2016/17 ANNUAL REPORT WINE INDUSTRY ASSOCIATION OF WA (INC.)

Transcription

1 WINES OF WESTERN AUSTRALIA ANNUAL REPORT /17 ANNUAL REPORT WINE INDUSTRY ASSOCIATION OF WA (INC.) 17 October 2017

2 WINES OF WESTERN AUSTRALIA ANNUAL REPORT Contents Introduction /17 Strategic Priorities 4 President s Report 5 Treasurer s Report 8 Chief Executive Officer s Report 9 Membership Report 12 Technical Report 14 Board of Directors 16 Wines of WA APC Budget 17 Financial Report 18 Appendix 2016 Vineyard and Production Data

3 WINES OF WESTERN AUSTRALIA ANNUAL REPORT Introduction The Wine Industry Association of Western Australia (Inc.) (Wines of Western Australia), established in 1987, is the state s primary organisation of wine producers. It is our mission to provide a unified, strategically influential voice that creates opportunities for the fine wine regions of Western Australia. Industry Overview Wine is a major value adding industry with significant regional economic and employment benefits. In 2014/15 the total value of the WA wine industry was estimated at $684 million with a grape value of $65 million. Regarding market channels, 48% of total value was sold in WA, 40% in eastern Australia and 12% in exports. The Western Australian wine industry produces about 42 million litres of wine annually representing just 3% of the volume of Australia s wine production but 8.5% of the value. WA Wine Industry Vision As outlined in the WA Wine Industry Strategic Plan , WA producers have a shared vision of: a Western Australian wine industry that grows sustainably and profitably, built on the reputation of its great fine wine regions The pathway to this vision is a unified and strategical influential industry focused on regional fine wines of provenance and authenticity. Producers and Regional Associations are the custodians of their Regional brand. Wines of WA Charter WA producers have mandated that Wines of WA should, provide stewardship of the industry to create opportunities for producers and the fine wine regions of WA. From an operational point of view, this service is provided through: Advocacy to ensure government, at all levels, understands our industry the benefits we provide to the state economy, particularly in regional WA and the assistance and resourcing we require to further develop out industry. Representation to ensure the value of industry is clearly understood by government, the community and other complimentary industry sectors. We need to ensure our social license to operate is retained and strengthened. We need to build strong partnerships with tourism, agriculture and fisheries by developing complimentary market development programs. We need to raise the stature of our industry so that West Australians are truly proud of their wine industry. Administration of technical and marketing program funding to provide Regional Associations and producers access to opportunities to improve business practises and market access. Communication to ensure wine industry participants are aware of the issues that affect their business enabling them to make informed decisions on the direction of the industry and their individual business. We look forward to working with Producers and Regional Associations in on developing a sustainable and profitable future for the WA wine industry. Page 3

4 WINES OF WESTERN AUSTRALIA ANNUAL REPORT Strategic Priorities Priority Priority Issues Activities and Progress 1. Secure Funding Model for WA wine industry Implement APC funding model in Financial Year Assist Regional Associations to implement APC funding model Assist producers in complying with APC funding model 2. Market Development 3. RDE & Adoption support for fine wine business model Secure funding and resources for export and domestic market development Support wine tourism initiatives and direct sales channels. Smoke taint Chemical resistance Improved clonal material (including alternative varieties) Business model innovation Pest and disease management Sustainable viticulture Continue engagement with DAFWA, DSD, AGWA and Regional Associations to obtain funding and resources export and domestic market development Continue working with DAFWA, submit application for R4R funding. Deeper engagement with Tourism WA to ensure Taste 2020 potential is realised. Support Busselton airport development and advocate for supporting infrastructure across south west Technical Committee to implement programs to address identified challenges through the AGWA Regional Program WoWA to advocate for policy settings and government support to address identified challenges 4. Taxation and Regulation Ensure taxation regime offers best operational environment for WA fine wine producers. Ensure legislation offers best operational environment for WA fine wine producers. Continue to work with producers and RAs to refine position on wine tax. Support WFA and WGGA where appropriate and in line with WA producers. Advocate for further amendments to Liquor Control Act to improve access to market, in particular, direct to consumer channels

5 WINES OF WESTERN AUSTRALIA ANNUAL REPORT Tax 1. President s Report In the last twelve months, WoWA achieved significant outcomes in delivering benefits to WA producers. We campaigned hard in Canberra, with significant help from Senator Dean Smith, Senator Mathias Cormann, Christian Porter MP, Nola Marino MP and Rick Wilson MP. WA producers were facing the unpalatable situation of seeing the WET rebate reduced from $500,000 to $290,000. Additional skin in the game tests requiring ownership of assets across the production chain would have excluded many producers and threatened income streams for contract winemakers. WoWA successfully prosecute the case to have the rebate refocused, not reduced. We argued that a cut in the WET producer rebate was an increase in taxation and would disproportionally impact WA producers. The outcome was that we were able to advocate for the introduction of a cellar door incentive scheme of $100,000 and secured a floor for the rebate at $350,000. We were also able to advocate for the concept of ownership of grapes at the crusher, rather than the ownership of a winery as the eligibility criteria. These two key policy positions ensured that WA producers from very small to large were assured of short-term certainty regarding the WET rebate. While this was a good short-term outcome, producers should be on notice that the Federal Treasury department do not like rebates such and we need to be proactive about a simpler and fairer structure into the future. Smoke Taint This year s vintage was a later than normal season. Spring was wet and early summer was cool. Spring burn offs didn t occur as planned and we were faced with a situation of large fuel loads and perfect burning conditions during Autumn. What eventuated was a potential disaster averted. WoWA and Regional Associations played a pivotal role in communicating and educating the Department of Parks and Wildlife about the potential loss of crop and the financial impact that would have within regional communities. Federal Government Export and Regional Wine Support Package (ERWSP) In the May 2015 pre-budget submission by the Winemakers Federation of Australia (WFA), State Associations provided letters of support for a support package of $25m (along with support of WET integrity measures). It was WoWA that led the charge at WFA to increase this to $50m The $50m that was pledged to industry has had significant WoWA involvement with Colin Bell and Simone Furlong-Horgan and me participating in the reference group that helped build the business plan for presentation to Federal government. Of the $32m that is allocated to Wine Australia with a focus on USA and China, we are pleased that Simone Furlong-Horgan has been accepted on the advisory panel overseeing that fund. The business case determined $5m will be allocated to states, currently targeting international wine tourism. It is pleasing that we are working very closely now with other state associations, and this college of states will submit a collective submission which states that the allocation should not be prescriptive, but rather align with state

