c wine trust for personal use only
TRANSCRIPT
Investments. Mortgages. Possibilities.
Challenger Wine TrustAnnual Report 2007
Challenger Wine Trust(ARSN 092 960 060)
Responsible EntityChallenger Listed Investments Limited(ABN 94 055 293 644)(AFSL 236887)
Challenger W
ine Trust
Level 15255 Pitt StreetSydney NSW 2000telephone 02 9994 7000facsimile 02 9994 7777
www.challenger.com.au 57
00
/CG
47
8/0
90
7
Investments. Mortgages. Possibilities.
Challenger W
ine Trust Annual Report 2007
For
per
sona
l use
onl
y
Challenger Listed Investments Limited(ABN 94 055 293 644) (AFSL 236887) (CLIL) isthe Responsible Entity of Challenger Wine Trust(ARSN 092 960 060) (CWT).
CLIL, as the Responsible Entity of CWT, has preparedthis Annual Report (Report) based on informationavailable to it. The information in this Report shouldbe regarded as general information only. Nothingcontained in this Report constitutes investment,legal, tax or other advice. It has been preparedwithout taking account of any person’s objectives,financial situation or needs. Recipients should,before acting on any such information, consider itsappropriateness, having regard to their objectives,financial situation and needs, and seek the assistanceof their financial or other licensed professionaladviser before making any investment decision.
Any investment in CWT is subject to investment riskand other risks, including possible loss of incomeand principal invested. None of CLIL, ChallengerManagement Services Limited (ABN 29 092 382 842)(AFSL 234678) (CMSL), Challenger Financial ServicesGroup Limited (ABN 85 106 842 371) (Challenger) or any other member of the Challenger Group givesany guarantee or assurance as to the performance of CWT or the repayment of capital.
Nothing in this Report should be considered asolicitation, offer or invitation to buy, subscribe for orsell any, or a recommendation of, financial products.
All reasonable care has been taken to ensure thatthe facts stated and opinions given in this Report are fair and accurate. To the maximum extentpermitted by law, the recipient releases CLIL, eachmember of the Challenger Group, their directors,officers, employees, representatives and advisersfrom any liability (including, without limitation, inrespect of direct, indirect or consequential loss ordamage or loss or damage arising by negligence)arising in relation to any recipient relying onanything contained in or omitted from this Report.
Challenger Wine Trust (CWT)ARSN 092 960 060
Australian Securities Exchange (ASX) codeCWT
Responsible EntityChallenger Listed Investments LimitedABN 94 055 293 644AFSL 236887
Directors of the Responsible EntityS Gerlach (Chairman)RRR HooperIM MartensGK McWilliamIR MooreRJ WoodsPR Brook
Company SecretaryC RobsonS Koeppenkastrop
ManagerChallenger Management Services LimitedABN 29 092 382 842
AddressLevel 15255 Pitt StreetSydney NSW 2000Telephone: +61 2 9994 7000Facsimile: +61 2 9994 7777Email: [email protected]: www.challenger.com.au/cwt
RegistryComputershare Investor Services Pty LtdLevel 5, 115 Grenfell StreetADELAIDE SA 5000Telephone: 1300 556 161Facsimile: +61 8 8236 2305Email: [email protected]: www.computershare.com
Any forward looking statements included in thisReport involve subjective judgement and analysisand are subject to significant uncertainties, risks andcontingencies, many of which are outside the controlof, and are unknown to, CLIL. In particular, theyspeak only as of the date of these materials, theyassume the success of CWT’s business strategies,and they are subject to significant regulatory,business, competitive and economic uncertaintiesand risks. Actual future events may vary materiallyfrom forward looking statements and assumptionson which those statements are based. Given theseuncertainties, recipients are cautioned not to placeundue reliance on such forward looking statements.
Any past performance information provided in thisReport is not a reliable indication of future performance.
CLIL does not receive any specific remuneration forany general advice which may be provided to you inthis Report. However, CLIL and CMSL receive trusteeand management fees as Responsible Entity andManager of CWT, respectively. For more details onfees, please refer to the Financial Report containedin this Report and additional information on theAustralian Securities Exchange (ASX) websitewww.asx.com.au. Financial advisers (including someChallenger Group companies) may receive fees orcommissions if they provide advice to you or arrangefor you to invest in a Challenger product (includingCWT). CLIL and its associates may have an interestin the financial products referred to in this Reportand may earn fees or other benefits as a result oftransactions in any such financial products.
Members of the Challenger Group and their officersand directors may hold securities in CWT from timeto time.
Important notice Directory
For
per
sona
l use
onl
y
1
Ch
alleng
erW
ine
Trust
AnnualReport
2007
CWT owns a portfolio of 28 commercial vineyards located across wine growing regions
of Australia and New Zealand. The vineyards are 100% leased to quality wine companies
or grape growers with secure grape contracts.
Chairman’s letter 2
Investment strategy and highlights 4
Fund Manager’s report 6
About Challenger 11
Portfolio summary 12
Corporate governance statement 24
Financial report 28
Unitholder information 78
Directory IBC
For
per
sona
l use
onl
y
2007
Dear unitholders,
On behalf of the CLIL Board, I am
pleased to present Challenger Wine
Trust’s (CWT’s) annual report for the
2007 financial year.
CWT has again generated a stable
distribution return for unitholders.
The high level of predictability associated
with CWT’s net operating income
comes as a direct result of its simple
structure and the highly transparent
nature of its rental income stream and
management costs.
The vineyard sector has experienced an
interesting year, with initial projections
of oversupply eliminated following the
impact of frost, fire and drought, which
together significantly reduced the size
of the 2007 Australian harvest. The
ongoing impact of the drought and
reduced water availability has had
some impact on valuations across warm
climate vineyards, negatively affecting
the valuation of some of CWT’s assets.
The uncertainty over future water
allocations along the Murray River
remains a key issue for the industry
in the months ahead.
Over the course of the year the
management team have spent
considerable time assessing opportunities for
the portfolio which are both consistent
with CWT’s strategic objectives and
create additional value for unitholders.
The newly acquired Miamba vineyards
met this criteria, being accretive
to distributions as well as enhancing
portfolio quality and diversification.
To further strengthen the
security of CWT’s income, a number of
assets have now also been identified for
disposal in the year ahead.
Importantly, steps have also been taken
to improve CWT’s capital structure,
with the suspension of the distribution
reinvestment plan and the conversion
of PICE units to ordinary units removing
the potential for further dilutionary
impact to distributions and enhancing
funding flexibility.
In my role as Chairman I draw on the
extensive skills and experience of the
CLIL Board’s executive and non-executive
directors. Over the course of the 2007
financial year the Board has monitored
the potential impact of changing
industry conditions on CWT’s portfolio,
supporting management’s decision
to offer a number of assets up for sale
that no longer meet the Trust’s
investment criteria. We have also
overseen the successful transition of
management responsibilities to the
Sydney office and the appointment
of a new Fund Manager.
As we commence the 2008 financial
year, CWT continues to offer investors
exposure to a high quality vineyard
portfolio which generates secure income
returns. Initiatives underway to enhance
portfolio quality should see this continue
in the year ahead.
I would like to thank you for your
support of CWT over the course of
the 2007 financial year, and look
forward to reporting to you on its
future performance.
Chairman’s letter
For
per
sona
l use
onl
y
3
Ch
alleng
erW
ine
Trust
AnnualReport
2007
…CWT continues to offer investorsexposure to a high quality vineyardportfolio which generates secureincome returns…
Stephen Gerlach
Chairman
For
per
sona
l use
onl
y
Investment strategy
2007
CWT aims to provide investors with exposure to a diversified portfolioof high quality, well located vineyards which offer secure and predictableincome returns and potential for capital growth.
Investmentstrategy andhighlights
For
per
sona
l use
onl
y
Highlights
5
CWT delivered profit from operatingactivities of $14.3 million for the year,up 8.8% on a comparable basisagainst the 2006 result. The keydrivers of this stronger performancewere growth in net property incomeand lower borrowing costs.
After accounting for new units issued during the year, CWT paid adistribution of 9.10 cents per unit,reflecting growth of 0.4% over thedistribution of 9.06 cents in theprevious year.
At 30 June 2007, CWT had a gearingratio of 45.2%, increasing to 47.4%following funding of the acquisition of Miamba Vineyards announcedfollowing year end.
Ch
alleng
erW
ine
Trust
AnnualReport
2007
Uncertainty over water availability atAustralian warm climate vineyardslocated along the Murray Rivercontributed to a net downwardmovement of $4.5 million overprevious asset valuations, equivalent toapproximately 1.6% of total portfoliocarrying value.
Weather conditions have negativelyimpacted the size of the Australian2007 grape harvest and 2008production forecasts. This is expectedto have a positive impact on grapeprices and vineyard sector profitabilitygenerally.
At 30 June 2007, CWT’s netasset value (NAV) per unit andnet tangible assets (NTA) per unit were $0.92 and $0.82 respectively.
The CWT portfolio remains 100%occupied, has a long weighted average lease term of 5.9 years and is well diversified by region, tenant and grape variety.
Following year end, CWT acquired theMiamba Vineyards. This acquisitionimproved CWT’s distribution profileand enhanced portfolio diversification.
For
per
sona
l use
onl
y
Financial resultsCWT delivered profit from operating
activities of $14.3 million for the year, up
8.8% on a comparable basis against the
2006 result.
The key driver of this stronger performance
was growth in net property income, up 2.8%
from $28.1 million in 2006 to $28.9 million.
This growth was the result of new income
from development projects nearing
completion, as well as the net uplift from
annual rental reviews across the portfolio.
Lower borrowing costs following the conversion
of PICE units (which were recognised as debt) to
ordinary units in April 2007, also contributed
to this positive result.
After inclusion of the unrealised impact of
the negative movement in the fair value of
non-current assets of $6.4 million, CWT’s
net profit for the period was $7.9 million.
DistributionsCWT’s distributable income for the year
was $14.3 million, up from $13.2 million in
2006. After taking into account new units
issued during the year under the distribution
reinvestment plan (DRP) and PICE unit
conversion, this equated to 9.10 cents per
unit, reflecting growth of 0.4% over the
9.06 cents per unit distribution for the
2006 financial year.
Fund Manager’s report
Dear unitholders,
In my first annual report as FundManager, I am pleased to reportto unitholders on the financialperformance and operations ofCWT for the 2007 financial year.
CWT’s 2007 financial results arerobust, reflecting 100% occupancyof the portfolio, as well as theprogression of vineyard developmentprojects and lower overall costs.Importantly, the structure of CWT’slease arrangements has insulated its rental income stream from theongoing effects of frost and drought.
In order to generate and maintainattractive, predictable income returnsto investors, CWT focuses onvineyards which are able to supportlong-term, sustainable operations.This continues to be achieved via theinvestment in a blend of both largescale commercial vineyards in warmclimate regions which provide grapesfor low cost wine producers, andvineyards in cool climate premiumgeographic regions which have global varietal presence and strongbrand support.
Our ongoing focus on improvingportfolio quality and diversificationhas resulted in the acquisition of Miamba Vineyards and the decision to sell a number ofproperties that no longer meet the Trust’s investment criteria.
2007
For
per
sona
l use
onl
y
7
Ch
alleng
erW
ine
Trust
AnnualReport
2007Change to accounting treatmentof water rightsFollowing discussions and agreement with
ASIC as to the appropriate treatment of
water rights under AIFRS, CWT has
determined to treat water rights associated
with its warm climate vineyards as intangible
assets recorded at cost. This change was
reflected in both 2007 asset values and prior
period comparatives.
Recognising water rights at cost rather than
fair value has resulted in a write down of
30 June 2006 asset values of $2.3 million,
with the restated 30 June 2006 Net Asset
Value (NAV) per unit now $0.94 (previously
$0.96). In addition, the recognition of
$15.8 million as intangible assets at 30 June
2006 resulted in Net Tangible Assets (NTA)
per unit being restated to $0.84 (previously
$0.96).
For the year ended 30 June 2007 a further
write down of $1.9 million was recorded
due to recognising intangible assets at cost.
This change in accounting treatment has
no impact on the underlying economic
value of CWT’s properties.
NAV/NTA per unitAt 30 June 2007, CWT’s NAV and NTA per
unit reflected the negative impact of asset
revaluations ($4.5 million), the write down
due to recognition of water rights at cost
($1.9 million) and additional units issued
following the PICE unit conversion in April
2007. These factors were partially offset
by fair value increments in interest rate
cash flow hedges and other movements,
resulting in NAV per unit and NTA per unit
both falling $0.02 to $0.92 and $0.82 per
unit respectively.
Capital managementAt 30 June 2007, CWT had total borrowings
of $134.4 million, and a gearing ratio of
45.2%. This gearing ratio is significantly
below prior periods, reflecting the conversion
of PICE units (categorised as debt) to ordinary
units in April 2007. Both the conversion
of PICE units and the suspension of the DRP
in August 2006 have simplified the Trust’s
capital structure and removed the potential
dilution to unitholder returns in the future.
CWT’s borrowings are denominated in a
mix of Australian and New Zealand currency.
The New Zealand borrowings of $82 million
account for 99% of the value of the
New Zealand portfolio, effectively providing a
natural foreign exchange hedge on their value.
All of the borrowings are at fixed rates, either
directly or through the overlay of interest rate
hedges. By locking in the cost of borrowings
at acquisition for the term of each lease, CWT
has a high degree of certainty on its funding
costs. At 30 June 2007, CWT’s weighted
average cost of borrowing was 7.7%.
Following the acquisition of the Miamba
Vineyards after year end, CWT’s total
borrowings have increased to $146.7 million,
bringing its gearing ratio to 47.4%, remaining
within its preferred range of 45-55%.
Investment performanceCWT recorded a total return of 35.2% for the
year to 30 June 2007, driven by a recovery in
its unit price from $0.70 at 30 June 2006 to
$0.85 at the conclusion of this financial year.
Over the longer term, CWT has delivered a
five year annual compound return of 10.8%
per annum to unitholders.
2
4
6
8
10
FY00
8.55
0
2
4
6
8
10
FY02
FY04
FY06
9.54
9.24
9.16 9.36
9.12
9.06
9.10
cpu
0.1111
0.2222
0.3333
0.44444
0.5555
0.6666
0.7777
0.8888
0.9999
88
01020304050
100
88 87 86 86
94 97
cpu
FY01
FY03
FY05
FY07
0
1
60708090
94 92
84 82
NTA
NTA
NA
V
NA
V
Distribution history
2
4
6
8
10
FY00
8.55
0
2
4
6
8
10
FY02
FY04
FY06
9.54
9.24
9.16 9.36
9.12
9.06
9.10
cpu
1999
0.000
0.11
0.222
0.333
0.444
0.55
0.666
0.77
0.888
0.999
2000
2001
2002
88
01020304050
100
88 87 86 86
94 97
2003
2004
2005
2006
2007
cpu
FY01
FY03
FY05
FY07
0
1
60708090
94 92
84 82
NTA
NTA
NA
V
NA
V
NTA/NAV history
For
per
sona
l use
onl
y
2007
Portfolio updatePortfolio strategyCWT’s investment objective is to generate
and maintain attractive, predictable income
returns to investors, with potential for
capital growth. To achieve this objective,
CWT invests in vineyards which are 100%
leased to premium brand wine and/or
multinational wine companies or contract
growers to industry companies.
In targeting vineyards which offer high gross
margins per hectare, CWT invests in either:
(a) large scale commercial vineyards in
warm climate regions which provide
grapes for low cost wine producers
that are targeting high production yields
but achieve low relative grape prices.
Examples include vineyards in the
Waikerie, South Australia and Riverina
and Sunraysia regions of NSW;
(b) vineyards in cool climate premium
geographic regions which have global
varietal presence and strong brand
support that have lower relative
production yields but target higher grape
prices. Examples include the Barossa Valley
for shiraz and the Marlborough region
in New Zealand for sauvignon blanc.
Overlaying this investment criterion is a
preference to reduce income risk via
maintaining a high level of region, tenant,
water source and varietal diversification.
This approach is adopted when assessing
the suitability of both existing and new
properties for the portfolio.
Portfolio activityThe CWT portfolio is 100% occupied, has a
long weighted average lease term of 5.9 years
and is well diversified by region, tenant and
grape variety.
Strong relationships with tenants remain key
to the ongoing success of the Trust. During
the year, lease extensions were negotiated
for McGuigan Simeon Wines at Hermitage
Road Winery and Sandy Hollow, Cowra
and Waikerie Vineyards for varying periods.
In addition, Grant Burge Wines has also
agreed to an extension of its lease at
Summers Hill Vineyard for a further five years.
After excluding assets planned for sale,
portfolio expiries in the next two years are
limited to Grant Burge Wines’ tenancy at
Corryton Park and McGuigan Simeon Wines’
tenancies at Cowra, Bethany Creek and Vine
Vale Vineyards, which together account for
only 3.3% of FY08 portfolio income.
On 20 August 2007, Evans & Tate, which
is a tenant at CWT’s Gnangara, Cocoparra
and Woods Vineyards, announced the
appointment of an Administrator and Receiver
and Manager. In the year to 30 June 2007,
rent on these properties totalled $1.7 million,
equivalent to 5.8% of CWT’s net property
income for the year. CWT is awaiting contact
from the Administrator and Receiver and
Manager in relation to their intentions
regarding Evans & Tate’s leases with CWT.
DevelopmentsFollowing the completion of development at
the Del Rios, Crownthorpe and Poole Rock
Vineyards, the majority of CWT’s development
vineyards are now fully operational. These
development vineyards have adopted industry
best practice viticulture production methods,
resulting in sustainable production yields and
good quality fruit.
n 5.7% Grant Burge Wines
n 34.3% McGuigan Simeon Wines
n 14.5% Pernod Ricard Pacific
n 3.2% BH & SE Booth Auction Services
n 1.1% Fosters Group
n 5.2% Green Valley Properties
n 25.1% Delegat’s Group
n 5.2% Evans & Tate
n 5.7% Other
n 30.0% SA
n 25.0% NSW
n 3.1% WA
n 16.7% VIC
n 25.2% NZ
n 30.0% SA
n 25.0% NSW
n 3.1% WA
n 16.7% VIC
n 25.2% NZ
Tenant diversification summary*(by value)
Geographic diversification*(by value)
*Includes Miamba Vineyards which were acquired on 17 August 2007.For
per
sona
l use
onl
y
9
Ch
alleng
erW
ine
Trust
AnnualReport
2007RevaluationsIndependent valuations, which take into
consideration the value of the land, vines,
infrastructure and water rights which
collectively reflect the underlying economic
value of the properties, remain the most
appropriate reflection of the market value
of the vineyards.
In the year to 30 June 2007, a net downward
movement of $4.5 million over previous asset
valuations was recorded. This fall was largely
driven by the impacts of the current drought
and uncertainty over future water availability
on vineyard profitability forecasts at Australian
warm climate vineyards located along the
Murray River.
AcquisitionsA core focus for the CWT management
team has been sourcing new opportunities.
The recent acquisition of the Miamba
Vineyards met all of CWT’s investment criteria
– improving the Trust’s distribution profile
whilst enhancing portfolio diversification.
In August 2007, CWT announced the
acquisition of the Miamba Vineyards from
Grant Burge Wines for $11.5 million (plus
costs). The properties were acquired under
a sale and lease back arrangement with
Grant Burge Wines, which has entered into
an initial eight year lease with an option to
renew for three further four year periods.
The Miamba Vineyards add to CWT’s growing
portfolio of premium brand cool climate
vineyards in Australia. Located in the southern
end of the Barossa Valley, South Australia’s
premium wine growing region, the Miamba
Vineyards comprise an aggregation of five
vineyards which together provide grapes
for many of Grant Burge Wines’ premium
wines, including the Barossa Vines, Miamba,
Filsell, Chaff Mill, Cameron Vale, and
Meshach brands.
Grant Burge Wines was attracted to CWT’s
business model, which provides it with an
opportunity to release capital for investment,
whilst still allowing the flexibility to retain
operational control over the vineyards.
DisposalsFollowing ongoing discussions with McGuigan
Simeon Wines, three properties have been
identified as no longer meeting CWT’s future
vineyard requirements.
The first of these is the Grande Junction
development vineyard located in Wentworth,
NSW. In February 2007, the development
was discontinued and all development
costs incurred to date of $6.0 million were
reimbursed to CWT. A further $0.9 million
will be paid by McGuigan Simeon Wines in
September 2007 to purchase the land.
