Delegat Group Limited - Annual Report 2021

Results announcement

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Results for announcement to the market	Results for announcement to the market	Results for announcement to the market	Results for announcement to the market
Name of issuer	Delegat Group Limited
Reporting Period	12 months to 30 June 2021
Previous Reporting Period	12 months to 30 June 2020
Currency	NZD
Amount (000s)		Percentage change
Revenue from continuing operations	$305,376	0%
Total Revenue	$305,376	0%
Operating Profit from ordinary activities after tax (Operating NPAT)1	$65,497	8%
Operating Profit from ordinary activities before interest, tax and depreciation (Operating EBITDA)1	$122,930	5%
Reported profit from continuing operations	$62,169	-5%
Total Net Profit	$62,169	-5%
Interim/Final Dividend
Amount per Quoted Equity Security	$0.20000000
Imputed amount per Quoted Equity Security	$0.07777778
Record Date	24/09/2021
Dividend Payment Date	08/10/2021
	Current period		Prior comparable period2
Net tangible assets per Quoted Equity Security	$4.44		$4.00
Authority for this announcement
Name of person authorised to make this announcement	Murray Annabell
Contact person for this announcement	Murray Annabell
Contact phone number	+649 359 7310
Contact email address	[email protected]
Date of release through MAP	27/08/2021

Audited financial statements accompany this announcement.

Operating Performance is a non-GAAP measure and as such does not have a standardized meaning prescribed by GAAP. It may therefore not be comparable to non-GAAP measures presented by other entities.
The Financial statements for the year ended 30 June 2020 have been restated for growing costs under NZ IAS41: Agriculture.

CONTENTS

2 Executive Chairman’s Report
7 Acting Managing Director’s Report
12 Statement of Financial Performance
13 Statement of Other Comprehensive Income
14 Statement of Changes in Equity
16 Statement of Financial Position
18 Statement of Cash Flows
21 Notes to the Financial Statements
60 Independent Auditor’s Report

Last year, wine lovers around the world enjoyed 190 million glasses of our wine.

EXECUTIVE CHAIRMAN’S REPORT 2021

“The results achieved in 2021 are testament to the strength of Delegat Group’s business model.”

JIM DELEGAT EXECUTIVE CHAIRMAN

On behalf of the Board of Directors of Delegat Group Limited, it is with great pleasure that I present to you, yet another record year for Delegat Group Limited on our journey to build a leading global Super Premium wine company. I am pleased to present its operating and financial results for the year ended 30 June 2021, which has been a challenging but successful year for the Group. The results achieved in 2021 are testament to the strength of Delegat Group’s business model.

PERFORMANCE HIGHLIGHTS

Global Case Sales of 3,178,000.
Record Operating NPAT of $65.5 million, up 8%.
Record Operating EBITDA of $122.9 million, up 5%.
Strong Cash from Operations of $74.7 million.
Operating Return of Capital Employed of 13.8%.

The Group presents its financial statements in accordance with the New Zealand equivalents to International Financial Reporting Standards (NZ IFRS).

To provide further insight into the Group’s underlying operational performance, the Group has also included in this report an Operating Performance Report. This Operating Performance Report excludes the impact of fair value adjustments required under NZ IFRS for grapes and derivative instruments. As a fully integrated winemaking and sales operation, Operating Profit includes the fair value adjustment in respect of grapes when packaged wine is sold rather than on harvest of the grapes, and the fair value adjustment on derivative instruments when these foreign exchange contracts and interest rate swaps are realised.

2 DELEGAT ANNUAL REPORT 2021 EXECUTIVE CHAIRMAN’S REPORT

The Group has included a reconciliation of Operating Profit to Reported Profit which eliminates from each line in the Statement of Financial Performance all fair value adjustments.[1]

OPERATING PERFORMANCE

A record operating NPAT of $65.5 million was generated compared to $60.7 million[*] in the previous 12 months. Operating EBIT of $99.9 million is $4.8 million higher than last year. Operating Expenses (before NZ IFRS adjustments) at $51.0 million are $5.1 million lower than last year.

Delegat achieved Operating Revenue of $302.7 million on global case sales of 3,178,000 in the year. The Group’s case sales performance and foreign currency rates achieved are detailed in table 2.

NZ IFRS FAIR VALUE ADJUSTMENTS

In accordance with NZ IFRS the Group is required to account for certain assets at ‘fair value’ rather than at historic cost. All movements in these fair values are reflected in and impact the Statement of Financial Performance. The Group records adjustments in respect of three significant items at the year-end as described below and detailed in table 3.

Table 1 OPERATING PERFORMANCE

	June 2021	June 2020	% change
NZ$ millions		Restated*	vs 2020
Operating Revenue1	302.7	302.9	0%
Operating Gross Profit2	150.9	151.2	0%
Operating Gross Margin	50%	50%
Operating Expenses3	(51.0)	(56.1)	9%
Operating EBIT4	99.9	95.1	5%
Operating EBIT % of Revenue	33%	31%
Interest and Tax	(34.4)	(34.4)	0%
Operating NPAT4	65.5	60.7	8%
Operating NPAT % of Revenue	22%	20%
Operating EBITDA4	122.9	116.7	5%
Operating EBITDA % of Revenue	41%	39%
Notes:

Operating Revenue is before fair value movements on derivative instruments (if gains).
Operating Gross Profit is before the net fair value movements on biological produce (harvest adjustment) and the NZ IFRS adjustments excluded in Note 1.
Operating Expenses are before fair value movements on derivative instruments (if losses).
Operating EBIT, EBITDA and NPAT are before any fair value adjustments.
Operating Performance is a non-GAAP measure and as such does not have a standardised meaning prescribed by GAAP. It may therefore not be comparable to non-GAAP measures presented by other entities. The Executive Chairman and Acting Managing Director’s Reports are read by the auditors as part of their responsibilities in respect of other information as disclosed in their audit report.
The financial statements for the year ended 30 June 2020 have been restated for growing costs under NZ IAS 41: Agriculture. Refer to Note 1 of the financial statements.

EXECUTIVE CHAIRMAN’S REPORT DELEGAT ANNUAL REPORT 2021 3

Harvest Provision Release (Grapes) – Inventory is valued at market value, rather than costs incurred, at harvest. Any fair value adjustment is excluded from Operating Performance for the year, by creating a Harvest Provision. This provision is then released through Cost of Sales when inventory is sold in subsequent years. This represents the reversal of prior periods’ fair value adjustments in respect of biological produce as finished wine is sold in subsequent years. In 2021, the market value of the Company grapes exceeded the costs incurred by $9.2 million (2020 Restated: $18.1 million). This write-up is lower than last year due to a lower-yielding 2021 vintage. This write-up, less the impact of prior years’ vintages being sold has resulted in a net write-down of $7.3 million for the year (2020 Restated: write-up of $1.2 million);
Derivative Instruments are held to hedge the Group’s foreign currency and interest rate exposure. The mark-to-market movement of these instruments at balance date resulted in a fair value write-up of $2.7 million (2020: write-up of $1.3 million);
The tax effect of reinstatement of depreciation in relation to the reintroduction of depreciation deductions on buildings has resulted in a tax write-up of $nil (2020: $2.9 million).

The above adjustments, net of taxation, amount to a write-down of $3.3 million for the year (2020 Restated*: write-up of $4.7 million).

Table 2 CASE SALES AND FOREIGN CURRENCY

		June 2021 June 2020 % change Case Sales (000s) vs 2020 UK, Ireland and Europe 1,074 1,101 -2% North America (USA and Canada) 1,487 1,438 3% Australia, NZ and Asia Pacific 617 738 -16% Total Cases 3,178 3,277 -3% Foreign Currency Rates GB£ 0.4988 0.5025 1% AU$ 0.9301 0.9313 0% US$ 0.6737 0.6493 -4% CA$ 0.8838 0.8648 -2%
		June 2021 June 2020 % change Case Sales (000s) vs 2020 UK, Ireland and Europe 1,074 1,101 -2% North America (USA and Canada) 1,487 1,438 3% Australia, NZ and Asia Pacific 617 738 -16% Total Cases 3,178 3,277 -3% Foreign Currency Rates GB£ 0.4988 0.5025 1% AU$ 0.9301 0.9313 0% US$ 0.6737 0.6493 -4% CA$ 0.8838 0.8648 -2%

The financial statements for the year ended 30 June 2020 have been restated for growing costs under NZ IAS 41: Agriculture. Refer to Note 1 of the financial statements.

4 DELEGAT ANNUAL REPORT 2021 EXECUTIVE CHAIRMAN’S REPORT

RECONCILIATION OF REPORTING TO OPERATING PERFORMANCE

Accounting for all fair value adjustments under NZ IFRS, the Group’s reported audited financial performance for the year ended 30 June 2021 is reconciled to Operating Profit as detailed in table 4.

CASH FLOW

The Group generated Cash Flows from Operations of $74.7 million in the current year, which is a decrease of $9.6 million or 11% on the previous year. This decrease is due to higher payments to suppliers and employees and higher net income tax paid. A total of $62.2 million was paid for additional property, plant and equipment during the year, this includes vineyard developments in New Zealand, and development of the Hawke’s Bay and Marlborough wineries, which will provide earnings growth into the years ahead. The Group distributed $17.2 million to shareholders in dividends. A net drawdown of $3.2 million was made during the year, increasing borrowings.

Having secured a $330.0 million syndicated Senior Debt facility in 2019 the Group is well positioned to fund its current operations as well as future capital investment in both New Zealand and Australia. The Group’s net debt at 30 June 2021 amounted to $249.1 million, an increase of 4% compared to last year and remains well within the Group’s long-term bank debt facilities.

DIVIDENDS

The Directors consider that the underlying operational performance and continued strong cash flows justify an increase in dividends this year. Accordingly, the Directors are pleased to advise they have approved a fully imputed dividend payout of 20.0 cents per share. The dividend will be paid on 8 October 2021 to Shareholders on record at 24 September 2021.

Table 3 IMPACT OF FAIR VALUE ADJUSTMENTS

	June 2021	June 2020	% change
NZ$ millions		Restated*	vs 2020
Operating NPAT	65.5	60.7	8%
Operating NPAT % of Revenue	22%	20%
NZ IFRS Fair Value Items
Biological Produce (Grapes)1	(7.3)	1.2	n/m2
Derivative Instruments	2.7	1.3	108%
Total Fair Value Items	(4.6)	2.5	n/m2
Taxation of NZ IFRS fair value items	1.3	(0.7)	n/m2
Reinstatement of Building tax depreciation	–	2.9	-100%
Fair Value Items after Tax	(3.3)	4.7	n/m2
Reported NPAT	62.2	65.4	-5%

Notes:

1. Biological Produce (Grapes) is the difference between market value paid for grapes and the cost to grow grapes. The Harvest Provision is reversed and only recognised when the finished wine is sold. 2. n/m means not meaningful.

The financial statements for the year ended 30 June 2020 have been restated for growing costs under NZ IAS 41: Agriculture. Refer to Note 1 of the financial statements.

EXECUTIVE CHAIRMAN’S REPORT DELEGAT ANNUAL REPORT 2021 5

INVESTING FOR GROWTH

Delegat Group continues to invest to support our strategic goal of building a leading global Super Premium wine company. During the year under review $61.7 million was invested in growth assets including development of the Group’s wineries, land acquisition and vineyard development in New Zealand and the Barossa Valley, Australia.

The Group plans to invest an additional $29.7 million in 2022 to provide earnings growth in the years ahead. This capital investment supports the Group’s plan to grow sales to 3,976,000 cases by 2024 and will provide for further growth beyond that period.

OUR GREAT WINE PEOPLE

The Board would like to take this opportunity to acknowledge our Delegat Great Wine People around the world. Our global team has once again shown great resolve and resilience to deliver success in a challenging year. The workload and operating environment endured this year have asked a great deal of our teams around the world and they have responded magnificently. Our people have built a unique culture founded on our values of aim high, mastery and winning together. The commitment and talent of our global team underpins our success and positions the Group well to deliver on its substantial growth plans.

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J I M D E L E G A T E X E C U T I V E C H A I R M A N

Table 4 RECONCILIATION OF REPORTING TO OPERATING PERFORMANCE

NZ$ millions	2021	2020 Restated*
	Operating Fair Value Reported Adjustment	Operating Fair Value Reported Adjustment
Revenue Cost of Sales	302.7 2.7 305.4 (151.8) (7.3) (159.1)	302.9 1.3 304.2 (151.7) 1.2 (150.5)
Gross Profit Operating Expenses	150.9 (4.6) 146.3 (51.0) – (51.0)	151.2 2.5 153.7 (56.1) – (56.1)
EBIT1 Interest and Tax	99.9 (4.6) 95.3 (34.4) 1.3 (33.1)	95.1 2.5 97.6 (34.4) 2.2 (32.2)
NPAT2	65.5 (3.3) 62.2	60.7 4.7 65.4
EBIT1 Depreciation	99.9 (4.6) 95.3 23.0 – 23.0	95.1 2.5 97.6 21.6 – 21.6
Notes: EBITDA3	122.9 (4.6) 118.3	116.7 2.5 119.2

1. EBIT means earnings before interest and tax. 2. NPAT means net profit after tax.

3. EBITDA means earnings before interest, tax, depreciation and amortisation.

The financial statements for the year ended 30 June 2020 have been restated for growing costs under NZ IAS 41: Agriculture. Refer to Note 1 of the financial statements.

6 DELEGAT ANNUAL REPORT 2021 EXECUTIVE CHAIRMAN’S REPORT

ACTING MANAGING DIRECTOR’S REPORT 2021

“We are very proud and appreciative of the way our people brought to life our core value of Winning Together, in what can only be described as a challenging year.”

GRAEME LORD ACTING MANAGING DIRECTOR

Our global team demonstrated great resilience and resolve in the 2021 financial year delivering record Operating Net Profit after tax of $65.5 million in a year impacted by the Covid-19 pandemic and associated global supply chain disruption. We are very proud and appreciative of the way our people brought to life our core value of Winning Together, in what can only be described as a challenging year.

