TIDMGUS
RNS Number : 5943L
Gusbourne PLC
29 April 2015
Gusbourne Plc
(London-AIM: GUS) ("Gusbourne" or the "Company")
Results for the year ended 31 December 2014.
The Board of Gusbourne Plc announces the audited results for the
year ended 31 December 2014.
Chairman's statement
I am pleased to report that 2014 has been a successful year of
further growth and development for the Group, in line with our
long-term plans. The year ended 31 December 2014 has been our first
full year of trading since the acquisition of the Gusbourne Estate
business on the 27 September 2013.
Our long term plans to expand the production and sales of one of
England's premier sparkling wine businesses alongside further
development of the Gusbourne brand remains unchanged.
We are firmly committed to producing the highest quality
sparkling wines made exclusively from grapes grown in our own
vineyards and ageing these wines for an extended period in order to
fully realise their potential. We use best practice in establishing
our vineyards and in their day-to-day management. Our winemaking
process remains traditional in every way but one that is open to
innovation where appropriate.
During the year we continued to invest in the business through
capital expenditure on vineyard establishment of GBP588,000 (2013:
GBP418,000) and on vineyard and winery equipment of GBP137,000
(2013: GBP538,000). Our principal working capital investment has
been in wine stocks in respect of the successful 2014 harvest which
has added a further GBP210,000 (2013: GBP290,000) to the carrying
value of our stocks. Increasing stock levels are planned to be a
continuing feature of our balance sheet until all vineyards reach
maturity and the resulting wine stocks are available for sale,
which is on average 4 years after harvest. It is important to note
that our stocks are currently reflected in the balance sheet at the
lower of cost and net realisable value. To the extent that net
realisable values are higher than cost, which we would expect them
to be in normal trading conditions, this potential uplift is of
course not reflected in the balance sheet. The anticipated
underlying surplus of net realisable value over cost of these wine
inventories will become an increasingly significant factor of the
Group's asset base.
We have also invested through the statement of comprehensive
income in terms of developing our sales and marketing strategies
and in further developing the Gusbourne brand.
At 31 December 2014 our net assets per share amounted to 44.1
pence (2013: 46.8 pence). Net tangible assets per share were 38.4
pence (2013: 40.2 pence). As noted above these figures are based on
book values and do not reflect any potential underlying uplift in
the value of our freehold land, wine inventories and brand. Our
operating loss for the year amounted to GBP919,000 (2013:
GBP636,000) which included development expenditure on sales and
marketing and on brand development.
Highlights of 2014 include:
-- The planting of an additional 50.7 acres of vineyards, in May
2014 on our 352 acre freehold estate in Kent. This is a proven
location for growing our sparkling wine grapes and with our
existing 50.8 mature acres brings our total acreage under vine in
Kent to 101.5 acres.
-- Our 2013 plantings on our long leasehold land in West Sussex
are progressing well and we expect to harvest an initial crop from
these vineyards in autumn 2015. These grapes, along with grapes
from our existing mature freehold vineyard site in West Sussex,
will complement those harvested in Kent to ensure Gusbourne
continues to produce wine from only the highest quality grapes.
-- With good weather throughout the key stages of the growing
season, the 2014 harvest was very successful and the second
earliest in the Group's history. The quality was excellent and
yield volumes were in line with expectations. The resulting wine
production has considerably added to the Group's wine stocks for
sale in future years and will help to satisfy the growing demand
for our wines in the United Kingdom and abroad.
-- Awards: In May 2014 we were delighted that our key product,
Gusbourne Brut Reserve 2009 won a gold medal at the prestigious
International Wine Challenge (IWC) competition. Our flagship wine,
Gusbourne Blanc de Blancs was awarded a silver medal at the equally
prestigious Decanter World Wine Awards (DWWA 2014) for the 2009
vintage.
Finally, the talented staff at Gusbourne have worked tirelessly
to meet and exceed our expectations. In the vineyards they have
overseen the expansion of our estate with new plantings whilst
maintaining the mature vineyards and nurturing last year's
plantings to the highest possible standards. Similarly our winery
staff have worked meticulously to produce and lay down our stocks
for the future.
The ongoing dedication and hard work from the entire team has
ensured that 2014 will be recorded as a year of progress and solid
achievement for the Group. We remain passionate about our wines and
firmly on track towards achieving our long term plans.
Andrew Weeber
Chairman
Chief Executive's review
I am delighted to report the continued and very pleasing
progress of the Group during the year in line with our long term
strategic development plans. We have increased year on year sales
and further developed our distribution channels. We have invested
in new vineyards, expanded winery capacity, brand development and
wine stocks. The Gusbourne sparkling wine products remain at the
luxury end of the English sparkling wines market and we remain
committed to maintaining this premium position.