Hermitage Road Winery and Sandy Hollow
Vineyard, which have leases to McGuigan
Simeon Wines expiring in June 2008 and
April 2009 respectively, are currently being
marketed for sale. The proposed sale of these
assets, which are both smaller, older style
properties, will minimise any risk to income
that may arise during the re-leasing period
and enhance the overall quality of the CWT
portfolio.
CWT has also contracted to sell Trillians
Hill Vineyard to the current tenant for
$1.1 million by December 2007.
For
per
sona
l use
onl
y
Australian industry conditionsThe 2007 grape harvest is estimated to have
been 1.35 million tonnes, the smallest since
2000. This was due to weather conditions,
including frost in the cooler climate regions
of South Australia, Victoria and Western
Australia, and drought in warm climate
regions, particularly the Murray Darling Basin.
The reduction in 2007 supply has significantly
lowered the existing grape surplus, with wine
companies lowering their inventory to meet
current demand. Industry organisations are
predicting supply-demand balance could occur
as early as the 2008 harvest, with the impact
of 2007 season frosts on vine development
and reduced water availability likely to again
reduce production. The current industry
forecast for the 2008 harvest is 1.5 million
tonnes which remains significantly below
the 1.9 million tonnes produced in 2006.
The reduced supply outlook coupled with
steady growth in demand is starting to have
a positive impact on grape prices, following
increases in prices for both bulk and bottled
wine for both domestic and export markets.
Water availability for the 2008 harvest remains
a critical issue, particularly for warm climate
regions dependent on irrigation water
allocations from the Murray River.
Current irrigation water allocations remain
below previous years at 60% for NSW
(high security), 5% for Victoria and 13%
for South Australia.
Some vines in these regions are being pruned
back in order to reduce water use, which will
result in reduced production for the 2008
harvest. However, these vines should not
suffer any long-term impact to productivity
in future years.
CWT’s rental income stream is backed by
long-term leases with fixed rental structures
and is therefore not directly impacted by
current industry conditions. However,
valuations of CWT’s vineyards dependent on
the Murray River have experienced downward
movements as a result of the uncertainty
regarding water allocations impacting forecast
vineyard profitability.
OutlookThroughout the 2007 financial year CWT has
continued to deliver a stable and predictable
income return to unitholders. This is expected
to continue into the 2008 financial year,
with the recent acquisition and planned sale
of assets identified as non-core forecast to
enhance returns whilst also improving overall
portfolio quality and diversification.
The impact of weather conditions and
water availability along the Murray River will
remain a key issue for the Australian vineyard
sector in 2008. CWT will continue to work
with its tenants in these regions to ensure
rental income remains secure and the capital
value of the portfolio is not impacted over the
longer term.
Thank you for your continued support of
the Challenger Wine Trust over the 2007
financial year.
Yours sincerely,
Nick Gill
Fund Manager
2007
For
per
sona
l use
onl
y
11
Ch
alleng
erW
ine
Trust
AnnualReport
2007Challenger Financial Services Group
(Challenger) is listed on the Australian
Securities Exchange and is a member of
the S&P/ASX 100. Created from the merger
between Challenger International Limited
and CPH Investment Corp in mid 2003,
Challenger has emerged as a mainstream
player in Australian financial services –
broadening and sharpening its focus, making
acquisitions, forging alliances and exiting
non-core businesses. At 30 June 2007,
Challenger had a market capitalisation
of $3.2 billion and approximately 1,000
employees.
Challenger has four complementary
divisions, Asset Management, Funds
Management, Financial Planning and
Mortgage Management. At 30 June 2007,
Challenger’s assets and loans under
management, administration and advice
totalled $52.8 billion.
Challenger AssetManagementChallenger’s specialised funds are operated
from within Challenger’s Asset Management
division. Challenger Asset Management is
a highly skilled manager and originator
of infrastructure, real estate and fixed income
assets. This expertise is applied to the creation
and ongoing management of its specialised
real estate and infrastructure funds, as well
as Challenger’s direct investment in these
asset classes.
Since its entry into the specialised funds
sector, Challenger has successfully listed
three specialised funds on the ASX,
with assets sourced from Australia, Japan,
the US, the UK and Europe.
Today, Challenger Asset Management has
responsibility for the management of assets
totalling $6.6 billion.
Recognised as an innovative and dynamic
performance focused manager, Challenger’s
Asset Management division has attracted a
highly skilled team with expertise in both the
creation and management of specialised
funds. To complement these skills, it has also
invested to attract industry professionals with
asset origination and management capabilities
across its three core asset classes.
As part of the Asset Management division,
each specialised fund team draws on this
pool of highly skilled resources from three
main areas:
• Fund management – Each specialised
fund has a dedicated fund management
team to manage the fund in accordance
with its investment strategy. This team
drives the fund’s strategic direction and
overall performance, with responsibility
for assessment of transactions, ongoing
management of the asset portfolio, and
financial and capital management.
• Asset origination – Each asset class has a
devoted origination team, with
responsibility for identifying and assessing
new opportunities for the specialised
funds and Challenger’s direct investment
portfolio. Located in both Sydney and
London, these teams have highly skilled
resources with deep industry relationships
and a proven track record in securing
assets which deliver value.
• Support services – As part of the Asset
Management division, the specialised
funds are able to draw upon a broad
support base to assist in managing the
fund and executing transactions. These
skills include finance, treasury, legal,
compliance, taxation, structuring, investor
relations and company secretarial
resources.
Challenger Asset Management has a strong
co-investment philosophy, and has invested
alongside investors in all of its specialised
funds. This alignment of manager and
investor is further enhanced by the use
of performance fees that reward relative
rather than absolute performance.
Support
origination
services
Asset
Fundmanagement
AboutChallenger
For
per
sona
l use
onl
y
portfolio summary
2007
For
per
sona
l use
onl
y
Total Area Occupancy WALE (by CarryingProperty Tenant area planted (by area) income) Valuation value
ha ha % yrs date $m
Australia
Dalswinton and Inglewood Vineyards 127 96 100 2.1 Dec-06 5.7Inglewood Vineyards
Chapel Vineyard National Viticultural 37 30 100 4.5 Dec-06 2.8Fund of Australia
Boh River Vineyard BH & SE Booth Auction Services 373 194 100 3.0 Dec-06 9.4
Sandy Hollow Vineyard McGuigan Simeon Wines 203 105 100 1.8 Dec-06 2.8
Qualco East Vineyard McGuigan Simeon Wines 214 171 100 8.5 Jun-07 6.8
Bethany Creek and McGuigan Simeon Wines 25 19 100 1.3 Dec-06 1.7Vine Vale Vineyards
Whitton Vineyard McGuigan Simeon Wines 102 98 100 7.8 Dec-06 3.8
Waikerie Vineyard McGuigan Simeon Wines 43 38 100 5.8 Dec-06 1.9
Cowra Station Vineyard McGuigan Simeon Wines 68 58 100 1.8 Dec-06 3.5
Balranald Vineyard McGuigan Simeon Wines 479 403 100 9.4 Jun-07 21.2
Schubert’s Vineyard McGuigan Simeon Wines 108 76 100 4.0 Dec-06 6.2
Hermitage Road Winery McGuigan Simeon Wines 40 – 100 1.0 Jun-07 3.9
Grande Junction Vineyard McGuigan Simeon Wines 572 – 100 13.0 Jul-05 0.9
Del Rios Vineyard McGuigan Simeon Wines 1,048 932 100 9.0 Jun-07 50.0
Gundagai Vineyard Green Valley Properties 289 239 100 3.2 Dec-06 15.6
Summers Hill Vineyard Grant Burge Wines 28 18 100 0.6 Dec-06 1.5
Corryton Park Vineyard Grant Burge Wines 54 42 100 0.6 Dec-06 3.1
Richmond Grove and Pernod Ricard Pacific 581 483 100 6.0 Jun-07 43.5Lawsons Vineyards
Cocoparra and Evans & Tate 496 266 100 5.8 Dec-06 9.7Woods Vineyards
Gnangara Vineyard Evans & Tate 257 101 100 5.8 Dec-06 5.9
Pooles Rock Vineyard Pooles Rock Wines 21 9 100 7.3 Dec-06 7.5and Winery
Trillians Hill Vineyard Trillians Hill Vineyard 41 24 100 9.9 Apr-05 1.1
Sirens Estate Vineyard Foster’s Group 66 44 100 4.9 Dec-06 3.2
Australiatotal/average 5,272 3,446 100 6.0 – 211.7
New Zealand
Dashwood Vineyard Delegat’s Group 197 167 100 5.3 Dec-06 23.2
Rarangi Vineyard Delegat’s Group 142 129 100 7.0 Dec-06 17.7
Gimblett Vineyards Delegat’s Group 45 40 100 3.8 Jun-07 6.7
Crownthorpe Vineyard Delegat’s Group 361 291 100 3.8 Jun-07 27.7
New Zealandtotal/average 745 627 100 4.9 – 75.3
Total/Average 6,017 4,073 100 5.8 – 287.0
Acquisition post30 June 2007
Miamba Vineyards Grant Burge Wines 205 118 100 8.0 Jun-07 12.4
Total/Average 6,222 4,191 100 5.9 – 299.4
Property summary
13
Ch
alleng
erW
ine
Trust
AnnualReport
2007
For
per
sona
l use
onl
y
Ownership interest 100% 100% 100%
Total area 127 ha 37 ha 373 haArea planted 96 ha 30 ha 194 haTenant Inglewood Vineyards National Viticultural Fund BH & SE Booth Auction Services
of AustraliaOccupancy 100.0% 100.0% 100.0%Lease expiry date July 2009 December 2011 June 2010WALE 2.1 years 4.5 years 3.0 yearsReview type/s Subject to grape price movements Increased on anniversary of Increased on anniversary of
with 4% cap on increase. lease by CPI. lease by CPI.FY07 net property income $0.630 million $0.34 million $1.11 millionDate acquired/established July 1999 December 2001 June 2006Purchase price $5.9 million $2.7 million $8.3 millionCarrying value $5.7 million $2.8 million $9.4 million*Valuation $5.8 million $2.8 million $9.3 million*Valuation date December 2006 December 2006 December 2006
Boh River Vineyard
Loxton, SA
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0%
100%
0% 0%0%0%
DescriptionInglewood Vineyard is located in theHunter Valley region, in New SouthWales. The vineyard is currentlybenefiting from a replanting programto favoured varieties which began in2005. Grapes from this vineyard gointo the Two Rivers range of wines.
DescriptionChapel Vineyard is located in theCoonawarra region of South Australia,a cool climate region famous for itspremium wines, particularly CabernetSauvignon. The vineyard is plantedto Cabernet Sauvignon, and grapesfrom the vineyard go into the Foster’sGroup range of premium wines fromthe region.
DescriptionBoh River Vineyard is located in theRiverland region of South Australia.It is a large scale, warm climatevineyard which produces varietalsincluding Chardonnay, Semillon,Verdelho, Cabernet Sauvignon,Grenache, Merlot, and Shiraz.A grape supply contract is inplace with Foster’s Group for allfruit produced at this vineyard.
Dalswinton andInglewood Vineyards
Hunter Valley, NSW
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0%
100%
0% 0% 0%0%
Chapel Vineyard
Coonawarra, SA
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0% 0% 0% 0%
100%
0
20
40
60
80
100
0%
Lease expiry profile (by income)
*Boh River Vineyard valuation at December 2006 did not include permanent waterpurchased in the 2007 year. Carrying value includes value of additional permanent water.
For
per
sona
l use
onl
y
DescriptionSandy Hollow Vineyard is located inthe Hunter Valley, New South Wales.The vineyard has a mixture of oldand new plantings, and grows awide variety of grapes, includingChardonnay, Riesling, SauvignonBlanc, Shiraz, Semillon, CabernetSauvignon, Merlot. Grapes fromthis vineyard go into the McGuiganSimeon Wines range of Hunter Valley wines.
Ownership interest 100% 100% 100%
Total area 203 ha 214 ha 25 haArea planted 105 ha 171 ha 19 haTenant McGuigan Simeon Wines McGuigan Simeon Wines McGuigan Simeon WinesOccupancy 100.0% 100.0% 100.0%Lease expiry date April 2009 December 2015 October 2008WALE 1.8 years 8.5 years 1.3 yearsReview type/s Increased on anniversary of Increased on anniversary of Increased on anniversary of
lease by CPI. lease by a fixed 1.5%. lease by CPI.FY07 net property income $0.55 million $0.87 million $0.19 millionDate acquired/established November 1998 December 2003 October 1998Purchase price $4.2 million $7.0 million $1.5 millionCarrying value $2.8 million $6.8 million $1.7 millionValuation $3.8 million $8.6 million $1.7 millionValuation date December 2006 June 2007 December 2006
Bethany Creek andVine Vale Vineyards
Barossa Valley, SA
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0%
100%
0% 0% 0%0%
15
Ch
alleng
erW
ine
Trust
AnnualReport
2007Sandy Hollow Vineyard
Hunter Valley, NSW
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0%
100%
0% 0% 0%0%
Qualco East Vineyard
Waikerie, SA
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0% 0% 0% 0% 0%
100%
DescriptionQualco East Vineyard is located in theRiverland region of South Australia.It is a large scale, warm climatevineyard which produces majorvarietals, being Chardonnay, Shiraz,Cabernet Sauvignon and Merlot.Grapes from this vineyard go intothe McGuigan Simeon Wines rangeof wines.
DescriptionThe Bethany Creek and Vine ValeVineyards are located in the BarossaValley in South Australia, a coolclimate region which is famous forits premium wines, particularly Shiraz.Vineyard management practicesincluding hand pruning are used tomaximise the quality of the Shiraz,Chardonnay and Riesling grapevarieties grown on the property thatgo into the McGuigan Simeon WinesTempus Two and premium wine range.
Lease expiry profile (by income)
For
per
sona
l use
onl
y
Ownership interest 100% 100% 100%
Total area 102 ha 43 ha 68 haArea planted 98 ha 38 ha 58 haTenant McGuigan Simeon Wines McGuigan Simeon Wines McGuigan Simeon WinesOccupancy 100.0% 100.0% 100.0%Lease expiry date April 2015 April 2013 April 2009WALE 7.8 years 5.8 years 1.8 yearsReview type/s Increased on anniversary of Increased on anniversary of Increased on anniversary of
lease by CPI. lease by CPI. lease by CPI.FY07 net property income $0.35 million $0.24 million $0.44 millionDate acquired/established April 2005 October 1998 April 1998Purchase price $3.5 million $1.9 million $3.4 millionCarrying value $3.8 million $1.9 million $3.5 millionValuation $3.8 million $2.0 million $3.5 millionValuation date December 2006 December 2006 December 2006
Cowra Station Vineyard
Cowra, NSW
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0%
100%
0% 0% 0%0%
DescriptionCowra Station Vineyard is locatedin the Cowra Region of New SouthWales. The vineyard has a heavyweighting towards white grapevarieties due to the site and regionalcharacteristics. Main varietals includeChardonnay, Semillon, SauvignonBlanc, Verdelho, Shiraz and Merlot.Grapes from this vineyard go intothe McGuigan Simeon Wines rangeof wines.
Whitton Vineyard
Whitton, NSW
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0% 0% 0% 0% 0%
100%
DescriptionWhitton Vineyard is located nearGriffith, New South Wales. It is alarge, warm climate vineyard whichproduces major varietals includingChardonnay, Colombard, Semillonand Shiraz. Planning is underway toimprove the efficiency of this vineyardthrough transition to a drip irrigationsystem. Grapes from this vineyard gointo the McGuigan Simeon Winesrange of wines.
Waikerie Vineyard
Waikerie, SA
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0% 0% 0% 0% 0%
100%
DescriptionWaikerie Vineyard is located in theWaikerie region of South Australia.The vineyard produces severalvarietals including Chardonnay,Colombard, Gordo, Verdelho,Cabernet Sauvignon, Grenache,Merlot, and Shiraz. Grapes fromthis vineyard go into the McGuiganSimeon Wines range of wines.
Lease expiry profile (by income)
For
per
sona
l use
onl
y
17
Ch
alleng
erW
ine
Trust
AnnualReport
2007
Ownership interest 100% 100% 100%
Total area 479 ha 108 ha 40 haArea planted 403 ha 76 ha 0 haTenant McGuigan Simeon Wines McGuigan Simeon Wines McGuigan Simeon WinesOccupancy 100.0% 100.0% 100.0%Lease expiry date November 2016 May 2011 June 2008WALE 9.4 years 4.0 years 1.0 yearsReview type/s Increased on anniversary of Increased on anniversary of Increased on anniversary of
lease by a fixed 1.5%. lease by CPI. lease by CPI.FY07 net property income $2.38 million $0.64 million $0.46 millionDate acquired/established December 2003 July 2001 October 2001Purchase price $20.7 million $4.2 million $4.0 millionCarrying value $21.2 million $6.2 million $3.9 millionValuation $22.5 million $6.2 million $4.5 millionValuation date June 2007 December 2006 June 2007
Schubert’s Vineyard
Adelaide, SA
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0% 0% 0% 0%
100%
0
20
40
60
80
100
0%
DescriptionSchubert’s Vineyard is located inthe Adelaide Hills region of SouthAustralia. The vineyard is solelyplanted to white grape varieties,namely Chardonnay, Sauvignon Blanc,Riesling and Traminer. Grapes fromthis vineyard go into Earths Portraitand other McGuigan Simeon Wineswine brands.
Hermitage Road Winery
Hunter Valley, NSW
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%
100%
0% 0% 0% 0%
0
20
40
60
80
100
0%
DescriptionHermitage Road Winery is locatedin the Hunter Valley in New SouthWales. This property is a 4,000 tonne crush capacity winery with storage capacity (includingfermentation tanks) of 6,300,000litres. The site also includes a cellardoor and restaurant.
Balranald Vineyard
Balranald, NSW
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0% 0% 0% 0% 0%
100%
DescriptionBalranald Vineyard is located on theMurrumbidgee River in New SouthWales. This large scale, warm climatevineyard is planted to Chardonnay,Cabernet Sauvignon, Colombard,Semillon, Shiraz, Ruby Cabernet andMerlot. Grapes from the vineyard gointo the McGuigan Simeon Winesrange of wines.
Lease expiry profile (by income)
For
per
sona
l use
onl
y
Grande JunctionVineyard
Wentworth, NSW
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0% 0% 0% 0% 0%
100%
Ownership interest 100% 100% 100%
Total area 572 ha 1,048 ha 289 haArea planted 0 ha 932 ha 239 haTenant McGuigan Simeon Wines McGuigan Simeon Wines Green Valley PropertiesOccupancy 100.0% 100.0% 100.0%Lease expiry date June 2020 June 2016 September 2010WALE 13.0 years 9.0 years 3.2 yearsReview type/s Increased on anniversary of Increased on anniversary of Increased on anniversary of
lease by CPI. lease by a fixed 1.5%. lease by CPI.FY07 net property income $0.45 million $4.87 million $1.86 millionDate acquired/established June 2005 June 2003 September 2000Purchase price $0.9 million $16.9 million $7.0 millionCarrying value $0.9 million $50.0 million $15.6 millionValuation n/a $50.0 million $16.0 millionValuation date n/a June 2007 December 2006
DescriptionGrande Junction Vineyard is locatednear Wentworth in New South Wales.Following the agreement betweenCWT and McGuigan Simeon Wines,this development will not proceed.McGuigan Simeon Wines hasreimbursed CWT for all developmentexpenditure incurred to date, and will repurchase the property inSeptember 2007.
Del Rios Vineyard
Boundary Bend, VIC
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0% 0% 0% 0% 0%
100%
DescriptionDel Rios Vineyard is the Trust’s singlelargest vineyard and one of the largestin Australia. Located on the MurrayRiver in Victoria, it is planted to mostmajor grape varietals including Shiraz,Cabernet Sauvignon, Chardonnayand Sauvignon Blanc. The grapesproduced from this vineyard go intothe McGuigan Simeon Wines rangeof wines.
Gundagai Vineyard
Gundagai, NSW
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0%
100%
0% 0%0% 0%
DescriptionGundagai Vineyard is located nearGundagai in New South Wales. It isa large scale vineyard which producesmajor varietals including Chardonnay,Cabernet Sauvignon, Merlot andShiraz. Grapes from this vineyardare contracted to Foster’s Group.
Lease expiry profile (by income)
For
per
sona
l use
onl
y
Ownership interest 100% 100% 100%
Total area 28 ha 54 ha 581 haArea planted 18 ha 42 ha 483 haTenant Grant Burge Wines Grant Burge Wines Pernod Ricard PacificOccupancy 100.0% 100.0% 100.0%Lease expiry date February 2008 February 2008 May 2012WALE 0.6 years 0.6 years 6.0 yearsReview type/s Increased on anniversary of Increased on anniversary of Increased on anniversary of
lease by CPI. lease by CPI. lease by a fixed 1.5% to 2009and by a fixed 0.75% for theremaining lease term.
