for our
viticultural assets, whilst exploring adaptation options.
•
Completing Primary Risk Assessments for 100% of
contracted spend in our supply chain.
•
Maintaining sustainability certification across 99.2%
of our owned and leased winery and vineyard sites
globally. Ongoing engagement with growers and
bulk wine providers has led to a large proportion of
global sourcing being sustainably certified.
TWE’s sustainability achievements provide a strong
foundation for future growth. Our commitment to
cultivating a brighter future remains unwavering,
driven by bold thinking and collaboration across all
areas of our business. This journey is enriched by
the active engagement and support of our external
partners, including our dedicated network of growers
and suppliers.
Our 2024 Sustainability Report will be available at
tweglobal.com/sustainability later this year.
Board Succession
This year we were delighted to announce the
appointment of Leslie Frank to TWE’s Board as a non-
executive director. As the former owner and founder of
Frank Family Vineyards in California, Leslie’s innovative
and entrepreneurial approach to luxury brand building,
coupled with her in-depth knowledge of the US wine
industry and deep relationships within the Napa Valley,
will be invaluable to TWE.
13
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
12
We would also like to take the opportunity to
acknowledge the enduring contribution made by Ed
Chan to the TWE Board. Ed has advised of his intention
to retire from the Board at our 2024 Annual General
Meeting. Ed has been a non-executive director since
2012, shortly after the Company was floated, and has
been an excellent director, having spent more than six
years as a member of the Audit and Risk Committee.
Looking ahead
Turning to F25, TWE’s business fundamentals today see a
diversified and truly global organisation. Since launching
our 2025 strategy four years ago, we have delivered a
positive increase in key financial metrics of which we
are extremely proud. Today we have a strong balance
sheet that gives us the opportunity to invest in strategic
initiatives, innovate our product offerings, and expand
into new markets, ensuring sustainable growth and
long-term success for TWE.
As we close out our 2025 strategy in a position of
strength, TWE has launched a new ‘Game Plan’ to ensure
we continue to reach new heights in F25 and beyond.
Our ‘Game Plan’ includes a brand new Purpose – Boldly
Cultivating, which symbolises our collective call to action
and commitment to shaping the future of TWE and
the global wine industry; refreshed vision which orients
TWE towards our core Luxury business – to become the
world’s most desirable luxury wine company; and our
strategy. This is all underpinned by our DNA – our cultural
code which guides how we act and the experiences
people have with TWE.
We will continue to strengthen and evolve our portfolio
led operating model, putting consumers at the heart
of everything we do and staying ahead of industry
trends. As part of this evolution, TWE has assessed
the future operating model for our global portfolio of
Premium brands. In addition to the decision to divest the
Commercial brand portfolio, TWE intends to establish
a single Global Premium division, which will be the
combination of TPB and the TAM Premium portfolio brands.
TWE considers a standalone globally focussed Premium
division to be the optimal way to drive value from
its Premium portfolio of brands whilst continuing to
leverage scale benefits across its global network. This
model will provide the opportunity to unlock optionality
for TWE to create additional future shareholder value
through its global portfolio of Premium brands to support
its luxury-led growth strategy. Transition to this new
model is expected by 1 July 2025.
Today we are less reliant on a single market or channel
than ever before, and we will continue to expand our
distribution, demand and availability of our brands
even further to drive our performance. We will continue
to delight our consumers by producing the wine they
demand by investing in our winemaking production
capabilities to create the best opportunities to grow
luxury grade fruit and to ensure world class supply
chain capabilities for increased luxury wine production,
while operating in the most sustainable way possible.
Long term partnerships with our broad global network
of suppliers, customers, and partners will remain
a cornerstone of our business and key enabler of
supporting our growth ambitions.
Our thanks
Our people are at the heart of TWE’s success. We thank
our teams across the globe for their deep commitment
to delivering on our strategy and ambitious growth
agenda throughout F24. Without their individual and
collective contributions, we would not be in the position
of strength we are today. We also acknowledge and
thank our shareholders for your continued support and
investment.
As we move into F25, TWE is strongly positioned to
continue to deliver growth with an exciting stategic
agenda and significant opportunities within each of our
portfolios and markets.
Kind regards,
John Mullen
Chairman
Tim Ford
Chief Executive Officer
A message from our Chairman
It has been a privilege to step into the role of Chairman of TWE as the business enters an exciting new chapter.
I would also like to acknowledge the tremendous leadership of Paul Rayner over his 12 year tenure as TWE’s
Chairman. Our accomplishments this year highlight the drive, creativity and talent of our teams and demonstrate
the importance of decisive action to remain competitive amidst ongoing changes and shifting consumer and
market dynamics. There is a huge amount of which the Board, the executive leadership and our employees
around the world can be proud of today, but there is more to be done. We enter F25 well positioned for continued
growth with strong momentum behind our strategic agenda.
Kind regards,
John Mullen
Kalimna Fortified Maturation facility, Barossa Valley
Photo by Dave Dahlenburg, Maintenance Planner
14
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
The following Operating and Financial Review contains
details of the significant changes in TWE’s state of affairs
that occurred during the year ended 30 June 2024.
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 sold in
more than 70 countries around the world, represented
predominantly by the luxury and premium price
segments, with commercial wine accounting for
approximately 5% of TWE Group’s gross profit. At the
heart of the business is TWE’s 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 and Paso Robles
in the United States, Marlborough in New Zealand,
Bordeaux in France and Tuscany in Italy.
TWE employs a global team of approximately
2,600 people.
TWE’s organisational structure and significant changes
in the state of affairs
Operating model
TWE operates a global business model with three
standalone divisions:
•
Treasury Americas – representing sales of US
sourced brands, as well as those imported from
Australia, New Zealand and Italy, in the Americas.
•
Penfolds – representing global sales of the
Penfolds Luxury brand portfolio.
•
Treasury Premium Brands – representing the sale
of TWE’s diverse range of predominantly Australia
and New Zealand sourced brands globally.
During the year, TWE made the following
management changes:
•
Stuart Boxer, previously Chief Strategy and
Corporate Development Officer, was appointed
Chief Financial and Strategy Officer, effective
1 November 2023.
•
Angus Lilley, previously Global Chief Revenue
Growth Officer, was appointed Managing Director
of Treasury Premium Brands, effective 1 July 2024.
•
Sarah Turner was appointed Chief Legal &
Corporate Affairs Officer, effective 1 August 2023.
Operating and Financial Review
Treasury Wine Estates (TWE) is a luxury focused and consumer-led global wine company,
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.
DAOU Vineyards acquisition
In December 2023, TWE completed the acquisition
of DAOU Vineyards, a highly acclaimed luxury wine
business based in California’s Paso Robles, for an
upfront consideration of US$900 million. The acquisition
established Treasury Americas as the leading luxury
wine business in the United States, with an unparalleled
portfolio of highly acclaimed and admired luxury brands.
DAOU Vineyards comprises an award-winning portfolio
of brands focused across five product tiers and luxury
price points from US$20-500 per bottle, the DAOU
Mountain Tasting Room, four luxury vineyards, four
wineries and 411 acres of vineyards in the Paso
Robles region.
Removal of tariffs on Australian wine imports
into China
On 29 March 2024, tariffs on Australian wine imports
into China were reduced to nil, effective immediately.
TWE promptly implemented a detailed plan to
re-establish its Australian Country of Origin (COO)
portfolio in China including re-establishing distribution
for Penfolds entry-level Australian portfolio, reallocating
a portion of Bin and Icon tiers to China, while maintaining
the strong momentum of growth in other key global
markets and expanding sales and marketing resources
in China. TWE also expanded sourcing from the 2024
Australian vintage and finalised price increases for a
number of key portfolio wines across the global customer
base.
Future operating model for global Premium
brand portfolio
Effective 1 July 2024, a new operating model was
implemented within Treasury Americas to enable a
separate sales and marketing focus between the Luxury
and Premium portfolios. In addition, from 1 July 2024, TWE
has integrated its Global Revenue Growth function into
the Treasury Premium Brands division, with the intention
of reducing overlap and simplifying operations.
Following these changes, TWE intends to evolve this
model further to a single Global Premium division, which
will be the combination of Treasury Premium Brands
and the Treasury Americas Premium portfolio brands.
TWE considers a standalone globally focussed Premium
division to be the optimal way to drive value from its
Premium portfolio of brands and support its luxury-
led growth ambitions. Transition to this new model is
expected by 1 July 2025.
TWE will also seek to divest its Commercial brand
portfolio, which includes Wolf Blass, Lindeman’s,
Yellowglen and Blossom Hill. In F24 these brands
represented approximately one third of the volume, 11% of
the NSR and less than 5% of the gross profit for the Group.
16
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Penfolds
Treasury
Premium
Brands
Treasury
Americas
Corporate functions
Treasury Business Solutions
Supply
US Supply
Our operating model
Net sales revenue ($m)
EBITS contribution3 ($m)
Earnings before interest, tax,
material items and SGARA
PENFOLDS 36%
TAM 37%
TPB 27%
PENFOLDS 58%
TAM 32%
TPB 10%
TWE’s business model
TWE is a vertically integrated wine business with three
principal activities:
•
Grape growing and sourcing.
•
Wine production.
•
Wine marketing, sales and distribution.
Grape growing and sourcing
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.
Figure 1: TWE’s regional sourcing model 2
Australia
California
New Zealand
Italy
France
China
TWE OWNED / LEASED
GROWER CONTRACTS
THIRD PARTY PRODUCED WINE
26% 60% 14%
34%
61% 5%
25%
67%
8%
41%
11%
47%
22% 27%
50%
88% 12%
A global sourcing model diversified across geographic
regions, varietals and price segments supports growth
and limits exposure to vintage variation risk as well as
grape and bulk wine pricing movements during periods
of grape shortages and surpluses.
This diversification and flexibility also enables TWE
to react to changes in consumer and customer
preferences to support growth. TWE owns and leases
6,876 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 2,684 planted
hectares in key viticultural regions in California, including
Napa Valley, Paso Robles, Sonoma County, Lake County
and Central Coast. In Europe, TWE owns and leases 191
planted hectares in France’s Bordeaux region and 168
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.
Wine production
TWE owns world-class wine production and
packaging facilities.
•
In Australia, TWE owns and operates six wineries
and one packaging facility with wines primarily
produced in South Australia and Victoria.
•
In New Zealand, TWE owns one winery located
in Marlborough.
•
In the US, TWE has nine wineries and one packaging
facility in California’s North and Central Coast
regions.
•
In Europe, TWE owns one winery in Italy and three
wineries in France.
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 insights
and opportunities.
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 price segments.
Figure 2 shows the net sales revenue (NSR) and
earnings before interest, tax, SGARA and material items
(EBITS) contribution by division in F24.
Figure 2: TWE’s business performance by division in F24
2. Regional sourcing is historical data for the northern hemisphere 2023 vintage and the southern
hemisphere 2024 vintage.
3 Excludes corporate costs of $(69.7) million
Operating and Financial Review
18
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Figure 3: Global wine category growth trends by price point
Luxury
(A$30+)
Premium
(A$10 - A$30)
Commercial
(below A$10)
HISTORICAL GROWTH (2014 — 2023)
FORECAST GROWTH (2023 — 2028)
Five year
forecast
CAGR
+1.6%
-1.2%
+3.1%
+0.9%
+2.7%
+14.1%
+1.1%
+1.6%
+2.0%
2023 market value A$bn
Global wine category trends4
In value terms, the global wine market has been flat in recent years, with growth in the Luxury and Premium
segments offset by declining consumption of commercial wine. The category is expected to remain stable as
premiumisation continues.
These premiumisation trends underpin continuing growth in several of the largest luxury wine markets, including
priority TWE growth markets – the United States, Asia, the United Kingdom, and Australia. Collectively, these priority
markets represent 80% of the global Luxury wine market. Looking forward, strong growth trends are expected
across many luxury wine markets led particularly by Asia and the United States.
TWE’s portfolio structure and global presence provides a platform from which to harness these trends with 49% of
revenue generated from the luxury price point (A$30+).
3.2%
2.0%
1.4%
-0.2%
-0.2%
-1.5%
Figure 4: Largest luxury wine markets and forecast five-year compound annual growth rate (CAGR)
in wine consumption
France
United
States
Asia ex
China
United
Kingdom
Italy
China
Switzerland
Spain
Australia
PRIORITY TWE GROWTH MARKETS
6.9
4.3
3.8
2.5
1.1
1.1
0.8
0.7
0.7
4. IWSR 2024, still wine only, A$ equivalent, portfolio price points classified as Luxury A$30+, Premium A$10-30, Commercial A$10 and below
TWE Ambition and Game Plan
TWE’s strategic vision and strategic imperatives are set out below
Operating and Financial Review
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Strategic imperative
Progress against initiative in F24
World class talent
•
Continued to put our DNA at the heart of everything we do, including further embedding and building
capability in our Leadership Attributes (which are underpinned by and reinforce our DNA).
•
Continued to build capability and elevate the impact of our senior leaders through an immersive
development program and global conference where leaders contributed to the creation of a
company-wide Purpose and evolution of TWE’s strategy.
•
Maintained our focus on building leadership at all levels and company-wide learning through our TWEforME
Academy, as well as building our pipeline of diverse senior and executive leaders.
•
Consolidated our collective commitment to Inclusion, Equity & Diversity by continuing to develop leadership
capability through inclusive mentoring, whilst increasing our focus in key workforce areas such as Supply,
receiving provisional approval of our first Reconciliation Action Plan from Reconciliation Australia and
implementing demographic data collection in multiple countries and regions as a step toward measuring
and broadening our impact.
•
Continued commitment to the wellbeing of our people through increased investment in resources and
support for both mental and physical wellbeing, ensuring that wellbeing is an intrinsic part of our culture and
everyday ways of working.
•
Conducted our 4th all-employee Engagement and Inclusion Survey, seeing a 4% point increase in
participation, off the back of an 8% increase in F23, indicating increasing levels of trust and confidence in the
survey process. Positively, TWE saw improvement in key areas of EVP focus such as safety and wellbeing and
in collaboration and connection.
Consumer focused premium
brand portfolio
•
The expansion of Penfolds multi-country of origin portfolio with the 2023 Penfolds Collection launch
including the release of our first China sourced wine – CWT (China Wine Trial) 521. Penfolds also
expanded its Champagne offering with the announcement of a new Champagne in collaboration with
Champagne Thienot.
•
Treasury Americas became the US luxury wine market leader with the addition of DAOU, the fastest growing
US Luxury brand, to its portfolio of iconic brands. The Luxury portfolio excluding DAOU grew NSR by 14% in F24
driven by Stags’ Leap and Frank Family Vineyards.
•
Treasury Premium Brands Innovation behind core brands including Squealing Pig, Matua and Pepperjack
continues to drive growth with expansion of the low-no alcohol portfolio and new packaging formats.
Multi regional and multi-channel
selling models
•
Penfolds deepened its relationship with La Place De Bordeaux, expanding the range distributed through this
iconic network of negotiants include our Luxury and Icon wines.
•
Treasury Americas’ strategic review of US distribution post the acquisition of DAOU has led to an enhanced
partnership model, leveraging existing long-term relationships.
•
Treasury Premium Brands embedded a new sales model in Australia, specifically focused on the
Independent channel.
Deep, long-term partnerships
and networks
•
Penfolds continued exploring new creative ideas through its ongoing partnership with NIGO,
and collaborated with some of the world’s best winemakers including Dourthe Bordeaux and
Champagne Thienot.
•
Treasury Americas’ partnership highlights included Stags’ Leap winery becoming the official wine of
Cirque Du Soleil, Frank Family Vineyards culminating its K9s for Warriors partnership and 19 Crimes
debuting as the official wine of the UFC.
•
Treasury Premium Brands continued its highly successful Squealing Pig activations at the Australian
Open and Sydney World Pride.
Sustainable and
multi-regional sourcing and
winemaking models
•
Positive momentum in sustainability, with strong progress against our renewable electricity
commitment, contributing to significant reductions in carbon emissions compared to F21. We continue
to treasure water and have certified >16 million litres of wine in F24 giving consumers confidence their
wine has been produced sustainably.
•
Completion of the Australian supply network transformation program, re-orienting TWE’s supply chain
to the production of premium and luxury wines in strategically attractive growing regions.
•
Acquisition and integration of a vineyard in New Zealand, materially increasing our Marlborough
Sauvignon Blanc supply base.
•
Ongoing expansion of our multi-country of origin sourcing strategy with the release of our first
Chinese sourced wine and the continued enhancement of our production footprint in France.
Operating and Financial Review
Harvesting Shiraz at Harnetts Vineyard, McLaren Vale
Photo by James Mitchell, Vineyard Operator
22
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
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.
While our material risks have not fundamentally changed in FY24, we have made some changes to the risks
included below to reflect how the Board and Executive see TWE’s risk profile considering both financial and
non-financial impacts.
Risk
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.
•
Maintain a global diversified portfolio of brands and products
biased to premium and luxury price points and at different
stages of the brand lifecycle.
•
Strategic focus on premium and luxury price points, 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. This includes investment in projects to
provide significant additional data and insights that are
being used to direct new product development, marketing
strategies, and investment in growth segments.
•
Global business planning processes, including portfolio
reviews and global volume alignment processes.
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.
•
Continue to grow our diversified portfolio of products and
markets including Australia, the US, Europe, Middle East, and
Asia.
•
Respect local laws wherever we operate based on 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
in which it makes and sells wine. 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 emerging ESG reporting 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 and the ESG Reporting
Governance Steering 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.
Future perspectives
Material business risks
In F25, TWE expects to deliver EBITS in the range of $780-810m, reflecting continued strong
top-line luxury portfolio growth in Penfolds and Treasury Americas, with stability expected
across the remainder of TWE’s global brand portfolios. Execution will be focused on three
clear priorities:
•
Continuing Penfolds well-established strategy of growing distribution and availability, and consumer demand,
in key global markets in addition to its focus on re-establishing the Australian COO portfolio and investment in
China ahead of increased Bin and Icon portfolio availability from F26;
•
Driving Treasury Americas market-leading US Luxury platform to continue DAOU’s strong growth momentum
and to deliver growth across the remainder of the Luxury portfolio brands, supported by a double digit
increase in portfolio availability; and
•
Improving the execution focus and operating performance of the Premium brand portfolios within Treasury
Premium Brands and Treasury Americas ahead of transition to the Global Premium division in F26.
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Risk
Description
Mitigation
Cyber and
information
security
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.
•
Regular user access and general system penetration
testing.
•
Crisis, business continuity and disaster recovery plans.
Health, safety
and wellbeing
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.
•
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, safety conversations, and a HR complaints
and whistleblower service capturing 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 (CMHAA), 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 health
care 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.
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.
•
Adjusting our footprint to focus on sites where the conditions
and access to water are projected to be more favourable.
•
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 help 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.
•
Continuing to monitor and understand emerging trends,
policy developments, and our emissions profile.
•
Developing business resilience through updated
interventions or approaches to adapting to
climate change.
Risk
Description
Mitigation
Damage to
corporate and/or
brand
reputation
exacerbated
by negative
traditional and
social media
coverage
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.
•
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.
•
Crisis Management Plan, associated training and preparation.
Technology
and business
infrastructure
supporting
growth
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.
•
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.
•
Annual key control self-assessment process.
•
Data and Analytics operating model to address data,
reporting and analytical capability needs.
Misaligned
supply and
demand for
region, variety,
and grade
of grapes
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 realignment 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.
•
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.
•
Long-term strategic partnerships to ensure the continued
supply of large volumes of luxury bulk wine.
•
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.
Partner
performance
and market
concentration
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.
•
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.
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Risk
Description
Mitigation
Pricing and
investment
execution and
cost management
impacting margin
outcomes
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.
•
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 defects,
contamination,
and counterfeit
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 recalls.
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.
•
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.
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.
•
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 136.
Risk
Description
Mitigation
Turnover
of key talent
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:
•
a culture enabled by a connection to
purpose and underpinned by our DNA values,
which celebrates diversity, courage and
collaboration.
•
a holistic approach to employee health, safety
and wellbeing, including mental and physical
health, resilience and flexibility.
•
market competitive remuneration, benefits,
incentives and reward aligned to the
achievement of TWE’s financial and business
goals and demonstration of the right
behaviours.
•
investment in inclusion, equity and diversity
initiatives that maximise inclusion and
minimise bias.
•
talent review and succession planning
processes
•
critical role reviews to identify any key person
dependencies and to explore development
and mobilisation opportunities for top talent.
•
strategically aligned and targeted learning
and development programs.
28
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Profit report
Announcement headlines1
•
Statutory NPAT of $98.9 million was down 61.1%,
reflecting post-tax material items loss of $318.1
million relating primarily to non-cash impairment
of goodwill and commercial brands within Treasury
Premium Brands; NPAT, pre material items and
SGARA, up 8.3%.
•
EBITS increased 12.8% to $658.1 million driven by
strong luxury portfolio growth in Penfolds and
Treasury Americas, including the 2H24 contribution
from the acquisition of DAOU.
•
Excluding the contribution from DAOU, EBITS
increased 6.4%, in line with the guidance for mid-
high single digit organic EBITS growth in F24.
•
Group Luxury NSR increased 29.6% (14.5% organic
growth), driven by outstanding execution and
with consumer demand for luxury wine remaining
strong in TWE’s key markets.
•
Re-establishment of Penfolds Australian COO
portfolio in China is on track, with strong shipment
demand from customers and initial depletions in
line with expectations.
•
DAOU delivered 2H24 EBITS of US$24.7 million, in line
with guidance, with business integration underway
and on track to deliver synergies of US$20 million+
by the end of F26.
•
Following completion of the premium brands
operating model review, TWE intends to create a
Global Premium division by 1 July 2025 through
the combination of Treasury Premium Brands and
Treasury Americas Premium portfolio brands, and
seek to divest its Commercial brand portfolio.
•
TWE expects F25 EBITS to be delivered in the range
of $780-810 million, reflecting continued strong
luxury portfolio growth in Penfolds and Treasury
Americas, with stability expected across the
remainder of TWE’s global brand portfolio
2.
A$m (unless otherwise stated)
F24
% Change
reported
% Change
constant
currency
% Change
organic3
Net Sales Revenue (NSR)
2,739.8
13.1%
10.7%
4.4%
NSR per case (A$)
125.2
14.2%
11.8%
8.1%
Earnings Before Interest, Tax, SGARA and Material items (EBITS)
658.1
12.8%
9.9%
3.6%
EBITS Margin
24.0%
(0.1)ppts
(0.2)ppts
(0.2)ppts
Net Profit After Tax
98.9
(61.1)%
(63.3)%
-
Earnings Per Share (A$ cents)
12.7
(63.6)%
(65.6)%
-
Net Profit After Tax before Material Items and SGARA
407.5
8.3%
4.2%
-
Earnings Per Share before Material Items and SGARA4 (A$ cents)
52.3
1.4%
(2.5)%
-
•
NSR increased 13.1% to $2,739.8 million with strong
luxury portfolio growth in Penfolds and Treasury
Americas, which included the contribution from
DAOU in 2H24, partly offset by lower sales in Treasury
Premium Brands.
•
NSR per case increased 14.2% driven by the ongoing
premiumisation of TWE’s portfolio towards luxury wine,
which now represents approximately 50% of
Group NSR.
•
Post-tax net material items loss of $318.1 million,
relating to Treasury Premium Brands’ impairment
in addition to transaction and integration costs
associated with the acquisition of DAOU.
•
NPAT pre-Material items and SGARA grew 8.3%, with
EPS growth of 1.4% reflecting the single-half of earnings
contribution for DAOU and the impact of increased
shares on issue following the $825 million equity
raising to part fund the acquisition.
•
ROCE5 10.9%, down 0.4ppt versus the pcp; excluding the
impact from the acquisition of DAOU, ROCE was 12.0%.
•
Cash conversion 82.0%; excluding the change in
non-current luxury and premium inventory, cash
conversion was 94.6%.
•
Net Debt to EBITDAS 2.0x6 , inclusive of twelve months
EBITDAS contribution for DAOU, up from 1.9x in the pcp,
with further deleveraging expected in F25.
•
Final dividend of 19.0 cents per share declared, 70%
franked; full year dividend of 36.0 cents per share, or
72% NPAT, a 16% increase in value on the pcp.
1 Unless otherwise stated, all figures and percentage movements within commentary are stated on a reported currency basis versus the prior corresponding period, are pre-SGARA and material items and are
subject to rounding. NPAT and EPS exclude earnings attributable to non-controlling interests.
2 F25 expectations exclude any impact from potential divestment of the commercial brand portfolio
3 On a constant currency basis, excluding the contribution of DAOU in Treasury Americas.
4 Earnings per share for the year ended 30 June 2023 has been restated, in accordance with AASB 133, for the dilutive effects of the rights issue executed during the current financial year to ensure consistency
period on period. Refer to Note 7 of the financial statements within the 2024 Annual Report for details
5 Capital employed has not been adjusted for the impact of the Treasury Premium Brands impairment
6 Net debt to EBITDAS includes capitalised leases in accordance with AASB 16 Leases. F24 includes last twelve months EBITDAS of DAOU
1 On a constant currency basis, excluding the contribution of DAOU in Treasury Americas.
A$m
F24
% Change
reported
% Change
constant
currency
% Change
organic1
NSR
Penfolds
1,000.5
22.1%
21.2%
–
Treasury Americas
1,002.3
22.1%
19.4%
0.6%
Treasury Premium Brands
737.0
(5.8)%
(8.9)%
–
Group
2,739.8
13.1%
10.7%
4.4%
Luxury (%NSR)
48.8
6.2ppts
6.6ppts
3.5ppts
Premium (%NSR)
38.5
(4.0)ppts
(4.0)ppts
(1.7)ppts
Commercial (%NSR)
12.7
(2.3)ppts
(2.6)ppts
(1.9)ppts
EBITS
Penfolds
421.3
15.5%
16.1%
–
Treasury Americas
230.5
13.1%
8.4%
(9.2)%
Treasury Premium Brands
76.0
(7.0)%
(16.7)%
–
Corporate
(69.7)
(4.4)%
(3.3)%
–
Group
658.1
12.8%
9.9%
3.6%
EBITS Margin (%)
24.0
(0.1)ppts
(0.2)ppts
(0.2)ppts
Performance overview
Group financial summary
•
Penfolds reported a 15.5% increase in EBITS to $421.3
million and an EBITS margin of 42.1% (down 2.4ppts).
The result was driven by strong top-line growth across
all portfolio tiers and price points, with the weighting of
Bin and Icon portfolio shipments to 2H24 completed as
planned. Momentum accelerated across the portfolio
in Asia, particularly in Hong Kong, Thailand and Taiwan,
in addition to the commencement of Australian
COO portfolio shipments to China in 4Q24 following
the removal of tariffs. The decline in EBITS margin
reflected the step-up of entry-level Australian COO
tier shipments and higher onshore overhead costs in
China through 4Q24. On a constant currency basis,
NSR and EBITS increased 21.2% and 16.1% respectively.
•
Treasury Americas reported a 13.1% increase in EBITS
to $230.5 million and an EBITS margin of 23.0% (down
1.8ppts). The result was driven by the 2H24 contribution
of DAOU and 14.1% NSR growth across Treasury
Americas’ other luxury portfolio brands, supported by
increased wine availability, particularly for Stags’ Leap
and Frank Family Vineyards. Across the remainder of
Treasury Americas’ brand portfolio, NSR declined 3.4%,
driven by the 19 Crimes Modern tier, with the NSR for
the 19 Crimes Classic tier stabilising to be modestly
below the pcp. On an organic1 basis, NSR was broadly
in line with the pcp while EBITS declined 9.2%, with
lower EBITS margin driven by higher COGS from the
wildfire impacted 2020 Californian vintage, with
improvement in 2H24 upon transition to the sale of the
2021 vintage.
•
Treasury Premium Brands reported a 7.0% decline
in EBITS to $76.0 million and an EBITS margin of
10.3% (down 0.1ppts). The result was driven by
reduced premium and commercial portfolio
shipments, reflecting soft consumption trends in the
below $15 (or equivalent) price points in addition
to underperformance relative to the category,
particularly in Australia and the UK through 2H24.
Treasury Premium Brands’ priority premium brands
maintained their positive momentum, with NSR
up 4.6%, driven by 19 Crimes, Squealing Pig and
Pepperjack. On a constant currency basis, NSR and
EBITS decreased 8.9% and 16.7% respectively.
•
Corporate costs increased 4.4%, reflecting general
inflationary impacts.
Treasury Premium Brands impairment
Following the latest review of the carrying value of the
Group’s assets as part of its annual impairment testing
process, TWE has recognised a non-cash impairment
charge of $354 million ($290 million post-tax) in its
financial result for the year ended 30 June 2024 in relation
to the Treasury Premium Brands division. This impairment
has been treated as a material item and relates primarily
to the write-down of goodwill ($115 million) and brands
($229 million), predominantly commercial brands,
including Wolf Blass (acquired 1996), Yellowglen (acquired
1996), Lindeman’s (acquired 2005), and Blossom
Hill (acquired 2015). In F24, the contribution of these
commercial brands represented less than 5% of TWE
Group’s gross profit.
The changes to the carrying value assessment
reflect moderated top-line expectations as a result of
challenging market conditions for commercial wine,
across all markets, and the underperformance of TPB’s
brands relative to the category at these commercial price
points. These adverse trends have offset the benefits from
TPB’s strategic focus to premiumise its portfolio, where it
has delivered a three-year NSR CAGR of 10% for its priority
premium brands, which include Wynns, Pepperjack,
Squealing Pig and 19 Crimes.
30
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Location Xxxxxxxxxxxxxxxxx.
Photo by Xxxxxx, Job title.
Petersen Ranch, Napa County
Photo by Nicole Graham, Assistant Winemaker
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
About Penfolds
Since the very beginning, Penfolds commitment to quality has been underpinned by the art of blending and
attesting that all wines are connected through a consistent and recognisable Penfolds ‘House Style’; the ultimate
expression of a time-honoured and distinctive tradition of finding the best grapes from the best regions. Today,
this philosophy extends beyond Australia, to the bountiful soils of America, France and China.
Penfolds continues to Venture Beyond in 2024 and will celebrate 180 years of excellence; achieved through an
alchemy of art and science. Through the passing of time, wine innovations have become great traditions and old
and new generations continue to mark moments and create their own stories, with a glass of Penfolds in hand.
And so, almost two centuries since its inception, Penfolds continues to write new chapters and proudly remains
one of the world’s most revered winemakers - now and for ‘evermore.’
Penfolds
Penfolds Chinese Winemaking Trial (CWT) 521
In July 2023, Treasury Wine Estates cemented its
long-term commitment to China’s wine industry
with the launch of its first China-sourced wine in the
prestigious 2023 Penfolds Collection. The Chinese
Winemaking Trial (CWT) 521 is a blend of cabernet
sauvignon and marselan sourced from Shangri-la in
the south-western province of Yunnan, and Ningxia, in
the country’s central-north. It was released globally in
limited quantities from 3 August 2023 to the acclaim
of wine critics and collectors. The wine was unveiled
by Penfolds Chief Winemaker Peter Gago at a press
conference in Shangri-La, attended by local Diqing
Government officials and representatives of the China
Alcoholic Drinks Association (CADA).
TWE established a strategic co-operation agreement
with the country’s peak alcohol body CADA, in 2022,
which sees the two organisations working together
to advance China’s wine industry on the global stage
through technical knowledge and expertise exchange,
as well as wine education and culture programs.
Penfolds continued investment in France
In February 2024, Penfolds unveiled a new Champagne
Cuvée Brut in collaboration with Champagne Thiénot,
set to launch from September 2024. This expansion
in the Penfolds Champagne portfolio symbolises the
brand’s ongoing commitment to winemaking in France
and marks the beginning of a new chapter in the
Penfolds France story.
Penfolds connection to France dates back more than
seven decades, with the experimental 1951 Grange
inspired by the ideas and techniques winemaker Max
Schubert learnt on a serendipitous visit to Bordeaux in
1950. The new Champagne Cuvée Brut was overseen
by the watchful eyes of Penfolds Chief Winemaker Peter
Gago and Champagne Thiénot Chef de Cave Nicolas
Uriel. The announcement of Penfolds new Champagne
Cuvée Brut was shared in tandem with the brand’s
expanding partnership and fine wine offer within the
Bordeaux open marketplace, La Place de Bordeaux,
enabling greater distribution of Penfolds Icon and
Luxury wines across Europe, the Middle East, and Africa.
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35
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Penfolds x NIGO partnership
Penfolds announced its first creative partnership with globally acclaimed designer and artist NIGO in July 2023.
The multi-year collaboration began with the global launch of One by Penfolds in 2023, where NIGO designed four
animal motifs for each wine label representing the four winemaking regions where One by Penfolds wines are
sourced – Australia, France, China, and America. Apparel items for the collaboration sold out globally in under 90
minutes. In 2024, Penfolds launched its Grange by NIGO release and celebrated the first-ever design takeover of
Penfolds Grange, marking a momentous milestone for Penfolds in its 180th anniversary year.
Collaborating with NIGO was inspired by Penfolds history of pushing boundaries in winemaking and the exploration
of new creative ideas. As the Creative Director of Human Made and Artistic Director of KENZO, NIGO is known for his
innovative and future-thinking vision. Future projects between Penfolds and NIGO will be announced in F25.
Penfolds
For over 30 years, NIGO has been at the
forefront of culture, establishing himself as a
global icon and cultural pioneer. These values
align with Penfolds philosophies, which have
been anchored by curiosity, innovation, and a
pioneering spirit for 180 years.
Penfolds Evermore Inaugural Grant Program Launch
Solidifying its commitment and support for the regions
where it operates and makes wine, Penfolds announced
the establishment of its community and sustainability
initiative, Penfolds Evermore, in July 2023. As part of
the initiative, Penfolds has pledged one million AUD to
fund the Evermore Grant Program, designed to support
community and sustainability programs in Australia, the
United States, France, and China over the next five years.