6 WINES OF WESTERN AUSTRALIA ANNUAL REPORT and regional strategic plans, as they are all different and unique to each state. We were also able to achieve recognition of the importance of the WA fine wine segment and its contribution towards wine tourism by being allocated $1m of the $5m. Regional Strategic Plans WoWA pushed the case to Regional Associations on the importance of implementing (or reviewing/developing) their strategic plans. An industry ratified strategic plan (State and Regional), provides WoWA, State Government agencies and Wine Australia with a clear indication of the resources and partnerships required at a Regional level to support industry development. We have seen Margaret River complete a strategic review and Geographe a strategic plan. On top of this, the Great Southern has started its own strategic plan at the time of writing. Because of the Margaret River strategic review, Wine Australia has aligned resources to the 50 th Anniversary celebrations by bringing influential US journalists to Margaret River. Over the coming four weeks we will see the roll out of priority activities identified in the strategic review. Naturally, more regions will follow this example, seeing the action from the Margaret River review and what we will have is a framework across the wine regions of WA that allows key stakeholders to align the right resources to regions. Revised WoWA Constitution At last years AGM, the new constitution of WoWA was introduced that now sees it as a truly representative regional board. It now has greater regional representation than it ever has, reflecting its grassroots origins. Organisational Reform The national grape grower body, WGGA, has changed its constitution from a national grower body, to an organisation able to represent state and regional bodies nationally, with an emphasis on small businesses from the grape and wine community. It is now called Australian Vignerons. WoWA has committed to being a member and sees the leadership at AV as something that will benefit our industry. AV understands the importance of being relevant and transparent. I believe Jo and Andrew have done an incredible job under difficult financial circumstances. The Winemakers Federation of Australia continues to do an incredibly professional job in the field of market access, wine and health. Unfortunately, all the great work the Federation does will continue to suffer external criticism, until it seriously addresses its membership and representational structure. The Future Wine Australia is embarking upon a marketing program of a scale never previously contemplated. The timing of this is potentially the start of what could be the next boom for Australian regional fine wine. And WA regions and producers have never been as well prepared in my time in the industry to be a part of this. Wine Australia has spent more time in WA over the past twelve months than I have seen before and the level of understanding of stakeholders roles and responsibilities has never been greater. The plan they seek to deliver will make for an exciting time Page 6

7 WINES OF WESTERN AUSTRALIA ANNUAL REPORT ahead for producers of all shapes and sizes. Export Development and Wine Tourism We continue to develop an industry business case that will be presented to our state government when ratified by WoWA and Regional Associations. It is aligned with ERWSP federal grant objectives. At the time of writing, this business case has evolved from being solely export driven, to one that needs to include Wine Tourism and acknowledge that these two areas need to work together to get greatest leverage. I have never been more confident about the future of the Australian Wine Industry. P.S. and yes, the orange tie will continue to be worn at all official wine industry events. Actions speak louder than words. Redmond Sweeny President If we only present an Industry development business case about export, we would be missing an important piece that includes an all of industry and regional development potential, which includes wine tourism. The opportunities are again significant for regional development if we get it right. Thank You Once again, I would like to thank Larry for his tireless work for WoWA on behalf of all State producers. I look forward to seeing him work with the newly appointed chairperson, Trevor Whittington. The foundations are in place for you to both excel. In departing I would like to thank the following people: Nigel Gallop and Stuart Watson for convincing me to do this job; Anthony Wilkes and Chris Furtado who have been exceptional Vice Chairs; Bryan Saunders was a great help with his governance and process advice; David Martin for drafting tax submissions and; Colin Bell for his clear thinking when confronting issues. Page 7

8 WINES OF WESTERN AUSTRALIA ANNUAL REPORT Treasurer s Report The financial performance of the Association in 2016/17 illustrates the critical importance of a secure funding model and a clear focus on strategic aims. The fee for service funding model resulted in an increase to producer derived revenue. Through a further refinement of business operations, fixed costs were significantly reduced. The Association still delivered on its core services of advocacy and representation. Surplus The net result of the above was that the Association reported a net surplus for the year of $68,614, up from a net loss of $8,517 in the prior year. As a result, the retained earnings at the end of 2016/17 financial year are $23,532. Having established a secure funding model via an APC, the board was committed to eradicating our negative equity position over the two years to It is pleasing to have achieved this one year earlier than planned because of ongoing discipline in managing outgoings. Revenues Overall revenues increased year on year by 33% reflecting the net impact of two factors including: Implementation of the fee for service funding model an increase in the draw-down of Grant funding reflecting increased activity this year Redmond Sweeny Acting Treasurer Expenses Overall, expenses for the Association were approximately in line with the prior year reflecting several changes with the significant ones being: A reduction in office expenses (rent and other outgoings) associated with reduced space requirements for the team, An increase in wages, superannuation and annual leave provisions due to annualised wage movements An increase in travelling expenses (intra and interstate) associated with the CEO and President s representation activities related to proposed change to the WET and the implementation of the wine industry APC Page 8

