Winemakers have reported disappointing full-year results amid inventory write-downs in reaction to the current global wine market glut.
Winemakers have reported disappointing full-year results amid inventory write-downs in reaction to the current global wine market glut.
Despite recording an 18 per cent jump in operating revenue, Evans & Tate posted a $49.8 million loss for the year to June 30.
Representing a $42.2 million turnaround on last year’s effort, the poor result was mainly attributable to $45.2 million worth of one-offs along with end-of-year adjustments of $11.4 million.
Write-downs worth $30.6 million were made for inventory, intangibles worth $7.3 million, provisions for a further $6.8 million, and a further one-off adjustment of $500,000, mak-ing up the $45.2 million figure.
In late June Evans & Tate announced it would have to write down its inventory by between $8 million and $10 million. Last month, however, the winemaker revealed that amount had grown to $16.5 million, just more than half that revealed in the final results.
Evans & Tate said that, due to the current cycle of the wine industry, the allocation of corporate overheads and interest to inventory was no longer appropriate. As a result, the company changed its cost allocation methods from July 2004 so that interest and corporate overheads are expen-sed rather than capitalised as inventory cost.
The winemaker added that it expected to complete the sale of its unallocated wine inventory by the end of October.
Former Evans & Tate chief executive and largest share-holder Franklin Tate also stepped down as non-executive chairman.
The future of the company hinges to a large extent on continued support from key creditor ANZ Bank, which has $116 million invested in secured debt. The bank has extended its credit facilities to Evans & Tate until the end of 2006.
Also reporting a loss was Australian Wine Holdings, which said the year ending June 30 was another “challenging and productive period”.
AWH reported a loss of just under $5.65 million for the 12 months, down from about $611,900 in the red, the previous year. Revenue from ord-inary activities was up slightly, however, to $9.25 million.
Despite the bad period, the group, which includes the Hay Shed Hill, Pitchfork and Tall Timber brands, managed to raise about $6.63 million in a convertible note issue.
The company also wrote-off an amount of $4.96 million, which included a $3.33 million inventory write-down.
Global Wine Ventures, formerly known as Xanadu Wines, revealed a $39.35 million loss for the year to June 30.
The only group out of the three listed WA winemakers to report a drop in revenues, GWV incurred a 49.8 per cent fall in revenues from ordinary activities to $15.28 million, including sales revenue, which was 28.2 per cent lower at $15.05 million.
On August 22, GWV settled the sale of the suffering Xanadu brand and Margaret River Winery for $26.16 million to the Rathbone family, based in Victoria.
The group wrote down inventory of $6.6 million across its range of 2004 and 2005 vintages.