The pilot round launched in Australia in January 2024, with
a focus on the areas of ‘food’, ‘winemaking/viticulture’ and
‘creative arts’ (including fashion, art and music).
Four grants were awarded in June to successful
recipients, whose projects venture beyond in their chosen
field. Complementing TWE ‘s broader sustainability
strategy, Evermore is Penfolds first brand-level
coordinated community and sustainability platform and
captures its aspirations as a global winemaker, employer,
and leader, to leave a positive mark on the places,
communities, and people it engages with. The Penfolds
Evermore Grant Program received the award for Social
Excellence: Investing in Community and Innovation at the
2024 Just Drinks Excellence Awards.
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Divisional performance overview
Penfolds1
A$m (unless otherwise stated)
F24
F23
%
F23
%
Volume (m 9Le)
3.0
2.3
30.4%
2.3
30.4%
NSR (A$m)
1,000.5
819.7
22.1%
825.3
21.2%
ANZ
255.8
235.9
8.5%
235.9
8.4%
Asia
629.6
467.4
34.7%
466.8
34.9%
Americas
48.2
51.5
(6.4)%
52.6
(8.3)%
EMEA
66.9
65.0
2.9%
70.0
(4.4)%
NSR per case (A$)
331.7
354.4
(6.4)%
356.8
(7.0)%
EBITS (A$m)
421.3
364.7
15.5%
363.0
16.1%
EBITS margin (%)
42.1%
44.5%
(2.4)ppts
44.0%
(1.9)ppts
Reported currency
Constant currency
Financial performance
Volume and NSR increased 30.4% and 21.2%
respectively, driven by:
•
Strong top-line growth across all portfolio tiers and
price points, with the weighting of Bin and Icon
portfolio shipments to 2H24 completed as planned
•
Continued strong momentum across the portfolio
in Asia, particularly in Hong Kong, Thailand and
Taiwan, in addition to the commencement of
Australian COO portfolio shipments to China
in 4Q24
•
Continued gains in Australia, with strong
performance in key retail accounts and the
DTC channel
•
Modest declines in EMEA and the Americas, which
reflect the re-allocation of a portion of the Bin and
Icon portfolio to support re-building distribution
in China
NSR per case2 decreased 7.0% driven by portfolio mix
from strong growth in the entry level luxury tiers.
COGS per case increased 4.4% reflecting the
sell-through of the higher cost 2020 and 2021 Australian
vintages in F24 and one-off costs related to re-work
of product labelling for the China market.
CODB2 increased 9.2%, driven by investment through
4Q24 to support the re-establishment of Penfolds
Australian COO portfolio in China.
EBITS increased 16.1% to $421.3 million and EBITS margin
reduced 1.9ppts to 42.1%, with the decline in EBITS margin
reflecting the re-establishment of entry-level Australian
COO luxury tiers and higher onshore overhead costs in
China through 4Q24.
Division insights
Key F24 execution highlights include:
•
Commencing re-establishment of the Australian
COO portfolio in China, with strong shipment
demand from customers and initial depletions in
line with expectations
•
Finalisation of price increases for a number of
key portfolio wines across the global customer
base, which were effective from 1 July 2024. On a
weighted average basis, Penfolds Bin and Icon
portfolio price has increased by approximately 6%
•
Record luxury wine intake from the 2024 Australian
vintage, which will support a significant step-up in
availability for the Bin and Icon portfolio from 2H26
Penfolds expects to deliver low double-digit EBITS
growth in F25, reflecting:
•
Top-line growth for the Bin and Icon portfolio,
including the benefit of price increases
•
Partly offset by a step-up in brand building
investment and overheads in China of
approximately $20m ahead of increased Bin and
Icon portfolio availability from F26
•
EBITS margin is expected to improve to within the
range of 43-45%
In F26 and F27, Penfolds will target:
•
Annual EBITS growth of approximately 15% across
both years, driven by the significant increase in
availability for the Bin and Icon portfolio from the
record 2024 Australian vintage intake
•
EBITS margin delivery in line with its long-term
target of 45%
•
TWE notes that the delivery of these long-term
targets remains subject to a range of variable
conditions: page 3 of this document provides
important information regarding the risk factors
relating to these targets
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 COGS and CODB exclude duties and taxes received from customers and paid to Chinese tax authorities under TWE’s China domestic business model, which are equal and offsetting
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Treasury Premium Brands
In line with our strategy to bring our awarded premium
wine brands to more people around the world,
Squealing Pig was introduced to our consumers in
Canada. No matter where this little pig goes, the
Squealing Pig ethos remains the same: to make wines
that are approachable and flavour-packed and to
have more fun than anyone else doing it. In partnership
with Mark Anthony Group, Canada’s leading importer
and distributor of exceptional wine, spirits and beer,
Squealing Pig now has listings and points of distribution
across the country.
We launched our rebellious wine brand 19 Crimes in
Japan, Indochina and India. To commemorate the
release in Japan, a ‘19 Crimes Night’ was held at the
world-famous Club Camelot in Shibuya, Tokyo, where
guests were introduced to 19 Crimes Cali Red, Cali Rosé
and Martha’s Chard in true 19 Crimes style.
Culture led partnerships and activations
Our 19 Crimes Snoop partnership continued with the
expansion of the Cali by Snoop range, introducing Cali
Blanc Sauvignon Blanc into the UK market. Consumers
can also ‘Ask the Doggfather’ questions via ground-
breaking augmented reality technology by following a
QR code on the back label where the D.O.G.G. will respond
to their questions. We know our consumers are always
looking for something new and different, so Halloween
2023 we created a wine to give them an experience like
no other with our 19 Crimes Halloween campaign, glow in
the dark labels and the world’s first coffin aged wine.
With a broad range of brands, the division is
focused on premium portfolio expansion and
consumer-led innovation.
Squealing Pig continued to make waves throughout Summer in our strongest Summer of Love campaign yet.
We continued to champion the colourful spectrums of love as the official wine of Sydney Gay and Lesbian Mardi
Gras and Brighton and Hove Pride in the UK, as well as our continued sponsorship of the Australian Pickleball
League (APL).
38
39
Continued global expansion of 19 Crimes and Squealing Pig
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 broad range of brands, the division is
focused on premium portfolio expansion and consumer-led innovation.
41
TREASURY WINE ESTATES ANNUAL REPORT 2024
40
New Italian lifestyle brand Belorante
Inspired by the effortless style, attitude and vivaciousness
of the Italian way, Belorante launched across Asda and
Morrisons stores in the UK – bringing a moment of colour
and joy, Italian style.
With Italian wine being the second largest category in the
UK grocery market, yet still very much led by tradition, we
saw an opportunity to reinvent Italian wine through a bold,
modern approach that embodies the true spirit of the
Italian lifestyle.
Tapping into the ‘better for you’ consumer trend
With a growing number of consumers looking to
moderate their alcohol intake, we grew our ‘better for
you’ portfolio with the launch of our Squealing Pig Zero
and Mid-Strength range as well as expansion of our
Pepperjack and 19 Crimes lower in alcohol and
mid-strength offerings globally.
Expanding alternative formats
To give consumers more options and open up more
wine occasions, we launched several alternative
packaging formats including Wolf Blass wine in
aluminum bottles for the Japan market, Squealing
Pig 250ml cans, with one standard drink per can, and
continued expansion and growth of Squealing Pig
Bagnums 1.5L pouch in ANZ.
this little pig poured a glass
cracked a tasty one
xxxxxxxx x xxxxx
TREASURY WINE ESTATES ANNUAL REPORT 2024
Treasury Premium Brands
Premiumisation with Wynns
Wynns Coonawarra Estate unveiled its 2024 Luxury
Collection, capturing the essence of two exceptional
years from the Estate’s prized vineyards in the Terra
Rossa soils in the heart of Coonawarra. An incredible 99
points was received for the 2021 John Riddoch Cabernet
Sauvignon by renowned Australian wine writer and
critic, Huon Hooke.
Extending the celebrations, industry icon and Wynns
Senior Winemaker, Sue Hodder, received two of the
highest honours in wine; being recognised as a ‘Patron
of Coonawarra’ by The Coonawarra Vignerons, and
inducted into the James Halliday Hall Of Fame.
Sue Hodder and Ben Harris with Wynns Luxury 2024 release
Photo by Truc Pham, Analytical Services Manager
Divisional performance overview
Treasury Premium Brands 1
A$m (unless otherwise stated)
F24
F23
%
F23
%
Volume (m 9Le)
12.9
14.3
(10.1)%
14.3
(10.1)%
NSR (A$m)
737.0
782.4
(5.8)%
809.3
(8.9)%
ANZ
345.7
367.2
(5.9)%
367.6
(6.0)%
Asia
49.4
73.0
(32.3)%
74.4
(33.6)%
Americas
27.0
27.4
(1.6)%
28.1
(4.0)%
EMEA
314.9
314.8
0.0%
339.2
(7.2)%
NSR per case (A$)
57.3
54.7
4.7%
56.6
1.3%
EBITS (A$m)
76.0
81.7
(7.0)%
91.3
(16.7)%
EBITS margin (%)
10.3%
10.4%
(0.1)ppts
11.3%
(1.0)ppts
Reported currency
Constant currency
Financial performance
Volume and NSR declined 10.1% and 8.9% respectively
driven by
•
Double-digit declines in commercial shipments
and reduced premium shipments, reflecting soft
consumption trends in the below $15 price points
in addition to underperformance relative to the
category, particularly in Australia and the UK
through 2H24
•
Reduced shipments to Asia reflect the re-alignment
of inventory levels to trend depletion rates
NSR per case increased 1.3% reflecting portfolio mix.
COGS per case increased 3.5% driven by portfolio mix,
with benefits from the organisational supply chain
optimisation initiatives implemented in 4Q23 reducing
the impact to COGS from lower sales volumes.
CODB improved 12.7%, reflecting the re-alignment of
brand investment with reduced divisional volume and
the gain of $10.5 million on sale from the divestment of
vineyard assets (of which $9.7 million was recognised in
1H24).
EBITS decreased 16.7% to $76.0 million and EBITS margin
declined 1.0ppt to 10.3%.
Division insights
Key F24 execution highlights include:
•
Priority premium brand focus continues to drive
momentum, with the portfolio remaining in growth,
driven by 19 Crimes, Squealing Pig and Pepperjack
•
Re-launch of Treasury Premium Brands’ Australian
COO portfolio in China with an initial focus on
Rawson’s Retreat
•
Innovation behind core brands continues to drive
growth with expansion of the low and no alcohol
portfolio and new packaging formats
both highlights
Trading conditions are expected to remain consistent
throughout Treasury Premium Brands’ key markets in
F25, supporting top-line stability and the delivery of
EBITS (excluding the one-off benefit of asset sales in
F24) broadly in line with the pcp2
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 F25 expectations exclude any impact from potential divestment of the Commercial brand portfolio
TREASURY WINE ESTATES ANNUAL REPORT 2024
42
Pinot Noir bunch, 2024 harvest at Matua
Photo by Grant Udy, Water Treatment Supervisor
About Treasury Americas
The leading luxury wine supplier in the United States, Treasury Americas aims to boldly lead change in the
Americas wine market through a consumer-obsessed business with an iconic portfolio of wines, disruptive
marketing, strong e-commerce capability, and a focus on innovation.
Acquisition of DAOU Vineyards
In F24, TWE announced the acquisition of the leading
luxury US wine business, DAOU Vineyards.
DAOU is recognised throughout the industry for its
award-winning Cabernet Sauvignon-based PATRIMONY
wines, unique consumer profile, and benchmark-setting
luxury experiences. Founded by brothers Georges
and Daniel Daou, DAOU has built a strong bond with
consumers through its excellence in winemaking,
unparalleled events, and the ability to reach consumers
through the innovative DAOU+ app. The addition of
DAOU accelerates Treasury Wine Estates’ premium and
luxury portfolio growth strategy in the US and globally,
cementing its place as a global leader in luxury wine.
With DAOU joining the TWE family of brands, the aim is
to bring the love of DAOU to consumers around
the world.
DAOU filled a gap in TWE’s portfolio, offering a
vibrant and contemporary brand that resonates
with the evolving tastes of wine enthusiasts. DAOU is
complementary to Treasury Americas’ existing luxury
portfolio, including Penfolds, Frank Family Vineyards,
Beaulieu Vineyard, Stags’ Leap Winery, Beringer
Vineyards, and Etude Winery.
Unlocking Treasury
Americas’ full potential
with two distinct
consumer-obsessed
portfolios.
45
TREASURY WINE ESTATES ANNUAL REPORT 2024
Treasury Americas
Consumer-obsessed Operating Model
Treasury Americas has curated an enviable suite of
brands requiring two different strategic marketing
approaches. The DAOU acquisition provided Treasury
Americas the scale to develop two distinct, consumer-
obsessed focused teams, allowing the division to
sharpen its focus.
•
Luxury: Set the standard for the US Luxury
Wine Experience.
•
Premium: Bold People, Bold Brands, Bold Innovation.
Following the acquisition, an extensive integration
program was executed to form one TWE team
with legacy members of DAOU and TWE, bringing
together the very best of both worlds. Treasury
Americas is implementing a separate sales and
marketing focus for the Luxury and Premium portfolios,
supported by a centre of excellence with the shared
services model. This operating model will bring with it
the benefits of separate focus to best drive business
plans, customer relationships, portfolio innovation and
ultimately strengthen financial performance.
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Excellence in Wine Marketing
Carrying on its legacy for disruptive marketing, Treasury Americas (TAM) earned
three prestigious awards at the inaugural Wine Marketing Awards. Hosted by the
Wine Industry Network, these accolades celebrate excellence and innovation in the
US wine industry. This recognition underscores TAM’s commitment to reaching
consumers with innovative, creative, and effective strategies in a hyper-competitive
and highly regulated market.
Cause Marketing: Frank Family Vineyards:
#FrankForACause
Napa’s Frank Family Vineyards established the
#FrankForACause giving campaign as a philanthropic
avenue to contribute to the well-being of its Napa
community and beyond.
These efforts garnered nearly $500,000 to benefit the
Breast Cancer Research Foundation, Feeding America,
Autism Speaks, the James Beard Foundation’s Open
for Good Campaign, the Humane Society of the United
States, the Arbor Day Foundation and, most recently,
K9s For Warriors.
TREASURY WINE ESTATES ANNUAL REPORT 2024
Treasury Americas
AI/Website Marketing: WineEvent.com
In March 2023, TAM launched WineEvent.com – a flash-
sale website for all its brands in the Americas. Nearly all
content in the creation of the site and ongoing content
has been created using Generative AI platforms such
as ChatGPT and Gemini.
This innovative site and content development method
has successfully achieved business goals and
continues to show how AI can create added bandwidth
for marketing teams, support increased creativity and
drive further innovation.
Packaging: Tapestry
Tapestry is a celebration of the unique terroir of Paso
Robles, brought to life through the art of the blend.
In partnership with branding and design firm Makers
& Allies, Tapestry’s label design, featuring custom
illustrations and typography, with flora and fauna
native to to California’s Central Coast, pays homage to
the region’s captivating biodiversity.
Together, a robust social media plan, photo and
video shoots, and lifestyle content all led to a successful
brand launch that embodies the brand’s ethos of
“The Art of The Blend.”
Napa Chamber of Commerce Sustainable
Business of the Year
A leader in sustainability in the wine industry and
beyond, the Treasury Americas team was honoured
with Sustainable Business of the Year award by the
Napa Chamber of Commerce.
The award highlights the Company’s unwavering
commitment to sustainability and its significant
contributions to environmental stewardship in Napa
Valley, in which it is one of the largest luxury landowners.
Sustainability is a key focus for TWE and Treasury
Americas has implemented a variety of innovative
strategies aimed at reducing environmental impact
while maintaining a high standard of excellence in its
business operations. With a focus on environmental
stewardship, the company has been at the forefront
of integrating sustainable methods into its operations,
setting the benchmark for other businesses in the region.
These efforts include improving ecosystems and
donating land in the Napa River restoration project,
as well as expanding solar arrays across all Treasury
Americas wineries, with future installations designed
to cover approximately 40% of the business’ current
electricity demand.1 As part of this approach, we
continued to develop partnerships including with the
University of California, Davis to educate and inspire
innovation in the industry.
Women in Wine Inspirational Leaders
Each year, the North Bay Business Journal’s Women
in Wine Awards celebrates the achievements and
contributions of female winemakers and wine industry
professionals in the San Francisco North Bay Area.
Treasury Americas was proud to see two exceptional
female leaders honored with the Inspirational Leader
Award in 2024: Leslie Frank (pictured left) and Rachel
Ashley (right).
Leslie Frank: Community champion and marketing expert
Co-founder of Frank Family Vineyards and TWE Board
Member, Leslie is a powerhouse in marketing and
communications. She also leads the #FrankForACause
initiative, making a big impact on the Napa community
and beyond. Leslie’s dedication to philanthropy and
community engagement truly embodies what the
Inspirational Leader Award is all about.
Rachel Ashley: Sustainability pioneer and mentor
Rachel Ashley, Senior Vice President of Supply at Treasury
Wine Estates, is driving change with the company’s
global sustainability strategy in the Americas. Thanks
to her efforts, Treasury Wine Estates is on track to hit
100% renewable electricity by the end of 2024. Rachel
is also a valued mentor, helping many women within
the Company and across the wine industry grow and
succeed.
As the wine industry evolves, leaders like Rachel and
Leslie are paving the way for future generations.
1 Demand is likely to increase in the future
48
49
Divisional performance overview
Treasury Americas1
A$m (unless otherwise stated)
F24
F23
%
F23
%
% Organic2
Volume (m 9Le)
6.0
5.5
9.7%
5.5
9.7%
(0.5)%
NSR (A$m)
1,002.3
820.8
22.1%
839.4
19.4%
0.6%
ANZ
-
-
-
-
-
-
Asia
-
-
-
-
-
-
Americas
1,002.3
820.8
22.1%
839.4
19.4%
0.6%
EMEA
-
-
-
-
-
-
NSR per case (A$)
167.0
150.0
11.3%
153.4
8.9%
1.1%
EBITS (A$m)
230.5
203.9
13.1%
212.7
8.4%
(9.2)%
EBITS margin (%)
23.0%
24.8%
(1.8)ppts
25.3%
(2.3)ppts
(2.5)ppts
Reported currency
Constant currency
Financial performance
Volume and NSR increased 9.7% and 19.4% respectively,
driven by:
•
The contribution from the acquired DAOU portfolio
in 2H24
•
Organic luxury portfolio NSR growth of 11.4%
supported by increased wine availability,
particularly for Stags’ Leap and Frank Family
Vineyards
•
Partly offset by the 5.5% decline in NSR for the
remainder of the Treasury Americas portfolio, driven
by the 19 Crimes Modern tier innovations that were
released in F23
•
Depletions exceeded shipments by 0.2m cases in
F24, driven by distributor inventory de-load across
some premium portfolio brands
NSR per case increased 8.9% reflecting portfolio mix,
with luxury portfolio contribution post the acquisition of
DAOU now over 50% of divisional NSR.
COGS per case increased 11.0% reflecting portfolio mix
and the sell through of the wildfire impacted 2020
California Luxury vintage, with COGS improving in 2H24
upon transition to the sale of the 2021 vintage.
CODB increased 28.4%, driven by the acquisition
of DAOU.
EBITS increased 8.4% to $230.5 million, with EBITS margin
decreasing 2.3ppts to 23.0%.
Division insights
Key F24 execution highlights include:
•
Luxury portfolio NSR growth, with increased
availability and improved breadth and quality of
distribution driving strong momentum
•
Continued strong growth for DAOU, which grew NSR
21% to $332.5 million in F24 versus the pcp. The 2H24
contribution was in line with expectations, with NSR
and EBITS of US$104.2 million and US$24.7million
respectively
•
Re-design of Treasury Americas operating model
to separate sales and marketing focus between its
luxury and premium portfolios, effective from 1 July
2024, and a revised distributor model focused on
enhanced partnerships
•
Stabilisation of the 19 Crimes Classic portfolio
(NSR modestly below the pcp), with key marketing
activations continuing into F25 expected to support
top-line stability
•
DAOU business integration is underway, with
material production and overhead cost synergies
of US$20 million+ progressing and on track to be
realised by the end of F26
In F25, Treasury Americas is focused on the following
priorities:
•
Completing integration and continuing the strong
growth momentum for DAOU
•
Delivering growth across the other luxury portfolio
brands, supported by a double-digit increase in
portfolio availability
•
Delivering stability across the remaining portfolio
brands
•
EBITS delivery is expected to be balanced across
F25, reflecting business seasonality and the
realisation of DAOU acquisition synergies, with EBITS
margin expected to improve towards the long-term
target in the high-20% range
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 On a constant currency basis, excluding the contribution of DAOU in Treasury Americas.
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
The Supply update replaces the Vintage update included previously in this report.
The update focuses on the result of the vintage completed in the most recent half
year. As a result of this change, this update reflects only the Southern hemisphere
vintage outcome. From next year onwards, the update will include both Southern
and Northern hemisphere vintage outcomes.
Supply update
Australia
Vintage conditions varied across regions and TWE’s
sourcing strategy, focused on premium and luxury
wines and sourcing grapes from several established
and climatically diverse inland regions such as
Barossa Valley, McLaren Vale, and Coonawarra, has
proven successful once again.
By anticipating the Chinese market’s reopening and
acting swiftly, TWE supplemented existing sourcing
by securing access to new fruit and wine supplies,
positioning ourselves to meet the rising demand for
our Luxury portfolio.
The exceptional quality of fruit from these regions
resulted in record intakes for TWE’s luxury wines,
particularly Penfolds. This achievement reflects
a combination of factors: a strong and diverse
sourcing network, valuable winery assets in the luxury
segment, and the outstanding execution of TWE’s
Australian supply team ensuring a significant step-
up in availability for Luxury wine from 2H26. Premium
and commercial fruit intake was reduced to align the
inventory position to an optimised level.
New Zealand
The 2024 New Zealand harvest delivered intake to
support TWE’s growth objectives, particularly for
Treasury Americas.
Recognising the seasonal variability in Marlborough
weather patterns and committed to proactive portfolio
management, TWE made a strategic acquisition in
2024: the Weta Vineyard. This expansion adds 245
hectares of prime Marlborough grapes to our portfolio,
bolstering our long-term supply security. With this
increased diversification, we are well-positioned to
navigate future fluctuations and mitigate any resulting
supply-demand imbalances.
Reconciliation of key performance measures
Metric (A$m unless otherwise stated)
Management calculation
F24
F23
Statutory net profit
98.9
254.3
Income tax expense
69.3
82.8
EBITS
Net finance costs
96.6
72.7
Material items (gain) / loss
404.2
109.2
SGARA (gain) / loss
(10.9)
64.5
EBITS
658.1
583.5
EBITS
658.1
583.5
EBITDAS
Depreciation & Amortisation
155.2
147.3
EBITDAS
813.3
730.8
Statutory net profit
98.9
254.5
Material items (gain) / loss
404.2
109.2
Tax on material items
(86.1)
(33.2)
EPS 1,2
SGARA
(10.9)
64.5
Tax on SGARA
1.4
(18.9)
NPAT (before material items & SGARA)
407.5
376.1
Weighted average number of shares (millions)
778.8
728.7
EPS (cents)
52.3
51.6
EBITS (LTM)4
716.0
583.5
Net assets excluding impariment in F24
4,900.7
3,878.9
SGARA in inventory
(43.5)
(37.8)
Net debt
1,712.5
1,386.2
ROCE3
Capital employed – Current year
6,569.7
5,227.4
Net assets (CFX)
4,782.3
3,875.7
SGARA in inventory (CFX)
(37.8)
(44.9)
Net debt (CFX)
1,827.1
1,285.2
Capital employed – Prior year (CFX)
6,571.6
5,116.0
Average capital employed
6,570.7
5,171.7
ROCE
10.9%
11.3%
1 Earnings per share for the year ended 30 June 2023 has been restated, in accordance with AASB 133, for the dilutive effects of the rights issue executed during the current financial year to ensure consistency
period on period. Refer to Note 7 of the financial statements within the 2024 Annual Report for details
2 Excludes earnings attributable to non-controlling interests
3 Capital employed has not been adjusted for the impact of the Treasury Premium Brands impairment
4 Includes 1H24 DAOU EBITS, prior to acquisition by TWE
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
In the face of a changing world and ongoing challenging market conditions, we have
continued to make significant progress in our sustainability agenda and broader strategic
objectives. We continue to build a more resilient business, produce sustainable wine,
and prioritise the wellbeing of our people, communities, and consumers to support our
ambition of cultivating a brighter future.
Sustainability
Our approach
Our approach to sustainability is embedded
throughout our entire organisation, and is driven by
our DNA. It reflects a clear commitment to innovation,
partnerships and taking a global leadership role
across the wine and beverages sectors. Through our
commitment to sustainability, we aspire to shape a
positive future for everyone who touches our business
from grape to glass.
This bold ambition adopts an integrated approach to
sustainability focusing on long-term value creation and
leading collective action to effectively manage risks,
and seize new and emerging opportunities. To support
this strategy, we continue to invest in improving our
overarching governance approach including data,
processes, and systems. We also acknowledge the
importance of sustainability being embedded into our
broader business strategy and decision making.
Our sustainability strategy and associated programs
of work are informed by best practice initiatives and
guidance including the Global Reporting Initiative
(GRI), the United Nations Global Compact (UNGC),
and the United Nations Sustainable Development
Goals (UN SDGs). We continue to evolve our reporting
approach to include emerging environment, social and
governance (ESG) requirements. In F24 the reporting
focus and expectations shifted from the Taskforce
on Climate-related Financial Disclosure (TCFD) to
future mandatory reporting from the International
Sustainability Standards Board (ISSB) and Australian
Accounting Standards Board (AASB). The finalisation of
these Standards and associated regulatory changes
are expected in F25, and mandatory reporting for TWE
is likely to commence from F26.
1 In addition, evolving
reporting areas outside of climate such as nature
and biodiversity captured within the Taskforce on
Nature-related Financial Disclosures (TNFD) are being
considered in our strategy and reporting.
1. Based on information available from ISSB, AASB and Australian Treasury as of 4 July 2024.
Cultivating a brighter future
BU
ILD
IN
G A
RE
SIL
IE
NT
BU
SIN
ES
S
FO
ST
ER
IN
G H
EA
LT
HY
AN
D
IN
CL
US
IV
E C
OM
MU
NIT
IES
PR
OD
UC
IN
G
SU
ST
AI
NA
BL
E
WI
NE
WATER
STEWARDSHIP
RESPONSIBLE
SUPPLY CHAIN
CLIMATE RISK
AND GHG
EMISSIONS
SUSTAINABLE
GROWING AND
PRODUCTION
HEALTH,
SAFETY AND
WELLBEING
SUSTAINABLE
PACKAGING
AND CIRCULAR
ECONOMY
CONSUMER
HEALTH AND
RESPONSIBLE
DRINKING
INCLUSION,
EQUITY AND
DIVERSITY
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, and change.
Fostering health and inclusive
communities:
we want to foster safe, sociable, and
connected communities where our
brands are promoted, and our wine
is consumed safely and responsibly.
Producing sustainable wine:
we want every consumer to
experience wine that is sustainably
grown, made, and packaged.
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55
TREASURY WINE ESTATES ANNUAL REPORT 2024
Our key performance highlights over the year include:2
•
Reducing our greenhouse gas emissions around 66%
since F21 (Scope 1 and 2)
•
Continuing to switch to renewable electricity, ~80% of
our total electricity usage3 over F24 was from certified
renewable sources. We have now completed 24 solar
projects across our global footprint
•
Installing smart water meters in >90% of sites3
operating in high-risk catchments as well as
completing a number of water preservation projects
•
Continuing to build a resilient business by developing
a deep understanding of climate risk for our viticultural
assets, whilst exploring adaptation options
•
Achieving a 39% reduction in the 3-year rolling
Serious Safety Incident Frequency Rate, as a result
of the ongoing focus and continued success of our
Build Safe campaign
•
Completing Primary Risk Assessments for 100% of
contracted spend in our supply chain
•
Maintaining sustainability certification across 99.2%
of our owned and leased winery and vineyard sites
globally. Ongoing engagement with growers and
bulk wine providers has led to a large proportion of
global sourcing being sustainably certified.
Importantly, we note there is more work to do, and
an ongoing commitment is required to drive holistic
and meaningful impact, and deliver our longer-term
objectives and business resilience. We remain focused
on improving the quality of our data, deepening the
integration of sustainability considerations including
climate change across our business, and supporting
collaborative action on key issues in our operating
markets.
A detailed overview of progress against our strategic
focus areas and public commitments will be available
Progress
Sustainability
in our 2024 Sustainability Report, released later this
year.
Governance and reporting
In F24 management continued to focus on the delivery
and advancement of our sustainability agenda.
Progress against strategic roadmaps for each of our
public commitments, alongside key enablers such as
communications, reporting, and data, was reported
monthly to our executive sponsor with regular updates
to the Executive Leadership Team (ELT).
The Board oversees TWE’s approach to, and
management of sustainability (or ESG) matters and
receives updates on sustainability and the status of key
priorities and initiatives. The Board also has oversight
of our key ESG disclosures, including the Company’s
annual Sustainability Report.
TWE’s Board Wine Operations and Sustainability
Committee (WOSC) has been in place since F22,
and focuses on strategic, long-term planning and
operational issues in winemaking, sustainability,
and supply chain in its own operations, and the
relationship with the sector in different winemaking
regions. The WOSC continued to meet regularly over
F24, engaging on a broad range of topics related to
our performance including climate risk and adaption,
renewable electricity and net zero emissions, farming
philosophy, water stewardship strategy, responsible
supply chain, modern slavery statement, and
mandatory climate reporting.
TWE’s reporting on sustainability and ESG topics is
captured in our annual Sustainability Report, which
provides updates on progress and performance.
Preparing for mandatory climate reporting
As a global viticultural business, TWE is exposed to
both physical and transitional climate risks and
opportunities. The physical risks include those arising
from extreme weather events and changes in climatic
patterns affecting temperature and water security.
Transitional risks and opportunities arise from political,
legal, technological, and market responses to the
challenges posed by climate change and the transition
to a lower carbon economy. We continue to monitor
these emerging trends, together with changing
consumer preferences and expectations.
Previously, we have sought to align our climate
disclosures with the 11 TCFD recommendations.
In line with the reporting expectations and changes
over F24, including the introduction of future mandatory
reporting requirements, we are working to increasingly
align with the ISSB and AASB. In F24, we established an
internal ESG Reporting Steering Committee comprising
relevant ELT and other senior members from across
the business. We have developed a roadmap to
ensure compliance with mandatory climate reporting
requirements and commenced delivery of various
initiatives and improvements across the business. Further
detail will be available in our 2024 Sustainability Report.
2 Pending verification and assurance
3 Includes DAOU
Castello di Gabbiano, Tuscany
Photo by Francesco Caselli, Head of Agriculture – Gabbiano Site Manager
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Our inclusive, supportive and collaborative culture
attracts and retains the best talent. We strive to
create 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 every six
months. The Company is pleased to report progress in
F24 and an overview of the TWE F30 IE&D Strategy and
F25 measurable objectives.
The Company’s IE&D policy can be found at
www.tweglobal.com
F24 diversity target and objectives
Recommendation 1.5 of the ASX Corporate Governance
Principles and Recommendations states that a
company’s board or board committee is to set
measurable objectives for achieving gender diversity.
The targets that have been set by the Board are as
follows:
1.
To increase female representation in leadership
roles to 50% by 2025, while continuing to foster an
inclusive culture.
2.
To increase female representation across the total
TWE workforce to 42% by 2025.
The three pillars of our IE&D strategy
Leaders who model our DNA: developing leaders who
steadfastly role model and lead inclusion.
Engaged employees, consumers and communities:
achieving meaningful outcomes from employees who
bring their whole selves to work, and consumers who
recognise our commitment to inclusion and diversity
through our brands.
Employer of choice: creating industry-leading policies
and work processes that maximise inclusion and
minimise bias.
The CEO and all ELT members had a Diversity and
Inclusion Key Performance Objective (KPO) to deliver
the objectives in F24.
F24 progress on diversity targets
As at 30 June 2024, TWE reached:
•
47.2% female representation in leadership roles,
compared to the target of 50% by 2025 (increased
from 44.5% in F23); and
•
42.9% female representation in all roles, compared
to the target of 42% by 2025 (increased from 42.8%
in F23).
F24 progress towards the IE&D Strategy
Our ambition, in seeking to continuously progress our
IE&D maturity as a company, is to create a culture
that is inclusive of all. Whilst we have made significant
progress demonstrating a leadership-led, visible
commitment to IE&D and embedding IE&D into our
ways of working, we recognise that we have some
specific challenges to overcome in certain areas of our
organisation. It was this insight that underpinned our
IE&D plan and focus for F24; continuing to encourage
leaders to embed IE&D into their ways of working,
whilst seeking to better integrate IE&D activities and
outcomes into and across our global Supply workforce.
The following outlines our key achievements against
the F24 plan, aligned under our three strategic pillars:
Leaders who model our DNA
•
The Supply Leadership Team and new members
of the Executive Leadership Team participated in
Inclusive Mentoring.
•
ERG awareness has been integrated into the
Supply Frontline Leadership Academy Program in
America and Australia.
Engaged employees, consumers and communities
•
Dedicated initiatives to address IE&D issues
within Supply were delivered, including engaging
Employee Resource Groups (ERGs) in site specific
events and positioning Supply at the centre of a
working group to lead TWE’s first Reconciliation
Action Plan (RAP).
•
Introduction of “ERG connects” for ERG leads to
drive greater connection between ERGs and
across regions to maximise shared impact.
•
IE&D alignment initiative with key distributor
partners in America.
Inclusion, equity and diversity
TWE’s Inclusion, Equity & 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.