GLOBAL SALES PERFORMANCE

The Group achieved global case sales of 3,178,000 cases which was 3% lower than the previous year. The decline in sales was primarily due to the impact of ongoing global port congestion compounded by constrained shipping line capacity on all major trade lanes.

The ongoing Covid-19 pandemic, related lockdowns and social distancing requirements have limited field sales activities and significantly reduced sales in on premise channels. Despite this our inmarket sales teams have engaged productively with customers and distributors throughout the year. In this environment, consumers have gravitated to established brands that they know and trust, and Oyster Bay has continued to flourish as a leading Super Premium wine brand.

The Group’s sales continue to be well diversified by market with 47% in North America, 34% in United Kingdom, Ireland and Europe, and 19% in the Australia, New Zealand and Asia Pacific region.

The Group continues to invest in the development of dedicated in-market sales teams to support substantial future sales growth. The Group has in-market sales teams in New Zealand, Australia, the United Kingdom, the United States, Canada and China. This unique infrastructure of in-market sales offices delivers the Group high quality distribution, enduring business relationships, market knowledge and focus.

ACTING MANAGING DIRECTOR’S REPORT DELEGAT ANNUAL REPORT 2021 7

Last year our 400 strong global team excelled in creating an environment for success and achieving the extraordinary.

NORTH AMERICA

Sales in North America grew by 3% to a record 1,487,000 cases, albeit sales volumes were constrained by port congestion and reduced shipping line capacity.

The United States remains one of the world’s most attractive wine markets, demonstrating sustained premium category growth and strong demand for imported wines including Marlborough Sauvignon Blanc. This makes it a major growth market opportunity for the Group.

The Oyster Bay brand continued to achieve strong distribution and rate of sale per point of distribution across the country. Oyster Bay Sauvignon Blanc is a top 5 white wine over US$10 by value.[1] The Group is well positioned to continue building momentum through its strong relationships with its distributor partners, a key factor in driving success of Oyster Bay and Barossa Valley Estate.

In Canada, a strong base of distribution has been established in each of the major provinces. Oyster Bay has grown to become one of the leading Super Premium wine brands in the market, with success being achieved across the range, including number two Chardonnay and top ten Pinot Noir in Canada above C$14.[2]

UNITED KINGDOM, IRELAND AND EUROPE

Sales in the United Kingdom, Ireland and Europe region were 1,074,000 cases, 2% lower than the prior year, largely due to supply chain constraints.

Oyster Bay has maintained its Super Premium category leadership position in the United Kingdom, with Sauvignon Blanc, Chardonnay and Merlot continuing to be the top selling wines above £8 in their individual varietal categories irrespective of origin.[3] Barossa Valley Estate sales were adversely affected by the impact of lockdowns and social distancing requirements on customers in the hospitality sector.

In Ireland, Oyster Bay continues to achieve success as a leading Super Premium wine brand. Oyster Bay Chardonnay, Merlot and Pinot Noir remain the top-selling wines in their respective varietal categories above €9.[4]

1. Source: IRI Scans, 52 Weeks ending 20.02.21, USD $10+, 750ml Table Wine

2. Source: LCA/ACD MAT to 28.02.21, CAD $14+, blended wholesale and retail pricing

3. AC Nielsen MAT 27.03.2021, £8+

4. AC Nielsen MAT 01.11.2020, €9

DELEGAT ANNUAL REPORT 2021 ACTING MANAGING DIRECTOR’S REPORT

AUSTRALIA, NEW ZEALAND AND ASIA PACIFIC

In the established New Zealand and Australia markets Oyster Bay is a category-leading Super Premium wine brand. The Australia, New Zealand and Asia Pacific region achieved sales of 618,000 cases, 16% lower than in the previous year as the Group focused on optimising long-term value growth in preference to short-term volume growth, whilst sales in Australia were also impacted by port congestion and reduced shipping line capacity.

In Australia, Oyster Bay Sauvignon Blanc continues to lead the category as the top-selling Sauvignon Blanc and bottled white wine by value, Oyster Bay Chardonnay remains the top-selling Chardonnay above A$13 and Oyster Bay Pinot Gris has become a top three product in its varietal category above A$13.[5]

During the year, the Group again experienced strong growth in China. While China is currently a relatively small emerging market for the Group, it continues to represent a valuable long-term growth opportunity.

BRANDS AND COMMUNICATIONS

The Group’s goal is to establish Oyster Bay and Barossa Valley Estate as leading brands in the Super Premium wine category globally.

Based on wine consumption patterns, the Group classifies markets as Established, Growth or Emerging. Understanding the level of maturity of our markets is essential for setting business strategy. Marketing activities are then tailored to the specific needs of each market and phases of brand development. The Group is investing in marketing programmes designed to grow consumer awareness and affinity, supporting distribution and rate of sale growth per point of distribution. The Group uses a mix of media channels, both online and offline to attract and engage the premium wine consumers and build its brands. The Group also works closely with its retail partners to develop highly effective in-store activations that support rate of sale growth and nurture long-term brand affinity.

In recognition of its market performance and reputation, Oyster Bay continues to be recognised as a Blue Chip Brand by New York’s IMPACT Magazine, a status reserved only for brands of substantial size and sustained growth over many years. Oyster Bay was also recognised by IMPACT Magazine as a ‘Hot Brand’ for the eleventh consecutive year.

Last year Oyster Bay engaged with over 58 million wine lovers across the globe.

5. IRI National Wine MAT 28.02.2021, AUD $13+

ACTING MANAGING DIRECTOR’S REPORT DELEGAT ANNUAL REPORT 2021 9

2021 HARVEST

The 2021 harvest delivered exceptional quality fruit across all three of our wine regions.

The Group harvest of 37,470 tonnes was 2% lower than the prior vintage and lower than forecast due to unseasonal cool spring weather during flowering in both Marlborough and Hawke’s Bay.

The vintage outcome will deliver excellent quality wines and the Group has appropriate inventories to achieve the 2022 forecast case sales as outlined in this report.

SUSTAINABILITY

Recognition and respect for the environment are reflected in the strong leadership role the Group plays in the practice and promotion of sustainable winegrowing and wine production. As a leader in the New Zealand wine industry and as a founding member since 2002 of Sustainable Winegrowing New Zealand (SWNZ), the Group takes its responsibilities to respect and protect the environment very seriously. The Group’s New Zealand vineyards and wineries are 100% accredited by the independently audited SWNZ Sustainability Programme. The Group applies many of these same principles in the Barossa Valley, again as a leader of sustainable winegrowing practices within the Australian wine industry.

Over the coming year the Group will undertake further work on the Group’s Climate Change strategy and response, using the Taskforce on Climate-related Financial Disclosure framework, which covers governance, strategy, risk management, metrics and targets. The Group is also undertaking a project to measure emissions generated from operations in order to develop plans to minimise the emissions footprint of the business.

GROUP OUTLOOK

The Group continues to operate in an environment of elevated uncertainty arising from the ongoing global pandemic and global supply chain disruption. Performance over the last year is testament to the strength and resilience of the Group’s business model in this environment. The Board is confident in the Group’s ability to prosper and drive sustainable sales and earnings growth over the long term. Accordingly, the Group continues to invest in its assets, brands and people in line with our strategic goal to build a leading global Super Premium wine company.

Delegat plans to grow sales by 25% to 3,976,000 cases over the next three years. The primary driver of planned growth is Oyster Bay sales in North America.

With respect to the 2022 year, Delegat plans to grow sales by 8% to 3,419,000 cases and forecasts Operating Net Profit after Tax to be in the range of $57 to $61 million. The forecast Operating Net Profit After Tax is lower than this year’s result due to the impact of the lower yielding 2021 vintage and higher grape prices resulting in an increased cost of goods per case, unfavourable exchange rate movements, higher freight costs and the recurrence of operating expenses suspended due to Covid-19 restrictions. The Group will continue to closely monitor and manage the potential impact of ongoing supply chain disruption including port congestion and shipping line capacity constraints, noting that these factors present some risk to the achievement of forecast case sales in 2022.

10 DELEGAT ANNUAL REPORT 2021 ACTING MANAGING DIRECTOR’S REPORT

Table 5 GROUP OUTLOOK CASE SALES

	2021 2022 2023 2024 Case Sales (000s) Actual Forecast Projection Projection Total Cases 3,178 3,419 3,734 3,976

OUR PEOPLE

As noted earlier in this report, we are extremely proud and appreciative of the way our people brought to life our core value of Winning Together in a challenging year. Our people are the key to realising the Group’s future goals and have collectively built a high performance team culture that is unique in the global wine business. I would like to take this opportunity to thank each and every one of our people around the world.

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G R A E M E L O R D A C T I N G M A N A G I N G D I R E C T O R

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BAROSSA VALLEY ESTATE AUSTRALIA
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ACTING MANAGING DIRECTOR’S REPORT DELEGAT ANNUAL REPORT 2021 11

STATEMENT OF FINANCIAL PERFORMANCE

	Notes	2021	2020
		$000	$000
			~~Restated*~~

Revenue	3	305,376	304,181
Profit before finance costs	4	95,311	97,639
Finance costs	3	9,777	10,807
Profit before income tax		85,534	86,832
Income tax expense	17	23,365	21,405
Profit for the year attributable to Shareholders of the Parent Company		62,169	65,427
Earnings per share
– Basic and fully diluted earnings per share (cents per share)	5	61.47	64.70

*The financial statements for the year ended 30 June 2020 have been restated for growing costs under NZ IAS 41: Agriculture. Refer to Note 1 of the financial statements. The accompanying notes form part of these financial statements

12 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

STATEMENT OF OTHER COMPREHENSIVE INCOME

	Notes	2021	2020
		$000	$000 ~~Restated*~~

Profit after income tax		62,169	65,427
*Other comprehensive income that may subsequently be classified to the profit*	*and loss:*
– Translation of foreign subsidiaries	6b	(958)	1,497
– Net loss on hedge of a net investment		(108)	(722)
– Income tax relating to components of other comprehensive income	17	30	202
Total comprehensive income for the year, net of tax		61,133	66,404
Comprehensive income attributable to Shareholders of the Parent Company		61,133	66,404

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 13

STATEMENT OF CHANGES IN EQUITY

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FOR THE YEAR ENDED 30 JUNE 2021
Notes Share Foreign Retained Total
Capital Currency Earnings Equity
Translation
Reserve
$000 $000 $000 $000
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Balance at 30 June 2020		49,815	(2,604)	363,295	410,506
Changes in equity for the year ended 30 June 2021
*Other comprehensive income*
– Translation of foreign subsidiaries	6b	–	(958)	–	(958)
– Net loss on hedge of a net investment		–	(108)	–	(108)
– Income tax relating to components of
other comprehensive income	17	–	30	–	30
Total other comprehensive income		–	(1,036)	–	(1,036)
– Net profit for the year		–	–	62,169	62,169
Total comprehensive income for the year		–	(1,036)	62,169	61,133
*Equity transactions*
– Dividends paid to Shareholders	7	–	–	(17,217)	(17,217)
Balance at 30 June 2021		49,815	(3,640)	408,247	454,422

The accompanying notes form part of these financial statements

14 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

STATEMENT OF CHANGES IN EQUITY CONTINUED

FOR THE YEAR ENDED 30 JUNE 2020 RESTATED*

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Notes Share Foreign Retained Total
Capital Currency Earnings Equity
Translation
Reserve
$000 $000 $000 $000
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Balance at 30 June 2019		49,815	(3,581)	315,083	361,317
Changes in equity for the year ended 30 June 2020
*Other comprehensive income*
– Translation of foreign subsidiaries	6b	–	1,497	–	1,497
– Net loss on hedge of a net investment		–	(722)	–	(722)
– Income tax relating to components of
other comprehensive income	17	–	202	–	202
Total other comprehensive income		–	977	–	977
– Net profit for the year		–	–	65,427	65,427
Total comprehensive income for the year		–	977	65,427	66,404
*Equity transactions*					–
– Dividends paid to Shareholders	7	–	–	(17,215)	(17,215)
Balance at 30 June 2020		49,815	(2,604)	363,295	410,506

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 15

STATEMENT OF FINANCIAL POSITION

	Notes	2021	2020
		$000	$000 ~~Restated*~~

Equity
Share capital	6	49,815	49,815
Foreign currency translation reserve	6b	(3,640)	(2,604)
Retained earnings		408,247	363,295
Total Equity		454,422	410,506
Liabilities
Current Liabilities
Trade payables and accruals	8	28,898	27,879
Derivative financial instruments	9	2,879	4,649
Income tax payable		8,235	9,674
Lease liability	16	4,840	4,538
		44,852	46,740
Non-Current Liabilities
Deferred tax liability	17	31,872	30,435
Derivative financial instruments	9	1,590	5,900
Interest-bearing loans and borrowings	10	258,001	254,296
Lease liability	16	93,863	79,524
		385,326	370,155
Total Liabilities		430,178	416,895
Total Equity and Liabilities		884,600	827,401

16 DELEGAT GROUP LIMITED AND SUBSIDIARIES. AS AT 30 JUNE 2021

STATEMENT OF FINANCIAL POSITION CONTINUED

	Notes	2021	2020
		$000	$000 ~~Restated*~~

Assets
Current Assets
Cash and cash equivalents		8,943	14,755
Trade and other receivables	11	43,997	41,788
Derivative financial instruments	9	271	3,618
Inventories	12	159,982	152,840
Biological work in progress	13	12,080	12,693
		225,273	225,694
Non-Current Assets
Property, plant and equipment	14	582,143	537,708
Right-of-use assets	16	71,335	58,494
Intangible assets	15	5,849	5,436
Derivative financial instruments	9	–	69
		659,327	601,707
Total Assets		884,600	827,401

For, and on behalf of, the Board, who authorised the issue of the financial statements on 27 August 2021.

