Information Memorandum
Australian Wine and Leisure Property Group
Important Notices & Disclaimers Purpose
or communication in relation to the Group is subject to the terms of the Constitution and the Share Purchase Agreement to be entered into by the Investor which together (collectively, Constituent Documents) contains the rights and obligations of Investors. If there is any inconsistency between this IM and any of the Constituent Documents, the relevant Constituent Document will prevail.
This Information Memorandum (IM) has been prepared solely for the purpose of providing general information to Recipients in considering whether to make an investment in the Group and may only be used for that purpose. This IM is supplied subject to the conditions outlined below and by accepting a copy of this IM the Recipient agrees to those conditions. This IM is confidential and the Recipient must not use, disclose, copy or re-create, or permit the use, disclosure, copy or re-creation of, the IM or any information contained in it, for any purpose other than in considering making an investment in the Group.
Not a document requiring lodgement with the Australian Securities and Investments Commission (ASIC) This IM is not a product disclosure document for the purposes of Part 7.9 of the Corporations Act or a prospectus or other disclosure document under Chapter 6D of the Corporations Act and is not required to be lodged with ASIC. This IM and the Offer is only available to Recipients who are Wholesale Clients and by accepting this IM a Recipient represents that it is a Wholesale Client. If the Recipient does not qualify as a Wholesale Client, they must return all copies of the IM to the Group immediately.
It is important that you read this Information Memorandum fully before making a decision about investing in the Group By investing in the Group, Investors risk losing some or all of their principal investment and there is a risk that an investment in the Group may achieve lower than expected returns.
Capital and Investment Returns are not Guaranteed
The information in the IM is general information only and does not take into account the objectives, financial situation or particular needs of any particular person. It is important that Recipients read the entire IM before making any decision to invest in the Group. In particular, in considering the prospects of the Group, it is important that Recipients consider the risk factors that could affect the performance of the Group. Recipients should carefully consider these factors in light of their particular objectives, financial situation and needs (including financial and taxation issues) and seek advice from their own professional advisers before deciding to invest. Some of the risk factors that should be considered are set out in section 7.
This IM contains certain forecast statements relating to the Group including intentions, projections, targeted returns, financial performance and returns, estimates, objectives, strategies, beliefs and similar information as well as intended future activities and acquisitions of the Group (Forecast Information). The Forecast Information is not a guarantee of future activities, values or performance of the Group. Neither the Group, nor any other person gives any representation, assurance or guarantee that the results, performance or achievements expressed in or implied by the Forecast Information and the forecast statements contained in this IM will actually occur.
The statements made in this IM should not be considered as financial product advice. Recipients should read this IM in its entirety and seek their own independent legal, financial and taxation advice before applying for Securities. Nothing in this IM is a recommendation by any person to acquire Securities or concerning investment in the Group. This IM contains selected information and is not all-inclusive nor does it contain all of the information that may be relevant to making a decision to invest in the Group. The Recipient acknowledges that circumstances may change and that this IM may become inaccurate or outdated as a result. Neither the Group, nor any of their respective related bodies corporate and other affiliates or any of each of their respective directors, employees, consultants, agents, associates and advisors (together Specified Persons), is under an obligation to update or correct this IM (including, any error or omission which may become apparent after this IM has been prepared or issued). Any information provided in this IM and any other document
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Offering Restrictions
Diagrams & Photographs
This IM does not constitute an offer in any jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer. The distribution of this IM in jurisdictions outside Australia may be restricted by law and persons who come into possession of it should seek advice on and observe any such restriction.
Diagrams and photographs used in this IM are illustrative only and may not be drawn to scale. Unless stated otherwise, all data contained in charts, graphs and tables is based on information available at the date of this IM. The assets depicted in photographs in this IM may not be assets in which the Group has an interest.
Defined Terms
Offer Period
A number of words and terms used in this IM have defined meanings or should be interpreted in a particular manner. These appear in the Defined Terms in section 8.
The Manager may close or withdraw the Offer at any time.
Anti-Money Laundering & Counter-Terrorism Financing Act 2006
All references to dollars are to Australian dollars and are net of GST, unless stated otherwise.
Potential investors, whether individuals, companies, partnerships or trusts, will be required to provide appropriate identification at the time an Application Form is lodged.
Information is current as at 30 June 2018 unless otherwise stated.
Exclusion of Liability
Privacy Notification
None of the Specified Persons make any representation or warranty as to the accuracy, completeness, timeliness or reliability of the contents of this IM. To the maximum extent permitted by law, no Specified Person accepts any liability (including, without limitation, any liability arising from fault or negligence on the part of any of them) for any loss or damage whatsoever arising from the use of, or reliance on, this IM or its contents or otherwise arising in connection with it.
The personal information supplied to the Group is used for the primary purpose of establishing an investment in the Group. The personal information will also be used for the related purposes of processing applications, administering investments and complying with applicable laws and regulations including Australian record keeping requirements and anti-money laundering and counterterrorism laws. Personal information including the Investor’s name and address will be supplied to ASIC, and will become publically available information. The Group may also use the information to provide Investors with details of future investment opportunities.
The Recipient agrees that the Specified Persons are not liable for any loss or damage whatsoever arising from, or in connection with, the provision of this IM or any other information provided by the Group, or in respect of any termination of the Offer process by the Group for any reason and, to the extent permitted by law, the Recipient waives any rights it may otherwise have in such respects.
By lodging an Application Form Recipients consent to the Group’s collection and use of their personal information as stated above. If all the information required is not supplied, the Group may be unable to establish an investment in the Group, process the Application Form and/or administer the investment.
All enquiries regarding this document should in the first instance be directed to: Rick Curtis Managing Director – Bensons Property Group Pty Ltd rick.curtis@bensonsproperty.com.au Ph : +613 8602 0800
Dollars All numbers referred to are in Australian Dollars.
Michael Dickson Chief Financial Officer – Bensons Property Group Pty Ltd michael.dickson@bensonsproperty.com.au Ph : +613 8602 0800
Date: 31 August 2018
Not Binding Other than the Recipient’s acceptance of the conditions set out in this Important Notices & Disclaimers section, nothing set out or referred to in this IM is intended to be legally binding or forms the basis of any contract.
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Contents Section 1: Letter from the Chairman ���������������������������������������6 Section 2: Key Features �������������������������������������������������������������7 Section 3: Levantine Hill Estate – Winery and Hospitality Businesses ������������������������������������ 13 Section 4: Maroondah Highway Property ����������������������������� 29 Section 5: Key Financial Information ������������������������������������ 33 Section 6: Taxation ������������������������������������������������������������������ 36 Section 7: Key Investment Risks �������������������������������������������� 37 Section 8: Defined Terms ������������������������������������������������������� 39 Section 9: Corporate Directory ���������������������������������������������� 46 Section 10: Related Company Activities �������������������������������� 46
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“Occupying a spectacular Yarra Valley site, Levantine Hill produces wine of European elegance and subtlety, and its quality aspirations are frankly inspiring.” — Jeremy Oliver, The Australian Wine Annual
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Section 1: Letter from the Chairman Dear Investor It is my pleasure to invite you to participate in the ownership of the Australian Wine and Leisure Property Group. The Group has been established to allow investors to invest in the growth and development of the Levantine Hill Estate branded winery, hospitality and property businesses. Levantine Hill Estate is already an award winning ultra-premium winery recognized for its high quality wines with significant expansion options. Levantine Hill Estate’s mission is simply “to produce exceptional wines, handcrafted without compromise”. Its key strategic objectives are: • Vineyards – nurture quality plantings, with the emphasis on quality rather than quantity • Wines – be a world class winery, with exclusive distribution networks seeking ultrapremium wines • Cellar Door and Restaurant - draw patrons from all over Australia and the world • Hospitality and Accommodation – be an ultra-exclusive function venue and an ultimate luxury retreat. The Group intends to: • acquire the property at 882 to 886 Maroondah Highway, Coldstream, Yarra Valley, Victoria, Australia (Maroondah Highway Property) together with the Levantine Hill Estate IP and over time the complete construction of: –– a state of the art winery building including function centre, gallery space, wine making operations and storage facilities. –– functions centre; –– winemaking and storage facilities; –– new resort and accommodation facilities; and –– a world class convention centre and car museum. • Increase the number of wine labels offered. • Increase plantings and purchase of grapes adding scale to current production levels, adding to the Group’s stable of brands with an appropriate range of price points and enhancing the Group’s Australian and overseas distribution platforms. The impact on the wine and leisure markets that Levantine Hill Estate has achieved over recent years has been quite stellar. Levantine Hill Estate wines are being served at a range of very impressive establishments. The relationships with Qantas and Emirates are a testament to Levantine Hill Estate’s recognition as a world class brand. These are very exciting and significant developments for the Group. After you have read this Information Memorandum and considered both the benefits and risks of investing in the Group, I invite you to join with me as an investor in the Group.
Yours sincerely Elias Jreissati KJGC Group Chairman
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Section 2: Key Features Key Features and Summary of Investment Offer Key Feature
Summary
Section
Assets of the Group
The Group currently owns the Levantine Hill Estate winery and hospitality businesses, consisting of a winery, wine sales business, cellar door and restaurant. The owner of the Maroondah Highway Property has agreed to sell to the Group for $50 million: • the Maroondah Highway Property, including water rights, plant and equipment, art, infrastructure and rights to the planning applications; and • the Levantine Hill Estate IP. As a result of the construction of the winery and upon acquisition of the Maroondah Highway Property and Levantine Hill Estate IP, the Group anticipates it will have an enterprise value in excess of $ 106 million.