FY07 net property income $0.16 million $0.33 million $4.61 millionDate acquired/established February 2008 February 1998 July 2003Purchase price $1.3 million $1.0 million $43.3 millionCarrying value $1.5 million $3.1 million $43.5 millionValuation $1.5 million $3.1 million $43.5 millionValuation date December 2006 December 2006 June 2007
19
Ch
alleng
erW
ine
Trust
AnnualReport
2007Corryton Park Vineyard
Eden Valley, SA
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%
100%
0% 0% 0% 0%
0
20
40
60
80
100
0%
DescriptionCorryton Park Vineyard is located inthe cool climate Eden Valley regionof South Australia. The vineyard isplanted to varietals of CabernetSauvignon, Merlot and Petit Verdotthat go into the Grant Burge labelledrange of wines.
Summers Hill Vineyard
Eden Valley, SA
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%
100%
0% 0% 0% 0%
0
20
40
60
80
100
0%
DescriptionSummers Hill Vineyard is located inthe Eden Valley, South Australia, acool climate region famous for itsChardonnay and Riesling. Mainvarietals planted include Chardonnay,Pinot Noir and Riesling. The grapes ofthis vineyard are of a very high qualityand go into the Grant Burge labelledrange of wines.
Richmond Grove andLawsons Vineyards
Padthaway, SA
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0% 0% 0% 0%
100%
0
20
40
60
80
100
0%
DescriptionRichmond Grove and LawsonsVineyards are located in Padthaway,South Australia, a cool climate regionwhich is famous for its premiumwines. The fruit produced at thesevineyards is of an extremely highstandard as a result of thecombination of careful varietalselection and management practices.The main varietals include Shiraz,Cabernet Sauvignon and Merlot.Grapes from this vineyard go intothe Trilogy and other Pernod RicardPacific premium wines.
Lease expiry profile (by income)
For
per
sona
l use
onl
y
Gnangara Vineyard
Manjimup, WA
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0% 0% 0% 0% 0%
100%
DescriptionGnangara Vineyard is located in theManjimup region in Western Australia.This is a newly developed vineyardplanted to largely white varieties,namely Chardonnay and SauvignonBlanc.
Cocoparra andWoods Vineyards
Griffith, NSW
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0% 0% 0% 0% 0%
100%
Ownership interest 100% 100% 100%
Total area 496 ha 257.25 ha 21 haArea planted 266 ha 101.25 ha 9 haTenant Evans & Tate Evans & Tate Pooles Rock WinesOccupancy 100.0% 100.0% 100.0%Lease expiry date April 2013 April 2013 November 2014WALE 5.8 years 5.8 years 7.3 yearsReview type/s Increased on anniversary of Increased on anniversary of Increased on anniversary of
lease by CPI. lease by CPI. lease by CPI.FY07 net property income $1.03 million $0.66 million $0.79 millionDate acquired/established April 2003 April 2003 November 2004Purchase price $9.3 million $1.5 million $6.2 millionCarrying value $9.7 million $5.9 million $7.5 millionValuation $10.4 million $6.5 million $8.0 millionValuation date December 2006 December 2006 December 2006
DescriptionThe Cocoparra and Woods Vineyardsare located in Griffith in New SouthWales. These large, warm climatevineyards are planted to Semillon,Chardonnay, Shiraz, CabernetSauvignon, Merlot, Grenacheand Ruby Cabernet.
Pooles Rock Vineyardand Winery
Hunter Valley, NSW
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0% 0% 0% 0% 0%
100%
DescriptionPooles Rock Winery and Vineyard islocated in the Hunter Valley regionof New South Wales. The propertyincludes a small vineyard, a wineryand a restaurant that opened to thepublic in 2007. Grapes from thisvineyard go into Pooles Rock andCockfighters Ghost range of wines.
Lease expiry profile (by income)
For
per
sona
l use
onl
y
21
Ch
alleng
erW
ine
Trust
AnnualReport
2007
Ownership interest 100% 100% 100%
Total area 41 ha 66.09 ha 197 haArea planted 24 ha 44.04 ha 167 haTenant Trillians Hill Vineyard Foster’s Group Delegat’s GroupOccupancy 100.0% 100.0% 100.0%Lease expiry date June 2017 May 2012 October 2012WALE 9.9 years 4.9 years 5.3 yearsReview type/s Increased on anniversary of Increased on anniversary of Minimum of CPI or 1.5% fixed
lease by CPI. lease by CPI. reviews annually.FY07 net property income $0.11 million $0.28 million $1.69 millionDate acquired/established June 2002 October 2002 September 2002Purchase price $0.9 million $3.2 million $15.0 millionCarrying value $1.1 million $3.2 million $23.2 millionValuation $1.1 million $28.0 million $23.3 millionValuation date April 2005 December 2006 December 2006
Sirens Vineyard
Margaret River, WA
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0%
100%
0% 0%0% 0%
DescriptionSirens Vineyard is located in theMargaret River region of WesternAustralia. This cool climate regionis known for its Chardonnay andCabernet Sauvignon. Main varietalsinclude Chardonnay, Merlot, CabernetSauvignon and Sauvignon Blanc.Grapes from this vineyard go intothe Foster’s Group Fifth Leg rangeof wines.
Trillians Hill Vineyard
Clare, SA
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0% 0% 0% 0% 0%
100%
DescriptionTrillians Hill Vineyard is located in theClare Valley in South Australia, a coolclimate region which is famous for itspremium wines, particularly Rieslingand Shiraz. Grapes from this vineyardgo into the Killakanoon range ofpremium wines.
Dashwood Vineyard
Marlborough, New Zealand
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0% 0% 0% 0% 0%
100%
DescriptionDashwood Vineyard is located in theMarlborough region of New Zealand’sSouth Island, a region which is famousfor its premium wines, particularlySauvignon Blanc. The DashwoodVineyard development of SauvignonBlanc, Chardonnay and Pinot Noirgrape varieties began in Spring2002 and is now reaching maturity.Grapes from the vineyard go into theDelegat’s Group’s Oyster Bay rangeof wines.
Lease expiry profile (by income)
For
per
sona
l use
onl
y
Rarangi Vineyard
Marlborough, New Zealand
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0% 0% 0% 0% 0%
100%
Ownership interest 100% 100% 100%
Total area 142 ha 45 ha 361 haArea planted 129 ha 40 ha 291 haTenant Delegat’s Group Delegat’s Group Delegat’s GroupOccupancy 100.0% 100.0% 100.0%Lease expiry date June 2014 April 2011 April 2011WALE 7.0 years 3.8 years 3.8 yearsReview type/s Minimum of CPI or Minimum of CPI or Minimum of CPI or
1.5% fixed reviews annually. 1.5% fixed reviews annually. 1.5% fixed reviews annually.FY07 net property income $1.29 million $0.60 million $2.2 millionDate acquired/established June 2004 April 2001 April 2001Purchase price $12.0 million $5.0 million $19.4 millionCarrying value $17.7 million $6.7 million $27.7 millionValuation $17.7 million $6.7 million $27.7 millionValuation date December 2006 June 2007 June 2007
DescriptionRarangi Vineyard is located in theMarlborough region of New Zealand’sSouth Island, a region which is famousfor its premium wines, particularlySauvignon Blanc. The RarangiVineyard is planted to Sauvignon Blancand Pinot Noir grape varieties. Thesevarieties are well suited to the site andreflect the varieties in demand fromthis region. Grapes from the vineyardgo into the Delegat’s Group’s OysterBay range of wines.
Gimblett Vineyards
Hawkes Bay, New Zealand
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0%
100%
0% 0%0% 0%
DescriptionThe Gimblett Road Vineyards arelocated in the ‘Gimblett Gravels WineGrowing District’ in the Hawkes Bayregion of New Zealand’s North Island.The Gimblett Road Vineyards areplanted to Cabernet Sauvignon,Chardonnay and Merlot. The varietalsplanted are well suited to the site andconsistently produce premium qualityfruit. Grapes from the vineyard gointo the Delegat’s Group’s Oyster Bayrange of wines.
Crownthorpe Vineyard
Hawkes Bay, New Zealand
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0%
100%
0% 0%0% 0%
DescriptionThe Crownthorpe Vineyard is locatedin the Hawkes Bay region of NewZealand’s North Island. Planting ofthe Crownthorpe Vineyard startedin 2001, and today comprises thelargest single vineyard planting inthe Hawke’s Bay wine region.Grapes from the vineyard go intothe Delegat’s Group’s Oyster Bayrange of wines.
Lease expiry profile (by income)
For
per
sona
l use
onl
y
23
Ch
alleng
erW
ine
Trust
AnnualReport
2007Miamba Vineyards
Barossa Valley, SA
20
40
60
80
100
Bey
ond
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
0
20
40
60
80
100
0%0% 0% 0% 0% 0%
100%
Ownership interest 100%
Total area 205 haArea planted 117.5 haTenant Grant Burge WinesOccupancy 100.0%Lease expiry date August 2015WALE 8.0 yearsReview type/s Rent increased annually but shall
not be greater than 1.5% of theformer rent.
FY07 net property income n/aDate acquired/established August 2007Purchase price $11.5 millionCarrying value $12.4 millionValuation $11.5 millionValuation date June 2007
DescriptionMiamba Vineyards is an aggregationof five neighbouring propertieslocated in the Barossa Valley inSouth Australia. All grapes fromthese properties go into GrantBurge brands including BarossaVines, Miamba, Filsell, Chaff Mill,Cameron Vale and Meshach brands.
Lease expiry profile (by income)
For
per
sona
l use
onl
y
IntroductionThe Australian Securities Exchange (ASX)
Corporate Governance Council has developed
a set of guidelines entitled Principles of
Corporate Governance and Best Practice
Recommendations (ASX principles).
The ASX principles are non-prescriptive,
however, listed entities (including CWT) are
required in their annual report to disclose
the extent of their compliance with the ASX
principles and to explain why they have not
adopted any particular recommendation.
Most of the recommendations contained in
the ASX principles are relevant to CWT and
have been adopted. However, several are
either not relevant or the Responsible Entity
has decided that it is appropriate not to
implement them.
Other than where specifically stated to the
contrary, the Responsible Entity’s corporate
governance structure as described below
complies with the ASX principles.
Where it is indicated, a policy is available on
CWT’s website. For further information on
corporate governance policies adopted by
the Responsible Entity, refer to our website
www.challenger.com.au/cwt.
CWTRole of the Responsible EntityThe role of the Responsible Entity is to
manage CWT in the unitholders’ best interests
in accordance with CWT’s constitution and
the Corporations Act 2001 (Act). The Act
empowers the Responsible Entity to engage
agents on its behalf, however, it remains fully
responsible for the actions of those agents.
The Responsible Entity has appointed
Challenger Management Services Limited
to manage CWT. Challenger Management
Services Limited and the Responsible Entity
are wholly owned subsidiaries of Challenger
Life Holdings Limited which is wholly owned
by Challenger Financial Services Group
Limited (CFSG).
CWT’s constitution governs, among other
things, how CWT will operate, how the
Responsible Entity’s remuneration will be
calculated and the rights of unitholders.
The Responsible Entity must also prepare
and lodge a compliance plan with the
Australian Securities and Investments
Commission (ASIC). The compliance plan
sets out the mechanisms the Responsible
Entity has in place to ensure compliance
with CWT’s constitution and the Act.
Board structureRelationship with ChallengerFinancial Services GroupThe corporate governance structure adopted
by the Responsible Entity reflects its role as
the responsible entity of a listed property
trust. In several ways, this will be different
to the corporate governance structure of a
listed company.
CFSG has expertise in developing and
managing specialist investment funds in areas
of property and infrastructure. The Responsible
Entity makes extensive use of the resources
available within CFSG in managing CWT.
The resources provided to assist the
Responsible Entity in fulfilling its role
include the services of senior executives
and responsible officers. CFSG in consultation
with the Responsible Entity may also appoint
appropriately skilled independent directors and
executives to ensure that CWT continues to be
managed to maximise returns to unitholders
within CWT’s stated strategy and mandate.
Composition of the BoardSee pages 30-31 for profiles of the directors,
including details of their skills, experience
and expertise.
Nomination and appointmentof directorsThe Responsible Entity is a wholly owned
subsidiary of CFSG. As a result, the Board
has not appointed a formal nominations
committee. The Board will draw upon
the CFSG nominations committee
recommendations for new directors. Such
recommendations are referred to the Board
of the Responsible Entity for approval prior to
any appointment. This represents a departure
from the ASX principles (recommendation 2.4)
which requires a nominations committee.
In determining the appointment of new
directors, the Board must comprise:
Corporategovernancestatement
2007
For
per
sona
l use
onl
y
25
Ch
alleng
erW
ine
Trust
AnnualReport
2007• directors with an appropriate range of
skills, experience and expertise; and
• directors who can understand and
competently deal with current and
emerging statutory developments.
Independent directorsThe Board has adopted an Independence
Policy. This policy meets the ASX principles
with the exception of the substantial
unitholder test. The Board has considered
this departure from the ASX principles.
The directors believe the Independence
Policy explains why it is appropriate for the
Responsible Entity. The policy states that an
independent director is a director who is
not a related party of, or associated directly
with, a substantial unitholder of CWT, except
where the person is a director of a related
party with a substantial unitholding in CWT
and the directors have resolved that the
director is independent of management
and free of any business relationship that
could materially interfere with, or could
reasonably be perceived to materially
interfere with, the exercise of their
unfettered and independent judgement.
Based on this policy, there is a majority of
independent directors on the Board.
Board CharterThe Board has adopted a formal Board
Charter which details the functions and
responsibilities of the Board with respect
to its oversight and management of CWT.
The topics covered in the Board Charter are:
• board size and composition;
• board’s role and responsibilities;
• audit and compliance committee;
• directors;
• conflicts;
• access to information and independent
advice by directors;
• ethical standards; and
• role of approved auditor.
The Board has delegated to CWT’s Fund
Manager the authority and powers necessary
to implement the strategies approved by the
Board for CWT and to manage the business
affairs of CWT within the policies and specific
delegation limits specified by the Board from
time to time.
A summary of the Board Charter is available
on CWT’s website.
Independent professional adviceAll directors have unrestricted access to the
Responsible Entity’s and CWT’s records and
information. The Company Secretary provides
directors with guidance on corporate
governance matters and developments and on
all other matters reasonably requested by the
directors. The Board or each individual director
has the right to seek independent professional
advice at the Responsible Entity’s expense to
assist them in discharging their duties.
Code of ConductThe Responsible Entity is committed to
maximising returns to unitholders whilst also
promoting unitholder and general market
confidence in CWT. As a wholly owned
subsidiary of CFSG, the Responsible Entity,
its directors and executives are subject to
the Code of Conduct of CFSG. The Code
of Conduct, as it applies to CWT, is designed
to ensure:
• high standards of corporate and individual
behaviour are observed by all directors and
executives in the context of their roles; and
• staff are aware of their responsibilities to
CWT and always act in an ethical and
professional manner.
The Code of Conduct requires directors and
executives to report any actual or potential
breach of the Act, the Code of Conduct
or other policies. The Responsible Entity
promotes and encourages ethical behaviour
and provides protection for those who report
violations.
A summary of the Code of Conduct is
available on CWT’s website.
Review of Board and seniormanagement performanceAn induction program has been implemented
to assist new independent directors. Existing
directors are encouraged to pursue continuing
education to update and improve their skills
and knowledge.
The CFSG executives on the Board, the
Chief Executive and other CFSG executives
performing services for CWT are subject to
annual performance evaluation.
This is part of CFSG’s employee evaluation
process. For independent directors, a
formal methodology for review is currently
being considered.
Audit and Compliance CommitteeThe Board has established an Audit and
Compliance Committee (‘Committee’) which
is responsible for advising the Board on
internal controls and appropriate standards
for the management of CWT. The Committee
oversees the financial reporting process,
the system of internal control and risk
management, the audit process and the
Responsible Entity’s processes for monitoring
compliance with laws and regulations.
The Committee also assists the Board in
discharging its responsibilities under the
Compliance Plan adopted by the Responsible
Entity. The Committee works on behalf of the
Board with the external auditor and reviews
non-audit services provided by the external
auditor to confirm that they are consistent
with maintaining external audit
independence.
The Committee is comprised of a majority
of independent members. The Committee is
currently comprised as follows:
• Ian Martens – chairman – independent
director
• Ian Moore – independent director
• Russell Hooper – independent director.
The Committee has adopted a Charter
which outlines the duties and responsibilities
of the Committee, which include:
• reviewing the financial statements of
CWT for the half year and full year and
considering whether they are complete
and consistent with information known
to the Committee members;
• monitoring the extent to which the
Responsible Entity complies with CWT’s
Compliance Plan, the Act and CWT’s
constitution and reviewing the
effectiveness of the system for monitoring
compliance with laws and regulations;
For
per
sona
l use
onl
y
2007
• considering the overall risk management
framework for CWT and reviewing its
effectiveness in meeting sound corporate
governance principles and identifying,
managing and monitoring the key risks
to CWT; and
• meeting separately from management
with the external auditor at least once a
year to discuss any matters the Committee
and the auditor believe should be
discussed privately.
To assist the Board and the Committee in
discharging their respective responsibilities,
the Fund Manager and Chief Financial Officer
of CWT are required to provide the Board and
Committee with a letter of representation in
relation to the financial statements of CWT.
The letter of representation confirms that
CWT’s financial reports present a true and
fair view, in all material respects, of CWT’s
financial condition and operational results
and are in accordance with relevant
accounting standards. The letter describes
the process the Fund Manager and Chief
Financial Officer have adopted to satisfy
themselves on these matters.
A summary of the Charter is available on
CWT’s website.
CWT Investment CommitteeThe Board has established a CWT Investment
Committee (CWT IC) which is responsible
for assisting the Board on property related
activities.
The CWT IC consists of at least three
members. The current CWT IC membership
consists of two independent directors, one
of whom will act as chairperson, and three
senior executives of the Challenger Group.
The CWT IC has adopted a Charter which
outlines the duties of the CWT IC, which
include:
• review and approval of CWT investments;
• monitoring and reporting of market,
liquidity and credit risk exposures; and
• monitoring of investment policies and
limits and reporting breaches of the
policies and limits to the Board.
On 14 August 2007, the Board resolved
to replace the CWT IC with the Property
Investment Committee (PIC). The PIC is
responsible for assisting the Board on property
related investments. The PIC consists of at
least three members. The current PIC
membership consists of two independent
directors, one of whom will act as
chairperson, and three senior executives
of the Challenger Group.
Risk managementThe Responsible Entity believes that the
management of risks is fundamental to
CWT’s operations and to building unitholder
value. The Board is responsible for CWT’s
risk management strategy and management
is responsible for implementing the Board’s
strategy and for developing policies and
procedures to identify, manage and
mitigate risks across CWT’s operations.
The Board has adopted the CFSG Operational
Risk Framework and formal policies in
respect of compliance and operational risk
management. Risks at both the Responsible
Entity and CWT level are managed through
the CFSG Operational Risk framework
and include:
• regulatory and reporting risks;
• financial risks (such as liquidity, interest
rate, currency and investment);
• legal risks (such as contract enforceability,
covenants);
• operational risks (such as people,
processes, infrastructure, technology); and
• reputation risk (such as investor relations,
media management).
The Responsible Entity as a subsidiary
of CFSG is subject to periodic review
by the CFSG internal audit function.
At the time of approving the financial
statements of CWT, the Board requires
representation letters from management
(see above) to address risk management
and internal compliance and controls
relevant to risk.
For
per
sona
l use
onl
y
A summary of the attendance of the directors at the CLIL Board meetings and committees held in the period 1 July 2006 to 30 June 2007 are as follows:
Board Audit and CWTCompliance InvestmentCommittee Committee
Eligible Eligible EligibleDirector Notes to attend Attended to attend Attended to attend Attended
S Gerlach 13 9 – – 5 4
P Brook 1 10 10 – – – –
R Hooper 13 12 9 9 – –
I Martens 13 13 9 9 5 5
G Martin 2 1 – – – – _
G McWilliam 13 13 – – – –
I Moore 13 13 9 8 – –
P Polson 3 1 1 – – – –
P Rogan 4 3 3 2 2 – –
R Woods 13 13 – – – –
27
Ch
alleng
erW
ine
Trust
AnnualReport
2007Disclosure of remunerationThe Responsible Entity is entitled to be paid
base and performance fees under the terms
of the Constitution for managing CWT. All
executives involved in the management of
CWT are employees of CFSG and are not
remunerated by CWT.