9 WINES OF WESTERN AUSTRALIA ANNUAL REPORT Chief Executive Officer s Report As outlined in Strategic Priorities for , our focus for the year prioritised: Implementing the APC funding model for the 2016 vintage Ensuring taxation policy amendments were affected favourably for all WA producers Ensuring WA producers receive fair access to Federal Export and Regional Wine Support Package The key activities to achieve these aims were, Advocacy, Representation, Administration and Communication Advocacy In , Wines of Western Australia advocated for the industry on the following issues: Successfully advocated for a unified national position on WET Rebate reform in response to the 2016 Federal Budget Advocated directly to WA Federal MPs, the Treasurer and the Prime Minister, clearly stating WA s position on Wet Rebate reform. Facilitated Regional forums on WET Rebate with Senator Anne Ruston. Continued engagement with AGWA to secure resources to support export market development for WA wine producers. Communicate WA wine industry policy positions to all parties during the 2017 State Election. In collaboration with the table grape industry and Regional Associations continued to advocate for amendments to the Federal Biosecurity Act 2015 which would restrict movement of imported grape products into WA. Worked with all Regional Associations and the Department of Parks and Wildlife to establish late season burn-off protocol to ensure late harvested fruit was not affected by prescribed burning. Representation In Wines of Western Australia engaged the following government and industry bodies on the following issues: Minister for Agriculture and the Department of Agriculture and Food, Minister for State Development and Department of State Development, advocating for increased funding for market development and industry development. Submitted successful application for R4R Growers Group Grant Pathways to Premium Markets, a $500,000 R&D project focusing on production capacity, market demand and international best practise for regional brand development. Facilitated UK buyers visit to WA in partnership with Regional Associations and Hazel Murphy Facilitated annual visit to WA for the Wine Education Centre s Singapore annexe Dux students Partnered with WA Fishing Industry Council and Office of Multi-cultural Interests to host TWA Chinese delegates on Chinese New Year Supported Swan Valley Wine Show, Timber Towns Wine Show, Blackwood Valley Wine Show and the 2016 Truffle Kerfuffle through IMP funding Administration In , Wines of WA administered the following projects on behalf of the WA wine industry: Worked with APC administration to develop collection process for FFS collection on the 2016 vintage. Compliance requirements for the International Marketing Program funding partnership with DAFWA. Compliance requirements for the AGWA Regional program. Management of the WA Wine Industry Technical Committee Page 9

10 WINES OF WESTERN AUSTRALIA ANNUAL REPORT Negotiated terms for the WA wine industry service agreement with Australia Post Negotiated terms for the WA wine industry co-membership arrangement with CCIWA Managed Grant compliance process for R4R Growers Group Grant. Project management of R4R Growers Group Grant, Pathways to Premium Markets. Communication In , we continued to refine our communications processes. A monthly e-newsletter which provides non-time sensitive information. Social media which provides day to day information. By following Wines of WA on facebook, twitter and linkedin, industry participants receive live updates that are relevant to their business. For urgent, critical information, members receive an or text message directly from me, sent from ceo@winewa.asn.au Eye to eye on a regular basis to share a coffee or a glass wine, depending on the time of day, discussing what you feel are the key issues affecting your business and region. Additionally, I urge producers to visit regularly as we post information and upcoming events to the newsblog that feeds directly to the home page. Finally, the art of communication requires getting the correct message to the right person. This is our biggest challenge as an industry. We continued to work on this in With information collected via the APC process our ability to communicate effectively will continually improve. Staff Movements During the financial year, Jodie Pannel continued as Administration and Membership Manager in a.8 FTE capacity. Larry Jorgensen continued as CEO in a full-time capacity. National Representation Winemakers Federation of Australia (WFA) Western Australian Board representatives are Anthony Wilkes (Medium Winery Membership Committee), Alexandra Burt (Winemakers Federation Executive Council and Small Winery Membership Committee) and Redmond Sweeny (Small Winery Membership Committee). Anthony was MD of Ferngrove and the Vice- President of Wines of WA. He retired at the 2016 AGM from both positions. Alexandra is a former Board member and Treasurer of Wines of Western Australia and runs her family s wine business, Voyager Estate. Redmond is a partner in Snake and Herring, as well as being the President of Wines of Western Australia. Australian Vignerons (AV formerly WGGA) AV is the new iteration of WGGA having revised its Constitution to include producers and growers under a state based membership model. Governance includes a proportional representative Council of members, responsible for strategic policy setting and appointing an independent, skills-based Board. The Board works with the CEO to implement strategy and ensure governance and compliance of the organisation. AV will provide an independent national body for WA producers with a greater focus on issues that are relevant to small and medium producers. Colin Bell (Wines of WA Board member) continued as the WoWA representative on AV during Colin is a viticulturist and principle AHA Viticulture has assumed the role. It is important that WA continues to provide energised and capable people to these national organisations to ensure our state issues are understood and addressed In addition to these formalised positions, Wines of WA has continued to strengthen our relationships with other State organisations. Page 10

11 WINES OF WESTERN AUSTRALIA ANNUAL REPORT The WET Rebate reform process is a good example of this. We will continue to communicate and collaborate with our interstate partners to advocate collectively where common interests exist. In closing, I wish to acknowledge the contribution and support of the following people: Regional Association Committees who have provided input to the development of policies and programs to support industry development. Producers who have provided input to the development of policies and programs to support industry development. The Wines of WA Technical Committee, Chair, Jim Campbell-Clause, Lee Hasselgrove, Keith Pekin, Richard Fennessy and Glynn Ward. The Wines of WA Board of Directors, and specifically, President Redmond Sweeny, Vice President Chris Furtado, AV State Independent Board Member Colin Bell Jodie Pannel, Membership and Administration Officer, Wines of WA Larry Jorgensen Chief Executive Officer Page 11

12 WINES OF WESTERN AUSTRALIA ANNUAL REPORT Membership Report The WA wine industry implemented a fee for service APC funding model for the financial year. The fees were affected against the 2016 vintage. A fee per tonne was collected from the owner of the fruit and crush and distributed to Wines of WA to provide state based services and to Regional Associations based on the GI origin of the fruit to provide regionally based services. As noted in the CEO report, administrative and process challenges were encountered in the first year, but the industry can now look forward to greater certainty around funding. This will enable longer term planning and strategic thinking for industry development. Industry Production Data A significant benefit arising from the APC collection is resulting production data. Information collected via the process includes, GI origin of fruit by variety. This provides an accurate snapshot of production capacity and will be invaluable to producers in determining how to structure their business to best meet market demand. As industry settles into acceptance of the APC, further information can be collected to provide more detail to support business planning. As summary of the data is included in Appendix 1. The information will also be provided to all producers and will be archived to the Wines of WA website. Producer Numbers by Production Category The budgeted revenue from APC collections for was $258,000, based on a 65,000 tonne vintage. The final reported amounts were $222,142 against 57,000 tonnes In total, 267 producers provided return forms for payment with a further 89 lodging nil returns. The aggregated figure, 356, represents the typically quoted number of active businesses in WA. Nil returns are attributable to smoke-taint events, yearly production decisions to balance inventory and the variety of business models that exist. As the fee is attributable to the owner of fruit at crush, businesses that typically purchase finished or raw wine would not submit a return form for payment. FFS Collection by Production Category >1000 tonnes 30% tonnes 36% tonnes 34% Page 12

