Post on 13-Nov-2014
transcript
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Vincor and The New World Of WinePresented By Thammasat Consulting
Chananun Manita
TarinSirunya
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
AGENDA
Company Profile
Situation Analysis
Issues and objectives
Recommendation
Financial Justification
Key Success Factors
Conclusion
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Total Sale of Cdn$376.6 million
Largest wine company in Canada with 22% Market share
Fourth largest in North America & the world’s 22nd largest
wine producer in term of revenue
Recent Acquisition: R.H. Phillips & Hogue Cellars (Super
Premium wine) --> Obtain US Distribution network and
Marketing expertise
Premium
Super Premium
Ultra Premium
$7-$10
$10-$15
$15-$20
Jackson-Triggs, Inniskillin, Sawmill Creek
Classification Retail Price Premium Brands
Vincor International
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
To become one of the world’s top ten wine companies producing Vincor-owned New World, premium brand wines, which are
marketed and sold through Vincor-controlled sales and distribution systems in all major
premium wine consuming regions.
Mission Statement
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Global Market Analysis
Percentage of Global Imports
1. United Kingdom – 19 %
2. United states – 16%
3. Germany – 14%
Implication: US & UK are the most attractive Wine market
United states – $10 Bm
United Kingdom – $3.7 Bm
Australia - $3.7 Bm
Top 3 New World Wine Sales
France
Italy
US
Germany
Spain
Argentina
UK
Top Consuming Nation
3,370
3,050
2,133
1,966
1,400
1,204
1,010
Wine Consumption (million liters)
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Potential Market Analysis
Current Situation
• Overall Wine Import grew
18% Last year
• Consolidation trend to obtain
distribution network
• Past 3 years Import growth
• Australia 28%
•Shifting from Old world Trend towards New World Trend
•Australian wine grew from 10% to 18% Market share within 4 yrs - replacing French wine as #1 Import
•7 of the top 10 wine brands were Australian
Implication: Strong Trend toward Australian wine
Potential Market
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Current Situation Ultimate Goal
North American Player with sale of Cdn$376.6
million
Global Player with sale of Cdn$1000 million within 5
years
Global Player with sale of Cdn$830 million within 5
years
Vincor’s Ambition
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Goundrey Acquisition
StrengtheningNorth American Market
Issues at Hand Objectives
Evaluate Business proposition to Vincor’s Global Strategy
Increase Sales of USMarket by CAGR 21% over the next 5 Yr.
Increase the Sales proportion from UK to 13.2% or the total sales of Cdn $110Million by 2007
Current Situation Ultimate Goal
North American Player with sale of Cdn$376.6 million
Global Player with sale of Cdn$830 million within 5 years
Global Expansion
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Goundrey Production Volume
GOUNDREY – WESTERN AUSTRALIA
Domestic Product Recognition
• Largest winery in Western Australia
• Reputation for super and ultra premium wine
• Most important winery for local distributors
85% (SP)
8% (P) 7% (UP)
Sales Revenue = AUD$25 million
• One Australian winery (Goundrey) is not enough
• Complexity of Oversea Integration
• Financial Capability
*Similar product segment focus Strong Product Recognition
To Become a Global Player
Immediate Strategy: Australian Acquisition
Acquire Goundrey PLUS
an Australian Comparable
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Short Term Strategy: US Acquisition
• Fragmented Market Room for Growth
• Australian imports grow at 28%
• Super premium wine growing at 17%
US Market Characteristics
Australian Wine Penetration
Implication: Domestic Winery Acquisition
• 6th largest exporter in the world
• Exports CAGR at 14% for the last 14 years
• 37% of US exports go to UK
Additional Benefit: US Exports Potential
Support Point for US acquisition
Increase ProductOfferings to International
Market esp. UK
Distribution Network Focus
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
US Acquisition: Network Target
OR
= Existing Distribution network
= Potential Target
NY
WA
Hogue Cellars
CA
R.H. Phillips
NY
Criteria for Choosing Winery in NY
1. At least CD$30Million Sales2. Super premium3. National distribution channel (esp. in the East Coast) with supporting sales personnel
Acquire 3 Wineries with aggregateCurrent annual sales of $90Million
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Long Term Strategy: UK Penetration
Marketing Strategy: Direct Marketing
OUTSOURCE
DISTRIBUTION
International wine dominates UK market
Acquiring foreign distribution is expensive
Advertising Channel: Wine Tasting, Sponsorship
Age Range 40 and above
Income Range $50,000 and
above
Target Market
LifestyleUpper Business
Clientele
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