Gusbourne Wines
The Group is dedicated to the production of premium sparkling
wines exclusively from its own vineyards. Our processes, both in
establishing and maintaining the vineyards and in making wine,
continue to follow the principles laid down by Andrew Weeber when
he established Gusbourne Estate 10 years ago in 2004, including his
fastidious and scientific attention to detail. An important aspect
of the Group's production of traditional method sparkling wines is
the extended lees ageing with an average production cycle of four
years.
Towards the end of 2014 we released the 2007 Gusbourne Blanc de
Blancs Late Disgorged; our very first late disgorged sparkling
wine. This was met with praise from wine critics and consumers
alike and was a great demonstration of the exceptional quality of
our wines.
Development strategy
Meeting growing customer demand for the Group's wines requires
careful long term planning and key elements of the Group's
development strategy include:
-- The establishment of further vineyards in Kent and West Sussex;
-- The expansion of the winery and storage facilities to process
and store the increasing production volumes as vineyards reach
maturity;
-- The further development of the Gusbourne brand; and
-- The development of exports as a significant contributor to sales.
Results for the year
The results for the year ended 31 December 2014 include the
results of the Gusbourne Estate business from 1 January 2014, the
first full year of trading since the acquisition of Gusbourne
Estate on 27 September 2013. Sales for the year, which comprise
solely those of Gusbourne wines, amounted to GBP434,000
(2013:GBP129,000). Whilst these sales reflect the sale of limited
stock availability at this time, they were however approximately 56
per cent higher than those made by the Gusbourne Estate business
and the Group in the comparative 12 month period in 2013 and
reflect a steady like for like growth in the sale of Gusbourne
wines. Administrative expenses of GBP918,000 for the year ended 31
December 2014 compare with GBP832,000 for the 9 month period ended
31 December 2013 and reflect the growth in the business following
the acquisition of the Gusbourne Estate business in September 2013,
additional staff and investment in sales, marketing and brand
development.
The operating loss for the year was GBP919,000 (GBP636,000 for
the period ended 31 December 2013). The loss before tax was
GBP1,104,000 (GBP666,000 for the period ended 31 December 2013)
after net finance costs of GBP185,000 (GBP30,000 for the period
ended 31 December 2013). These planned losses are in line with the
long-term development strategy of the Group.
Balance Sheet
The main changes in the Group's balance sheet during the year
reflect expenditure on the ongoing investment in, and development
of, the Group's business, net of income from wine sales. This
expenditure includes the establishment of additional vineyards in
Kent and West Sussex at a cost of GBP588,000, the purchase of
additional plant and equipment for the vineyards and the winery
amounting to GBP137,000 and the planned ongoing development of the
business, which is reflected in the net loss for the period of
GBP1,044,000.
Total assets at 31 December 2014 of GBP12,073,000,
(GBP11,235,000 at 31 December 2013) include freehold land and
buildings of GBP4,578,000 (GBP4,601,000 at 31 December 2013),
inventories of wine stocks amounting to GBP1,435,000 (GBP1,310,000
at 31 December 2013), GBP1,237,000 of biological assets
(GBP1,240,000 at 31 December 2013) and GBP1,842,000 of cash
(GBP1,703,000 at 31 December 2013). Intangible assets of
GBP1,007,000 (GBP1,007,000 at 31 December 2013) arise from the
acquisition of the Gusbourne Estate business in 2013. Biological
assets reflect the fair value of grape vines calculated in
accordance with International Accounting Standard 41.
It is worth noting that the Group's inventories are reported at
the lower of cost and net realisable value and that these
inventories are expected to grow significantly until the Group
reaches full production maturity, bearing in mind the long
production cycle in relation to sparkling wine and related vineyard
establishment. The anticipated underlying surplus of net realisable
value over cost of these wine inventories will become an
increasingly significant factor of the Group's asset base.
The Group's net tangible assets at 31 December 2014 amount to
GBP6,864,000 (GBP6,124,000 at 31 December 2013) and represent 87%
of total equity (86% at 31 December 2013).
Financing
The Group's activities are financed by its own cash resources,
bank loans and convertible bonds. Bank loans and convertible bonds
at 31 December 2014 amount in total to GBP3,866,000 (GBP3,720,000
at 31 December 2013) and represent 49% (2013 - 52%) of total
equity.
On 11 November 2014, the Group completed a placing of ordinary
shares for cash proceeds of GBP1,788,000. The cash proceeds of the
placing will be used to support the ongoing development and
expansion of the business.
The achievement of the Group's long term development strategy
will depend on the raising of further equity and/or debt funds to
achieve those goals. The production of premium quality wine from
new vineyards is, by its very nature a long term project. It takes
four years to bring a vineyard into full production and a further
four years to transform these grapes into Gusbourne's premium
sparkling wine. Additional funding will be sought by the Company
over the coming few years to invest in additional vineyards, winery
capacity, and stocks of wine as well as brand development, in line
with its development strategy.