13 WINES OF WESTERN AUSTRALIA ANNUAL REPORT Current Member Benefit Schemes Australia Post Membership entitles access to the Wines of WA alliance with Australia Post whereby members can take advantage of specialised wine handling and delivery services at significantly reduced prices in both the domestic and overseas markets. Chamber of Commerce and Industry, WA (CCIWA) Membership permits access to the dual Wines of WA / CCI membership agreement. This provides members with access to the full range of CCI member benefits including: advice and assistance on industrial relations, workplace agreements, worker s compensation, occupational safety and health, industry training, trade, environmental compliance and more. Affiliate Membership Benefits Affiliate members receive the following benefits: Advertising events and new products in the WoWA E-newsletter Advertising page link, events and new products on WoWA website Invitation to the facebook members only group Receive regular issues of the WoWA E- newsletter and keeping up to date with all the latest wine industry news Access and notification to networking events and workshops with WOWA wine producers and growers Advertising events and new products in the Wine Scene E-newsletter Advertising page link, events and new products in social media Page 13

14 WINES OF WESTERN AUSTRALIA ANNUAL REPORT Technical Committee The Wines of WA Technical Committee oversees the development and implementation of the AGWA Regional Program for WA. The Program provides grants based funding for R&D projects with specific regional relevance. The Committee also reviews: biosecurity water security resource management Committee Members for were: Jim Campbell-Clause AHA Viticulture Dave Botting Burch Family Wines Peter Traeger Sandalford Lee Hasselgrove Mure Viticulture Yuri Berns Sittella Suzie Muntz Xanadu Con Simos AWRI Alec McCarthy - DAFWA Mark Gibberd Curtin University Dave Kelly - Curtin University Jeremy Galbreath - Curtin University Glynn Ward DAFWA Richard Fennessy DAFWA Keith Pekin Perth NRM Michael Considine UWA Larry Jorgensen Wines of WA AGWA Regional Program activities; 1. Updating growers on managing garden weevil: This project will examine strategies identified as possible alternative approaches to managing garden weevil through a review of current and emerging practices and will also support a group of producers to trial and demonstrate the identified alternative practice management strategies that have potential to replace Indoxacarb. This activity will encourage practice change for managing Garden weevil through the identification and demonstration of a broader range of management options. The DAFWA entomology team will conduct a desk top review to determine emerging best practice management for garden weevil and will then contact the most appropriate research providers to garner additional information relevant to conducting trials in West Australian vineyards. These trials/demonstrations will be utilised to extend the research findings to the broader wine grape producing audience. 2. Evaluating and demonstrating alternative varieties: Approximately 80% of Western Australia's wine grape production comprises of five `noble' French varietals. Reliance on such a small collection of varietals to sustain the profitability of the WA wine industry while considering challenges such as climate change and market trends for example, poses potential limitations. One tool available to growers to ensure continuation of optimum production while addressing issues such as increasing temperatures, compressed growing seasons, limited water availability is through varietal selection. This project aims to change the way growers think when considering the varieties that best suit their region by pairing varieties with climates (current and forecasted). Demonstrating the potential of such varieties by means of wine tastings and field walks is an integral pathway to adoption. 3. Benchmarking and extending info on improving BMP soil health: This activity will build the capacity of producers to better understand and interpret soil, irrigation water and petiole sample analysis results to improve fertiliser and irrigation management practices. This activity will involve engaging with a number of wine grape producers in the Geographe region to evaluate their irrigation and nutrition regimes via water, soil and petiole tests and vine performance records. We aim to help wine Page 14

15 WINES OF WESTERN AUSTRALIA ANNUAL REPORT grape producers improve nutrition and irrigation practices to achieve targeted yield and quality outcomes. Results would be benchmarked against each other and against industry standards. 4. Year 2 - Cabernet Hang-time: The practice change will stem from the trials and evaluation work conducted in year one which will lead to grape growers and winemakers gaining a better understanding of the most appropriate time to leave Cabernet fruit on the vine to achieve the required fruit quality. We are trying to encourage communication and understanding of harvest decisions between winemakers and grape growers and viticulturists. Year two of the project will focus on disseminating this information to industry by hosting an industry forum in Margaret River. The forum will utilise outcomes from year one (field trials, small batch winemaking and sensory evaluation by AWRI) the DAFWA Report on Cabernet production in WA and current research on Hang time being conducted throughout other regions in Australia and overseas. Development of the AGWA Regional Program The plan was developed through the West Australian wine industries technical committee and WoWA. In January 2016, Larry Jorgensen (CEO of WoWA) ed a copy of the AGWA Regional s program guidelines to the regional associations with an explanatory note seeking their input into the program. At the same time, technical committee members made direct contact with producers to seek their input into regional RD&E priorities. producing regions throughout WA are diverse, the selected activities for 2015/16 program aim to be of benefit to all regions. The committee and Wines of WA would like to acknowledge that there is scope to improve industry input into the program and are actively seeking greater industry representation and input to the planning process for future regional programs. 5 Year Strategic Planning Session In January 2017, the Wines of WA Technical Committee undertook a facilitated strategic planning session to identify the RD&E strategic priorities over the next 5 years. The process included a request for input from all WA producers. The responses were collated by Wines of WA. The Technical Committee reviewed these, noting the frequency of identified issues in determining 5 key focus areas: Smoke taint Chemical resistance Improved clonal material (including alternative varieties) Business model innovation Pest and disease management Sustainable viticulture The WA Wine Industry RD&E Strategic Priorities Plan is available on the Wines of WA website in the Technical Section. A committee meeting was held at DAFWA's Bunbury office on the 14th of January to prioritise regional RD&E issues. This prioritisation process was based on feedback from the regional associations and direct contact with producers. Though the wine Page 15