1. Top 2 GDP (per capita) in region2. Distribute at least 350,000 cases
per region 3. 3. Focus on Super Premium or
above4. “One region at a time”
Criteria for Choosing Distributors
Edinburg, Glasgow
North UK
Leeds, Manchester
Central UK
London, Bristol
South UK
Source: Barclay Statistic 2002
Long Term Strategy: UK Penetration
2007 Distributor Penetration
2005 Distributor Penetration
2006 Distributor Penetration
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
2003 2004 2005 2006 2007
Timeline
Immediate Strategy
Australian Wineries Acquisition
Integration
Short-term Strategy
New York Wineries Acquisition
Integration
Long-term Strategy
London and Bristol Distributors
Glasgow and Edinburgh Distributors
Leeds and Manchester Distributors
Event Marketing
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
0.00
100.00
200.00
300.00
400.00
500.00
600.00
700.00
800.00
900.00
2002 2003F 2004F 2005F 2006F 2007F
Revenue Growth Rate
Financial Forecast
CAGR = 17.22%
Revenue (in million Cdn$)
380 million Cdn$
830 million Cdn$
Winery Acquisitions
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
2002 2003F 2004F 2005F 2006F 2007F
Net Income Growth Rate
Net Income (in million Cdn$)
CAGR = 26.54%
27 million Cdn$
76.5 million Cdn$
NPM 9.2%
Financial Forecast
Interest Expense
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Financing the recommendation
2003 2004 2005 2006 2007Acquiring Wineries in Australia 115Acquiring Wineries in U.S. 120Marketing Cost 20 20 20Total 115 120 20 20 20Total 5 Years 295
Total Cost295 million Cdn$
Debt FinancingTotaling Cdn$140 million
NPV190 million Cdn$
Pay Back Period6.1 Years
Costs Related to Recommendations (in million Cdn$)
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Key Success Factors
Marketing Distribution
Product
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Issues are solved
OBJECTIVES
PROPOSED STRATEGIES
Evaluate Business proposition Vincor’s Global Strategy
Australian Acquisition
- Goundrey + Comparable- Strategic Fits- Brand image Consistency
United States Conquest
- Acquire 3 New York wineries- Expand market coverage (East coast)- Broaden Brand Portfolio Increase the Sales
proportion from UK to 13.2% or the total sales of Cdn $110 Million by 2007
Enter United Kingdom
- Outsource Distribution- Marketing campaign- Regional Selection
Increase Sales of US market by CAGR 21% over the next 5 Yr.
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Slide Navigator
• Company Profile• Mission Statement• Global Market Analysis• Market Analysis• Current position and Ultimate goal • Issues & Objective • Immediate Strategy• Short Term Strategy• Long Term Strategy• Time Line• Financial Justification
– Revenue– Net Income– Financing
• Key Success Factors• Conclusions
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Back Up Navigator
Financial Data
• Historical Financial Statement
• Historical Ratio Analysis
• Overall Financial Position
• Assumptions
• Pro Forma Statement
• Ratio Analysis
• Free Cash Flow Analysis
• Revenue Break-down
• Revenue Growth Assumptions
• Revenue in UK
• Revenue Growth in Each Region
Overall Strategy
• Why can’t we achieve Cdn $1,000 millions
• Integration
• Portfolio Management
United States
• Why acquisition Not strategic alliance (US)
• Why have more than one distributor?
• Acquisition Targets
• Distribution Channels in US
• Will imported Australian wine cannibalize US wine?
United Kingdom
• Why do you need marketing campaign in the UK not US?
• Why not acquire winery plant in UK?
• UK Distributor criteria
• Opportunity Loss for Late Entry – UK
• Marketing Campaign
• GDP – UK
• Headquarters in UK
• Our Value Proposition to Distributors
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Why acquisition not strategic alliance (US)
-Complete control over wineries and distribution is crucial in order to successfully
compete in the US Market- Consolidation trend
Advantages of Acquisition
-Reliability of strategic partners is likely to be controversial
-Should those partners be trusted to handle our products?
Drawbacks of Strategic Alliances
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Why have more than one distributor?
• Mitigating sole distributor risk– Decrease risk of losing entire distributing
network
• Broaden the geographic market coverage– Prominent distributors from different
geographic areas– Attain geographical core competency from
each distributor
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Our Value Proposition to Distributors
• Wide range of super premium product
– Australian, US, Canada
• Increase in demand of super premium Australian and US
wine
• Vincor’s marketing campaign to support “SALES”
• Brand Recognition (4th largest wine producer in North
America) + Goundrey’s recognition
Company Credibility
Great ProductMarketingSupport
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Why do you need marketing campaign in the UK not US?
