New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Delegat Group (DGL) FY21 Result Initial Impressions</h2>
Delegat (DGL) reported a pre-signalled FY21 operating NPAT of NZ$65.5m, up +8% on the prior year period. FY21 case sales of 3,278,000 fell -3.0%, with growth in North America (target market) offset by declines elsewhere.
DGL announced a fully imputed final dividend of 20cps, +2cps ahead of our forecast (18cps).
Outlook reiterated
DGL reiterated its recently provided FY22 NPAT guidance range of NZ$57m to NZ$61m (FB NZ$60m).
The forecast decline in profitability is due to the impact of a lower yielding 2021 vintage, which has the impact of increasing the cost of goods sold per case. This impact is predominantly captured in FY22 although with some carry through into FY23. The impacts of this are already reflected in our current forecasts.
Conference call at 11:00am NZT
Management will host a conference call at 11:00am (NZT).&nbsp;Dial in details: New Zealand 0800 452 934,&nbsp;Conference ID: 379 226 1990.
Key result take outs
<ul>
<li>Sales revenue fell -1% on the prior year period, driven by a decline in case sales (-3%). &nbsp;More encouragingly, DGL has been able to achieve an increase in average realised price, up +2% on the prior year period. Of that, prices increased +3%, positive mix changes contributed +1%, while negative FX movements dampened NZD prices -2%.</li>
<li>FY21 capex of NZ$62m, was ahead of our expectations with continued investment into its vineyards and wineries as well as land acquisition.</li>
</ul>
o&nbsp;&nbsp;DGL has guided to FY22 capex of NZ$30m (FB NZ$33m) which includes further vineyard and winery developments across its producing regions.
<ul>
<li>DGL reported FY21 net debt of NZ$249m, up +4% on the prior year, driven by a small lift in inventory held and larger capital requirements. Supply chain congestion remains a theme for exporters, and may be a possible driver behind higher inventory holdings.</li>
</ul>
FY21 result summary (NZ$m)
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/226/367/original/image_40955834421630022992150.png?1630022992" class="editor-image img-responsive" data-smartkarma-image-id="226367"></figure>
Source: Company reports, Forsyth Barr analysis

Delegat Group (DGL) FY21 Result Initial Impressions
Delegat (DGL) reported a pre-signalled FY21 operating NPAT of NZ$65.5m, up +8% on the prior year period. FY21 case sales of 3,278,000 fell -3.0%, with growth in North America (target market) offset by declines elsewhere.
DGL announced a fully imputed final dividend of 20cps, +2cps ahead of our forecast (18cps).
Outlook reiterated
DGL reiterated its recently provided FY22 NPAT guidance range of NZ$57m to NZ$61m (FB NZ$60m).
The forecast decline in profitability is due to the impact of a lower yielding 2021 vintage, which has the impact of increasing the cost of goods sold per case. This impact is predominantly captured in FY22 although with some carry through into FY23. The impacts of this are already reflected in our current forecasts.
Conference call at 11:00am NZT
Management will host a conference call at 11:00am (NZT).&nbsp;Dial in details: New Zealand 0800 452 934,&nbsp;Conference ID: 379 226 1990.
Key result take outs

Sales revenue fell -1% on the prior year period, driven by a decline in case sales (-3%). &nbsp;More encouragingly, DGL has been able to achieve an increase in average realised price, up +2% on the prior year period. Of that, prices increased +3%, positive mix changes contributed +1%, while negative FX movements dampened NZD prices -2%.
FY21 capex of NZ$62m, was ahead of our expectations with continued investment into its vineyards and wineries as well as land acquisition.

o&nbsp;&nbsp;DGL has guided to FY22 capex of NZ$30m (FB NZ$33m) which includes further vineyard and winery developments across its producing regions.

DGL reported FY21 net debt of NZ$249m, up +4% on the prior year, driven by a small lift in inventory held and larger capital requirements. Supply chain congestion remains a theme for exporters, and may be a possible driver behind higher inventory holdings.

FY21 result summary (NZ$m)

Source: Company reports, Forsyth Barr analysis

Delegat Group (DGL): FY21 Result Initial Impressions