Section 3: Levantine Hill Estate – Winery and Hospitality Businesses (page 13)
Share Capital
The Group intends to progressively increase its capital over time. To invest in the growth and development of the Levantine Hill Estate branded winery, hospitality and property businesses.
Section 2: Structure of the Investment and Key Information (page 7)
Target return
The Group is targeting that each Investor, for the period of their investment in the Group to 31 June 2021, will receive Distributions from the Group of at least 4% per annum (pro rata and before any applicable taxes) on their investment. There are always factors that could affect the performance of the Group and the businesses it operates which are outside the control of the Group. Actual results may differ from targeted returns.
Section 2: Structure of the Investment and Key Information (page 7)
Distributions
Distributions (if available) will be paid half yearly.
Section 2: Structure of the Investment and Key Information (page 7)
Liquidity and Transfer of Securities
An investment in the Group should be viewed as a strategic play into a wine and leisure enterprise. The investment should be considered to be a long-term investment and is illiquid. Investors may transfer their Securities provided they comply with the terms of the Constitution and Share Purchase Agreement. The Group is targeting an ASX listing or trade sale within six to seven years of the date of this IM.
Section 2: Structure of the Investment and Key Information (page 7)
Risks
There are risks in investing in the Group.
Section 7: Key Investment Risks (page 37)
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Section 2: Structure of the Investment and Key Information (page 7)
Section 5: Key financial information (page 33)
Investment Opportunity With firm commitments from new investors to invest in the Group, the Group will have a capital base of at least $106 million and proceed with the acquisition of:
» substantial wine sales growth by tapping into new markets across Australia and around the world. • The Group is also targeting substantial returns from business development opportunities in hospitality and wine and leisure property development;
• the Maroondah Highway Property, including water rights, plant and equipment, art, infrastructure and rights to the planning applications; and
» further synergies that may be achieved by the Group owning all the Maroondah Highway Property assets;
• the Levantine Hill Estate IP. As a result of the anticipated Capital Raising and upon acquisition of the Maroondah Highway Property and Levantine Hill Estate IP, the Group anticipates it will have an enterprise value in excess of $106 million.
» further favourable amendments to the applicable planning schemes for the Maroondah Highway Property that may arise in the future; and • develop new resort and retreat accommodation facilities on the Maroondah Highway Property adjacent to the Yarra River;
It is the intention that S.M.K. Nominees Trust will remain a long term Investor in the Group, while Elias Jreissati’s management team will continue to lead the growth of the Levantine Hill Estate Businesses.
• developing a world class convention centre and car museum;
The management strategy will be to maintain a sharp focus on the production of world class wines, whilst continuing to further develop relationships with national and international wholesalers and top tier airlines in order to drive business growth.
• ultimately prepare the Group for an ASX public listing or a trade sale.
Export Levantine Hill has commenced an export program to the U.S. and is pursuing other export markets.
Further, the Group has the intention to add scale to current production levels, add to the stable of brands with an appropriate range of price points and to enhance the Group’s Australian and overseas distribution platforms.
Key Highlights Key highlights of the Group include: • an award winning ultra-premium Australian winery recognised internationally and nationally for its high quality wines. • an opportunity to acquire from a related entity, S.M.K Holdings Trust, that has agreed to sell for $35 million plus approximately a further $15 million for the new winery building currently under construction: » the exceptional Maroondah Highway Property, including water rights, plant and equipment, art, infrastructure and rights to the planning applications; and » the Levantine Hill Estate IP. • options for the Group to capture significant value include: » expanding the winery, cellar door and restaurant businesses; » building a state of the art winery building including function centre, gallery space, winemaking and storage facilities on the Maroondah Highway Property; (Permit now approved and construction commenced) » increased plantings and purchase of grapes to add scale to current production levels, add to the stable of » brands with an appropriate range of price points and to enhancing the Group’s Australian and overseas distribution platforms;
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Maroondah Highway Property and Levantine Hill Estate IP
• estimated profit earnt by the current owner of the Maroondah Highway Property from the sale of grapes to LHE Sales which would be retained by the Group if the Group owns the vineyards itself – estimated at $800,000 per annum ex GST for the 2018/19 financial year.
The owner of the Maroondah Highway Property, S.M.K. Holdings Trust, has agreed to sell to the Group: • the Maroondah Highway Property, including water rights, plant and equipment, art, infrastructure and rights to the planning applications; and
• From 2020, $800,000 for rental of the winery building. The capital improved value of the Maroondah Highway Property has increased significantly in recent years as a result of the continuing investments the existing owner has made to and on the land.
• the Levantine Hill Estate IP. The owner currently receives the following income streams in respect of the Maroondah Highway Property:
Upon completion of the new state of the art winery building the land owner will also receive rental income from LHE Sales Pty Ltd of $800,000 per annum.
• rental income from 882 Hospitality Unit Trust; • licence fees from 882 Hospitality Unit Trust and LHE Sales, and
A further planting programme is underway which will see the planted area increase by a further 30 acres under vine.
• revenue from the sale of grapes to LHE Sales. By acquiring the Maroondah Highway Property and Levantine Hill Estate IP, the Group would no longer have to make the following payments to the existing land owner, and accordingly would immediately enjoy a substantial profit uplift of approximately $1.35 million per annum for the 2018/19 financial year. The expense savings would include: • rental income paid by 882 Hospitality Unit Trust – forecast at over $500,000 ex GST per annum; • licence fee paid by LHE Sales on licensed area being used by LHE Sales – forecast at approximately $46,000 ex GST per annum; and
Map of The Yarra Valley Healesville Yarra Glen
TarraWarra Museum of Art Yarra River
Chateau Yering Historic House
Domaine Chandon Maroondah Hwy
Yarra River
The Heritage Golf and Country Club
ß 60km Melbourne CBD 9
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No Cooling Off Period There is no “cooling off” period in relation to the issue of Securities under this IM. Therefore, once Securities have been acquired by the Investor, there is no obligation on the Group to buy-back or re-acquire the Securities.
Offer to Investors The Group reserves the right to close the Offer and suspend applications without notice at any time.
Risks As with any investment there are risks associated with an investment in the Group. Please refer to section 8 for a discussion of specific and general risks associated with an investment in the Group.
Type of Investment It is anticipated that the Group will position itself for an ASX public listing or trade sale within six to seven years of the date of this IM. The information provided in the IM is general information only and does not take account of your personal objectives, financial situation or needs. It is not intended to be a recommendation by any Specified Person or any other person to invest in the Group. You should invest in the Group only if it is an appropriate investment for you and if you are comfortable with the risks of this investment. You should obtain your own financial advice tailored to your personal circumstances.
FIRB If you are a ‘foreign person’ (as defined in the FIRB Act), your investment in the Group may require notification to, and approval by the Australian Foreign Investment Review Board. If you are a ‘foreign person’ (as defined in the FIRB Act), you are responsible for obtaining any FIRB approval required. You must provide a copy of the FIRB approval to the Group.
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Section 3: Levantine Hill Estate – Winery and Hospitality Businesses Business Snapshot
All told, Levantine Hill won three trophies, two gold and five silver medals at this year’s awards. Yarra Valley’s Levantine Hill Estate 2015 Syrah has been judged the winner of the prestigious Australian Red Trophy at the world’s most important wine awards revealed by The International Wine Challenge (IWC) last night in London.
Levantine Hill Estate is located in Coldstream in the Yarra Valley in the heart of the sun-drenched, fertile, Yarra Valley, Victoria. The Levantine Hill Estate Businesses are diverse, consisting of a winery, wholesale and direct to customer wine sales business, cellar door and restaurant.
The Levantine Hill Estate Syrah 2015 won a string of awards at this year’s IWC awards including The Victorian Shiraz Trophy, The Australian Shiraz Trophy and The Australian Red Trophy as well as a gold medal. This means that the judges found that the 2015 Syrah is not only the best shiraz from Victoria, but the best shiraz in Australia.
Levantine Hill Estate, being a long held vision of its founders Elias and Colleen Jreissati, strives to encapsulate the superlative quality of the world’s best wines. In a relatively short timeframe, Levantine Hill Estate has established itself as a premium wine brand that is synonymous with prestige and quality.
Moreover, the 2015 Syrah, was named as the best Australian red wine, beating all other red wine categories from around the nation including pinot noirs, cabernet sauvignons, and the famed shiraz’s from South Australia.
Renowned wine critic James Halliday has referred to Levantine Hill Estate as “the most ambitious project in the Yarra Valley since the establishment of Domaine Chandon a quarter of a century ago”. James Halliday has also given the winery a five-star status.
Another gold medal winner was awarded to Levantine Hill’s 2015 Colleen’s Paddock in the pinot noir division. In addition, Levantine Hill Estate won an additional five silver awards for their Family Paddock red wines (see list below).
Winemaking Philosophy Producing an array of award winning wines, Levantine Hill Estate wines are a true testament to the passion and craft of small batch winemaking. The business is dedicated to bottling superior quality wine in impeccable vintage years, allowing Levantine Hill Estate to maintain a premium price position in the market. Levantine Hill Estate’s first ever released vintage was in 2012.