As CWT does not pay any remuneration
directly to executives of the Responsible
Entity, the Responsible Entity considers that
the requirement to disclose its remuneration
policies (pursuant to recommendation 9.1
of the ASX principles), to establish a
remuneration committee (pursuant to
recommendation 9.2) and to distinguish
the nature of executive remuneration from
that of non-executives (pursuant to
recommendation 9.3) are not relevant to
CWT. In addition, CWT does not have an
equity based executive remuneration trust
in operation and thus the disclosure required
by recommendation 9.4 is also not relevant
to CWT. These represent departures from
the ASX principles.
See pages 71-72 for details on the calculation
of Responsible Entity fees.
Independent directors’ feesIndependent directors are paid an annual
fee for their service on the Board and all
committees of the Board. Independent
directors are not provided with retirement
benefits other than statutory superannuation
and do not receive options or bonus
payments.
All independent director remuneration is
paid by the Responsible Entity and is not
an expense of CWT.
Staff Trading PolicyThe Board has adopted the CFSG Staff
Trading Policy. Directors and staff are subject
to restrictions under the Corporations Act
relating to dealing in securities, including the
units issued by CWT if they are in possession
of inside information. The policy applies to
all directors and staff and places restrictions
and reporting requirements on staff, including
limiting trading in units in CWT and CFSG
shares to specific trading windows and in a
specified manner and requiring those staff
designated as potentially having access to
inside information to seek prior approval
to trades in other securities.
A summary of the Staff Trading Policy is
available on CWT’s website.
Communications with unitholdersConsistent with CWT’s Continuous Disclosure
Policy, the Responsible Entity is committed
to communicating with unitholders in an
effective and timely manner so as to provide
them with ready access to information
relating to CWT.
CWT lodges with the ASX market sensitive
information including annual and half year
profit announcements, financial reports
and analysts’ presentations as soon as they
are available.
The Responsible Entity has a practice of
ensuring that all information to be given
by the Responsible Entity in relation to
CWT at analyst and investor briefings is
first released to the ASX to ensure that the
market is fully informed.
The Responsible Entity is not required to hold
annual general meetings for CWT, however, it
may convene general meetings from time to
time. Where the Responsible Entity convenes
a general meeting for CWT, unitholders are
strongly encouraged to attend and participate
in such meetings. The Responsible Entity
will provide unitholders with details of any
proposed meeting well in advance of the
relevant date.
If unitholders cannot attend formal meetings,
they may lodge a proxy in accordance with
the Corporations Act. Proxy forms can be
mailed or lodged by facsimile.
The external auditor will attend unitholder
meetings and be available to answer
unitholder questions.
Notes1. P Brook was appointed to the Board on 6 November 2006.2. G Martin resigned from the Board on 4 August 2006.3. P Polson resigned from the Board on 4 August 2006.4. P Rogan resigned from the Board on 2 November 2006.
For
per
sona
l use
onl
y
2007
financial report
For
per
sona
l use
onl
y
29
Ch
alleng
erW
ine
Trust
AnnualReport
2007
29
Ch
alleng
erW
ine
Trust
AnnualReport
2007
The directors of ChallengerListed Investments Limited(CLIL) (ABN 94 055 293 644),the Responsible Entity of theChallenger Wine Trust (CWT)(ARSN 092 960 060), submit theirreport together with the financialreport for CWT, for the year ended30 June 2007.
Principal activitiesThe principal activity of Challenger Wine
Trust during the period was to pool
investors’ funds in a portfolio of vineyards
and wine infrastructure assets which is
designed to provide its investors with a
stable distribution stream derived from
net rental incomes. The Trust’s investments
are structured in such a way as to avoid
the risks inherent in grape production.
Scheme informationChallenger Listed Investments Limited
(CLIL), the Responsible Entity of the Trust,
is incorporated and domiciled in Australia.
The registered office of the Responsible
Entity is located at Level 15, 255 Pitt Street,
Sydney NSW 2000.
Directors’report
For
per
sona
l use
onl
y
2007
Directors’ summaryThe following persons held office as directors
of CLIL during the period 1 July 2006 to
30 June 2007:
• Stephen Gerlach Chairman
• Peter Brook (appointed 6 November 2006)
• Russell Hooper
• Ian Martens
• Greg Martin (resigned 4 August 2006)
• Geoff McWilliam
• Ian Moore
• Peter Polson (resigned 4 August 2006)
• Paul Rogan (resigned 2 November 2006)
• Robert Woods
Qualifications, experienceand special responsibilitiesof directorsCLIL has considerable expertise in
the infrastructure, property and funds
management sectors as illustrated by
the experience of its directors.
The names and details of the directors in
office at the date of this report are as follows.
Directors andKey Management Personnel
Stephen GerlachLLB, FAICDChairman
Mr Gerlach has extensive experience as a
corporate adviser and company director,
having held positions on the boards of several
public companies. At present he is on the
Board of Santos Limited (Chairman) and
Futuris Corporation Limited (Chairman).
Mr Gerlach is the former Managing Partner
of Adelaide legal firm Finlaysons, and is a
former Director of Elders Australia Limited
(Chairman), Elders Rural Bank Limited,
Equatorial Mining Limited (Chairman),
Penrice Soda Products Limited (Chairman),
Southcorp Limited and Brunner Mond
Holdings Limited (UK).
Mr Gerlach is a member of the Australian
Institute of Company Directors, its Corporate
Governance Committee and is Chairman of
Foodbank SA Inc, a Director of Foodbank
Australia Inc and a Trustee of the Australian
Cancer Research Foundation.
Mr Gerlach is a member of the CLIL
Challenger Wine Trust Investment Committee.
Peter BrookBComm, MMngt, AICAExecutive Director
Mr Brook is the Chief Financial Officer of
Challenger’s Asset Management division.
In this role, Mr Brook is responsible for
overseeing the financial management and
reporting of the Asset Management division’s
investment portfolio and specialist funds
across direct property, infrastructure and
fixed income.
Mr Brook has over 20 years experience in
finance roles, most recently with MLC Limited
and National Australia Bank, prior to which
he was a partner in professional practice.
Russell HooperFAICD, FCPA, FFinNon-Executive Director
Mr Hooper has extensive experience in
financial services, including over 13 years
at St.George Bank Limited and Advance
Bank Limited, where he held senior
management positions in life insurance,
wealth management and listed investment
trusts, including the role of Chief General
Manager, Funds Management.
Mr Hooper is also a Director of Challenger
Financial Services Group Limited, Challenger
Life No.2 Limited and Century Australia
Investments Limited, and was previously
a Director of (and Chairman of the Audit
Committee for) Commonwealth Insurance
Limited, a subsidiary of the Commonwealth
Bank. Mr Hooper is a Fellow of the
Australian Institute of Company Directors,
the Australian Society of Certified Practising
Accountants and the Financial Services
Institute of Australasia.
Mr Hooper is a member of the CLIL Audit
and Compliance Committee.
Ian MartensFCA, FAICDNon-Executive Director
Mr Martens is a chartered accountant
and was senior partner at BDO Chartered
Accountants (SA), where he is now a
consultant. Throughout his career Mr Martens
has advised a broad range of public and
private companies on financial measurement
and reporting, strategy development and
evaluation and merger and acquisitions
activities.
Mr Martens is currently Chairman of
RAA Insurance Ltd and a Director of
RAA Investments Pty Ltd and the Royal
Automobile Association of SA Inc.
Mr Martens is Chairman of the CLIL Audit
and Compliance Committee and the CLIL
Challenger Wine Trust Investment Committee.
For
per
sona
l use
onl
y
31
Ch
alleng
erW
ine
Trust
AnnualReport
2007Geoff McWilliamBE(Civil)Non-Executive Director
Mr McWilliam has had an extensive career in
the Australian property investment industry.
Most recently, Mr McWilliam spent 10 years
building the Commonwealth Bank’s property
funds management division, Colonial First
State Property. As head of this business, he
was responsible for the management and
performance of over $16 billion in listed
and unlisted property funds. Prior to this,
Mr McWilliam spent 23 years with Lend
Lease Corporation in a variety of senior
management roles.
Mr McWilliam is a Director of Lend Lease
Funds Management Limited, Lend Lease
Asian Retail Investments Limited, Lend Lease
Real Estate Investments Limited, St Laurence
Limited (NZ), Dunmore Lang College Limited,
Gandel Group Pty Ltd and the Dusseldorp
Skills Forum Incorporated, and a Fellow of
the Australian Property Institute.
Ian MooreBA, FIA, FIAANon-Executive Director
Mr Moore has extensive experience in
investment banking and structured finance.
Mr Moore was Head of Corporate Finance
at Bankers Trust Investment Bank where he
was responsible for all forms of corporate,
project and asset backed financings.
Mr Moore is currently a Director of Artesian
Capital Management and a Fellow of the
Institute of Actuaries of Australia and the
Institute of Actuaries in London.
Mr Moore is a member of the CLIL Audit
and Compliance Committee.
Robert WoodsBCommExecutive Director
Mr Woods is Chief Executive, Asset
Management at Challenger. In this role,
Mr Woods is responsible for managing
Challenger’s $6.6 billion portfolio of
investments in direct property, infrastructure
and fixed income. The Asset Management
business manages assets for third party
investors, policyholders and shareholders,
generating spread and fee based income.
Prior to joining Challenger, Mr Woods was
a founder of Zurich Capital Markets Asia,
where he was responsible for the alternative
asset business. Prior to this, Mr Woods spent
11 years with Bankers Trust in investment
banking.
Bevan TowningHead of Specialised Funds
Mr Towning joined Challenger in February
2006 and is Head of Specialised Funds for
Challenger. In this role, Mr Towning is
responsible for the management and
performance of Challenger’s listed and
unlisted funds as well as attracting third
party capital for co-investment.
Prior to joining Challenger, Mr Towning
spent five years as the General Manager,
Listed Funds for Colonial First State’s
property division. In this role Mr Towning
was responsible for the strategic direction,
management and performance of two ASX
100 listed property trusts with combined
gross assets in excess of $7.5 billion, namely
CFS Gandel Retail Trust (of which he was also
Fund Manager) and Commonwealth Property
Office Fund.
Mr Towning has 25 years experience in the
property investment industry, including roles
in funds management, asset management,
property leasing and valuation with Colonial
First State, Lend Lease, Armstrong Jones and
Richard Ellis International.
Nick GillFund ManagerChallenger Wine Trust (CWT)
Mr Gill joined Challenger in November 2006
in the role of Fund Manager. Mr Gill has
specific responsibility for the ongoing
management of CWT. This includes
responsibility for Trust strategy, financial and
investment performance and transaction
evaluation and execution.
Mr Gill has over 20 years experience in the
corporate agribusiness and investment
industries, including roles in corporate
strategy, commercial management and
investment with Macquarie Bank, SunRice
Limited, Twynam Agricultural Group, Colly
Cotton Limited and Rural Property Trust.
Company Secretary
Chris RobsonBA, LLB (Hons), LLMGeneral Counsel andGroup Company Secretary
Mr Robson is a qualified solicitor and is the
Group Company Secretary and General
Counsel of the Challenger Financial Services
Group. He is also a non-independent Director
of certain subsidiaries of the Challenger
Group. His responsibilities include leading the
legal and company secretariat teams within
the Business Services division of the
Challenger Group.
Suzie KoeppenkastropBComm, LLB, LLMCompany Secretary
Ms Koeppenkastrop is a qualified solicitor
and head of the company secretariat team
at Challenger. Ms Koeppenkastrop has over
13 years experience in legal and company
secretarial roles in the financial services
industry.
For
per
sona
l use
onl
y
2007
Corporate governanceIn recognising the need for the highest standards of corporate behaviour and accountability, the directors of CLIL support and have adhered to
the ASX Corporate Governance Council’s Principles of Corporate Governance and Best Practice Recommendations. The corporate governance
statement is contained in the corporate governance section of this report.
Review and results of operationsThe consolidated net profit before tax for the year to 30 June 2007 attributable to unitholders of CWT was $7,875,356 (2006 Restated:
$13,779,904). The following table provides an analysis of the result:
Consolidated Consolidated
Restated30 June 2007 30 June 2006
$’000 $’000
Net property income 28,925 28,144
Profit from operating activities 14,331 13,171
Net fair value movement in non-current assets (i) (6,456) 608
Net profit attributable to unitholders 7,875 13,779
Distributions to ordinary unitholders 14,326 13,175
Interim distributions – paid 15 November 2006, 15 February 2007 and15 May 2007 (cents per unit) 6.815 6.746
Final distribution – to be paid on 16 August 2007in respect of 30 June 2007 (cents per unit) 2.285 2.316
(i) Following discussions and agreement with ASIC, CWT has restated its prior period comparatives to take into account a change in the treatmentof vines, investment properties, integral infrastructure and water rights. The impact of the change has resulted in a decrease in carrying value ofwater rights due to recognising intangible assets at cost (water rights previously carried at fair value within vines). The net fair value movementin non-current assets consists of:
Consolidated Consolidated
Restated30 June 2007 30 June 2006
$’000 $’000
Net fair value movement in non-current assets for the year consists of:
(Decrease)/increase from revaluation of non-current assets (4,552) 2,951
(Decrease) in carrying value due to recognising intangible assets at cost (1,904) (2,343)
(6,456) 608
DistributionsInterim distributions of 6.815 cents per unit were paid as described above. On 14 August 2007, the directors resolved to pay a final distribution
of 2.285 cents per unit on 16 August 2007 in respect of the period ended 30 June 2007 resulting in a total distribution of 9.100 cents per unit
for the year.
Units on issue170,312,633 (2006: 151,957,010) ordinary units were on issue at 30 June 2007. During the period, 1,151,178 ordinary units and 2,016 Preferred
Indexed Convertible Equity (PICE) units were issued through the respective Distribution Reinvestment Plans. The Distribution Reinvestment Plans for
ordinary and PICE unitholders were suspended on 15 August 2006.
On 27 April 2007, all 1,494,938 PICE units on issue were converted, in accordance with the PICE unit terms of issue, into 17,204,445 ordinary
units.
For
per
sona
l use
onl
y
33
Ch
alleng
erW
ine
Trust
AnnualReport
2007Earnings per unitBasic earnings per unit amounts are calculated by dividing the net profit after tax attributable to ordinary unitholders by the weighted average
number of securities outstanding during the period.
All PICE units were converted to ordinary units during the year therefore no diluted earnings per unit calculations are provided for the year
ended 30 June 2007.
The following reflects the income and security data used in the basic earnings per unit computations.
Consolidated Consolidated
Restated30 June 2007 30 June 2006
Net profit attributable to unitholders ($’000) 7,875 13,779
Time weighted average number of units for basic earnings per unit at year end(Number of units in thousands) 156,172 145,358
Time weighted average number of units for diluted earnings per unit at year end(Number of units in thousands) 156,172 169,043
Basic earnings per unit for net profit attributable to unitholders (cents per unit) 5.04 9.48
Diluted earnings per unit for net profit attributable to unitholders (cents per unit) 5.04 9.18
Scheme assetsAt 30 June 2007, CWT held assets to a total value of $297.5 million (2006 Restated: $294.0 million). The basis for valuation of the assets is
disclosed in Note 2 to the financial statements.
Fees paid to the Responsible Entity and associatesThe following table discloses all fees paid by CWT to CLIL and Challenger Management Services Limited (CMSL) under the Trust Constitution
and to CMSL under the management agreement with CLIL:
Consolidated Consolidated
Restated30 June 2007 30 June 2006
$’000 $’000
(a) Responsible Entity fees for the financial year paid to CLIL in accordancewith the Scheme Constitution 300 1,524
(b) Management fees for the financial year paid to CMSL under theManagement Agreement 2,045 1,057
Total fees paid or payable at balance date 2,345 2,582
Of the above fees $71,216 (2006: $161,197) has been capitalised to property acquisitions and developments.
Interests held in CWT by the Responsible Entity and its associatesThe following related entities of CLIL hold interests of 5% or more in CWT:
• Challenger Life No.2 Limited holds 44,626,652 ordinary units (26%) (2006: 36,251,019 ordinary units and 783,052 PICE units) as at
30 June 2007.
Challenger Life No.2 Limited (CL2) and CLIL are wholly owned subsidiaries of Challenger Financial Services Group Limited.
For
per
sona
l use
onl
y
2007
Significant changes in the state of affairsThere were no significant changes to the state of affairs of CWT during the year, other than those changes identified in the financial statements
for the year ended 30 June 2007.
Significant events after the balance dateExcept for those items disclosed in Note 28 to the financial statements there has been no matter or circumstance that has arisen since the
end of the financial year that has significantly affected, or may affect, CWT’s operations in future financial years, the results of those operations
or CWT’s state of affairs in future financial years.
Likely developments and expected resultsFurther information on likely developments on the operation of CWT and the expected results of those operations have not been included
in this report because the Responsible Entity believes it would be likely to result in unreasonable prejudice to CWT.
Environmental regulation and performanceThe Trust owns properties which are subject to environmental regulations under both Commonwealth and State legislation. The directors are
satisfied that adequate systems were in place for the management of the environmental responsibilities and the compliance with various
legislative, regulatory and licence requirements. Further, the directors are not aware of any breaches to these requirements and to the best
of their knowledge all activities have been undertaken in compliance with environmental requirements.
Indemnification and insurance of directors and officersThe Responsible Entity (RE) has insured the directors and officers against liabilities incurred in their role as directors and officers of the RE.
The RE is prohibited by the insurance contract itself from disclosing the nature of the liabilities covered and the amount of the premium.
The auditors of CWT are in no way indemnified out of the assets of the scheme.
Fund Manager and CFO declarationThe Fund Manager and Chief Financial Officer have given a declaration to the Board of directors that in their opinion the financial records
of CWT have been properly maintained in accordance with section 286 of the Corporations Act 2001, and the financial statements and notes
for the financial year ended 30 June 2007 comply with accounting standards and give a true and fair view.
Rounding of amounts in the directors’ report and the financial reportCWT is a registered scheme that is of a kind referred to in Class Order 98/100, issued by ASIC, relating to the ‘rounding off’ of amounts in the
directors’ report and financial report. Amounts in the directors’ report and financial report have been rounded off to the nearest thousand dollars in
accordance with that Class Order, unless otherwise indicated.
Auditor’s Independence DeclarationWe have obtained an independence declaration from our auditor, Ernst & Young, as set out on page 35.
This report is made in accordance with a resolution of directors of Challenger Listed Investments Limited.
Russell Hooper
Director
Sydney
22 August 2007
For
per
sona
l use
onl
y
Auditor’s Independence Declaration to the Directors of the Responsible Entity
of the Challenger Wine Trust
In relation to our audit of the financial report of Challenger Wine Trust for the financial year ended
30 June 2007, to the best of my knowledge and belief, there have been no contraventions of the
auditor independence requirements of the Corporations Act 2001 or any applicable code of
professional conduct.
Ernst & Young
Graeme McKenzie
Partner
22 August 2007
35
Ch
alleng
erW
ine
Trust
AnnualReport
2007
Auditor’s Independence Declaration
Liability limited by a scheme approved underProfessional Standards Legislation.
A
For
per
sona
l use
onl
y
2007
Income StatementFor the year ended 30 June 2007
Consolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
Notes $’000 $’000 $’000 $’000
Property income
Rental income 28,925 28,144 10,157 10,589
Less: Property related expenses – – – –
Net property income 28,925 28,144 10,157 10,589
Other income 4 505 334 10,467 9,556
Net gains from sale of investment property – 47 – 47
Other trust expenses
Finance costs 5 (11,627) (11,904) (4,569) (5,186)
Responsible Entity’s and Manager’s fees (2,274) (2,420) (733) (840)
Operating expenses 5 (1,198) (1,030) (991) (995)
Profit from operating activities 14,331 13,171 14,331 13,171
Unrealised foreign exchange losses – – 1,516 (1,240)
Net fair value movement in non-current assets 17 (6,456) 608 (1,139) (3,291)
Net profit 7,875 13,779 14,708 8,640
Basic earnings per ordinary unit (cents) 5.04 9.48 9.42 5.94
Diluted earnings per ordinary unit (cents) 5.04 9.18 9.42 6.14
Distributions paid per ordinary unit (cents) 9.10 9.06 9.10 9.06
The above Income Statement should be read in conjunction with the notes to the financial statements set on pages 42 to 74.