Employer of choice
•
The collection of demographic data for desk-based
employees has been extended beyond our pilot in
the UK to now include the US, Australia, New Zealand
and Singapore. This enables us to be data-led and
more targeted in our strategy and initiatives.
•
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.
•
TWE Americas was recognised as the Healthiest
Employers of the Bay Area for mid-sized company
category.
•
Recognised as an Australian Workplace Equality
Index (AWEI) Silver Status Employer.
•
TWE participated for the first time in the Australian
Disability Network’s Access & Inclusion Index: an
important step in identifying, measuring and
progressing TWE’s access and inclusion maturity.
F30 IE&D Strategy
Aligned with TWE’s new Game Plan, we have developed
the next evolution of the IE&D strategy, with the goal
of fostering greater connection and belonging for all
employees with specific initiatives aligned with the
three pillars:
1.
Leadership – we continue to recognise and
prioritise the importance of inclusive leadership.
2.
Connection – our goal is to ensure every team
member feels valued and included, irrespective of
who they are or where they work.
3.
Ways of working – we continue to focus on
attracting people from different demographic
groups to apply to work at TWE, and to evolve
our systems and processes so that everyone is
positioned for success.
Our F30 IE&D strategy is an emergent strategy which
will evolve over time based on a process of continuous
experimentation and adaptation.
F25 objectives and initiatives
TWE continues to strive towards the following targets:
•
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 Company’s achievements in F25:
•
Support senior leaders to develop a personal
understanding of inclusion and connection, to build
their motivation and capability to lead
IE&D initiatives.
•
Use volunteering to build connections between
employees and between our employees and
the community.
•
Use strategic workforce planning to diversify TWE’s
talent pool for potential candidates.
•
Leverage development and development planning
to retain employees from underrepresented groups
to maintain and improve diversity.
The CEO and all ELT members have a Leadership,
Inclusion, Equity and Diversity Key Performance
Objective (KPO) to deliver the above objectives
in F25.
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 four non executive directors
based offshore in regions in which the Company
operates. Females represent 50% of the Board, and 57%
of non-executive directors, as at the date of this report.
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TREASURY WINE ESTATES ANNUAL REPORT 2024
Proportion of females in the whole organisation
As at 30 June 2024, 42.9% of the Group’s employees were female.
Proportion of females in senior executive1 positions within the Group
As at 30 June 2024, 30% of the senior executive positions within the Group were
held by females.
Proportion of females on the Board of the Company
As at 30 June 2024, 42.9% of the Company’s Board of Directors (and 50% of
non-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.
Further details are set out in the Corporate Governance section of the
Annual Report
Recommendation 1.5 requirement
Inclusion, equity and diversity
Organisational gender profile
The Company makes the following diversity disclosures in relation to Recommendation 1.5 of the ASX Corporate
Governance Principles and Recommendations:
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 the TWE websites in June 2024. https://www.tweglobal.com/careers/inclusion-equity-and-diversity
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, 47.2% of leadership roles were
held by females as at 30 June 2024.
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TREASURY WINE ESTATES ANNUAL REPORT 2024
John Mullen
BSc
Non-executive Chairman
Member of the Board since May 2023
and Chairman of the Board and
the Nominations Committee since
October 2023.
Mr Mullen is an independent Director
and is an Australian resident.
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 a director and
Chairman Elect of Qantas Airways
Ltd (since April 2024), Chairman of
Brambles Ltd (since 2020) and Scyne
Advisory (since 2023), 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
Telstra Group Limited (2016 to 2023 and
Director 2008 to 2023), Toll Holdings
(2017 to 2022), the US National Foreign
Trade Council in Washington (2008
to 2010), and Member of the UNICEF
Task Force on Workplace Gender
Discrimination and Harassment
(2018-2019).
Board of Directors
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,
Mr Ford has held key roles across the
business’ 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 Mr Ford was
appointed Chief Operating Officer
with responsibility for TWE’s global
operations, and took the helm
as Chief Executive Officer on
1 July 2020.
Mr Ford 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
B.A/Ec, MS
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 Dingdong
(Cayman) Limited (NYSE:DDL) (since
August 2024) and 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.
Garry Hounsell
B.Bus (Acc), FCA, FAICD
Non-executive Director
Member of the Board since
September 2012, Chair 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),
the Commonwealth Superannuation
Corporation Limited (since July 2021,
and a director since July 2016) and
Electro Optic Systems Holdings Limited
(since November 2022).
Mr Hounsell is a former Chairman of
Hiro Brands Limited formerly known as
Wellness and Beauty Solutions Limited
(from December 2021 to November
2023), 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),
Dulux Group Limited (from July 2010
to December 2017) and Findex Group
Limited (January 2020 to April 2024),
and has held senior positions at both
Ernst & Young and Arthur Andersen.
Colleen Jay
B.BA (Hons)
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 (NASDAQ: COO) and
Beyond Meat (NASDAQ: BYND).
Antonia Korsanos
BEC, CA, GAICD
Non-executive Director
Member of the Board since April 2020,
Chair of the Audit and Risk Committee
and a member of the Nominations
Committee.
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 is currently Vice Chair
of Light & Wonder, Inc. (formerly known
as Scientific Games Corporation)
(NASDAQ: LNW) (since September
2020). Ms Korsanos was Chair of
SciPlay Corporation (NASDAQ: SCPL)
from August 2022 to October 2023
when SciPlay became a wholly-
owned subsidiary of Light & Wonder.
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.
Lauri Shanahan
JD Business Law, BS Finance
Non-executive Director
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 DTC,
consumer products, hospitality,
consumer branding, remuneration,
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).
Leslie Frank
B.A. Journalism
Non-executive Director
Member of the Board since
1 July 2024.
Ms Frank is a non-independent
Director and an American resident.
Ms Frank is a former owner and
founder of the iconic Frank Family
Vineyards, a highly acclaimed luxury
wine business based in the Napa
Valley, California that was acquired
by TWE in 2021. Ms Frank has extensive
expertise in luxury brands and the
US wine industry, having played an
instrumental role in the strategic
marketing and branding of Frank
Family Vineyards and its luxury
collection of wines. Ms Frank is also
an Emmy Award-winning journalist,
having worked in some of the largest
television markets in the United States
including reporting and anchoring
at the number one rated KABC in Los
Angeles and KCPQ in Seattle.
Ms Frank is actively involved in
charitable work in the Napa Valley
community. Ms Frank currently sits on
the Boards of Festival Napa Valley and
the St. Helena Hospital Foundation. Ms
Frank has been named Honorary Gala
Chair for Collabria Care and has been
recognised as Vintner Grant Honoree
by the V Foundation for Cancer
Research. Ms Frank received the wine
industry Philanthropy Award by the
North Bay Business Journal in 2019
and was recently awarded the 2024
Women in Wine Inspirational Leader
Award. Ms Frank is a former director
of OLE Health (September 2021 to
June 2023).
Ms Frank is classified as a ‘non-
independent’ Director having regard
to two grape supply agreements she
has in place with TWE, as well as an
ongoing consultancy arrangement,
details of which are disclosed in
the Company’s 2024 Corporate
Governance Statement.
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TREASURY WINE ESTATES ANNUAL REPORT 2024
Introduction
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 (ASX
Principles and Recommendations).
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.
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 2024, 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 www.
tweglobal.com/investors/corporate-governance.
Board of Directors
Members of the Board
The Board continues to comprise a majority of
independent directors.
The Board is committed to ensuring it is comprised
of individuals with appropriate skills, experience and
diversity to develop and support the Company’s
vision to be the world’s most desirable luxury wine
company. 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/some exposure, 2
= good understanding/material exposure outside
direct accountability, and 3 = expert/significant
accountable experience). 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.
A summary of the Company’s Board skills matrix as at
30 June 2024 is included in Table 1.
The Board believes good corporate governance and transparency in corporate reporting is
a fundamental part of the Company’s culture and business practices.
Corporate governance
•
Approving the acquisition of DAOU Vineyards, a highly acclaimed
luxury wine brand in the USA, and overseeing its integration.
•
Preparing for and overseeing the execution of plans to
re-establish the Company’s Australian Country of Origin portfolio
in China following the Chinese Ministry of Commerce’s decision to
remove tariffs on Australian wine imports into China.
•
Considering the future operating model for TWE’s global portfolio
of Premium brands, with a determination to be made during
CY24.
•
Overseeing the creation of and approving the One TWE
architecture, which includes the Company’s purpose, vision,
strategy and DNA.
•
Overseeing the Company’s sustainability agenda and
progress, including approval of TWE’s 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.
•
Continued development of Board composition and succession
plans including the appointment of John Mullen as Chairman
and the appointment of Leslie Frank as a non-executive director,
effective 1 July 2024.
•
Continued commitment to the governance of workplace health,
safety and wellbeing performance, and developing a culture of
leadership on safety across the business.
•
Providing input into, and approval of, the TWE F25-F29 Strategic Plan,
approving the annual financial budget, and monitoring corporate
performance and the implementation of strategy
and policy.
•
Maintaining effective governance to facilitate high-quality
processes and internal controls.
Table 1 – TWE Board skills matrix as at 30 June 2024
No. of directors (total of 7)
Board skills and experience
Expert
Good understanding Working knowledge
Industry
Expertise and experience in the wine or alcohol industry, consumer
marketing or supply and distribution
3
4
0
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
6
1
0
Finance and business
Proficiency in financial accounting and reporting, corporate finance
and internal controls, corporate funding, capital management and
associated risks
2
5
0
Governance, regulatory and human capital
Expertise identifying and managing legal, regulatory, governance,
public policy and corporate affairs issues; and experience in complex
human capital and remuneration issues and understanding of the link
between strategy, performance and remuneration outcomes
4
3
0
Risk management
Experience anticipating and identifying risks and monitoring the
effectiveness of both financial and non-financial risk management
frameworks and controls; and extensive experience with complex
workplace health, safety, environmental and community risks and
frameworks
5
2
0
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
0
7
0
Innovation
Expertise in and understanding of key factors relevant to innovation;
and experience in the creation and delivery of new ways of working
and commercial initiatives
2
5
0
International
Relevant experience in regions and countries related to the
Company’s strategy and activities, including USA, Asia and EMEA
6
1
0
Board or senior management experience
Yes
No
Chairman – Listed company
3
4
CEO/Senior management
7
0
During the year, the Board continued to govern the Company through the execution of its
strategy. Key issues for the Board during the year included:
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TREASURY WINE ESTATES ANNUAL REPORT 2024
The Board recognises the importance of cultural,
geographic and gender diversity amongst its members,
which is reflected in the current representation on the
Board, with four non-executive directors based offshore in
regions in which the Company operates.
The Board considers that it also has an appropriate mix
of director tenure, with its members ranging from newly
appointed to longer standing directors. As at 30 June 2024,
the average tenure for the Company’s non-executive
directors was 7.17 years. The Board has clear succession
plans in place to ensure continued Board renewal. The
length of service of each director is set out in the Directors’
Report contained in this Annual Report.
In order to maintain gender diversity in the composition
of the Board, in 2019 the Board set itself a measurable
objective that at least 30% of its directors will be female
going forward. Following Paul Rayner’s retirement from
the Board on 16 October 2023, women represented
42.8% of the Board. Since Leslie Frank’s appointment to
the Board on 1 July 2024, women represent 50% of the
Board. In order to maintain gender diversity into the
future, the Board has set itself a measurable objective
to maintain at least 30% of its directors being of either
gender going forward.
The Board is committed to ensuring its performance is
enhanced through its director induction program and
ongoing education. The Board’s ongoing education
incorporates site visits and presentations given
by management and external parties concerning
developments impacting, or likely to impact, the
business.
Corporate governance
Audit & Risk Committee
Nominations Committee
Human Resources Committee
Wine Operations &
Sustainability Committee
Board of Directors
Oversees: financial reporting,
risk management and internal
controls, external and internal
audit, capital management, and
compliance.
Key focuses for F24
•
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.
•
Reviewing the group of individuals
within the organisation who
constitute ‘Executive Key
Management Personnel.’
•
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: Board composition,
performance of the Board, Board
Committees and individual
directors, as well as succession
planning.
Key focuses for F24
•
Overseeing Board composition
and succession plans including
the appointment of John Mullen as
Chairman, and the appointment
of Leslie Frank as a non-executive
director.
•
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.
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 F24
•
Reviewing remuneration practices
and plan documentation to
ensure alignment with the
Company’s DNA and to provide for
the attraction, incentives, rewards
and retention of key talent.
•
Considering and adopting
feedback received from
stakeholders on the 2023
Remuneration Report.
•
Advising the Board on the
departure and replacement of the
Company’s CFO.
•
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.
Oversees: winemaking 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 F24
•
Reviewing and monitoring
progress against the Company’s
sustainability targets and the
implementation of initiatives to
reach these targets.
•
Overseeing the implementation
of mandatory climate reporting
standards.
•
Monitoring environmental business
risks and mitigations including
relating to climate and water.
•
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.
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.
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.
•
Directing, monitoring and assessing the Company’s
performance against strategic and business plans.
•
Approving and monitoring capital management,
including major capital expenditure, acquisitions,
and divestments.
Risk assessment and management
•
Reviewing and evaluating the integrity of the
Company’s systems of risk management (for both
financial and non-financial risks), legal compliance,
and internal compliance and control.
•
Reviewing and approving the Company’s risk
appetite statement.
Obligations to stakeholders
•
Monitoring and approving external financial and
other reporting.
•
Monitoring compliance with adopted strategies,
procedures and standards, including corporate
governance standards.
Board Committees
Four standing Board Committees have been established to assist the Board in fulfilling its responsibilities.
Role of the Board
The responsibilities of the Board as set out in the Board Charter include the following.
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TREASURY WINE ESTATES ANNUAL REPORT 2024
•
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;
Corporate governance
•
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; and
•
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.
Governance policies
The Company has a number of governance policies which guide how it does business, including:
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TREASURY WINE ESTATES ANNUAL REPORT 2024
Paul Rayner
9 May 2011 1
Ed Chan
1 September 2012
Garry Hounsell
1 September 2012
Lauri Shanahan
1 November 2016
Colleen Jay
1 April 2018
Antonia Korsanos
1 April 2020
Timothy Ford (Chief Executive Officer)
1 July 2020
John Mullen
1 May 2023
Leslie Frank
1 July 2024
Date of appointment
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 2024 financial year
John Mullen4
9
9
—
—
—
—
2
2
—
—
5
Tim Ford
9
9
—
—
—
—
—
—
—
—
4
Ed Chan
9
9
4
4
—
—
—
—
—
—
—
Garry Hounsell
9
8
4
4
6
6
5
5
4
4
—
Colleen Jay
9
9
—
—
6
6
—
—
4
4
—
Antonia Korsanos
9
9
4
4
—
—
5
5
—
—
6
Lauri Shanahan
9
9
—
—
6
6
5
5
—
—
—
Paul Rayner1
3
3
—
—
—
—
3
3
—
—
1
Board meetings2
Held
Held
Held
Held
Attended
Attended
Attended
Attended
Attended
Held
1. Paul Rayner retired from the Board on 16 October 2023.
2. 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).
3. 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.
4. John Mullen was appointed Chair of the Nominations Committee on 16 October 2023.
Audit and Risk
Committee meetings2
Human Resources
Committee meetings2
Nominations
Committee meetings2
Wine Operations &
Sustainability
Committee meetings2
Directors’ report
Directors
The directors of the Company during the financial year
and up to the date of this report are:
The directors of Treasury Wine Estates Limited (the
Company) present their report together with the
financial report for the Company and its controlled
entities (the Group) for the financial year ended
30 June 2024 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:
•
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
2024 and appear on pages 100 to 154.
Particulars of the current directors’ qualifications,
experience and Board Committee responsibilities are
detailed in the Board of Directors section of this
Annual Report.
Additional
meetings3
We appreciate our employees for 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. Matters are 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 to the Board and the
Wine and Operations Sustainability Committe and are
published in our annual Sustainability Report.
People Related Compliance
During F24, a total of 98 matters were reported,
representing 3.5% of our workforce. Of these, four
were managed under the Whistleblower Policy. Of the
reported people-related matters, 71 (72%) were fully or
partially substantiated:
The most common actions taken in response to
substantiated matters include those listed below:
•
44% resulted in end of employment.
•
31% resulted in formal warning (including final
written warning).
•
14% resulted in coaching, counselling or training
intervention.
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 vision to be the world’s
most desirable luxury wine company.
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.
BREACH OF POLICY, 27
BULLYING, HARASSMENT OR WORKPLACE MISCONDUCT, 18
FRAUD, 3
PERFORMANCE, 18
SEXUAL HARASSMENT, 3
TERMINATION OF EMPLOYMENT, 1
THEFT OF COMPANY INFORMATION,1
UNSUBSTANTIATED, 27
Attended
70
71
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Directors’ interests in share capital
The relevant interest of each director in the share
capital of the Company as at the date of this report is
disclosed in the Remuneration Report.
Company Secretary
Alexandra Lorenzi BA, LLB (Hons) was appointed
Company Secretary on 3 July 2023. Ms Lorenzi is an
experienced corporate lawyer with deep commercial,
legal, and governance expertise. Ms Lorenzi has been
a member of the TWE team since April 2020. Prior
to joining TWE, Ms Lorenzi was a Senior Associate at
leading global law firm Herbert Smith Freehills, where
she advised senior management and Boards of
Australia’s largest listed companies.
Whilst Ms Lorenzi was on maternity leave between
3 July 2023 and 6 December 2023, Christine Harman
BA, LLB (Hons) MBA was appointed to act in the role of
Company Secretary.
Dividends
Interim dividend: The Company paid an interim
dividend of 17 cents per ordinary share on 3 April 2024.
The dividend was fully franked.
Final dividend: Since the end of the financial year,
the directors have approved a final dividend of 19 cents
per share, 70% franked and payable on 1 October 2024.
The record date for entitlement to this dividend
is 29 August 2024.
In summary:
Interim dividend paid on
3 April 2024
17 cents
$137.9
Final dividend payable on
1 October 2024
19 cents
$154.2
Total
36 cents
$292.1
$M
Dividend per share
The Company paid shareholders a final dividend in respect
of the 2023 financial year of $122.7 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
During the financial year the Company’s state of affairs
was significantly impacted by the acquisition of DAOU
Vineyards, the removal of tariffs on Australian wine
imports into China and changes to the operating model
for the Company’s Premium brand portfolios. The nature
of these impacts has been discussed in various ASX
announcements made by TWE. Further information
regarding these impacts on TWE can be found in the OFR,
in this Annual Report.
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.
Events subsequent to balance date
Since the end of the financial year, the directors approved
a final 70% franked dividend of 19 cents per share. This
dividend has not been recognised as a liability in the
consolidated financial statements at 30 June 2024.
On 6 August 2024, the Group announced that it will seek
to divest its Commercial brand portfolio. There is no
impact to the classification or carrying value of assets and
liabilities as of 30 June 2024.
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.
Sustainability
Matters of environmental and social significance to
the Group are primarily addressed within the Group’s
sustainability strategy. This strategy addresses the
material topics for the Group, and the Executive
Leadership Team actively monitors progress against our
strategic roadmaps and public targets.
Further detail on the Group’s sustainability strategy,
initiatives and achievements are detailed in the
Sustainability section of this Annual Report and the
Company’s most recent Sustainability Report.
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 issues and risks is a core
element of the work program delivered by sustainability
and technical teams and is detailed in the relevant
material business risks outlined in the OFR.
The Group recognises the direct link between effective
management of its environmental impacts and its
business 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 receives six-monthly reports detailing any
matters involving non-compliance and potential
non-compliance. These reports also detail the corrective
action that has been taken.
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 2023.
During the financial year, the Group has not been
convicted of any significant breaches of
environmental regulation.
Proceedings on behalf of the company
There are no proceedings brought or intervened in, or
applications to bring or intervene in proceedings, on
behalf of the Company by a member or other person
entitled to do so under section 237 of the Corporations
Act 2001 (Cth).
Non-audit services and auditor independence
KPMG is the Company’s auditor, appointed with effect
from 23 October 2013.
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 and
Strategy 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; and
•
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 $185,672 . 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 72 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 2024 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.
Rounding
Treasury Wine Estates Limited is a company of the kind
referred to in ASIC Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191 and, except
where otherwise stated, amounts in the statutory
financial statements forming part of this report have
been rounded off to the nearest one hundred thousand
dollars or to zero where the amount is $50,000 or less.
This report is made on 15 August 2024, in accordance
with a resolution of the directors.
John Mullen
Tim Ford
Chairman
Chief Executive Office
Directors’ report
72
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All
rights reserved. The KPMG name and logo are trademarks used under license by the independent member
firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Treasury Wine Estates Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Treasury Wine
Estates Limited for the financial year ended 30 June 2024 there have been:
i.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
ii.
no contraventions of any applicable code of professional conduct in relation to the audit.
KPM_INI_01
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
KPMG
Penny Stragalinos
Partner
Melbourne
15 August 2024
Auditor’s independence declaration
74
75
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Contents
Executive remuneration
1. Key messages and changes for F25
76
2. Remuneration strategy and framework
80
3. Performance and remuneration outcomes
86
Non-Executive Director remuneration
4. Framework and outcomes
94
Other remuneration information
5. Governance
96
6. Further information
97
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 F24 remuneration
report for which we will seek your approval at our
Annual General Meeting in October 2024. The
remuneration report is designed to demonstrate strong
alignment between our Company’s performance, our
executive reward framework, our strategic objectives
and shareholder interests.
The ‘strike’ against the F23 remuneration report
In light of the first ‘strike’ at the 2023 AGM in relation to the
F23 remuneration report, we have invested considerable
time reviewing our stakeholders’ feedback (both
positive and negative) on the Board’s decision to adjust
the ROCE outcome under the F21 Long Term Incentive
Plan (LTIP). We have also focused on our disclosures
relating to the Short Term Incentive Plan (STIP), and
other areas of concern. Section 1 of the Report sets out
the key issues raised by some of our investors and the
way in which we have sought to address those issues.
In summary:
•
Whilst the Board regards the decision to adjust
the ROCE outcome under the F21 LTIP as warranted
and in the best interests of all stakeholders, it
has affirmed its commitment to remove any
incremental benefit due to the removal of tariffs
on Australian wine into China to ROCE and EPS
outcomes under the F22 and F23 LTIP grants. The
targets associated with these grants were set in
expectation that the tariffs on Australian wine into
China would remain in place. The Board maintains
discretion to adjust hurdles or vesting outcomes to
ensure that executives are neither penalised nor
provided with a windfall benefit and now that the
tariffs have been removed, the Board will ensure
consistency in any application of discretion.
•
We have greatly enhanced the transparency of our
STIP disclosures, including not only the disclosure of
retrospective financial targets for the F24 STIP and
greater clarity on how overall F24 STIP outcomes
for executives were determined, but notably the
disclosure of prospective financial targets for the
F25 STIP.
•
We have reviewed the structure of our STIP for F25
and removed the multiplying elements, replacing
them with a single, weighted Scorecard to simplify
the structure and enhance transparency, while
ensuring continued alignment with value creation
for our shareholders.
We will continue to engage with stakeholders and
look forward to receiving further feedback on our
F24 remuneration report as we work to improve our
remuneration framework and disclosures.
F24 remuneration report
F24 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.
Management have delivered impressive results in
F24, with EBITS of $658.1m, a 12.8% increase on the prior
year, and a 13.1% increase to Net Sales Revenue (NSR)
to $2,739.8m. NSR per case also increased by 14.2%
during F24, driven by the ongoing premiumisation
of TWE’s portfolio toward luxury wine. TWE delivered
Earnings per Share (EPS) of 52.3 cents per share (before
material items and SGARA), up slightly from F23. When
excluding the impact from the acquisition of DAOU,
ROCE increased from 11.3% in F23 to 12.0% in F24 (when
impacts are included, ROCE is 10.9%). EBITS margin
declined slightly by 0.1 percentage points to 24.0%.
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 over the
long-term.
F24 executive remuneration outcomes
In F24, 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 October 2023. F24 STIP outcomes reflect the level of
business performance and range between 62%-64%
of maximum opportunity. As outlined in the report, as
a result of the impairment within Treasury Premium
Brands (TPB), the Board has applied discretion to
reduce the F24 STIP multiplier for the CEO.
The F22 LTIP vested at 20% of the total target grant
value. ROCE performance was below threshold resulting
in nil vesting for this component of the LTIP. The Board
elected not to adjust or apply discretion to the ROCE
component and the vesting of 20% was based solely on
relative Total Shareholder Return (rTSR) outcomes.
F24 activities of the Human Resources Committee
We are confident that our executives have set the
Company up exceptionally well for long-term success
and are positive on our outlook across key markets
as a global leader in luxury wine. We remain focused
on continuing the strong momentum of growth in our
luxury portfolios as evidenced through our acquisition of
DAOU and the re-establishment of Penfolds in the China
market following the removal of tariffs, while
growing our premium portfolio through innovation.
TWE’s remuneration practices are designed to attract,
motivate and retain the high-calibre talent needed to
deliver sustainable results that out-perform over the
long term. As the Chair of the Committee, during F22
and F23 I consulted considerably with investors and
proxy advisors to discuss the challenges with ensuring
remuneration outcomes reflect an alignment between
pay, TWE’s strategic objectives, financial performance
and shareholder returns given the cumulative and
continuing impacts of the pandemic, supply chain
disruptions and the tariffs imposed by China.
During F24, we further reviewed the incentive plans
for executives based on a wide range of feedback
provided by our stakeholders and have made changes
to STIP for executives from F25. Beyond remuneration,
the Committee invested significant time on oversight
of other critical, Company-wide Human Resources
matters, including the development and introduction of
our new company purpose, vision and strategic pillars.
Culture, diversity and inclusion, talent development
and succession, and employee engagement remain a
key focus of the Committee. 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 objectives over the near and longer
term. 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
76
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
1. Key messages and changes for F25
This report details the F24 remuneration framework and
outcomes for the Key Management Personnel (KMP) of
the Company which includes non-executive directors.
In this report, ‘executives’ refers to executives identified
as KMP excluding the non-executive directors. It is
prepared in accordance with the requirements of the
Corporations Act 2001 (Cth) and all references are to
Australian dollars ($) unless otherwise specified.
F24 remuneration report (audited)
Current KMP
TM Ford
Chief Executive Officer (CEO)
Full Year
SR Boxer
Chief Financial and Strategy Officer
(CFSO)
1 November 2023
- 30 June 2024
SR Boxer
Chief Strategy and Corporate
Development Officer (CSCDO)
1 July 2023
- 31 October 2023
Former KMP
MJ Young
Chief Financial Officer (CFO)
Ceased 31 October 2023
a) KMP
Executive KMP at TWE during F24 are as follows:
Executives (as at 30 June 2024)
F25 STIP
We have also made a number of changes to the F25
STIP for executives. The multiplying elements of the STIP
outcome have been removed and replaced with a
single, weighted Scorecard. The company measures in
the Scorecard have been simplified to 3 key financial
health measures – EBITS, NSR and Cash Conversion.
The Board believes that these measures are key to
driving top-line and bottom-line growth, ensuring
executives are managing cash flow effectively, and
providing the best return for our shareholders. These
company measures make up 50% of the total STIP
award an executive can receive. The remaining 50% of
any STIP award is based on achievement of individual
Key Performance Objectives (KPOs). These KPOs are a
mixture of strategic future value creation objectives
(which include further quantitative and financial
d) LTIP
F22 LTIP vesting
Whilst the Board regards the decision to adjust the
ROCE outcome in the F21 LTIP as warranted and in the
best interests of all stakeholders, it has committed
to ensuring there are no unintended advantages
for executives for LTIP allocations made after F21,
particularly the F22 and F23 LTIP grants, which were set
with the expectation that the tariffs on Australian wine
into China would remain in place through the relevant
performance periods. The Board maintains discretion
to adjust hurdles or vesting outcomes to ensure that
executives are neither penalised nor provided with a
windfall benefit arising from material, non-recurring
items and now that the tariffs have been removed,
the Board will ensure consistency in any application of
discretion.
The Company updated the market in March 2024
that the incremental EBITS contribution from the
re-establishment of TWE’s Australian wine in China
would be minimal through the remainder of F24, with
From 1 November 2023, Matthew Young ceased as an
Executive KMP and Stuart Boxer, previously Chief Strategy
and Corporate Development Officer, was appointed as
Chief Financial and Strategy Officer. Mr Young ceased
employment on 12 January 2024.
b) Remuneration framework changes
At our AGM for the financial year ended 30 June
2023, 46.07% of the votes cast were against the F23
remuneration report (a first ‘strike’), based predominately
on stakeholder disapproval of the Board’s decision to
adjust the ROCE outcome for the F21 Long Term Incentive
Plan (LTIP). The Board is committed to ensuring executive
remuneration outcomes are aligned to our shareholders
and providing increased transparency. During F24, we
have undertaken an extensive review of our remuneration
framework and have made changes to our remuneration
structures and disclosures moving forward.
In particular, the Board is committed to providing
increased transparency within our disclosures on STIP
targets and outcomes. The F24 remuneration report
contains a number of areas where we have provided
enhanced disclosure including:
•
inclusion of retrospective financial targets for the
F24 STIP;
•
greater clarity on how overall STIP outcomes for
executives were determined; and
•
inclusion of prospective financial targets for the
F25 STIP.
c) Short Term Incentive Plan (STIP)
F24 STIP outcomes
As in previous years, targets set for F24 STIP included
stretch goals such as driving growth in other markets
to mitigate the ongoing impact of severely reduced
shipments to Mainland China and a focus on
delivering quality growth in earnings. The Company
has achieved strong performance against the F24 STIP
targets. The continued focus on luxury portfolio growth
within Penfolds and Treasury Americas, including the
successful contribution of DAOU in the second half, has
enabled strong EBITS and NSR growth.
As a result of the Company’s performance in F24, the
F24 Balanced Scorecard multiplier for executives is
0.966x. Whilst the Company has had a strong year
and the Board was very pleased with Management’s
performance, as part of closing out the year it was
decided to write down within Treasury Premium Brands
(TPB) the value of goodwill of a number of TPB’s brands.
This resulted in a non-cash impairment of $290m
(post-tax) being recognised as at 30 June 2024. At the
same time, the Company announced its intention to
divest its commercial wine brand portfolio. While the
Board recognises Management’s efforts with regards to
these legacy brands, it is still necessary to acknowledge
that such an impairment has had some impact on
shareholder value. For this reason, the Board has
decided the following:
•
Tim Ford as CEO has had his STIP payment reduced
by 10 percentage points to 110.8% of target for the
F24 year;
•
STIP payments for Senior Divisional TPB
Management were commensurate with the
performance of the division including the
impairment; and
•
With respect to ROCE calculations for ongoing
LTIP, for measurement purposes the value of the
impairment will be added back to the capital
employed for three years to ensure there are no
windfall gains delivered to Management
going forward.
The F24 STIP outcomes are 110.8% of fixed remuneration
for Mr Ford and 77.1% of fixed remuneration for Mr Boxer.
Mr Young did not receive a STIP award for F24.
measures), as well as specific targets relating to
Environmental, Social and Governance, Health,
Safety and Wellbeing and Leadership, Inclusion
and Engagement. We recognise that ‘how’
objectives are achieved is also important therefore
demonstration of the Company’s DNA is also a
factor in determining outcomes of the Leadership,
Inclusion and Engagement KPOs. The target
and maximum achievable STIP award for each
executive have not changed with the CEO eligible
for a maximum STIP outcome of 180% of fixed
remuneration and the CFSO eligible for a maximum
STIP outcome of 120% of fixed remuneration.
increased shipments of Penfolds entry-level Luxury tier
wines to be offset by the step up in overhead costs
onshore.
The F22 LTIP grant, covering a performance period
of 1 July 2021 to 30 June 2024, 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. ROCE performance was below
threshold resulting in nil vesting for this component of
the LTIP and no discretion was applied by the Board.
Performance for rTSR was assessed by an independent
service provider, Orient Capital, and the Group’s rTSR
performance was at the 65th percentile of its peer
group, driving an outcome of 80% vesting for this
component of the LTIP. As a result, total vesting of the
F22 LTIP was 20% of the target grant value.
1. Targets are based on and adjusted for constant currency
F25 STIP Measures
Measure
F24 Actual
Threshold1
Target1
Maximum1
Weighting
Global EBITS
$658.1m
+13% vs F24
$793.6m
+28% vs F24
25%
Net Sales Revenue
$2,739.8m
+7% vs F24
Low double-digit growth
+20% vs F24
15%
Cash conversion
94.6%
75%
80%
85%
10%
Individual KPOs
•
Strategic and Future Value Creation objectives, including quantitative and financial measures where appropriate that will drive
value accretion. These will be tailored for each role.
25%
Individual KPOs
•
Leadership, Inclusion and Engagement objectives, including demonstration of TWE DNA
•
Environmental, Social, Governance and Health, Safety and Wellbeing objectives
25%
78
79
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F24 remuneration report (audited)
e) Fixed remuneration
TWE’s global platform continues to experience
significant growth, increasing the responsibility and
complexity of executive roles. Moreover, the executive
team has been crucial to ensuring the successful
navigation of the tariffs imposed on Australian wine by
MOFCOM. The reward, retention and development of
this team is a key consideration of the Board.
As reported in the Company’s F23 remuneration report,
Mr Ford’s, Mr Young’s and Mr Boxer’s remuneration
were increased by 3%, all effective from 1 September
2023. Mr Boxer received a further increase to
$900,000 per annum effective 1 November 2023 to
reflect the responsibilities of his new role. For F25,
the Board has approved a further 3% increase to Mr
Ford’s remuneration and a 3% increase to Mr Boxer’s
remuneration, effective 1 September 2024.
f) NED fees
There will be no increases to NED fees in F25.
F25 LTIP grants
The weighting of the three metrics for the F25 LTIP will be
the same as F24 - relative TSR weighted at 20%, ROCE
weighted at 40%, and EPS weighted at 40% of the plan.
