TREASURY WINE ESTATES LIMITED — Capital/Financing Update 2021

Aug 15, 2021

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16 August 2021

ASX ANNOUNCEMENT

TWE provides accounting policy update, historic divisional financials & F21 guidance reaffirmation

Treasury Wine Estates Limited (ASX:TWE) today provides details of the impact of a recent change to Australian Accounting Standards which will result in restatement of TWE’s historical financial statements. In addition, TWE is providing updated and expanded historical financial information for its new brand portfolio divisions.

The information is being provided to assist investors ahead of TWE’s Annual Results announcement on 19 August 2021.

Accounting standards update – Cloud computing arrangements

The International Financial Reporting Standards Interpretations Committee (IFRIC), under IFRIC agenda decision Configuration or Customisation Costs in a Cloud Computing Arrangement (IAS38 Intangible Assets), has clarified the accounting standard requirements with respect to costs associated with cloud computing, requiring costs associated with the configuration and customisation of cloud software to be recorded immediately in the Statement of Profit and Loss and Other Comprehensive Income, rather than capitalised in the Statement of Financial Position and amortised over the useful life of the asset.

As a result, TWE has updated its accounting policy on a full retrospective basis, resulting in the cost of several major technology projects in previous financial years being expensed in those years, and the reversal of any previously recorded amortisation expenses associated with these software systems.

TWE has presented its restated historical financials for F18 to F20 in Attachment 1. TWE confirms that the impact to F21 is negligible, due to the timing and nature of technology projects in F21.

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T R E A S U R Y W I N E E S T A T E S L I M I T E D A B N 2 4 0 0 4 3 7 3 8 6 2 L E V E L 8 , 1 6 1 C O L L I N S S T R E E T M E L B O U R N E V I C 3 0 0 0 A U S T R A L I A W W W . T W E G L O B A L . C O M

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Historical financials for brand portfolio divisions

At its investor day on 13 May 2021, TWE provided details of historic full year financial performance for its new brand portfolio divisions – Penfolds, Treasury Premium Brands and Treasury Americas - which became operational on 1 July 2021. In Attachment 2, TWE has again provided this historical full year information, as well as providing historical half year information.

TWE notes that, since the Investor Day, it has updated its assumptions with respect to the allocation of costs to the divisions, resulting in fewer costs being allocated to the respective divisions and more retained in the Corporate segment.

TWE believes this approach enhances transparency of reporting because it is aligned to TWE’s current methodology of cost allocation to regions. TWE also believes that retaining these costs within the Corporate segment will promote more efficient management of these costs on a long-term basis.

F21 Earnings Outlook

TWE reaffirms its guidance for F21 EBITS to be in the range of $495m to $515m, inclusive of any impact of the accounting standards update referred to above.

For the purposes of ASX Listing Rule 15.5, TWE confirms that this document has been authorised for release to the market by the Board.

Contacts:

Media

Melissa O’Neill Tel: +61 3 8533 3923 Mob: +61 467 555 175

Investors

Bijan Taghian Tel: +61 3 8533 3568 Mob: +61 433 173 664

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Attachment 1: Restated Historical Financials

1.1 Group profit & loss[1][23]

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1.2 Regional EBITS summary

	F18	F18	F18	F19	F19	F19	F20	F20	F20
EBITS A$m	Reported	Adjustment2	Restated	Reported	Adjustment2	Restated	Reported	Adjustment2	Restated
ANZ Asia Americas EMEA Corporate TWE EBITS	137.5 199.5 203.3 56.3 (52.6) 544.0	(0.1) - (0.1) - - (0.2)	137.4 199.5 203.2 56.3 (52.6) 543.8	158.0 283.0 233.4 63.3 (56.7) 681.0	(4.8) (1.9) (5.3) (1.8) (2.5) (16.3)	153.2 281.1 228.1 61.5 (59.2) 664.7	133.3 243.7 147.3 51.7 (42.5) 533.5	(3.2) (2.2) (10.4) (2.2) (2.9) (20.9)	130.1 241.5 136.9 49.5 (45.4) 512.6

1 All figures and percentage movements are subject to rounding

2 Net impact of accounting change to cost of doing business expense (costs incurred that were previously capitalised and reversal of amortisation previously recognised)

3 Gross Profit less EBITS. Includes overheads, A&P, depreciation/amortisation and other business income

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Attachment 2: Divisional key financial information

2.1 Penfolds

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F18 F19 F20
Volume (m9LE) 2.1 2.8 2.5
NSR (A$m) 544.3 816.0 765.2
NSR/Case (A$) 255.3 287.3 312.2
EBITS (A$m) 232.8 374.2 362.6
EBITS margin (%) 42.8% 45.9% 47.4%
1H18 1H19 1H20
Volume (m9LE) 1.2 1.5 1.5
NSR (A$m) 320.2 444.1 515.1
NSR/Case (A$) 278.0 301.4 342.4
EBITS (A$m) 142.7 206.3 265.0
EBITS margin (%) 44.6% 46.5% 51.4%
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2.2 Treasury Americas[4]

	F18	F19	F20	F20 Proforma
Volume (m9LE) NSR (A$m) NSR/Case (A$) EBITS (A$m) EBITS margin (%)	13.5 935.4 69.1 194.4 20.8%	13.9 1,084.4 78.2 208.2 19.2%	12.3 1,014.6 82.6 117.0 11.5%	7.6 810.8 106.8 127.0 15.7%
	1H18	1H19	1H20
Volume (m9LE) NSR (A$m) NSR/Case (A$) EBITS (A$m) EBITS margin (%)	7.2 487.2 67.5 99.2 20.4%	7.3 569.5 77.8 102.7 18.0%	6.9 566.9 82.7 72.9 12.9%

4 Proforma financials adjusted for commercial portfolio brands divested March 2021 and organisational structure changes. Does not include any future benefit from supply chain optimisation initiatives or dyssynergies.

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2.3 Treasury Premium Brands

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F18 F19 F20
Volume (m9LE) 18.9 18.8 17.6
NSR (A$m) 949.2 931.2 869.7
NSR/Case (A$) 50.2 49.6 49.4
EBITS (A$m) 169.2 141.5 78.4
EBITS margin (%) 17.8% 15.2% 9.0%
1H18 1H19 1H20
Volume (m9LE) 10.1 9.9 9.3
NSR (A$m) 488.0 494.1 454.1
NSR/Case (A$) 48.5 49.9 48.8
EBITS (A$m) 73.7 64.6 44.1
EBITS margin (%) 15.1% 13.1% 9.7%
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2.4 Corporate

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Corporate F18 F19 F20
EBITS (A$m) (52.6) (59.2) (45.4)
Corporate 1H18 1H19 1H20
EBITS (A$m) (25.6) (31.2) (26.2)
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