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JN Delegat, Executive Chairman

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GS Lord, Acting Managing Director

DELEGAT GROUP LIMITED AND SUBSIDIARIES. AS AT 30 JUNE 2021 17

STATEMENT OF CASH FLOWS

	2021	2020
	$000	$000

Operating Activities
Cash was provided from
Receipts from customers	300,556	300,923
Net GST received	603	307
	301,159	301,230
Cash was applied to
Payments to suppliers and employees	193,767	189,173
Net interest paid	9,300	10,037
Net income tax paid	23,370	17,707
	226,437	216,917
Net Cash Inflows from Operating Activities	74,722	84,313
Investing Activities
Cash was provided from
Proceeds from sale of property, plant and equipment	60	45
Dividends received	1	1
	61	46
Cash was applied to
Purchase of property, plant and equipment	60,375	27,176
Purchase of intangible assets	494	424
Capitalised interest paid	1,325	1,460
	62,194	29,060
Net Cash Outflows from Investing Activities	(62,133)	(29,014)

The accompanying notes form part of these financial statements

18 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

STATEMENT OF CASH FLOWS CONTINUED

	2021	2020
	$000	$000

Financing Activities
Cash was provided from
Proceeds from borrowings	53,787	10,290
	53,787	10,290
Cash was applied to
Dividends paid to Shareholders	17,208	17,204
Borrowing facility fees	-	989
Repayment of borrowings	50,628	33,826
Repayment of lease liability	4,179	4,573
	72,015	56,592
Net Cash Outflows from Financing Activities	(18,228)	(46,302)
Net (Decrease)/Increase in Cash Held	(5,639)	8,997
Cash and cash equivalents at beginning of the year	14,755	5,647
Effect of exchange rate changes on foreign currency balances	(173)	111
Cash and Cash Equivalents at End of the Year	8,943	14,755

The accompanying notes form part of these financial statements

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 19

STATEMENT OF CASH FLOWS CONTINUED

	2021	2020
	$000	$000 ~~Restated*~~

Reconciliation of Profit for the Year with Cash Flows from Operating Activities
Reported profit after tax	62,169	65,427
Add/(deduct) items not involving cash flows
Depreciation expense	22,998	21,629
Other non-cash items	(516)	1,569
Gain on disposal of assets	(19)	(71)
Movement in derivative financial instruments	(2,664)	(1,331)
Movement in deferred tax liability	1,437	277
	21,236	22,073
Movement in working capital balances are as follows
Trade payables and accruals	1,019	(4,432)
Trade and other receivables	(2,209)	(1,804)
Inventories	(7,142)	766
Biological work in progress	613	(2,328)
Income tax	(1,439)	3,229
Add items classified as investing and financing activities
Capital purchases included within trade payables and inventories	475	393
Borrowing facility fees	–	989
	(8,683)	(3,187)
Net Cash Inflows from Operating Activities	74,722	84,313
Reconciliation of movement in Net Debt:
Opening balance at 1 July	239,541	270,342
Per statement of cash flows:
– Proceeds from/(Repayment of) borrowings	3,159	(23,536)
– Net Decrease/(Increase) in cash held	5,639	(8,997)
Foreign exchange movement	400	1,413
Othernon-cash movements	319	319
Closing balance at 30 June	249,058	239,541

20 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS

1. GENERAL INFORMATION

REPORTING ENTITY

The financial statements presented are those of Delegat Group Limited and its subsidiaries (the Group). Delegat Group Limited is a company limited by shares, incorporated and domiciled in New Zealand and registered under the Companies Act 1993. The Parent shares are publicly traded on the New Zealand Stock Exchange.

The financial statements comprise the statement of financial performance, statement of other comprehensive income, statement of changes in equity, statement of financial position and statement of cash flows, as well as the notes to the financial statements. The financial statements for the Group for the year ended 30 June 2021 were authorised for issue in accordance with a resolution of the Directors on 27 August 2021.

BASIS OF PREPARATION

The financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (NZ GAAP) and the requirements of the Financial Markets Conduct Act 2013. For the purposes of complying with NZ GAAP, the entity is a for-profit entity. These financial statements are presented in New Zealand Dollars, rounded to the nearest thousand. They are prepared on a historical cost basis, except for derivative financial instruments and biological produce which have been measured at fair value.

The preparation of the financial statements requires the Group to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may vary from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods.

STATEMENT OF COMPLIANCE

The financial statements comply with New Zealand equivalents to International Financial Reporting Standards and other applicable Financial Reporting Standards (NZ IFRS), as applicable to the Group as a profit-oriented entity. The financial statements comply with International Financial Reporting Standards (IFRS).

BASIS OF CONSOLIDATION

The consolidated financial statements comprise the financial statements of the Group as at 30 June 2021 and comparative as at 30 June 2020.

Subsidiaries are those entities over which the Group has control. Control is achieved when the Group is exposed, or has rights, to variable returns from its investment in the entity, and has the ability to affect those returns through its power over the entity. Specifically, the Group controls an entity if, and only if, the Group has:

Power over the entity (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
Exposure, or rights, to variable returns from its involvement with the entity; and
The ability to use its power over the investee to affect its returns.

The financial statements of the subsidiaries are prepared for the same reporting period as the Parent, using consistent accounting policies. The effects of intercompany transactions are eliminated in preparing the consolidated financial statements.

Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease to be consolidated from the date on which control is transferred out of the Group. The acquisition of subsidiaries is accounted for using the acquisition method of accounting as noted on the following pages.

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 21

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

1. GENERAL INFORMATION (CONTINUED)

BUSINESS COMBINATIONS

The acquisition method of accounting is used to account for all business combinations regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange. Where equity instruments are issued in a business combination, the fair value of the instruments is their published market price at the date of the exchange, unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly within equity.

Except for non-current assets or disposal groups classified as held for sale (which are measured at fair value less costs to sell), all identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values as at acquisition date, irrespective of the extent of any noncontrolling interests. The excess of the cost of the business combination over the net fair value of the Group’s share of the identifiable net assets acquired is recognised as goodwill. If the cost of the acquisition is less than the Group’s share of the net fair value of the identifiable net assets of the subsidiary, the difference is recognised as a gain in the statement of financial performance, but only after a reassessment of the identification and measurement of the net assets acquired.

Where settlement of any part of the consideration is deferred, the amounts payable in the future are discounted to the present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which similar borrowings could be obtained from an independent financier under comparable terms and conditions.

GOODS AND SERVICES TAX (GST)

The statement of financial performance, statement of other comprehensive income, statement of changes in equity and statement of cash flows have been prepared so that all components are stated net of GST. All items in the statement of financial position are stated net of GST, with the exception of receivables and payables, which include GST invoiced.

FOREIGN CURRENCIES

a) Functional and Presentation Currency

The presentation currency of the Group is the New Zealand Dollar. Each subsidiary company in the Group determines its own functional currency and uses that functional currency for its individual financial statements. Subsidiary companies with a different functional currency than that of the Group are translated through converting all reported assets and liabilities at the closing rate at the date of the balance sheet, while income and expenses are translated at exchange rates at the dates of the transactions. Any resulting exchange differences are recognised as a separate component of equity.

b) Transactions and Balances

Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand, and short-term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Bank overdrafts are included within interest-bearing loans and borrowings in current liabilities in the statement of financial position.

22 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

1. GENERAL INFORMATION (CONTINUED)

NET DEBT

Net debt is the sum of the Group’s interest-bearing loans and borrowings less cash and cash equivalents.

OTHER ACCOUNTING POLICIES

Other accounting policies that are relevant to an understanding of the financial statements are provided throughout the notes to the financial statements.

SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

In applying the Group’s accounting policies, management continually evaluates the judgements, estimates and assumptions based on experience and other factors, including expectations of future events that may have an impact upon the Group. All judgements, estimates and assumptions made are believed to be reasonable based upon the most current set of circumstances available to management. The actual results may differ from the judgements, estimates and assumptions used. The significant judgements, estimates and assumptions made by management in the preparation of these financial statements are disclosed within the specific financial statement notes as shown below:

Area of Judgement, Estimate or Assumption

Note

Selling, marketing and promotional accruals Note 3 Segmental Reporting Fair value of grapes at point of harvest Note 12 Inventories Estimation of useful lives of assets Note 14 Property, Plant and Equipment Impairment of property, plant and equipment Note 14 Property, Plant and Equipment Impairment of intangible assets Note 15 Intangible Assets Lease term and discount rates Note 16 Leases

To allow the Accounting Policies and Significant Accounting Judgements, Estimates and Assumptions to be easily identified within the notes, Accounting Policies have been identified with an symbol, and Significant Accounting Judgements, Estimates and Assumptions with an symbol.

CHANGES IN ACCOUNTING POLICIES

The accounting policies adopted are consistent with those of the previous financial year, with the exception of growing costs as detailed below.

Growing Costs

An adjustment has been made to restate the 2020 comparatives to align the accounting treatment for growing costs. Previously a distinction was made between where the Group maintains beneficial ownership in bearer plants and where the Group is not the beneficial owner of bearer plants. All vineyard costs that are incurred subsequent to harvest up to balance sheet date are now treated consistently and are carried forward in the Statement of Financial Position and included in the subsequent year’s fair value adjustment at point of harvest.

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 23

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

1. GENERAL INFORMATION (CONTINUED)

This adjustment has resulted in the following restatements:

	2020
	$000
	Increase/
	(decrease)

Statement of Financial Performance
Profit before finance costs	1,815
Income tax expense	510
Statement of Financial Position
Retained earnings	5,926
Deferred tax liability	1,979
Inventories	(4,788)
Biological work in progress	12,693
Statement of Cash Flows
Reconciliation of Profit for the Year with Cash Flows from Operating Activities
Reported profit after tax	1,305
Movement in deferred tax liability	510
Inventories	513
Biological work in progress	(2,328)

Basic and fully diluted earnings per share for the year ended 30 June 2020 have increased by 1.29 cents per share. Retained earnings as at 1 July 2019 increased by $4,621,000.

NEW ACCOUNTING STANDARDS AND INTERPRETATIONS

Standards and Interpretations that have recently been issued or amended, but are not yet effective, have not been adopted by the Group for the annual report period ending 30 June 2021.

The Group is in the process of assessing the accounting for upfront configuration and customisation costs incurred in system implementations, and the on-going costs of Software as a Service (SaaS) arrangements, in response to the agenda decisions published by the IFRIC clarifying its interpretation of how current accounting standards apply to these types of arrangements.

As at 30 June 2021, a carrying amount of $1.2 million has been recognised as property, plant and equipment in respect of configuration and customisation costs incurred in implementing SaaS arrangements. Due to the complexity of historical SaaS projects, the Group is still in the process of obtaining the required information to analyse the impact of the Group’s change in accounting policy in respect of these SaaS arrangements. The Group expects it is likely that the analysis will be completed over the coming months and the restatement, following the change in accounting policy, will be presented in the Interim report for the half-year period ending 31 December 2021.

There are other standards, amendments and interpretations which have been approved by the External Reporting Board (XRB) but are not yet effective. The Group expects to adopt these other standards when they become mandatory. None are expected to materially impact the Group’s financial statements although may result in disclosure changes.

24 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

1. GENERAL INFORMATION (CONTINUED)

COVID-19

The effects of Covid-19 continue to have an impact on the financial performance on Delegat’s business, primarily associated with the global supply chain disruption and getting inventory to customers. Lockdowns, and social distancing requirements have limited field sales activities and significantly reduced sales in on-premise channels. In FY21 these negative impacts were partially offset by certain in-market operating expenses that were not able to be incurred.

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial liabilities comprise interest-bearing loans and borrowings, lease liabilities, and trade payables and accruals. The main purpose of these financial liabilities is to raise funding for the Group’s ongoing operations. The Group also has financial assets such as trade and other receivables, and cash and cash equivalents, which arise directly from its operations.

The Group is counterparty to derivative financial instruments, principally being foreign currency forward exchange contracts and options, and interest rate swaps. The purpose of entering into foreign currency forward exchange contracts and options is to manage currency risk primarily arising from foreign denominated trade receivables. Interest rate swaps are entered into with the aim of mitigating interest rate risk to movements on floating rate debt facilities.

The main risks arising from the Group’s financial instruments are foreign currency risk, interest rate risk, credit risk and liquidity risk. Each of the main operational risks are reviewed by the Treasury Management Committee (TMC) and their recommendations are provided to the Board of Directors. The composition of the TMC includes the Chief Financial Officer, Group Financial Controller, Group Financial Planning Manager and Independent Treasury Advisors. The Board reviews and agrees policies for managing each of these risks as summarised below. Board approval is required for any movement outside policy.

FOREIGN CURRENCY RISK

The net assets employed through subsidiary companies based overseas exposes the Group to foreign currency risk as a result of changes in the GBP/NZD, AUD/NZD, USD/NZD, EUR/NZD, CAD/NZD, SGD/NZD, JPY/NZD, HKD/NZD and CNY/NZD exchange rates. The Group also has foreign currency risk resulting from sales of product in a currency which is other than that of the New Zealand Dollar. Profits from each export region are repatriated and reported in New Zealand Dollars and the Group is exposed to changes in foreign exchange rates.

To minimise foreign currency risk, the Group enters into forward exchange contracts and options for foreign denominated sales at levels which are considered to be highly probable. The Group attempts to maintain foreign currency cover of between 75% to 100% of highly probable sales in one to three months, 50% to 75% for highly probable sales in four to six months, 25% to 50% for highly probable sales in seven to 12 months, 0% to 50% for sales between 13 to 18 months and between 0% to 25% for sales thereafter. The Group has the option of increasing foreign exchange cover to 100% for any time period upon approval by the Board of Directors.

When the Group is exposed to foreign currency risk as a result of being contractually committed to purchase capital items from an overseas supplier and such expenditure is expected to exceed $200,000, the Group’s policy is to ensure the foreign currency exposure is covered in full. Any capital expenditure below $200,000 is to be covered at the discretion of the TMC, based on such factors as timing for payment and expected volatility of currency markets. It is the Group’s policy that in no instance is trading for speculative purposes permitted.