16 WINES OF WESTERN AUSTRALIA ANNUAL REPORT Wines of WA Board of Directors Producer Representatives tonnes Redmond Sweeny (retiring Oct. 2017) President Snake and Herring tonnes Chris Furtado (retiring Oct. 2017) Vice President Voyager Estate Over 1000 tonnes Paul Holmes a Court Vasse Felix paul@heytebury.com.au Regional Representatives Swan Valley/Perth Hills/Peel GI Ross Pamment Houghton ross.pamment@houghton-wines.com.au Australian Vignerons State Representative Colin Bell (Grower) AHA Viticulture Director and Viticulturist (08) colin@ahaviticulture.com.au Executive CEO Larry Jorgensen Wine Industry Assoc WA ceo@winewa.asn.au Geographe GI Pippa Nielsen Vineyard 28 wine@vineyard28.com.au Margaret River GI Bruce Pearse (retiring Oct. 2017)) Pearse Viticulture pearse.vitivculture@bigpond.com Margaret River GI Justin Horgan Leeuwin Estate Justin@leeuwinestate.com.au Blackwood Valley/Pemberton/Manjimup GI Troy Schoof Latitude 34 troy.schoof@latitude34wineco.com Great Southern GI Nial Twigger Twigger Estate twiggerestate@gmail.com Page 16

17 Wines of WA Proposed Operational Budget and Services to be Provided Budget Total FFS required 15/16 Industry Structure and Development $76,000 - Recover APC establishment costs/assist Regional Associations with APC implementation $30,000 - Assist Regional Associations with strategic planning, securing resources, funding to implement $21,000 - Develop and implement industry structure for decision making and policy development (working with RAs and produc $20,000 - Provide Secretariat services to APC Committee $5,000 Market Development and Consumer Interaction $60,000 - Secure resourcing for Regional Association and producers through Royalties for Regions programs, Dept. of Agriculture and Wine Australia $20,000 - Develop Export Market Strategy in collaboration with RAs and producers $20,000 - Assist RAs to implement strategy $20,000 Innovation, RDE&A and Biosecurity - Provide Secretariat services to Technical Committee $10,000 $66,000 - Administer AGWA Regional Program $10,000 - Develop Biosecurity policies, facilitate communication to relevant agencies for producers $24,000 - Secure additional resourcing for industry development/innovation through extension and adoption $12,000 - Secure resourcing for WA specific R&D requirements (Growers Group R&D Grant) $10,000 Legislation, Regulation, Social Responsibility and Advocacy $55,000 - Establish and maintain high level relationships with all relevant government agencies and industry stakeholders $20,000 - Monitor all legislative and regulatory areas affecting wine producers. Communicate industry policy on these to relevant agencies and regulatory bodies. Advocate as required. $20,000 - Host an annual networking event at state Parliament House $15,000 TOTAL FUNDING REQUIREMENT $257,000 Refer to pages 22, 23, 37, 38, 39 of WA Wine Industry Strategic Plan for overview of implementation roles and responsibilities.

18 Wines of WA Proposed Fee for Service Rates 2016 Vintage Annual Production Volume Category* Annual Base Fee (Excludes GST) Annual Per Tonne Fee** (Excludes GST) under 5 tonne $ $ t $ $ t $ $ $ $ $ $ $1, $ $1, $ $2, $ $2, $ $3, $ $3, $ $4, $ $6, $ $8, $ $9, $ *Production volume defined by grapes owned at crusher **Per tonne fee applied to tonnes processed within production volume category ie. Producer A - 9 tonnes crushed = $225 + GST Annual Fee Producer B 350 tonnes crushed: $2090 (Base Fee) + $190 (per tonne fee of 50 tonnes x $3.80) = $ GST Annual Fee

19 WINES OF WESTERN AUSTRALIA INC. ABN FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017 Liability limited by a scheme approved under Professional Standards Legislation

20 WINES OF WESTERN AUSTRALIA INC. ABN CONTENTS Committee's Report 1 Income Statement 3 Balance Sheet 5 Notes to the Financial Statements 6 Statement by Members of the Committee 11 Compilation Report 12 Certificate by Members of the Committee 13

21 WINES OF WESTERN AUSTRALIA INC. ABN COMMITTEE'S REPORT Your committee members submit the financial report of the WINES OF WESTERN AUSTRALIA INC. for the financial year ended 30 June Committee Members The name of each member of the committee during the year and if different, at the date of the report; Redmond Sweeny (President) Chris Furtado (Vice President) Larry Jorgensen (CEO) Paul Holmes a Court Ross Pamment Pippa Nielsen Justin Horgan Colin Bell Troy Schoof Nial Twigger Bruce Pearse Principal Activities The principal activities of the association during the financial year were: Advocacy to confirm government, at all levels, understands the wine industry and also ensure the value of the wine industry is clearly understood by government, the community and other complimentary industry sectors. Administration of technical and marketing program funding to provide Regional Associations and producers access to opportunities to improve business practices and market access. Communication to ensure wine industry participants are aware of the issues that may affect their businesses. Significant Changes No significant change in the nature of these activities occurred during the year. Operating Result The profit of the association after providing for income tax amounted to $68, Signed in accordance with a resolution of the Members of the Committee. Page 1

22 WINES OF WESTERN AUSTRALIA INC. ABN COMMITTEE'S REPORT Committee Member: Redmond Sweeny (President) Committee Member: Larry Jorgensen (CEO) Dated this 16th day of October 2017 Page 2

23 WINES OF WESTERN AUSTRALIA INC. ABN INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE Note $ $ INCOME Events Management 27,067 13,682 Grants & Projects 34,926 3,463 Interest Received Membership Fees 231, , , ,789 OTHER INCOME Recoupment of Expenses 1,364 26,700 Other Income 11,640 4,622 13,003 31, , ,111 The accompanying notes form part of these financial statements. This report is to be read in conjunction with the attached compilation report of RSM Australia Pty Ltd. Page 3