The following targets have been set for the F25 LTIP. The
Board considers that the Company’s F25 targets are
realistic but challenging and an appropriate level of
performance is required to justify full vesting of each
portion of the LTIP award.
While the baseline was reset to reflect the impact of the
DAOU acquisition, ROCE growth rates for the F25 LTIP are
the same as the F24 LTIP and will be measured against the
F24 ROCE base of 10.9% (including impacts of DAOU). The
acquisition of DAOU has resulted in a short-term decline
in ROCE, however the Company expects it to return to
previous levels in the medium term.
The relative TSR vesting schedule for the F25 LTIP is unchanged from F24.
Relative TSR
vesting schedule
Relative TSR ranking
% of performance rights subject to
relative TSR measure which vest
Below 50th percentile
0%
50th to 60th percentile
50-70%
60th to 75th percentile
70-100%
At or above 75th percentile
100%
ROCE baseline
10.9% (F24)
% points ROCE growth
ROCE result
% of performance rights
subject to ROCE measure which vest
Less than 1.0
Less than 11.9%
0%
1.0 to 1.7
11.9% to 12.6%
35-75%
1.7 to 2.1
12.6% to 13.0%
75-100%
At or above 2.1
At or above 13.0%
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%
0%
6% to 10%
35-100%
At or above 10%
100%
As in prior years, 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 to ensure that executives are neither
penalised nor provided with a windfall benefit arising
from material, non-recurring items.
Offers of performance rights under the F25 LTIP are
subject to the satisfaction of performance conditions,
as outlined on the previous page, over the performance
period from 1 July 2024 to 30 June 2027. LTIP awards to
KMP are at the absolute discretion of the Board. For the
F25 LTIP the following awards will apply:
•
Mr Ford: opportunity of 175% of fixed remuneration at
maximum, 66.5% at threshold, 0% below threshold
•
Mr Boxer: opportunity of 150% of fixed remuneration
at maximum, 57% at threshold, 0% below threshold
The Company will seek shareholder approval at the
2024 Annual General Meeting for the F25 LTIP offer to
the CEO.
1 Earnings per Share before material items and SGARA
ROCE will vest according to the following schedule.
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2. Remuneration strategy and framework
a) Remuneration strategy
TWE’s remuneration strategy sets the direction for the
remuneration framework and drives the design and
application of remuneration programs across the
Company, including for executives. The strategy aims to
attract, retain and reward the best talent while building
a performance-oriented culture. It sets out principles
and processes to ensure remuneration practices
attract and motivate the highest calibre employees to
achieve TWE’s business and financial objectives.
The remuneration strategy is designed to achieve
5 key objectives:
1.
attract, motivate and retain the highest
calibre executives;
2.
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; and
5.
deliver results that reinforce our culture and
are sustainable over the long-term.
The Board believes that remuneration of executives
should include a fixed component and at-risk or
performance-related components, including both
short-term and long-term incentives. Executive and
stakeholder interests are aligned through share
ownership. The weighting of the at-risk remuneration
components for each executive reflects the Board’s
commitment to performance-based reward. Section
3 of this report describes performance outcomes
over the past five years, and how they have impacted
remuneration outcomes.
F24 remuneration report (audited)
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
b) Remuneration framework
Remuneration strategy
F24 remuneration framework
Components
Performance measures
Details
Fixed Remuneration (FR)
Base Salary, superannuation and other benefits
Further information is included in section 2 (d)
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
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.
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 2 (e)
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.
The annual STIP opportunity is at the absolute
discretion of the Board. In F24, 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.
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 2 (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 F24, 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.
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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 F24, firstly as a percentage of total remuneration (TR) at target, and then as a proportion of total maximum
potential remuneration.
F24 remuneration report (audited)
Total remuneration with STIP at Target and LTIP at threshold:
Total remuneration with both STIP and LTIP at maximum:
CEO
CEO
Executives
Executives
FR
STIP CASH (AT TARGET)
STIP DEFERRED EQUITY (AT TARGET)
LTIP (AT THRESHOLD)
38%
25%
12%
25%
45%
20%
10%
25%
22%
26%
13%
39%
27%
22%
11%
40%
FR
STIP CASH (AT MAXIMUM)
STIP DEFERRED EQUITY (AT MAXIMUM)
LTIP (AT MAXIMUM)
d) Fixed remuneration
For Australian-based executives, total fixed remuneration is inclusive of superannuation and other benefits.
Fixed remuneration is reviewed annually and set at a market-competitive level reflective of the executive’s skills,
experience and responsibilities, and considering complexity of role, location and performance. Any changes
to fixed remuneration are effective from 1 September. 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. When comparing executives’ remuneration to the market, the ASX
21-75 peer group is used and peer groups are reviewed regularly for accuracy and alignment with the nature of
the business.
The overall structure of the F24 STIP is provided below:
STIP award $
X
=
(A) Fixed
remuneration $
(B) STIP opportunity %
(C) Balanced
Scorecard multiplier
(0 to 1.2)
(D) Individual
multiplier (0 to 1.5)
Fixed
Based on level of skill
and responsibility
Variable
Based on Balanced
Scorecard performance
Fixed
Based on role and level of
role within the Company
Variable
Based on individual
performance
X
X
RESTRICTED EQUITY 1/3
CASH 2/3
e) Short-term incentive plan (STIP)
The STIP drives an annual at-risk component of
remuneration and links business results for the fiscal
year, executive performance and reward. The STIP
uses a balanced scorecard approach for company
performance measures whilst the individual
performance for each executive is derived from the
level of each executive’s achievement of individual Key
Performance Objectives (KPOs).
The STIP Balanced Scorecard measures are designed
to support the financial health of the organisation and
shareholder return in terms of dividends and share
price - this year and over time. Hurdles and stretch
targets are set for each metric and the sustainability of
growth and returns is non-negotiable.
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%). These KPO measures include a combination of
quantitative and qualitative measures. 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 Board
believes that the KPOs set for executives for F24 were
appropriately stretch goals to pivot the business and
mitigate impacts by driving growth in other markets
and focusing on delivering quality growth in earnings.
As outlined in section 1 c), following feedback from
our stakeholders, we undertook a review of our STIP
framework and have made several changes to address
the feedback. These changes will take effect from the
F25 LTIP, noting that the calculation of any STIP award
for an executive for F24 is unchanged from previous
years and is dependent on the following key factors:
A)
Fixed Remuneration as at 30 June of the
performance year;
B)
Individual short-term incentive plan (STIP)
opportunity: this is expressed as a percentage
of Fixed Remuneration;
C)
Balanced Scorecard (BSC) multiplier: this is
based on the performance of the Group
Balanced Scorecard measures; and
D)
Individual performance multiplier (IPM): this is
based on the executive’s achievement of
individual KPOs and demonstration of the
Company’s DNA.
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Global EBITS (50%)
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.
Growth in sales volumes (15%)
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.
Brand contribution margin (15%)
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.
Cash conversion (10%)
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.
F24 remuneration report (audited)
(C) F24 Balanced Scorecard measures (multiplier 0 to 1.2x)
Strategy & operations (60%)
•
Individual strategic KPOs based on functional responsibility.
Leadership, inclusion, equity & diversity (20%)
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 (20%)
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 F24 targets and associated initiatives, and
demonstrating progress towards F25 and F30 targets.
Company DNA
All executives
•
We bring our whole self
•
We are courageous
•
We deliver together
(D) F24 Individual KPOs and Company DNA (multiplier 0 to 1.5x)
F24 LTIP measures and vesting schedules
% of performance rights
subject to relative TSR
measure which vest
% of performance rights
subject to EPS measure
which vest
Relative TSR ranking
EPS1 CAGR %
ROCE percentage points
growth (from F23 ROCE
baseline 11.3%)
ROCE result
Relative Total Shareholder
Return (rTSR) (20%)
Earnings per Share
(EPS) (40%)
Return on Capital Employed
(ROCE) (40%)
Below 50th percentile
50th to 60th percentile
60th to 75th percentile
At or above 75th percentile
0 - 6%
6% - 10%
At or above 10%
Less than 1.0
1.0 to 1.7
1.7 to 2.1
At or above 2.1
Less than 12.3%
12.3% to 13.0%
13.0% to 13.4%
At or above 13.4%
Relative to S&P/ASX 200 Index, excluding
companies from the energy, metal and
mining, real estate and finance sectors.
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.
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.
0%
50%-70%
70%-100%
100%
0%
35%-100%
100%
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 F24,
the Board awarded the CEO an LTIP opportunity of 175% of fixed remuneration and 150% of fixed remuneration for
Mr Boxer. Mr Young did not receive an award under the F24 LTIP.
The performance period for the F24 LTIP is 1 July 2023 to 30 June 2026 and the plan has the following features.
LTIP measures
% of performance rights
subject to ROCE measure
which vest
0%
35%-75%
75%-100%
100%
1. Earnings per Share before material items and SGARA
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 (minimum
$250 to maximum $5,000) to acquire shares in the
Company. The Company delivers one matched share
for every purchased share held at the plan vesting
date (approximately two years), subject to continued
employment. An equivalent cash plan operates in
countries where, due to local laws, it is not practicable
to offer shares to employees.
Shares were acquired in F24 under the 2023 Share
Cellar offer and a subsequent offer to participate in
the 2024 Share Cellar Plan was made during the year.
The first share purchases in the 2024 Share Cellar Plan
occurred in March 2024 (F24).
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
offers an LTIP to leaders below the executive leadership
team, along with a REP which allows 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 leaders including members of the Global
Leadership Group (GLG) (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 F24.
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i) Other key information
Board discretion and clawback
The Board will exercise discretion to ensure any cash
or equity outcomes are appropriately aligned to the
Company’s underlying performance and the interests
of shareholders. The Board maintains the discretion
to clawback any vested or unvested equity should a
clawback event arise, which was not apparent at the
time the equity was awarded. This may include (but not
limited to) material misstatement of financial results,
material reputational damage to the Company, or
where there was serious misconduct by a participant.
This includes discretion to reduce, forfeit or reinstate
awards, require payback of proceeds from the sale of
vested awards and/or reset or alter the performance
conditions applying to any award.
Leavers
The Board has absolute discretion as to whether
participants retain their unvested equity upon ceasing
employment, taking into account the circumstances
of their departure. In general if an executive ceases
employment with the Company, they forfeit their
entitlement to cash or equity under the Company’s
incentive plans.
In exceptional circumstances (such as redundancy,
death or disability or bona fide retirement), the Board,
in its discretion, may determine that a portion of the
award is retained having regard to performance
and time lapsed to date of cessation (or that an
equivalent cash payment be made). 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 in so far as to permit
the executive to participate in the change of control
event. Any shares that do not participate in the change
of control event will continue to be subject to restrictions
until the end of the applicable restriction period.
Hedging
To ensure the variable components of the Company’s
remuneration structure remain ‘at-risk’, employees may
not hedge against the risk inherent in arrangements
such as the LTIP or any other equity-based incentive
plans. Awards will be forfeited if the policy is breached.
F24 remuneration report (audited)
3. Performance and remuneration outcomes
a) Overview of Company performance
Company performance during F24 saw earnings and
revenue growth, driven by strong luxury top-line growth
from Penfolds and Treasury Americas. TWE delivered
strong luxury portfolio momentum in Penfolds and
Treasury Americas, driving NSR and EBITS growth.
TWE delivered EBITS of $658.1m, a 12.8% increase on the
prior year, and a 13.1% increase to NSR to $2,739.8m.
NSR per case also increased by 14.2% during F24, driven
by the ongoing premiumisation of TWE’s portfolio
toward luxury wine. TWE delivered Earnings per Share
(EPS) of 52.3 cents per share (before material items
and SGARA), up slightly from F23. When excluding the
impact from the acquisition of DAOU, ROCE increased
from 11.3% in F23 to 12.0% in F24 (10.9% when impacts
of the DAOU acquisition are included). EBITS margin
declined slightly by 0.1 percentage points to 24.0%.
The Company’s capital structure remains flexible and
efficient. Despite a slight increase in net debt/EBITDAS
from 1.9x to 2.0x following the acquisition of DAOU, we
have retained a strong balance sheet and investment
grade capital structure.
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 F24. Penfolds saw top-line
growth across all portfolio tiers and price points, driving
a 15.5% increase to EBITS. Momentum accelerated
across the portfolio in Asia, with double-digit NSR
growth delivered in Hong Kong, Thailand and Taiwan,
in addition to the commencement of Australian COO
portfolio shipments to China in Q4 F24 following the
removal of tariffs.
With the acquisition of DAOU, Treasury Americas has
been established as the leading luxury wine business
in the United States with an existing portfolio of iconic
Napa Valley brands that includes Stags’ Leap, Beaulieu
Vineyard, Frank Family Vineyards and Beringer. It
delivered a 13.1% increase to EBITS, driven by the
contribution of DAOU in the second half of the year
and a 14.1% increase in NSR across other luxury portfolio
brands, particularly Stag’s Leap and Frank Family
Vineyards.
As a result of reduced premium and commercial
shipments which reflect softening consumption trends
in the below $15 price points, Treasury Premium Brands
had a 7.0% decline in EBITS. Priority brands within
Treasury Premium Brands maintained their positive
momentum with NSR up 4.6%, driven by 19 Crimes,
Squealing Pig and Pepperjack.
The table overleaf summarises the Company’s financial
performance over the last five financial years.
Table 3.1: Link between Company performance and remuneration outcomes
Historical STIP and LTIP outcomes
STI outcome (% of maximum)3
0
61–72
62–73
30–40
62-64
STI outcome (% of fixed remuneration)3
0
73–108
74–109
36–72
77-111
LTI vesting (% of maximum)
0
0
0
78.75%
20%
Dividends paid per share (cents)
40
23
28
34
344
Closing share price (as at 30 June)
10.48
11.68
11.35
11.23
12.44
F20
F21
F22
F23
F24
1. Prior year results for EBITS, Earnings per share and return on Capital Employed have been restarted for changes in accounting.
2. Before material items and SGARA.
3. Rounded up to whole numbers.
4. The 2024 dividend of 34 cents is comprised of the final dividend in F23 of 17 cents (100% franked) paid on 3 October 2023 and the interim F24 dividend of 17 cents (70% franked) paid on 3 April 2024. For the final
F24 dividend see Note 6 of the Financial Statments.
150%
100%
50%
0%
TWE
ASX200
01 July 2019
01 July 2020
01 July 2021
01 July 2022
01 July 2023
01 July 2024
The following graph shows movement in the Company share price against movement in the ASX200 over the last
five years.
EBITS 1
(A$ million)
ROCE 1
(%)
EPS 1,
(cents)
NSR
(A$ million)
EBITS margin
(%)
FY20 FY21
FY22
FY23
FY24
658.1
583.5
523.7
510.3
512.6
FY20 FY21
FY22
FY23
FY24
FY20 FY21
FY22
FY23
FY24
FY20 FY21
FY22
FY23
FY24
FY20 FY21
FY22
FY23
FY24
10.9
11.3
10.7
10.8
10.2
52.3
52.1
44.7
43.0
41.7
2739.8
2,423.0
2,476.7
2,569.6
2,649.5
24.0
24.1
21.1
19.9
19.3
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b) Fixed remuneration outcomes
Market benchmarking and salary reviews are conducted
annually with any changes effective from 1 September.
When comparing executives’ remuneration to the market,
the ASX 21-75 peer group was used. During F24:
•
The CEO, Mr Ford, received a 3% fixed remuneration
increase from $1,622,250 to $1,670,918 per annum,
effective 1 September 2023.
•
Mr Boxer was appointed Chief Financial and
Strategy Officer (CFSO) on 1 November 2023. He
received a 3% increase from $712,700 to $734,081
per annum, effective 1 September 2023 and then
a further fixed remuneration increase to $900,000
per annum effective 1 November 2023 to reflect the
responsibilities of his new role.
•
Mr Young was the Chief Financial Officer (CFO) until
31 October 2023. His remuneration increased by
3% increase from $772,200 to $795,366 per annum,
effective 1 September 2023. Mr Young ceased
employment on 12 January 2024.
c) Short-term incentive outcomes
Short-term incentives are assessed by achievement
against each executive’s Balanced Scorecard and
individual KPOs (including demonstration of the
Company’s DNA).
The F24 STIP Balanced Scorecard is heavily weighted
to financial metrics, with the primary driver EBITS. The
Company has achieved strong performance against
the F24 STIP targets and F24 EBITS increased by 12.8%
from F23 to $658.1m. As in previous years, targets set for
F24 STIP included 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 growth in earnings. Whilst the tariffs were
removed at the end of March 2024, the impacts of this will
not be substantially realised until at least F25.
The continued focus on luxury wine and premiumisation
has enabled EPS of 52.3 cents per share (before material
items and SGARA) and strong NSR growth. Group Luxury
NSR increased 29.6% (14.5% organic growth), driven by
outstanding execution and with consumer demand for
luxury wine remaining strong in TWE’s key markets. NSR
per case increased 14.2% the ongoing premiumisation
of TWE’s portfolio towards luxury wine, which now
represents approximately 50% of Group NSR. This level of
performance is reflected in the STIP results and the level of
payout for executives.
Actual results for the Balanced Scorecards and Individual
KPOs are provided below.
F24 STIP outcomes
Measure
Weight
Threshold
Target
Stretch
Result
Weighted
outcome
Global EBITS
50%
$614.6M
$673.7M
$707.4M
$658.1M
43.4%
Quality growth in sales volume
15%
10,879
12,088
12,724
12,044
14.7%
Brand Contribution margin
15%
36.3%
36.6%
36.9%
36.9%
17.6%
Cash Conversion
10%
81.3%
86.3%
91.3%
94.6%
12%
Return on Capital Employed1
10%
11.4%
12.2%
12.8%
12%
8.9%
Total
100%
96.6%
(C) F24 Balanced Scorecard Measures (multiplier 0 to 1.2x)
Scorecard Results
(Balanced Scorecard multiplier)
KMP
Threshold
Target
Maximum
Result
Individual Performance Multiplier
(IPM)
CEO
Above target
125%
CFSO
Above target
120%
Individual Result
F24 remuneration report (audited)
(D) F24 Individual KPOs (multiplier 0 to 1.5x)
1. Excluding impacts of DAOU acquisition
Executive
Grant date
Vesting date
Number of
awards granted
Face Value at grant
date ($)1
Fair Value at valuation
date ($)2
Current (as at 30 June 2024)
TM Ford
8 November 2023
30 June 2026
234,630
2,924,107
2,341,138
SR Boxer
8 November 2023
30 June 2026
108,324
1,350,000
1,073,274
Table 3.2: F24 STIP outcomes
d) Long-term incentive awards and outcomes
LTIP awarded during the year
Performance rights were allocated to executives under the F24 LTIP after the 2023 Annual General Meeting and are
subject to a three-year performance period. Any vesting is subject to three hurdles (detailed on page 85).
The performance rights have no exercise price and the minimum total value of the grant is zero. The maximum
value is the number of awards granted multiplied by the share price at vesting.
Table 3.3: F24 LTIP performance rights
(A)
FR1 for
STIP
opportunity
(B) STIP
opportunity
at Target
(% of FR)
STIP
opportunity
at Target
(C)
Business
scorecard
multiplier
(D)
Individual
performance
multiplier
STIP
awarded
Total STIP
awarded
(% of FR )
Total STIP
awarded
(% of
maximum)
Cash
Restricted
equity
Total STIP
opportunity
forfeited
(% of
maximum)
Executive
($)
(%)
($)
(%)
(%)
($)
(%)
(%)
($)
($)
(%)
TM Ford2
1,670,918
100.0%
1,670,918
96.6%
125%
1,850,542
110.8%
62%
1,233,695
616,847
38%
SR Boxer3
844,240
66.5%
561,420
96.6%
120%
650,798
77.1%
64%
433,865
216,933
36%
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 2023 ($12.4626 per share).
2. The fair value ($) in the table above is calculated using the valuation method detailed in Note 22 of the Financial Statements. The valuation date for Mr Ford is 16 October 2023 and the valuation date for Mr
Boxer is 11 August 2023.
As detailed in section 2 (e), individual KPOs include a
combination of strategic and operational objectives specific
to the executive, and shared objectives relating to leadership,
inclusion, equity and diversity, and wellbeing and sustainability.
These KPO measures include a combination of quantitative
and qualitative measures. 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. The Individual Performance Multiplier
of 1.25x for the CEO, Mr Ford, was driven by strong individual
performance driving the strategic direction of TWE as a global
leader in luxury wine, including the acquisition of DAOU and
assessing a future operating model for the global portfolio of
Premium brands ahead of transition to the single, standalone
global operating division in F26. DAOU delivered its expected
EBITS during H2F24, with business integration underway and on
track to deliver synergies by the end of F26.
During F24, Mr Ford implemented key initiatives to build
sustainable distribution growth and identified future channel
growth opportunities in Asian priority markets and channels,
including successfully developing and implementing a plan
for when the Chinese tariffs on Australian wine were removed.
As outlined earlier in the report, whilst the Company has
had a strong year and the Board was very pleased with
Management’s performance, as part of closing out the year it
was decided to write down within TPB the value of goodwill of a
number of TPB’s legacy commercial brands. This resulted in a
non-cash impairment of $290m (post-tax) being recognised
as at 30 June 2024. The Board has applied discretion to reduce
the F24 STIP multiplier for the CEO from 120.8% to 110.8% of target.
STIP payments for Senior Divisional TPB Management are
commensurate with the performance of the division including
the impairment.
The table below sets out short-term incentive outcomes
for each executive inclusive of the impact of individual
performance multiplier outcomes. The cash component of
F24 STIP awards will be paid in September 2024. The Restricted
Equity will also be allocated in September 2024. Mr Young did
not receive a STIP award for F24.
1. FR is salary as of 1 September 2023. Where change have occurred after 1 September, FR is pro-rated based on calendar days in the financial year.
2. Mr Ford’s STIP was reduced to 110.8% from 120.8% following the exercise of discretion from the Board relating to impairment of TPB brands.
3. Mr Boxer’s fixed remuneration was increased to $900,000 effective from 1 November 2023 on his appointment to the role of Chief Financial & Strategy Officer.
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TREASURY WINE ESTATES ANNUAL REPORT 2024
As outlined previously in the report, the Group’s Total
Shareholder Return (TSR) performance was at the
65th percentile relative to its peer group driving 80%
vesting for this component of the LTIP (weighted at
25%). However, whilst the Company has continued to
focus on sustainable earnings, cost management and
operational effectiveness, the ROCE component has
once again fallen below threshold and has nil vesting.
The Board elected not to adjust or apply discretion to
the ROCE component. The resulting total vesting of the
F22 LTIP for each executive equated to 20% of the target
grant value.
The Board acknowledges stakeholder feedback to its
decision to adjust outcomes relating to the F21 LTIP
vesting in 2023. The adjustments made to the ROCE
component of the F21 LTIP were a one-off adjustment,
to reflect the direct and material impact of the
imposition of MOFCOM tariffs (and to exclude the other
material, unanticipated events including the pandemic
and wildfires).
The Board committed in the 2023 remuneration report
that it would remove any benefit to executives for future
LTIP ROCE and EPS targets if the Chinese wine tariffs were
removed to ensure consistency in the discretion that has
been applied. No adjustments have been applied to the
F22 LTIP, which was not impacted, negatively or positively,
by the application and subsequent lifting of wine tariffs
in China.
As result of the impairment, for measurement purposes
of ongoing LTIP, the value of the impairment will be
added back to the capital employed for three years
to ensure there are no windfall gains delivered to
Management going forward
The F22 LTIP vesting outcome by executive is
provided overleaf:
F24 remuneration report (audited)
Relative TSR
vesting schedule
Relative TSR ranking
% of performance rights
subject torelative TSR
measure which vest
Below 50th percentile
0%
50th to 60th percentile
50%-70%
60th to 75th percentile
70-100%
At or above 75th percentile
100%
ROCE baseline
10.8% (F21)
ROCE percentage points growth
ROCE result
% of performance rights
subject to ROCE measure
which vest
Less than 1.8
Less than 12.6%
0%
1.8 to 2.1
12.6% to 12.9%
35%-75%
2.1 to 2.8
12.9% to 13.6%
75%-100%
At or above 2.8
At or above 13.6%
100%
LTIP Vesting
The F22 LTIP was due to vest at the end of F24. The vesting schedule for the F22 LTIP is provided below.
Executive
Number
of performance
rights granted
Value at grant 1
($)
Number
of rights vested
Value vested 2
($)
Number
of rights which
lapsed3
Value lapsed2
($)
Current (as at 30 June 2024)
TM Ford
240,171
2,624,997
48,034
597,543
192,137
2,390,184
SR Boxer
92,637
1,012,495
18,527
230,476
74,110
921,928
Former
MJ Young
97,989
1,070,990
16,557
205,969
81,432
1,013,014
1. ‘Value at grant’ is calculated based on $10.9297 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 2021. This was the price used to calculate the number of performance rights granted under the F22 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 28 June 2024, being $12.44.
3. The number of rights which lapsed as they did not vest. For Mr. Young, this includes 15,199 rights which were forfeited on termination of employment.
Table 3.4: Vesting / lapsing of F22 LTIP
e) General employee share plan (Share Cellar)
During F24, the 2024 Share Cellar Plan was launched.
No executives participated in this plan. The Company
has approximately one third of all eligible employees
participating in the Share Cellar Plan and investing their
post-tax pay to become shareholders.
f) Summary of awards held by executives
The table below sets out the number and movement
of awards held by executives. Restricted Shares are
generally issued under STIP Deferral (Restricted Equity).
Performance Rights are issued under the LTIP.
Name
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
Current (as at 30 June 2024)
TM Ford
Restricted Shares
64,963
33,549
(43,566)
-
-
54,946
Performance Rights
491,778
234,630
(48,034)
(192,137)
-
486,237
SR Boxer
Restricted Shares
21,743
9,801
(14,239)
-
-
17,305
Performance Rights
187,384
108,324
(18,527)
(74,110)
-
203,071
Former
MJ Young3,44 Restricted Shares
22,181
-
(15,301)
-
(6,880)
-
Performance Rights
200,646
-
(16,557)
(131,543)
(52,546)
-
Grand Total
988,695
386,304
(156,224)
(397,790)
(59,426)
761,559
Table 3.5: Summary of awards held by executives
1. Represents restricted shares under the F21 and F22 Deferred STIP which became unrestricted during F24 and performance rights that vested under the F22 LTIP.
2. Represents F22 LTIP performance rights which lapsed on 30 June 2024. For Mr Young this includes 65,310 F22 and F23 LTIP performance rights which were forfeited on termination of employment.
3. Mr Young ceased to be KMP on 1 November 2023 and as such his reportable equity awards retained post resignation as at 30 June 2024 have been reduced to nil.
4. Mr Young ceased to be KMP on 1 November 2023 and was not granted any restricted share rights or performance rights under the F24 LTIP.
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Table 3.6: Remuneration of executives
g) Remuneration of executives
Table 3.6 provides details of remuneration for the CEO and executives for F24, 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.
F24 remuneration report (audited)
1 Represents cash salary including any salary sacrificed items such as superannuation and novated motor vehicles, and for Mr Young includes cash out of accrued leave entitlements upon cessation of employment.
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 F24 STIP, excluding the Restricted Equity portion which will be allocated in September 2024.
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 Acounting Standard, 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.
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. F23 STIP Restricted Equity was outstanding at the end
of F24. Restricted Equity granted under the F24 STIP is expected to be allocated in September 2024. 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.
8 Termination benefits for MJ Young reflect a severance payment per his executive contract.
9 Mr Young ceased as KMP on 1 November 2023 and ceased employment on 12 January 2024. Amounts reported are for the KMP period only from 1 July 2023 to 1 November 2023. Upon exit, Mr Young forfeited a portion of
his F22 and F23 LTIP awards. The remaining awards are subject to post-employment vesting.
Short-term benefits
Executive
Year
Salary / Fees1
Leave accrual2
Non-monetary
benefits3
Total cash
incentive4
Other
payments
Superannuation /
pension
Total amortisation
value of LTIP5
Other equity6
Total
Performance
related %7
Termination
benefits 8
Current (as at 30 June 2024)
TM Ford
F24
1,635,408
91,527
14,829
1,233,695
–
27,399
471,137
473,201
3,947,196
55%
–
F23
1,588,486
75,359
14,422
778,680
–
25,292
1,685,247
507,449
4,674,935
64%
–
SR Boxer
F24
813,731
59,087
15,233
433,865
–
27,399
199,304
150,239
1,698,858
46%
–
F23
683,937
1,400
10,184
227,494
–
25,292
647,731
169,540
1,765,578
59%
–
Former
MJ Young9
F24
438,312
(190,469)
7,752
–
–
13,418
70,056
71,648
410,717
35%
397,683
F23
743,120
16,736
12,312
184,865
–
25,292
816,323
173,634
1,972,282
60%
–
Total
F24
2,887,451
(39,855)
37,814
1,667,560
–
68,216
740,497
695,088
6,056,771
397,683
F23
3,015,543
93,495
36,918
1,191,039
–
75,876
3,149,301
850,623
8,412,795
–
Share-Based Payments
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TREASURY WINE ESTATES ANNUAL REPORT 2024
F24 remuneration report (audited)
Name
Position
Dates
Non-Executive Directors
Current
J Mullen
Chairman1
Full year
EYC Chan
Non-executive director
Full year
GA Hounsell
Non-executive director
Full year
CE Jay
Non-executive director
Full year
A Korsanos
Non-executive director
Full year
LM Shanahan
Non-executive director
Full year
Former
PA Rayner
Non-Executive Director
Retired effective 16 October 2023
Non-executive director remuneration
4. Framework and outcomes
This section of the report refers to the following non-executive directors.
a) Fee pool
The current maximum aggregate fee pool of $2,500,000
per annum (inclusive of superannuation) was approved
by shareholders at the 2016 Annual General Meeting.
b) Non-executive director fees
The level of non-executive directors’ fees takes into
account the risks and responsibilities of the role, the
global reach and complexity of the business, director
skills and experience, and market benchmark data
(provided by independent external consultants).
As disclosed in the F23 remuneration report, for F24, the
Board approved a 3% increase to Chair and Member
base fees to be effective from 1 October 2023. No
changes were made to Committee fees. There will be
no increases to Chairman or non-executive director
fees in F25.
Board/Committee
Chair fee ($)
Member fee ($)
Board base fee
562,380
204,455
Audit and Risk Committee
46,500
22,500
Human Resources Committee
42,500
21,500
Nominations Committee
10,000 1
5,000
Wine Operations and Sustainability Committee
35,000
18,000
The above fees were effective 1 October 2023 and are inclusive of superannuation for Australian-based
non-executive directors.
1. The Chairman of the Board, Mr Mullen, is also the Chair of the Nominations Committee. He does not receive any additional fees for this role.
Table 4.1: F24 Non-executive director fees
In addition to the above fees, non-executive directors receive a wine allowance of $4,000. In order to maintain
independence, non-executive directors do not participate in the Company’s incentive plans and they do not
receive retirement benefits other than the superannuation contributions disclosed in this report.
Non-Executive Director
Year
Fees
Non-monetary
benefits1
Superannuation
Total
J Mullen2
FY24
462,101
4,000
27,399
493,500
FY23
29,940
–
3,144
33,084
EYC Chan3
FY24
219,921
4,000
5,546
229,467
FY23
214,792
4,000
6,208
225,000
GA Hounsell
FY24
259,568
4,000
27,399
290,967
FY23
250,931
7,370
25,170
283,471
CE Jay3
FY24
242,467
4,000
-
246,467
FY23
238,000
4,000
-
242,000
LM Shanahan3
FY24
250,467
4,000
-
254,467
FY23
246,000
4,000
-
250,000
A Korsanos
FY24
229,250
7,192
25,217
261,659
FY23
226,244
7,370
23,756
257,370
Former
PA Rayner4
FY24
151,085
5,263
9,208
165,556
FY23
520,708
17,363
25,292
563,363
TOTAL
FY24
1,814,859
32,455
94,769
1,942,083
FY23
1,726,615
44,103
83,570
1,854,288
c) Non-executive director outcomes
Details of non-executive director remuneration for F24 and F23 are provided below.
Table 4.2: F24 Non-executive director remuneration ($)
1 Includes product allocations, entertainment and Fringe Benefits Tax, where applicable. The amount for Mr Rayner includes car parking.
2 Mr Mullen joined the Board effective from 1 May 2023.
3 For non-executive directors who reside outside of Australia, fees are converted into their local currency based on a 3-year average foreign exchange rate up to 30 April of the previous year.
4 Mr Rayner retired from the Board of Directors as of 16 October 2023.
1 Mr Mullen joined the Board effective from 1 May 2023 and became Chair of the Board on 16 October 2023
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TREASURY WINE ESTATES ANNUAL REPORT 2024
F24 remuneration report (audited)
Other remuneration Information
5. Governance
a) Role of the Human Resources Committee (HRC)
The HRC provides assistance to the Board in relation to
such matters as monitoring remuneration principles
and frameworks, providing advice on remuneration
matters, making remuneration recommendations for
executives, approving incentive plans and reviewing
and governing remuneration policies. In addition to
its remuneration responsibilities and together with
the Board, the HRC’s duties include overseeing talent
management, inclusion, equity and diversity, culture
and leadership development.
The Committee ensures that the Company’s
policies and frameworks aid the achievement of the
Company’s strategic objectives, provide appropriate
governance, are aligned with market practice, and fulfil
the Board’s responsibility to shareholders. During the
year, the Audit and Risk Committee Chair attended all
of the Human Resources Committee meetings. Also, the
Human Resources Committee Chair typically attends
the Audit & Risk Committee meetings, providing a link
between both Committees to assist with oversight of
non-financial risk.