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 25

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

At 30 June 2021, had the New Zealand Dollar (NZD) moved as illustrated in the following table with all other variables held constant, post-tax profit and equity would have been affected as follows:

	IMPACT ON 2021	REPORTED	IMPACT ON 2020 REPORTED	IMPACT ON 2020 REPORTED
	Post-Tax	Equity	Post-Tax	Equity
	Profits		Profits
*Group*	$000 ~~Increase/~~	$000 ~~Increase/~~	$000 ~~Increase/~~	$000 ~~Increase/~~
	~~(decrease)~~	~~(decrease)~~	~~(decrease)~~	~~(decrease)~~

NZD/USD +5%	1,529	1,529	1,292	1,292
NZD/USD -5%	(1,733)	(1,733)	(1,307)	(1,307)
NZD/GBP +5%	1,599	1,599	1,494	1,494
NZD/GBP -5%	(1,957)	(1,957)	(1,175)	(1,175)
NZD/AUD +5%	400	(681)	546	(530)
NZD/AUD -5%	(482)	712	(751)	439
NZD/CAD +5%	390	390	168	168
NZD/CAD -5%	(577)	(577)	(197)	(197)
NZD/EUR +5%	(52)	(52)	(39)	(39)
NZD/EUR -5%	58	58	43	43

The above table calculates the impact of a change in foreign exchange rates on closing equity and post-tax profits of the Group, as a result of the Group being counterparty to transactions which are foreign currency denominated. Foreign currency denominated balances include trade and other receivables, trade payables and accruals, loans and borrowings, cash on hand, and unsettled foreign exchange contracts that exist at balance sheet date. The net foreign currency exposure is determined in aggregate and the impact on post-tax profits determined as a result of a +/- 5% movement in foreign exchange rates. A +5% movement reflects the strengthening of the NZD relative to the other currency, whereas a -5% movement reflects the weakening of the NZD relative to the other currency.

The impact upon the Group’s equity balance is derived through determining the impact on post-tax profits as noted above.

26 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

HEDGE OF NET INVESTMENT IN FOREIGN OPERATION

==> picture [44 x 88] intentionally omitted <==

For hedges of a net investment in a foreign operation, the effective portion of the gain or loss on the hedging instrument is recognised in the statement of other comprehensive income and accumulated in the foreign currency translation reserve, while any ineffective portion is recognised immediately in the statement of financial performance. On disposal of the foreign operation, the cumulative amount of any such gains or losses accumulated within equity is transferred to the statement of financial performance.

The net assets employed in Barossa Valley Estate Pty Limited (BVE) exposes the Group to foreign currency risk as a result of changes in the AUD/NZD exchange rate.

The foreign currency movement on translation of the net assets of BVE is included in the statement of other comprehensive income. Since the acquisition of BVE the Group has maintained a portion of their external borrowings in AUD to mitigate this risk. The foreign exchange movement on these external borrowings in the absence of hedge accounting is included in the statement of financial performance.

External borrowings of A$29,350,000 have been designated as a hedge of the net investment in BVE. Gains or losses on the retranslation of this borrowing are transferred to the statement of other comprehensive income to offset any gains or losses on translation of the net assets of BVE. There is no hedge ineffectiveness in the year ended 30 June 2021.

INTEREST RATE RISK

The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term and short-term debt obligations with interest payable based on floating rates of interest. Interest rate risk is monitored by the TMC on an ongoing basis. The recommendation by the TMC to enter into fixed or variable rate debt facilities and decisions to retire existing debt instruments is made after consideration of the economic indicators impacting upon the overnight cash rate, which influences the rates of interest charged by financial institutions. All funding facilities recommended by the TMC must be approved by the Board of Directors.

The Group manages interest rate risk through maintaining a mix of debt instruments having variable and fixed interest rates. The Group’s policy is to maintain a level of fixed debt facilities between 40% to 100% of core debt for a period of one year, between 30% to 80% of projected core debt for periods of one to three years, and between 0% to 60% of projected core debt facilities for three to five years.

The Group also manages interest rate risk through being counterparty to a series of interest rate swaps. The Group agrees to settle or has the option to exchange, at specified dates, the difference between fixed and variable rate interest amounts calculated by reference to an agreed upon notional principal amount. These are discussed in Note 9: Derivative Financial Instruments.

The table below demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, on the Group’s post-tax profits and equity:

	IMPACT ON 2021	REPORTED	IMPACT ON 2020	REPORTED
	Post-Tax	Equity	Post-Tax	Equity
	Profits		Profits
*Group*	$000	$000	$000	$000

2.00% Increase – 200 basis points
(2020: 2.00% Increase – 200 basis points)	1,169	1,169	3,012	3,012
0.25% Decrease – 25 basis points
(2020: 0.25% Decrease – 25 basis points)	(146)	(146)	(377)	(377)

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 27

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

The key assumptions which impact upon the values presented in the above table are the following:

Cash and cash equivalents include deposits on call which are at floating interest rates. The estimated impact upon interest revenues from these sources is based upon amounts held on deposit remaining at consistent levels as reported at the balance sheet date. For foreign denominated deposits, the impact on foreign exchange is based on the conversion rate existing at balance sheet date.
Account balances that are trade receivables or trade payables are generally on 30 to 90 day terms and are noninterest bearing and are not subject to interest rate risk.
The impact upon the fair value of the interest rate swaps is based upon the differential in rates between the Group paying a fixed rate of interest and receiving the floating New Zealand Bank Bill Rate (BKBM) multiplied by the nominal amount under the swap agreement up until maturity.
Interest payable on bank debt is based upon the BKBM/BBSY, plus a margin. The margin is dependent upon the Group achieving certain financial covenants and the margin ranges from 1.02% to 1.50%. The analysis assumes that the margin and principal are held constant at the same rate as at the balance sheet date with the sensitivity calculating the effect on interest expense of movements in the BKBM/BBSY rate. The analysis excludes any future interest that would be capitalised as part of long-term assets.
Included in the above table is the change in fair value of interest rate swaps, which results from changes in the floating interest rate.

CREDIT RISK

The Group trades with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. Receivable balances are monitored on an ongoing basis. The maximum exposure to the carrying amount of receivable balances is disclosed in Note 11. The Group does not have any significant concentrations of credit risk.

LIQUIDITY RISK

Liquidity risk is the risk that an unforeseen event or miscalculation in the required liquidity level may lead to the Group being unable to meet its day to day funding obligations. To minimise liquidity risk, the Group’s policy is to maintain committed funding facilities at a minimum of 105% of the projected peak debt level over the next 12 months (excluding the cash requirements for any business combinations).

A General Security Agreement exists in favour of Westpac New Zealand Limited, Westpac Banking Corporation, Bank of New Zealand Limited, China Construction Bank (New Zealand) Limited, and Hongkong and Shanghai Banking Corporation Limited to secure amounts loaned to the Group. The General Security Agreement covers the existing and future assets of Delegat Group Limited, Delegat Limited, Delegat Australia Pty Limited, and Barossa Valley Estate Pty Limited. The amount of the guarantee in respect of the banking facilities is not included in the above table and is the lower value of the net assets of the Group and the aggregate of the loans advanced at balance date. Loan facilities are disclosed in Note 10.

The table below presents all contractual payments which the Group is legally obliged to make and includes all future interest payments on interest-bearing facilities. The interest cost has been estimated by maintaining the current principal balance and interest rates that exist at balance sheet date. The table also includes the New Zealand Dollar equivalent for the foreign currency amounts, which are to be delivered to fulfil obligations under foreign currency contracts.

28 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

==> picture [487 x 53] intentionally omitted <==

----- Start of picture text -----

Facility Drawn at < 1 year 1 to 2 years > 2 years
Facility Type Limit Balance Sheet
30 June 2021 Date
$000 $000 $000 $000 $000
----- End of picture text -----

Working Capital facility	48,000	23,676	363	23,706	–
Term facility (multi-currency)	220,000	199,784	2,717	200,007	–
Headroom facility	20,000	–	–	–	–
Term facility (AUD)	42,942	34,890	391	34,922	–
Lease liability	N/A	98,703	10,492	10,086	145,617
Low value asset leases	N/A	N/A	5,559	3,799	4,279
Derivative financial instruments	N/A	N/A	122,223	7,552	395
Trade payables and accruals	N/A	27,186	27,186	–	–
Financial guarantee contracts	N/A	N/A	143	–	–
As at 30 June 2021	330,942	384,239	169,074	280,072	150,291

Included in the table above are financial guarantees which are presented at their highest possible amount that can be called at balance date. For each individual guarantee, if the obligation at balance date is lower than the maximum amount callable under the guarantee then the lower value has been included. The guarantees can be called in favour of the beneficiary if certain acts of non-performance occur. The Directors consider the likelihood of each financial guarantee being called remote.

==> picture [487 x 53] intentionally omitted <==

----- Start of picture text -----

Facility Drawn at < 1 year 1 to 2 years > 2 years
Facility Type Limit Balance Sheet
30 June 2020 Date
$000 $000 $000 $000 $000
----- End of picture text -----

Working Capital facility	48,000	–	–	–	–
Term facility (multi-currency)	220,000	220,196	2,881	2,881	220,432
Headroom facility	20,000	–	–	–	–
Term facility (AUD)	42,794	34,771	410	410	34,804
Lease liability	N/A	84,062	9,990	8,959	133,437
Low value asset leases	N/A	N/A	5,889	4,503	3,937
Derivative financial instruments	N/A	N/A	100,430	7,078	2,889
Trade payables and accruals	N/A	27,286	27,286	–	–
Financial guarantee contracts	N/A	N/A	186	–	–
As at 30 June 2020	330,794	366,315	147,072	23,831	395,499

All of the above facilities have a floating rate of interest which is tied to the New Zealand BKBM for NZD facility/ Australian BBSY for AUD facility plus margin. At balance sheet date the Group has interest rate swaps that cover $140,258,000 (2020: $137,620,000) of the principal balance drawn at balance sheet date. Refer to Note 9.

The Group maintains credit facilities at a level sufficient to fund the Group’s working capital during the period between cash expenditure and cash inflow.

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 29

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

SUMMARY OF FINANCIAL INSTRUMENTS HELD

At the balance sheet date the Group reports the following categories of financial instruments:

	2021	2020
	$000	$000

Financial Assets
Financial assets at amortised cost	51,102	55,222
Financial assets at fair value through profit and loss	271	3,687
	51,373	58,909
Financial Liabilities
Financial liabilities at amortised cost	378,056	359,627
Financial liabilities at fair value through profit or loss	4,469	10,549
	382,525	370,176

The Group does not have any financial assets or liabilities that are classified as fair value through other comprehensive income (FVOCI).

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of financial instruments is presented in the previous table. For financial instruments measured at fair value, further disclosure is required that allocates the fair values into a measurement hierarchy. The following principles have been applied in classifying these instruments:

Level 1 – the fair value is calculated using quoted prices in active markets;

Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices);
Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data.

The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised below:

	Level 1	Level 2	Level 3	Total
*30 June 2021*	$000	$000	$000	$000

Financial Assets
Foreign currency forward exchange contracts	–	271	–	271
	–	271	–	271
Financial Liabilities
Foreign currency forward exchange option contracts	–	382	–	382
Interest rate swap contracts	–	4,087	–	4,087
	–	4,469	–	4,469

30 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

The fair value of financial instruments held at balance date that are not traded on an active market include foreign currency forward exchange contracts and options, and net settled interest rate swap contracts. The fair values are derived through valuation techniques that maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs come from observable market data the instrument is included in Level 2 of the hierarchy.

	Level 1	Level 2	Level 3	Total
*30 June 2020*	$000	$000	$000	$000

Financial Assets
Foreign currency forward exchange option contracts	–	2,052	–	2,052
Foreign currency forward exchange contracts	–	1,635	–	1,635
	–	3,687	–	3,687
Financial Liabilities
Interest rate swap contracts	–	10,549	–	10,549
	–	10,549	–	10,549

FINANCIAL RISK ASSOCIATED TO BEARER PLANTS

The Group is exposed to financial risks in respect of agricultural activities. The agricultural activities of the Group consist of the management of vineyards to produce grapes for use in the production of wine. The primary risk borne by the Group is caused by the length of time between when cash is expended on the purchase or planting and maintenance of grape vines and on harvesting grapes and the ultimate realisation of proceeds from the sale of finished product (wine). The Group takes reasonable measures to ensure that the current year’s harvest is not affected by disease, drought, frost, or other factors that may have a negative effect upon yield and quality. These measures include consultation with experts in viticulture, frost protection measures, and ensuring that each vineyard is managed according to a specifically developed Vineyard Management Calendar.

CAPITAL MANAGEMENT

When managing capital, management’s objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders of the business. The ultimate aim is to maintain a capital structure which provides flexibility to enable future growth of the Group while ensuring the lowest cost of capital is available to the Group.

Management reviews the capital structure of the Group as a result of changes in market conditions which impact upon interest and foreign exchange rates and may adjust the capital structure to take advantage of these changes. Management has no current plans to issue further shares on the market but is intent on growing the business which will require future funding.

The Group is subject to a series of bank covenants over its Senior Debt facilities. These are discussed in Note 10.

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 31

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

3. SEGMENTAL REPORTING

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An operating segment is a reportable segment if the segment engages in business activities in which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Group’s Chief Operating Decision Maker and for which discrete financial information is available.

The Group reviews its operational performance based upon the management and the geographic areas in which their customers are based. Financial information which is available to management in order to assess segment performance and investment opportunities is presented on the same basis. In accordance with NZ IFRS 8: Operating Segments this forms the basis of presentation for Segment Reporting and is in the format adopted below:

Delegat Limited (Delegat) is party to vineyard leases and has interests in freehold land and winery infrastructure which allows the company to grow, harvest and make finished wine to be marketed, distributed and sold into the Super Premium wine markets. Delegat sells and markets its product through a combination of subsidiary companies based overseas or to customers and distributors directly in the New Zealand, Canadian, Asian and Pacific Island markets.
Delegat Australia Pty Limited, Delegat Europe Limited and Delegat USA, Inc. act as distributors and assist in the marketing of product in their respective geographic regions. Wines are sold all year round to all regions and the Group considers there is no significant variations in revenues throughout the year.

