Half Year Report and Results Announcement

EXECUTIVE CHAIRMAN AND CEO'S REVIEW For the six months ended 31 December 2023 Performance Overview Marlborough Wine Estates Group Limited ("MWE", "Company") is pleased to release its financial results for the six months ended 31 December 2023 (HY24). HY24 has been a challenging period for the New Zealand Wine industry with global macro-economic conditions leading to significant reductions in export volumes for the period. In HY24 total wine export volumes from New Zealand were down 24% on the previous year. This reduction is being attributed to global customers reducing inventory levels and adjusting their purchasing patterns to match current trading conditions. In contrast the value per litre for New Zealand bottled wine exports increased by 10% as the industry raised prices to counter production cost inflation. MWE's domestic branded sales revenue increased by 19% in HY24 driven by increased distribution with the major retailers in New Zealand. International case sales were down 10% as distributors reduced inventory holdings. Total sales revenue of $3.7 million was down 12% compared to HY23, driven by lower than expected bulk wine sales. Cost pressure on production and logistics, particularly due to labour and material cost increases, as well as increased fuel costs continues to be experienced. Management have achieved some efficiencies through increased volumes and continue to develop and implement initiatives to improve efficiencies where possible. Gross profit of $0.6 million, is a decrease of $0.46 million on the prior comparative period, while the net loss after tax was $0.74 million, increased $0.5 million from the previous half-year. The major driver of this was the reduction in bulk wine sales revenue which also led to lower net cashflow from operating activities compared to HY23. Strategic Progress The company continues to pursue its growth initiatives, particularly growth of branded premium wine sales, under the OTU and Music Bay brands, and expansion of its domestic and international distribution networks. HY24 branded premium wine sales volume increased by 7% compared to HY23 MWE continues its focus on building premium branded wine sales growth in global and domestic markets and expanding current in-market distribution networks with its existing partners. The New Zealand market remains the largest market for MWE branded wine sales and plays a key role in demonstrating consumer appeal and commercial success to our international distributor partners. MWE has continued its focus on premiumisation of its products in the New Zealand market. The OTU Sauvignon Blanc is now a top 10 wine brand in the highly competitive premium Sauvignon Blanc segment in New Zealand (Nielsen data, December 2023). An expanded distribution footprint and growing consumer recognition combined to deliver a 14% increase in sales volume in HY24. The two largest international markets for MWE branded wine sales are the UK and USA. HY24 sales from OTU distributors to customers in the US grew by 300% on the prior year. This is a result of over 12 months trading in the US market and driven by OTU's wines expanding distribution, including a further 8 states during 2023. In the UK distributor sales to customers for HY24 remained steady despite a 20% wine excise tax increase on the 1st August 2023. The company also continues to work closely with our distributor network across Canada, Ireland, Japan, Australia, Singapore and China. The expertise and experience of in-market distribution partners is a significant advantage in building sales in new and existing markets. MWE will continue to invest resources in developing its global distribution footprint. Accolades and reviews During the first half of FY24, MWE's wines continued to receive strong reviews and recognition: o OTU Marlborough Sauvignon Blanc 2023, o Trophy, Gold and Champion Export Wine, National Wine Awards Aotearoa o James Suckling, 91 Points o 4.5 Stars and Best Buy, Michael Cooper o 94 Points, Wine Orbit o OTU Limited Release Marlborough Sauvignon Blanc 2023, o Gold, New Zealand International Wine Show o 95 Points, Wine Orbit o OTU Limited Release Marlborough Syrah 2020, o Gold, New Zealand International Wine Show o OTU Limited Release Pinot Noir Rose, o Gold, National Wine Awards Aotearoa Outlook The New Zealand wine category is small by global standards accounting for less than 2% of global wine production. The demand for premium Marlborough Sauvignon Blanc in global markets remains strong and despite challenging economic conditions, the New Zealand wine category remains in growth in key markets such as the UK and USA. Following two strong vintages for the New Zealand wine industry, MWE was expecting a return to average vintage yields for V.24. Due to unsettled weather conditions during the growing season, the industry is now anticipating a lower than average yield however it is too early to reliably estimate this until harvest. MWE is well positioned to continue its growth in the domestic and international markets. Our premium brands and high quality wines are designed to appeal to engaged wine consumers who are prepared to pay a premium for the best wines from New Zealand. MWE prides itself on producing some of the world's finest Marlborough Sauvignon Blanc and this was recognised recently with the OTU Sauvignon Blanc being awarded the Champion Export Wine Trophy at the Aotearoa Wine Awards in November 2023. This commitment to quality is essential to maintaining a premium price position for our branded wines in global markets. Premiumisation of MWE's wines has been a key focus and this will continue. MWE will continue to look for distribution in premium channels to increasingly convert grape and bulk wine sales into branded bottled wine sales. We would like to thank our committed team, suppliers, business partners and shareholders for their continued support. Marlborough Wine Estates Group Limited. Min Jia Executive Chairman Andrew Stafford Chief Executive Officer End CA:00427033 For:MWE Type:HALFYR Time:2024-02-28 15:13:35