As outlined in Section 4 of the Corporate Governance
Statement disclosed on the Company’s website
www.tweglobal.com, the Company has procedures in
place for the reporting of any matter that may give 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 www.tweglobal.com).
b) Engagement of remuneration advisors
In F24, the Board and HRC engaged PwC as an
independent advisor to the HRC. Potential conflicts
of interest are considered by the HRC, and the Board
and HRC are satisfied that the advice provided by PwC
was free from undue influence. Any advice provided
by remuneration consultants is used as a guide only
and is not a substitute for detailed consideration
of all relevant issues by the HRC. No remuneration
recommendations, as defined by the Corporations Act
2001 (Cth), were provided.
c) Executive and non-executive director share ownership
Executives and non-executive directors are
encouraged to have control over ordinary shares in the
Company and executives and non-executive directors
are required to hold at least the equivalent of one
year’s fixed remuneration or base fees. The guidelines
are expected to be met over a reasonable period
of time (approximately five years). The Company’s
variable incentive programs contribute towards
executives meeting this guideline. The Director Share
Acquisition Plan (DSAP) allows directors to apply after-
tax fees to the acquisition of the Company’s shares on
a periodic basis at the prevailing market rate. The table
below sets out KMP shareholdings.
F24
Balance at start
of the year
Received upon
vesting/exercise1
Other changes
during the year2
Balance at end
of year
Executive
Current (as at 30 June 2024)
TM Ford3
295,284
91,600
41,670
428,554
SR Boxer3
84,477
32,766
12,275
129,518
Former
MJ Young
145,341
31,858
(177,199)
-
Executive total
525,102
156,224
(123,254)
558,072
F24
Balance at start
of the year
Acquired during the
year as part of DSAP4
Other changes during
the year
Balance at end
of year5
Non-Executive Directors
Current (as at 30 June 2024)
J Mullen
-
-
68,990
68,990
EYC Chan
48,280
-
-
48,280
GA Hounsell
100,000
-
10,583
110,583
CE Jay
28,682
3,447
-
32,129
LM Shanahan
22,368
-
22,368
T Korsanos
17,500
-
4,352
21,852
Former
PA Rayner6
301,671
(301,671)
Non-Executive Director total
518,501
3,447
(217,746)
304,202
Grand total
1,043,603
159,671
(341,000)
862,274
Table 5.1: KMP shareholdings
1 Includes release of restricted shares under Tranche 2 of F21 Deferred STIP and Tranche 1 of F22 Deferred STIP and shares acquired upon auto-exercise of F22 LTIP performance rights.
2 Includes the purchase/sale of ordinary shares during F24; including shares purchased under the renouncable rights offer completed in November 2023, with shares allocated in December 2023.
3 Mr Ford & Mr Boxer participate in TWE’s voluntary sell-to-cover program which allows eligible executives and senior leaders the ability to opt-in to an irrevocable arrangement for the automatic sale of 47% of
shares that vest under TWE’s employee share plans in order to cover their Australian tax liabilities. The automatic sale of shares will occur upon vesting of any F22 LTIP rights and release of restricted shares under
the F21 and F22 Deferred STIP.
4 Shares acquired by Directors using post-tax fees in TWE's Director Share Acquisition Plan (DSAP).
5 No changes in shareholdings have occurred for non-executive directors from the balance date to the date of this report.
6 Mr Rayner retired from the Board of Directors as of 16 October 2023. Mr Rayner’s balance of shares held as at 30 June 2024 is reduced to nil to reflect his retirement as an Non-Executive Director.
6. Further information
a) Executive contracts
There is no fixed term for executive contracts. The Company may terminate service agreements immediately
for cause, in which case the executive is not entitled to any payment other than the value of fixed remuneration
and accrued leave entitlements up to the termination date. On resignation all executives are required to give six
months’ notice. If the termination is Company initiated without cause, all executives have termination provisions of
six months’ notice by the Company plus six months’ severance pay.
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TREASURY WINE ESTATES ANNUAL REPORT 2024
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).
c) Prior years’ equity arrangements
This section summarises all outstanding equity
arrangements for executives, as reported in previous
Remuneration Reports.
The below equity plans 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.
Executive
Plan
Instrument type
Allocation date
Number
Face value
at allocation
date 1
($)
Fair value
at allocation
date 2
($)
Vesting date
Current
TM Ford
F23 LTIP
Performance Rights
1 November 2022
251,607
2,838,938
2,906,564
30 June 2025
SR Boxer
F23 LTIP
Performance Rights
1 November 2022
94,747
1,069,050
1,094,517
30 June 2025
Former
MJ Young3
F23 LTIP
Performance Rights
1 November 2022
52,546
592,887
607,011
30 June 2025
1 The value of F23 LTIP awards at allocation date is calculated based on the 90-day VWAP up to and including 30 June 2022 ($11.2832 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.
3 Mr Young was granted 102,657 performance rights under the F23 LTIP. 50,111 F23 LTIP performance rights were forfeited upon termination of employment.
Table 6.1: Prior years’ restricted equity
Relative TSR vesting schedule
Relative TSR ranking
% of performance rights subject to
relative TSR measure which vest
Below 50th percentile
0%
50th to 60th percentile
50%-70%
60th to 75th percentile
70%-100%
At or above 75th percentile
100%
ROCE baseline 10.7% (F22)
ROCE percentage points growth
ROCE result
% of performance rights subject to
ROCE measure which vest
Less than 2.8
Less than 13.5%
0%
2.8 to 3.2
13.5% to 13.9%
35%-75%
3.2 to 4.0
13.9% to 14.7%
75%-100%
At or above 4.0
At or above 14.7%
100%
Earnings per Share
EPS CAGR
% of Performance Rights subject to
EPS measure which vest
0 – 7.5%
0%
7.5% - 15%
35%-100%
At or above 15%
100%
Table 6.2: F23 LTIP vesting schedules
F24 remuneration report (audited)
Term
Definition
Cash Conversion
Net operating cash flows before financing costs, tax and material items divided by EBITDAS (excluding
movement in non-current luxury and premium inventory).
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
Earnings before interest, tax, depreciation, amortisation, material items and SGARA.
EBITS
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.
d) Definitions
100
101
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Note
2024
$M
2023
$M
Revenue
3
2,808.3
2,488.3
Cost of sales
(1,573.7)
(1,413.7)
Gross profit
1,234.6
1,074.6
Selling expenses
(246.1)
(231.3)
Marketing expenses
(153.7)
(157.1)
Administration expenses
(241.3)
(183.4)
Other income/(expenses)
(326.9)
(93.1)
Profit before tax and finance costs
266.6
409.7
Finance income
106.8
79.6
Finance costs
(205.1)
(152.3)
Net finance costs
(98.3)
(72.7)
Profit before tax
168.3
337.0
Income tax expense
24
(69.3)
(82.7)
Net profit
99.0
254.3
Net (profit)/loss attributable to non-controlling interests
(0.1)
0.2
Net profit attributable to shareholders of Treasury Wine Estates Limited
98.9
254.5
Other comprehensive income/(loss)
Items that may subsequently be reclassified to profit or loss
Cash flow hedges
(11.0)
5.7
Tax on cash flow hedges
3.2
(1.3)
Exchange gain/(loss) on translation of foreign operations
(41.7)
80.0
Other comprehensive income/(loss) for the year, net of tax
(49.5)
84.4
Total comprehensive income for the year attributable to:
Shareholders of Treasury Wine Estates Limited
49.5
338.3
Non-controlling interests
(0.1)
0.4
Total comprehensive income for the year
49.4
338.7
Cents
Per share
Cents1
Per share
Earnings per share for profit attributable to Treasury Wine Estates Limited shareholders
Basic
7
12.7
34.9
Diluted
7
12.6
34.8
The consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2024
1. Earnings per share for the year ended 30 June 2023 has been restated, in accordance with AASB 133, for the dilutive effects of the rights issue executed during the current financial year to
ensure consistency period on period, see note 7.
Note
2024
$M
2023
$M
Current assets
Cash and cash equivalents
9
458.1
565.8
Receivables
9
683.1
607.3
Inventories
9
1,020.5
990.3
Current tax assets
24
12.0
24.4
Assets held for sale
14
13.6
32.9
Derivative assets
26
1.3
16.5
Total current assets
2,188.6
2,237.2
Non-current assets
Inventories
9
1,339.1
1,175.3
Property, plant and equipment
10
1,816.1
1,576.8
Right-of-use assets
11
360.8
389.7
Agricultural assets
12
50.4
44.8
Intangible assets
13
2,182.8
1,426.7
Deferred tax assets1
24
116.6
28.9
Derivative assets
26
44.1
66.4
Other non-current assets
14.3
7.9
Total non-current assets1
5,924.2
4,716.5
Total assets1
8,112.8
6,953.7
Current liabilities
Trade and other payables
9
793.8
709.7
Current tax liabilities
24
77.0
18.7
Provisions
16
72.1
101.7
Borrowings
18
83.8
250.7
Derivative liabilities
26
3.8
17.6
Total current liabilities
1,030.5
1,098.4
Non-current liabilities
Borrowings
18
2,074.7
1,686.9
Deferred tax liabilities1
24
287.6
245.6
Contingent consideration
35
45.4
-
Derivative liabilities
26
40.4
20.8
Other non-current liabilities
23.3
23.1
Total non-current liabilities1
2,471.4
1,976.4
Total liabilities1
3,501.9
3,074.8
Net assets
4,610.9
3,878.9
Equity
Contributed equity
19
4,226.8
3,280.7
Other equity
23
(18.1)
(18.1)
Reserves
21
82.2
134.5
Retained earnings
302.9
464.6
Total parent entity interest
4,593.8
3,861.7
Non-controlling interests
17.1
17.2
Total equity
4,610.9
3,878.9
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
Consolidated statement of financial position
As at 30 June 2024
1. Reported results at 30 June 2023 restated. Refer to note 24.
102
103
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Contributed
equity
$M
Other
equity
$M
Retained
earnings
$M
Foreign
currency
translation
reserve
$M
Other
reserves
$M
Total
$M
Non-
controlling
interests
$M
Total
equity
$M
Balance at 30 June 2022
3,280.7
-
455.5
72.2
(23.5)
3,784.9
4.1
3,789.0
Profit/(loss) for the year
-
-
254.5
-
-
254.5
(0.2)
254.3
Total other comprehensive
income/(loss)
-
-
-
79.4
4.4
83.8
0.6
84.4
Total comprehensive
income/(loss)for the year
-
-
254.5
79.4
4.4
338.3
0.4
338.7
Transactions with owners in their
capacity as owners directly in equity
Share based payment expense
-
-
-
-
13.8
13.8
-
13.8
Vested deferred shares and share rights
-
-
-
-
(11.8)
(11.8)
-
(11.8)
Other equity
-
(18.1)
-
-
-
(18.1)
-
(18.1)
Non controlling interest of aquisition
-
-
-
-
-
-
12.7
12.7
Dividends to owners of the Company
-
-
(245.4)
-
-
(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
Profit for the year
-
-
98.9
-
-
98.9
0.1
99.0
Total other comprehensive
income/(loss)
-
-
-
(41.7)
(7.7)
(49.4)
(0.2)
(49.6)
Total comprehensive
income for the year/(loss)
-
-
98.9
(41.7)
(7.7)
49.5
(0.1)
49.4
Transactions with owners in their
capacity as owners directly in equity
Share based payment expense
-
-
-
-
11.7
11.7
-
11.7
Issue of ordinary shares
825.4
-
-
-
-
825.4
-
825.4
Issue of ordinary shares as consideration
for business acquisition
139.1
-
-
-
-
139.1
-
139.1
Transaction costs on issue of ordinary
shares
(18.4)
-
-
-
-
(18.4)
-
(18.4)
Vested deferred shares and share rights
-
-
-
-
(14.6)
(14.6)
-
(14.6)
Other equity
-
-
-
-
-
-
-
-
Non controlling interest of aquisition
-
-
-
-
-
-
-
-
Dividends to owners of the Company
-
-
(260.6)
-
-
(260.6)
-
(260.6)
Balance at 30 June 2024
4,226.8
(18.1)
302.9
109.9
(27.7)
4,593.8
(17.1)
4,610.9
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Consolidated statement of changes in equity
For the year ended 30 June 2024
Note
2024
$M
inflows/
(outflows)
2023
$M
inflows/
(outflows)
Cash flows from operating activities
Receipts from customers
3,411.6
3,125.8
Payments to suppliers, governments and employees
(2,837.4)
(2,710.2)
Borrowing costs paid
(12.1)
(9.7)
Income taxes paid
(31.2)
(69.8)
Interest paid (net)
(99.2)
(64.1)
Net cash flows from operating activities
8
431.7
272.0
Cash flows from investing activities
Payments for property, plant, and equipment
(176.2)
(243.6)
Payments for intangible assets
(13.9)
(5.4)
Payments for subsidiaries, net of cash acquired
35
(1,204.6)
(55.8)
Proceeds from sale of property, plant and equipment
74.8
193.4
Net cash flows used in investing activities
(1,319.9)
(111.4)
Cash flows from financing activities
Proceeds from issue of shares net of transaction costs
807.0
-
Dividend payments
(260.6)
(245.4)
Proceeds from borrowings
921.3
394.2
Repayment of borrowings
(698.8)
(154.1)
Proceeds from settlement of currency swaps and other derivatives
19.4
-
Purchase of shares – employee equity plans
(5.3)
(21.9)
Net cash flows used in financing activities
783.0
(27.2)
Total cash flows from activities
(105.2)
133.4
Cash and cash equivalents at the beginning of the year
565.8
430.5
Effects of exchange rate changes on foreign currency cash flows and cash balances
(2.5)
1.9
Cash and cash equivalents at end of the year
9
458.1
565.8
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Consolidated statement of cash flows
For the year ended 30 June 2024
104
105
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Treasury Wine Estates Limited (‘the Company’) is a for profit
company incorporated in Australia and limited by shares which
are publicly traded on the Australian Securities Exchange (ASX).
The consolidated financial statements comprise the Company
and its controlled entities (collectively, ‘the Group’). The Company’s
registered office and principal place of business is at Level 8, 161
Collins St, Melbourne VIC 3000, Australia.
The accounting policies that are critical to understanding the
financial statements are set out in this section. Where an accounting
policy is specific to one note, the policy is described in the note to
which it relates.
Basis of preparation
The consolidated financial statements are general purpose financial
statements prepared in accordance with Australian Accounting
Standards (AAS) adopted by the Australian Accounting Standards
Board (AASB) and the Corporations Act 2001. The consolidated
financial statements comply with the International Financial
Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB). They were authorised for issue by the Board
of Directors on 15 August 2024.
The financial statements are presented in Australian dollars with
all values rounded to the nearest tenth of one million dollars unless
otherwise stated, in accordance with ASIC Corporations (Rounding in
Financial/Directors’ Reports) Instrument 2016/191.
The consolidated financial statements may also include certain
non-IFRS measures including earnings before finance costs, tax,
SGARA and material items (EBITS). These measures are used
internally by management (and some analysts) to assess the
performance of the Group and segments, to make decisions on the
allocation of resources and assess operational management.
Notes to the financial statements
The notes include additional information required to understand the
financial statements that is material and relevant to the operations,
financial position and performance of the Group.
Information is considered material and relevant if the amount in
question is significant because of its size, nature or incidence or it
helps to explain the impact of significant changes in the business, for
example, acquisitions and asset write-downs.
Line items labelled ‘other’ on the face of the consolidated statements
comprise miscellaneous income, expenses, assets, liabilities or cash
flows which individually or in aggregate are not considered material
to warrant additional disclosures.
Where applicable, comparative periods have been adjusted to
disclose comparatives on the same basis as the current year.
The notes are organised into the following sections:
Earnings: focuses on the financial results and performance of the
Group. It provides disclosures relating to income, expenses, segment
information, material items and earnings per share.
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.
Capital structure: provides information about the capital
management practices adopted by the Group - particularly how
much capital is raised from shareholders (equity) and how much
is borrowed from financial institutions (debt) in order to finance the
activities of the Group both now and in the future.
Taxation: sets out the Group’s tax accounting policies, the current
and deferred tax charges, a reconciliation of profit or loss before tax
to the tax charge or credit and the movements in deferred tax assets
and liabilities.
Risk: discusses the Group’s exposure to various financial risks,
explains how these affect the financial position of the Group and
what is done to manage these risks.
Group composition: explains aspects of the Group’s structure and
business acquisitions.
Other: other required disclosures under AAS and IFRS.
Key estimates and judgements
In preparing this financial report, the Group is required to
make estimates, judgements and assumptions that affect the
reported amounts in the financial statements.
These estimates, judgements and assumptions are continually
evaluated, and are based on forecasts of economic conditions
which reflect expectations and assumptions as at 30 June 2024
about future events that the Directors believe are reasonable in
the circumstances.
The areas involving a higher degree of judgement or complexity,
or areas where assumptions and estimates are significant to
the financial statements:
Note 3:
Revenue
Note 9:
Working capital
Note 11:
Right-of-use assets
Note 12:
Agricultural assets
Note 13:
Intangible assets
Note 15:
Impairment of non-financial assets
Note 24:
Income tax
Note 35:
Business acquisitions
Note 1 - About this report
Notes to the consolidated financial statements: About this report
For the year ended 30 June 2024
Principles of consolidation
The consolidated financial statements include the assets and
liabilities of Treasury Wine Estates Limited and its controlled entities
as a whole at year-end and the consolidated results and cash flows
for the year. A list of controlled entities (subsidiaries) is provided in
note 28.
An entity is regarded as a controlled entity when the Company is
exposed to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through power
over the entity.
The rights of other investors to the results and equity of the
subsidiaries (called non-controlling interests) are shown separately
in the consolidated statement of profit or loss and
other comprehensive income, consolidated statement of
changes in equity and consolidated statement of financial
position respectively.
The financial information of the subsidiaries is prepared for the same
reporting period as the parent, using consistent accounting policies.
Intra-group balances and transactions arising from
intra-group transactions are eliminated.
A change in the ownership interest of a subsidiary, without a loss of
control, is accounted for as an equity transaction.
Functional and presentation currency
The consolidated financial statements are presented in Australian
dollars. Each entity in the Group determines its own functional
currency and items included in the financial statements of each
entity are measured using that functional currency. The major
functional currencies used throughout the Group include 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.
Foreign Group companies
As at the reporting date, the assets and liabilities of overseas
subsidiaries are translated into Australian dollars at the rate
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.
Tax charges and credits attributable to these exchange differences
are also recognised in equity.
Average exchange rates used in translating profit and loss items in
F24 are:
A$1 = US$ 0.656 (F23: US$ 0.673)
A$1 = GB£ 0.521 (F23: GB£ 0.559)
Year-end exchange rates used in translating financial position items
in F24 are:
A$1 = US$ 0.665 (F23: US$ 0.662)
A$1 = GB£ 0.526 (F23: GB£ 0.525)
Fair value measurement
The Group measures certain financial instruments, including
derivatives, and certain non-financial assets such as agricultural
assets, at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market
participants in its principal or most advantageous market at the
measurement date. It is measured using the assumptions that
market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best
interest. A fair value measurement of a non-financial item assumes it
is put to its highest and best use.
The Group uses valuation techniques that are appropriate in the
circumstances and for which sufficient data is available to measure
fair value, maximising the use of relevant observable inputs and
minimising the use of unobservable inputs.
Accounting standards prescribe a fair value hierarchy, described as
follows, based on the lowest level input that is significant to the fair
value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for
identical assets or liabilities.
Level 2 - Valuation techniques for which the lowest level input that is
significant to the fair value measurement is directly (i.e. as 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.
Note 1 - About this report (continued)
Notes to the consolidated financial statements: About this report
For the year ended 30 June 2024
106
107
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Segment accounting policies
Segment assets and liabilities
Segment assets and liabilities represent those working capital
and non-current assets and liabilities which are located in the
respective segments. Cash and borrowings, other than lease
liabilities, are not considered to be segment assets/liabilities as
they are managed by the Group’s centralised treasury function.
Consistent with the use of EBITS for measuring profit, tax assets
and liabilities, which do not contribute towards EBITS, are not
allocated to operating segments.
Corporate charges
Unallocated corporate charges are reported in the Unallocated/
corporate segment. Net finance costs are not allocated
to segments as the Group’s financing arrangements are
centralised through its treasury function.
Segment loans payable and loans receivable
Segment loans are initially recognised at the amount
transferred. Intersegment loans receivable and payable that
earn or incur non-market interest are adjusted to fair value
based on market interest rates.
Other
If items of revenue and expense are not allocated to operating
segments, then any associated assets and liabilities are not
allocated to segments either.
The Group’s segments
The Group reports segment information on the same basis as its
internal management reporting structure and consistent with the
information used to organise and manage the Group.
Presentation of segment results
Management EBITS
The principal profit metric for internal management reporting is
Management earnings before interest, tax, SGARA and material items
(EBITS). Corporate charges are allocated to each segment on a
proportionate basis linked to segment revenue, head count
or other appropriate driver depending on the nature of the charge.
SGARA represents the difference between the fair value of harvested
grapes (as determined under AASB 141 Agriculture)
and the cost of harvested grapes. 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 the
Group’s consumer branded business and improves comparability
with domestic and global peers. The F24 SGARA gain of $10.9 million
reflects increased intake from the 2023 Californian vintage, partly
offset by a deliberate reduction of Commercial and Premium intake
from the 2024 Australian vintage and lower market grape pricing
in Australia.
The Group has the following reportable segments:
(i)
Treasury Premium Brands
This segment is responsible for the manufacture, sale and
marketing of wine within Australia, Asia, Europe, Canada,
Middle-East and Africa.
(ii) Penfolds
This segment is responsible for the manufacture, sale and
marketing of Penfolds wine globally.
(iii) Treasury Americas
This segment is responsible for the manufacture, sale
and marketing of wine within North American and Latin Americas
regions.
Note 2 - Segment information
Notes to the consolidated financial statements: Earnings
For the year ended 30 June 2024
2024
Treasury
Premium
Brands
$M
Penfolds
$M
Treasury
Americas
$M
Total
segment
$M
Unallocated/
corporate
$M
Consolidated
$M
Total revenue comprises:
Net sales revenue
737.0
1,000.5
1,002.3
2,739.8
-
2,739.8
Other revenue
2.8
33.9
23.1
59.8
8.7
68.5
Total segment revenue (excl other income/interest)
739.8
1,034.4
1,025.4
2,799.6
8.7
2,808.3
Management EBITS
76.0
421.3
230.5
727.8
(69.7)
658.1
SGARA gain/(loss)
(10.7)
(15.5)
37.1
10.9
-
10.9
Material items
(335.6)
(0.9)
(61.3)
(397.8)
(6.4)
(404.2)
Management EBIT
(270.3)
404.9
206.3
340.9
(76.1)
264.8
Net finance costs
(96.5)
Consolidated profit before tax
168.3
Depreciation of property, plant and equipment and
right-of-use assets
(20.8)
(34.3)
(81.5)
(136.6)
(4.3)
(140.9)
Amortisation of intangible assets
(0.5)
(0.6)
(2.3)
(3.4)
(11.2)
(14.6)
Impairment of intangible assets
(343.8)
-
-
(343.8)
-
(343.8)
Assets held for sale
8.8
0.3
4.5
13.6
-
13.6
Capital expenditure (additions)
(36.8)
(76.7)
(69.4)
(182.9)
(7.2)
(190.1)
Business acquisitions, net of cash acquired
-
-
(1,204.6)
(1,204.6)
-
(1,204.6)
Segment assets
990.8
1,930.6
4,445.0
7,366.4
746.4
8,112.8
Segment liabilities
(228.5)
(318.7)
(802.4)
(1,349.6)
(2,152.3)
(3,501.9)
2023
Treasury
Premium
Brands
$M
Penfolds
$M
Treasury
Americas
$M
Total
segment
$M
Unallocated/
corporate
$M
Consolidated
$M
Total revenue comprises:
Net sales revenue
782.4
819.7
820.9
2,423.0
-
2,423.0
Other revenue
4.8
26.7
28.0
59.5
5.8
65.3
Total segment revenue (excl other income/interest)
787.2
846.4
848.9
2,482.5
5.8
2,488.3
Management EBITS
81.7
364.7
203.9
650.3
(66.8)
583.5
SGARA gain/(loss)
(27.0)
(33.2)
(4.3)
(64.5)
-
(64.5)
Material items
(108.2)
(5.7)
31.6
(82.3)
(26.9)
(109.2)
Management EBIT
(53.5)
325.8
231.2
503.5
(93.7)
409.7
Net finance costs
(72.7)
Consolidated profit before tax
337.0
Depreciation of property, plant and equipment and
right-of-use assets
(21.3)
(34.5)
(73.1)
(128.9)
(3.7)
(132.6)
Amortisation of intangible assets
(2.1)
(0.1)
(2.1)
(4.3)
(10.5)
(14.8)
Impairment of intangible assets
(14.3)
-
-
(14.3)
-
(14.3)
Assets held for sale
21.3
11.6
-
32.9
-
32.9
Capital expenditure (additions)
(23.2)
(38.6)
(178.5)
(240.3)
(8.7)
(249.0)
Segment assets1
1,398.5
1,854.9
2,902.6
6,156.0
797.7
6,953.7
Segment liabilities1
(301.4)
(267.2)
(695.7)
(1,264.3)
(1,810.5)
(3,074.8)
Note 2 - Segment information (continued)
Notes to the consolidated financial statements: Earnings
For the year ended 30 June 2024
1. Reported results at 30 June 2023 restated. Refer to note 24.
108
109
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Geographical segments
The presentation of geographical net sales revenue is based on the location of the selling entity.
The presentation of non-current assets is based on the geographical location of the assets.
1. Other than Australia, the United States of America and the United Kingdom, sales of other countries are individually less than 10% of the Group’s net sales revenue.
2. Reported results at 30 June 2023 restated. Refer to note 24.
3. Other than Australia, the 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.
4. Other non-current assets include financial derivative assets and deferred tax assets.
Net sales revenue
2024
$M
2023
$M
Australia
1,150.8
1,004.3
United States of America
1,093.1
922.0
United Kingdom
314.0
329.4
Other geographical locations1
181.9
167.3
Total
2,739.8
2,423.0
Non-current assets
2024
$M
2023
$M
Australia
1,798.9
1,974.7
United States of America
3,579.1
2,227.0
United Kingdom
17.3
136.8
Other geographical locations3
368.2
282.8
Total geographical non-current assets
5,763.5
4,621.3
Other non-current assets2,4
160.7
95.2
Consolidated non-current assets2
5,924.2
4,716.5
Note 2 - Segment information (continued)
Notes to the consolidated financial statements: Earnings
For the year ended 30 June 2024
Note 3 - Revenue
1. Net sales revenue is inclusive of excise duty, and net of trade discounts and volume rebates.
2024
$M
2023
$M
Revenue
Net sales revenue1
2,739.8
2,423.0
Other revenue
68.5
65.3
Total revenue
2,808.3
2,488.3
Accounting policies
Key estimate and judgement
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. Excise duties are not included
as a separate item on external invoices; are not always passed
onto the customer and where a customer fails to pay for
products received, the Group cannot reclaim the excise duty.
The Group therefore recognises excise duty as a cost to the
Group. Payment terms vary by customer.
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.
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.
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, 19 Crimes, Beaulieu Vineyard,
Sterling Vineyards, Stags’ Leap, and Daou Vineyards (DAOU).
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, grape sales and bulk wine sales.
Major customer
For F24, the Group had one customer whose revenues represented
12.3% of reported net sales revenue. For F23, the Group had no
customers whose revenues represented more than 10.0% 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.
Notes to the consolidated financial statements: Earnings
For the year ended 30 June 2024
110
111
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Note 4 - Other earnings disclosures
2024
$M
2023
$M
Net foreign exchange gains/(losses)
1.3
0.5
Salaries and wages expense
(416.6)
(386.5)
Share based payments expense
(11.7)
(13.8)
Other items
Restructuring and redundancy costs
(1.9)
(0.3)
Insurance income
8.6
22.7
Net profit/(loss) on sale of property, plant and equipment
23.6
7.3
Material items before tax — refer note 5
(404.2)
(109.2)
Total other gains and (losses)
(373.9)
(79.5)
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.
Gain on sale of property, plant and equipment
Gains from the sale of property, plant and equipment are recognised when an executed contract becomes unconditional.
Insurance income
Revenue is recognised when recovery is virtually certain.
Notes to the consolidated financial statements: Earnings
For the year ended 30 June 2024
Individually material items included in profit before income tax:
2024
$M
2023
$M
Impairment of Treasury Premium Brands
(Write-down)/reversal of write-down of goodwill
(115.0)
-
(Write-down)/reversal of write-down of brand names
(228.8)
-
(Write-down)/reversal of write-down of inventory
(9.9)
-
Acquisition of DAOU Vineyards
Transaction and integration (costs)
(61.0)
-
Accounting for the earn-out agreement
(3.7)
-
Treasury Premium Brands Operating Model restructure
Restructuring and redundancy (costs)
(6.1)
(72.9)
Net profit/(loss) on sale of property, plant and equipment
17.0
-
(Write-down)/reversal of write-down of property, plant and equipment
3.3
(40.9)
(Write-down)/reversal of write-down of brand names
-
(14.3)
Divestment of US brands and assets
Restructuring and redundancy (costs)
-
(0.2)
(Write-down)/reversal of write-down of intangible assets
-
-
Net profit/(loss) on sale of property, plant and equipment
-
34.4
Supply chain restructure
Restructuring and redundancy (costs)
-
(9.5)
Acquisition of Frank Family Vineyards
Transaction and integration (costs)
-
(0.4)
Acquisition of Château Lanessan
Transaction and integration (costs)
-
(5.4)
Total material items (before tax)
(404.2)
(109.2)
Tax effect of material items
86.1
33.2
Total material items (after tax)
(318.1)
(76.0)
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.
The following individually material items are included within the consolidated statement of profit or loss and other comprehensive income.
In F24, material items reflect costs relating to the impairment of Treasury Premium Brands, acquisition and integration of DAOU Vineyards and
the continuation of the Treasury Premium Brands Operating Model restructure.
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.
Note 5 - Material items
Notes to the consolidated financial statements: Earnings
For the year ended 30 June 2024
112
113
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
2024
Cents per
share
20231
Cents per
share
Basic EPS
Basic EPS (cents) based on net profit attributable to shareholders of Treasury Wine Estates Limited
Diluted EPS
Diluted EPS (cents) based on net profit attributable to shareholders of Treasury Wine Estates Limited
Number
Number
Weighted average number of shares
Weighted average number of ordinary shares on issue used in the calculation of basic EPS
(in thousands)
778,834
721,848
Impact of renounceable entitlement offer (in thousands)
-
6,889
Weighted average number of ordinary shares on issue used in the calculation of EPS
(in thousands)
778,834
728,737
Effect of potentially dilutive securities
Deferred shares (in thousands)
3,472
3,612
Weighted average number of ordinary shares on issue used in the calculation of diluted EPS
(in thousands)
782,306
732,349
Earnings reconciliation
Basic and diluted EPS
$M
$M
Net profit
99.0
254.3
Net (profit)/loss attributable to non-controlling interest
(0.1)
0.2
Net profit attributable to shareholders of Treasury Wine Estates Limited used in
calculating basic and diluted EPS
98.9
254.5
Note 6 - Dividends
2024
$M
2023
$M
Dividends declared and paid on ordinary shares
Final dividend for F23 of 17.0 cents per share, 100% franked (F22: 16.0 cents per share, 100% franked)1
122.7
115.5
Interim dividend for F24 of 17.0 cents per share 70% franked (F23: 18.0 cents per share, 100% franked)2
137.9
129.9
260.6
245.4
Dividends approved after balance date
Since the end of the financial year, the Directors approved a final dividend of 19.0 cents per share
(F23: 17.0 cents) 70% franked (F23: 100% franked). This dividend has not been recognised as a liability in the
consolidated financial statements at year-end and there are no tax consequences.
154.2
122.7
1. The F23 final dividend includes an amount of $5.4 million (F22 final dividend: $5.1 million) for shares issued under the Dividend Reinvestment Plan which were fulfilled by on market share purchases.
2. The F24 interim dividend includes an amount of $7.5 million (F23 interim dividend: $6.8 million) for shares issued under the Dividend Reinvestment Plan which were fulfilled by on market share purchases.
Note 7 - Earnings per share
Details in relation to franking credits are included in note 24.
Calculation of earnings per share
Earnings per share (EPS) is the amount of post-tax profit attributable to each share.
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).
34.8
Notes to the consolidated financial statements: Earnings
For the year ended 30 June 2024
12.6
1. Earnings per share for the year ended 30 June 2023 has been restated, in accordance with AASB 133, for the dilutive effects of the rights issue executed during the current financial year to ensure consistency
period on period.
34.9
12.7
Note 8 - Net cash flows from operating activities
Reconciliation of net cash flows from operating activities to profit after income tax
2024
$M
2023
$M
Profit for the year
99.0
254.3
Depreciation and amortisation
155.5
147.4
SGARA (gain)/loss
(10.9)
64.5
Write-down/(reversal of write-down) of property, plant and equipment
(3.3)
40.9
Write-down/(reversal of write-down) of intangible assets
343.8
14.3
Net (profit)/loss on disposal of non-current assets
(40.6)
(41.7)
Share based payments expense
11.7
13.8
Other
(1.3)
-
Net cash provided by operating activities before change in assets and liabilities
553.9
493.5
Change in working capital and tax balances, net of effects from acquisition/disposal of controlled entities
Receivables
(52.0)
(38.8)
Inventories
11.9
(132.5)
Derivative financial assets/liabilities
2.0
9.0
Payables
(91.5)
(69.9)
Net tax balances
37.7
(13.0)
Provisions
(30.3)
23.7
Net cash flows from operating activities
431.7
272.0
Notes to the consolidated financial statements: Earnings
For the year ended 30 June 2024
114
115
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Note 9 - Working capital
2024
$M
2023
$M
Current
Cash and cash equivalents
458.1
565.8
Receivables (a)
683.1
607.3
Inventories (b)
1,020.5
990.3
Trade and other payables
(793.8)
(709.7)
Total current
1,367.9
1,453.7
Non-current
Inventories (b)
1,339.1
1,175.3
Total non-current
1,339.1
1,175.3
(a) Receivables
2024
$M
2023
$M
Current
Trade receivables
560.8
448.6
Allowance for expected credit loss
(11.8)
(7.7)
Other receivables
58.6
99.7
Prepayments
75.5
66.7
Total current receivables
683.1
607.3
(b) Inventories
2024
$M
2023
$M
Current
Raw materials and stores
67.1
67.7
Work in progress
282.1
253.6
Finished goods
671.3
669.0
Total current inventories
1,020.5
990.3
Non-current
Work in progress
1,017.4
872.8
Finished goods
321.7
302.5
Total non-current inventories
1,339.1
1,175.3
Total inventories
2,359.6
2,165.6
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 $1,500.9 million (F23: $1,314.3 million).