Key Performance Indicators
Year ended Period
31 December 1 April to
2014 31 December
GBP'000 2013
GBP'000
Sales 434 129
Capital expenditure
Investment in vineyard establishment 588 418
Other capital expenditure 159 653
Total capital expenditure 747 1,071
At 31 December At 31 December
2014 2013
GBP'000 GBP'000
Total assets 12,073 11,235
Net tangible assets 6,864 6,124
Total equity 7,871 7,131
Net tangible assets as per cent of
total equity 87% 86%
Gearing 49% 52%
Ben Walgate
Chief Executive
Annual General Meeting
The annual report and accounts are being posted to shareholders
today, together with notice of the Annual General Meeting to be
held at 11 a.m. on 18 June 2015 at the offices of Cenkos Securities
PLC, 6.7.8 Tokenhouse Yard, London EC2R 7AS. The annual report and
accounts are available to view on the Company's website at
www.gusbourneplc.com
Enquiries:
Gusbourne Plc
Andrew Weeber/Ben Walgate +44 (0)12 3375 8666
Cenkos Securities plc
Nicholas Wells +44 (0)20 7397 8920
Note: This and other press releases are available at the
Company's web site: www.gusbourneplc.com
Consolidated statement of comprehensive income for the period
ended 31 December 2014
Period
Year ended 1 April to
31 December 31 December
2014 2013
Note GBP'000 GBP'000
Revenue 434 129
Cost of sales (361) (78)
Gross profit 73 51
Change in fair value of biological assets 14 (74) 145
Transaction expenses - stamp duty land
tax 11 - (211)
Transaction expenses - other 11 - (187)
Other administrative expenses (918) (434)
Total administrative expenses (918) (832)
Loss from operations 5 (919) (636)
Finance income 8 38 29
Finance expense 8 (223) (59)
Loss before tax (1,104) (666)
Tax expense 9 60 (60)
Loss for the year/period attributable
to owners of the parent (1,044) (726)
Total comprehensive loss attributable
to owners of the parent (1,044) (726)
Loss per share attributable to the ordinary
equity holders of the parent: 10
Basic (pence) (6.70) (6.88)
Diluted (pence) (6.70) (6.88)
Consolidated statement of financial position at 31 December
2014
December December
2014 2013
Note GBP'000 GBP'000
Assets
Non-current assets
Intangibles 12 1,007 1,007
Property, plant and equipment 13 6,339 5,724
Biological assets 14 1,237 1,240
8,583 7,971
Current assets
Inventories 15 1,435 1,310
Trade and other receivables 16 213 251
Cash and cash equivalents 1,842 1,703
3,490 3,264
Total assets 12,073 11,235
Liabilities
Current liabilities
Trade and other payables 17 (336) (324)
(336) (324)
Non-current liabilities
Loans and borrowings 18 (2,025) (2,025)
Convertible deep discount bonds 19 (1,841) (1,695)
Deferred tax liabilities 20 - (60)
(3,866) (3,780)
Total liabilities (4,202) (4,104)
Net assets 7,871 7,131
December December
2014 2013
Note GBP'000 GBP'000
Issued capital and reserves attributable to owners
of the parent
Share capital 22 8,927 7,612
Share premium 23 815 346
Merger reserve 23 (13) (13)
Convertible bond reserve 23 95 95
Retained earnings 23 (1,953) (909)
Total equity 7,871 7,131
Consolidated statement of cash flows for the year ended 31
December 2014
Period
1 April to
December 31 December
2014 2013
Note GBP'000 GBP'000
Cash flows from operating activities
Loss for the year/period before tax (1,104) (666)
Adjustments for:
Depreciation of property, plant and equipment 13 130 36
Profit on disposal of property, plant and equipment (4) (8)
Finance expense 8 223 59
Finance income 8 (38) (29)
Movement in biological assets 14 74 (302)
(719) (910)
Decrease in trade and other receivables 38 44
Increase in inventories (195) (17)
Increase in trade and other payables 12 130
Cash outflow from operations (864) (753)
Income taxes paid - -
Investing activities
Purchases of property, plant and equipment, excluding
vineyard establishment 13 (159) (653)
Investment in vineyard establishment 13 (588) (418)
Acquisition of Gusbourne Estate business 11 - (4,263)
Sale of property, plant and equipment 5 35
Interest received 33 29
Net cash from investing activities (709) (5,270)
Financing activities
Bank loan 18 - 2,025
Redemption of redeemable preference shares - (50)
Interest paid (72) (19)
Issue of ordinary shares 22 1,788 2,851
Share issue expenses (4) (209)
Net cash from financing activities 1,712 4,598
Net increase/(decrease) in cash and cash equivalents 139 (1,425)
Cash and cash equivalents at the beginning of
the year/period 1,703 3,128
Cash and cash equivalents at the end of the year/period 1,842 1,703
Consolidated statement of changes in equity for the year ended
31 December 2014
Total attributable
to equity
Share Share Merger Convertible Retained holders
capital premium reserve bond earnings of parent
GBP'000 GBP'000 GBP'000 reserve GBP'000 GBP'000
1 April 2013 4,000 266 (266) - (183) 3,817
Shares issued 3,612 80 - - - 3,692