The Group implements appropriate transfer pricing regimes within the operating segments on an arm’s length basis in a manner similar to transactions with third parties.

Management monitors the operating results of its business units separately for the purpose of making resource allocations and performance assessments. Segment performance is evaluated based on operating profit or loss, which may be measured differently from operating profit or loss in the consolidated financial statements as segment reporting is based upon internal management reports. The main differences are a result of some deferred tax balances being recognised upon consolidation not being allocated to individual subsidiaries. Also inter-company stock margin eliminations are managed on a group basis and are not allocated to operating segments.

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REVENUE

Revenue is recognised when the Group satisfies its performance obligation to the customer. Satisfaction of a performance obligation occurs when the Group has transferred a promised good to the customer and when the customer obtains control of that good. The following specific recognition criteria have been applied to each individual classification of revenue:

i) Sale of Goods

The primary source of revenue earned by the Group is through providing wine to third party retailers and distributors. Revenue is recognised when control of the wine has passed to the buyer and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Control is considered passed to the buyer at the time of delivery of goods to the customer.

ii) Interest Revenue

Revenue is recognised as interest accrues using the effective interest rate method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

32 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

3. SEGMENTAL REPORTING ( C O N T I N U E D )

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REVENUE

Sales are often made with volume discounts, other rebates and various other payments to customers for promotional support. For volume discounts and other rebates not invoiced at the reporting date, these are estimated based on agreements with customers and estimated depletions during the period. Other payments to customers for promotional support include listing fees, mailer fees and other incentives. For expenses that have not been invoiced at the reporting date, these are estimated based on agreements with customers and estimated achievement of various targets by the customer. At 30 June 2021 the Group has recognised accruals for all of these expenses of $18.1 million (2020: $22.4 million). The majority of these amounts will be settled within the six months following balance date.

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----- Start of picture text -----

Year ended Delegat Delegat Delegat Delegat Other Eliminations Year Ended
30 June 2021 Limited Australia Europe USA, Inc. Segments [10] and 30 June
Pty Ltd Limited Adjustments [11] 2021
$000 $000 $000 $000 $000 $000 $000
----- End of picture text -----

Operating income
External sales2,8	72,343	53,683	97,139	142,183	9,489	(72,212)	302,625
Internal sales	258,933	–	–	–	5,335	(264,268)	–
Unrealised foreign
exchange (loss)/gain	(7)	–	218	–	1	(145)	67
Fair value gain on
derivative instruments	2,664	–	–	–	–	–	2,664
Dividend revenue	3,843	–	–	–	10,552	(14,377)	18
Interest revenue	–	–	–	–	2	–	2
Total segment revenues1	337,776	53,683	97,357	142,183	25,379	(351,002)	305,376
Operating expenses
Interest expense3	8,911	45	4	78	739	–	9,777
Depreciation4	19,819	601	171	491	1,916	–	22,998
Income tax expense5	20,707	472	830	835	116	405	23,365
Segment profit/(loss)	57,306	1,094	3,540	2,643	10,922	(13,336)	62,169
Assets
Segment assets6	827,292	12,429	20,175	21,030	82,191	(78,517)	884,600
Capital expenditure7	60,771	23	–	–	931	–	61,725
Segment liabilities	404,196	6,253	9,537	4,248	40,662	(34,718)	430,178

Refer to footnotes on page 48

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 33

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

3. SEGMENTAL REPORTING ( C O N T I N U E D )

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----- Start of picture text -----

Year ended Delegat Delegat Delegat Delegat Other Eliminations Year Ended
30 June 2020 Limited Australia Europe USA, Inc. Segments [10] and 30 June
Restated Pty Ltd Limited Adjustments [11] 2020
$000 $000 $000 $000 $000 $000 $000
----- End of picture text -----*

Operating income
External sales2,9	65,047	67,202	99,607	143,346	6,630	(79,028)	302,804
Internal sales	271,867	–	–	–	7,533	(279,400)	–
Fair value gain on derivative
financial instruments	1,331	–	–	–	–	–	1,331
Dividend revenue	2	–	–	–	8	–	10
Interest revenue	13	1	–	22	–	–	36
Total segment revenues1	338,260	67,203	99,607	143,368	14,171	(358,428)	304,181
Operating expenses
Interest expense3	9,614	57	6	105	1,025	–	10,807
Depreciation4	18,411	597	183	549	1,889	–	21,629
Income tax expense5	18,963	593	851	868	89	41	21,405
Segment profit	57,545	1,366	3,631	2,601	182	102	65,427
Assets
Segment assets6	767,299	20,941	20,289	34,994	87,439	(103,561)	827,401
Capital expenditure7	27,681	266	5	–	740	–	28,692
Segment liabilities	401,432	5,181	9,653	19,568	39,784	(58,723)	416,895

1. Intersegment revenues are eliminated on consolidation. Intercompany profit margins are also eliminated.

2. External sales revenue includes various payments to customers for volume discounts, rebates and other promotional support. For volume discounts, rebates and other promotional support not invoiced at 30 June 2020, the Group recognised accruals of $22,390,000 (30 June 2019: $22,712,000). During the year, $2,577,000 of these accruals have been released (2020: $1,373,000).

3. Interest expense is net of any interest capitalised to long-term assets and inventory. During the year, $1,325,000 (2020: $1,460,000) was capitalised to long-term assets. During the year, $5,254,000 (2020: $5,442,000) was capitalised to inventory.

4. Depreciation expense presented above is gross of $18,774,000 (2020: $18,224,000), which has been included within inventory.

5. Segment income tax expense does not include the deferred tax impacts of temporary differences arising from intercompany stock margin eliminations as this is managed on a group level.

6. Segment assets include the value of investments and loan balances for subsidiaries which reside in Delegat Limited, however do not include the effects of stock margin eliminations for stock on hand in subsidiaries.

7. Capital expenditure consists of additions of property, plant and equipment inclusive of capitalised interest. Capital expenditure is included within each of the reported segment assets noted above.

8. During the 2021 financial year, Delegat USA, Inc. had a single customer which comprised 10% or more of group sales amounting to $70,118,000.

9. During the 2020 financial year, Delegat USA, Inc. had a single customer which comprised 10% or more of group sales amounting to $65,556,000.

10. Other segments’ assets include non-current assets of Barossa Valley Estate Pty Limited of $47,723,000 (2020: $48,539,000) which are located in Australia.

11. The eliminations and adjustments of segment profit, assets and liabilities relate to intercompany transactions and balances which are eliminated on consolidation.

*The financial statements for the year ended 30 June 2020 have been restated for growing costs under NZ IAS 41: Agriculture. Refer to Note 1 of the financial statements.

34 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

4. EXPENSES

Expenses by function have been categorised as follows:

	Notes	2021	2020
		$000	$000
			~~Restated*~~

Cost of sales		159,118	150,436
Selling, marketing and promotion expenses		36,016	39,884
Corporate governance expenses		991	941
Administration expenses		13,940	15,281
		210,065	206,542
Specific components of the above expenses include:
Directors’ fees – Delegat Group Limited		332	320
Directors’ fees – Overseas subsidiaries		52	50
Unrealised foreign exchange loss		-	853
Depreciation1	14, 16	22,998	21,629
Wages and salaries2		44,279	44,487
Defined contribution pension plans2		1,622	1,603
Termination benefits paid2		550	274
Auditor Remuneration3,4
Assurance services
Audit of the financial statements		286	214
Non-assurance services
Tax compliance		42	41
Total remuneration		328	255

1. The depreciation figure presented above represents the gross depreciation charge for the year. Depreciation is recorded in the business function to which the asset relates. Depreciation incurred on assets directly associated with winemaking and viticulture of $18,774,000 (2020: $18,224,000) is included within the cost of inventories and expensed as a cost of sales when product is sold.

Depreciation on vineyard development commences when the vineyard is considered to be in commercial production, which is generally when the vineyard has produced approximately 60% of the expected yield at full production.

2. The employee benefit figures above represent the gross employee benefits expense for the year. Included within inventory is remuneration paid to employees directly associated with winemaking, bottling and packaging. During the year, $9,837,000 (2020: $9,414,000) of employee benefits were included within inventory. These costs are included within inventory until the stock to which the expenditure relates is sold.

3. The auditor of Delegat Group Limited is Deloitte (2020: Ernst & Young). Amounts received, or due and receivable, by Deloitte (2020: Ernst & Young) are as disclosed above.

4. During the year, the Group also paid $5,000 (2020: $4,000) to SBA Stone Forest CPA Co. Limited for the audit of the local financial statements of Delegat (Shanghai) Trading Co. Limited.

*The financial statements for the year ended 30 June 2020 have been restated for growing costs under NZ IAS 41: Agriculture. Refer to Note 1 of the financial statements.

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 35

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

5. EARNINGS PER SHARE

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Basic earnings per share is calculated as Group profit after income tax attributable to ordinary shareholders of the Parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares on issue.

Diluted earnings per share is calculated as Group profit after income tax attributable to ordinary shareholders of the Parent adjusted for:

costs of servicing equity (other than dividends) and preference share dividends;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses;
other non-discretionary changes in revenues and expenses during the period that would result from the dilution of potential ordinary shares;

divided by the weighted average number of ordinary shares and dilutive potential ordinary shares.

The following reflects the earnings used in the calculation of the basic and fully diluted earnings per share:

	2021	2020
		~~Restated*~~

a) Earnings Used in Calculating Earnings per Share
Profit for the year – basic and fully diluted ($000)	62,169	65,427
b) Weighted Average Number of Shares
Weighted average number of shares – basic and fully diluted (000s)	101,130	101,130
c) Reported Earnings per Share on Statement of Financial Performance
(expressed as cents per share)
Basic and fully diluted earnings per share	61.47	64.70

*The financial statements for the year ended 30 June 2020 have been restated for growing costs under NZ IAS 41: Agriculture. Refer to Note 1 of the financial statements.

36 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

6. SHARE CAPITAL

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Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds.

	2021	2020
	$000	$000

Balance at beginning of the year	49,815	49,815
Balance at end of the year	49,815	49,815
a) Movement in the Number of Ordinary Shares on Issue	Shares Held
	000s	000s

Balance at beginning of the year	101,130	101,130
Balance at end of the year	101,130	101,130

All ordinary shares have equal voting rights and share equally in dividends and surplus on winding up.

b) Nature and Purpose of Reserves

Foreign Currency Translation Reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. During the year, equity decreased by $958,000 upon the translation of foreign subsidiaries (2020: $1,497,000 increase).

7. DIVIDENDS PAID AND PROPOSED

a) Recognised Amounts

Dividends that were declared and paid on ordinary shares during the year amounted to $17,217,000 (2020: $17,215,000) equating to 17.0 cents per share (2020: 17.0 cents per share).

b) Unrecognised Amounts

After the balance sheet date, dividends of 20.0 cents per share were approved by the Board of Directors. These amounts are not recognised in these financial statements as the declaration date was subsequent to year-end.

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 37

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

8. TRADE PAYABLES AND ACCRUALS

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Trade payables are initially recognised at fair value and then carried at amortised cost, and due to their short-term nature, they are not discounted. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services.

Provisions and accruals are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of economic resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Provisions and accruals are measured as the present value of management’s best estimate of the expenditure required to settle the present value of the obligation at the balance sheet date. If the effect of the time value of money is material, provisions and accruals are discounted using a pre-tax rate that reflects the time value of money and the risks specific to the liability. The increase in the provision or accruals resulting from the passage of time is recognised as a finance cost.

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulated sick leave expected to be settled within 12 months of the reporting date, are recognised in respect of the employee’s services up to the reporting date. They are measured as the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and is measured at the rates paid or payable.

The Group makes regular contributions to various defined contribution pension plans. Included within the statement of financial performance are amounts paid and payable by the Group into these pension plans, net of any related tax rebates. The Group does not make available or make contributions to any defined benefit superannuation plans.

	2021	2020
	$000	$000

Trade payables	15,281	13,416
Employee entitlements and leave benefits	5,834	6,017
Goods and services tax	1,712	593
Accrued expenses	6,071	7,853
	28,898	27,879

Trade payables are unsecured, non-interest bearing and are generally settled on 30 to 60 day terms. The carrying amount disclosed above is a reasonable approximation of fair value.

38 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

9. DERIVATIVE FINANCIAL INSTRUMENTS

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The Group uses derivative financial instruments such as forward currency contracts and options to economically hedge its risks associated with foreign currency fluctuations and interest rate swaps to manage interest rate risk. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into, and are subsequently remeasured to fair value at balance date. Any gains or losses arising from changes in the fair value of derivatives are taken directly to the statement of financial performance. The fair value of forward exchange contracts and options is determined by reference to current forward exchange rates for contracts with similar maturity profiles. The fair value of interest rate swaps is determined by reference to market inputs for similar instruments.

The Group has the following derivative financial instruments outstanding at the balance sheet date:

a) Foreign Currency Forward Exchange Contracts and Options

i) Forward Exchange Contracts

i) Forward Exchange Contracts
	AVERAGE CONTRACTED RATE		NOTIONAL VALUE
	2021	2020	2021	2020
*Selling Currency/Buying NZD*			$000	$000

Sell AUD, maturity 0 – 5 months	0.9230	0.9279	8,570	8,245
Sell USD, maturity 0 – 12 months	0.6902	0.5962	17,069	10,333
Sell GBP, maturity 0 – 9 months	0.5039	0.4912	17,107	12,218
Sell CAD, maturity 1 – 12 months	0.8800	0.8359	5,114	1,975
Sell SGD, maturity 0 – 8 months	0.9463	0.8481	447	539
Sell JPY, maturity 1 month	76.9700	64.0400	65	78
Sell HKD, maturity 0-6 months	5.4883	–	1,275	–
Sell EUR, maturity 0-3 months	0.5886	–	1,699	–
*Buying Currency/Selling NZD*
Buy EUR, maturity 0 months	0.5854	0.5729	700	454
Buy GBP	–	0.5130	–	439

The fair value of forward exchange contracts is determined by comparing the market rates for contracts with the same nominal amount, exercise price and length of time to maturity.