This is the second year in a row that Levantine Hill’s Syrah has secured an international trophy after last year it won best Syrah/Shiraz in class. Qantas, Australia’s national airline, has chosen to serve Levantine Hill Estate wines in-flight to its first class passengers and international business class passengers and to its premium members at its airport lounges, including the
The winemaker and his team hand harvest, hand sort and hand plunge harvested grapes. Small batches of grapes are harvested at perfect ripeness and batch fermented, before being matured in the finest French oak, including Mercurey, Seguin Moreau or Taransaud.
Qantas Chairman’s Lounge in Australia. Levantine Hill has a marketing arrangement with Qantas that means our wines are permanently in the following locations. Every day. –– Every domestic Business Class Lounge –– Every domestic Chairman’s Club Lounge
Major awards and recognition
–– Every International Business Class Lounge
Levantine Hill Estate’s elegant wines have earned the praises of revered wine critics, most notably from James Halliday, Huon Hook and Jeremy Oliver. Levantine Hill Estate’s inaugural 2012 Syrah was awarded its first Gold Medal at one of Australia’s pre-eminent wine shows (the 2014 Royal Adelaide Wine Show), as well as winning a Gold Medal at the 2014 Six Nations Wine Challenge and being a Gold Winner at the 2014 Melbourne International Wine Competition.
–– Every International First Lounge –– In one (or both) of International First Class cabins or, Business Class cabins. Emirates, a substantial world airline, is also serving Levantine Hill Estate wines in-flight to its first class and business class passengers. Levantine Hill Estate wines are being poured in some of the most exclusive restaurants in Australia and in a Michelin star restaurant in England.
At the 2016 China Wine & Spirits Awards, both the Levantine Hill Estate Pinot Noir 2013 and Levantine Hill Estate Syrah 2013 were awarded Gold medals and The Levantine Hill Estate Samantha’s Paddock Melange Traditionnel 2013 was awarded a Double Gold medal. At the 2017 International Wine & Spirit Competition (IWSC) in London, the Levantine Hill Estate Syrah 2014 won the award as the best Shiraz in the world. Levantine Hill Estate in the Yarra Valley also received three trophies for its 2015 Estate Syrah at the prestigious International Wine Challenge awards in London.
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Levantine Hill Estate currently produces four tiers of wine.
The new Glen Garvald brand is to be launched in 2019. It will be positioned between the Levantine Hill Estate range and the Coldstream Guard range.
Family Block range
Export
This is Levantine Hill Estate’s ultra-premium range. The Family Block wines are single block wines named after members of the founding family – Samantha’s Paddock (Bordeaux Cabernet blend), Colleen’s Paddock (Pinot Noir), Katherine’s Paddock (Chardonnay), and Melissa’s Paddock (Shiraz). The RRP is between $125 and $200 per bottle for current vintages.
Á substantive market exists for Levantine Hill Estate in both the USA, China and the rest of Asia. Relationships in China have been established with the first order received in May 2017. Initial work has also commenced on opening the USA and Singapore markets. The Levantine Hill Estate winery seeks to produce wines that not only rival the best of the Yarra Valley or Australia, but also rival the world’s most renowned wines. The production estimate for the 2017 vintage is in excess of 21,000 dozen bottles. There is opportunity to increase production without compromising quality in future years.
Estate range
The Levantine Hill Estate brand operates its winemaking business and wine sales business through LHE Sales.
These are single vineyard wines that honour the French varietals of Bordeaux and Burgundy. They are made using certain percentages of each grape variety to keep with the traditional ways of making those blends in France. The current range consists of Rosé, Sauvignon Blanc Semillon, sparkling white, Mélange Traditionnel Blanc, Cabernet Sauvignon, Pinot Noir and Syrah. The recommended retail price (RRP) is between $35 and $80 per bottle for current vintages.
LHE Sales operates a winery offsite at premises in Coldstream within close proximity to the Maroondah Highway Property. The winery will continue to operate at this offsite location until the new winery building on the Maroondah Highway Property is completed. Preliminary construction works commenced in June 2018. LHE Sales sells wine at wholesale prices to select retailers and restaurants around Australia. It has ambitions to expand into global markets. Levantine Hill Estate has a team of employees who sell direct to wholesalers and consumers.
The Coldstream Guard range
Levantine Hill Estate also sells its wine through Veraison Wines, a wholesale distributor of premium Australian wines.
The Coldstream Guard was created to free Levantine Hill Estate from its own rules of single vineyard winemaking. The Coldstream Guard is a proud salute to its winemaker who uses selected batches from blocks throughout the Maroondah Highway Property, as well as other vineyards in the Yarra Valley. The winemaker unites these batches to create a blend unique to each vintage. The RRP is between $35 and $50 per bottle for current vintages.
Glen Garvald range This range will be introduced in 2019 and will utilise fruit, exclusively sourced from our Maroondah Hwy site. With climate change, Levantine Hill has commenced a future proofing replanting program. This range will showcase the new variety and our winemaking technologies.
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From left to right: Aaron Zuccaro, Paul Bridgeman, Cameron Joyce and Peter Shone.
Highly Renowned Winemaker – Paul Bridgeman Paul Bridgeman is a highly respected winemaker. He joined Levantine Hill Estate in September 2013, following five years as winemaker at Yarra Yering where he steered the iconic label immediately after the passing of Yarra Valley legend, DrBailey Carrodus. In addition to working 20 Yarra Valley vintages, Paul has also worked vintages in McLaren Vale,
the Hunter Valley, the King Valley and Gascony in Southwest France. In 2006, he fulfilled a personal dream by working at the legendary Domaine Jean-Louis Chave in France’s Rhône Valley. Levantine Hill Estate’s philosophy of pursuing quality fits with Paul’s winemaking values and passion for small batch wine-making.
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Organisation Chart Set out below is the organisation chart for the Cellar Door and Restaurant Team and the Winery and Sales Team.
Cellar Door and Restaurant Team
Winery and Sales Team
Board of Directors
Group General Manager
Venue Manager
Cellar Door Manager
Wait Staff
Assistant Winemaker
Head Chef
Cellar Door Staff
Sales Manager
Winemaker
Cellar Hands
Kitchen Staff
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Export Manager
Winery Hands
Account Managers
Cellar Door and Restaurant The Levantine Hill Estate Businesses operate a cellar door and restaurant, which trades as “ezard @ Levantine Hill” through the 882 Hospitality Unit Trust. ezard @ Levantine Hill is a collaboration between hatted chef Teage Ezard and Levantine Hill Estate, and the 882 Hospitality Unit Trust is permitted to use the Ezard name pursuant to a licence agreement until 30 June 2020.
At the cellar door, a selection of tastings is offered so the guests can experience, firsthand, the finesse and outstanding character of Levantine Hill Estate’s wines. The restaurant and cellar door has had over 30,000 visitors in its first year with forecast visitation anticipated to grow to over 100,000 per annum. After 12 months of operation, the existing kitchen facilities in the cellar door and restaurant were expanded due to customer demand.
Located at the Maroondah Highway Property in a stunningly architectural building designed by renowned architects Fender Katsalidis Architects, ezard @ Levantine Hill is home to Levantine Hill Estate’s cellar door, as well as two distinct dining spaces. There is an All Day Dining space offering sharing plates and casual dining of high quality. There is also a Signature Restaurant offering five and eight course degustation menus and wine matching. The venue can be seen from the Maroondah Highway in a location known as the “Golden Mile”. Visitors can enjoy the best of Levantine Hill Estate wines matched to dishes inspired by the classic food styles of Europe.
Art and sculpture are a strong feature of the beautifully manicured grounds and building. The Cellar Door has the honour of being named Best in the Yarra Valley by Gourmet Traveller Wine.
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Future Expansion Plans The Group has plans to substantially expand the Levantine Hill Estate Businesses. The strategy Maroondah Highway Property is to progressively:
The substantial acreage of the property along the Yarra River allows for multiple staged developments. Planning approvals have already been obtained for the new winery and function centre building. See further details below.
• expand the winery, cellar door and restaurant businesses; • build a state of the art winery building including function centre, gallery space, winemaking and storage facilities, increase plantings and purchase grapes to add scale to current production levels, add to the stable of brands with an appropriate range of price points and enhancing the Group’s Australian and overseas distribution platforms;
Resort and Retreat Accommodation facilities
• increase plantings and purchase grapes to add scale to current production levels, add to the stable of brands with an appropriate range of price points and enhancing the Group’s Australian and overseas distribution platforms;
Yarra Ranges Council
The Group intends to acquire the Maroondah Highway Property with the development of new resort and retreat accommodation facilities adjacent to the Yarra River on the eastern section of the Maroondah Highway Property. The substantial acreage of the property along the Yarra River allows for multiple developments. The Group has had positive discussions with the Yarra Ranges Council and the State Government about the development of the resort and retreat accommodation facilities.
• develop new resort and retreat accommodation facilities on eastern section of the Maroondah Highway Property adjacent to the Yarra River; • develop a world class convention centre and car museum; and • capture synergies that may be achieved by the Group owning all the Maroondah Highway property assets.