24 WINES OF WESTERN AUSTRALIA INC. ABN INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE Note $ $ EXPENDITURE Accounting & Audit Fees 2,119 3,950 Amortisation - Intangibles 1,955 3,895 Bad and Doubtful Debts - 1,000 Bank Charges 1,228 1,507 Cleaning & Rubbish Removal Computer Expenses 3,195 2,925 Depreciation 524 1,486 Electricity & Gas 251 1,834 General Expenses Insurance 6,538 8,778 Loss on Sale of Fixed Assets 1,893 - Marketing Expense 5,797 2,127 Meeting Expenses 484 5,823 Postage 1, Printing & Stationery 5,844 5,893 Provision for Annual Leave (1,707) 14,584 Rates Rent 7,744 11,264 Stock Write-Off 6,933 - Subscriptions 5,150 - Superannuation 13,765 13,304 Telephone 3,578 4,250 Travelling Expenses 26,276 12,829 Wages 144, , , ,628 Profit (Loss) before income tax 68,614 (8,517) Profit (Loss) for the year 68,614 (8,517) Accumulated losses at the beginning of the financial year (45,082) (36,564) Retained earnings (Accumulated losses) at the end of the financial year 23,532 (45,082) The accompanying notes form part of these financial statements. This report is to be read in conjunction with the attached compilation report of RSM Australia Pty Ltd. Page 4

25 WINES OF WESTERN AUSTRALIA INC. ABN BALANCE SHEET AS AT 30 JUNE Note $ $ ASSETS Cash and cash equivalents 3 290, ,384 Trade and other receivables 4-15, Inventories 5-6,933 Advance Payment - Salary Package Prepaid Expenses 38,595 37,427 TOTAL CURRENT ASSETS 330, , NON-CURRENT ASSETS Property, plant and equipment ,894 Intangible assets 7-1,955 TOTAL NON-CURRENT ASSETS 477 4,849 TOTAL ASSETS 330, , LIABILITIES CURRENT LIABILITIES Trade and Other Payables 8 307, ,821 TOTAL CURRENT LIABILITIES 307, ,821 TOTAL LIABILITIES 307, ,821 NET ASSETS (LIABILITIES) (23,532) 45,082 MEMBERS' FUNDS Retained earnings (Accumulated losses) 9 23,532 (45,082) TOTAL MEMBERS' FUNDS 23,532 (45,082) The accompanying notes form part of these financial statements. This report is to be read in conjunction with the attached compilation report of RSM Australia Pty Ltd. Page 5

26 WINES OF WESTERN AUSTRALIA INC. ABN NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 The financial statements cover WINES OF WESTERN AUSTRALIA INC. as an individual entity. WINES OF WESTERN AUSTRALIA INC. is a not for profit Association incorporated in Western Australia under the Associations Incorporation Act (ACT) 1991 ('the Act'). The functional and presentation currency of WINES OF WESTERN AUSTRALIA INC. is Australian dollars. 1 Basis of Preparation In the opinion of the Committee of Management, the Association is not a reporting entity since there are unlikely to exist users of the financial report who are not able to command the preparation of reports tailored so as to satisfy specifically all of their information needs. These special purpose financial statements have been prepared to meet the reporting requirements of the Act. The financial statements have been prepared in accordance with the recognition and measurement requirements of the Australian Accounting Standards and Accounting Interpretations, and the disclosure requirements of AASB 101 Presentation of Financial Statements, AASB 107 Statement of Cash Flows, AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors and AASB 1054 Australian Additional Disclosures. Significant accounting policies adopted in the preparation of these financial statements are presented below and are consistent with prior reporting periods unless otherwise stated. The financial statements have been prepared on an accruals basis and are based on historical costs modified, where applicable, by the measurement at fair value of selected non current assets, financial assets and financial liabilities. 2 Summary of Significant Accounting Policies Inventories Inventories are measured at the lower of cost and net realisable value. Costs are assigned on a specific identification basis and include direct costs and appropriate overheads, if any. Plant and Equipment Plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment of losses.plant and equipment is depreciated on a straight line basis over the assets useful life to the association, commencing when the asset is ready for use. Depreciation The depreciable amount of all plant and equipment is depreciated over the useful lives of the assets to the association commencing from the time the asset is held ready for use. These notes should be read in conjunction with the attached compilation report of RSM Australia Pty Ltd. Page 6

27 WINES OF WESTERN AUSTRALIA INC. ABN NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Impairment of Non-Financial Assets At the end of each reporting period the association determines whether there is an evidence of an impairment indicator for non-financial assets. Where this indicator exists and regardless for goodwill, indefinite life intangible assets and intangible assets not yet available for use, the recoverable amount of the assets is estimated. Where assets do not operate independently of other assets, the recoverable amount of the relevant cash-generating unit (CGU) is estimated. The recoverable amount of an asset or CGU is the higher of the fair value less costs of disposal and the value in use. Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit. Where the recoverable amount is less than the carrying amount, an impairment loss is recognised in profit or loss. Reversal indicators are considered in subsequent periods for all assets which have suffered an impairment loss, except for goodwill. Employee Benefits Provision is made for the association's liability for employee benefits arising from services rendered by employees to the end of the reporting period. Employee benefits that are expected to be wholly settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits expected to be settled more than one year after the end of the reporting period have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wage increases and the probability that the employee may satisfy vesting requirements. Cash flows are discounted using market yields on high quality corporate bond rates incorporating bonds rated AAA or AA by credit agencies, with terms to maturity that match the expected timing of cash flows. Changes in the measurement of the liability are recognised in profit or loss. Cash and Cash Equivalents Cash and cash equivalents comprises cash on hand, demand deposits and short term investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. These notes should be read in conjunction with the attached compilation report of RSM Australia Pty Ltd. Page 7