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 39

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

9. DERIVATIVE FINANCIAL INSTRUMENTS ( C O N T I N U E D )

a) Foreign Currency Forward Exchange Contracts and Options (continued)

ii) Forward Currency Options

ii) Forward Currency Options
	AVERAGE CONTRACTED RATE		NOTIONAL VALUE
	2021	2020	2021	2020
*Selling Currency/Buying NZD*			$000	$000

Sell USD, maturity 1 – 21 months	0.6877	0.6284	28,750	25,737
Sell GBP, maturity 1 – 12 months	0.5128	0.4914	28,285	24,095
Sell AUD, maturity 3 – 11 months	0.9289	0.9314	9,150	13,421
Sell CAD, maturity 3 – 12 months	0.8846	0.8491	9,611	7,362

==> picture [44 x 126] intentionally omitted <==

NZ IFRS 9: Financial Instruments requires that derivative financial instruments are classified as fair value through profit or loss for measurement purposes unless they are accounted for as hedges. Under NZ IAS 1: Presentation of Financial Statements, assets and liabilities under the fair value through profit or loss classification would generally be classified as current in the statement of financial position if held for trading. However, if the intent is not to actually trade the derivative financial instruments with maturities greater than one year but to hold them until maturity, then the derivative financial instruments are more appropriately classified as non-current. The amounts that are classified as non-current reflect the amounts that will not be settled in the next 12 months.

The classification of forward exchange contracts and forward currency options between current and non-current is based on whether the contracts will be settled in the next 12 months. The fair value of open contracts existing at balance sheet date are classified as follows:

	2021		2020
	Assets	Liabilities	Assets	Liabilities
	$000	$000	$000	$000

*Current*
Forward Exchange Contracts	271	–	1,635	–
Foreign Currency Options	–	314	1,983	–
	271	314	3,618	–
*Non-current*
Forward Exchange Contracts	–	–	–	–
Foreign Currency Options	–	68	69	–
	–	68	69	–

40 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

9. DERIVATIVE FINANCIAL INSTRUMENTS ( C O N T I N U E D )

b) Interest Rate Swaps

In order to protect against risks relating to increases in interest rates, the Group has entered into interest rate swap contracts under which the Group receives interest at variable rates and has agreed to pay interest at fixed rates for varying terms of principal and time durations.

At balance sheet date interest rate contracts are in place that cover a total of $100,000,000 (2020: $97,500,000) of current New Zealand Dollar denominated Group debt through 11 separate cap rate agreements, which range in maturity from one to four years, with a weighted average interest rate cap of 3.61% plus bank margin (2020: 3.75% plus bank margin). In addition, interest rate contracts are in place that cover a total of A$37,500,000 (2020: A$37,500,000) of current Australian Dollar denominated Group debt through eight separate cap rate agreements, which range in maturity from one to four years, with a weighted average interest rate cap of 2.66% plus bank margin (2020: 2.66% plus bank margin).

At balance sheet date the Group has one further separate cap rate agreement that covers NZ$25,000,000 (2020: NZ$45,000,000) which applies at a future date to cover future Group indebtedness. Maturity is five years, with an interest rate cap of 0.95% plus bank margin (2020: 0.95% and 3.1% plus bank margin). A further two cap rate agreements are in place that cover a total of A$10,000,000 (2020: A$10,000,000) which apply from various future dates, ranging in maturity from four to five years, with an interest rate cap of 0.8% plus bank margin (2020: 0.8% plus bank margin). The application date of these New Zealand Dollar and Australian Dollar denominated future cap rate agreements range between December 2021 and March 2023.

The total fair value of these contracts at balance sheet date is a liability of $4,086,000 (2020: $10,549,000 liability).

==> picture [44 x 49] intentionally omitted <==

The Group has elected not to apply hedge accounting to its derivative financial instruments and accordingly the instruments have been classified as fair value through profit and loss.

The classification between current and non-current is based on whether the contracts or portion of contracts will be settled within the next 12 months. The total fair value of these contracts at balance sheet date is classified as follows:

	2021		2020
	Assets	Liabilities	Assets	Liabilities
	$000	$000	$000	$000

*Current*
Interest Rate Swaps	–	2,565	–	4,649
	–	2,565	–	4,649
*Non-current*
Interest Rate Swaps	–	1,522	–	5,900
	–	1,522	–	5,900

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 41

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

10. INTEREST-BEARING LOANS AND BORROWINGS

a) Debt Facilities Existing at Balance Sheet Date

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Interest-bearing loans and borrowings are initially recognised at the fair value of the consideration received, less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Fees paid on the establishment of loan facilities are included as part of the carrying amount of the interestbearing loans and borrowings. Interest-bearing loans and borrowings are classified as current liabilities, unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after balance sheet date.

Borrowing costs are expensed as incurred, except when they are directly attributable to the acquisition or construction of a qualifying asset. When this is the case, they are capitalised as part of that asset. Once the asset is put into productive use, capitalisation of the borrowing costs ceases.

At the balance sheet date the following debt facilities have been drawn upon by the Group:

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----- Start of picture text -----

Maturity Effective Interest Rate 2021 2020
2021 2020 $000 $000
Non-Current Debt Obligations
Term facility (Multi-Currency) 30 July 2022 3.52% 3.29% 199,552 219,750
Term facility (AUD) 30 July 2022 1.12% 1.18% 34,845 34,684
Working capital facility 30 July 2022 1.53% N/A 23,625 (97)
Headroom facility 30 July 2022 N/A N/A (21) (41)
258,001 254,296
----- End of picture text -----

The carrying amount of the Group’s non-current interest-bearing loans and borrowings are the fair values at balance sheet date.

42 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

10. INTEREST-BEARING LOANS AND BORROWINGS ( C O N T I N U E D )

b) Terms and Conditions of Debt Facilities

i) Senior Debt Facilities

The Group has a syndicated Senior Debt facilities agreement with Westpac New Zealand Limited, Westpac Banking Corporation, Bank of New Zealand Limited (BNZ), China Construction Bank (New Zealand) Limited (CCB) and Hongkong and Shanghai Banking Corporation Limited (HSBC). With the syndicated facility a General Security Agreement has been put in place in favour of the banks over the existing and future assets of Delegat Group Limited, Delegat Limited, Delegat Australia Pty Limited and Barossa Valley Estate Pty Limited.

At balance sheet date the Working Capital facility, Term facility (Multi-Currency), Term facility (AUD), and Headroom facility collectively make up the syndicated Senior Debt Facilities of Delegat, which provide funding for the assets of the Group. The maximum limit of the Working Capital facility is NZ$48,000,000 (2020: NZ$48,000,000), Term facility (Multi-Currency) is NZ$220,000,000 (2020: NZ$220,000,000), Term facility (AUD) is A$40,000,000 (2020: A$40,000,000), and the Headroom facility is NZ$20,000,000 (2020: NZ$20,000,000). At balance sheet date NZ$72,592,000 (2020: NZ$75,828,000) is available for further drawdown on these facilities.

The Term facility (AUD) and a portion of the Term facility (Multi-Currency) are denominated in Australian Dollars (A$). The amount drawn down in foreign currency at the balance sheet date was A$61,850,000 (2020: A$61,850,000).

Interest on these facilities is based on the BKBM/BBSY plus margin. The facility agreement requires that certain banking covenants be met and requires the Group to maintain or a better specified EBITDA and fixed charges coverage ratios, and maintain or better a minimum adjusted equity balance. The Group must also maintain or better a specified total tangible asset backing. At year-end, and at measurement dates during the year, the covenants of the Senior Debt Facilities have been met.

ii) Other Facilities

Delegat also has available an overdraft limit of $1,000,000 (2020: $1,000,000). Interest charged on this facility is at the commercial lending rate (2020: commercial lending rate). At 30 June 2021 the commercial lending rate is 4.75% (2020: commercial lending rate 4.75%). No amount is drawn against this facility at balance sheet date.

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 43

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

11. TRADE AND OTHER RECEIVABLES

==> picture [44 x 197] intentionally omitted <==

On initial recognition, the Group’s trade receivables are recognised at their transaction price as defined in NZ IFRS 15: Revenue from Contracts with Customers. The Group’s trade receivable balances are generally short term and do not contain a significant financing component. They are subsequently measured at amortised cost using the effective interest method, less an allowance for expected future credit losses.

The Group applies the simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and sundry receivables if financial assets. Expected credit losses are measured by grouping trade receivables based on shared credit risk characteristics and the days past due. A provision matrix is then determined based on the historical credit loss rates for each group of customers, adjusted for any material expected changes to the future risk for that customer group.

Individual trade receivable balances which are known to be uncollectible are written off where the Group has no reasonable expectation of recovering the trade receivable balance.

	2021	2020
	$000	$000

Trade receivables	37,663	36,721
Prepayments and sundry receivables	4,496	3,746
Goods and services tax	1,838	1,321
	43,997	41,788

As at 30 June 2021 the ageing of trade receivables is as follows:

==> picture [487 x 123] intentionally omitted <==

----- Start of picture text -----

New Zealand Australia United United Canada Group
(including Kingdom States of
Ageing of receivables Asia Pacific) America
As at 30 June 2021 $000 $000 $000 $000 $000 $000
Current 2,747 9,696 13,677 6,573 4,158 36,851
1 to 30 days 10 - 95 293 398 796
31 to 60 days - - - 16 - 16
Total trade receivables 2,757 9,696 13,772 6,882 4,556 37,663
----- End of picture text -----

All amounts recognised as trade receivables are unsecured and the maximum credit risk is equivalent to the carrying values noted directly above. Trade receivables are non-interest bearing and generally settled on 30 to 90 day terms. Due to their short-term nature trade receivables are not discounted.

In determining the historical loss rates to be applied to these customer groups and ageing buckets, the Group has reviewed whether there were any bad debts written off over the past five years and has identified that these were $nil (2020: $nil). Accordingly the historical loss rates applied to each customer group at 30 June 2021 are 0% (2020: 0%).

Due to the short term nature of the Group’s trade receivables, the nature of the Group’s customer base, the Group’s experience over the past five years and other forward looking information, the historical loss rates have not been adjusted for any material expected future changes in credit risk.

44 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

12. INVENTORIES

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Inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. Costs of finished goods sold are assigned on a weighted average cost basis.

GRAPES

Included within the cost of inventory is the fair value of the grapes (agricultural produce) at the time the grapes are harvested. At the point of harvest, the harvest of grapes qualify as agricultural produce under NZ IAS 41: Agriculture and are recorded at fair value at that date. The fair value becomes the basis of cost when accounting for inventories.

Harvesting of the grape crop is ordinarily performed in late March or early April. Costs incurred in growing the grapes, including any applicable harvest costs, are initially allocated into the cost of inventory as part of the total costs to acquire and grow the agricultural produce. At the point of harvest, a fair value adjustment is made so that the cost per tonne is adjusted to fair value in accordance with NZ IAS 41: Agriculture and NZ IFRS 13: Fair Value Measurement. Any difference between cost and fair value is included within the statement of financial performance as cost of sales.

The fair value of grapes at the point of harvest is determined by reference to the market prices for each variety of grape grown in the local area and the market price paid to independent grape growers. Any difference between cost and fair value is included within the statement of financial performance as cost of sales.

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 45

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

12. INVENTORIES ( C O N T I N U E D )

	2021	2020
	$000	$000
		~~Restated*~~

Current vintage	85,790	88,395
Aged wine	67,331	58,329
Winery ingredients, packaging materials and other	6,861	6,116
	159,982	152,840

During the year, the Group harvested a total of 37,470 tonnes of grapes (2020: 38,129 tonnes) in New Zealand and Australia. Of this amount a total of 9,113 tonnes (2020: 11,054 tonnes) were purchased from independent third party growers. The fair value of agricultural produce from the Group’s owned and leased vineyards at the point of harvest was $50,785,000 (2020: $53,161,000). A fair value gain of $9,178,000 (2020 Restated*: $18,140,000) was recorded during the year and included within cost of sales. Included within cost of sales is a total of $168,296,000 (2020: $168,575,000) which represents costs expended in grape growing (inclusive of lease costs), procurement, delivery and materials.

13. BIOLOGICAL WORK IN PROGRESS

	2021	2020
	$000	$000 ~~Restated*~~

Growing costs relating to next harvest	12,080	12,693
	12,080	12,693

==> picture [44 x 61] intentionally omitted <==

As allowed under NZ IAS 41: Agriculture the vineyard costs in the period to 30 June have been recognised as work in progress for the next harvest and the Group has determined that cost is equal to fair value at this point of the growth cycle.

*The financial statements for the year ended 30 June 2020 have been restated for growing costs under NZ IAS 41: Agriculture. Refer to Note 1 of the financial statements.

46 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

14. PROPERTY, PLANT AND EQUIPMENT

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Property, plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Such costs include the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. The cost of purchased property, plant and equipment is the value of the consideration given to acquire the assets and the value of other directly attributable costs that have been incurred in bringing the assets to the location and condition necessary for their intended service.

The cost of self-constructed assets includes the cost of all materials used in the construction, direct labour on the project, lease costs and financing costs that are directly attributable to the project and an appropriate proportion of directly attributable variable and fixed overheads. Costs cease to be capitalised when the asset is ready for productive use. In respect of vineyard improvements, capitalisation of costs continues until the vineyards are ready for productive use, which is when the vineyard has produced approximately 60% of expected yield at full production, ordinarily a period of three years after the planting of vines.

Land and Land Improvement assets are measured at cost and are not subject to depreciation.

IMPAIRMENT

Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If an impairment trigger exists, the recoverable amount of the asset is determined, being the higher of an asset’s fair value, less costs to sell, and value in use. An impairment charge is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. For the purposes of assessing impairment, the recoverable amount is determined at the lowest level for which there are separately identifiable cash flows (cash-generating units).