Maroondah Highway Property Masterplan
PROPOSED ACCESS VIA MAROONDAH HWY WINERY CELLAR DOOR & RESTURANT
GALLERY & FUNCTION CENTRE
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FARMHOUSE CENTRE FOR ARTS & CRAFTS
RESTURANT, LOUNGE, HEALTH & WELBEING FACILITY
NEW 130 VEHICLE CAR PARK SELF CONTAINED PAVILIONS OUT BUILDING & CART STORE
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POST & WIRE
EXISTING IRR IG
MAIN
97°14'15" 135.17m
EMERGENCY ASSEMBLY AREA
EXISTING IRRIG MAIN
NEW GARDEN BEDS
MAIN VEHICLE ACCESS EXISTING SEALED CAR PARK AND LOADING
EXISTING CELLAR DOOR
VILLAGE GREEN
358°57' 236.56m
HILL ROAD
POST & WIRE
EXISTING IRRIG MAIN
EXISTING VISITORS CAR PARK (35 CARS & 3 BUSES)
EXISTING NEW SEWER
NEW PEDESTRIAN WALKWAY
NEW GARDEN BEDS
PROPOSED NEW WATER
PIPE EXISTING PEDESTRIAN WALKWAY (CRUSHED ROCK)
NEW ASPHALT DRIVEWAY
New Winery Building Plan
New Winery Building
The new facilities will include the following:
A new state of the art winery building, designed by highly renowned architects Fender Katsalidis Architects, has EXISTING RAIN TANKS obtained Council and authority approvalsWATER (Planning Permit (2 X 390KL) No. YR-20179/19 issued on 24 August 2017). Preliminary construction commenced in July 2018, with the target to complete the base works in May 2019.
Winery Function Areas:
REVISION 01 P1 P2 T1 T2
• A bar and wine tasting facility that will host patrons for wine tasting. EXISTING NEW SEWER
The design of the winery building is for a singular curvilinear building that is positioned to the east directly EXISTING VISITORS CAR PARK on axis with the existing cellar door and restaurant and (48 CARS) separated by village green. The winey is over two levels basement and ground with a footprint of approximately 100 metres by 20 metres. The total building area will be approximately 3,400m2. The village green will have a total area of approximately 5,700m2 and is intended to be an ornamental centrepiece between the existing restaurant BIM Server: Bimserver9 - BIM Server 20/16059 Levantine Hill Winery/16059 General and the new winery building.
• Gallery space that is capable of hosting functions. It is EXISTING envisaged that functions with banquet seating capacity VEGETABLE PATCH of 220 persons is provided in this space.
• An outdoor deck space to accommodate dining option and provide break-out space for functions with vistas over the vineyard. • Landscape work to provide on grade and ceremonial access to the undercover entrance of the building. • Amenities to support the function area. • Separate toilet facilities at basement level.
CONTINUATION REFER • A separated quiet lounge for bridal parties withFOR private entry for bridal party. QUALITY ASSURANCE (ISO 9001 CERTIFIED) NOTES
REVISION
T5 GENERATOR AND LINE OF LOWER SERVICE LEVEL ROAD ADJUSTED AC 31.05.2018 INFORMATION JH 27.09.2017 ItISSUEisFORexpected that that rationalisation, reduced evaporation THIS PROJECT IS SUBJECT TO THE FK QUALITY ASSURANCE SYSTEM • A luxury car museum when not used as a function space. T6 ISSUE FOR SURVEYOR INFORMATION AC 01.06.2018 ISSUE FOR INFORMATION KT 14.02.2018 SCHEMATIC DESIGN REVIEW FOR THIS PROJECT IS YET TO BE COMPLETED. and better quality controls gains to be achieved by the new T7 ISSUE FOR SURVEYOR INFORMATION AC 07.06.2018 DRAWING NUMBER CHANGE KT 26.03.2018 DESIGN DEVELOPMENT REVIEW FOR THIS PROJECT IS YET TO BE COMPLETED. TENDER DOCUMENTATION REVIEW FOR THIS PROJECT IS YET TO BE COMPLETED. T8 ISSUE FORmillion INFORMATION AC 03.07.2018 UPDATED WIP DD PRELIMINARY ISSUE KT 12.04.2018 winery building will result in approximately $1.5 per CONSTRUCTION DOCUMENTATION REVIEW FOR THIS DRAWING IS YET TO BE COMPLETED. T9 ISSUE FOR CFA MEETING AC 19.07.2018 PRELIMINARY CONCRETE AND STEEL TENDER PACKAGE KT 01.05.2018 IF THIS DRAWING IS STAMPED 'UNCONTROLLED COPY' THEN IT IS TO BE CONSIDERED A annum in cost savings to the group. AMENDED SERVICE AREA KT 04.05.2018 DRAFT, SUBJECT TO REVISION WITHOUT NOTICE
UNCONTROLLED COPY
T3
UPDATED BASEMENT RETENTION SYSTEM AND GENERATOR AND RAMP TO BASEMENT KT
11.05.2018
T4
GENERAL UPDATE AND ADDED TAGS
23.05.2018
KT
THIS DRAWING IS COPYRIGH
CHECK AND VERIFY ALL DIME
IN CONJUNCTION WITH ALL O DIMENSIONS ONLY. SEEK CL
DRAWN
AC
GSPublisherVersion 304.4.13.3
21
M
MAROOND
AH HIGHW AY
W AX
EL
LS
RO
AD
LINE OF EXISTING HWY SHOWN DASHED
95°42'15" 150 .96m 9' 70°0
.73m 84°21'45" 177
m 7.82
0 7'2
"
3°3
23
EASEMENT 1 TITLE PLAN 128699A
23
89°55'40" 8.00m
179°55'40" 5.00m
179°55'40" 5.00m
EXISTING GRAVL ROADWAY TO BE WIDENED
7 3°3
m .12 29 m .12 9 2 " '20
269°55'40" 8.00m
KIOSK SUBSTATION 8x5m reserver aprox 1.75 tall NEW TREES NEW CHIPSEAL DRIVEWAY
NEW GARDEN BEDS EXISTING GRAVEL CARPARK
NEW STAFF CAR PARK 8 CARS 1 DISABLED PARKING
8 400
1 in 2.5 batter
4 000
6 100
400
HYDRANT BOOSTER
BOOSTER
GENERATOR MSB
CHIPSEAL DRIVEWAY
3 400
1 000
SMALL SERVICE BAY ENTRY COURT
DARK GREY WASHED CONCRETE HARDSTAND LOADING
DARK GREY WASHED CONCRETE
5 000
EXISTING TREE SHOWN DASHED TO BE REMOVED IN ACCORDANCE WITH ARBORIST REPORT
114.300
STORAGE SHED
RAIN WATER TANK (200KL)
PLANT
BASEMENT LAYDOWN AREA
SURGE TANK (45 KL)
HYDRANT
RAIN WATER TANK (200KL)
RAMP
FFL 118.000
NEW SCREENING SHRUBS
PROPOSED NEW SEWER
NEW CHIPSEAL DRIVEWAY
DASHED LINE DENOTES EXISTING LEVELS
EXISTING TRACK
EXISTING VINES)
Winery Operations, Installations and Facilities: • Wine making facilities to allow for the full process of processing grapes, producing wine, storing and
Barrel Store: A barrel store area will be located in the subfloor basement. NEW SEWER CONNECTION It is FOR to consist of: WINERY WASTE WATER TO NEW WATER TREATMENT DAM
bottling wine.
• Space for the storage wine barrels totalling approximately EXISTING TREES 200,000 litres. This space is the be climate and humidity controlled to maintain ideal
• Area designed for the display adjacent to the basement front of house area • Barrel store to contain approximately 200,000 litres of wine stacked oak barrels
SHOWN DASHED TO BE REMOVED IN ACCORDANCE WITH ARBORIST REPORT
• Spatial allowance for barrel access to the requirement of the winemaker
conditions for maturation processes. • Loading facilities to allow trucks to entre and make
• Nominated working area to accommodate cleaning of barrels, and a bottling plant
deliveries to the winemaking facility. • Storage for wine bottles and equipment, forklifts
• CO2 detection and extraction capabilities to Wine Technologies Engineer’s requirement
and equipment. • Vertical transportation to support both public and
• Temperature control facilities to maintain constant 16 degrees and 75% humidity
disability access, and for transportation of heavy R TO DRAWING A0002 equipment typically used in wine making production
• Access to loading through insulated access door. FENDER facility KATSALIDIS
PROJECT
and to support function spaces.
LEVANTINE HILL WINERY ENSIONS ON SITE PRIOR TO COMMENCING WORK. DRAWING TO BE READ 882-886 MAROONDAH HWY OTHER CONTRACT DOCUMENTS. DO NOT SCALE DRAWINGS. USE FIGURED LARIFICATION OF INCONSISTENCES • / CONFLICTS. Storage facilities for banquet tables and seating.VIC 3770 COLDSTREAM
WWW.FKAUSTRALIA.COM 2 RIVERSIDE QUAY, SOUTHBANK VICTORIA 3006 AUSTRALIA TELEPHONE: +61 3 8696 3888 FENDER KATSALIDIS (AUST) PTY LTD ACN 092 943 032
HT AND SHALL REMAIN THE PROPERTY OF FENDER KATSALIDIS (AUST) PTY LTD
DATE
CHECKED
• Rain water tank storage. PLOT DATE JOB NO.