UK MARKET
• Lack of expertise
• Unknown market
• High competition rate for Australian wine requires marketing campaigns in order to make our product known to consumers
US MARKET
• Existing US market
• Already have local expertise
• Well established brands and network distribution
• Recent acquisitions is competent enough on their marketing campaign
• Good performance– Acquisition of Hogue added 11
sales people which immediately increased Vincor’s annual U.S. Sales volume to more than 1 million cases
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Portfolio Management
Exporting Australian wine Into the US market
SHORT TERM
Integration of products from US, Canada, and Australia
LONG TERM
Rising trend of Australian wine consumption
Increasing demand for Premium and super
premium wine
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Why not acquire winery plant in UK?
• UK has relatively minimal domestic wine production
• Emphasis is on UK wine distribution rather than UK
wine production
• Already established, strong portfolio with renowned
US, Australian, Canadian brands
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
UK Distributor criteria
At least 10 years of experience in wine distribution
within UK
One of the top 5 UK distributors
Promising future of network expansion into other
European countries (foundation for Vincor’s further
penetration into Europe)
Extensive network of super and ultra premium wine
distribution channels
Distributors’ product image are consistent with that of
Vincor (premium and above)
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Will imported Australian wine cannibalize US wine?
• Inevitable loss
• Offer consumers with a wider variety of products
• Increasing trend of Australian wine consumption
• Addition of Australian brands to US brands can better solidify market base in US and UK
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Opportunity Loss for Late Entry - UK
- Already established distribution network- Known market - Higher probability of Success- Room for growth in UK - Uk wine consumption is on an increasing trend - With Distribution and Marketing support - 2 years is not too late
Reasons for further penetrating into US market first
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Marketing Campaign to End-consumers
-Sponsorship of sporting events (e.g. golf, polo)
-Approach cart galleries and museums
- Approach classy restaurants and hotels
-Advertisement in magazines that are parallel to target
market
- “15 days with 15 super premium brand of Vincor”
- Invite wine expert to be the spokesperson
- Contest – Blind tasting
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
GDP - UK
City GDP per Capita (€)
London 35,702
Edinburg 35,018
Glasgow 31,893
Bristol 29,437
Leeds 25,619
Manchester 21,099
Source: Eurostat: Region: Statistical Year book 2003
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
• Canadian Growth rate– Vincor existing product is growing at only 4 %– Therefore maximum = $285 millions
• US market – Meet objective: Maximum at $260 millions
• UK and Australian market generates additional $300Millions
• • Margin of Safety: Debt Ratio < 50% and TIE at 3
• Based on precedent acquisition, in order to obtain additional $180M in sales to achieve $1000M, $300M debt financing is required. This would lead our leverage position to 62%
Why can’t we achieve Cdn$1000 Million
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Cultural DifferenceVision
CommunicationRetaining Key
Employee
• Global Mission
• Key Exporting Base
• No interference in Domestic plan
• Collaboration over Export Market
• Determine Key Contributor
• Increase Promotion & Salary
• make them know that we appreciate their value
• Organize Goundrey Focus Group
• Discuss potential differences with Vincor’s Expatriate
• Gradually and collaboratively implement the plan
Integration
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Distribution Channels in US
• Ideally: – High-end Restaurants– Duty Free– Hotel (5 stars)
• Nevertheless, it’s heavily depend upon relationship with distributors.