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 47

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

14. PROPERTY, PLANT AND EQUIPMENT ( C O N T I N U E D )

==> picture [44 x 370] intentionally omitted <==

DEPRECIATION

Depreciation of property, plant and equipment, other than land and land improvements, which has an indefinite economic life and hence not depreciated, is charged on a straight-line basis so as to write off the assets to their expected residual value over their estimated useful lives. The estimated useful lives are as follows:

==> picture [246 x 48] intentionally omitted <==

----- Start of picture text -----

|||
|---|---|
|Buildings|10–50 years|
|Plant and Equipment|3–50 years|
|Vineyard Improvements|3–50 years|
|Bearer Plants|50 years|

----- End of picture text -----

The estimation of the useful lives of assets has been based on historical experience as well as lease terms. The condition of the assets is assessed at least once per year and considered against the remaining useful life. Adjustments to useful lives are made when considered necessary.

Depreciation on vineyard improvements commences when the vineyard is considered to be in commercial production, which is when the vineyard has produced approximately 60% of the expected yield at full production, ordinarily a period of three years after the planting of vines. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at the end of each financial year.

Capitalised assets on leased vineyards or office premises are depreciated over the shorter of the estimated useful life of the asset and the remaining lease term.

IMPAIRMENT

The Group assesses impairment of all assets at each reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. Management considers there are no indicators of impairment in the current year and the recoverable amount of the Group’s assets was not required to be determined.

a) Reconciliation of Carrying Amounts at Beginning and End of the Year

==> picture [487 x 54] intentionally omitted <==

----- Start of picture text -----

Year ended 30 June 2021 Freehold Land Vineyard Bearer Plants Buildings Plant and Capital Work in Total
and Land Improvements Equipment Progress
Improvements
$000 $000 $000 $000 $000 $000 $000
----- End of picture text -----

==> picture [487 x 161] intentionally omitted <==

----- Start of picture text -----

|||||||||
|---|---|---|---|---|---|---|---|
|Net book value at 1 July 2020|130,260|85,553|43,619|110,252|135,407|32,617|537,708|
|Additions/Transfers|25,538|12,948|6,015|7,243|11,351|(1,766)|61,329|
|Disposals|–|–|–|–|(45)|–|(45)|
|Foreign currency translation|24|56|10|35|11|2|138|
|Depreciation charge|–|(3,397)|(1,262)|(2,887)|(9,441)|–|(16,987)|
|Net book value at 30 June 2021|155,822|95,160|48,382|114,643|137,283|30,853|582,143|
|At cost|155,829|141,740|63,818|137,630|248,269|30,853|778,139|
|Accumulated depreciation and|
|impairment|(7)|(46,580)|(15,436)|(22,987)|(110,986)|– (195,996)|
|Net book value at 30 June 2021|155,822|95,160|48,382|114,643|137,283|30,853|582,143|

----- End of picture text -----

48 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

14. PROPERTY, PLANT AND EQUIPMENT ( C O N T I N U E D )

a) Reconciliation of Carrying Amounts at Beginning and End of the Year (continued)

==> picture [487 x 55] intentionally omitted <==

----- Start of picture text -----

Year ended 30 June 2020 Freehold Land Vineyard Bearer Plants Buildings Plant and Capital Work in Total
and Land Improvements Equipment Progress
Improvements
$000 $000 $000 $000 $000 $000 $000
----- End of picture text -----

Net book value at 1 July 2019	126,297	77,675	44,205	111,868	133,602	31,536	525,183
Additions/Transfers	3,800	10,805	565	929	11,140	1,072	28,311
Disposals	–	–	–	–	(34)	–	(34)
Foreign currency translation	163	361	68	239	185	9	1,025
Depreciation charge	–	(3,288)	(1,219)	(2,784)	(9,486)	–	(16,777)
Net book value at 30 June 2020	130,260	85,553	43,619	110,252	135,407	32,617	537,708
At cost	130,267	128,729	57,791	130,348	237,729	32,617	717,481
Accumulated depreciation and
impairment	(7)	(43,176)	(14,172)	(20,096)	(102,322)	–	(179,773)
Net book value at 30 June 2020	130,260	85,553	43,619	110,252	135,407	32,617	537,708

b) Other Items

During the year, no assets were transferred and classified as assets available for sale. The weighted average interest rate on interest capitalised during the year was 4.36% (2020: 4.68%).

Bearer plants consist of grapevines on company owned vineyards located in New Zealand and the Barossa Valley, Australia. At 30 June 2021 the Group has grapevines planted on 1,797 productive hectares of land (2020: 1,528 productive hectares) in New Zealand and 183 productive hectares (2020: 183 productive hectares) in Australia.

The net book value of vines on leased land where the Group does not have the beneficial ownership in the bearer plants is not reported above, as the risks and rewards incidental to owning the vines do not transfer to the Group. The Group is, however, party to leases of land on which bearer plants is owned by the Group (refer note 16). The net book value of these assets is reported, as the risk and rewards incidental to ownership are retained by the Group.

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 49

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

15. INTANGIBLE ASSETS

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Intangible assets acquired separately are measured on initial recognition at cost. The cost of the intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.

The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortised over their useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit (CGU) level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable; if not, the change in useful life from indefinite to finite is made on a prospective basis.

Intangible assets currently owned by the Group have been assessed as having indefinite useful lives and are therefore tested annually for impairment at the CGU level. The recoverable amount of the CGU’s assets are higher than the assets’ carrying value and therefore no impairment is required to be recognised.

Intangible assets currently owned by the Group consist of water rights in both New Zealand and Australia.

Barossa Valley Estate Pty Limited (BVE) owns water rights consisting of shares in Barossa Infrastructure Limited and associated infrastructure levies. These water rights grant BVE the right to a fixed number of units of water per share and were purchased by BVE to support their vineyard activities. BVE continues to have the right to use the water over an indefinite period and therefore the water rights are considered to have an indefinite useful life.

Delegat Limited (Delegat) owns water rights consisting of shares in Lower Waihopai Dam Limited. These water rights grant Delegat the right to a fixed number of units of water per share and were purchased by Delegat to support their vineyard activities. Delegat continues to have the right to use the water over an indefinite period and therefore the water rights are considered to have an indefinite useful life.

The movement in the value of intangible assets is summarised as follows:

	2021	2020
	$000	$000

Carrying value at beginning of the year	5,436	4,950
Purchases of intangible assets	395	421
Disposal of intangible assets	–	(40)
Foreign currency translation	18	105
Carrying value at end of the year	5,849	5,436

50 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

16. LEASES

==> picture [44 x 639] intentionally omitted <==

At the 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.

The Group applies a single recognition and measurement approach for all leases, except for leases of low-value assets. The Group applies the low-value assets recognition exemption for its barrel leases. Payments on the Group’s barrel leases are expensed on a straight line basis over the lease terms. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

RIGHT-OF-USE ASSETS

The Group recognises right-of-use assets at the commencement date of the lease. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date, less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets. The estimated useful lives of right-ofuse assets are determined on the same basis as those of property, plant and equipment.

LEASE LIABILITY

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. In calculating the present value of lease payments, the Group uses the interest rate implicit in the lease when readily determinable; if the implicit interest rate is not readily determinable the Group uses its incremental borrowing rate at the lease commencement date. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term or a change in the lease payments.

Right-of-use asset depreciation and lease liability interest that are directly attributable to bringing new vineyards to working condition for their intended use are capitalised up until the time the vineyards become commercially productive. The accumulated amount is then amortised over the remaining lease term.

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised. When the Group has the option to extend a lease, management uses its judgement to determine whether or not an option would be reasonably certain to be exercised. Management considers all facts and circumstances, including its past practice and any cost that will be incurred to change the asset if an option to extend is not taken, to help determine the lease term. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew.

To determine the value of the lease liability, the future lease payments are discounted using the interest rate implicit in the lease, otherwise the Group’s incremental borrowing rate is used. Implicit interest rates are present in most of the Group’s vineyard leases. The Group’s incremental borrowing rate is the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. The Group is required to revise the discount rate used if there is a change in the lease term, a change in the assessment of an option to purchase the underlying asset, a change in future lease payments resulting from a change in an index or a rate used to determine those payments, or where there is a lease modification that is not accounted for as a separate lease.

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 51

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

16. LEASES (CONTINUED)

RIGHT-OF-USE ASSETS

Leases held by the Group include long-term land leases, vineyard improvements and bearer plants, which allow the Group to access prime viticultural land in the Marlborough and Hawke’s Bay areas. The leases provide the Group the right of first refusal in the event that the land is put up for sale. Other leases include office building, car and equipment leases.

a) Reconciliation of Right-of-Use Assets at the Beginning and End of the Year

*Year ended 30 June 2021*	Freehold Land and Land Improvements $000	Freehold Land and Land Improvements $000	Vineyard Improvements $000	Vineyard Improvements $000	Bearer Plants $000	Buildings $000	Plant and Equipment $000	Total $000

Net book value at 1 July 2020		32,088		11,770	3,872	6,106	4,658	58,494
Additions/Transfers		324		300	95	18,042	378	19,139
Disposals		(95)		-	-	(45)	(9)	(149)
Foreign currency translation		-		-	-	(140)	2	(138)
Depreciation charge		(1,558)		(693)	(224)	(2,728)	(808)	(6,011)
Net book value at 30 June 2021		30,759		11,377	3,743	21,235	4,221	71,335
At cost		55,486		23,962	7,518	33,157	7,191	127,314
Accumulated depreciation		(24,727)		(12,585)	(3,775)	(11,922)	(2,970)	(55,979)
Net book value at 30 June 2021		30,759		11,377	3,743	21,235	4,221	71,335
*Year ended 30 June 2020*	Freehold Land and Land Improvements $000		Vineyard Improvements $000		Bearer Plants $000	Buildings $000	Plant and Equipment $000	Total $000

Net book value at 1 July 2019		33,278		12,094	3,980	6,744	5,011	61,107
Additions/Transfers		360		348	110	940	476	2,234
Disposals		–		–	–	(91)	(41)	(132)
Foreign currency translation		–		–	–	126	11	137
Depreciation charge		(1,550)		(672)	(218)	(1,613)	(799)	(4,852)
Net book value at 30 June 2020		32,088		11,770	3,872	6,106	4,658	58,494
At cost		55,256		23,662	7,423	18,018	7,028	111,387
Accumulated depreciation		(23,168)		(11,892)	(3,551)	(11,912)	(2,370)	(52,893)
Net book value at 30 June 2020		32,088		11,770	3,872	6,106	4,658	58,494

52 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

16. LEASES (CONTINUED)

LEASE LIABILITY

b) Reconciliation of Lease Liability at the Beginning and End of the Year

	2021	2020
	$000	$000

Balance at beginning of the year	84,062	86,429
Per Statement of Cash Flows:
– Interest Expense	5,770	5,649
– Principal Repayments	(9,949)	(10,222)
Additions/Transfers	19,139	2,241
Disposals	(155)	(192)
Foreign currency translation	(164)	157
Balance at end of the year	98,703	84,062
Current	4,840	4,538
Non-current	93,863	79,524
	98,703	84,062

The maturity analysis of lease liabilities is disclosed in Note 2.

c) Other Items

The Group had total cash outflows for leases of $15,849,000 (2020: $16,102,000); this includes an amount of $5,900,000 (2020: $5,880,000) in relation to leases of low-value assets. Low value asset lease expenses are expensed on a straight line basis over the lease terms.

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 53

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

17. INCOME TAX EXPENSE

==> picture [44 x 294] intentionally omitted <==

Current tax assets and liabilities for the current and prior periods are measured as the amount expected to be recovered from, or paid to, the taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the balance sheet date.

Deferred income tax is provided for all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all, or part of, the deferred income tax asset to be utilised.

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 the tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in the statement of financial performance.

Deferred tax assets and 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.

54 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

17. INCOME TAX EXPENSE (CONTINUED)

	2021	2020
	$000	$000 ~~Restated*~~

a) Numerical reconciliation between aggregate tax expense
in the statement of financial performance and tax expense
calculated per the statutory income tax rate
Accounting profit before tax	85,534	86,832
At the Group’s statutory income tax rate of 28% (2020: 28%)	23,950	24,313
Tax impact of the following items:
Adjustments in respect of income tax of prior years	(63)	(93)
Entertainment	56	179
Legal fees	26	40
Non-assessable income	(48)	(47)
Reinstatement of tax depreciation for buildings	–	(2,860)
Non-deductible depreciation on buildings acquired post May 2010	–	388
Tax on foreign income due to different tax rates	(556)	(515)
Income tax expense for the year	23,365	21,405
b) The major components of income tax expense are:
Income tax reported in the statement of financial performance
Estimated current period tax assessment	22,569	21,259
Adjustments in respect of income tax of prior years	(63)	(116)
Movements in the deferred income tax liability	859	262
Income tax expense for the year	23,365	21,405
Income tax reported in the statement of other comprehensive income
Net loss on hedge of net investment	(30)	(202)
Income tax credited to other comprehensive income	(30)	(202)

*The financial statements for the year ended 30 June 2020 have been restated for growing costs under NZ IAS 41: Agriculture. Refer to Note 1 of the financial statements.

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 55

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

17. INCOME TAX EXPENSE (CONTINUED)

	2021	2020
	$000	$000 ~~Restated*~~

c) Deferred income tax at balance sheet date relates to the following:
Capitalised interest	5,352	5,131
Capitalised leases	427	504
Accelerated depreciation of long-term assets	19,898	17,744
Leases	(7,651)	(7,123)
Fair value adjustments on biological produce	7,996	9,788
Excess of fair value on acquisition of bearer plants over tax values	8,682	8,682
Provisions	(750)	(906)
Stock profit eliminations	(907)	(1,312)
Tax losses carried forward	-	(152)
Derivative financial instruments	(1,175)	(1,921)
Net deferred tax liability	31,872	30,435
Balance at beginning of the year	30,435	30,157
On surplus for year	859	262
Adjustments in respect of income tax of prior years	557	–
Foreign currency translation	21	16
Balance at end of the year	31,872	30,435

There are no elements of deferred taxes which are reported within equity.