SCALE
DRAWING TITLE
ISSUE PURPOSE
REV.
DRAWING NO.
19.07.2018
RL
1:500@A1
SITE PLAN SHEET 01
FOR INFORMATION
T9
A0001
19.07.2018
16059
• Water tank storage for fire authority use.
22
Office and Staff Amenity: The following amenity to support both the front of house and winery spaces is needed:
Land and Vines The Group has grape supply agreements with S.M.K. Holdings Trust, the proprietor of the vineyards of the Maroondah Highway Property and the Hill Road Property, whereby S.M.K. Holdings Trust agrees to sell the Group grapes from S.M.K. Holdings Trust’s vineyards.
• A laboratory and testing space. • A tasting bench and stools for visitors • A staff space including tea and coffee making facilities, male and female toilets
Levantine Hill Estate sources grapes for its Estate wines from the Maroondah Highway Property, which has been producing superior grapes since the 1990s. More information about the grape varietals at the Maroondah Highway Property is located in section 7.
• A ground floor office located centrally to wine making and front of house functions. • An open office area, with 10 workstations and a reception desk
Levantine Hill Estate sources its Family Paddock grapes from the Hill Road Property from blocks that fan out on one of the highest hills on the Valley’s floor. The Family Paddocks comprise a further 13.9 acres (approximately) and spread out over steep clay loam slopes, at similar elevations to the Grand Cru vineyards of Chablis in France. The vines planted are Chardonnay, Cabernet Sauvignon, Merlot, Petit Verdo, Cabernet Franc, Malbec, Shiraz and Pinot Noir.
• A 12 seat boardroom overlooking the wine making and front of house space.
Licences, Grape Supply Agreement and Plant and Equipment Licence for premises Pursuant to a licence for premises, S.M.K. Holdings Trust has granted the Group a licence to use cool rooms and part of a dwelling (used as an office) on the Maroondah Highway Property. The licence fee is currently $45,900 plus GST per annum.
The Hill Road property is not offered as part of this Offer. The environment of the two vineyards which Levantine Hill Estate draws its grapes from, along with the vineyards’ ultra- low yielding vines, puts Levantine Hill Estate in a unique and advantageous position. This uniqueness is evident in Levantine Hill Estate’s Estate and Family Paddocks range.
S.M.K. Holdings will also grant the Group a licence to use the new winery building on the Maroondah Highway Property once completed. The licence fee in the first year has been agreed at $800,000 plus GST per annum
Award-winning Sauvignon Blanc Semillon in the style of the finest Bordeaux Blanc and a Rosé of Cabernet Sauvignon, reminiscent of the full-flavoured Rosado’s of Northern Spain are complex and classic, yet fresh. Levantine Hill Estate’s Pinot Noir is perfumed and intensely layered, yet savoury on the palate. Its Cabernet Sauvignon and Syrah exhibit exceptional varietal characteristics and the elegance exhibited in only the most sophisticated cool climate wines. Although each of the varietal wines draw inspiration from their historical heartland and strongholds in France, the specificity of their faithful expression of Levantine Hill Estate’s grapes makes them highly individual. To meet production targets, Levantine Hill Estate also sources fruit from select producers.
Levantine Hill Estate Trademarks and Business Names S.M.K. Holdings Trust is the owner of trademarks and business names relating to Levantine Hill Estate (Levantine Hill Estate IP). S.M.K. Holdings Trust has granted the Group, through intellectual property licence agreements, the right to use and exploit the Levantine Hill Estate IP. S.M.K. Holdings Trust agreed that the Group need not pay any royalty fee from 1 July 2016 to 31 December 2018 (inclusive). Royalty fees are again applicable from 1 January 2019. The licence agreements for the Levantine Hill Estate IP expire on 10 February 2025. S.M.K. Holdings Trust has agreed to sell to the Group the Levantine Hill Estate IP with the Maroondah Highway Property for the total consideration of $35 million.
Plant and Equipment The existing owner of the Maroondah Highway Property, S.M.K. Holdings Trust, owns farm plant and equipment incidental to maintaining the Maroondah Highway Property vineyard. Such plant and equipment includes forklifts, tractors and other farm equipment. These plant and equipment items will be sold to the Group together with the Maroondah Highway Property should the Group proceed to acquire the Maroondah Highway Property.
23
“Blessed with resources beyond most small Australian producers, Levantine Hill has actually already achieved what many makers fail to do – which is simply to understand very clearly and uncompromisingly each and every wine it wants to put into bottle.” — Jeremy Oliver, The Australian Wine Annual
24
Our Prestigious Wines Inventory As at 30 June 2018 the Group has bottled wine inventory with a Landed Unit Cost value ex GST of in excess of $21.9 million. Many of these wines are being aged and are not due for release until after 5 years of vintage.
GOLD 2018
S R
E H
NET SAU VI ER B
N MAST E NO G
B GLO AL C A
The Group also has substantial value in its wine stock ageing in barrels that has yet to be bottled.
T
Levantine Hill Estate Samantha’s Paddock MÊlange Traditionnel A blend of cabernet, merlot, cabernet franc, malbec and petit verdot. Open-fermented, 16 months in high-quality French oak. Immaculately balanced, medium-bodied, with a wreath of small berry fruits around superfine, but persistent tannins and cedary oak. The keynote is elegance. Variety: Cabernet Blend Region: Yarra Valley Drink by: 2032
25
ES
HALLI
D
94 100
AY
JA
M
Levantine Hill Estate Colleen’s Paddock Pinot Noir The gushing back label is best left unread. Complex winemaking is reflected in this wine, which says different things along the way to its finish, where the lift is reminiscent of Burgundy. Variety: Pinot Noir Region: Yarra Valley Drink by: 2024
26
Levantine Hill Estate Melissa’s Paddock Syrah Shades of grey in a red wine glass. There is so much going on here, yet no single flavour or texture stands out: fruit, spice, oak, tannins all flit silently in and out of view. There is nothing tawdry about the wine, which breaks free on its finish and aftertaste. Variety: Syrah Region: Yarra Valley Drink by: 2034
27
Levantine Hill Estate Estate Pinot Noir
Levantine Hill Estate Estate Syrah
It expresses an array of intense characters reminiscent of black cherry, marzipan, sarsaparilla, dark chocolate, mace spice and a suggestion of Damson plum and juniper. A ‘quiet’ entry onto the palate builds across a restrained acidity to a long, slow, expansive decanter.
Brooding, lifted complex aromas of red berry compote, musk, cardamom and white pepper complement the underlying nutmeg and vanillin bouquet. The elegant, medium bodied palate abounds with spice and earthy nuances in a concentration of savouriness. The silky ripe tannins have been deftly integrated with the underlying oak, providing carriage for the fruit weight and lingering flavours to a pronounced and persistent finish.
Variety: Pinot Noir Region: Yarra Valley Drink by: 2028
Variety: Syrah Region: Yarra Valley Drink by: 2028
28
Section 4: Maroondah Highway Property Opportunity to Purchase
Lease Details
The existing owner of the Maroondah Highway Property, S.M.K. Holdings Trust, has agreed to sell for $50 million:
Part of the Maroondah Highway Property is leased to the Group for a ten-year term, which commenced on 1 July 2015.
• the Maroondah Highway Property, including water rights, plant and equipment, art, infrastructure and rights to the planning applications; and
The lease provides for fixed annual review rental increases of 4%.
• the Levantine Hill Estate IP.
Cellar Door & Restaurant Lease Snapshot (as at 30 June 2018)
»» includes value for construction of winery.
The Property
Premises
Part 882 Maroondah Highway, Coldstream, Victoria.
The Maroondah Highway Property is a long-standing vineyard in Coldstream in the Yarra Valley. The property is located on corner of the Maroondah Highway and Hill Road, extending through to the Yarra River. It has been producing superior grapes from the 1990’s.
Tenant
882 Hospitality Unit Trust (part of the Group).
Commencement date
1 July 2015.
Expiry date
30 June 2025.
At 75.27 hectares in size, the Maroondah Highway Property is a commercial sized vineyard with other complementary buildings and improvements, which under current planning rules is capable of being subdivided into 3 lots.
Term
10 years.
Option
No further option.
Commencement rent
$460,000 plus GST per annum Turnover rent is payable by the amount of money which 9% of the Tenant’s gross sales exceed the rent payable for the lease year.
Current passing rent
$517,400 plus GST per annum.
Annual reviews
On each anniversary of the commencement date, the rent is increased by 4%.
Outgoings payable by vthe Tenant
All amounts paid or payable by the Landlord for owning, managing or maintaining the land or the premises which are non-capital.
Security amount
Three months’ rent plus GST.
The property boasts helicopter landing areas and legal rights. The section 173 agreement with the Yarra Ranges Council captures the helicopter legal rights and allows for 4,380 helicopter landings per annum. The property also has both VIP sealed asphalt car parking bays and unsealed car parking bays. The land is subject to a Green Wedge Zone in the Yarra Ranges Planning Scheme. The property is made up of two titles, however, is capable of being further subdivided into a total of three lots.
Property Snapshot (as at 30 June 2018)
The Location
Location
882 – 886 Maroondah Highway, Coldstream, Victoria.
Principal use
Vineyard, cellar door and restaurant
The Maroondah Highway Property has approximately 857 metres of Maroondah Highway frontage and approximately 425 metres of Hill Road frontage.
