Treasury Wine Estates : Appendix 4D and 2017 Interim Results 14 February 2017

Appendix 4D Treasury Wine Estates Limited For the half year ended 31 December 2016 ABN 24 004 373 862‌

1. Results for announcement to the market

   Key information	Half year	Half year	% Change	Amount
   	ended	ended	increase /	increase /
   	31 December	31 December	(decrease)	(decrease)
   	2016	2015		$m
   	$m	$m1
   Revenue from ordinary activities	1,368.4	1,138.0	20.2%	230.4
   Net profit attributable to members of Treasury Wine Estates Limited	136.2	58.6	132.4%	77.6
   Earnings before interest, tax, SGARA and material items	226.8	142.8	58.8%	84.0

   Earnings per share	Half year	Half year
   	ended	ended
   	31 December	31 December
   	2016	2015
   	Cents per share	Cents per share1
   Basic earnings per share	18.5	8.5
   Basic earnings per share, adjusted to exclude SGARA and material items	20.2	13.7

2. Dividends

   The Directors declared an interim dividend of 13 cents per share in respect of the half year ended 31 December 2016 on 14 February 2017. Accordingly this dividend is not provided for in the balance sheet as at 31 December 2016. The record date for determining an entitlement to receipt of the interim dividend is 5pm, 6 March 2017 and the dividend is expected to be paid on 5 April 2017.

   Dividends (distributions)	Cents per	Franking %
   	share
   Interim dividend - half year ended 31 December 2016 (determined subsequent to balance date)1	13.0 cents	unfranked
   Final dividend - year ended 30 June 2016	12.0 cents	unfranked
   Interim dividend - half year ended 31 December 2015	8.0 cents	unfranked

   1 Non-resident withholding tax is payable on the unfranked component of this dividend as the conduit foreign income component for the period is declared to be $48.0 million.

   The Dividend Reinvestment Plan (DRP) continues to be suspended with respect to the interim dividend for the financial year 2017.

   i.

   1 - Comparative balances have been restated to reflect the final purchase price allocation for the Diageo acquisition, reallocation of inter-regional corporate and IT costs, and a change in accounting standards relating to Agricultural Assets. Refer to note 11 for details.

3. Financial statements

   Please refer to pages 1 through 26 of this report wherein the following are provided:

   • Directors' report;

   • Auditor's independence declaration;

   • Consolidated statement of profit or loss and other comprehensive income for the half year ended 31 December 2016;

   • Consolidated statement of financial position as at 31 December 2016;

   • Consolidated statement of changes in equity for the half year ended 31 December 2016;

   • Consolidated statement of cash flows for the half year ended 31 December 2016;

   • Notes to the consolidated financial statements;

   • Director's Declaration; and

   • Independent auditor's review report for the half year ended 31 December 2016.

4. Net tangible assets

   Net tangible asset backing per ordinary share	Half year ended 31 December 2016 $	Half year ended 31 December 20151 $
   Net tangible asset backing per ordinary share	3.42	3.70

5. Associates and joint ventures

   Investments in Associates and Joint Ventures	Half year	Year
   	ended	ended
   	31 December	30 June
   	2016	20161
   	$m	$m
   Investments accounted for using the equity method	2.5	2.6
   Investments in associates and joint venture partnerships are accounted for in the consolidated financial statements using the equity method of accounting. The Group holds a 50 percent investment in Fiddlesticks LLC, a company incorporated in the United States of America. The percentage ownership at 31 December 2016 is consistent with the prior period.

6. Further information

Additional Appendix 4D disclosure requirements can be found in the notes to our half-year financial report, the half-year Directors' Report and the ASX announcement lodged with this document.

Further information can be obtained from:

Media: Carolyn Coon Tel: [phone] Mob: [phone]

Investors: Jane Betts Tel: + 61 3 8533 3493 Mob: [phone]

1 - Refer to note 11 for details.

ii.

