The New Zealand Wine Company

The New Zealand Wine Company Limited – Half Year Report

2011 has been a very challenging year for the company as Directors and Management have worked to restructure the business while working through a PricewaterhouseCoopers (PwC) Independent Appraisal Report and the requirements of the ANZ National Bank (Bank).
 
The NZWC unaudited ‘underlying’ lossbefore interest, NZ IFRS revaluation adjustments and income tax for the 31 December 2011 half year of ($1,044,000) was higher than the ($97,000) comparable underlying loss reported for the same period in 2010. Some significant costs and one off expenses in the 2011 half year, increased the loss over the 2010 half year. NZWC unaudited ‘NZ IFRS’ net earnings for the 31 December 2011 half year resulted in a net loss after tax of ($1,597,000) which is higher than the ($1,078,000) net loss reported for the same period in 2010. 
 
Revenue for the 31 December 2011 half year was $7,318,000, an increase of $1,050,000 or 17% on the $6,268,000 for the same period in 2010.
 
Much Director and Management time and effort during the second half of 2011 has been devoted to working with the Bank and PwC as the Company worked through a review of the business while also implementing its restructuring initiatives targeted at reducing costs and providing a pathway back to profitability.
 
NZWC appointed Grant Samuel early in December 2011 to advise on capital restructuring and to work with the Company to implement an equity raising plan and in late December Directors reached an agreement with the Bank to raise a minimum of $5m prior to 30 June 2012 to reduce Bank debt by a minimum of $5m.
 
Grant Samuel’s brief is to consider all Capital Restructuring options that range from securing a strong cornerstone shareholder through to selling 100% of the business. Grant Samuel has made good progress with identifying interested investors and has produced an Information Memorandum which has been released to a limited number of interested trade investors.
 
The 2012 harvest will be affected by the adverse weather conditions during flowering. Reduced yields will reduce the overall harvest tonnes and it is expected that the Marlborough district average grape prices will be higher than 2011. At this point management anticipate that its NZWC 2012 harvest will be up to 20% lower than their initial forecast grape intake of 2,550 tonnes.
 
NZWC is unable to provide reliable net earnings guidance for the June 2012 financial year, as the NZ IFRS reporting standard makes it difficult for an agricultural exporting company to predict what can be significant swings in the NZ IFRS revaluation adjustments that are required to be made at each balance date.
 
Chairman, Alton Jamieson said that:
 
 “The key uncertainties in the second half of the June 2012 year are around the 2012 harvest yields and the Marlborough district average prices to be paid for grapes, along with the margin impact of the continued strength of the NZD against the USD and GBP.”
 
“Directors believe that the Company is now structured to compete effectively and progressively return underlying earnings to profitability.”
 
A full copy of the Half Yearly Report for the six months ended 31 December 2011 including the Directors’ Report, comparative financial statements and explanatory notes is available on the NZWC web site, at: http://www.nzwineco.co.nz/financial.aspx.
 
Authorised for public release.
 
For further information please contact:
 
Alton Jamieson
Chairman
The New Zealand Wine Company Limited
PO Box 67, Renwick, Marlborough
Telephone number: 021 964 995
E Mail address: alton_jamieson@xtra.co.nz
Web site address:www.nzwineco.co.nz