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Headquarters in UK
• With 2 cities in one region cover a greater market
area
• Effective distribution channel within the region
• Strength in one region will benefit another region
• Having weak market presence in a wider
geographical area is less favorable than having a
strong presence in a concentrated area
– Do not want to be perceived by consumers as inferior
to competitors’ brands present in the same area
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Acquisition Targets
• Benchmark from past acquisitions
• Same firm’s characteristic, size, and revenue
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
F'98 F'99 F'00 F'01 F'02Revenue 206.4 253.2 268.2 294.9 376.6EBITDA 28.1 35 37.9 49.5 70.5%Revenue 13.60% 13.80% 14.10% 16.80% 18.70%Net Income 10.8 11.7 13.3 14.3 26.9Avg. Capital Employed 145.5 191.6 222.1 310.4 468.2ROCE (EBIT) 14.50% 13.80% 12.70% 13.10% 12.50%
F'98 F'99 F'00 F'01 F'02Funds EmployedReceivables 30.4 33.3 35.7 37.4 55.1Inventory 65.1 83.1 70.7 125.9 175.6Working Capital 57.8 73.3 67.9 111.9 184.9Net Fixed Asset 45.2 60 73.3 165.9 178.8Other Assets 59.8 87.1 82.7 133.4 161.5Funds Employed 162.8 220.4 223.9 411.2 525.2Turnover 1.267813 1.14882 1.197856 0.717169 0.71706
FinancingDebt (net) 50.9 92.5 80.5 254.5 110.1Deferred Tax 9.6 12.1 14.1 11.4 18.3Equity 102.3 115.8 129.3 145.3 396.8Financing 162.8 220.4 223.9 411.2 525.2
Historical Income Statement
Historical Balance Sheet
Historical Financial Statement
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Historical Ratio Analysis
F'98 F'99 F'00 F'01 F'02Liquidity Ratios Current Ratio Quick RatioLeverage Ratios Debt Ratio 37.16% 47.46% 42.25% 64.66% 24.45% TIE RatioProfitability Ratios NPM 5.23% 4.62% 4.96% 4.85% 7.14% ROE 10.56% 10.10% 10.29% 9.84% 6.78% ROA 6.63% 5.31% 5.94% 3.48% 5.12%Asset Utilization Total Asset Turnover 1.267813 1.14882 1.197856 0.717169 0.71706 DSO Inventory Turnover
Historical Ratio Analysis
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Overall Financial Position
• Good financial position
• Low leverage, high debt capacity
• Low asset utilization rate, due to acquisitions
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Assumptions
F'02 F'03F F'04F F'05F F'06F F'07FRevenue 376.6EBITDA 70.5 18.70% 19.30% 20.50% 20.70% 20.70%%Revenue 18.70%Depre&Amor 9.00% 9.00% 9.00% 9.00% 9.00%EBIT 58.53 15% 15% 16% 17% 17.00%Interest Exp. 22.66 EBT 35.87 Tax 8.97 Net Income 26.9 8.00% 8.00% 9.00% 10.00% 10.00%Avg. Capital Employed 468.2 88.03% 88.03% 88.03% 88.03% 88.03%ROCE (EBIT) 12.50%
F'02 F'03F F'04F F'05F F'06F F'07FFunds EmployedReceivables 55.1 13.31% 13.31% 13.31% 13.31% 13.31%Inventory 175.6 35.22% 35.22% 35.22% 35.22% 35.22%Working Capital 184.9 33.00% 33.00% 33.00% 33.00% 33.00%Net Fixed Asset 178.8 0.00% 0.00% 1.50% 1.50% 1.50%Other Assets 161.5 5.00% 3.00% 3.00% 3.00% 3.00%Funds Employed 525.2Turnover 0.71706
FinancingDebt (net) 110.1Deferred Tax 18.3 20.99% 20.99% 20.99% 20.99% 20.99%Equity 396.8 0.00% 0.00% 0.00% 0.00%Financing 525.2
Income Statement
Balance Sheet
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Pro Forma Statement
F'02 F'03F F'04F F'05F F'06F F'07FRevenue 376.6 479.36 598.04 704.12 773.34 833.60 EBITDA 70.5 89.64 115.42 124.35 140.08 152.55 %Revenue 18.70% 18.70% 19.30% 17.66% 18.11% 18.30%Depre&Amor 23.87 31.97 32.45 32.93 33.43 EBIT 58.53 65.77 83.45 91.90 107.15 119.13 Interest Exp. 22.66 18.09 29.70 28.74 24.14 17.15 EBT 35.87 47.69 53.76 63.16 83.01 101.98 Tax 8.97 11.92 13.44 15.79 20.75 25.49 Net Income 26.90 35.76 40.32 47.37 62.26 76.48Avg. Capital Employed 468.20 522.74 640.94 681.08 710.73 737.98ROCE (EBIT) 12.50% 12.58% 13.02% 13.49% 15.08% 16.14%