In F24, the write-down of inventories to net realisable value is $32.2 million (F23: $16.9 million). Reversals of write-downs amounted to nil (F23: nil).
These amounts are included in cost of sales.
Notes to the consolidated financial statements: Working capital
For the year ended 30 June 2024
Accounting policies
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits
held at call with banks, cash in transit, short-term deposits and
investments with maturities of three months or less.
Cash assets and bank overdrafts are offset and presented as a
net amount in the consolidated statement of financial position
when the Group has a legally enforceable right to offset or intent
to settle on a net basis.
For the purposes of the consolidated statement of cash flows,
cash and cash equivalents are disclosed net of outstanding
bank overdrafts.
Receivables
Trade receivables are initially recognised at invoice value (fair
value) and subsequently measured at amortised cost, less an
allowance for expected credit losses.
Credit terms are generally between 30 – 120 days depending on
the nature of the transaction. For trade receivables, 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.
Key estimates and judgements
Trade discounts and volume rebates
Key estimates relate to the amount accrued for discounts
and rebates. Products are often sold with trade discounts and
volume rebates. Sales are recorded based on the price specified
in the sales contracts or terms, net of the estimated discount or
rebate at the time of sale. Accumulated experience is used to
estimate and provide for the discounts and rebates based on
anticipated purchases and depletions.
Net realisable value of inventory
The period over which some wine inventories are converted
from raw materials to finished goods can be a significant length
of time. Failure to forecast demand effectively may result in
excess inventories or missed revenue opportunities.
Forecast demand and market prices can vary significantly over
the holding period up to the likely date of sale. Estimating the
most likely conditions at the expected point of sale is therefore
more challenging over the longer term. Non-current inventory
is $1,339.1 million (F23: $1,175.3 million) and its estimated selling
price is therefore a key estimate.
Note 9 - Working capital (continued)
Notes to the consolidated financial statements: Working capital
For the year ended 30 June 2024
116
117
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Land
Freehold
buildings
Leasehold
buildings
Plant and
equipment
Total
2024
$M
2023
$M
2024
$M
2023
$M
2024
$M
2023
$M
2024
$M
2023
$M
2024
$M
2023
$M
Cost
537.7
475.9
612.9
544.4
48.4
45.1
1,880.8
1,783.5
3,079.8
2,848.9
Projects in progress
4.1
-
0.5
-
-
-
117.0
72.6
121.6
72.6
Accumulated depreciation and
impairment
(26.6)
(29.4)
(233.9)
(223.9)
(28.1)
(25.1)
(1,096.7)
(1,066.3)
(1,385.3)
(1,344.7)
Carrying amount at end of year
515.2
446.5
379.5
320.5
20.3
20.0
901.1
789.8
1,816.1
1,576.8
Note 10 - Property, plant and equipment
Reconciliations
Carrying amount at start of year
446.5
403.4
320.5
301.3
20.0
16.2
789.8
800.6
1,576.8
1,521.5
Additions
28.4
133.6
27.6
13.7
-
-
120.2
96.3
176.2
243.6
Business acquisition
42.8
19.8
37.3
23.4
-
-
83.0
1.9
163.1
45.1
(Transfer to)/from
assets held for sale
0.4
(121.4)
0.4
(1.1)
1.6
-
(1.9)
(15.6)
0.5
(138.1)
(Transfer to)/from other asset
classes
(0.4)
1.6
(0.5)
(8.0)
1.9
6.3
-
(0.4)
1.0
(0.5)
Disposals
(2.9)
(1.4)
(0.2)
(0.1)
-
(0.2)
(8.6)
(17.0)
(11.7)
(18.7)
(Write-downs)/write-downs
reversal
-
(0.7)
-
(6.2)
-
(0.1)
3.3
(33.9)
3.3
(40.9)
Depreciation expense
-
-
(11.5)
(11.2)
(3.2)
(2.7)
(66.0)
(61.9)
(80.7)
(75.8)
Foreign currency translation
0.4
11.6
5.9
8.7
-
0.5
(18.7)
19.8
(12.4)
40.6
Carrying amount at end of year
515.2
446.5
379.5
320.5
20.3
20.0
901.1
789.8
1,816.1
1,576.8
Included within plant and equipment are ‘Projects in Progress’ of $121.6 million (F23: $72.6 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 reversal of $3.3 million. In F23 the Group recognised a write down of $40.9 million for property, plant
and equipment during the year.
Notes to the consolidated financial statements: Operating assets and liabilities
For the year ended 30 June 2024
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 depreciated 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
1.5% - 10.0%
Leasehold buildings
10.0% - 20.0%
Plant and equipment
3.3% - 40.0%
Vines
2.5% - 5.0%
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.
Accounting policies
Note 10 – Property, plant and equipment (continued)
Vineyard resources
2024
Hectares
2023
Hectares
Australia
6,171
6,859
United States
2,684
2.393
New Zealand
705
505
Italy
187
185
France
191
175
9,938
10,117
The area under vine shown above:
•
Includes 2,838 hectares (F23: 2,719 hectares) under direct leasing arrangements.
•
19 hectares (F23: 19 hectares) of olive groves in Tuscany, a region of Italy.
•
Yielded 62,485 tonnes of grapes (F23: 68,026 tonnes).
Harvests generally occur in September - October in the Northern Hemisphere and February - May in the Southern Hemisphere.
As the harvest was completed prior to the acquisition of DAOU, this is not reflected in the tonnes of grapes yielded.
Notes to the consolidated financial statements: Operating assets and liabilities
For the year ended 30 June 2024
118
119
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
(c) Amounts recognised in statement of cash flows
2024
$M
2023
$M
Total cash out flow for lease liabilities
86.2
88.0
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.
(d) Extension options
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 should it exercise the extension option for all leases, the lease liability would be $607.2 million
(F23: $577.4 million).
(a) Right-of-use assets
Land
Leasehold
buildings
Plant and
equipment
Total
2024
$M
2023
$M
2024
$M
2023
$M
2024
$M
2023
$M
2024
$M
2023
$M
Cost
481.5
469.5
264.7
256.3
36.9
39.2
783.1
765.0
Accumulated depreciation and impairment
(251.5)
(225.2)
(153.7)
(131.2)
(17.1)
(18.9)
(422.3)
(375.3)
Carrying amount at end of year
230.0
244.3
111.0
125.1
19.8
20.3
360.8
389.7
Reconciliations
Carrying amount at start of year
244.3
274.9
125.1
143.1
20.3
17.3
389.7
435.3
Additions
14.7
8.7
4.7
9.1
7.8
10.1
27.2
27.9
Business acquisitions
-
-
5.7
-
-
-
5.7
-
Disposals1
-
(20.5)
-
(7.7)
(0.3)
-
(0.3)
(28.2)
Depreciation and impairment expense
(27.9)
(26.7)
(24.3)
(22.3)
(8.0)
(7.8)
(60.2)
(56.8)
Foreign currency translation
(1.1)
7.9
(0.2)
2.9
-
0.7
(1.3)
11.5
Carrying amount at end of year
230.0
244.3
111.0
125.1
19.8
20.3
360.8
389.7
(b) Amounts recognised in the statement of profit or loss and other comprehensive income
2024
$M
2023
$M
Interest expense on lease liabilities
28.3
30.1
Expenses relating to low-value leases, excluding short-term leases of low-value items
31.6
31.5
Expenses relating to short-term leases
0.4
0.1
Income from sub-leasing right-of-use assets presented in ‘other revenue’
2.8
2.7
1. 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.
(e) Variable lease payments
2024
$M
2023
$M
Variable lease payments not included in lease liabilities
147.7
128.4
Notes to the consolidated financial statements: Operating assets and liabilities
For the year ended 30 June 2024
Certain contractual arrangements may contain both lease and
non-lease components. Non-lease components are distinct elements
of a contract that are not related to securing the use of the leased
asset, such as inventory, common area maintenance, and other
management costs. The Group has elected to measure the amount
disclosed in relation to variable leases for these arrangements by
combining the lease and non-lease components.
Certain leases include variable lease payments, including payments
that depend on an index or rate, as well as variable payments for items
such as grapes, labour, property taxes, insurance, maintenance, and
other operating expenses associated with leased assets.
Certain grape purchasing arrangements include variable payments
based on actual tonnage and price of grapes that will vary depending
on certain factors, including weather, time of harvest, overall market
conditions, and the agricultural practices and location of the vineyard.
Such variable lease payments are excluded from the calculation of
the right-of-use asset and are recognised in the period in which the
obligation is incurred.
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 the
underlying asset to the Group by the end of the lease term 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;
• 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
to zero.
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 estimate and judgement
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 exist.
Note 11 – Right-of-use assets (continued)
Notes to the consolidated financial statements: Operating assets and liabilities
For the year ended 30 June 2024
120
121
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Note 12 - Agricultural assets
2024
$M
2023
$M
Agricultural assets
50.4
44.8
Total agricultural assets
50.4
44.8
Reconciliations
Carrying amount at start of year
44.8
32.9
Fair value increase
50.9
43.7
Transfers to inventory
(44.8)
(32.9)
Foreign currency translation
(0.5)
1.1
Carrying amount at end of year
50.4
44.8
Grape growing and sourcing
The Group has a variety of sources of fruit including owned and leased vineyards and contracted growers.
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 and Paso Robles in California and the Bordeaux region in France. These vineyards
contribute to some of the Group’s most prestigious wines.
Accounting policies
The agricultural assets of the Group (i.e. grapes) are measured
at their fair value, less estimated point of sale costs.
The fair value adjustment during the year is recognised within
‘Other income/(expenses)’ in the consolidated statement of
profit or loss and other comprehensive income.
Harvested grapes are transferred to inventory initially at fair
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.
Key estimate and judgement
Fair value of grapes
Key to estimating the value of grapes is the following:
• Yield estimates;
• The estimated harvest costs;
• Market prices for grapes; or
• The quality of grapes, including the impacts on harvested
grapes of weather, agricultural practices and location of the
vineyard.
Notes to the consolidated financial statements: Operating assets and liabilities
For the year ended 30 June 2024
Note 13 - Intangible assets
Brand names
and licences
IT development
costs
Goodwill
Total
2024
$M
2023
$M
2024
$M
2023
$M
2024
$M
2023
$M
2024
$M
2023
$M
Cost
2,208.2
1,646.4
204.2
145.8
1,516.5
989.9
3,928.9
2,782.1
Projects in progress at cost
-
-
2.7
2.5
-
-
2.7
2.5
Accumulated amortisation and
impairment
(847.3)
(617.4)
(170.7)
(114.4)
(730.8)
(626.1)
(1,748.8)
(1,357.9)
Carrying amount at end of year
1,360.9
1,029.0
36.2
33.9
785.7
363.8
2,182.8
1,426.7
Treasury Premium
Brands
Penfolds
Treasury
Americas
Total
2024
$M
2023
$M
2024
$M
2023
$M
2024
$M
2023
$M
2024
$M
2023
$M
Goodwill
Carrying amount at start of year
116.1
114.5
111.0
91.1
136.7
131.4
363.8
337.0
Business acquisitions
-
-
-
17.3
548.8
-
548.8
17.3
Impairment
(115.0)
-
-
-
-
-
(115.0)
-
Foreign currency translation
(1.1)
1.6
1.0
2.6
(11.8)
5.3
(11.9)
9.5
Carrying amount at end of year
-
116.1
112.0
111.0
673.7
136.7
785.7
363.8
Brand names and licences
Carrying amount at start of year
249.7
265.2
223.0
221.3
556.3
536.0
1,029.0
1,022.5
Business acquisitions
-
-
-
1.6
572.6
-
572.6
1.6
Disposal
-
-
-
-
-
-
-
-
Amortisation
-
(1.5)
-
-
(1.5)
(1.1)
(1.5)
(2.6)
Impairment
(228.8)
(14.3)
-
-
-
-
(228.8)
(14.3)
(Transfers to)/from other asset
classes
-
-
-
-
-
-
-
-
Foreign currency translation
(3.3)
0.3
0.1
0.1
(7.2)
21.4
(10.4)
21.8
Carrying amount at end of year
17.6
249.7
223.1
223.0
1,120.2
556.3
1,360.9
1,029.0
Reconciliations
Carrying amount at start of year
1,029.0
1,022.5
33.9
40.3
363.8
337.0
1,426.7
1,399.8
Additions
-
-
13.9
5.4
-
-
13.9
5.4
Business acquisitions
572.6
1.6
2.6
-
548.8
17.3
1,124.0
18.9
Disposal
-
-
-
-
-
-
-
-
(Transfers to)/from
other assets classes
-
-
(1.0)
0.4
-
-
(1.0)
0.4
Amortisation
(1.5)
(2.6)
(13.1)
(12.2)
-
-
(14.6)
(14.8)
Impairment
(228.8)
(14.3)
-
-
(115.0)
-
(343.7)
(14.3)
Foreign currency translation
(10.4)
21.8
(0.1)
-
(11.9)
9.5
(22.5)
31.3
Carrying amount at end of year
1,360.9
1,029.0
36.2
33.9
785.7
363.8
2,182.8
1,426.7
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:
Notes to the consolidated financial statements: Operating assets and liabilities
For the year ended 30 June 2024
122
123
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Note 13 - Intangible assets (continued)
Key estimate and judgement
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
Brand names are recognised as assets when purchased
individually and (primarily) as part of the allocation of the
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.
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. Brand names are not amortised, but are tested for
impairment annually.
Licenses are amortised over their expected useful life of 5-6
years, on a straight line basis.
Following initial recognition, intangible assets are carried at
cost less any accumulated amortisation and any accumulated
impairment losses. Amortisation is included in ‘Other income/
(expenses) in the consolidated statement of profit or loss and
other comprehensive income.
Goodwill
Goodwill arises on the acquisition of businesses and 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).
Any impairment pertaining to Goodwill is included within ‘Other
income/(expenses)’ in the consolidated statement of profit or
loss and other comprehensive income.
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
income/(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
accounting treatment of implementation costs incurred in
relation to SaaS arrangements:
Costs incurred for the development of software code that
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
intangible IT assets.
Recognise as an operating
expense over the term of the
service contract
• Fee for use of application
software
• Customisation costs only
when ‘not distinct’ and
undertaken by SaaS vendor
Recognise as an operating
expense as the service is
received
• Configuration costs
• Data conversion and testing
• Testing costs
• Training costs
Notes to the consolidated financial statements: Operating assets and liabilities
For the year ended 30 June 2024
Note 14 - Assets and disposal groups held for sale
2024
$M
2023
$M
Assets and disposal groups held for sale
13.6
32.9
Total assets and disposal groups classified as held for sale
13.6
32.9
Assets held for sale comprise property, plant and equipment identified by the Group to be recovered through sale.
Management is committed to a plan to sell a number of surplus assets in Australia, including vineyards and winemaking 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 (F23: nil) for the write down of the disposal group to the lower of its carrying amount and its fair value less costs to sell have
been included in ‘Other income/(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 value of the assets is based on independent market appraisals.
Note 15 - Impairment of non-financial assets
In F24, the carrying value of the Treasury Premium Brands (TPB) division exceeds its recoverable amount and as a result, an impairment loss
of $289.8 million after tax (F23: $14.3 million) to write down the value of the CGUs to their recoverable amount has been recognised in the
statement of profit or loss and other comprehensive income. Refer notes 5, 9 and 13. The recoverable amount of all other CGUs exceeds their
carrying value and as a result, no impairment has been recognised (F23: Nil). There were no indications previously recognised impairment
losses should be reversed (F23: Nil).
The Group’s CGUs are: Penfolds Americas, Penfolds ANZ, Penfolds EMEA, Treasury Americas, Treasury Premium Brands ANZ, Treasury Premium
Brands EMEA, and DAOU Vineyards.
Goodwill is tested for impairment at a divisional level, which is the level it is monitored at.
Timing of impairment testing
The Group tests non-financial assets for impairment
• At least annually for goodwill and indefinite life brands;
• Where there are indications that an asset may be impaired; and
• Where there is an indication that previously recognised
impairments may have changed.
Approach to impairment testing
The Group completes its impairment test of non-financial assets
in accordance with AASB 136 ‘Impairment of Assets’. In testing for
impairment, the recoverable amount is estimated for an individual
asset or CGU to which the asset belongs. CGUs are the smallest
identifiable group of assets that generate cash inflows that are
largely independent from the cash flows of other assets or groups of
assets. Each CGU is no larger than an operating segment.
Where the carrying amount of assets contained within the CGUs
exceed their recoverable amount, the assets contained within the
CGU are considered impaired and written down to their recoverable
amount. Recoverable amount is the higher of the asset’s (or CGU’s)
value in use or fair value less cost of disposal.
Fair value is determined in accordance with the accounting policy
set out in note 1.
Accounting policies
In assessing value in use, the estimated future cash flows are
discounted to their present value using a discount rate that reflects
current market assessment of the time value of money and the risks
specific to the asset or CGU. The VIU discounted cash flow model
covers a five-year period (F23: five years) with an appropriate
terminal value growth rate at the end of that period.
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.
Notes to the consolidated financial statements: Operating assets and liabilities
For the year ended 30 June 2024
124
125
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Note 15 - Impairment of non-financial assets (continued)
Key estimate and judgement
Impairment testing key assumptions
The Group has estimated recoverable amount based on value
in use at 30 June 2024. 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 assumptions
in the cash flow forecasts include sales volume growth, cost of
sales and cost of doing business.
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 2024 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% (F23: 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:
Exchange rates
Cash flow forecasts in foreign currency are forecast in that
currency and discounted using the applicable regional discount
rates (predominantly USD and GBP).
Impairment testing results
The estimates and judgements included in the calculations are
based on a range of factors, including expectations of current
and future trading. The growth outlook reflects moderated
top-line expectations as a result of ongoing reducing consumer
demand for Commercial wine across all markets and the
under-performance of TPB’s brands relative to the category
at these Commercial price points. As a result, an impairment
charge of $353.7 million (gross) was recognised for TPB ANZ
and TPB EMEA, primarily recorded against the carrying value of
goodwill ($115.0 million, impaired to a recoverable amount of nil)
and Brands ($228.8 million, impaired to a recoverable amount
of $17.6 million). Refer notes 5 and 13.
Sensitivity analysis
In F24, the recoverable amount of TPB is equal to its carrying
amount. 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
carrying values.
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 amount that would result in a material impairment
to the Group.
2024
2023
Penfolds Americas
10.1%
10.4%
Penfolds ANZ
9.8%
10.4%
Penfolds EMEA
9.2%
9.5%
Treasury Americas
10.0%
10.0%
Treasury Premium Brands ANZ
10.6%
10.7%
Treasury Premium Brands EMEA
10.5%
10.0%
DAOU Vineyards
9.4%
-
Notes to the consolidated financial statements: Operating assets and liabilities
For the year ended 30 June 2024
Note 16 - Provisions
2024
$M
2023
$M
Current
Employee entitlements
43.1
39.2
Other
29.0
62.5
Total current provisions
72.1
101.7
Other provisions
2024
Supply contracts
$M
Restructuring
$M
Other
$M
Total
$M
Carrying amount at start of year
33.1
23.0
6.4
62.5
Charged/(credited) to profit or loss
(5.3)
2.5
1.8
(1.0)
Payments
(17.4)
(15.3)
-
(32.7)
Foreign currency translation
-
-
0.2
0.2
Carrying amount at end of year
10.4
10.2
8.4
29.0
Other provisions include $7.5 million (F23: $5.2 million) in relation to estimated repair costs for a winery and vineyards that were damaged
by wildfires in the Americas.
From time to time, supply contract provisions are held for contracts that the Group expects to incur costs related to early termination.
The restructuring provision comprises costs in relation to the Group’s rationalisation and restructure program.
Accounting policies
Provisions are recognised for present obligations (legal 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
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).
Notes to the consolidated financial statements: Operating assets and liabilities
For the year ended 30 June 2024
126
127
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Note 17 - Capital management
Note 18 - Borrowings
The Group considers capital to be the combination of shareholders’
equity, reserves and net debt. The key objectives of the Group’s
approach to capital management include:
•
Safeguard the Company’s ability to continue as a going concern;
•
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; and
•
To provide returns to shareholders and benefits to other
stakeholders.
In order to optimise the Group’s capital structure and in line with the
Group’s strategic objectives and operating plans, the
Group may:
•
Alter the amount of dividends paid to shareholders;
•
Return capital to shareholders;
•
Issue new shares;
•
Vary discretionary capital expenditure;
•
Draw-down additional debt; or
•
Sell assets to reduce debt.
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; and
•
Group debt maturity profile.
Total borrowings consist of:
2024
$M
2023
$M
Current
83.8
250.7
Non-current
2,074.7
1,686.9
Total borrowings
2,158.5
1,937.6
Details of major arrangements
US Private Placement Notes and Debt Facilities
US Private Placement (USPP) notes totalling US$450 million
(unsecured) are outstanding, with maturities ranging from
December 2025 to September 2034. The carrying value of USPP notes
at 30 June 2024 is $677.1 million (F23: $868.6 million).
In December 2023 the Group repaid USPP notes totalling US$125
million at maturity.
During the year the Group refinanced existing syndicated debt
facilities of US$350 million and established additional facilities of
US$300 million. Syndicated debt facilities totalling US$650 million are
fully drawn at 30 June 2024, with the following maturities:
•
US$125 million maturing December 2027
•
US$120 million maturing June 2029
•
US$120 million maturing December 2029
•
US$105 million maturing December 2030
•
US$180 million maturing June 2031
The carrying value of the syndicated debt facility at 30 June 2024 is
$978.1 million (F23: $528.7 million).
The Group has in place several revolving bank debt facilities with
maturities staggered through to September 2027. As at 30 June 2024
$9.6 million is drawn under the bank debt facilities (F23: $10.3 million).
USPP notes bear interest at fixed and floating interest rates. In
accordance with the Group’s risk management strategy, the Group
has entered into a combination of fixed to floating and floating to
fixed interest rate swaps to obtain the desired fixed/floating interest
ratio. Refer to note 25 for further details.
Financial guarantees
The Group has issued financial guarantees to other persons of
$21.6 million (F23: $28.8 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.
Lease liabilities
The Group enters into lease arrangements that meet the
capitalisation requirements under AASB 16 Leases. Current and non-
current lease liabilities are recognised for the present value of the
lease payments due under the lease contracts and are represented
as borrowings.
At 30 June 2024, the Group recognised current lease liabilities of
$70.8 million (F23: $63.8 million) and non-current lease liabilities of
$442.5 million (F23: $485.1 million). The Group’s lease arrangements
have durations up to 25 years.
Notes to the consolidated financial statements: Capital structure
For the year ended 30 June 2024
Note 19 - Contributed equity
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.
2024
$M
2023
$M
Issued and paid-up capital
811,426,445 (F23: 721,848,176) ordinary shares, fully paid
4,226.8
3,280.7
Own shares held
-
-
4,226.8
3,280.7
Contributed equity at the beginning of the year
3,280.7
3,280.7
Shares movements:
Nil shares issued under the Dividend reinvestment plan (F23: nil)
-
-
Nil shares issued for vested Long Term Incentive Plan and Share Cellar plan (F23: nil)
-
-
76,428,231 ordinary shares issued, net of transaction costs (F23: Nil)
807.0
-
13,150,038 ordinary shares issued as consideration for business acquisition
139.1
-
Net movement in own shares held
-
-
Contributed equity at the end of the period
4,226.8
3,280.7
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 2024, receivables of $15.3 million
had been derecognised under this arrangement (F23: $22.9 million).
The shares have no par value.
All balances translated to AUD
2023
$M
Total cash flows
from activities
$M
Additions to
net debt
$M
Debt
revaluation and
FX movements
$M
2024
$M
Net debt
Cash and cash equivalents
565.8
(132.9)
-
25.2
458.1
Loan receivable
5.8
2.2
-
-
8.0
Bank loans1
(539.8)
(452.5)
-
4.6
(987.7)
US Private Placement Notes (net of fair
value hedge)
(868.6)
186.7
-
4.8
(677.1)
Lease liabilities
(548.9)
68.8
(27.1)
(6.1)
(513.3)
Other loan payable
(0.5)
-
-
-
(0.5)
Net debt
(1,386.2)
(327.7)
(27.1)
28.5
(1,712.5)
1.
Loans are stated net of capitalised facility finance costs. At reporting date, the balance of bank loans is $999.4 million (F23: $546.3 million) against capitalised facility finance costs of $11.7 million
(F23: $6.5 million) to be amortised over the facility period.
Note 18 - Borrowings (continued)
Notes to the consolidated financial statements: Capital structure
For the year ended 30 June 2024
128
129
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Note 20 - Commitments
Note 21 - Reserves
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 2024 (F23: Nil).
Under this arrangement during the period, the Group purchased 0.5 million shares ($5.3 million) (F23: 1.6 million shares ($21.8 million)). A total of 0.8
million shares (F23: 1.5 million) purchased under the third-party arrangement are available at 30 June 2024.
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 Plans (ELT LTIP & GLG 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.
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
2024
$M
2023
$M
The following expenditure has been contracted but not provided
for in the financial statements:
Capital expenditure
19.4
42.2
2024
$M
2023
$M
Cash flow hedge reserve
27.8
35.3
Share based payments reserve
(55.5)
(52.4)
Foreign currency translation reserve
109.9
151.6
Total reserves
82.2
134.5
Note 19 - Contributed equity (continued)
Notes to the consolidated financial statements: Capital structure
For the year ended 30 June 2024
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
199,065
1,935,312
1,152,793
160,436
27,222
257,070
Granted during the year
91,476
906,407
973,939
-
125,340
217,202
Exercised during the year
(128,254)
(171,922)
-
(160,436)
(22,401)
(135,250)
Forfeited during the year
-
(845,954)
(208,324)
-
-
(19,252)
Outstanding at the end of the year
162,287
1,823,843
1,918,408
-
130,161
319,770
Exercisable at the end of the year
-
-
-
-
-
-
The Group operates equity plans as outlined below:
STIP Restricted Equity
One-third of earned STIP is delivered in the form of deferred equity
(Restricted Shares). The key terms of this award are:
•
Subject to a mandatory restriction period and continued
employment. Half of the award is restricted for one year and
the remaining half for two years from grant date;
•
Holders of Restricted Shares are entitled to dividends and to
exercise their voting rights during the restriction;
•
Will generally be forfeited if the executive is dismissed for cause
or resigns. Clawback mechanisms apply.
ELT LTIP
Under the ELT LTIP, members of the Executive Leadership Team
receive Performance Rights which entitle participants to receive
the Company’s shares at no cost subject to the achievement of
performance conditions and continued employment. No dividends
are payable to participants prior to vesting and Performance Rights
will generally be forfeited if the executive is dismissed for cause or
resigns. Clawback mechanisms apply.
The performance conditions are:
•
Relative Total Shareholder Return (TSR);
•
Return on Capital Employed (ROCE) growth; and
•
Earnings per Share (EPS) compound annual growth rate.
The F22 ELT LTIP Performance Rights are subject to TSR and
ROCE targets weighted of 25% for TSR and 75% for ROCE over a
performance period of 3 years. The F23 and F24 LTIP Performance
Rights are subject to TSR (20%), ROCE (40%) and EPS (40%) over a
performance period of 3 years. The F22 ELT LTIP partially vested as the
TSR threshold was met, however the ROCE threshold was not met.
Global Leadership Group (GLG) LTIP
The Group awarded a GLG LTIP grant in F23 and F24 to senior
leaders included in the Global Leadership Group. Under the GLG LTIP,
employees receive Performance Rights which entitle the participant
to receive shares at no cost subject to the achievement of
performance conditions and continuing employment. No dividends
are payable to participants prior to vesting and Performance Rights
will generally be forfeited if the employee is dismissed for cause or
resigns. Clawback mechanisms apply.
The F23-F24 Performance Rights are subject to three vesting
conditions: time-based (50%), EBITS (25%) and EBITS Margin (25%)
over a performance period of 3 years.
Mid-Term Incentive Plan (MTIP)
The Group ceased to operate its MTIP equity incentive in F22, with
a final award of MTIP granted in F22 to senior leaders. Under the
MTIP, employees received Performance Rights which entitled the
participant to receive shares at no cost subject to the achievement
of performance conditions and continuing employment. No
dividends are payable to participants prior to vesting and
Performance Rights will generally be forfeited if the executive is
dismissed for cause or resigns. Clawback mechanisms apply.
The F22 MTIP had 2 equal vesting conditions: time-based (50%)
and ROCE (50%) over a performance period of 2 years. For the time-
based conditions, half vested in 1 year (25%) and half in 2 years (25%).
Vesting conditions for the F22 MTIP were tested at the end of F23. The
vesting of the second time-based tranche (25%) and the lapsing of
the ROCE component (due to this performance measure not being
met) occurred in F24 and no further MTIP grants have been made.
Restricted Equity Plan (REP)
Under the REP certain employees receive a grant of restricted 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.
Restricted equity awards may be granted to compensate employees
for foregoing equity compensation in their previous organisation as
a sign-on award and/or as a retention incentive.
Share Cellar (broad-based Employee Share Plan)
Share Cellar is the Group’s broad-based Employee Share Plan and
plan participation is offered annually. The plan was first launched
early in 2015. Participation is voluntary and employees in select
countries are eligible to join the Plan. Share Cellar operates as a
matching plan whereby employees contribute funds to the Plan
from their after-tax pay and shares are acquired by the Group on
their behalf. For employees enrolling in the F22-F24 plans, the Group
delivers one matched share for every purchased share held at the
plan vesting date, subject to continued employment.
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.
Notes to the consolidated financial statements: Capital structure
For the year ended 30 June 2024
130
131
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Active share-based payment plans:
Long-term Incentive Plans
The below table outlines the F24 and F23 ELT LTIP plans which have a vesting date post 30 June 2024:
The below table outlines the F24 and F23 GLG LTIP plans which have a vesting date post 30 June 2024:
Valuation date
F24 Plan
16-Oct-23
F24 Plan
11-Aug-23
F23 Plan
1-Nov-22
Valuation date share price
$11.59
$11.70
$13.03
Expected share price volatility (%)
25
25
40
Expected dividend yield (%)
3.1
3.1
2.6
Risk-free interest rate (%)
3.98
3.74
3.36
Fair value estimate at valuation date - TSR
$7.17
$6.66
$9.12
Fair value estimate at valuation date - ROCE
$10.68
$10.72
$12.16
Fair value estimate at valuation date - EPS
$10.68
$10.72
$12.16
Valuation date
F24 Plan
11-Aug-23
F23 Plan
1-Oct-22
Valuation date share price
$11.70
$12.57
Expected dividend yield (%)
3.1
2.6
Fair value estimate at valuation date – EBITS & EBITS Margin
$10.72
$11.70
Fair value estimate time-based
$10.67
$11.65
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 valuation
date by an external valuer using a Monte-Carlo simulation.
For the non-market components (ROCE, EPS, EBITS and EBITS
Margin), 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 Group 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.
Notes to the consolidated financial statements: Capital structure
For the year ended 30 June 2024
SAS Domaines
Bouteiller
2024
$M
SAS Domaines
Bouteiller
2023
$M
NCI percentage
21.4%
21.4%
Non-current assets
60.0
62.0
Current assets
21.5
20.1
Non-current liabilities
15.0
16.0
Current liabilities
6.4
4.9
Net assets
60.1
61.2
Net assets attributable to NCI
12.9
13.1
Revenue
4.0
0.9
Profit/(loss) after tax
0.2
(1.0)
Other comprehensive income/(loss)
(1.1)
2.8
Total comprehensive income/(loss)
(0.9)
1.8
Profit/(loss) allocated to NCI
0.0
(0.2)
Other comprehensive income/(loss) allocated to NCI
(0.2)
0.6
Cash flows from operating activities
2.0
(0.7)
Cash flows from investment activities
(2.6)
(2.5)
Cash flows from financing activities (dividends to NCI: nil)
-
-
Net increase (decrease) in cash and cash equivalents
(0.6)
(3.2)
Restricted Equity Plans
Valuation date
Valuation date share price
F23 1-Oct-22
$12.57
F24 31-Aug-23
$11.67
1-Dec-23
$10.61
16-Feb-24
$11.40
Note 23 - Non-controlling interest
The Consolidated Statement of Profit or Loss and other Comprehensive Income reflects the results of all non-controlling interests as outlined in
Note 28, including those not material to the Group.
Note 22 - Employee equity plans (continued)
Notes to the consolidated financial statements: Capital structure
For the year ended 30 June 2024
The Group only discloses subsidiaries where there is a material non-controlling interest, being SAS Domaines Bouteiller. The shareholders of
the NCI have a put option to sell their non-controlling interest $18.1 million (F23: $18.1 million).