28 WINES OF WESTERN AUSTRALIA INC. ABN NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Revenue and Other Income Revenue is recognised when the amount of the revenue can be measured reliably, it is probable that economic benefits associated with the transaction will flow to the association and specific criteria relating to the type of revenue as noted below, has been satisfied. Revenue is measured at the fair value of the consideration received or receivable and is presented net of returns, discounts and rebates. Interest revenue Interest revenue is recognised using the effective interest rate method. Rendering of services Revenue in relation to rendering of services is recognised depending on whether the outcome of the services can be estimated reliably.if the outcome can be estimated reliably then the stage of completion of the services is used to determine the appropriate level of revenue to be recognised in the period. If the outcome cannot be reliably estimated then revenue is recognised to the extent of expenses recognised that are recoverable. If the outcome cannot be reliably estimated then revenue is recognised to the extent of expenses recognised that are recoverable. Revenue from training services is generally recognised once the training has been delivered. Goods and Services Tax (GST) Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). Receivables and payables are stated inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in the balance sheet. These notes should be read in conjunction with the attached compilation report of RSM Australia Pty Ltd. Page 8

29 WINES OF WESTERN AUSTRALIA INC. ABN NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE $ $ 3 Cash and Cash Equivalents CBA Business Transaction A/C 22,926 6,894 NAB Cheque Account 266,831 54,446 NAB Savings Account , , ,384 4 Trade and Other Receivables Current Trade Receivable - 15,146 5 Inventories - 15,146 Current Stock on Hand - at Cost - 6,933 6 Property, Plant and Equipment Office Equipment - at Cost 4,128 34,829 Less Prov'n for Depreciation (3,651) (32,541) 477 2,289 Furniture & Fittings - at Cost - 2,020 Less Prov'n for Depreciation - (1,415) Software Development - at Cost 7,000 7,000 Less Prov'n for Depreciation (7,000) (7,000) - - Total Plant and Equipment 477 2,894 Total Property, Plant and Equipment 477 2,894 These notes should be read in conjunction with the attached compilation report of RSM Australia Pty Ltd. Page 9

30 7 Intangible Assets WINES OF WESTERN AUSTRALIA INC. ABN NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE $ $ Wines of WA Brand 19,477 19,477 Less: Amortisation (19,477) (17,521) - 1,955 Total 8 Accounts Payable and Other Payables - 1,955 Current Trade Creditors 111,041 9,812 PAYGW Payable 3,862 3,516 Superannuation Payable 3,545 3,304 Other Payroll Liabilities Project Advance Payments 161, ,832 GST Payable 6,553 18,732 Provision for Holiday Pay 20,486 22, , ,821 9 Retained Earnings (Accumulated Losses) Accumulated losses at the beginning of the financial year (45,082) (36,564) Net profit (Net loss) attributable to the association 68,614 (8,517) Retained earnings (Accumulated losses) at the end of the financial year 23,532 (45,082) These notes should be read in conjunction with the attached compilation report of RSM Australia Pty Ltd. Page 10

31 WINES OF WESTERN AUSTRALIA INC. ABN STATEMENT BY MEMBERS OF THE COMMITTEE The committee has determined that the association is not a reporting entity and that this special purpose financial report should be prepared in accordance with the accounting policies outlined in Note 1 to the financial statements. In the opinion of the committee the financial statements as set out on pages 1 to 10: 1. Presents a true and fair view of the financial position of WINES OF WESTERN AUSTRALIA INC. as at 30 June 2017 and its performance for the year ended on that date. 2. At the date of this statement, there are reasonable grounds to believe that WINES OF WESTERN AUSTRALIA INC. will be able to pay its debts as and when they fall due. This statement is made in accordance with a resolution of the Committee and is signed for and on behalf of the Committee by: President: Redmond Sweeny CEO: Larry Jorgensen Dated this 17th day of October 2017 Page 11

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33 WINES OF WESTERN AUSTRALIA INC. ABN CERTIFICATE BY MEMBERS OF THE COMMITTEE I, Redmond Sweeny of Dunsborough, certify that: (a) I attended the annual general meeting of the association held on 17th October (b) The financial statements for the year ended 30 June 2017 were submitted to the members of the association at its annual general meeting. Dated this 17th day of October 2017 Committee Member: Redmond Sweeny Page 13

34 Western Australian Vineyard Area WA Wine producing hectares of vineyards 2016 Zone Region Name Sum Of Area (ha) Greater Perth Peel 79 Greater Perth Perth Hills 187 Greater Perth Swan District 802 Central Western Australia Central Western Australia 28 South West Australia Blackwood 376 South West Australia Geographe 891 South West Australia Great Southern 2,714 South West Australia Manjimup 290 South West Australia Margaret River 5,819 South West Australia Pemberton 513 Total 11,700 Wines of Western Australia PO BOX 2091, Claremont North WA 6010 T E winewa@winewa.asn.au W

35 Western Australian Vineyard Area Great Southern Sub-Regions Great Southern Sub-Regions Great Southern Other 30 Great Southern Albany 77 Great Southern Denmark 85 Great Southern Frankland River 1,596 Great Southern Mount Barker 834 Great Southern Porongurup 92 Wines of Western Australia PO BOX 2091, Claremont North WA 6010 T E winewa@winewa.asn.au W

36 2016 Western Australian Wine Grape Production by Region WA 2016 Vintage Tonnes by Region Region Tonnes Blackwood Valley 784 Geographe 3766 Great Southern Margaret River Peel 16 Perth Hills 219 Swan Disticts 3976 Wine Industry Southern Forests 2624 Total Swan Disticts, 3976 Peel, 16 WA 2016 Vintage Tonnes by Region Perth Hills, 219 Margaret River, Wine Industry Southern Forests, 2624 Blackwood Valley, 784 Geographe, 3766 Great Southern, Wines of Western Australia PO BOX 2091, Claremont North WA 6010 T E winewa@winewa.asn.au W