Tenure
Freehold
Site area
75.27 hectares
Hard building area
Cellar Door - 129 square metres Restaurants / Kitchen / Amenities – 417 square metres Plant Room / Mezzanine Office – 127 square metres
Coldstream in the Yarra Valley is a central and wellrecognised tourism destination. It is a rural area with rural properties and residences. The area encompasses a diversity of uses including vineyards, grazing properties for beef cattle, horses and sheep, and horticulture. The property is close to a network of major arterial roads that allow ease of travel to and throughout the Yarra Valley. The relatively close proximity to Melbourne means that the Yarra Valley is a major tourist destination. The Maroondah Highway Property is approximately 50 kilometres by road from Melbourne.
Winery Lease Commence Date
1 January 2019 10 Years No further option $800,000 4% Annual Reviews All outgoings payable by the tenants as per Cellar Door lease
29
Sheds
Both the Lilydale and Healesville town centres are a reasonably short commute from the property. Lilydale and Healesville include a range of retail outlets, schools and transport terminals.
Within close walking distance from the office sits a galvanised iron shed. The shed is approximately 243 square metres in size. This shed is used by the Group subject to a licence agreement.
The property is also within a close drive of tourism attractions such as the Healesville Sanctuary, Tarrawarra Museum of Art and the Yarra Valley Chocolaterie and Ice Creamery. It is also within close proximity to other well-known wineries and tourism destinations including Domaine Chandon, Oakridge, Coombe Farm, TarraWarra, Yering Station, Stones of the Yarra Valley and Dominque Portet. It is of immediate proximity to the Major Tourism zoned Rochford Winery.
There is also a second shed used for machinery. This shed, made of colorbond clad, is approximately 200 square metres in size. Irrigation The property is fully irrigated and the property benefits from an irrigation system, which was upgraded in 2013. The irrigation system is automated and also allows individual blocks to be controlled.
Existing Improvements
Water Licences The property enjoys two take and use water licences that together draw up to 114 megalitres from the Yarra River between 1 July and 30 June inclusive. Those water licences can be used for irrigation, as well as domestic and stock use, dairy use and general non-irrigation farm use.
The Maroondah Highway Property has the following improvements. Cellar door and restaurant | ezard @ Levantine Hill The cellar door and restaurant building complex is located on the northern portion of the Maroondah Highway Property. The building was designed by renowned architects Fender Katsalidis Architects. The building is a contemporary and modern in style. The interiors of the building were designed by Molecule.
Water Storage Dams and Plant There are two water storage dams that provide water supply for vineyard irrigation. Each dam is filled using rain water and water pumped from the Yarra River under water licences.
The building houses a commercial kitchen, amenities and an office on the mezzanine level, two dining spaces, a private dining room and barrel booths, which together make up approximately 150 seats. There is also substantial capacity for outdoor dining and entertainment.
In mid-2015, a commercial sewage treatment plant trickling filter was installed and commissioned. The plant is used to treat effluent water from the building where ezard @ Levantine Hill operates. Once the water is treated, it is used to irrigate non-consumable plantings on the property.
There is also a substantial outdoor deck and landscaped area capable of accommodating up to a further 150 people. The gross building areas on the property are over 1,000 square metres.
The property has a third dam, which is a “winter-fill” dam. That dam harvests water from the sewage treatment plant, which is used to water the landscaped grounds. In mid-2015, a water purification plant was also installed and commissioned. The plant draws water from the Yarra River and the large dam on the property. It also captures
Vines There are approximately 60 acres under vine on the Maroondah Highway Property; The yield for the 2017 vintage was 143 tonnes of fruit.
rainwater. The plant purifies the water to a potable standard, which is then pumped into a water tank which holds up to 390,000 litres of water. The potable tank water is used by ezard @ Levantine Hill. The tank, when full, has a reserve of approximately forty days’ capacity.
An ongoing planting program is in place that is expected to see close to 90 acres under vine on this property. A further 15 acres are under vine at the 15 Hill Road Property. Office There is an office, formerly a residence, on the property. The office is a brick veneer construction with a terracotta tile roof and timber frame windows. The office provides a basic floor plan with an open-plan administrative area, central corridor, amenities including a kitchen and two bathrooms, and three separate rooms (used as offices). The building area is approximately 180 square metres. Parts of the office are used by the Group subject to a licence agreement.
Winery Under construction.
Tenant Details The 882 Hospitality Unit Trust owns and operates the restaurant and cellar door business at Maroondah Highway Property. The business trades as ‘ezard @ Levantine Hill’, and is described further in section 3 of this IM.
30
Yarra Valley
The Australian Wine Industry
Planted in 1838, the Yarra Valley is Victoria’s first planted wine region. The region is renowned for its cool climate wines, particularly Pinot Noir and sparkling. The top five grape varieties in the Yarra Valley according to tonnes produced are Pinot Noir, Chardonnay, Shiraz, Cabernet Sauvignon and Sauvignon Blanc. Levantine Hill Estate makes wines using all of these grape varieties.
The Australian wine sector, defined as wine grape growing, winemaking and wine-related tourism, has a role to play in the Australian economy. According to the Australian Grape and Wine Authority (a Commonwealth statutory authority), the Australian wine sector has approximately: • 5,160 grape growers;
The Australian Geographical Indication “Yarra Valley” was entered in the Register of Protected Names on 30 October 1996 in response to a direction received by the Registrar from the Presiding Member of the Geographical Indications Committee acting under Section 40Z of the Wine Australia Corporation Act 1980.
• 135,178 hectares of vines; and • 2,900 wineries and produces 1.2 billion litres of wine. The Australian Grape and Wine Authority announced in February 2016 that the Australian wine sector contributes $40.2 billion to the value of gross output to the Australian economy. Further, wine-related tourism accounts for 15.8 million domestic visitor nights and 44.2 million international visitor nights.
The Yarra Valley itself has the enviable reputation as one of the world’s great wine regions and is recognised as one of Australia’s foremost cool climate producers. Other well- known wineries in the Yarra Valley region include Coldstream Hills, Domaine Chandon, Yering Station, TarraWarra, De Bortoli and Yarra Yering. With wineries at the heart of the visitor offering, visitors can also discover cafes and restaurants, art galleries, markets, nature walks, bustling villages and a multitude of attractions scattered throughout the region (including Healesville Sanctuary, which is home to the largest collection of Australian native wildlife).
The Australian Government has shown support for the grape and wine industry. In the May 2016 Federal Budget, the Government announced that from 1 July 2016 it will provide $50 million over four years to the Australian Grape and Wine Authority to promote Australian wine overseas and wine tourism within Australia to benefit regional wine producing communities. Free trade agreements will reduce or eliminate tariffs in coming years. In the past year, total Australian wine exports have grown 13% and now earn wine exporters in excess of $2 billion. As Australia’s wine exports grow, so too does China’s enthusiasm for Australian wine. According to the Australian Grape and Wine Authority, Australian wine exports to mainland China in the past year were valued at over $600 million making China Australia’s second most valuable export market.
The relatively close proximity to Melbourne means that the Yarra Valley is a major tourist destination. Approximately 75 minutes drive from Melbourne’s central business district, visitation to the Yarra Valley is increasing. According to Tourism Victoria: • approximately 4.3 million domestic day trip visitors visited the Yarra Valley and Dandenong Ranges region in the year ending 31 December 2017. Victoria has been the stand out performer in the international tourism market in Australia in the past year with visitors, nights and spend all growing at a rate above the national average and key competitors. China continues to underpin Victoria’s strong international visitor and expenditure performance, with growth in visitors and expenditure ahead of the national averages.
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32
Section 5: Key Financial Information This section 5 sets out summary financial information in relation to the Group. The summary financial information does not include all the information normally included within the annual or half yearly financial reports and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the Group as these documents. The three subsidiary entities with their operating businesses were founded by Elias and Colleen Jreissati and were acquired by the Group on 1 July 2016. The Group issued 32 million Shares in the Company to the vendor, S.M.K. Nominees Trust, with a deemed issue price of $1.00 per Share, as its consideration for the sale.
Consolidated Statement of Financial Position as at 30 June 2018 The consolidated statement of financial position of the Group is shown below.
financial position. The net realisable value of this inventory is considered to be significantly higher than its historical cost by the Directors of the Company.
Consolidated Wine and Leisure Property Group $’000 Cash held at Banks
488
Accounts Receivable and Prepayments
838
Food, Beverage & Consumable Inventory
639
Wine – Work in progress
Note 2
3,224
Wine – Finished Goods
Note 3
5,693
Levantine Hill Estate Merchandise Fixed Assets
59
31,888 43,933
Accounts Payable, Gift Vouchers, Customer Deposits and Accruals
(619)
Taxes Payable
(141)
Bank Loans Employee and Other Provisions
Note 4 The value of the Goodwill on Acquisition is not intended to be and should not be considered a forecast. It has not been determined by a qualified accountant or valuer and has not been audited by the Group’s external accountant. It is merely an indication of the value of the Goodwill on Acquisition as determined by the Directors of the Company as at 1 July 2016.