For
per
sona
l use
onl
y
37
Ch
alleng
erW
ine
Trust
AnnualReport
2007
Distribution StatementFor the year ended 30 June 2007
Consolidated Consolidated
Restated30 June 2007 30 June 2006
Note $’000 $’000
Net profit attributable to unitholders of CWT 7,875 13,779
Earnings per unit (cents) 5.04 9.48
Adjusted for:
Net fair value movement in non-current assets 6,456 (608)
Transfers to/(from) retained earnings (5) 4
Distribution to unitholders 6 14,326 13,175
Distribution per unit (cents) 9.10 9.06
The above Distribution Statement should be read in conjunction with the notes to the financial statements set on pages 42 to 74.
For
per
sona
l use
onl
y
2007
Balance SheetAs at 30 June 2007
Consolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
Notes $’000 $’000 $’000 $’000
Assets
Current assets
Cash and cash equivalents 8 6,158 3,991 1,367 2,983
Trade and other receivables 9 1,030 374 1,307 10,238
Prepayments 10 122 887 77 867
Other financial assets 11 – 600 – 600
Assets of a disposal groupclassified as held for sale 18 8,691 – 8,691 –
Total current assets 16,001 5,852 11,442 14,688
Non-current assets
Investment properties 13 161,358 160,674 42,042 45,617
Vines 14 94,991 103,727 26,222 34,874
Intangible assets 15 16,995 15,827 5,111 3,943
Plant and equipment 16 4,954 7,024 4,954 7,024
Derivative financial instruments 24 2,293 – 566 –
Available-for-sale financial assets 12 500 500 76,441 60,039
Other financial assets 11 397 397 21,090 21,090
Total non-current assets 281,488 288,149 176,426 172,587
Total assets 297,489 294,001 187,868 187,275
Liabilities
Current liabilities
Trade and other payables 19 2,034 1,931 987 942
Rent received in advance 976 819 274 121
Distributions payable 6 3,892 3,519 3,892 3,519
Interest-bearing liabilities 20 – 1,925 – 1,925
Derivative financial instruments 24 – 1,760 – 633
Liabilities directly associated withthe assets classified as held for sale 18 2,366 – 2,366 –
Total current liabilities 9,268 9,954 7,519 7,140
Non-current liabilities
Interest-bearing liabilities 20 132,027 127,210 39,654 41,834
PICE units 21 – 13,625 – 13,625
Total non-current liabilities 132,027 140,835 39,654 55,459
Total liabilities 141,295 150,789 47,173 62,599
Net assets 156,194 143,212 140,695 124,676
Equity
Contributed equity 22 145,644 131,206 145,644 131,206
Retained earnings 23 6,835 13,286 (5,968) (6,350)
Reserves 23 3,715 (1,280) 1,019 (180)
Total equity 156,194 143,212 140,695 124,676
The above Balance Sheet should be read in conjunction with the notes to the financial statements set on pages 42 to 74.
For
per
sona
l use
onl
y
39
Ch
alleng
erW
ine
Trust
AnnualReport
2007
Statement of Changes in EquityFor the year ended 30 June 2007
Issued Retainedcapital earnings Reserves Total
$’000 $’000 $’000 $’000
Consolidated
Balance as at 1 July 2005 134,280 12,682 1,997 148,959
Adjustment on transition to AIFRS – – (2,666) (2,666)
Currency translation differences – – (1,517) (1,517)
Fair value movements in derivativefinancial instruments – – 906 906
Total income and expense for the yearrecognised directly in equity – – (3,277) (3,277)
Restated profit for the year – 13,779 – 13,779
Total income and expense for the year – 13,779 – 13,779
Transfer PICE units to liabilities ontransition to AIFRS (16,434) – – (16,434)
Issues of units 13,448 – – 13,448
Capital raising costs (88) – – (88)
Distribution to unitholders – (13,175) – (13,175)
Balance as at 30 June 2006 131,206 13,286 (1,280) 143,212
Balance as at 1 July 2006 131,206 13,286 (1,280) 143,212
Currency translation differences – – 942 942
Fair value movements in derivativefinancial instruments – – 4,053 4,053
Total income and expense for theyear recognised directly in equity – – 4,995 4,995
Profit for the year – 7,875 – 7,875
Total income and expense for the year – 7,875 – 7,875
Conversion of PICE units to equity 13,643 – – 13,643
Issues of units 806 – – 806
Capital raising costs (11) – – (11)
Distribution to unitholders – (14,326) – (14,326)
Balance as at 30 June 2007 145,644 6,835 3,715 156,194
The above Statement of Changes in Equity should be read in conjunction with the notes to the financial statements set on pages 42 to 74.
For
per
sona
l use
onl
y
2007
Statement of Changes in Equity (continued)For the year ended 30 June 2007
Issued Retainedcapital earnings Reserves Total
$’000 $’000 $’000 $’000
Parent
Balance as at 1 July 2005 134,280 (1,815) 453 132,918
Adjustment on transition to AIFRS – – (1,858) (1,858)
Fair value movements in derivativefinancial instruments – – 1,225 1,225
Total income and expense for theyear recognised directly in equity – – (633) (633)
Restated profit for the year – 8,640 – 8,640
Total income and expense for the year – 8,640 – 8,640
Transfer PICE units to liabilitieson transition to AIFRS (16,434) – – (16,434)
Issues of units 13,448 – – 13,448
Capital raising costs (88) – – (88)
Distribution to unitholders – (13,175) – (13,175)
Balance as at 30 June 2006 131,206 (6,350) (180) 124,676
Balance as at 1 July 2006 131,206 (6,350) (180) 124,676
Fair value movements in derivativefinancial instruments – – 1,199 1,199
Total income and expense for theyear recognised directly in equity – – 1,199 1,199
Profit for the year – 14,708 – 14,708
Total income and expense for the year – 14,708 – 14,708
Conversion of PICE units to equity 13,643 – – 13,643
Issues of units 806 – – 806
Capital raising costs (11) – – (11)
Distribution to unitholders – (14,326) – (14,326)
Balance as at 30 June 2007 145,644 (5,968) 1,019 140,695
The above Statement of Changes in Equity should be read in conjunction with the notes to the financial statements set on pages 42 to 74.
For
per
sona
l use
onl
y
41
Ch
alleng
erW
ine
Trust
AnnualReport
2007
The above Cash Flow Statement should be read in conjunction with the notes to the financial statements set on pages 42 to 74.
Consolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
Notes $’000 $’000 $’000 $’000
Cash flows from operating activities
Rental received 28,734 25,963 10,455 11,198
Interest received 447 360 231 1,574
Dividends received 101 27 101 27
Finance costs paid (10,322) (9,715) (3,470) (2,771)
Payments to suppliers (3,253) (3,677) (1,323) (1,545)
Distributions received – – 10,169 3,146
Net cash flows fromoperating activities 8 15,707 12,958 16,163 11,629
Cash flows from investing activities
Proceeds from disposal of property 5,970 2,701 5,970 2,701
Payment for vines, investmentproperties and developments (4,920) (21,241) (2,834) (5,070)
Proceeds from deposits 600 2,045 600 2,004
Payments to subsidiaries – – (5,668) (7,072)
Net cash flows from/(used in)investing activities 1,650 (16,495) (1,932) (7,437)
Cash flows from financing activities
Finance costs – PICE units (1,541) (1,744) (1,541) (1,744)
Proceeds from borrowings 53,631 8,520 750 1,363
Repayment of borrowings (54,115) – (1,925) –
Payment for transaction costs (9) (89) (9) (88)
Distributions to unitholders (13,130) (2,532) (13,130) (2,532)
Net cash flows from/(used in)financing activities (15,164) 4,155 (15,855) (3,001)
Net increase/(decrease) in cashand cash equivalents 2,193 618 (1,624) 1,191
Net foreign exchange differences (26) (7) 8 (7)
Cash and cash equivalentsat beginning of period 3,991 3,380 2,983 1,799
Cash and cash equivalents atend of period 8 6,158 3,991 1,367 2,983
Cash Flow StatementFor the year ended 30 June 2007
For
per
sona
l use
onl
y
2007
1. Trust informationThe financial report for the year ended 30 June 2007 was authorised for issue in accordance with a resolution of the directors dated
22 August 2007.
Challenger Wine Trust (CWT or ‘the Trust’) is a trust limited by units incorporated and domiciled in Australia whose units are publicly traded on
the Australian Securities Exchange (ASX).
The principal activity of the Trust during the year was the pooling of investors’ funds in the Trust through the private placement and public issue
of units and the investment of the Trust funds in wine industry properties and infrastructure assets. These assets are then leased to experienced
wine industry participants for periods generally of at least 10 years.
2. Summary of significant accounting policiesThe accounting policies which have been adopted in the preparation of the financial statements are stated to assist in a general understanding
of this report.
(a) Basis of preparationThe financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Constitution,
the Corporations Act 2001, applicable Accounting Standards and other mandatory professional reporting requirements.
The financial report has also been prepared on an historical cost basis, except for investment properties, vines, winery land and buildings,
derivative financial instruments and available for sale financial assets, which have been measured at fair value.
The accounting policies adopted in preparing these consolidated financial statements have been consistently applied by CWT unless
otherwise specified.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’000) unless otherwise
stated under the option available to the Trust under ASIC Class Order 98/100. The trust is an entity to which the class order applies.
(b) Statement of complianceExcept for the amendments to AASB 101: Presentation of Financial Statements, which CWT has early adopted, Australian Accounting
Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by CWT for the
annual reporting period ending 30 June 2007.
The following standards and amendments were available for early adoption but have not been applied by CWT in these financial statements:
• AASB 7: Financial Instruments: Disclosure replacing the presentation requirements of financial instruments under AASB 132: Financial
Instruments: Disclosure and Presentation. AASB 7 is applicable for annual reporting periods beginning on or after 1 January 2007.
• AASB 2005-10: Amendments to Australian Accounting Standards makes consequential amendments to AASB 132: Financial Instruments:
Disclosure and Presentation, AASB 101: Presentation of Financial Statements, AASB 114: Segment Reporting, AASB 117: Leases,
AASB 133: Earnings per Share, AASB 139: Financial Instruments: Recognition and Measurement, AASB 1: First-time Adoption of AIFRS,
AASB 4: Insurance Contracts, AASB 1023: General Insurance Contracts and AASB 1028: Life Insurance Contracts, arising from the release
of AASB 7. AASB 2005-10 is applicable for annual reporting periods beginning on or after 1 January 2007.
• AASB 8: Operating Segments. This is applicable for annual reporting periods beginning on or after 1 January 2009.
CWT plans to adopt AASB 7 and AASB 2005-10 in the year ending 30 June 2008. The initial application of AASB 7 and AASB 2005-10
is not expected to have an impact on the financial results of CWT as the standard and the amendment are concerned only with disclosures.
A summary of the significant accounting policies of the Group under AIFRS are disclosed below.
The financial report complies with Australian Accounting Standards, which include Australian equivalents to IFRS. The financial report
also complies with IFRS.
Notes to the financial statementsFor the year ended 30 June 2007
For
per
sona
l use
onl
y
43
Ch
alleng
erW
ine
Trust
AnnualReport
2007
2. Summary of significant accounting policies (continued)(c) Restatement of prior period comparatives
After discussions and agreement with ASIC, CWT has restated its prior period comparatives to take into account a change in the treatment
of vines, investment properties, integral infrastructure and water rights owned by the Trust.
Previously the integral infrastructure and water rights were reported at fair value as part of vines (including integral infrastructure and water
rights) under AASB 141: Agriculture.
CWT has identified two types of water rights owned by the Trust:
(i) Separable and tradeable water rights that are able to be separately identified from properties.
(ii) Water rights that are not able to be separately identified from properties with no market defined cost base.
Separable and tradeable water rights are recognised under AASB 138: Intangible Assets as an intangible asset and are accounted for using the
cost model until such time as an actively traded market for such rights can be identified, after which the rights would be carried at fair value.
Integral infrastructure and water rights with no separate market defined cost base are recognised under AASB 140: Investment Property
as part of the investment properties to which they are integrally linked.
Vines, now excluding any integral infrastructure and water rights, are carried at fair value under AASB 141: Agriculture.
There has been no impact on the distributable earnings of the Trust.
The changes to the 30 June 2006 restated balances are detailed below:
Challenger Wine TrustExtract from the balance sheet
Consolidated Consolidated Parent Parent
Restated Restated30 June 2006 30 June 2006 30 June 2006 30 June 2006
$’000 $’000 $’000 $’000
Non-current assets
Investment properties 38,194 160,674 9,299 45,617
Vines 244,377 103,727 76,904 34,874
Intangible assets – 15,827 – 3,943
282,571 280,228 86,203 84,434
Decrease in non-current assets due torecognising water rights at cost ratherthan fair value (2,343) (1,769)
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
2007
2. Summary of significant accounting policies (continued)(c) Restatement of prior period comparatives (continued)
Challenger Wine TrustExtract from the statement of changes in equity
Consolidated Consolidated Parent Parent
Retained Retained Retained RetainedEarnings Earnings Earnings Earnings
Restated Restated30 June 2006 30 June 2006 30 June 2006 30 June 2006
$’000 $’000 $’000 $’000
Balance at 1 July 2005 12,682 12,682 (1,815) (1,815)
Profit for the period 16,122 13,779 10,409 8,640
Distribution to unitholders (13,175) (13,175) (13,175) (13,175)
Balance as at 30 June 2006 15,629 13,286 (4,581) (6,350)
Decrease in retained earnings dueto recognising water rights at costrather than fair value (2,343) (1,769)
Challenger Wine TrustExtract from the income statement
Consolidated Consolidated Parent Parent
Restated Restated30 June 2006 30 June 2006 30 June 2006 30 June 2006
$’000 $’000 $’000 $’000
Net operating income 13,171 13,171 13,171 13,171
Unrealised foreign exchange losses – – (1,240) (1,240)
Net fair value movement innon-current assets 2,951 608 (1,522) (3,291)
Net profit 16,122 13,779 10,409 8,640
Decrease in net profit dueto recognising water rights atcost rather than fair value (2,343) (1,769)
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
45
Ch
alleng
erW
ine
Trust
AnnualReport
2007
2. Summary of significant accounting policies (continued)(c) Restatement of prior period comparatives (continued)
Reconciliation of movement in earnings per ordinary unit and diluted earnings per ordinary unit:
Consolidated Parent
Cents per Cents perunit unit
Earnings per ordinary unit
Basic earnings per ordinary unit 11.09 7.16
Decrease due to restatement (1.61) (1.22)
Restated basic earnings per ordinary unit 9.48 5.94
Diluted earnings per ordinary unit
Diluted earnings per ordinary unit 10.57 7.19
Decrease due to restatement (1.39) (1.05)
Restated diluted earnings per ordinary unit 9.18 6.14
(d) Basis of consolidationThe consolidated financial statements comprise the financial statements of CWT and its subsidiaries (‘the Group’).
The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting
policies.
In preparing the consolidated financial statements, all intercompany balances and transactions, including unrealised profits arising
from intra-group transactions, have been eliminated in full.
Controlled entities are consolidated from the date on which the parent obtains control and cease to be consolidated from the date on
which control is transferred out of CWT. Where loss of control over an entity occurs, the consolidated financial statements include the
results for the part of the reporting period during which CWT had control.
(e) Significant accounting judgementsIn the process of applying the Group’s accounting policies, management has made the following judgement, apart from those involving
estimations, which have the most significant effect on the amounts recognised in the financial statements:
Operating lease commitments – group as lessor
The Group has entered into commercial property leases on its investment property portfolio. The Group has determined that it retains
all the significant risks and rewards of ownership of these properties and has thus classified the leases as operating leases.
(f) RevenueRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably
measured. Revenue brought to account but not received at balance date is recognised as a receivable.
Rental income arising on investment properties is recognised in accordance with the provisions of the lease. The basic rent rate is increased
annually at a rate not greater than CPI and in accordance with the terms of the lease. Contingent rental income is recognised as income
in the periods in which it is earned. All rental income is recognised net of Goods and Services Tax (GST).
Interest income is recognised as interest accrues using the effective interest method.
Distribution and dividend income is recognised when the Group’s right to receive the payment is established.
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
2007
2. Summary of significant accounting policies (continued)(g) Leases
Vineyards and wineries are leased to vineyard operators and/or wine companies under long-term contracts, typically for 10 year terms.
Rentals are paid generally monthly or quarterly, based on a premium over bond rates. Leases are renewable at the lessee’s option after
the expiration of the initial lease term, in renewal periods of not less than five years.
Under the terms and conditions of the lease contract, lessees are responsible for the following:
• payment of relevant rates, taxes and levies;
• costs incurred to preserve and maintain the land and the vines growing in the land in accordance with Best Viticultural Practice,
including pruning, irrigation, fertilisation, etc;
• expenditure on any additional plant that will remain the lessee’s property;
• maintenance, repair and replacement of items of a structural and or capital nature; and
• all operational costs related to the growing of grapes.
The Trust will reimburse the lessee for any agreed alterations and additions to the leased vineyards and wineries, with rental payments
adjusted accordingly.
The vineyard properties are subject to call options, which have been granted to the lessees. These options are exercisable upon expiry
of the initial lease term or at each five year increment at varying dates between June 2007 and June 2020. The exercise price of the options
is to be the higher of cost or market value as determined by an independent valuation if required.
Lease agreements entered into with lessees over vineyard properties and wineries are considered to be operating leases given that the
Group retains substantially all the risks and benefits of ownership of the leased assets. Initial directs costs incurred in negotiating an
operating lease are added to the carrying amount of the leased asset.
(h) Cash and cash equivalentsCash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of
three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
For the purposes of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of
outstanding bank overdrafts.
(i) Trade and other receivablesTrade receivables, which generally have 15-30 day terms, are recognised and carried at original invoice amount less an allowance for
any uncollectible amounts. An allowance for doubtful debts is made when there is objective evidence that the Group will not be able
to collect the debt. Bad debts are written off when identified.
(j) Derivative financial instruments and hedgingThe Group uses derivative financial instruments such as interest rate swaps to hedge its risks associated with interest rate fluctuations.
Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and
are subsequently remeasured to fair value. Derivatives are carried as assets when their fair value is positive and as liabilities when their
fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives, except for those that qualify as cash flow hedges, are taken
directly to net profit or loss for the year.
The fair value of interest rate swap contracts are determined by reference to market values for similar instruments.
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
47
Ch
alleng
erW
ine
Trust
AnnualReport
2007
2. Summary of significant accounting policies (continued)(j) Derivative financial instruments and hedging (continued)
For the purpose of hedge accounting, hedges are classified as cash flow hedges when they hedge exposure to variability in cash flows
that is attributable either to a particular risk associated with a recognised asset or liability or to a forecast transaction.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes
to apply hedge accounting and the risk management objectives and strategies for undertaking the hedge. The documentation includes
identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess
the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s cash flows attributable to the hedged risk.
Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing
basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.
Hedges that meet the strict criteria for hedge accounting are accounted for as follows:
(i) Cash flow hedges
Cash flow hedges are hedges of the Group’s exposure to variability in cash flows that is attributable to a particular risk associated with
a recognised asset or liability or a highly probable forecast transaction and that could affect profit or loss. The effective portion of the
gain or loss on the hedging instrument is recognised directly in equity, while the ineffective portion is recognised in profit or loss.
Amounts taken to equity are transferred to the income statement when the hedged transaction affects profit or loss, such as when
hedged income or expenses are recognised or when a forecast sale or purchase occurs. When the hedged item is the cost of a non-
financial asset or liability, the amounts taken to equity are transferred to the initial carrying amount of the non-financial asset or liability.
If the forecast transaction is no longer expected to occur, amounts previously recognised in equity are transferred to the income statement.
If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is
revoked, amounts previously recognised in equity remain in equity until the forecast transaction occurs. If the related transaction is not
expected to occur, the amount is taken to the income statement.
(k) Derecognition of financial assets and financial liabilities(i) Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:
• the rights to receive cash flows from the asset have expired;
• the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material
delay to a third party under a ‘pass-through’ arrangement; or
• the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risk and
rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred
control of the asset.
When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all
the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing
involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the
lower of the original carrying amount of the asset and the maximum amount of consideration received that the Group could be required
to repay.
When continuing involvement takes the form of a written and/or purchased option (including a cash-settled option or similar provision)
on the transferred asset, the extent of the Group’s continuing involvement is the amount of the transferred asset that the Group may
repurchase, except that in the case of a written put option (including a cash-settled option or similar provision) on an asset measured
at fair value, the extent of the Group’s continuing involvement is limited to the lower of the fair value of the transferred asset and the
option exercise price.