132
133
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
2024
$M
2023
$M
The major components of income tax expense are:
Statement of profit or loss
Current income tax expense
109.6
57.9
Deferred income tax expense
(40.3)
24.8
Total tax expense
69.3
82.7
Deferred income tax expense included in the income tax expense comprises:
(Decrease)/increase in deferred tax assets
30.8
1.0
(Decrease)/increase in deferred tax liabilities
(71.1)
23.8
Deferred income tax
(40.3)
24.8
Profit before tax excluding material items
572.5
446.2
Material items before tax
(404.2)
(109.2)
Profit before tax
168.3
337.0
Prima facie income tax expense attributable to profit from operations calculated
at the rate of 30% (F23: 30%)
50.5
101.1
Tax effect of:
Non-taxable income and profits, net of non-deductible expenditure
8.3
1.8
Impairment of non-current assets
34.0
4.3
Other deductible items
(0.3)
(2.3)
Tax losses recognised
-
(4.3)
Change in tax rate
(0.6)
(0.1)
Foreign tax rate differential
(4.1)
(10.0)
Other
(17.1)
(4.3)
Under/(over) provisions in previous years
(1.4)
(3.5)
Total tax expense
69.3
82.7
Income tax expense on operations
155.4
115.9
Income tax benefit attributable to material items
(86.1)
(33.2)
Income tax expense
69.3
82.7
Deferred income tax relates to the following:
Deferred tax assets
The balance comprises temporary differences attributable to:
Inventory
5.5
1.1
Property, plant and equipment (including vines)
4.6
-
Lease liabilities1
126.7
135.0
Accruals
48.4
32.5
Provisions
24.7
36.7
Foreign exchange
16.3
11.2
Tax losses
26.1
37.4
Other
11.3
7.8
Total deferred tax assets
263.6
261.7
Less set-off against deferred tax liabilities1,2
(147.0)
(232.8)
Net deferred tax assets
116.6
28.9
Note 24 - Income tax
Tax reconciliation
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:
Notes to the consolidated financial statements: Taxation
For the year ended 30 June 2024
2024
$M
2023
$M
Deferred tax liabilities
The balance comprises temporary differences attributable to:
Inventory
14.8
13.8
Property, plant and equipment (including vines)
97.9
106.1
Intangibles
193.1
225.4
Right-of-use assets1
97.4
95.2
Other
31.4
37.9
Total deferred tax liabilities
434.6
478.4
Less set-off against deferred tax assets1,2
(147.0)
(232.8)
Net deferred tax liabilities
287.6
245.6
Movements in deferred income tax relate to the following:
Movement in deferred tax assets:
Opening balance
261.7
163.5
(Charged) to profit or loss
(30.8)
(1.0)
Recognised directly in equity
(1.2)
(0.8)
Business acquisitions
30.6
1.0
Balance sheet reclassification
2.1
(1.2)
Foreign currency translation
(0.7)
5.6
Accounting standard change
-
95.2
Other
1.9
(0.6)
Total deferred tax assets
263.6
261.7
Less set-off against deferred tax liabilities1,2
(147.0)
(232.8)
Net deferred tax assets
116.6
28.9
Movement in deferred tax liabilities:
Opening balance
478.4
338.7
(Credited)/charged to profit or loss
(71.1)
23.8
Recognised directly in equity
(4.4)
0.5
Business acquisitions
30.6
8.4
Transfer (to)/from Assets Held for Sale
-
5.4
Balance sheet reclassification
2.1
(1.2)
Foreign currency translation
(1.1)
8.1
Accounting standard change
-
95.2
Other
0.1
(0.5)
Total deferred tax liabilities
434.6
478.4
Less set-off against deferred tax assets1,2
(147.0)
(232.8)
Net deferred tax liabilities
287.6
245.6
Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting period and not recognised
in net profit or loss but directly credited to equity
3.2
(1.3)
Note 24 - Income tax (continued)
1. In line with the amendment to AASB 112, deferred tax arising from the right-of-use assets and lease liabilities have been presented on a gross basis. Historically these were netted.
2. Deferred tax balances have been set-off to the extent that they relate to the same tax authority $(147.0) million (F23: $(137.6) million).
Notes to the consolidated financial statements: Taxation
For the year ended 30 June 2024
134
135
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Current tax position
The current tax asset of $12.0 million (F23: $24.4 million) and current tax
liability of $77.0 million (F23: $18.7 million) reflect the difference between
the timing of instalment payments made during the year and the
estimated final tax receivable/liability. Current tax assets and liabilities
are only offset where they relate to the same tax authority.
Unrecognised tax assets
There are potential future income tax benefits relating to accumulated
losses in non-Australian group companies, which have not been
brought to account. These possible benefits amount to $34.8 million
(F23: $34.5 million).
The Group has carry forward capital tax losses in Australia and the
UK respectively. These losses may be used to offset any future capital
gains derived by activities in these countries. The Group will assess the
conditions for deductibility imposed by the tax laws of Australia and the
UK prior to any utilisation of the capital losses.
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.
Franking credits
The Australian Tax Consolidation Group has $0.8 million (F23: $67.0
million) of franking credits available for subsequent reporting periods.
OECD global minimum tax framework
The Group operates in 11 countries (Japan, United Kingdom, Denmark,
France, Italy, South Korea, Malaysia, Netherlands, New Zealand, Norway
and Sweden) which have either enacted or substantively enacted new
tax legislation to implement the Pillar Two global minimum top-up
tax (top-up tax), which seeks to apply a 15% global minimum tax. The
Group does not expect to be subject to material top-up tax in relation to
its operations in any of these countries.
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. The Group continues
to monitor and evaluate domestic implementation of Pillar Two by
relevant countries of the OECD and based on the information available
at this point in time, the exposure to the additional taxation under Pillar
Two is not estimated to be material for the Group.
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 some 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.
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.
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; and
•
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.
Note 24 - Income tax (continued)
Notes to the consolidated financial statements: Taxation
For the year ended 30 June 2024
Note 24 - Income tax (continued)
Accounting policies (continued)
Deferred taxes arising from a single transaction
The Group has adopted Deferred Tax related to Assets and
Liabilities arising from a Single Transaction (Amendments to
AASB 12) from 1 July 2023. The amendments narrow the scope
of the initial recognition exemption to exclude transactions
that give rise to equal and offsetting temporary differences
such as leases. For leases, an entity is required to recognise
the associated deferred tax assets and liabilities from the
beginning of the earliest comparative period presented, with
any cumulative effect recognised as an adjustment to retained
earnings or other components of equity at that date. For all
other transactions, an entity applies the amendments to
transactions that occur on or after the beginning of the earliest
period presented.
The Group previously accounted for deferred tax on leases by
applying the ‘integrally linked’ approach, resulting in a similar
outcome as under the amendments, except that the deferred
tax asset or liability was recognised on a net basis. Following the
amendments, the Group has recognised a separate deferred
tax asset in relation to its lease liabilities and a deferred tax
liability in relation to its right-of-use assets. However, there was
no impact on the consolidated statement of financial position
nor opening retained earnings because the balances qualify
for offset under paragraph 74 of AASB 12. The key impact for
the Group relates to disclosure of the deferred tax assets and
liabilities recognised.
Notes to the consolidated financial statements: Taxation
For the year ended 30 June 2024
136
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
At reporting date, the standby arrangements and unused credit facilities are as follows:
The Group is in compliance with all undertakings under its various financing arrangements.
2024
$M
2023
$M
Committed facilities
Available facilities
2,400.7
2,216.9
Amounts utilised
(1,670.6)
(1,416.0)
Amount unutilised
730.1
800.9
Notes to the consolidated financial statements: Risk
For the year ended 30 June 2024
Note 25 - Financial risk management
Financial risk management framework
The Group’s financial risk management policies (‘Group Treasury
Policies’) cover risk tolerance, internal controls (including segregation
of duties), delegated authority levels, management of foreign currency,
interest rate and counterparty credit exposures, and the 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.
The Group holds financial instruments from financing (principally
borrowings), transactions (trade receivables and payables) and risk
management (derivatives) which result in exposure to the following
financial risks, covered by the Group Treasury Policies:
•
Liquidity risk;
•
Interest rate risk;
•
Foreign exchange risk; and
•
Counterparty credit risk.
The following table outlines how these risks impact Group financial assets and liabilities:
Note
Liquidity
risk
(a)
Interest
rate risk
(b)
Foreign
exchange risk
(c)
Credit
risk
(d)
Net borrowings
18
x
x
x
x
Receivables
9
x
x
x
Other financial assets
9
x
x
Payables
9
x
x
Derivative financial assets and liabilities
26
x
x
x
(a) Liquidity risk
Nature of the risk
The Group is exposed to liquidity risk primarily from its core operating
activities. The Group’s focus is to ensure it is able to meet financial
obligations as and when they fall due.
Risk management
The Group ensures the maintenance, at all times, of an appropriate
minimum level of liquidity, comprising committed, unutilised debt
facilities and cash resources. To facilitate this, the Group monitors
forecast and actual cash flows, performs sensitivity analysis as well as
monitoring the availability and cost of debt and equity funding.
The Group’s objective is to balance continuity of funding and flexibility
by maintaining an appropriately structured debt maturity profile with
a mix of bank and capital (bond) market debt, whilst also monitoring
compliance with the Group’s key financial covenants and undertakings.
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
2024
Non-derivative financial liabilities
Bank loans1
33.3
30.3
53.5
503.4
654.8
1,275.3
987.7
Lease liabilities
41.9
48.5
91.8
230.2
243.5
655.9
513.3
Other loans
-
-
0.5
-
-
0.5
0.5
US Private Placement Notes
12.5
11.5
96.6
273.5
426.7
820.8
677.1
Trade payables
314.0
-
-
-
-
314.0
314.0
Other payables
479.8
-
-
-
-
479.8
479.8
Derivative financial liabilities
Foreign exchange contracts
2.8
1.0
0.2
-
-
4.0
4.0
Interest rate and cross currency swaps
0.1
7.5
15.1
48.2
(2.1)
68.8
40.2
Total financial liabilities
884.4
98.8
257.7
1,055.3
1,322.9
3,619.1
3,016.6
2023
Non-derivative financial liabilities
Bank loans1
18.4
18.1
30.4
585.5
-
652.4
539.8
Lease liabilities
40.2
45.3
89.2
234.8
306.5
716.0
548.9
Other loans
-
-
0.5
-
-
0.5
0.5
US Private Placement Notes
205.5
11.6
23.2
281.9
518.0
1,040.2
868.6
Trade payables
339.9
-
-
-
-
339.9
339.9
Other payables
369.8
-
-
-
-
369.8
369.8
Derivative financial liabilities
Foreign exchange contracts
3.6
3.0
2.8
0.4
-
9.8
9.8
Interest rate and cross currency swaps
5.0
6.7
10.6
2.5
0.4
25.2
20.3
Total financial liabilities
982.4
84.7
156.7
1,105.1
824.9
3,153.8
2,697.6
1. Loans are stated net of capitalised facility finance costs. At reporting date, the balance of bank loans is $999.4 million (F23: $546.3 million) against capitalised facility finance costs of $11.7 million (F23: $6.5
million) to be amortised over the facility period.
Note 25 - Financial risk management (continued)
(a) Liquidity risk (continued)
Notes to the consolidated financial statements: Risk
For the year ended 30 June 2024
(b) Interest rate risk
Nature of the risk
The Group is exposed to interest rate risk principally from floating rate
bank borrowings. Other sources of interest rate risk include receivable
purchasing agreements, interest-bearing investments, creditors’
accounts offering a discount and debtors’ accounts on which discounts
are offered.
Risk management
We manage interest rate risk by ensuring that the sensitivity of forecast
future earnings to changes in interest rates is within acceptable limits.
This involves longer term forecasting of both expected earnings and
expected borrowing to determine the tolerable exposure.
A combination of interest rate swaps have been exchanged to obtain
the desired ratio of fixed and floating interest rates. At 30 June 2024,
interest rate swap contracts were in use to exchange fixed interest rates
on $225.7 million (US$150.0 million) of US Private Placement notes to
floating rates. Subsequently a combination of floating to fixed interest
rate swaps have been used to exchange the floating rates to fixed on
US Private Placement notes totalling US$150.0 million. The swaps mature
between December 2027 and June 2029. Cross currency interest rate
swaps have been used to exchange floating USD interest obligations
on the US$650 million syndicated Term Loan into AUD fixed and floating
rates with maturities ranging from December 2027 through to June 2031.
Refer to note 25(a) for the profile and timing of cash flows over the next
five years.
138
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Open foreign currency hedges at 30 June 2024
Currency
AUD/USD
Forwards
36.3
0.6821
Options
87.7
0.6895
Total
124.0
AUD/GBP
Forwards
56.3
0.5348
Options
62.1
0.5455
Total
118.4
NZD/USD
Forwards
13.9
0.5878
Options
-
-
Total
13.9
(c) Foreign exchange risk
Nature of the risk
The Group is exposed to foreign exchange risk through:
•
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), Great British
Pound (GBP) and New Zealand Dollar (NZD).
Other currencies used include the Canadian Dollar, Euro, Singapore
Dollar, Swedish Krona, Norwegian Krone and Chinese Renminbi.
Risk management
The focus of the Group’s foreign exchange risk management activities is
on the transactional exposures arising from the sourcing and sale
of wine. A proportion of expenses are hedged over time up to a period of
three years. The nominal amount and average price of the instruments in
place at 30 June 2024 are disclosed in the following table. 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.
Details of the Group’s open hedges at balance sheet date are shown below.
Note 25 - Financial risk management (continued)
Hedge value
(notional AUD)
$M
Hedge type
Average
hedge rate
Notes to the consolidated financial statements: Risk
For the year ended 30 June 2024
Sensitivity analysis
The table below shows the impact by currency denomination if the Group’s weighted average floating interest rates change from the year-end
rates of 5.33% (F23: 5.01%) with all other variables held constant.
Sensitivity
Pre-tax impact on profit
2024
2023 2024
2023
Currency
+$M
-$M
+$M
-$M
USD
+ / - 25bp
+ / - 25bp
(0.12)
0.12
0.3
(0.3)
AUD
+ / - 25bp
+ / - 25bp
0.61
(0.61)
0.7
(0.7)
GBP
+ / - 25bp
+ / - 25bp
0.05
(0.05)
-
-
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.
2024
$M
2023
$M
Financial assets
Cash and cash equivalents
458.1
565.8
Total assets
458.1
565.8
Financial liabilities
US Private Placement Notes1
150.5
75.5
Bank loans1
797.5
166.2
Total liabilities
948.0
241.7
1. Net of hedged amounts.
The Group’s exposure to variable interest rate risk results from the following financial instruments at balance sheet date:
(b) Interest rate 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
AUD
$M
USD
$M
GBP
$M
Other
$M
Total
$M
2024
Net debt
Cash and cash equivalents
242.2
104.2
0.8
110.9
458.1
Loan receivable
-
0.3
-
7.7
8.0
Bank loans2
1.4
(973.9)
-
(15.2)
(987.7)
US Private Placement Notes (net of fair value hedge)
-
(677.1)
-
-
(677.1)
Lease liabilities
(73.2)
(417.8)
(1.1)
(21.2)
(513.3)
Other loan payable
(0.5)
-
-
-
(0.5)
Net debt
169.9
(1,964.3)
(0.3)
82.2
(1,712.5)
Other financial assets/(liabilities)
Trade receivables (net of allowance for expected credit loss)
273.4
143.0
72.1
60.5
549.0
Other receivables
20.2
35.7
0.1
2.6
58.6
Trade and other payables
(321.2)
(310.2)
(63.8)
(98.6)
(793.8)
Net other assets/(liabilities)
(27.6)
(131.5)
8.4
(35.5)
(186.2)
2023
Net debt
Cash and cash equivalents
292.6
196.2
-
77.0
565.8
Loan receivable
-
0.3
-
5.5
5.8
Bank loans2
1.3
(522.0)
-
(19.1)
(539.8)
US Private Placement Notes (net of fair value hedge)
-
(868.6)
-
-
(868.6)
Lease liabilities
(86.6)
(447.1)
(1.6)
(13.6)
(548.9)
Other loan payable
(0.5)
-
-
-
(0.5)
Net debt
206.8
(1,641.2)
(1.6)
49.8
(1,386.2)
Other financial assets/(liabilities)
Trade receivables (net of allowance for expected credit loss)
223.1
80.4
66.5
70.9
440.9
Other receivables
26.4
68.9
-
4.4
99.7
Trade and other payables
(334.3)
(232.0)
(60.1)
(83.3)
(709.7)
Net other assets/(liabilities)
(84.8)
(82.7)
6.4
(8.0)
(169.1)
2 - Includes capitalised borrowing costs of $11.7 million (F23: $6.5 million).
(c) Foreign exchange risk (continued)
Note 25 - Financial risk management (continued)
Notes to the consolidated financial statements: Risk
For the year ended 30 June 2024
140
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
3. Australian dollar versus individual currencies. Implied one-year currency volatility at reporting date (Source: Bloomberg).
(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
Sensitivity
Assumption3
Pre-tax impact on profit
$M
Impact on equity
$M
2024
2023
2024
2023
2024
2023
+
–
+
–
+
–
+
–
United States Dollar
9.4%
9.9%
(0.2)
0.2
0.3
(0.4)
(186.0)
223.3
(98.6)
119.5
Great Britain Pound
7.1%
8.0%
(0.9)
1.0
(0.9)
1.1
(26.4)
28.2
(29.2)
32.5
Euro
7.1%
8.0%
3.0
3.5
(1.9)
2.2
6.2
(5.6)
6.4
(5.9)
Canadian Dollar
6.4%
7.3%
-
-
-
-
-
-
-
-
New Zealand Dollar
5.0%
5.6%
-
-
-
-
(6.4)
7.0
(7.0)
7.9
(d) Credit risk
Nature of the risk
Counterparty credit risk arises primarily from the following assets:
•
Cash and cash equivalents;
•
Trade and other receivables; and
•
Derivative instruments.
Risk management
The Group’s counterparty credit risk management philosophy is to limit
the Group’s loss from default by any one counterparty by dealing only
with financial institution counterparties of good credit standing, setting
maximum exposure limits for each counterparty, and taking a conservative
approach to the calculation of counterparty credit limit usage. Where
available, credit opinions on counterparties from two credit rating agencies
are used to determine credit limits.
The Group assesses the credit quality of individual customers prior to
offering credit terms and continues to monitor on a regular basis. Each
customer is assigned a risk profile based upon the measurable risk
indicators for dishonoured payments, adverse information and average
days late along with the securities and guarantees held. All prospective
accounts are required to complete a credit application 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 F24 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 focus on
accounts that are greater than 90 days overdue. Where debt cannot
be recovered, it is escalated from the credit representative to the credit
manager to initiate recovery action.
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 transactions.
Level of exposure at balance date
The maximum counterparty credit risk exposure at 30 June 2024 in respect
of derivative financial instruments was $19.0 million (F23: $23.3 million)
and in respect of cash and cash equivalents was $110.0 million (F23: $113.9
million). The Group’s authorised counterparties are 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 equivalent rating of A3), with
any exceptions requiring approval from the Board. Commercial paper
investments are restricted to counterparties whose short-term credit rating
is at or above a Standard and Poor’s rating of A-2 (or Moody’s equivalent
rating of P-2). The magnitude of credit risk in relation to receivables is
generally the carrying amount, net of any allowance for expected credit
loss.
The ageing of the consolidated Group trade receivables (net of provisions) is outlined below:
2024
$M
2023
$M
Not past due
509.7
378.5
Past due 1-30 days
34.3
50.9
Past due 31-60 days
3.1
5.6
Past due 61 days+
1.9
5.9
Total
549.0
440.9
Note 25 - Financial risk management (continued)
Notes to the consolidated financial statements: Risk
For the year ended 30 June 2024
Trade receivables have been aged according to their due date. Terms may be extended on a temporary basis with the approval of management.
The past due receivables shown above relate to customers who have a good debt history and are considered recoverable. There is no collateral
held as security against the receivables above and there are no other receivables past due.
Note 26 - Derivative financial instruments
Notes to the consolidated financial statements: Risk
For the year ended 30 June 2024
2024
$M
2023
$M
Derivative assets
Cash flow hedges
Interest rate swaps
22.2
47.3
Cross currency swaps
21.6
24.6
Foreign exchange contracts
1.6
11.0
Total
45.4
82.9
Derivative liabilities
Cash flow hedges
Cross currency swaps
20.1
–
Foreign exchange contracts
4.0
18.1
Fair value hedges
Cross currency swaps
4.2
–
Interest rate swaps
15.9
20.3
Total
44.2
38.4
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 $710.9 million (F23:
$904.8 million) and the fair value of the syndicated debt facility is $1,049.2
million (F23: $552.7 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.
For all other recognised financial assets and financial liabilities, based
on the facts and circumstances existing at reporting date and the
nature of the Group’s financial assets and financial liabilities including
hedge positions, the Group has no reason to believe that the financial
assets could not be exchanged, or the financial liabilities could not be
settled, in an arm’s length transaction at an amount approximating its
carrying amount.
The derivative financial instruments of the Group are as follows:
142
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries:
Note 28 - Subsidiaries
Entity name
Country of incorporation
Equity holding of 100% (F23: 100%)
Aldershot Nominees Pty. Ltd.*
Australia
B Seppelt & Sons Limited*
Australia
Beringer Blass Distribution S.R.L.
Italy
Beringer Blass Italia S.R.L.
Italy
Beringer Blass Wine Estates Chile Limitada
Chile
Beringer Blass Wine Estates Limited
UK
Beringer Blass Wines Pty. Ltd.*
Australia
Bilyara Vineyards Pty. Ltd.*
Australia
Cellarmaster Wines (UK) Limited
UK
Cellarmaster Wines Holdings (UK) Limited
UK
Cuppa Cup Vineyards Pty. Ltd.
Australia
Devil’s Lair Pty. Ltd.
Australia
Daou Brothers LLC1
USA
Daou Family LLC11
USA
Daou Vineyards LLC1
USA
Ewines Pty. Ltd.
Australia
FBL Holdings Limited
UK
Frank Family Vineyards LLC
USA
Il Cavaliere del Castello di Gabbiano S.r.l.
Italy
Interbev Pty. Ltd.*
Australia
Leo Buring Pty. Ltd.
Australia
Lindeman (Holdings) Limited*
Australia
Lindemans Wines Pty. Ltd.
Australia
Mag Wines Pty. Ltd
Australia
Majorca Pty. Ltd.*
Australia
Mildara Holdings Pty. Ltd.*
Australia
North America Packaging (Pacific Rim) Corporation
USA
Patrimony Estates LLC1
USA
Penfolds Wines Australia Pty Ltd (formerly known as Treasury Logistics Pty Ltd)*
Australia
Penfolds Wines International Limited (formerly known as Coldstream Australasia Limited)*
Australia
Penfolds Wines Pty Ltd
Australia
Piat Pere et Fils B.V.
Netherlands
Premium Land, Inc.
USA
Robertsons Well Pty. Ltd.
Australia
Robertsons Well Unit Trust
Australia
Rosemount Estates Pty. Ltd.
Australia
Rothbury Wines Pty. Ltd.*
Australia
SCW905 Limited*
Australia
Seaview Wynn Pty. Ltd.*
Australia
Société Civile d’Exploitation Agricole Cambon La Pelouse
France
Southcorp Australia Pty. Ltd. *
Australia
Southcorp Brands Pty. Ltd.*
Australia
Southcorp International Investments Pty. Ltd.*
Australia
Southcorp Limited*
Australia
Southcorp NZ Pty. Ltd.*
Australia
Notes to the consolidated financial statements: Group composition
For the year ended 30 June 2024
Entity name
Country of incorporation
Southcorp Whitegoods Pty. Ltd.
Australia
Southcorp Wines Asia Pty. Ltd.
Australia
Southcorp Wines Pty. Ltd.*
Australia
Southcorp XUK Limited
UK
T'Gallant Winemakers Pty. Ltd.
Australia
The Rothbury Estate Pty. Ltd.*
Australia
Tolley Scott & Tolley Limited*
Australia
Treasury Americas Inc
USA
Treasury Chateau & Estates LLC
USA
Treasury Wine Estates (China) Holding Co Pty Ltd*
Australia
Treasury Wine Estates (Matua) Limited
New Zealand
Treasury Wine Estates (NZ) Holding Co Pty Ltd*
Australia
Treasury Wine Estates (Shanghai) Trading Co. Ltd.
China
Treasury Wine Estates (UK) Holding Co Pty Ltd*
Australia
Treasury Wine Estates Americas Company
USA
Treasury Wine Estates Asia (SEA) Pte Ltd
Singapore
Treasury Wine Estates Asia Pty. Ltd.
Australia
Treasury Wine Estates Australia Limited*
Australia
Treasury Wine Estates Barossa Vineyards Pty. Ltd.
Australia
Treasury Wine Estates Canada, Inc.
Canada
Treasury Wine Estates Denmark ApS
Denmark
Treasury Wine Estates EMEA Limited
UK
Treasury Wine Estates France S.A.R.L.
France
Treasury Wine Estates HK Limited
Hong Kong SAR, China
Treasury Wine Estates Holdings Inc.
USA
Treasury Wine Estates Japan KK
Japan
Treasury Wine Estates Managing Office Ltd2
UAE
Treasury Wine Estates Netherlands B.V
Netherlands
Treasury Wine Estates Norway AS
Norway
Treasury Wine Estates Sweden AB
Sweden
Treasury Wine Estates (Thailand) Co. Ltd2
Thailand
Treasury Wine Estates UK Brands Limited
UK
Treasury Wine Estates Vintners Limited*
Australia
TWE Finance (Aust) Limited*
Australia
TWE Finance (UK) Limited
UK
TWE Insurance Company Pte. Ltd.
Singapore
TWE Lima Pty Ltd*
Australia
TWE Share Plans Pty Ltd
Australia
TWE US Finance Co.
USA
TWE USA Partnership
USA
Wolf Blass Wines Pty. Ltd.*
Australia
Woodley Wines Pty. Ltd.
Australia
Wynn Winegrowers Pty. Ltd.
Australia
Wynns Coonawarra Estate Pty. Ltd
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.
1 Acquired as a part of the DAOU transaction, F23 holding is nil.
2 Incorporated in F24. F23 holding is not applicable.
Note 28 - Subsidiaries (continued)
Notes to the consolidated financial statements: Group composition
For the year ended 30 June 2024
144
145
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Equity holding of less than 100%
2024
2023
Graymoor Estate Joint Venture
Australia
48.8
48.8
Graymoor Estate Pty. Ltd.
Australia
48.8
48.8
Graymoor Estate Unit Trust
Australia
48.8
48.8
North Para Environment Control Pty. Ltd.
Australia
69.9
69.9
Groupment Forestier des Landes de Lanessan
France
78.6
78.6
SAS Domaines Bouteiller
France
78.6
78.6
Note 29 - Parent entity financial information
(a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Current liabilities comprise balances with other entities within the
Group. These balances will not be called within the next 12 months.
(b) Contingent liabilities
Refer note 34 for contingent liabilities relevant to the Group.
(c) Financial guarantees
Refer note 18 for financial guarantees to banks, financiers and other
persons.
(d) 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.
(e) Capital commitments
There are no capital commitments for the Company (F23: nil).
2024
$M
2023
$M
Balance sheet
Current assets
1,978.6
1,370.6
Total assets
11,091.2
9,476.5
Current liabilities
6,209.0
5,863.0
Total liabilities
6,209.0
5,863.0
Net assets
4,882.2
3,613.5
Shareholders' equity
Issued capital
4,226.8
3,280.7
Share based payments reserve
(56.8)
(41.3)
Retained earnings
712.2
374.1
Total equity
4,882.2
3,613.5
Profit for the year
598.8
-
Total comprehensive income
598.8
-
Note 28 - Subsidiaries (continued)
Notes to the consolidated financial statements: Group composition
For the year ended 30 June 2024
Entity name
Country of incorporation
% of holding
Consolidated statement of profit or loss and other comprehensive income
2024
$M
2023
$M
Revenue
1,983.1
1,787.4
Cost of sales
(1,160.4)
(1,056.7)
Gross profit
822.7
730.7
Selling expenses
(59.7)
(69.4)
Marketing expenses
(43.9)
(48.9)
Administration expenses
(117.1)
(103.0)
Other income/(expenses)
(422.1)
(334.2)
Profit before tax and finance costs
179.9
175.2
Finance income
73.3
43.9
Finance costs
(117.9)
(74.4)
Net finance costs
(44.6)
(30.5)
Profit before tax
135.3
144.7
Income tax expense
(58.1)
(36.2)
Net profit
77.2
108.5
Other comprehensive income/(loss)
Items that may subsequently be reclassified to profit or loss
Cash flow hedges
(8.6)
(0.2)
Tax on cash flow hedges
2.6
–
Exchange gain/(loss) on translation of foreign operations
-
–
Other comprehensive income/(loss) for the year, net of tax
(6.0)
(0.2)
Retained earnings reconciliation
2024
$M
2023
$M
Retained earnings at beginning of the year
27.1
164.0
Profit for the period
77.2
108.5
External dividends
(260.6)
(245.4)
Retained earnings at end of the year
(156.3)
27.1
Note 30 - Deed of cross guarantee
Under the terms of ASIC Corporations (Wholly owned Companies)
Instrument 2016/785, certain wholly owned controlled entities have
been granted relief from the requirement to prepare audited financial
reports. It is a condition of the class order that the Company and each
of the relevant subsidiaries enter into a Deed of Cross Guarantee
whereby each company guarantees the debts of the companies party
to the Deed. The member companies of the Deed of Cross Guarantee
are regarded as the ‘Closed Group’ and identified in note 28.
A consolidated statement of profit or loss and other comprehensive
income, retained earnings reconciliation and a consolidated statement
of financial position, comprising the Company and those controlled
entities which are a party to the Deed of Cross Guarantee, after
eliminating all transactions between parties to the Deed, at 30 June
2024 are set out below.
Notes to the consolidated financial statements: Group composition
For the year ended 30 June 2024
146
147
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
2024
$M
2023
$M
Statement of financial position
Current assets
Cash and cash equivalents
242.0
414.4
Receivables
426.2
310.8
Inventories
343.6
394.8
Current tax assets
-
9.3
Investments
1.2
1.8
Assets held for sale
9.1
32.1
Derivative assets
5.1
20.5
Total current assets
1,027.2
1,183.7
Non-current assets
Inventories
705.0
685.8
Investments
3,213.2
2,257.5
Property, plant and equipment
628.0
616.4
Right-of-use assets
60.5
74.2
Intangible assets
343.8
539.4
Deferred tax assets
-
55.2
Derivative assets
22.1
46.1
Other non-current assets
3.6
–
Total non-current assets
4,976.2
4,274.6
Total assets
6,003.4
5,458.3
Current liabilities
Trade and other payables
341.8
346.0
Borrowings
427.0
969.8
Current tax liabilities
60.9
–
Provisions
40.3
80.7
Derivative liabilities
4.6
20.0
Total current liabilities
874.6
1,416.5
Non-current liabilities
Borrowings
1,024.6
597.4
Deferred tax liabilities
33.2
130.6
Derivative liabilities
24.8
4.0
Other non-current liabilities
3.3
3.2
Total non-current liabilities
1,085.9
735.2
Total liabilities
1,960.5
2,151.7
Net assets
4,042.9
3,306.6
Equity
Contributed equity
4,226.8
3,280.7
Reserves
(27.6)
(1.2)
Retained earnings
(156.3)
27.1
Total equity
4,042.9
3,306.6
Current borrowings include balances with other entities within the Group. These balances will not be called within the next 12 months.
Note 30 - Deed of cross guarantee (continued)
Notes to the consolidated financial statements: Group composition
For the year ended 30 June 2024
2024
$
2023
$
Short-term employee benefits
4,552,970
4,366,995
Post-employment benefits
68,216
75,876
Share based payments
1,435,585
3,999,924
Termination benefits
397,683
-
Total
6,454,454
8,412,795
Additionally, compensation paid to Non-Executive Directors was $1,942,083 (F23: $1,929,302).
Ownership interests in related parties
All material ownership interests in related parties are disclosed in note 28
to the financial statements.
Parent entity
The ultimate parent entity is Treasury Wine Estates Limited, which is
domiciled and incorporated in Australia.
Transactions with entities in the wholly-owned Group
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.
Transactions with controlled entities are made on normal commercial
terms and conditions.
Transactions with other related parties
The Group entered into transactions which are insignificant in amount
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 arm’s
length dealings.
There were no other transactions with related parties during the
current year.
The Audit and Risk Committee has completed an evaluation of the overall
effectiveness and independence of the Group’s external auditor, KPMG. As
part of this process, the external auditor has provided a written statement
that no professional engagement with the Group has been carried out
which would impair their independence as auditor.
The Group also engages external auditors Grant Thornton and Aeccelis
for the audit of certain subsidiaries and the Audit and Risk Committee
has confirmed their independence. The Chairman of the Audit and Risk
Committee has advised the Board that the Committee’s assessment is
that the auditors are independent. During the year, the following fees were
paid or payable for services provided by the auditors of the Group, and
their related practices:
Note 31 - Related party disclosures
Note 32 - Remuneration of auditors
1. F24 fees include the first time audit of DAOU.
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 2024, other non-audit services included fees in
respect of compliance and taxation services.
Key management personnel compensation
The following table shows the compensation paid or payable to the key management personnel (‘executives’) of the Group.
Notes to the consolidated financial statements: Other
For the year ended 30 June 2024
2024
$
2023
$
Audit and review services
Auditors of the Group – KPMG
Audit and review of financial statements - Group1
2,313,566
1,796,637
Audit and review of financial statements – Controlled entities
556,557
434,334
2,870,123
2,230,971
Other auditors
Audit and review of financial statements – Controlled entities
28,295
–
Assurance services
Auditors of the Group - KPMG
100,313
102,500
Other auditors
-
-
Other services
Auditors of the Group - KPMG
85,359
81,735
Other auditors
–
–
Total
3,084,090
2,415,206
148
149
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
New accounting standards and interpretations
Since 30 June 2023, the Group has adopted the following new and amended accounting standards.
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.