37 Western Australian White Grape Production 2016 Grape Variety - White TONNAGE SAUVIGNON BLANC 9, CHARDONNAY 8, SEMILLON 7, CHENIN BLANC 2, VERDELHO 1, RIESLING 1, SAVIGNIN BLANC MUSCADELLE PINOT GRIS OTHER MUSCAT BLANC A PETITS GRAINS VIOGNIER FIANO VERMINTINO GEWURTZTRAMINER ROUSSANNE VERDEJO 7.49 SCHEUREBE 5.94 ARNEIS 5.75 PEDRO XIMENEZ 3.89 TRAMINER 3.69 ALBARINO 2.00 TOTAL 32,497 Wines of Western Australia PO BOX 2091, Claremont North WA 6010 T E winewa@winewa.asn.au W

38 Western Australian Red Grape Production 2016 GRAPE VARIETY TONNAGE CABERNET SAUVIGNON 8, SHIRAZ 7, MERLOT 2, PINOT NOIR MALBEC TEMPRANILLO CABERNET FRANC PETIT VERDOT GRENACHE OTHER SAPERAVI SANGIOVESE ZINFANDEL NEBBIOLO MOUVEDRE PINOT MEUNIER BARBERA DURIF 7.84 BRACHETTO 3.80 NERO D'AVOLA 3.30 GRACIANO 1.50 TANNAT 0.75 TOTAL 21,321 Wines of Western Australia PO BOX 2091, Claremont North WA 6010 T E winewa@winewa.asn.au W

39 2016 Western Australian Wine Grape Production Variety within Region Blackwood Valley Red Varieties Variety Tonnage SHIRAZ CABERNET SAUVIGNON MERLOT MALBEC TEMPRANILLO GRENACHE 1.4 PETIT VERDOT 0.25 Total White Varieties Variety Tonnage CHARDONNAY SAUVIGNON BLANC SEMILLON VIOGNIER 5 VERMINTINO 0.96 FIANO 0.4 SCHEUREBE 0.2 WHITE TOTAL Wines of Western Australia PO BOX 2091, Claremont North WA 6010 T E winewa@winewa.asn.au W

40 2016 Western Australian Wine Grape Production Variety within Region Geographe Variety - Red Tonnage CABERNET SAUVIGNON SHIRAZ MERLOT SAPERAVI MALBEC TEMPRANILLO GRENACHE OTHER BARBERA PETIT VERDOT ZINFANDEL MOUVEDRE SANGIOVESE GRACIANO 1.5 DURIF NEBBIOLO Total Red Varieties Wines of Western Australia PO BOX 2091, Claremont North WA 6010 T E winewa@winewa.asn.au W

41 2016 Western Australian Wine Grape Production Variety within Region Geographe Variety - White Tonnage SAUVIGNON BLANC 680 CHARDONNAY SEMILLON VERDELHO CHENIN BLANC RIESLING MUSCAT BLANC A PETITS GRAINS 5.48 SAVIGNIN BLANC ARNEIS 4.4 VIOGNIER VERDEJO 2 PINOT GRIS 1.65 FIANO 0.5 Total White Varieties Wines of Western Australia PO BOX 2091, Claremont North WA 6010 T E winewa@winewa.asn.au W

42 2016 Western Australian Wine Grape Production Variety within Region Great Southern Variety - Red Tonnage SHIRAZ CABERNET SAUVIGNON PINOT NOIR MERLOT MALBEC TEMPRANILLO CABERNET FRANC GRENACHE PETIT VERDOT 9.32 MOUVEDRE OTHER PINOT MEUNIER SANGIOVESE NEBBIOLO Total Red Varieties Wines of Western Australia PO BOX 2091, Claremont North WA 6010 T E winewa@winewa.asn.au W

43 2016 Western Australian Wine Grape Production Variety within Region Great Southern White Varieties Variety - White Tonnage SAUVIGNON BLANC CHARDONNAY SEMILLON RIESLING PINOT GRIS VERDELHO FIANO VIOGNIER GEWURTZTRAMINER VERMINTINO 7.2 TRAMINER 3.69 OTHER Total Wines of Western Australia PO BOX 2091, Claremont North WA 6010 T E winewa@winewa.asn.au W

44 2016 Western Australian Wine Grape Production Variety within Region Margaret River Variety Tonnage CABERNET SAUVIGNON SHIRAZ MERLOT MALBEC PETIT VERDOT CABERNET FRANC TEMPRANILLO PINOT NOIR GRENACHE OTHER SANGIOVESE ZINFANDEL NEBBIOLO SAPERAVI BRACHETTO 3.8 TANNAT 0.5 MOUVEDRE Total Red Varieties Wines of Western Australia PO BOX 2091, Claremont North WA 6010 T E winewa@winewa.asn.au W

45 2016 Western Australian Wine Grape Production Variety within Region Margaret River Variety Tonnage SAUVIGNON BLANC SEMILLON CHARDONNAY CHENIN BLANC SAVIGNIN BLANC RIESLING VERDELHO MUSCAT BLANC A PETITS GRAINS PINOT GRIS VIOGNIER FIANO OTHER VERMINTINO SCHEUREBE MUSCADELLE GEWURTZTRAMINER VERDEJO ROUSSANNE 2.22 ARNEIS Total White Varieties Wines of Western Australia PO BOX 2091, Claremont North WA 6010 T E winewa@winewa.asn.au W

46 2016 Western Australian Wine Grape Production Variety within Region Peel Red Varieties Variety Tonnage OTHER SHIRAZ Total White Varieties Variety Tonnage OTHER 2.75 SEMILLON 2 VERDELHO 1.35 CHARDONNAY FIANO 0.7 TOTAL Wines of Western Australia PO BOX 2091, Claremont North WA 6010 T E winewa@winewa.asn.au W

47 2016 Western Australian Wine Grape Production Variety within Region Perth Hills Red Varieties Variety Tonnage SHIRAZ TEMPRANILLO OTHER 28.4 CABERNET SAUVIGNON MERLOT GRENACHE PINOT NOIR 4.82 DURIF 1 PETIT VERDOT Total White Varieties Variety Tonnage CHARDONNAY OTHER 21 VERDELHO 5.35 VIOGNIER 3.64 SAUVIGNON BLANC VERDEJO 1.5 GEWURTZTRAMINER 1 SEMILLON 0.95 TOTAL Wines of Western Australia PO BOX 2091, Claremont North WA 6010 T E winewa@winewa.asn.au W