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
2007
2. Summary of significant accounting policies (continued)(k) Derecognition of financial assets and financial liabilities (continued)
(ii) Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of
an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability
and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.
(l) Impairment of financial assetsThe Group assesses at each balance sheet date whether a financial asset or group of financial assets is impaired.
(i) Financial assets carried at amortised cost
If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount
of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows
(excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the
effective interest rate computed at initial recognition). The carrying amount of the asset is reduced either directly or through use of
an allowance account. The amount of the loss is recognised in profit or loss.
The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant,
and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of
impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial
assets with similar credit risk characteristics and that group of financial assets is collectively assessed for impairment. Assets that are
individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective
assessment of impairment.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring
after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment
loss is recognised in profit or loss, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.
(ii) Available-for-sale investments
If there is objective evidence that an available-for-sale investment is impaired, an amount comprising the difference between its cost
(net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in profit
or loss, is transferred from equity to the income statement. Reversals of impairment losses for equity instruments classified as available-
for-sale are not recognised in profit. Reversals of impairment losses for debt instruments are reversed through profit or loss if the increase
in an instrument’s fair value can be objectively related to an event occurring after the impairment loss was recognised in profit or loss.
(m) Foreign currency translationBoth the functional and presentation currency of Challenger Wine Trust and its Australian subsidiaries is Australian dollars. The functional
currency of the New Zealand subsidiary (Delegat’s Trust) is New Zealand dollars and is reported in Australian dollars.
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance
sheet date.
All exchange differences in the consolidated financial report are taken to profit or loss with the exception of differences on foreign
currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal
of the net investment, at which time they are recognised in the profit or loss.
Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at
the date of the initial transaction.
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
49
Ch
alleng
erW
ine
Trust
AnnualReport
2007
2. Summary of significant accounting policies (continued)(m) Foreign currency translation (continued)
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair
value was determined.
As at the reporting date the assets and liabilities of the overseas subsidiary are translated into the presentation currency of
Challenger Wine Trust at the rate of exchange ruling at the balance sheet date and the income statements are translated at
the spot rate on the effective date of each transaction.
The exchange differences arising on the retranslation are taken directly to a separate component of equity.
On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is
recognised in profit or loss.
(n) Income taxEligible investment business
Under current legislation the Trust undertakes activities of an ‘eligible investment business’, that is investing in land and vines for the
purpose of, or primarily for the purpose of deriving rent, and is, therefore, taxed as a trust estate.
It is the opinion of the directors that the Trust has not conducted activities outside of the scope of an eligible investment business
during the financial year ended 30 June 2007.
Distributions to investors will be taxed as distributions of net income or corpus.
(o) Goods and Services TaxRevenues, expenses and assets are recognised net of the amount of GST except:
• when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the
GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in
the balance sheet.
Cash flows are included in the cash flow statement on a gross basis and the GST component of cash flows arising from investing
and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
(p) Investment propertiesInvestment properties, which include vineyard land and winery land and buildings (including integral infrastructure and water rights)
are measured initially at cost including transaction costs. Subsequent to initial recognition, investment properties are stated at fair
value, which reflects market conditions at the balance sheet date. Gains or losses arising from changes in the fair values of investment
properties are recognised in profit or loss in the year in which they arise.
Valuations of investment properties are obtained annually from independent qualified valuers. The valuations have been completed
in accordance with AASB 140: Investment Property and the fair value definitions, and the AIFRS determination that fair value may
be assessed utilising a discounted cash flow approach. The directors of the Responsible Entity make reference to these independent
valuations when assessing the fair value of investment properties at each reporting date. Gains or losses arising from changes in
the fair values of investment properties are recognised in profit or loss in the year in which they arise.
Water rights are included in investment properties when they are not legally separate from such properties and for which there
is no market against which cost can be reliably determined.
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
2007
2. Summary of significant accounting policies (continued)(q) Vines
Vines are initially recorded at cost including transaction costs. Subsequent to initial recognition the vines are stated at fair value.
Gains or losses arising from changes in the fair values of vines are recognised in profit or loss in the year in which they arise.
Independent valuations of vineyards are obtained annually from suitably qualified valuers. The valuations have been completed in
accordance with AASB 141: Agriculture and the fair value definitions, and the AIFRS determination that fair value may be assessed
utilising a discounted cash flow approach. The directors of the Responsible Entity make reference to these independent valuations
when assessing the fair value of vines at each reporting date.
The directors’ valuations of vines are determined by discounting the expected future cash flows from the vines.
(r) Plant and equipmentWinery plant and equipment is stated at historical cost, including relevant transactions costs, less accumulated depreciation and any
accumulated impairment losses.
Impairment
At each reporting date the Group assesses whether there is an indication that an asset may be impaired. If any such indication exists,
or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s
recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless
the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset’s
value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating
unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or
cash-generating unit is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risk specific to the asset. Impairment losses relating to continuing operations
are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount
(in which case the impairment loss is treated as a revaluation decrease).
An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may
no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment
loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment
loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot
exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in
prior years. Such reversal is recognised in profit or loss. After such a reversal the depreciation charge is adjusted in future periods to allocate
the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
(s) DepreciationInvestment properties and vines (including integral infrastructure and water rights) are not required to be depreciated as per AASB 140:
Investment properties and AASB 141: Agriculture respectively. Winery plant and equipment are depreciated, on a straight-line basis, over
their expected useful life. Major depreciation periods are:
2007 2006
Grape processing plant 30 years 30 years
Storage 50 years 50 years
Winery plant 20 years 20 years
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
51
Ch
alleng
erW
ine
Trust
AnnualReport
2007
2. Summary of significant accounting policies (continued)(t) Investments and other financial assets
Financial assets in the scope of AASB 139: Financial Instruments: Recognition and Measurement are classified as either financial assets
at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale investments, as appropriate.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through
profit or loss, directly attributable transaction costs. The Group determines the classification of its financial assets after initial recognition
and, when allowed and appropriate, re-evaluates this designation at each financial year-end.
(i) Available-for-sale investments
Available-for-sale investments are those non-derivative financial assets that are designated as available-for-sale. After initial recognition
available-for-sale investments are measured at fair value with gains or losses being recognised as a separate component of equity until
the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously
reported in equity is recognised in profit or loss.
(ii) Loans
Loans are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets
are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans are
derecognised or impaired, as well as through the amortisation process.
(u) Intangible assets(i) Separable and tradeable water rights
Separable and tradeable water rights, which are included in intangible assets, provide the owner with an allocation of irrigation
water for as long as the rights are held. Separable and tradeable water rights are able to be legally separated from properties and
are able to be traded.
Separable and tradeable water rights are recognised at cost less impairment losses. The cost is not amortised as the water licences
have indefinite useful lives.
Due to the water rights being used for the provision of permanent planting of crops (vines) these water rights are held to support
the vines and not for regular trading purposes.
(v) Trade and other payablesTrade and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to
the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the
purchase of the goods and services.
(w) Interest-bearing loans and borrowingsAll loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest
method. Fees paid on the establishment of loan facilities that are yield related are included as part of the carrying amount of the loans
and borrowings.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least
12 months after the balance sheet date.
Gains and losses are recognised in profit or loss when the liabilities are derecognised.
Borrowing costs are recognised as an expense when incurred.
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
2007
2. Summary of significant accounting policies (continued)(x) Preferred Income Convertible Equity (PICE) units
During the year, in accordance with the PICE unit terms of issue, the Responsible Entity of CWT resolved to convert all 1,494,938 PICE
units on issue into ordinary units. The conversion was made on 27 April 2007 with 17,204,445 new ordinary units issued. As such all
liabilities recognised in relation to the PICE units were derecognised on this day.
During the period before conversion, the PICE unitholders continued to be entitled to a yield at the rate of 9.0% per annum, which was
indexed annually in arrears in accordance with increases in the Australian Consumer Price Index. The distributions paid to PICE unitholders
are treated as a finance cost.
(y) Contributed equityOrdinary units are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
(z) Earnings per unitBasic earnings per unit is calculated as net profit attributable to unitholders of the parent, adjusted to exclude any costs of servicing equity
(other than distributions) and PICE distributions, divided by the weighted average number of ordinary units, adjusted for any bonus element.
Diluted earnings per unit are calculated as net profit attributable to unitholders of the parent, adjusted for:
• cost of servicing equity (other than distributions) and PICE distributions;
• the after tax effect of distributions and interest associated with dilutive potential ordinary units that have been recognised as expenses; and
• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary units;
divided by the weighted average number of ordinary units and dilutive potential ordinary units, adjusted for any bonus element.
3. Segment informationThe Group operates entirely within Australasia, investing in vineyard properties and wine infrastructure assets for lease to vineyard and
winery operators.
There are no distinguishable business segments or geographical segments within the Trust which are subject to a different risk and return.
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
53
Ch
alleng
erW
ine
Trust
AnnualReport
2007
4. RevenueConsolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Other income
Interest income 404 307 188 272
Interest income – wholly owned group entities – – 1,740 1,612
Dividend income 101 27 101 27
Distributions by subsidiaries – – 8,428 7,588
Realised foreign exchange gains – – 10 57
505 334 10,467 9,556
5. ExpensesConsolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
Note $’000 $’000 $’000 $’000
Finance costs
Interest expense – bank borrowings 10,471 10,160 3,413 3,442
Interest expense – PICE units 1,156 1,744 1,156 1,744
11,627 11,904 4,569 5,186
Operating expenses
Custodian fees 105 86 81 71
Consultant fees 350 114 200 101
Auditor’s remuneration 25 84 81 84 81
Depreciation 385 382 385 382
Realised foreign exchange losses 26 – – –
Other costs 248 366 241 360
1,198 1,029 991 995
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
2007
6. Distributions paid and proposedThe following distributions are paid or payable for the period ended 30 June 2007:
Consolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Distributions proposed and recognised forordinary unitholders as a liability at year end 3,892 3,519 3,892 3,519
Distributions paid during the year 10,434 9,656 10,434 9,656
Total distributions paid or payablefrom current year profits 14,326 13,175 14,326 13,175
Prior year distributions paid duringthe year from prior year profits 3,519 3,515 3,519 3,515
7. Earnings per unitThe following reflects the income and unit data used in the basic and diluted earnings per unit computations:
Consolidated Consolidated
Restated30 June 2007 30 June 2006
$’000 $’000
Net profit attributable to ordinary unitholders of the parent from continuing operations 7,875 13,779
Net profit attributable to ordinary unitholders of the parent (used in calculating basic EPU) 7,875 13,779
Thousands Thousands
Weighted average number of ordinary units for basic earnings per unit 156,172 145,358
Effect of dilution:
PICE units – 23,685
Weighted average number of ordinary units adjusted for the effect of dilution 156,172 169,043
There have been no other transactions involving ordinary units or potential ordinary units between the reporting date and the date of
completion of these financial statements.
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
55
Ch
alleng
erW
ine
Trust
AnnualReport
2007
8. Cash and cash equivalentsFor the purpose of the cash flow statement, cash and cash equivalents comprise the following at 30 June:
Consolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Cash at bank and in hand 3,907 2,173 1,363 1,165
Term deposits 2,251 1,818 4 1,818
6,158 3,991 1,367 2,983
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Short-term deposits are made for varying periods of between seven days and three months, depending on the immediate
cash requirements of the Group and earn interest at the respective short-term deposit rates.
(a) Reconciliation of net profit to net cash flows from operations
Consolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Net profit 7,875 13,779 14,708 8,640
Adjustments for:
Depreciation of non-current assets 385 382 385 382
Amortisation of borrowing costs 138 165 29 49
Unrealised losses from currency fluctuations 26 – (1,516) 1,240
PICE units – finance costs classified as finance activities 1,156 1,744 1,156 1,744
Net fair value movement in non-current assets 6,456 (608) 1,139 3,291
Changes in assets and liabilities
(Increase)/decrease in trade and other receivables (437) 88 212 (3,938)
(Decrease)/increase in unearned income 157 (2,446) 153 (440)
(Decrease)/increase in trade and other payables (49) (146) (103) 661
Net cash flows from operating activities 15,707 12,958 16,163 11,629
(b) Non-cash financing activitiesNon-cash and financing activities during the year on normal terms and conditions include:
Consolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Reinvestment of ordinary unitholders’ distributions 806 10,211 806 10,211
Reinvestment of PICE unitholders’ distributions 18 438 18 438
824 10,649 824 10,649
(c) Disclosure of financing facilitiesRefer to Note 20.
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
2007
9. Trade and other receivablesConsolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Trade receivables (i) 1,030 331 408 331
Allowances for impairment losses – – – –
Receivables from subsidiaries (ii) – – 899 9,864
Other – 43 – 43
Total trade and other receivables 1,030 374 1,307 10,238
(i) Trade receivables are non-interest-bearing and generally 15-30 day terms. An allowance for doubtful debts is made when there is objective evidence that a trade receivable is impaired. No allowances have been recognised as an expense for the current year.
(ii) Receivable from subsidiaries is comprised of interest charged on convertible notes issued by the parent entity to applicable subsidiaries and equity distributions.
10. PrepaymentsConsolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Prepaid interest – 351 – 348
Other (i) 122 536 77 519
Total prepayments 122 887 77 867
(i) Other prepayments represents amounts paid in advance for property developments.
11. Other financial assetsConsolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Current
Loan notes – 600 – 600
– 600 – 600
Non-current
Loan notes (i) 397 397 397 397
Units in controlled entities at cost – – 20,693 20,693
397 397 21,090 21,090
(i) The loan notes are repayable in April 2009. Interest is earned at the applicable rate of 10.75% per annum.
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
57
Ch
alleng
erW
ine
Trust
AnnualReport
2007
12. Available-for-sale assetsConsolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
At fair value
Shares – unlisted at fair value 500 500 500 500
Convertible notes in controlled entities – – 75,941 59,539
500 500 76,441 60,039
Available-for-sale investments consist of investments in ordinary shares, and therefore have no fixed maturity date or coupon rate.
The fair value of the unlisted available-for-sale investments has been estimated using valuation techniques based on assumptions that are not
supported by observable market prices or rates. Management believes the estimated fair values resulting from the valuation techniques and
recorded in the balance sheet and the related changes in fair values recorded in the income statement are reasonable and the most appropriate
at the balance sheet date.
13. Investment propertiesConsolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Investment property
Beginning of the year at fair value 160,674 129,969 45,617 45,761
Additions – 1,308 – –
Disposals (5,970) (1,894) (5,970) (1,307)
Foreign currency fluctuations 4,871 (3,712) – –
Net fair value movement in non-current assets 5,437 35,003 6,049 1,163
Assets included in a disposal group classifiedas held for sale (3,654) – (3,654) –
End of the year at fair value 161,358 160,674 42,042 45,617
Revaluation of investment properties
Investment properties, which include land, buildings, integral infrastructure and water rights that are not able to be separately identified from
properties and with no market defined cost base are stated at fair value which has been determined based on valuations from independent
accredited industry valuers who are specialists in valuing these types of investment properties. Valuations have been performed at 30 June 2007
and 30 June 2006. The directors of the Responsible Entity make reference to these independent valuations when assessing the fair value of
investment properties at each reporting date.
Assets pledged as security
First mortgages have been granted as security for bank loans (Note 20) over all investment properties and vines. The terms of the first mortgages
preclude the assets being sold or being used as security for further mortgages without the permission of the first mortgage holder.
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
2007
14. VinesConsolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Vines
Beginning of the year at fair value 103,727 127,354 34,874 38,022
Additions 2,252 15,401 167 2,417
Disposals – (523) – (523)
Foreign currency fluctuations 2,533 (4,110) – –
Net fair value movement in non-current assets (11,893) (34,395) (7,191) (5,042)
Assets included in a disposal group classifiedas held for sale (1,628) – (1,628) –
End of the year at fair value 94,991 103,727 26,222 34,874
Revaluation of vines
Independent valuations of vineyard properties are obtained annually from suitably qualified valuers. The directors’ valuations of vines are determined
by discounting the expected future cash flows from the vines.
Assets pledged as security
First mortgages have been granted as security for bank loans (Note 20) over all investment properties and vines. The terms of the first
mortgages preclude the assets being sold or being used as security for further mortgages without the permission of the first mortgage holder.
15. Intangible assetsConsolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Intangible assets(separable and tradeable water rights)
Beginning of the year at cost less impairment losses 15,827 15,371 3,943 3,943
Additions 1,168 456 1,168 –
Disposals – – – –
Allowances for impairment losses – – – –
End of the year at cost less impairment losses 16,995 15,827 5,111 3,943
Separable and tradeable water rights
Separable and tradeable water rights, which are included in intangible assets, provide the owner with an allocation of irrigation water for as
long as the rights are held. Separable and tradeable water rights are able to be legally separated from properties and are able to be traded.
Separable and tradeable water rights are recognised at cost less impairment losses. The cost is not amortised as the water licences are
considered to have indefinite useful lives.
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
59
Ch
alleng
erW
ine
Trust
AnnualReport
2007
16. Plant and equipmentConsolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Winery plant and equipment
Beginning of the year at net carrying value 7,016 7,634 7,016 7,634
Additions (at cost) 1,732 – 1,732 –
Disposals (WDV) – (237) – (237)
Depreciation for the year (385) (381) (385) (381)
Assets included in a disposal group classifiedas held for sale (3,409) – (3,409) –
End of the year at net carrying value 4,954 7,016 4,954 7,016
Office plant and equipment
Beginning of the year at net carrying value 8 9 8 9
Additions (at cost) – – – –
Depreciation for the year (8) (1) (8) (1)
End of the year at net carrying value – 8 – 8
4,954 7,024 4,954 7,024
Consolidated Consolidated Parent Parent
Winery P & E Office P & E Winery P & E Office P & E
$’000 $’000 $’000 $’000
1 July 2006
Cost 7,826 10 7,826 10
Accumulated depreciation (810) (2) (810) (2)
Net carrying amount 7,016 8 7,016 8
30 June 2007
Cost 5,157 – 5,157 –
Accumulated depreciation (203) – (203) –
Net carrying amount 4,954 – 4,954 –
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
2007
17. Investment properties, vines, intangible assets, assets of a disposal group classified as held for sale and plant and equipment
Details of the investment properties, vines, intangible assets, assets of a disposal group classified as held for sale and plant and equipment are
presented below:
Date of 2007 2006 2007 2006latest Fair Fair Carrying Carrying
Acquisition independent value value value valueDescription date Country valuation $’000 $’000 $’000 $’000
Corryton Park Vineyard (i) Feb 1998 Australia Dec 2006 3,100 3,100 3,100 3,100Summers Hill Vineyard (i) Feb 1998 Australia Dec 2006 1,500 1,500 1,500 1,500Bethany Creek and Vine Vale Vineyards (i) Oct 1998 Australia Dec 2006 1,700 1,800 1,700 1,800Cowra Station Vineyard (ii) Oct 1998 Australia Dec 2006 3,500 3,500 3,500 3,500Waikerie Vineyard (ii) Oct 1998 Australia Dec 2006 1,900 1,800 1,900 1,706Dalswinton and Inglewood Vineyards (ii) (xii) Jul 1999 Australia Dec 2006 5,700 5,500 5,700 5,500Boh River Vineyard (i) Jun 2000 Australia Dec 2006 10,086 9,200 9,452 7,525Gundagai Vineyard (iii) Sep 2000 Australia Dec 2006 16,022 16,462 15,564 16,462Schubert’s Vineyard (i) Nov 2001 Australia Dec 2006 6,200 6,250 6,200 6,250Chapel Vineyard (iii) Dec 2001 Australia Dec 2006 2,800 2,900 2,800 2,900Cocoparra and Woods Vineyards (iii) (xiii) Apr 2003 Australia Dec 2006 9,750 9,595 9,750 9,595Gnangara Vineyard (iv) Apr 2003 Australia Dec 2006 5,900 5,700 5,900 5,700Poole’s Rock Vineyard and Winery (iv) Nov 2004 Australia Dec 2006 7,463 5,800 7,463 5,800Whitton Vineyard (iii) Mar 2005 Australia Dec 2006 3,800 3,800 3,800 3,800
Total held by parent entity before held for sale properties 79,421 76,907 78,329 75,138
Sandy Hollow Vineyard (ix) Nov 1998 Australia Dec 2006 2,800 4,100 2,800 4,100Hermitage Road Winery (ix) Oct 2001 Australia Jun 2007 3,887 3,887 3,887 3,887Trillians Hill Vineyard (ix) Jun 2002 Australia Jun 2006 1,100 1,450 1,100 1,450Grande Junction Vineyard (ix) Jun 2005 Australia N/A 904 6,875 904 6,875
Total held for sale assets 8,691 16,312 8,691 16,312
Total held by parent entity 88,112 93,219 87,020 91,450
Sirens Estate Vineyard (iv) Oct 2002 Australia Dec 2006 3,221 3,343 3,221 3,343Del Rios Vineyard (vi) (x) Jun 2003 Australia Jun 2007 50,000 52,102 50,000 52,102Balranald Vineyard (vi) Dec 2003 Australia Jun 2007 22,500 24,000 21,156 24,000Qualco East Vineyard (vi) Dec 2003 Australia Jun 2007 8,600 9,000 6,789 8,426Richmond Grove and Lawsons Vineyards (viii) Dec 2003 Australia Jun 2007 43,500 42,867 43,500 42,867Crownthorpe Vineyard (vii) Apr 2001 New Zealand Jun 2007 27,669 24,278 27,669 24,278Gimblett Vineyards (vii) (xii) Apr 2001 New Zealand Jun 2007 6,696 6,023 6,696 6,023Dashwood Vineyard (v) Oct 2002 New Zealand Dec 2006 23,259 20,888 23,259 20,888Rarangi Vineyard (v) Jun 2004 New Zealand Dec 2006 17,679 13,867 17,679 13,867
Total held by controlled entities 203,124 196,368 199,969 195,794
Total consolidated 291,236 289,587 286,989 287,244
Variance between carrying value and fair value at year end (xiv) (4,247) (2,343)
The Directors have assessed fair value by reference to the following valuers’ valuations as described in Notes 2(p) and 2(q).