(3,500) (121)
Loans Payable to S.M.K. Nominees Trust
(4,542)
Total Liabilities
(8,923)
Net Assets
35,010
Share Capital
32,000
Shareholders Equity
The Landed Unit Cost ex GST value as at 30 June 2018 is approximately $21.9 million. It is also noteworthy that the founding family has not costed to inventory the countless hours invested by the family and some of its associated entities in establishing the wine production business and its premium quality wines over past years. Had it done so the historical cost of the inventory held would have been significantly higher at 30 June 2018.
22 Note 4
Total Assets
Accumulated profit
The Levantine Hill Estate bottled wine stock inventory is recorded at historical cost in the above consolidated statement of financial position. The net realisable value of this inventory is considered to be significantly higher than its historical cost by the Directors of the Company.
1,082
Other Goodwill on Acquisition
Note 3
The Goodwill on Acquisition, as determined by the Directors of the Company, reflects the combination of: • The opportunity to acquire the Maroondah Highway Property and the Levantine Hill Estate IP;
3010 35,010
• The value of the existing businesses after the significant work that has gone before in prior years to establish them;
As a result of the anticipated Capital Raising and upon acquisition of the Maroondah Highway Property and Levantine Hill Estate IP, the Group anticipates it will have net assets and an enterprise value in excess of $106 million.
• The value of the prospect of the businesses significantly increasing their turnover, profitability and underlying valuation in future years; and
Note 1 The consolidated statement of financial position has been prepared on an accruals basis and is based on historical costs in line with Australian Generally Accepted Accounting Principles and Australian Accounting Standards.
• The value of the Wine – Finished Goods and Wine –– Work in progress not reflected in the Consolidated Statement of Financial Position due to Australian Accounting Standards stating that Inventory need be shown at the lower of cost or net realisable value.
Note 2 The Levantine Hill Estate Wine - Work in progress is principally wine that is maturing and ageing in barrels and has yet to be bottled. This work in progress is recorded at historical cost in the above consolidated statement of
The Goodwill on Acquisition has been determined in accordance with Australian Generally Accepted Accounting Principles and Australian Accounting Standards. It is an intangible asset.
33
Trading, Profit and Loss Statements The LHE Sales Trading, Profit and Loss Statements for the five years ending 30 June 2018 are set out below: LHE Sales – Trading, Profit and Loss Statement Y/E 30/6/14 $
Y/E 30/6/15 $
Y/E 30/6/16 $
Y/E 30/6/17 $
Y/E 30/6/18 $
Y/E 30/6/19 $ BUDGET
Headline Turnover (inc GST)
600
1400
2000
3000
4300
5400
Sales Revenue
566
1,232
1,813
2,808
4,000
4,891
Cost of Goods Sold
(170)
(361)
(718)
(1,097)
(1,591)
(1,794)
Gross Profit
396
871
1,095
1,711
2,409
3,097
0
11
0
0
0
0
Employment Expenses
(248)
(476)
(546)
(659)
(1,040)
(1,334)
Operating Expenditure
(368)
(432)
(437)
(659)
(846)
(905)
Depreciation
(31)
(106)
(134)
(167)
(210)
(234)
Winery Overheads transferred to stock
312
514
600
636
751
820
Net Operating Profit before income tax
61
382
578
862
1,064
1,444
Other Income
Note: Past performance is not a reliable indicator of future performance.
The 882 Hospitality Unit Trust Trading, Profit and Loss Statement for the three years of operations ending 30 June 2018 are set out in the following table: 882 Hospitality Unit Trust Trading, Profit and Loss Statement Y/E 30/6/16 $
Y/E 30/6/17 $
Y/E 30/6/18 $
Y/E 30/6/19 $ BUDGET
Headline Turnover (inc GST)
3,100
4,900
6,100
6,600
Sales Revenue
2,783
4,485
5,539
6,050
Cost of Goods Sold
(960)
(1,528)
(2,025)
(2,018)
Gross Profit
1,823
2,957
3,514
4,032
Employment Expenses
(1,356)
(1,413)
(1,466)
(1,643)
Operating Expenditure
(865)
(961)
(1,246)
(1,280)
Depreciation
(90)
(80)
(84)
(85)
(488)
503
708
1,024
Net Operating Profit/(Loss) before income tax
Note: Past performance is not a reliable indicator of future performance.
The cellar door and restaurant businesses commenced operations in late July 2015 with the intention of building its patronage during the year as the business continued to be established. The actual business result for the year ending 30 June 2016 was a significant improvement on its forecast performance due to the growth of the business exceeding expectations. The Net Operating Loss for the year ending 30 June 2016 is after the rent and outgoings paid under its lease agreement with S.M.K. Holdings Trust for the year totalling $497,500. Excluding these costs, the overall result of the business activities for the year was approximately a breakeven result.
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Proposed Acquisition of the Maroondah Highway Property and Levantine Hill Estate IP By acquiring the Maroondah Highway Property and Levantine Hill Estate IP, the Group would no longer have to make the following payments to the existing land owner, S.M.K. Holdings Trust, and accordingly would immediately enjoy a substantial profit uplift of approximately $1.36 million per annum for the 2018/19 financial year. The expense savings would include:
The Forecast and estimated information set out above is not a guarantee of future activities, values or performance of the Group. Neither the Group, nor any other person gives any representation, assurance or guarantee that the results, performance or achievements expressed in or implied by the Forecast Information and the forecast statements contained in this IM will actually occur. Capitalisation of Estimated Future Maintainable Earnings This valuation methodology involves capitalising the earnings of a business at a multiple which reflects the growth prospects of the business and the risks inherent in the business.
• rental income paid by 882 Hospitality Unit Trust – forecast at approximately $517,400 ex GST per annum; • licence fee paid by LHE Sales on licensed area being used by LHE Sales – forecast at approximately $46,000 ex GST per annum; and
Businesses in the beverage and food sector are often valued based on a multiple of earnings before interest, tax, depreciation and amortisation (EBITDA).
• estimated profit earnt by the current owner of the Maroondah Highway Property from the sale of grapes to LHE Sales which would be retained by the Group if the Group owns the vineyards itself – estimated at $800,000 per annum ex GST for the 2017/18 financial year.
Since projected earnings are used, a prospective EBITDA multiple is also used; one that takes into account risk, future growth prospects and the time value of money. It is common practice to benchmark earnings multiples used in a valuation against those used by companies in the same industry sector. Factors such as size, growth prospects, geographic location, the strength of its brands and market positioning appear to be the important valuation drivers that have an impact on transaction and listed company valuation multiples.
• Upon completion of the the state of the art winery building the land owner will also receive rental income from LHE Sales Pty Ltd of $800,000 per annum. The above savings would be added to the profit of the Group once the acquisition of the Maroondah Highway Porperty has been completed.
A multiple in the range of 15 to 20 was used to determine the value of estimated future maintainable earnings of the Group as at 30 June 2018. The future maintainable earnings are anticipated to significantly increase over time as the business grows and matures.
Enterprise Value after Net Debt The Enterprise Value after Net Debt is a measure of value determined by the Manager by reference to: • the capitalisation of estimated future maintainable earnings valuation methodology;
Value of bottled wine inventory held As at 30 June 2018 the Group has bottled wine inventory with a Landed Unit Cost value ex GST of in excess of $21.9 million.
• the value of wine inventory held; and • the net debt of the Group. The Enterprise Value after Net Debt of the Group if the Capital Raising results in an increase of the capital of the Group to $1 million.
Many of these wines are being aged and are not due for release until after 5 years of vintage. The Group also has substantial value in its wine stock ageing in barrels that has yet to be bottled.
The basis of this estimate is:
$M
Net Assets of the Group as at 30 June 2018
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Add Increases in the value of tangible assets held not reflected in the 30 June 2018 Balance Sheet • Wine - Finished Goods (bottled wine) - $13 million value increment above inventory value held when Goodwill on Acquisition was determined on 1 July 2018
13
• Wine - Work in Progress and Fixed Assets including wine barrels and equipment - $7 million value increment above historical cost
7
Value of Maroondah Highway Property to be acquired
35
Value of winery construction
15
Value of Levantine Hill IP to be acquired
1
Increase in the value of goodwill resulting from planning approvals for future developments and financial performance
9
Estimated Enterprise Value of the Group after anticipated Capital Raising and upon acquisition of the Maroondah Highway Property and Levantine Hill Estate IP
106
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Section 6: Taxation There are tax implications when investing, withdrawing and receiving income from any Group. The following information is of a general nature only. Given the complex nature of the Australian taxation system, and the fact that different taxation circumstances apply to different investors, investors are strongly recommended to seek the advice of a professional tax adviser. The Group does not provide financial or tax advice, nor has it obtained taxation advice specific to the offer the subject of this IM. As such this IM cannot address all of the taxation issues which may be relevant to the Investor. The Investor must take full and sole responsibility for their investment in the Group, the associated taxation implications arising from that investment and any changes in those taxation implications during the course of that investment. This brief summary assumes tax provisions relevant as at the date of this IM. The information below is of a general nature and does not constitute tax advice. The investor should obtain their own independent professional taxation advice on the full range of taxation implications applicable to their own individual facts and circumstances. The Group, together with its subsidiary entities, are taxable entities and their taxation is governed by Australian taxation law. Non-Resident Investors Appropriate deductions of Australian tax will be made from distributions of Australian sourced income from the Group to non-resident investors. The amounts will be withheld at the rates of tax applicable to non-residents and will depend (amongst other things) on the type of income paid to the investor and the residence of the investor. Where a non-resident disposes of shares in a company or units in a trust, they should not generally be liable to Australian capital gains tax. However, where a non-resident disposes of an asset that is “taxable Australian property� which amongst other things, includes certain direct or indirect interests (for example via a shareholding) in Australian real property such as land, then they will be subject to capital gains tax.