Treasury Wine Estates Limited Directors' report For the half year ended 31 December 2016

The Directors present their report on the consolidated entity ("the Group") comprising Treasury Wine Estates Limited ("the Company") and the entities it controlled at the end of, or during, the half year ended 31 December 2016.

DIRECTORS

The members of the Board of Directors of Treasury Wine Estates Limited who held office during the half year and as at the date of this report are as follows:

Paul Rayner (Chairman) Michael Clarke (CEO) Lyndsey Cattermole

Ed Chan Michael Cheek

Warwick Every-Burns Peter Hearl

Garry Hounsell

Lauri Shanahan (appointed 1 November 2016)

PRINCIPAL ACTIVITIES

The principal activities of the Group during the period involved the production, marketing and sale of wine.

OPERATING AND FINANCIAL REVIEW

Financial information in the Operating and Financial Review is based on the reviewed financial statements. Non-IFRS measures have not been subject to audit or review. The non-IFRS measures are used internally by management to assess the performance of our business and make decisions on the allocation of our resources.

A full review of operations of the Group during the half year is contained in the Australian Securities Exchange announcement dated 14 February 2017.

Throughout this review, constant currency assumes current and prior period earnings of foreign operations are translated and cross border transactions are transacted at current year exchange rates.

Net profit after tax attributable to members of Treasury Wine Estates Limited for the six months ended 31 December 2016 was $136.2 million, and reported EPS was 18.5 cents per share.

Net sales revenue increased to $1,294.7 million, an increase of 20% on a reported currency basis and 24% on a constant currency basis compared to the prior comparative period ("PCP"). Total volume for the half year was 18.7 million cases, up 2.9 million cases on the PCP.

EBITS of $226.8 million is up by 59% on a reported currency basis. On a constant currency basis, EBITS increased by 69%. All four regions delivered double digit EBITS growth.

The Company also delivered outstanding EBITS margin accretion, up 4.3ppts on a reported currency basis to 17.5% in 1H17 and up 2.5ppts relative to TWE's F16 EBITS margin of 15.0%, which included 6 months of the Diageo Chateau & Estates contribution. The margin

accretion was delivered by the acquired business and strong portfolio premiumisation (notably in the US), enhanced price realisation, accelerated growth in Asia, Supply Chain savings and lower cost of doing business margin.

Cost of doing business (gross profit less earnings before interest, tax, material items and SGARA) increased to $273.8 million, an increase of 7.2% on a reported currency basis, principally driven by the front-ended A&P increase per case in the US, integration of Diageo Chateau & Estates and continued investment in organisational capability presence in Asia and the US.

The SGARA loss for the period (Australian Accounting Standard AASB 141) was $10.5 million (PCP: $14.5 million loss).

EVENTS SUBSEQUENT TO REPORTING DATE

The following events have occurred subsequent to 31 December 2016:

1. The Board declared an interim dividend of 13 cents per share on 14 February 2017.

2. On 12 January 2017 the Group appointed Mark Anthony Wine and Spirits to exclusively import and distribute its portfolio of wines in Canada. Restructuring costs from this appointment will be recorded in the second half.

3. On 14 February 2017, the Company announced the appointment of Gunther Burghardt as Chief Financial Officer of the Company, effective on that date and based at the Company' Napa Valley office in the United States.

4. On 14 February 2017, the Company announced a variation to the Chief Executive Officer's employment agreement to reflect that the Chief Executive Officer, Michael Clarke, will be co-located between the Company's offices in Melbourne, Australia and the Napa Valley in the United States for the period from 1 March 2017 until reviewed by the Company on or before 31 December 2017.

Other than the above, there are no further matters or circumstances which have arisen since 31 December 2016 which have significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial periods.

SHARES

The movement in share capital from 30 June 2016 is set out below:

Number of
shares
(million)
Balance at 30 June 2016	738.1
Issue of shares during the period	-
Balance at 31 December 2016	738.1

DIVIDENDS

A final dividend in respect of the year ended 30 June 2016 of $88.6 million (representing a dividend of 12 cents per ordinary share) was paid in October 2016. This dividend was unfranked.