(i) As valued by Alex Thamm, B.Bus (Prop), A.A.P.I., Agri Valuation & Advisory Certified Practising Valuer, Qualified Agent and Conveyancer, of McGees Property.
(ii) As valued by Angus Barrinton-Case, B. Bus (Prop), A.A.P.I., Agri Valuation & Advisory Certified Practising Valuer, of McGees Property.(iii) As valued by Colin Pickett, A.A.P.I., Certified Practising Valuer, of Colin Gaetjens & Co.(iv) As valued by Colin Gaetjens, F.A.P.I., (Val, P&M), R.E.I.V. (Aust), A.R.E.I. of Colin Gaetjens & Co.(v) As valued by Boyd Gross, B. Agr. (Rural Val), Dip. Bus. Std., A.N.Z.I.V, of Logan Stone.(vi) As valued by Angus Barrinton-Case, B. Bus (Prop), A.A.P.I., Agri Valuation & Advisory Certified Practising Valuer, of Colliers International
Consultancy and Valuation Pty Ltd.(vii) As valued by David Stark, B.Ag.Com., F.N.Z.I.V., F.P.I.N.Z. of Alexander Hayward Ltd.(viii) As valued by Jason Oster, B. Bus. Prop. (Val.), A.A.P.I., Dip. App. Sc. (Farm Management), Certified Practising Valuer of Knight Frank.(ix) Classified at 30 June 2007 as a disposal group classified as held for sale (refer to Note 18).(x) Previously known as Dos Rios Vineyard.(xi) Disclosed at 30 June 2006 as two individual properties, Gimblett Road Vineyard and Highway 50 Vineyard.(xii) Disclosed at 30 June 2006 as two individual properties, Dalswinton Vineyard and Inglewood Vineyard.(xiii) Disclosed at 30 June 2006 as two individual properties, Cocoparra Vineyard and Woods Vineyard.(xiv) Variance between carrying value and fair value at year end relates to intangible assets (water rights) carried at cost.
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
61
Ch
alleng
erW
ine
Trust
AnnualReport
2007
17. Investment properties, vines, intangible assets, assets of a disposal group classified as held for sale and plant and equipment (continued)
The reconciliation of the consolidated book values for the combined investment properties, vines, intangible assets, assets of a disposal group
classified as held for sale and plant and equipment is detailed below:
Consolidated Consolidated
Restated30 June 2007 30 June 2006
$’000 $’000
Book value at the beginning of the year 287,244 280,328
Additions 5,152 17,165
Disposals (5,970) (2,654)
Depreciation for the year (385) (381)
Foreign currency fluctuations 7,404 (7,822)
Net fair value movement in non-current assets (i) (6,456) 608
Book value at the end of the year 286,989 287,244
(i) Net fair value movement in non-current assets for the year consists of:
(Decrease)/increase from revaluation of non-current assets (4,552) 2,951
(Decrease) in carrying value due to recognising intangible assets at cost (1,904) (2,343)
(6,456) 608
18. Assets and liabilities of a disposal group classified as held for sale(a) Details of assets held for sale
The Sandy Hollow Vineyard is being actively marketed for sale with the intention of disposing the property within the next 12 months.
The reason for the intended disposal is due to McGuigan Simeon Wines Ltd not exercising its option for a five year lease renewal or to
purchase the property at the end of the lease term. The current lease is due to expire in April 2009.
The Hermitage Road Winery is being actively marketed for sale with the intention of disposing the property within the next 12 months.
The reason for the intended disposal is due to McGuigan Simeon Wines Ltd not exercising its option for a five year lease renewal or to
purchase the property at the end of the lease term. The current lease is due to expire in June 2008.
On 5 March 2007, an agreement was reached for the disposal of the Trillians Hill Vineyard to Trillians Hill Vineyard Pty Ltd, the current lessee.
Settlement on the disposal of the Trillians Hill Vineyard is expected to occur on 1 December 2007 for $1.1 million, the current carrying value
at 30 June 2007.
During the year it was agreed between CWT and McGuigan Simeon Wines Ltd that the development of the Grande Junction Vineyard
would not proceed. All development costs, totalling $5.97 million, were repaid to CWT in February 2007 with the land carried at cost at
30 June 2007. An agreement has been reached to dispose the land to McGuigan Simeon Wines Ltd for marginally above its current book
value of $0.9 million.
The following table includes a summary of the properties classified as held for sale:
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
2007
18. Assets and liabilities of a disposal group classified as held for sale (continued)(a) Details of assets held for sale (continued)
30 June 2007Date of latest Carrying
Acquisition independent valuedate Country valuation $’000
Sandy Hollow Vineyard Nov 1998 Australia Dec 2006 2,800
Hermitage Road Winery Oct 2001 Australia Jun 2007 3,887
Trillians Hill Vineyard Jun 2002 Australia Jun 2006 1,100
Grande Junction Vineyard Jun 2005 Australia N/A 904
8,691
(b) Assets and liabilities classified as held for saleThe major classes of assets and liabilities held for sale at 30 June 2007 are as follows:
Consolidated Parent
30 June 2007 30 June 2007
$’000 $’000
Assets
Investment property 3,654 3,654
Vines 1,628 1,628
Plant and equipment 3,409 3,409
Assets of a disposal group classified as held for sale 8,691 8,691
Liabilities
Interest-bearing loans and borrowings (2,366) (2,366)
Liabilities directly associated with the assets classified as held for sale (2,366) (2,366)
Net assets attributable to a disposal group classified as held for sale 6,325 6,325
19. Trade and other payablesConsolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Trade payables 2,034 1,931 987 942
2,034 1,931 987 942
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
63
Ch
alleng
erW
ine
Trust
AnnualReport
2007
20. Interest-bearing loans and borrowings
Consolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Current
Bank bill facilities – 1,925 – 1,925
– 1,925 – 1,925
Non-current
Bank bill facilities 132,027 127,210 39,654 41,834
132,027 127,210 39,654 41,834
Total interest-bearing liabilities associatedwith continuing operations 132,027 129,135 39,654 43,759
Liabilities directly associated with the assetsclassified as held for sale 2,366 – 2,366 –
Total interest-bearing loans and borrowings 134,393 129,135 42,020 43,759
Financing facilities availableAt reporting date, the following financing facilities had been negotiated and were available.
Consolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Total facilities:
Bank overdraft 30 30 30 30
Secured bank bills 138,865 149,369 46,405 48,902
138,895 149,399 46,435 48,932
Facilities used at reporting date
Bank overdraft – – – –
Secured bank bills 134,393 129,135 42,020 43,759
134,393 129,135 42,020 43,759
Facilities unused at reporting date
Bank overdraft 30 30 30 30
Secured bank bills 4,472 20,234 4,385 5,143
4,502 20,264 4,415 5,173
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
2007
20. Interest-bearing loans and borrowings (continued)Bank overdraftThe bank overdraft is secured by a floating charge over certain of the Group’s assets, including its land and buildings.
The bank overdraft facility may be drawn at any time and is reviewed by the bank annually at which time it can elect to cancel the facility.
The bank may also cancel the facility at any time should the Group be in breach of its covenants or otherwise in default.
Assets pledged as securityThe carrying amounts of assets pledged as security for current and non-current interest-bearing liabilities are:
Consolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Non-current
First-mortgage
Investment properties at fair value 161,358 160,674 42,042 45,617
Vines 94,991 103,727 26,222 34,874
Winery plant and equipment at net carrying value 4,954 7,016 4,954 7,016
Intangible assets 16,995 15,827 5,111 3,943
Assets of a disposal group classified as held for sale 4,804 – 4,804 –
Total non-current assets pledged as security 283,102 287,244 83,133 91,450
21. PICE unitsConsolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
PICE units
Opening balance at beginning of year 13,625 16,434 13,625 16,434
Issued during the year 18 438 18 438
Costs associated with the issue of units – (1) – (1)
Converted to ordinary units (13,643) (3,246) (13,643) (3,246)
Balance at the end of the year – 13,625 – 13,625
Units ’000 Units ’000 Units ’000 Units ’000
Movements in PICE units on issue
Opening balance at beginning of year 1,493 1,773 1,493 1,773
Issued during the year
– Distribution reinvestment plan 2 45 2 45
PICE units converted to ordinary units (1,495) (325) (1,495) (325)
Closing balance at end of year – 1,493 – 1,493
In accordance with the PICE unit terms of issue, the Responsible Entity of CWT resolved to convert all PICE units on issue into
ordinary units on 27 April 2007. As such all liabilities recognised in relation to the PICE units were derecognised on this day.
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
65
Ch
alleng
erW
ine
Trust
AnnualReport
2007
22. Contributed equityConsolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Ordinary units
Opening balance at beginning of year 131,206 117,846 131,206 117,846
Conversion of PICE units to equity (i) 13,643 – 13,643 –
Issued during the year 806 13,448 806 13,448
Costs associated with the issue of units (11) (88) (11) (88)
Equity balance at the end of the year 145,644 131,206 145,644 131,206
Units ’000 Units ’000 Units ’000 Units ’000
Movements in ordinary units on issue
Opening balance at beginning of year 151,957 136,138 151,957 136,138
Issued during the year
– Distribution reinvestment plan 1,151 11,823 1,151 11,823
– PICE units converted to ordinary units 17,205 3,996 17,205 3,996
Closing balance at end of year 170,313 151,957 170,313 151,957
(i) Conversion of PICE units to equity
Conversion of PICE units to equity 15,001 – 15,001 –
PICE issue costs transferred to equity (1,358) – (1,358) –
New equity recognised on PICE conversion 13,643 – 13,643 –
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
2007
23. Reserves and undistributed incomeRetained earningsMovements in retained earnings were as follows:
Consolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Balance 1 July 13,286 12,682 (6,350) (1,815)
Net profit for the year 7,875 13,779 14,708 8,640
Distributions paid/payable (14,326) (13,175) (14,326) (13,175)
Balance 30 June 6,835 13,286 (5,968) (6,350)
Reconciliation of closing retained earnings:
Net fair value movement in non-current assets 6,835 13,291 (6,212) (5,073)
Unrealised foreign exchange losses – – 244 (1,272)
Under/(over) distributed income – (5) – (5)
Balance 30 June 6,835 13,286 (5,968) (6,350)
ReservesMovements in reserves were as follows:
Foreigncurrency Investment Cash flow
translation revaluation hedge Total
Consolidated $’000 $’000 $’000 $’000
At 1 July 2005 1,544 453 – 1,997
Transition to AIFRS on 1 July 2005 – – (2,666) (2,666)
Currency translation movements (1,517) – – (1,517)
Fair value movements in derivative financial instruments – – 906 906
At 30 June 2006 27 453 (1,760) (1,280)
Currency translation movements 942 – – 942
Fair value movements in derivative financial instruments – – 4,053 4,053
At 30 June 2007 969 453 2,293 3,715
Investment Cash flowrevaluation hedge Total
Parent $’000 $’000 $’000
At 1 July 2005 453 – 453
Transition to AIFRS on 1 July 2005 – (1,858) (1,858)
Currency translation movements – – –
Fair value movements in derivative financial instruments – 1,225 1,225
At 30 June 2006 453 (633) (180)
Currency translation movements – – –
Fair value movements in derivative financial instruments – 1,199 1,199
At 30 June 2007 453 566 1,019
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
67
Ch
alleng
erW
ine
Trust
AnnualReport
2007
23. Reserves and undistributed income (continued)Nature and purpose of reservesInvestment revaluation reserve
This reserve records fair value changes on available-for-sale investments in unlisted shares.
Cash flow hedge reserve
This reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an effective hedge.
Currency revaluation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of the
foreign subsidiary.
24.Financial instruments(a) Financial risk management objectives and policies
The Group’s principal financial instruments, other than derivatives, comprise bank loans and an overdraft, cash and short-term deposits.
The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial assets
and liabilities such as trade receivables and trade payables, which arise directly from its operations. The Group also enters into derivative
transactions, principally interest rate swaps. The purpose is to manage the interest rate risk arising from the Group’s operations and its sources
of finance.
It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall be undertaken.
The main risk arising from the Group’s financial instruments are cash flow interest rate risk, liquidity risk, foreign currency risk and credit risk.
The Board reviews and agrees policies for managing each of these risks and they are summarised below and in the directors’ report.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the
basis on which income and expenses are recognised, in respect of each class of financial assets, financial liability and equity instruments are
disclosed in Note 2 to the financial statements.
(b) Interest rate riskThe Group’s exposure to changes in market interest rates relates primarily to the Group’s long-term debt obligations with a floating interest
rate.
The Group’s policy is to manage its interest cost using fixed rate debt. Floating interest contracts are aligned to matching swap contracts to
hedge against fluctuations in interest rate movements.
Interest rate swaps, denominated in Australian dollars and New Zealand dollars, have been entered into as cash flow hedges of medium-term
notes and long-term notes. The swaps have maturities ranging from one to nine years, following the maturity of the related notes and have
swap rates ranging from 6.36% to 8.39%. At 30 June 2007, the Group had interest rate swaps with a notional contract amount of
$130.7 million (2006: $122.3 million).
The net fair value of swaps at 30 June 2007 was $2.293 million (2006: ($1.760 million)).
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
2007
24. Financial instruments (continued)(b) Interest rate risk (continued)
Weightedaverage
effectiveYear ended 30 June 2007 <1 >1-<2 >2-<3 >3-<4 >4-<5 >5 interest
year years years years years years Total rateConsolidated $’000 $’000 $’000 $’000 $’000 $’000 $’000 %
Financial assetsCash and cash equivalents 6,158 – – – – – 6,158 5.60%
Weighted average effectiveinterest rate 5.60% – – – – –Derivative financial instruments 21 675 – 154 157 1,286 2,293
Other financial assets – 397 – – – – 397 10.75%
Weighted average effectiveinterest rate – 10.75% – – – –
Financial liabilitiesBank bills with interestrate swaps 217 81,974 – 9,469 6,040 32,063 129,763 7.69%
Weighted averageeffective interest rate 6.59% 7.82% – 7.24% 7.96% 7.48%Bank bills – – 4,630 – – – 4,630 7.74%
Weighted average effectiveinterest rate – – 7.74% – – –PICE units – – – – – – – –
Weighted averageeffective interest rate – – – – – – – –
Weightedaverage
effectiveYear ended 30 June 2007 <1 >1-<2 >2-<3 >3-<4 >4-<5 >5 interest
year years years years years years Total rateParent $’000 $’000 $’000 $’000 $’000 $’000 $’000 %
Financial assetsCash and cash equivalents 1,367 – – – – – 1,367 5.60%
Weighted average effectiveinterest rate 5.60% – – – – –Derivative financial instruments 21 (153) – 19 157 522 566
Other financial assets – 397 – – – – 397 10.75%
Weighted average effectiveinterest rate – 10.75% – – – –
Financial liabilitiesBank bills with interestrate swaps 340 13,747 – 8,163 1,400 13,740 37,390 7.64%
Weighted average effectiveinterest rate 6.59% 8.55% – 7.16% 6.78% 7.13%Bank bills – – 4,630 – – – 4,630 7.74%
Weighted average effectiveinterest rate – – 7.74% – – – – –PICE units – – – – – – – –
Weighted average effectiveinterest rate – – – – – – – –
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
69
Ch
alleng
erW
ine
Trust
AnnualReport
2007
24. Financial instruments (continued)(b) Interest rate risk (continued)
Weightedaverage
effectiveYear ended 30 June 2006 <1 >1-<2 >2-<3 >3-<4 >4-<5 >5 interest
year years years years years years Total rateConsolidated $’000 $’000 $’000 $’000 $’000 $’000 $’000 %
Financial assetsCash and cash equivalents 3,991 – – – – – 3,991 4.31%
Weighted average effectiveinterest rate 4.31% – – – – –Other financial assets 600 – 397 – – – 997 8.79%
Weighted average effectiveinterest rate 7.50% – 10.75% – – –
Financial liabilitiesBank bills with interestrate swaps 1,535 – 78,301 – 9,426 32,746 122,008 7.53%
Weighted average effectiveinterest rate 6.80% – 7.58% – 7.21% 7.55%Bank bills 1,925 – – 4,710 – 492 7,127 7.52%
Weighted average effectiveinterest rate 6.76% – – 7.74% – 8.38%PICE units – – – – 13,625 – 13,625 10.10%
Weighted average effectiveinterest rate – – – – 10.10% – – –Derivative financial instruments 1 – 1,358 – 183 218 1,760 –
Weightedaverage
effectiveYear ended 30 June 2006 <1 >1-<2 >2-<3 >3-<4 >4-<5 >5 interest
year years years years years years Total rateParent $’000 $’000 $’000 $’000 $’000 $’000 $’000 %
Financial assetsCash and cash equivalents 2,983 – – – – – 2,983 4.31%
Weighted average effectiveinterest rate 4.31% – – – – –Other financial assets 600 – 397 – – – 997 8.79%
Weighted average effectiveinterest rate 7.50% – 10.75% – – –
Financial liabilitiesBank bills with interestrate swaps 1,754 – 13,993 – 8,375 13,002 37,124 7.65%
Weighted average effectiveinterest rate 6.80% – 8.55% – 7.16% 7.11%Bank bills 1,925 – – 4,710 – – 6,635 7.46%
Weighted average effectiveinterest rate 6.76% – – 7.74% – –PICE units – – – – 13,625 – 13,625 10.10%
Weighted average effectiveinterest rate – – – – 10.10% – – –Derivative financial instruments 1 – 487 – 79 66 633 –
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
2007
24.Financial instruments (continued)(c) Foreign currency risk
The Group has transactional currency exposure. Such exposure arises from bank interest paid by an operating unit in a currency other
than the unit’s functional currency.
(d) Credit riskThe economic entity’s maximum exposure to credit risk at balance date in relation to each class of recognised financial asset is
the carrying amount of those assets as indicated in the balance sheet. Credit reviews of all vineyard lessees are
completed prior to the acquisition of any vineyard property and there is an ongoing review process during the terms of the leases.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.
(e) Liquidity riskThe Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans and bank overdrafts.
(f) Fair valuesThe carrying amount of the financial assets and financial liabilities recorded in the balance sheet approximates the respective net fair values,
determined in accordance with the accounting policies disclosed in Note 2 to the financial statements.
25. Auditor’s remunerationThe auditor of Challenger Wine Trust is Ernst & Young.
Consolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Amounts received or due and receivableby Ernst & Young for:
An audit or review of the financial report of theentity and any other entity in the consolidated group 69 46 69 46
Other services in relation to the entity and anyother entity in the consolidated group:
Compliance plan audit – 7 – 7
Other 15 28 15 28
84 81 84 81
26.Related party disclosure(a) Related party entities
The consolidated financial statements include the financial statements of Challenger Wine Trust and the subsidiaries listed in the following table.