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Section 7: Key Investment Risks
Force Majeure
All investments carry a degree of risk. A number of risks and uncertainties may affect the future operating and financial performance of the Group, its distributions and the value of its Securities. The following is not intended to be an exhaustive list of the risk factors to which the Group may be exposed.
There is a risk that force majeure events, such as natural phenomena and terrorist attacks, may affect the Group for which insurance is not available or for which the Group does not have insurance cover. Should such an event occur, a loss will result which will have a negative impact on the income and/or capital value of the Group.
Capital
Insurance
The Group may not be able to raise sufficient capital to expand its business as contemplated in the IM including acquiring the Maroondah Highway Property and Levantine Hill Estate IP.
Contracts of insurance are generally available that provide a degree of protection over assets, liabilities and people. While those policies typically cover against material damage to assets, business interruption, general and professional liability and workers’ compensation, there are certain risks that cannot be mitigated by insurance, either wholly or in part.
Capital Expenditure The risk of unforeseen capital or other expenditure requirements for the Group may impact returns to Investors.
Further, insurance may be materially detrimentally affected by economic conditions so that insurance becomes more expensive or in some cases, unavailable.
Competition Competing businesses may increase in time, impacting on revenues which ultimately could result in a decrease in both Group distributions and the value of the Securities.
Key Personnel This is the risk that key individuals are no longer able to fulfill their obligations in respect of the investment, administrative process and operations of the Group. The performance of the Group at times may be dependent on the management skill of a particular individual.
Environmental There is a risk that environmental laws and regulations will become more onerous making the operations more expensive.
Expansion/Development Approvals In relation to the potential expansion or development of the existing winery and hospitality businesses, anticipated increases in income and property values may not be achieved or may take longer to achieve than anticipated, which may result in reduced returns to Investors and affect the value of its Securities.
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Market Conditions
Forward looking statements and financial forecasts There can be no guarantee that the assumptions contained within forward looking statements or estimates (including as to the Group’s future earnings) will ultimately prove to be accurate. The forward looking statements depend on a variety of factors, many of which are beyond the Group’s control.
A number of factors outside the Manager’s control may have a significant impact on the Group’s business activities, its performance and the price of the Group’s Securities. These factors include economic conditions in Australia and internationally, changes in exchange rates, changes in fiscal, monetary and regulatory policies such as inflation and interest rates, attitudes to agribusiness, property and leisure as investment classes and general market conditions. Investors should recognise that the financial performance of the Group could be negatively affected by any of the above factors, or any other factors not so noted, which in turn may affect the value of Securities and returns to Investors.
Interest rates If interest rates rise, the Group would be exposed to higher interest costs on any borrowings. Higher borrowing costs could reduce returns to Investors. Liquidity Investors may be unable to liquidate their investments as and when they require.
Specific Agricultural Risks
The Group is targeting for its businesses to achieve substantial growth and development over the first five years; allowing the Group to then position itself for a targeted ASX listing or trade sale within six to seven years of the date of this IM.
Like many agricultural projects, there is a risk of fire over the dry months. Other climate related risks include drought, frost, hailstorm, flooding and long term climate change. The occurrence of such events has the potential to be detrimental to the supply of quality grapes and patronage to the Group’s business activities.
Taxation Any changes to taxation law, its interpretation or its administration may increase the amount of tax paid by the Group or impact on the treatment of tax losses that may have been, or may be, accumulated. These changes could adversely impact the accounting profit and loss recognized by the Group, the cash tax that it pays and the tax treatment of distributions to the Group’s shareholders.
A number of other physical risks such as disease, insects and other pests can also affect the quality of readily available grapes to the winery business.
Specific Financial Risks
The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Group and the value of the Securities offered under this IM.
Currency The Group’s winery business intends to open up export opportunities. If the value of overseas currencies changes relative to the Australian dollar, the value of the Group’s investments and revenues can change.
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Section 8: Defined Terms 882 Hospitality Trustee
882 Hospitality Pty Ltd ACN 603 253 283
882 Hospitality Unit Trust
882 Hospitality Unit Trust ABN 17 426 312 422
ABN Application Form
Investment
investment in the Group
Information Memorandum or IM
this document which offers Investors an opportunity to invest in the Group
Australian Business Number
Investor
an application form indicating an interest to acquire Securities
any person who is an investor in the Group and holds Securities
Landed Unit Cost
a term used in Australia that generally has the meaning of the bottle price charged to a wholesale customer after WET tax but before GST
Levantine Hill Estate IP
trademarks and business names relating to the Levantine Hill Estate Businesses
Levantine Hill Estate Businesses or Levantine Hill Estate
the winery, wine sales business, cellar door and restaurant business conducted at the Maroondah Highway Property
Application Price
means the price required to be paid by a proposed Investor to acquire Securities
ASIC
Australian Securities and Investments Commission
ASX
official list of the Australian Securities Exchange Limited
AUD
Australian dollars
Board
Board of directors
Business Day
a day that is not a Saturday, Sunday, public holiday or bank holiday in Melbourne, Victoria
LHE Sales
LHE Sales Pty Ltd ACN 125 273 047
CGT
capital gains tax
Maroondah Highway Property
Constituent Documents
Constitution, and the Share Purchase Agreement to be entered into by the Investor
the real estate property located at 882 to 886 Maroondah Highway Coldstream, Victoria, Australia
Recipient
a potential Investor who receives a copy of this IM
Constitution
Constitution of the Company
RRP
recommended retail price
Corporations Act
Corporations Act 2001 (Commonwealth of Australia)
Securities
shares and/or units in the Group.
Distributions
dividends (including declared but unpaid dividends), distributions, guarantor payments, capital returns or similar payments received by the Investor from the Group
S.M.K. Holdings Trust
S.M.K. Holdings Pty Ltd ACN 110 759 361 as trustee for Jreissati Family Holdings Trust ABN 65 426 842 069
S.M.K. Holdings Trustee
S.M.K. Holdings Pty Ltd ACN 110 759 361
S.M.K. Nominees Trust
S.M.K. Nominees Pty Ltd ACN 113 587 705 as trustee for Jreissati Family Trust No. 2 ABN 18 787 060 366
Financial Year
12-month period ending on 30 June
FIRB Act
Foreign Acquisitions and Takeovers Act 1975 (Cth)
Gross Asset Value
gross value of the assets of the Group
S.M.K. Nominees Trustee
S.M.K. Nominees Pty Ltd ACN 113 587 705
Group
means: the business entities collectively known as the “Australian Wine and Leisure Property Group”
Specified Person
has the meaning given in the "Important Notices & Disclaimers" section of this IM
goods and services tax
WET
GST
wine equalisation tax
the property located at 15 Hill Road, Gruyere, Victoria, Australia
Wholesale Client
Hill Road Property
means: a person who is a ‘sophisticated investor’ as that term is defined in section 708(8) of the Corporations Act.
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“Levantine Hill seem to have resources many wine grower/ makers would dream of, and their aim which seems to be to create a luxury estate, immediately, is well on its way.” — Mike Bennie, Wine Front
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The Pain of Perfection.
Enjoyed. www.levantinehill.com.au
LEVANTINE HILL. NOW SERVING QANTAS FIRST CLASS, AND AT THESE FIRST CLASS VENUES.
Capital Hotel, London Icebergs Dining Room, Bondi Flower Drum Vue de Monde Nobu, Crown Towers Silks, Crown Towers Guillaume Catalina Bistrot Gavroche
Exceptional wines handcrafted without compromise YARRA VALLEY
www . levantinehill . com 42
43
44
“This is the most ambitious project in the Yarra Valley since the establishment of Domaine Chandon a quarter of a century ago.” — James Halliday, James Halliday Australian Wine Companion
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Section 9: Corporate Directory Company Australian Wine and Leisure Property Group Pty Ltd ACN 613 279 020 Registered office Level 7 616 St Kilda Road Melbourne, Victoria, 3004 Australia Business and Postal Address Level 3 367 Collins Street Melbourne, Victoria, 3000 Australia Telephone: + 613 8602 0800 Facsimile: + 613 8602 0888 Website: www.levantinehill.com.au
External Accountants and Tax Advisors to the Group Lowe Lippmann Level 7 616 St Kilda Road Melbourne, Victoria, 3004 Australia Telephone: + 613 9525 3777 Facsimile: + 613 9537 1104 Website: www.lowelippmann.com.au
Section 10: Related Company Activities An independent business founded and owned by Elias Jreissati which is complementary to the Group’s activities is J Group Elite. The J Group Elite marketing brochure is included for information purposes only. These assets do not form part of the investment offer by the Australian Wine and Leisure Property Group Pty Ltd.
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KP#VB MSJ
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Contact Details Bensons Property Group Pty Ltd ABN 63 063 470 833 Telephone: + 613 8602 0800 Facsimile: + 613 8602 0888 Level 3 367 Collins Street Melbourne, Victoria, 3000 Australia