18. IMPUTATION CREDIT ACCOUNT

	2021	2020
	$000	$000

Balance at beginning of the year	84,386	72,297
Tax payments	19,902	18,431
Fully imputed dividend paid	(6,342)	(6,342)
Balance at end of the year	97,946	84,386

19. COMMITMENTS

The estimated capital expenditure contracted for at 30 June 2021 but not provided for is $18,261,000 (2020: $24,771,000).

*The financial statements for the year ended 30 June 2020 have been restated for growing costs under NZ IAS 41: Agriculture. Refer to Note 1 of the financial statements.

56 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

20. RELATED PARTIES

a) Investment in Subsidiaries

Investments in controlled entities are as follows:

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Name of Entity Principal Activity Country of Ownership Interest %
Incorporation 2021 2020
Delegat Limited Winemaking, Sales and New Zealand 100.00 100.00
Distribution
Delegat Canada Limited Brand Marketing Canada 100.00 100.00
Delegat Australia Pty Limited Sales and Distribution Australia 100.00 100.00
Delegat USA, Inc. Sales and Distribution United States of 100.00 100.00
America
Delegat Europe Limited Sales and Distribution United Kingdom 100.00 100.00
Delegat (Singapore) Pte. Limited Investment Holding Singapore 100.00 100.00
Company
Barossa Valley Estate Pty Limited Winemaking Australia 100.00 100.00
Delegat (Shanghai) Trading Co. Sales and Distribution China 100.00 100.00
Limited
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The parent company of all subsidiaries is Delegat Group Limited, except for Delegat Europe Limited and Barossa Valley Estate Pty Limited whose immediate parent company is Delegat Limited, and Delegat (Shanghai) Trading Co. Limited whose immediate parent company is Delegat (Singapore) Pte. Limited.

All subsidiaries have a 30 June balance date, except for Delegat (Shanghai) Trading Co. Limited which has a 31 December balance date as required by law in China.

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 57

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

20. RELATED PARTIES (CONTINUED)

b) Key Management Personnel

Details relating to key management personnel, including remuneration paid, are included within Note 21.

c) Related Parties by Virtue of Share Ownership

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The following Directors hold the following number of Shares in the Parent 2021 2020
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Delegat Share Protection Trust
(Jakov Delegat, Rosamari Delegat and Lord Trustee Limited – Trustees)	66,857,142	66,857,142
Robert Wilton (Retired 25 November 2020)	765,872	800,000
John Freeman (Resigned 31 March 2021)	–	11,000

The individuals above are considered related parties as a result of their shareholding or by virtue of being considered a member of key management. During the year, a total of $31,000 (2020: $75,000) was paid to Robert Wilton in his capacity as a Non-Executive Director. Rosamari Delegat received $75,000 (2020: $75,000) in her capacity as a Non-Executive Director during the year. Graeme Lord (Lord Trustee Limited) received $56,000 (2020: $nil) in his capacity as a Non-Executive Director up to 31 March 2021. Graeme Lord has not received any director fees since being appointed Acting Managing Director.

During the year, a total of $50,000 (2020: $100,000) was paid to Robert Wilton in his capacity as an independent consultant, under normal terms and conditions.

During the year, a total of $198,000 (2020: $nil) was paid to Seacliffe Consulting Limited. The payments made to Seacliffe Consulting Limited were made in Graeme Lord’s capacity as an independent consultant and under normal terms and conditions.

d) Transactions with Related Parties who have Significant Influence over Subsidiary Companies

During the year, Delegat Australia Pty Limited paid a total of $27,000 (2020: $26,000) to Yaroona Pty Limited. The payments made to Yaroona Pty Limited were made in Peter Taylor’s capacity as Company Director. Peter Taylor was considered to be a related party by virtue of his ability to significantly influence the financial and operating policies of a subsidiary company.

During the year, Barossa Valley Estate Pty Limited paid a total of $75,000 (2020: $41,000) to Range Road Estate Pty Limited, including directors’ fees of $21,000 (2020: $21,000). The remaining payments made to Range Road Estate Pty Limited were made in Alan Hoey’s capacity as an independent consultant and under normal terms and conditions. Alan Hoey was considered to be a related party by virtue of his ability to significantly influence the financial and operating policies of a subsidiary company.

During the year, Delegat Limited paid a total of $nil (2020: $19,000) to Range Road Estate Pty Limited. The payments made to Range Road Estate Pty Limited were made in Alan Hoey’s capacity as an independent consultant and under normal terms and conditions. Alan Hoey was considered to be a related party by virtue of his ability to significantly influence the financial and operating policies of a subsidiary company.

During the year, Delegat Limited paid a total of $4,000 (2020: $5,000) to Camelot Trust Pte. Limited, a company in which a Director of Delegat (Singapore) Pte. Limited has an interest. The payments made to Camelot Trust Pte. Limited are made in Anita Chew Peck Hwa’s capacity as Company Director.

58 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

21. KEY MANAGEMENT PERSONNEL

Compensation of Key Management Personnel

Included in the definition of related parties are Key Management Personnel having authority and responsibility for planning, directing and controlling the activities of the entity either directly or indirectly, including any Director. Management have assessed the composition of the Key Management and their compensation for the year ended 30 June is presented below:

	2021	2020
	$000	$000

Short-term employee benefits (including Directors’ fees)	8,708	8,261
Post-employment benefits (including defined contribution pension plan)	249	242
	8,957	8,503

22. EVENTS SUBSEQUENT TO BALANCE SHEET DATE

On 27 August 2021, the Directors of the Parent declared a fully imputed dividend of $20,226,000 (20.0 cents per Share) to be paid on 8 October 2021.

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 59

INDEPENDENT AUDITOR’S REPORT

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Independent Auditor’s Report

To the Shareholders of Delegat Group Limited Opinion We have audited the consolidated financial statements of Delegat Group Limited (the ‘Company’) and its subsidiaries (the ‘Group’), which comprise the consolidated statement of financial position as at 30 June 2021, and the consolidated statement of financial performance, statement of other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

	statement of financial position as at 30 June 2021, and the consolidated statement of financial performance, statement of other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.
	In our opinion, the accompanying consolidated financial statements, on pages 12
	to 59, present fairly, in all material respects, the consolidated financial position of
	the Group as at 30 June 2021, and its consolidated financial performance and cash
	flows for the year then ended in accordance with New Zealand Equivalents to
	International Financial Reporting Standards (‘NZ IFRS’) and International Financial
	Reporting Standards (‘IFRS’).
Basis for opinion	We conducted our audit in accordance with International Standards on Auditing
	(‘ISAs’) and International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). Our
	responsibilities under those standards are further described in the_Auditor’s_
	_Responsibilities for the Audit of the Consolidated Financial Statements_section of
	our report.
	We believe that the audit evidence we have obtained is sufficient and appropriate
	to provide a basis for our opinion.
	We are independent of the Company in accordance with Professional and Ethical
	Standard 1_International Code of Ethics for Assurance Practitioners (including_
	_International Independence Standards) (New Zealand)_issued by the New Zealand
	Auditing and Assurance Standards Board and the International Ethics Standards
	Board for Accountants’International Code of Ethics for Professional Accountants
	(including International Independence Standards), and we have fulfilled our other
	ethical responsibilities in accordance with these requirements.
	Other than in our capacity as auditor and the provision of taxation advice, we have
	no relationship with or interests in the Company or any of its subsidiaries. These
	services have not impaired our independence as auditor of the Company and
	Group.
Audit materiality	We consider materiality primarily in terms of the magnitude of misstatement in the
	financial statements of the Group that in our judgement would make it probable
	that the economic decisions of a reasonably knowledgeable person would be
	changed or influenced (the ‘quantitative’ materiality). In addition, we also assess
	whether other matters that come to our attention during the audit would in our
	judgement change or influence the decisions of such a person (the ‘qualitative’
	materiality). We use materiality both in planning the scope of our audit work and in
	evaluating the results of our work.
Key audit matters	Key audit matters are those matters that, in our professional judgement, were of
	most significance in our audit of the consolidated financial statements of the
	current period. These matters were addressed in the context of our audit of the
	consolidated financial statements as a whole, and in forming our opinion thereon,
	and we do not provide a separate opinion on these matters.

60 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

INDEPENDENT AUDITOR’S REPORT CONTINUED

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Key audit matter		How our audit addressed the key audit matter
Revenue Recognition – Rebates & Promotional
Allowances Accruals
Revenue is recognised net of volume discounts, other rebates and various other payments to customers for promotional support. Volume discounts and rebates not invoiced at reporting date are estimated based on	In order to respond to the significant judgement in estimating the rebates and promotional expenses accruals we:
agreements with customers and estimated depletions	•	held discussions with management to understand the
during the period.		process and models for estimating the rebates and
As disclosed in note 3, the value of the rebates and promotional allowances accruals at 30 June 2021 was $18.1m (2020: $22.4m).	•	promotional allowances accruals; evaluated the design and tested the operating effectiveness of relevant controls over the rebates and promotional allowances accruals and associated
The value of rebates and promotional allowances		revenue recognition;
accruals as at 30 June 2021 is a key audit matter due	•	performed a look-back analysis comparing previous
to the high levels of judgement involved in the		rebates and promotional allowances accruals to the
calculation of the accruals as management must		actual cost incurred; and
estimate the level of achievement of future targets by	•	obtained management’s calculation of the 30 June
customers in order to calculate the level of rebates		2021 rebates and promotional allowances accruals,
and promotional allowances that will be incurred.		checked the calculation for mathematical accuracy
		and agreed to supporting evidence on a sample basis.

Other information

The directors are responsible on behalf of the Group for the other information. The other information comprises the information in the Annual Report that accompanies the consolidated financial statements and the audit report.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and consider whether it is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If so, we are required to report that fact. We have nothing to report in this regard.

Directors’ responsibilities for the consolidated financial statements

The directors are responsible on behalf of the Group for the preparation and fair presentation of the consolidated financial statements in accordance with NZ IFRS and IFRS, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors are responsible on behalf of the Group for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021 61

INDEPENDENT AUDITOR’S REPORT CONTINUED

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Auditor’s responsibilities for Our objectives are to obtain reasonable assurance about whether the consolidated the audit of the consolidated financial statements as a whole are free from material misstatement, whether due financial statements 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 ISAs and ISAs (NZ) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and 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 these consolidated financial statements.

A further description of our responsibilities for the audit of the consolidated financial statements is located on the External Reporting Board’s website at: https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditorsresponsibilities/audit-report-1 This description forms part of our auditor’s report.

Restriction on use

This report is made solely to the Company’s shareholders, as a body. Our audit has been undertaken so that we might state to the Company’s shareholders those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company’s shareholders as a body, for our audit work, for this report, or for the opinions we have formed.

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Andrew Dick Partner for Deloitte Limited Auckland, New Zealand 27 August 2021

62 DELEGAT GROUP LIMITED AND SUBSIDIARIES. FOR THE YEAR ENDED 30 JUNE 2021

AI assistant

Delegat Group Limited — Annual Report 2021

66183_rns_2021-08-27_d6efe16b-a3f2-4bf9-8ba0-412bc411cd16.pdf

Last year, wine lovers around the world enjoyed 190 million glasses of our wine.

“The results achieved in 2021 are testament to the strength of Delegat Group’s business model.”

PERFORMANCE HIGHLIGHTS

OPERATING PERFORMANCE

NZ IFRS FAIR VALUE ADJUSTMENTS

Table 1 OPERATING PERFORMANCE

RECONCILIATION OF REPORTING TO OPERATING PERFORMANCE

CASH FLOW

DIVIDENDS

Table 3 IMPACT OF FAIR VALUE ADJUSTMENTS

INVESTING FOR GROWTH

OUR GREAT WINE PEOPLE

GLOBAL SALES PERFORMANCE

Last year our 400 strong global team excelled in creating an environment for success and achieving the extraordinary.

NORTH AMERICA

UNITED KINGDOM, IRELAND AND EUROPE

AUSTRALIA, NEW ZEALAND AND ASIA PACIFIC

BRANDS AND COMMUNICATIONS

Last year Oyster Bay engaged with over 58 million wine lovers across the globe.

SUSTAINABILITY

GROUP OUTLOOK

OUR PEOPLE

STATEMENT OF FINANCIAL POSITION CONTINUED

STATEMENT OF CASH FLOWS CONTINUED

1. GENERAL INFORMATION

REPORTING ENTITY

BASIS OF PREPARATION

STATEMENT OF COMPLIANCE

BASIS OF CONSOLIDATION

1. GENERAL INFORMATION (CONTINUED)

BUSINESS COMBINATIONS

GOODS AND SERVICES TAX (GST)

FOREIGN CURRENCIES

a) Functional and Presentation Currency

b) Transactions and Balances

CASH AND CASH EQUIVALENTS

1. GENERAL INFORMATION (CONTINUED)

NET DEBT

OTHER ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

Area of Judgement, Estimate or Assumption

Note

CHANGES IN ACCOUNTING POLICIES

Growing Costs

1. GENERAL INFORMATION (CONTINUED)

NEW ACCOUNTING STANDARDS AND INTERPRETATIONS

1. GENERAL INFORMATION (CONTINUED)

COVID-19

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

FOREIGN CURRENCY RISK

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

HEDGE OF NET INVESTMENT IN FOREIGN OPERATION

INTEREST RATE RISK

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

CREDIT RISK

LIQUIDITY RISK

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

SUMMARY OF FINANCIAL INSTRUMENTS HELD

FAIR VALUE OF FINANCIAL INSTRUMENTS

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

FINANCIAL RISK ASSOCIATED TO BEARER PLANTS

CAPITAL MANAGEMENT

3. SEGMENTAL REPORTING

REVENUE

i) Sale of Goods

ii) Interest Revenue

3. SEGMENTAL REPORTING ( C O N T I N U E D )

REVENUE

3. SEGMENTAL REPORTING ( C O N T I N U E D )

4. EXPENSES

5. EARNINGS PER SHARE

6. SHARE CAPITAL

b) Nature and Purpose of Reserves

Foreign Currency Translation Reserve

7. DIVIDENDS PAID AND PROPOSED

Delegat Group Limited Annual Report 2021