Name Country of % of equity interest Investment ($’000)incorporation 2007 2006 2007 2006
Delegat’s Trust New Zealand 100 100 11,793 11,793
Southcorp Trust Australia 100 100 500 500
McGuigan Simeon Trust Australia 100 100 8,400 8,400
20,693 20,693
(b) Responsible EntityThe Responsible Entity of CWT is Challenger Listed Investment Limited (CLIL), a wholly owned subsidiary of Challenger Life Holdings Pty Limited.
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
71
Ch
alleng
erW
ine
Trust
AnnualReport
2007
26.Related party disclosure (continued)(c) Details of Key Management Personnel
(i) Directors
The directors of CLIL, the Responsible Entity of CWT, are considered to be Key Management Personnel.
• Stephen Gerlach Chairman
• Peter Brook (appointed 6 November 2006)
• Russell Hooper
• Ian Martens
• Greg Martin (resigned 4 August 2006)
• Geoff McWilliam
• Ian Moore
• Peter Polson (resigned 4 August 2006)
• Paul Rogan (resigned 2 November 2006)
• Robert Woods
During the year ended 30 June 2007, directors were paid $639,150 in respect of their directorship of the Responsible Entity.
This amount includes all fees paid to the directors of CLIL in respect of their Responsible Entity Board and committee duties
for all trusts, including this trust.
(ii) Key Management Personnel
In addition to the directors noted above, the following were considered Key Management Personnel during the period with
the authority for the strategic direction and management of the Challenger Wine Trust:
• Bevan Towning (Head of Specialised Funds)
• Nick Gill (Fund Manager, CWT)
• CLIL (Responsible Entity, CWT)
(iii) Compensation of the Key Management Personnel of CWT
No amounts are paid by CWT directly to the Key Management Personnel individuals of the Trust.
CLIL, as the Responsible Entity of CWT, is deemed to be the Key Management Personnel of CWT. Compensation paid directly
to CLIL in the form of fees is disclosed in Note 26(g).
(d) Management feesThe Responsible Entity is entitled under the Constitution to be reimbursed for certain expenses incurred in administering the Trust.
The basis on which the expenses are reimbursed is defined in the Constitution.
(i) Management fees policy applicable up to 31 December 2005
In accordance with the Constitution, the Responsible Entity was entitled to a fee up to 0.75% per annum of the total asset
value of the Trust, assessed at the end of each month.
The Responsible Entity was entitled to receive up to 2% per annum of the properties’ annual gross income for managing
the vineyards, payable monthly. The Responsible Entity may also have been entitled to additional fees for providing additional
services to the Trust.
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
2007
26.Related party disclosure (continued)(d) Management fees (continued)
(ii) Management fees policy applicable after 1 January 2006
In accordance with changes to the Constitution, the Responsible Entity is entitled to a fee up to 0.65% per annum of the total asset
value of the Trust and 1.5% on capital acquisitions, assessed at the end of each month.
The Responsible Entity is entitled to receive up to 1% per annum of the properties’ annual gross income for managing the vineyards, payable
monthly. The Responsible Entity may also be entitled to additional fees for providing additional services to the Trust.
Expenses are recognised on an accruals basis as they are incurred.
On 31 January 2006, the Responsible Entity delegated certain of its management activities to Challenger Management Services Limited
(CMSL) as is permitted following changes to the Constitution.
(e) CustodianThe Custodian is Australian Executor Trustees Limited (formerly known as Tower Trust (SA)).
(f) Wholly owned group transactionsAll transactions with related parties have been conducted at terms not more favourable than arm’s length.
(g) Related party transactionsThe attached table discloses all fees paid by CWT to CLIL and Challenger Management Services Limited (CMSL) under the Trust Constitution
and to CMSL under the management agreement with CLIL:
Consolidated Consolidated
Restated30 June 2007 30 June 2006
$’000 $’000
(a) Responsible Entity fees for the financial year paid to CLIL in accordancewith the Scheme Constitution 300 1,524
(b) Management fees for the financial year paid to CMSL under theManagement Agreement 2,045 1,057
Total fees paid or payable at balance date 2,345 2,582
Of the above fees $71,216 (2006: $161,197) has been capitalised to property acquisitions and developments.
(h) Convertible notesDelegat’s Trust and Southcorp Trust have issued convertible notes to Challenger Wine Trust. The convertible notes are issued in
consideration for funds advanced by CWT. The convertible notes may be redeemed at 30 days’ notice or converted to ordinary units
on each anniversary of the issue of the notes.
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
73
Ch
alleng
erW
ine
Trust
AnnualReport
2007
26. Related party disclosure (continued)(i) Interests in the shares and options of the company and related bodies corporate
As at the balance date, the following related parties held the following interests in CWT:
Ordinary Ordinary PICE PICEunits units units units
fully paid fully paid fully paid fully paid
30 June 2007 30 June 2006 30 June 2007 30 June 2006
No. of units No. of units No. of units No. of units
Related entities
Challenger Life No.2 Limited 44,626,652 36,251,019 – 783,052
CLIL directors
S Gerlach 151,600 151,600 – –
IM Martens 256,148 152,123 – 200
G McWilliam 100,000 – – –
R Woods 233,812 105,656 – 10,530
Key Management Personnel
B Towning 215,085 – – –
Total 45,583,297 36,760,398 – 793,782
27. Commitments and contingenciesOperating lease commitments – group as lessorThe Group has entered into commercial property leases on its investment property portfolio.
These non-cancellable leases have remaining terms between one and nine years. The rates are based on predetermined formulae in each lease.
Future minimum rentals receivable under non-cancellable operating leases as at 30 June are as follows:
Consolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Within one year 29,365 29,016 9,581 10,031
After one year but not more than five years 105,810 113,546 27,012 32,923
More than five years 51,234 72,862 5,204 8,874
186,409 215,424 41,797 51,828
The 30 June 2006 operating lease commitments have been restated to exclude any lessee options which were assumed to be exercised
in the previous 30 June 2006 balances.
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
2007
27. Commitments and contingencies (continued)Capital expenditure commitmentsFinance facilities which total $4,472,440 (2006: $30,394,142) have been made available to the Group for further development of various
vineyards. These commitments will be secured by the Group and the Group will earn lease rentals on these developments at rates based
on predetermined formulae in each lease.
Consolidated Consolidated Parent Parent
Restated Restated30 June 2007 30 June 2006 30 June 2007 30 June 2006
$’000 $’000 $’000 $’000
Investment property
Within one year 4,472 12,250 4,385 8,358
After one year but not more than five years – 18,144 – 14,875
More than five years – – – –
4,472 30,394 4,385 23,233
28. Events after the balance sheet dateOn 30 June 2007, CWT signed two conditional agreements with companies controlled by the Grant Burge family to purchase the Filsell, Miamba,
Cameron Vale and Chaff Mill Vineyards for $11.5 million plus acquisition costs. The properties would be leased to Grant Burge Wines Pty Ltd for
eight years, with three options to extend for a further four years each. On 17 August 2007 settlement was reached on the purchase of these
properties.
On 21 August 2007, the Board of Evans and Tate Limited announced the appointment of an Administrator. Subsequently the ANZ Banking Group
as secured creditor appointed a Receiver and Manager, that day. Evans and Tate Limited is a tenant at CWT’s Cocoparra, Woods and Gnangara
Vineyards. For the year ended 30 June 2007, they paid rental income of $1.7 million to CWT, equivalent to 5.8% of net property income. Rental
on all three properties has been paid up until 31 July 2007 in accordance with existing lease terms. CWT management are currently reviewing
possible options in regards to these properties and leases.
Notes to the financial statements (continued)F
or p
erso
nal u
se o
nly
75
Ch
alleng
erW
ine
Trust
AnnualReport
2007
On the financial report of the Challenger Wine TrustIn accordance with a resolution of the Directors of Challenger Listed Investments Limited (the Responsible Entity of the Challenger Wine
Trust (herein known by its ASX code ‘CWT’)), I state that:
1. In the opinion of the directors:
(a) The financial statements and notes of CWT are in accordance with the Trust Constitution and the Corporations Act 2001, including:
(i) giving a true and fair view of CWT as at 30 June 2007 and of its performance for the period ended on that date; and
(ii) complying with Accounting Standards and Corporations Regulations 2001; and
(b) There are reasonable grounds to believe that CWT will be able to pay its debts as and when they become due and payable.
2. This declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A
of the Corporations Act 2001 for the financial period ended 30 June 2007.
On behalf of the Board
Russell Hooper
Director
Sydney
22 August 2007
statement by the directors of the Responsible Entity of CWTF
or p
erso
nal u
se o
nly
Liability limited by a scheme approved underProfessional Standards Legislation.
Independent auditor’s report to the unitholders of Challenger Wine Trust
We have audited the accompanying financial report of the Challenger Wine Trust (the Trust) and
the entities it controlled during the year, which comprises the balance sheet as at 30 June 2007, and
the income statement, statement of changes in equity and cash flow statement for the year ended
on that date, a summary of significant accounting policies, other explanatory notes and the
directors’ declaration.
Directors’ Responsibility for the Financial Report
The directors of the Responsible Entity are responsible for the preparation and fair presentation of
the financial report in accordance with the Australian Accounting Standards (including the
Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility
includes establishing and maintaining internal controls relevant to the preparation and fair
presentation of the financial report that is free from material misstatement, whether due to fraud or
error; selecting and applying appropriate accounting policies; and making accounting estimates
that are reasonable in the circumstances. In Note 2(b), the directors also state that the financial
report, comprising the consolidated financial statements and notes, comply with International
Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards
require that we comply with relevant ethical requirements relating to audit engagements and plan
and perform the audit to obtain reasonable assurance whether the financial report is free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on our judgment, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or
error. In making those risk assessments, we consider internal controls relevant to the entity’s
preparation and fair presentation of the financial report in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors
of the Responsible Entity, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
2007
Independent review report to members of CWTF
or p
erso
nal u
se o
nly
2
Independence
In conducting our audit we have met the independence requirements of the Corporations Act 2001.
We have given to the directors of the Responsible Entity a written Auditor’s Independence
Declaration, a copy of which is included in the directors’ report. In addition to our audit of the
financial report, we were engaged to undertake the services disclosed in the notes to the financial
statements. The provision of these services has not impaired our independence.
Auditor’s Opinion
In our opinion:
the financial report of the Challenger Wine Trust is in accordance with:
(a) the Corporations Act 2001, including:
(i) giving a true and fair view of the financial position of the Challenger Wine Trust
and the consolidated entity at 30 June 2007 and of their performance for the year
ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian
Accounting Interpretations); and
(b) other mandatory financial reporting requirements in Australia.
Ernst & Young
Graeme McKenzie
Partner
Sydney
22 August 2007
77
Ch
alleng
erW
ine
Trust
AnnualReport
2007
For
per
sona
l use
onl
y
ASX listingChallenger Wine Trust (CWT) is listed on
the Australian Securities Exchange (ASX).
The Trust’s units trade under the code ‘CWT’.
Unit prices are published daily in major
Australian metropolitan newspapers, and
are also accessible from the CWT website.
The CWT websiteThe CWT website
www.challenger.com.au/cwt contains
important information about the Trust,
including unit prices, announcements, annual
reports and an overview of each property in
the CWT portfolio.
Unitholder enquiriesIf you have queries relating to your
unitholding or wish to provide a change
of address, Tax File Number, instructions for
payment of distributions or annual report
elections please contact the Unit Registry
as follows:
Challenger Wine Trust
C/– Computershare Investor Services Pty Ltd
Level 5, 115 Grenfell Street
ADELAIDE SA 5000
Telephone: 1300 556 161
Facsimile: +61 8 8236 2305
Email:
Website: www.computershare.com
If you have any questions relating to the
management of the Trust, please contact
Challenger on +61 2 9994 7000, or send
an email to [email protected].
DistributionsCWT pays distributions quarterly for the
periods ending 31 March, 30 June,
30 September and 31 December. Distributions
are typically paid to unitholders six weeks
after quarter end. Distribution payments can
be paid by:
• direct credit to a nominated Australian
financial institution account; or
• a cheque mailed to your registered
unitholding address.
Annual taxation statementsThe taxable income shown on your Annual
Taxation Statement is taxable in the year of
entitlement rather than the year of receipt.
This means that taxable income included in
distributions paid in October 2006, February
2007, May 2007 and August 2007 is
assessable in the taxation year ended
30 June 2007.
An Annual Taxation Statement is sent
to unitholders in August each year. This
statement includes important taxation
information and should be retained by
unitholders to assist in the completion
of their taxation return.
Unitholder complaintsIf you are dissatisfied with a service or process
relating to your investment, please let us
know. There is no charge to make a
complaint. Complaints can be made either
verbally or in writing by contacting:
Complaints Manager
Challenger Wine Trust
C/– Computershare Investor Services Pty Ltd
Level 5, 115 Grenfell Street
ADELAIDE SA 5000
Telephone: 1300 556 161
Facsimile: +61 8 8236 2305
Email:
Website: www.computershare.com
The Responsible Entity has a documented
internal dispute and resolution policy in line
with the Australian Standard for Complaint
Handling ISO 10002_2004.
If you are not happy with how the complaint
has been handled, you may contact the
Financial Industry Complaints Service (FICS),
of which the Responsible Entity is a member.
This is an independent body and is approved
by ASIC to consider complaints. The contact
details for FICS are:
Financial Industry Complaints Service
PO Box 579
Collins Street West
Melbourne VIC 8007
Tel: 1300 780 808
www.fics.asn.au
Unitholderinformation
2007
For
per
sona
l use
onl
y
79
Ch
alleng
erW
ine
Trust
AnnualReport
2007Substantial unitholdings as at 31 August 2007
Effective Number % issued Company name date of units capital
Challenger Financial Services Group Limited 27-3-2006 28,237,885 (ordinary) 27.267,673,909 (PICE)
Commonwealth Bank Group 7-5-2007 14,055,189 8.25UBS Nominees Pty Ltd 12-1-2007 11,408,184 7.45SG Hiscock & Company 20-2-2007 9,986,572 6.52DLIBJ Asset Management Co. Ltd 10-5-2007 10,837,674 6.36
Top 20 unitholders as at 31 August 2007Number % issued
Number Name of units capital
1 J P Morgan Nominees Australia Limited 47,147,734 27.68
2 HSBC Custody Nominees (Australia) Limited 17,031,548 10.00
3 National Nominees Limited 13,348,074 7.84
4 Mr Alan Segel – Segel Partnership II LP A/C 4,603,400 2.70
5 Citicorp Nominees Pty Limited 4,438,786 2.61
6 Crownace Pty Ltd 3,750,000 2.20
7 Invia Custodian Pty Limited 2,704,850 1.59
8 Cogent Nominees Pty Limited 2,455,980 1.44
9 ANZ Nominees Limited 1,157,594 0.68
10 Ago Pty Ltd Superannuation Fund A/C 1,050,152 0.62
11 Paticoa Nominees Pty Ltd 935,000 0.55
12 Sandhurst Trustees Ltd 874,459 0.51
13 Brispot Nominees Pty Ltd <House Head Nominee No 1 A/C> 863,758 0.51
14 RBC Global Services Australia Nominees Pty Ltd 821,851 0.48
15 Mr Malcolm Eric Gordon 745,407 0.44
16 Miss Samantha Orgill 660,180 0.39
17 Netwealth Investments Limited Super Services A/C 638,728 0.38
18 Mrs Julie Ann Orgill 536,000 0.31
19 Cherryoak Investments Pty LTD C & N Family A/C 500,000 0.2920 Australian Executor Trustees Limited No 1 Account 466,704 0.27
Total 104,730,205 61.49
For
per
sona
l use
onl
y
2007
Spread of unitholders as at 31 August 2007Number of Number of % issued
Holding unitholders units fully paid capital
1 – 1,000 148 65,477 0.04
1,001 – 5,000 605 2,039,892 1.20
5,001 – 10,000 744 5,921,657 3.48
10,001 – 100,000 1,677 45,700,793 26.83
100,001 – 9,999,999,999 95 116,584,814 68.45
Total 3,269 170,312,633 100.00
At 31 August 2007 there were 100 unitholders each holding less than a marketable parcel of 637 ordinary units.
Voting rightsOn a show of hands, each member of CWT, being a holder of ordinary units (Member) has one vote.
On a poll, each Member has one vote for each dollar of the value of the total units in CWT held by that Member.
For
per
sona
l use
onl
y
Challenger Listed Investments Limited(ABN 94 055 293 644) (AFSL 236887) (CLIL) isthe Responsible Entity of Challenger Wine Trust(ARSN 092 960 060) (CWT).
CLIL, as the Responsible Entity of CWT, has preparedthis Annual Report (Report) based on informationavailable to it. The information in this Report shouldbe regarded as general information only. Nothingcontained in this Report constitutes investment,legal, tax or other advice. It has been preparedwithout taking account of any person’s objectives,financial situation or needs. Recipients should,before acting on any such information, consider itsappropriateness, having regard to their objectives,financial situation and needs, and seek the assistanceof their financial or other licensed professionaladviser before making any investment decision.
Any investment in CWT is subject to investment riskand other risks, including possible loss of incomeand principal invested. None of CLIL, ChallengerManagement Services Limited (ABN 29 092 382 842)(AFSL 234678) (CMSL), Challenger Financial ServicesGroup Limited (ABN 85 106 842 371) (Challenger) or any other member of the Challenger Group givesany guarantee or assurance as to the performance of CWT or the repayment of capital.
Nothing in this Report should be considered asolicitation, offer or invitation to buy, subscribe for orsell any, or a recommendation of, financial products.
All reasonable care has been taken to ensure thatthe facts stated and opinions given in this Report are fair and accurate. To the maximum extentpermitted by law, the recipient releases CLIL, eachmember of the Challenger Group, their directors,officers, employees, representatives and advisersfrom any liability (including, without limitation, inrespect of direct, indirect or consequential loss ordamage or loss or damage arising by negligence)arising in relation to any recipient relying onanything contained in or omitted from this Report.
Challenger Wine Trust (CWT)ARSN 092 960 060
Australian Securities Exchange (ASX) codeCWT
Responsible EntityChallenger Listed Investments LimitedABN 94 055 293 644AFSL 236887
Directors of the Responsible EntityS Gerlach (Chairman)RRR HooperIM MartensGK McWilliamIR MooreRJ WoodsPR Brook
Company SecretaryC RobsonS Koeppenkastrop
ManagerChallenger Management Services LimitedABN 29 092 382 842
AddressLevel 15255 Pitt StreetSydney NSW 2000Telephone: +61 2 9994 7000Facsimile: +61 2 9994 7777Email: [email protected]: www.challenger.com.au/cwt
RegistryComputershare Investor Services Pty LtdLevel 5, 115 Grenfell StreetADELAIDE SA 5000Telephone: 1300 556 161Facsimile: +61 8 8236 2305Email: [email protected]: www.computershare.com
Any forward looking statements included in thisReport involve subjective judgement and analysisand are subject to significant uncertainties, risks andcontingencies, many of which are outside the controlof, and are unknown to, CLIL. In particular, theyspeak only as of the date of these materials, theyassume the success of CWT’s business strategies,and they are subject to significant regulatory,business, competitive and economic uncertaintiesand risks. Actual future events may vary materiallyfrom forward looking statements and assumptionson which those statements are based. Given theseuncertainties, recipients are cautioned not to placeundue reliance on such forward looking statements.
Any past performance information provided in thisReport is not a reliable indication of future performance.
CLIL does not receive any specific remuneration forany general advice which may be provided to you inthis Report. However, CLIL and CMSL receive trusteeand management fees as Responsible Entity andManager of CWT, respectively. For more details onfees, please refer to the Financial Report containedin this Report and additional information on theAustralian Securities Exchange (ASX) websitewww.asx.com.au. Financial advisers (including someChallenger Group companies) may receive fees orcommissions if they provide advice to you or arrangefor you to invest in a Challenger product (includingCWT). CLIL and its associates may have an interestin the financial products referred to in this Reportand may earn fees or other benefits as a result oftransactions in any such financial products.
Members of the Challenger Group and their officersand directors may hold securities in CWT from timeto time.
Important notice Directory
For
per
sona
l use
onl
y
Investments. Mortgages. Possibilities.
Challenger Wine TrustAnnual Report 2007
Challenger Wine Trust(ARSN 092 960 060)
Responsible EntityChallenger Listed Investments Limited(ABN 94 055 293 644)(AFSL 236887)
Challenger W
ine Trust
Level 15255 Pitt StreetSydney NSW 2000telephone 02 9994 7000facsimile 02 9994 7777
www.challenger.com.au 57
00
/CG
47
8/0
90
7
Investments. Mortgages. Possibilities.
Challenger W
ine Trust Annual Report 2007
For
per
sona
l use
onl
y