F'02 F'03F F'04F F'05F F'06F F'07FFunds EmployedReceivables 55.10 63.81 79.61 93.73 102.94 110.96 Inventory 175.60 168.84 210.64 248.00 272.38 293.60 Working Capital 184.90 158.19 197.35 232.36 255.20 275.09 Net Fixed Asset 178.80 265.18 355.18 360.51 365.92 371.41 Other Assets 161.50 170.47 175.58 180.85 186.27 191.86 Funds Employed 525.20 593.84 728.12 773.72 807.39 838.35 Turnover 0.72 0.81 0.82 0.91 0.96 0.99
FinancingDebt (net) 110.10 139.13 228.45 221.06 185.67 131.91 Deferred Tax 18.30 22.14 26.79 32.41 39.21 47.44 Equity 396.80 432.56 472.88 520.25 582.51 659.00 Financing 525.20 593.84 728.12 773.72 807.39 838.35
Pro Forma Income Statement
Pro Forma Balance Sheet
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Ratio Analysis
F'02 F'03F F'04F F'05F F'06F F'07FLiquidity Ratios Current Ratio Quick RatioLeverage Ratios Debt Ratio 24.45% 27.16% 35.05% 32.76% 27.85% 21.39% TIE Ratio 2.58 3.64 2.81 3.20 4.44 6.95 Profitability Ratios NPM 7.14% 7.46% 6.74% 6.73% 8.05% 9.18% ROE 6.78% 8.27% 8.53% 9.11% 10.69% 11.61% ROA 5.12% 6.02% 5.54% 6.12% 7.71% 9.12%Asset Utilization Total Asset Turnover 0.71706 0.807224 0.821351 0.91005 0.957825 0.994324 DSO Inventory Turnover
Ratio Analysis
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Free Cash Flow Analysis
F'03F F'04F F'05F F'06F F'07FEBITDA W 89.64 115.42 124.35 140.08 152.55 Investment 115.1786 120 0 0 0Tax 11.92 13.44 15.79 20.75 25.49Terminal Value 1230.815CF 37.46- 18.02- 108.55 119.33 1,357.87 EBITDA WO 75.28 78.80 82.13 84.87 87.71 InvestmentTax 12.77 12.34 11.86 10.90 10.59Terminal Value 707.6191CF 62.51 66.47 70.27 73.96 784.74 FCFF 99.97- 84.48- 38.28 45.36 573.14
NPV
WACCKd 13.00%Wd 21.72%Tax 25%Ke 16%We 78.28%WACC 14.64%
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Revenue Break-down
F'02 F'03F F'04F F'05F F'06F F'07FCanadaVincor 270.00 280.80 292.03 303.71 312.82 322.21 R.H. Phillips 9.00 9.18 9.36 9.55 9.74 9.94 Hogue 11.00 11.22 11.44 11.67 11.91 12.14 Goundrey - - - 5.00 6.20 7.69 NY - - - - - - Total 290.00 301.20 312.84 329.94 340.67 351.98
U.S.Vincor 30.00 30.00 30.00 30.00 30.00 30.00 R.H. Phillips 36.00 38.88 41.99 44.09 46.29 48.61 Hogue 44.00 49.28 54.21 58.54 62.06 65.78 Goundrey - - - 15.00 20.00 22.00 NY - - 90.00 97.20 103.03 109.21 Total 110.00 118.16 216.20 244.83 261.38 275.60
AustraliaVincor - - - - - - R.H. Phillips - - - - - - Hogue - - - - - - Goundrey 50.00 60.00 69.00 79.35 87.29 96.01 NY - - - - - - Total 50.00 60.00 69.00 79.35 87.29 96.01
U.K.Vincor - - - 5.00 8.00 10.00 R.H. Phillips - - - 5.00 8.00 10.00 Hogue - - - 5.00 8.00 10.00 Goundrey - - - 20.00 36.00 50.00 NY - - - 15.00 24.00 30.00 Total - - - 50.00 84.00 110.00 Total Sales 450.00 479.36 598.04 704.12 773.34 833.60
Assumption Sales Target
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Revenue Growth Assumptions
F'02 F'03F F'04F F'05F F'06F F'07FCanadaVincor 4% 4% 4% 4% 3% 3%R.H. Phillips 2% 2% 2% 2% 2% 2%Hogue 2% 2% 2% 2% 2% 2%Goundrey 24% 24% 24% 24% 24% 24%NY
U.S.VincorR.H. Phillips 8% 8% 8% 5% 5% 5%Hogue 12% 12% 10% 8% 6% 6%Goundrey 20% 20% 20% 15% 10%NY 10% 8% 6% 6%
AustraliaVincorR.H. PhillipsHogueGoundrey 20% 15% 15% 10% 10%NY
U.K.Vincor 5.00% 5.00%R.H. Phillips 12.50% 10.00%Hogue 12.50% 10.00%Goundrey 20.00% 20.00%NY 12.50% 10.00%
Assumption Sales Growth
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Revenue Growth
UK
- Market penetration by establish distribution network one
region each year
- Marketing strategy helps with product acceptance
Current Market Growth ProjectionCanada Market 4% 4%US Market 10% 20%Australia Market 20% 14%UK Market 48%
Company Profile
Situation Analysis
Issues & Objectives
Recommendation
Time Line
Financial Justification
Key Success Factors
Conclusion
Revenue in UK
Total market size of 3.7 billion pound
Growth rate is very high especially for new world wines