Note 33 - Other accounting policies
Reference
Title
Application
AASB 17
Insurance Contracts
1 January 2023
AASB 2021-2
Amendments to Australian Accounting Standards – Disclosure of
Accounting Policies and Definition of Accounting Estimates
1 January 2023
AASB 2021-5
Amendments to Australian Accounting Standards – Deferred Tax
related to Assets and Liabilities arising from a single transaction
1 January 2023
Reference
Title
Application
AASB 2023-1
Amendments to Australian Accounting Standards – Supplier
Finance Arrangements
1 January 2024
AASB 2020-1
Amendments to Australian Accounting Standards – Classification of Liabilities as
Current or Non-current
1 January 2024
AASB 2020-6
Amendments to Australian Accounting Standards – Classification of Liabilities as
Current or Non-current - Deferral of Effective Date
1 January 2024
AASB 2022-6
Amendments to Australian Accounting Standards – Classification Non-current
Liabilities with Covenants
1 January 2024
AASB 2023-3
Amendments to Australian Accounting Standards – Disclosure of Non-current
Liabilities with Covenants: Tier 2
1 January 2024
AASB 2022-5
Amendments to Australian Accounting Standards – Lease Liability in a Sale and
Leaseback
1 January 2024
AASB 2014-10
Amendments to Australian Accounting Standards – Sale or Contribution
of Assets between an Investor and its Associate or Joint Venture
1 January 2025
AASB 2015-10
Amendments to Australian Accounting Standards – Effective Date of
Amendments to AASB 10 and AASB 128
1 January 2025
AASB 2017-5
Amendments to Australian Accounting Standards – Effective Date of
Amendments to AASB 10 and AASB 128 and Editorial Corrections
1 January 2025
AASB 2021-7(a-c)
Effective Date of Amendments to AASB 10 and AASB 128 and
Editorial Corrections
1 January 2025
AASB 2023-5
Amendments to Australian Accounting Standards – Lack of
Exchangeability
1 January 2025
AASB 18*
Presentation and Disclosure in Financial Statements
1 January 2027
* AASB 18 Presentation and Disclosure in Financial Statements was issued in June 2024 and replaces AASB 101 Presentation of Financial
Statements. The new standard introduces new requirements for the Consolidated statement of profit or loss and other comprehensive
income, including:
•
new categories for the classification of income and expenses into operating, investing and financing categories; and
•
presentation of subtotals for ‘operating profit’ and ‘profit before financing and income taxes’.
Additional disclosure requirements are introduced for management-defined performance measures and new principles for aggregation
and disaggregation of information in the notes and the primary financial statements as well as the presentation of interest and dividends
in the statement of cash flows. The new standard is effective for annual periods beginning on or after 1 January 2027 and will first apply to
the Group for the financial year ending 30 June 2028.
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.
Other accounting policies
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.
Notes to the consolidated financial statements: Other
For the year ended 30 June 2024
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
Other accounting policies (continued)
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 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 33 - Other accounting policies (continued)
Notes to the consolidated financial statements: Other
For the year ended 30 June 2024
150
151
TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
From time to time, Companies within the Group are party to various
legal actions as well as inquiries from regulators and government
bodies that have arisen in the normal course of business. The Directors
have given consideration to such matters which are or may be
subject to claims or litigation at year end and are of the opinion that
any liabilities arising over and above already provided in the financial
statements from such action would not have a material effect on the
Group’s financial performance.
It is not practical to estimate the potential effect of these matters
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 Treasury Wine Estates Limited.
The first action was served on 2 April 2020 by Slater & Gordon (S&G)
acting for Brett Stallard as trustee for the Stallard superannuation fund.
The second action was served on 1 May 2020 by Maurice Blackburn
Note 34 – Contingent liabilities
(MB) acting for Steven Napier. The class in both 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. Treasury Wine Estates Limited 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 2024 in respect of the claim.
Financial guarantees
Refer note 18 for financial guarantees to banks, financiers and other
persons.
Daou Vineyards
On 12 December 2023, the Company acquired 100% of the share
capital of DAOU Vineyards, LLC and its associated entities (“DAOU”),
a Company incorporated in the US. DAOU is a highly acclaimed luxury
wine brand based in Paso Robles, California comprising the DAOU
Mountain Tasting Room, four luxury vineyards, four wineries and 411
acres of vineyards in the region.
There have been changes to provisional values of the assets and
liabilities of DAOU at the date of acquisition that were disclosed at 31
December 2023. The accounting for the acquisition is now final.
Details of the purchase consideration are as follows:
Note 35 – Business acquisitions
$M
Cash
1,227.8
Ordinary shares (i)
139.1
Contingent consideration (ii)
44.3
Total
1,411.2
(i) Ordinary shares
The fair value of the 13,150,038 ordinary shares issued as part of the
consideration paid for DAOU ($139.1 million) was based on the published
share price on 12 December 2023 of $10.58 per share. The value of
ordinary shares issued of $139.1 million was lower than the implied
value of $157.4 million disclosed when the acquisition was announced
due to a change in the Company’s share price from acquisition
announcement to acquisition completion.
(ii) Contingent consideration
In the event that certain NSR targets deliver growth in excess of pre-
determined thresholds for the years ended 31 December 2025 to 31
December 2027, additional consideration of up to US$100 million will
be payable to the former owners of DAOU and key employees. There
is no minimum amount payable. A contingent earn-out plan has also
been established under which a material portion of the contingent
consideration will be made available to certain DAOU employees
conditional on their continued employment through the earn-out period.
Notes to the consolidated financial statements: Other
For the year ended 30 June 2024
Any amounts payable under this plan will reduce the maximum
amount payable to the former owners and will be accounted for as
post-combination remuneration expenses and recognised in material
items. Any amounts forfeited by employees resulting from discontinued
employment will revert to the former owners.
The Group has recognised $44.3 million (US$29.1 million) as contingent
consideration for the amount payable to the former owners which
represents its fair value at the date of acquisition. As of 30 June 2024,
this is valued at $45.4 million.
Contribution to F24 earnings
From the date of acquisition, $158.0 million revenue and $37.1 million
profit before tax from continuing operations were recognised regarding
DAOU. Estimated F24 EBITS and revenue from the acquired entities
that would have been earned if the acquisition had occurred at the
commencement of the financial year was $95.3 million, and $332.5
million respectively. Transaction and integration costs of $61.0 million
were expensed and are largely included in administration expenses
and cost of sales. Transaction costs of $18.4 million which were directly
attributable to the issue of ordinary shares to fund part of the acquisition
have been netted against the proceeds in equity.
Note 35 – Business acquisitions (continued)
Assets acquired and liabilities assumed
The fair value of the identifiable assets and liabilities of DAOU at the date of acquisition were:
Since the end of the financial year, the Directors approved a final
70% franked dividend of 19.0 cents per share. This dividend has not been
recognised as a liability in the consolidated financial statements at 30
June 2024.
On 6 August 2024, the Group announced that it will seek to divest its
Commercial brand portfolio. There is no impact to the classification or
carrying value of assets and liabilities as of 30 June 2024.
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.
Fair value recognised
on acquisition
(final)
$M
Assets
Cash
23.2
Trade and other receivables
46.0
Inventories
194.3
Property, plant and equipment
163.1
Right-of-use assets
5.7
Intangible assets
575.2
Deferred tax asset
30.6
1,038.1
Liabilities
Trade and other payables
93.0
Provisions
2.2
Borrowings
11.8
Other non-current liabilities
38.1
Deferred tax liability
30.6
175.7
Total identifiable net assets at fair value
862.4
Goodwill arising from the acquisition has been recognised as follows:
Consideration transferred
1,411.2
Fair value of identifiable assets and liabilities acquired
862.4
Goodwill
548.8
Analysis of cash flows on acquisition
Cash consideration paid
1,227.8
Cash acquired as part of the acquisition
(23.2)
Net cash flow outflow on acquisition (included in cash flows from investing activities)
1,204.6
Note 36 – Subsequent events
Notes to the consolidated financial statements: Other
For the year ended 30 June 2024
Accounting for acquisitions is inherently complex, requiring a
number of judgements and estimates to be made. Management
judgement is required to determine the fair value of identifiable
assets and liabilities acquired in business combinations. A
number of judgements have been made in relation to the
identification of fair values attributable to separately identifiable
assets and liabilities acquired, including customer relationships
and brands. The determination of fair values require the use of
valuation techniques based on assumptions including future
cash flows, revenue growth, margins, customer attrition rates and
weighted-average cost of capital.
Key estimates and judgements are also used in determining the
fair value of the contingent consideration include the expectation
of achieving NSR targets, the retention of employees and
discount rate.
Key estimate and judgement
152
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Consolidated entity disclosure statement
For the year ended 30 June 2024
Entity name
Type of entity / trustee,
partner or participant in JV
Country of
incorporation
Tax residency
Equity holding of 100%
Aldershot Nominees Pty. Ltd.1
Body Corporate / Partner
Australia
Australia
B Seppelt & Sons Limited
Body Corporate
Australia
Australia
Beringer Blass Distribution S.R.L.
Body Corporate
Italy
Italy
Beringer Blass Italia S.R.L.
Body Corporate
Italy
Italy
Beringer Blass Wine Estates Chile Limitada
Body Corporate
Chile
Chile
Beringer Blass Wine Estates Limited
Body Corporate
UK
UK
Beringer Blass Wines Pty. Ltd.
Body Corporate
Australia
Australia
Bilyara Vineyards Pty. Ltd. 1
Body Corporate / Partner
Australia
Australia
Cellarmaster Wines (UK) Limited
Body Corporate
UK
UK
Cellarmaster Wines Holdings (UK) Limited
Body Corporate
UK
UK
Cuppa Cup Vineyards Pty. Ltd.
Body Corporate
Australia
Australia
Daou Brothers LLC
Body Corporate
USA
USA
Daou Family LLC
Body Corporate
USA
USA
Daou Vineyards LLC
Body Corporate
USA
USA
Devil’s Lair Pty. Ltd.
Body Corporate
Australia
Australia
Ewines Pty. Ltd.
Body Corporate
Australia
Australia
FBL Holdings Limited
Body Corporate
UK
UK
Frank Family Vineyards LLC
Body Corporate
USA
USA
Il Cavaliere del Castello di Gabbiano S.r.l.
Body Corporate
Italy
Italy
Interbev Pty. Ltd.
Body Corporate
Australia
Australia
Leo Buring Pty. Ltd.
Body Corporate
Australia
Australia
Lindeman (Holdings) Limited
Body Corporate
Australia
Australia
Lindemans Wines Pty. Ltd.
Body Corporate
Australia
Australia
Mag Wines Pty. Ltd
Body Corporate
Australia
Australia
Majorca Pty. Ltd.
Body Corporate
Australia
Australia
Mildara Holdings Pty. Ltd.
Body Corporate
Australia
Australia
North America Packaging (Pacific Rim) Corporation
Body Corporate
USA
USA
Patrimony Estates LLC
Body Corporate
USA
USA
Penfolds Wines Australia Pty Ltd
Body Corporate
Australia
Australia
Penfolds Wines International Limited
Body Corporate
Australia
Australia
Penfolds Wines Pty Ltd
Body Corporate
Australia
Australia
Piat Pere et Fils B.V.
Body Corporate
Netherlands
Netherlands
Premium Land, Inc.
Body Corporate
USA
USA
Robertsons Well Pty. Ltd.
Body Corporate / Trustee
Australia
Australia
Robertsons Well Unit Trust
Trust
Australia
Australia
Rosemount Estates Pty. Ltd.
Body Corporate
Australia
Australia
Rothbury Wines Pty. Ltd
Body Corporate
Australia
Australia
SCW905 Limited
Body Corporate
Australia
Australia
Seaview Wynn Pty. Ltd.
Body Corporate
Australia
Australia
Société Civile d’Exploitation Agricole Cambon La Pelouse
Body Corporate
France
France
Southcorp Australia Pty. Ltd.
Body Corporate
Australia
Australia
Southcorp Brands Pty. Ltd.
Body Corporate
Australia
Australia
Southcorp International Investments Pty. Ltd.
Body Corporate
Australia
Australia
Southcorp Limited
Body Corporate
Australia
Australia
Southcorp NZ Pty. Ltd.
Body Corporate
Australia
Australia
Southcorp Whitegoods Pty. Ltd.
Body Corporate
Australia
Australia
Southcorp Wines Asia Pty. Ltd.
Body Corporate
Australia
Australia
Southcorp Wines Pty. Ltd.
Body Corporate
Australia
Australia
Entity name
Type of entity / trustee,
partner or participant in JV
Country of
incorporation
Tax residency
Southcorp XUK Limited
Body Corporate
UK
Australia
T’Gallant Winemakers Pty. Ltd.
Body Corporate
Australia
Australia
The Rothbury Estate Pty. Ltd.
Body Corporate
Australia
Australia
Tolley Scott & Tolley Limited
Body Corporate
Australia
Australia
Treasury Americas Inc
Body Corporate
USA
USA
Treasury Chateau & Estates LLC
Body Corporate
USA
USA
Treasury Wine Estates (China) Holding Co Pty Ltd
Body Corporate
Australia
Australia
Treasury Wine Estates (Matua) Limited
Body Corporate
New Zealand
New Zealand
Treasury Wine Estates (NZ) Holding Co Pty Ltd
Body Corporate
Australia
Australia
Treasury Wine Estates (Shanghai) Trading Co. Ltd.
Body Corporate
China
China
Treasury Wine Estates (UK) Holding Co Pty Ltd
Body Corporate
Australia
Australia
Treasury Wine Estates Americas Company
Body Corporate
USA
USA
Treasury Wine Estates Asia (SEA) Pte Ltd
Body Corporate
Singapore
Singapore
Treasury Wine Estates Asia Pty. Ltd.
Body Corporate
Australia
Australia
Treasury Wine Estates Australia Limited
Body Corporate
Australia
Australia
Treasury Wine Estates Barossa Vineyards Pty. Ltd.
Body Corporate
Australia
Australia
Treasury Wine Estates Canada, Inc.
Body Corporate
Canada
Canada
Treasury Wine Estates Denmark ApS
Body Corporate
Denmark
Denmark
Treasury Wine Estates EMEA Limited
Body Corporate
UK
UK
Treasury Wine Estates France S.A.R.L.
Body Corporate
France
France
Treasury Wine Estates HK Limited
Body Corporate
Hong Kong SAR, China
Hong Kong SAR, China
Treasury Wine Estates Holdings Inc.
Body Corporate
USA
USA
Treasury Wine Estates Japan KK
Body Corporate
Japan
Japan
Treasury Wine Estates Managing Office Ltd
Body Corporate
UAE
UAE
Treasury Wine Estates Netherlands B.V
Body Corporate
Netherlands
Netherlands
Treasury Wine Estates Norway AS
Body Corporate
Norway
Norway
Treasury Wine Estates Sweden AB
Body Corporate
Sweden
Sweden
Treasury Wine Estates (Thailand) Co. Ltd
Body Corporate
Thailand
Thailand
Treasury Wine Estates UK Brands Limited
Body Corporate
UK
UK
Treasury Wine Estates Vintners Limited
Body Corporate
Australia
Australia
TWE Finance (Aust) Limited
Body Corporate
Australia
Australia
TWE Finance (UK) Limited
Body Corporate
UK
UK
TWE Insurance Company Pte. Ltd.
Body Corporate
Singapore
Singapore
TWE Lima Pty Ltd
Body Corporate
Australia
Australia
TWE Share Plans Pty Ltd
Body Corporate
Australia
Australia
TWE US Finance Co.
Body Corporate
USA
USA
TWE USA Partnership¹
Partnership
USA
USA / Australia
Wolf Blass Wines Pty. Ltd.
Body Corporate
Australia
Australia
Woodley Wines Pty. Ltd.
Body Corporate
Australia
Australia
Wynn Winegrowers Pty. Ltd.
Body Corporate
Australia
Australia
Wynns Coonawarra Estate Pty. Ltd
Body Corporate
Australia
Australia
1 TWE USA Partnership is a Delaware general partnership between Aldershot Nominees Pty. Ltd. (99.99%) and Bilyara Vineyards Pty. Ltd. (0.01%).
Consolidated entity disclosure statement
For the year ended 30 June 2024
154
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Consolidated entity disclosure statement
For the year ended 30 June 2024
Entity name
Type of entity / trustee,
partner or participant in JV
Country of
incorporation
Tax residency
% Of holding
Equity holding of less than 100%
Graymoor Estate Joint Venture
Joint Venture
Australia
Australia
48.8
Graymoor Estate Pty. Ltd.
Body Corporate / Trustee
Australia
Australia
48.8
Graymoor Estate Unit Trust
Trust
Australia
Australia
48.8
North Para Environment Control Pty. Ltd.
Joint Venture
Australia
Australia
69.9
Groupment Forestier des Landes de Lanessan
Body Corporate
France
France
78.6
SAS Domaines Bouteiller
Body Corporate
France
France
78.6
The consolidated entity disclosure statement has been prepared in
accordance with the Corporations Act 2001, includes information for
each entity that was part of the consolidated entity as at 30 June
2024 and has regard to the Australian Taxation Office’s Practical
Compliance Guidance 2018/9.
Determination of tax residency
Section 294 (3A)(vi) of the Corporations Act 2001 defines tax residency
as having the meaning in the Income Tax Assessment Act 1997. The
determination of tax residency involves judgement as there are different
interpretations that could be adopted and which could give risk to a
different conclusion on residency.
In determining tax residency, the consolidated entity has applied the
following interpretations:
Australian tax residency
The consolidated entity has applied the current legislation and guidance,
including having regard to the Australian Taxation Office’s public
guidance in Tax Ruling TR 2018/5.
Foreign tax residency
The consolidated entity has applied current legislation and where
available, relevant revenue authority guidance in the determination of
foreign tax residency.
Partnership and trusts in Australia
Australian tax law generally does not contain corresponding residency
tests for partnerships and trusts and these entities are typically taxed on
a flow-through basis.
Basis of preparation
Directors’ declaration
For the year ended 30 June 2024
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 1 to 36 are in accordance with the Corporations Act 2001, including:
(i) complying with Australian Accounting Standards, the Corporations Regulations 2001; and
(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2024 and of its performance for the
financial year ended on that date.
b) In the Directors’ opinion, there are reasonable grounds to believe that Treasury Wine Estates Limited will be able to pay its debts as
and when they become due and payable.
c) In the Directors’ opinion, the consolidated entity disclosure statement on pages 152-154 is true and correct.
d) There are reasonable grounds to believe that members of the Closed Group identified in note 28 will be able to meet any liabilities
to which they are or may become, subject because of the Deed of Cross Guarantee described in note 30.
e) Note 1 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
f) The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer as required by section 295A
of the Corporations Act 2001.
John Mullen
Chairman
15 August 2024
Melbourne, Australia
Tim Ford
Managing Director and Chief Executive Officer
156
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with
KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are
trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme
approved under Professional Standards Legislation.
Independent Auditor’s Report
To the shareholders of Treasury Wine Estates Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Treasury Wine Estates Limited (the Company).
In our opinion, the accompanying Financial
Report of the Company gives a true and fair
view, including of the Group’s financial
position as at 30 June 2024 and of its financial
performance for the year then ended, in
accordance with the Corporations Act 2001, in
compliance
with
Australian
Accounting
Standards and the Corporations Regulations
2001.
The Financial Report comprises:
•
Consolidated statement of financial position as at 30 June
2024
•
Consolidated statement of profit or loss and other
comprehensive
income,
Consolidated
statement
of
changes in equity, and Consolidated statement of cash
flows for the year then ended
•
Consolidated
entity
disclosure
statement
and
accompanying basis of preparation as at 30 June 2024
•
Notes, including material accounting policies
•
Directors’ Declaration.
The Group consists of the Company and the entities it
controlled at the year end or from time to time during the
financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants
(including Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia.
We have fulfilled our other ethical responsibilities in accordance with these requirements.
Independent auditor’s report
Independent auditor’s report
Key Audit Matters
The Key Audit Matters we identified are:
•
Valuation of intangible assets;
•
Valuation of inventory; and
•
Acquisition accounting.
Key Audit Matters are those matters that, in our professional
judgement, were of most significance in our audit of the
Financial Report of the current period.
These matters were addressed in the context of our audit of the
Financial Report as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Valuation of intangible assets ($2,182.8 million)
Refer to Note 15 Impairment of non-financial assets to the financial report
29T29T he key audit matter
29T29THow the matter was addressed in our audit
Valuation of goodwill and brand names is a key
audit matter due to:
•
The size of the balance being 26.9% of total
assets.
•
The inherent complexity in auditing the
forward-looking assumptions applied to the
Group’s value in use models (VIU) for each
Cash Generating Unit (CGU) given the
significant judgement involved. We focused
on
the
significant
forward-looking
assumptions the Group applied in their VIU
models, including forecast cash flows and
terminal growth rates due to market
volatility increasing the risk of inaccurate
forecasting.
•
The judgement associated with discount rates
including the underlying risks of each CGU
and the countries they operate in.
As set out in Note 15, the Group recorded an
impairment charge of $289.8 million in the
Treasury Premium Brands (TPB) division, primarily
against goodwill and brands. This was a result of
the impact of the continued decline in the
commercial category outlook.
We involved valuation specialists to supplement
our senior audit team members in assessing this
key audit matter.
Working with our valuation specialists, our procedures
included:
•
considering the appropriateness of the value in use
method applied by the Group to perform the annual test
of goodwill and brand names for impairment against the
requirements of the accounting standards;
•
assessing the integrity of the value in use models used,
including the accuracy of the underlying calculation
formulas;
•
comparing the forecast cash flows contained in the
value in use models to Board approved forecasts;
•
assessing the accuracy of previous Group forecasts to
inform our evaluation of forecasts incorporated in the
models;
•
assessing the Group’s determination of CGU assets for
consistency with the assumptions used in the forecast
cash flows and the requirements of the accounting
standards;
•
challenging the Group’s significant forecast cash flow
and growth assumptions;
•
comparing terminal growth rates to published studies of
industry trends and expectations, and considering
differences for the Group’s operations;
•
independently developing a discount rate range
considered comparable using publicly available market
data for comparable entities, adjusted by risk factors
specific to the Group and the industry it operates in;
•
comparing the implied multiples from comparable
market transactions to the implied multiples from the
Group’s model;
•
recalculating the impairment charge relating to the TPB
division and CGUs against the recorded amounts; and
•
assessing the disclosures in the financial report using
our understanding of the issues obtained from our
testing and against the requirements of the accounting
standards.
158
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Valuation of inventory ($2,359.6 million)
Refer to Note 9 Working Capital to the Financial Report
29T29T he key audit matter
29T29THow the matter was addressed in our audit
29T29TThe valuation of inventories of finished goods and
work in progress is a key audit matter as we need to
consider estimates and judgements made by the
Group.
These
include
inherently
subjective
judgements about forecast demand and estimated
market sales prices. We focus our work on
assessing the judgements contained in the valuation
models for:
•
29T29Tthe period of time over which harvested grapes
are converted from work in progress to bottled
wine ready for sale (the holding period) which
can be a number of years depending on the
varietal and type of wine; and
•
29T29Tforecast demand and market sale prices, which
can fluctuate significantly over the holding
period and are influenced by the fundamentals
of
the
global
wine
industry,
including
fluctuations in demand and supply and other
factors that impact agricultural outputs.
These factors influence the Group’s determination of
the most likely market conditions at the estimated
date of sale. A key indicator for at-risk inventory
values, including finished goods and work in
progress in the holding period, is the identification of
current slow moving and obsolete inventories. These
can signal changes in consumer demand patterns or
potential over-supply issues which may impact
forecast prices.
Our procedures included:
•
29T29Ttesting key controls designed by the Group to identify
slow moving and obsolete inventories, which if
existing, may indicate valuation issues with work in
progress and finished goods;
•
29T29Ttesting year-end inventory valuation models, in
particular the identification and valuation of work in
progress and finished goods considered to be ‘at risk’
(i.e. where the costs may potentially exceed the
estimated net realisable value at the time of sale). We
considered forecast sales plans, inventory holding
reports and the outcomes of the Group’s process to
identify slow moving and obsolete inventories. For a
sample of ‘at risk’ inventory we:
•
evaluated the inventory value against the Group’s
brand strategies and forecast sales plans for
consistency;
•
29T29Tassessed the Group’s action plans in place to
mitigate the risk that wine will be sold below cost
and facilitate the sale of potential at risk inventory
above cost; and
•
assessed the impact of the actions undertaken
during the current year to mitigate the risk that the
wine will be sold below cost, including Australian
sourced inventory that was previously planned to
have been sold in China.
•
29T29Tassessing the integrity of the inventory valuation
models used, including the mathematical accuracy of
the underlying calculation formulas;
•
29T29T29Tattending cycle counts and / or year-end inventory
counts in significant locations;
•
29T29Tassessing the accuracy of the slow moving
inventories provision in prior periods to assess the
historical accuracy of the Group’s estimation process;
and
•
29T29Tassessing
the
Group’s
inventory
valuation
methodologies and the Group’s disclosures in respect
of inventory valuation against the requirements of
relevant accounting standards.
Independent auditor’s report
Independent auditor’s report
Acquisition accounting (purchase consideration of $1,411.2 million)
Refer to Note 35 Business Acquisitions to the financial report
The key audit matter
How the matter was addressed in our audit
The Group’s acquisition of DAOU Vineyards LLC and
its associated entities (DAOU) is considered to be a
key audit matter due to:
•
The size of the acquisition having a significant
impact on the Group’s financial statements;
•
The judgement and complexity involved in the
determination of the fair value of assets and
liabilities acquired in the transaction requiring
significant audit effort. The Group engaged
external valuation experts to assess the fair
value of certain assets including property, plant
and equipment and the DAOU brand.
•
The Group’s valuation model used to determine
the fair value of acquired intangible assets is
complex and sensitive to changes in a number
of key assumptions. This drives additional audit
effort specifically on the feasibility of these key
assumptions and consistency of application to
the Group’s strategy. The key assumptions we
focused on in the valuation of the DAOU brand
included forecast earnings, terminal growth
rates and discount rates.
•
The judgement involved in estimating the fair
value of contingent consideration at acquisition
date. We focused on the forecast cash flow
assumptions, including the achievability of the
earn-out targets and discount rates.
We involved our valuation specialists to supplement
our senior audit team members in assessing this key
audit matter.
Our procedures included:
•
evaluating the acquisition accounting by the Group
against
the
requirements
of
the
accounting
standards;
•
reading the underlying transaction agreements to
understand the terms of the acquisition and nature of
the assets and liabilities acquired;
•
assessing the accuracy of the calculation and
measurement of consideration paid to acquire DAOU
based on the underlying transaction agreements and
the Group’s bank statements;
•
working with our valuation specialists, we assessed
the Group’s external valuation expert reports and:
•
Considered the objectivity, competence and
scope of work of the Group’s external valuation
experts;
•
Evaluated the valuation methodology used to
determine the fair value of assets and liabilities
acquired,
considering
accounting
standard
requirements and observed industry practice;
•
Assessed the key assumptions in the Group’s
external valuation expert report prepared in
relation to the identification and valuation of the
DAOU brand including:
• checking forecast earnings assumptions for
consistency with the Group’s valuation
model used as part of the acquisition process
and the forecast cash flows to Board
approved forecasts;
• comparing terminal growth rates and royalty
rates to published studies of industry trends
and expectations;
• evaluating the calculation methodology for
the discount rate, against observed industry
practice.
•
comparing a sample from the Group’s external expert
property, plant and equipment valuation reports to
underlying fixed asset schedules of the acquiree;
•
assessing
the
Group’s
inventory
valuation
methodology against the requirements of the
accounting standards;
160
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
The key audit matter
How the matter was addressed in our audit
•
challenging the key assumptions in the Group’s
valuation model used as part of the acquisition
process, including forecast cash flows of the entity
acquired, likelihood of achieving the earn out targets
and discount rate, as the basis of the contingent
consideration fair value calculation;
•
recalculating the goodwill balance arising as a result
of the transaction and comparing it to the goodwill
amount recorded by the Group; and
•
assessing the adequacy of disclosures in the financial
report using our understanding of the transaction
obtained
from
our
testing
and
against
the
requirements of the accounting standard.
Other Information
Other Information is financial and non-financial information in Treasury Wine Estates Limited’s annual reporting
which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for
the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express
an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing
so, we consider whether the Other Information is materially inconsistent with the Financial Report or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information, and
based on the work we have performed on the Other Information that we obtained prior to the date of this
Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
•
preparing the Financial Report in accordance with the Corporations Act 2001, including giving a true and
fair view of the financial position and performance of the Group, and in compliance with Australian
Accounting Standards and the Corporations Regulations 2001
•
implementing necessary internal control to enable the preparation of a Financial Report in accordance with
the Corporations Act 2001, including giving a true and fair view of the financial position and performance
of the Group, and that is free from material misstatement, whether due to fraud or error
•
assessing the Group and Company’s ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless they either intend to liquidate
the Group and Company or to cease operations, or have no realistic alternative but to do so.
Independent auditor’s report
Independent auditor’s report
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
•
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of the
Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and
Assurance Standards Board website at http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This
description forms part of our Auditor’s Report
Report on the Remuneration Report
Opinion
In our opinion, the Remuneration Report of
Treasury Wine Estates Limited for the year
ended 30 June 2024, complies with Section
300A of the Corporations Act 2001.
Directors’ responsibilities
The Directors of the Company are responsible for the preparation
and presentation of the Remuneration Report in accordance with
Section 300A of the Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included in pages 76
to 99 of the Directors’ report for the year ended 30 June 2024.
Our responsibility is to express an opinion on the Remuneration
Report, based on our audit conducted in accordance with
Australian Auditing Standards.
KPMG
Penny Stragalinos
Partner
Melbourne
15 August 2024
162
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TREASURY WINE ESTATES ANNUAL REPORT 2024
TREASURY WINE ESTATES ANNUAL REPORT 2024
Substantial shareholders – 5 July 2024
Twenty largest shareholders – 5 July 2024
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).
Listed securities 5 July 2024
No. of holders
No. of shares
% held by Top 20
Fully paid ordinary shares
90,035
811,426,445
83.67
Institution
No. of fully paid
ordinary shares
% of fully paid
ordinary shares
State Street Corporation
60,116,226
7.4%
Capital Group
59,490,813
7.3%
BlackRock Group
45,713,004
5.6%
Vanguard Group
36,123,880
4.5%
Size of holding
No. of holders
Total % held
1 – 1,000
62,598
2.92
1,001 – 5,000
23,684
6.24
5,001-10,000
2,541
2.19
10,001 – 100,000
1,143
3.00
100,001 and over
69
85.65
Total
90,035
100
Rank
Shareholder
No. of fully paid
ordinary shares
% of fully paid
ordinary shares
1
HSBC Custody Nominees (Australia) Limited
305,855,930
37.69
2
J P Morgan Nominees Australia Pty Limited
160,611,838
19.79
3
Citicorp Nominees Pty Limited
101,546,463
12.51
4
National Nominees Limited
26,266,214
3.24
5
BNP Paribas Nominees Pty Ltd
20,121,912
2.48
6
BNP Paribas Noms Pty Ltd
11,874,345
1.46
7
BNP Paribas Nominees Pty Ltd
7,578,998
0.93
8
HSBC Custody Nominees (Australia) Limited -A/C 2
6,716,993
0.83
9
HSBC Custody Nominees (Australia) Limited
5,796,909
0.71
10
Daniel Vineyards LLC
5,260,016
0.65
11
GJD Holdings LLC
5,260,016
0.65
12
Argo Investments Limited
4,043,916
0.50
13
Citicorp Nominees Pty Limited
3,438,262
0.42
14
Netwealth Investments Limited
2,899,305
0.36
15
Citicorp Nominees Pty Limited <143212 NMMT Ltd A/C>
2,101,681
0.26
16
Palm Beach Nominees Pty Limited
2,065,952
0.25
17
BNP Paribas Nominees Pty Ltd Barclays
1,752,788
0.22
18
Netwealth Investments Limited
1,625,237
0.20
19
Mutual Trust Pty Ltd
1,505,296
0.19
20
Daniel J Daou Foundation
1,315,003
0.16
20
The Georges J Daou Foundation
1,315,003
0.16
Total
678,952,077
83.67
As at 5 July 2024, 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 $12.25 per share, is 1,487.
Details of shareholders and shareholdings
Holding of securities
Details of shareholders, shareholdings and
top 20 shareholders
163
TREASURY WINE ESTATES ANNUAL REPORT 2024
Shareholder information
Annual general meeting & director nominations
The Annual General Meeting of the Company will be held at 10:00am
on Thursday, 17 October 2024 (AEDT) at The InterContinental The Rialto.
Full details will be contained in the Company’s Notice of Meeting to be
available on the Company’s website prior to the meeting. All director
nominations for election at the 2024 Annual General Meeting are to be
received in writing no later than 5:00pm (AEST) on Thursday, 29 August
2024.
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
Website: www.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: www.tweglobal.com
Address: Level 8, 161 Collins Street Melbourne Victoria 3000, Australia
ADR Depositary and Transfer Agent:
BNY Mellon Shareowner Services 150 Royall Street - Suite 101
Canton, MA 02021
United States of America
Postal address: PO Box 43006
Providence RI 02940 – 3078
United States of America
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 www.tweglobal.com, go to
the Investor Contacts section located under the Investors menu and click
the ‘Computershare Investor Centre’ link. 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 – Cellardoor.co & TheWineShop.com
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.
TheWineShop.com is Treasury Wine Estates’ multi-branded US shopping
experience that highlights many of the most 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 US 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 https://invite.cellardoor.co/
twe-shareholder1 and enter Access Code 89374 to register.
US shareholders:
Visit https://www.thewineshop.com/?utm_source=Shareholders&utm_
medium=email&utm_campaign=TWE_Shareholders_email to shop our
portfolio.
Treasury Wine Estates Limited
ABN 24 004 373 862
Company secretary
Alexandra Lorenzi BA LLB (Hons)
Registered office
Level 8, 161 Collins Street
Melbourne Victoria 3000 Australia
Telephone: +61 3 8533 3000
164
TREASURY WINE ESTATES ANNUAL REPORT 2024
tweglobal.com