Equity recognised on
issue of convertible
bonds - - - 95 - 95
Excess of fair value
over nominal value of
shares Issued - - 253 - - 253
Comprehensive loss for
the year - - - - (726) (726)
Total comprehensive profit/
(loss) for the year - - - - (726) (726)
31 December 2013 7,612 346 (13) 95 (909) 7,131
1 January 2014 7,612 346 (13) 95 (909) 7,131
Shares issued 1,315 469 - - - 1,784
Comprehensive loss for
the year - - - - (1,044) (1,044)
Total comprehensive profit/
(loss) for the year - - - - (1,044) (1,044)
31 December 2014 8,927 815 (13) 95 (1,953) 7,871
1 Accounting policies
Gusbourne PLC (the "Company") is a company incorporated and
domiciled in the United Kingdom and quoted on the London Stock
Exchange's AIM market. The consolidated financial statements of the
Group for the year ended 31 December 2014 comprise the Company and
its subsidiaries (together referred to as the "Group").
Basis of preparation
The financial information does not constitute the Group's
statutory accounts for either the year ended 31 December 2014 or
the period ended 31 December 2013, but is derived from those
accounts. The Group's statutory accounts for 31 December 2013 have
been delivered to the Registrar of Companies and those for 31
December 2014 will be delivered following the Company's Annual
General Meeting. The Auditor's reports on both the 31 December 2013
and 31 December 2014 accounts were unqualified, did not draw
attention to any matters by way of an emphasis and did not contain
any statement under Section 498 of the Companies Act 2006.
The Group's consolidated financial statements have been prepared
in accordance with International Financial Reporting Standards as
adopted for use in the EU ("IFRS").
The following accounting policies have been applied consistently
in dealing with items which are considered material in relation to
the Group's financial statements.
The financial statements are presented in pounds sterling. They
have been prepared on the historical cost basis except that
biological assets and convertible bonds are stated at their fair
value.
Going concern
The Directors believe the Group to be a going concern on the
basis that it has sufficient cash to continue operations for at
least 12 months from the date these financial statements were
approved.
The Directors have reviewed the Group's cash flow forecasts and
note that the achievement of the Group's long term development
strategy will depend on the raising of further equity and/or debt
funds to achieve those goals. The production of premium quality
wine from new vineyards is, by its very nature a long term project.
It takes four years to bring a vineyard into full production and,
an average of four years to transform these grapes into the Group's
premium sparkling wine. Additional funding will be sought by the
Group over the coming few years to invest in additional vineyards,
winery capacity, and stocks of wine as well as brand development,
in line with its development strategy. The Directors believe that
future fundraisings will be successful and have therefore prepared
the financial statements on a going concern basis.
New accounting standards and changes to existing accounting
standards
i. New standards and interpretations adopted in the current year:
-- IFRS 10 Consolidated Financial Statements
-- IFRS 12 Disclosure of Interests in Other Entities
-- IAS 27 Separate Financial Statements
-- Consolidated Financial Statements, Joint Arrangements and
Disclosure of Interests in Other Entities: Transition Guidance
(Amendments to IFRS 10, IFRS 11 and IFRS 12)
-- Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32)
-- Recoverable amounts disclosures for non-financial assets (Amendments to IAS 36)
These had no material impact on the financial statements.
ii. Standards, amendments and interpretations to existing
standards that are not yet effective and have not been early
adopted by the Group:
At the date of authorisation of these financial statements, the
following standards and interpretations applicable to the Group's
financial statements were in issue but not yet effective at the
year end. They have not been adopted early and when they come into
effect are deemed not to have a material impact on its financial
statements:
-- Annual Improvements to IFRSs 2010-2012 Cycle
-- Annual Improvements to IFRSs 2011-2013 Cycle
-- Accounting for Acquisitions of Interests in Joint Operations: Amendments to IFRS 11
-- Clarification of Acceptable Methods of Depreciation and
Amortisation: Amendments to IAS 16 and IAS 38
-- Equity Method in Separate Financial Statements (Amendments to IAS 27)
-- Sale or contribution of assets between an investor and its
associate or joint venture (Amendments to IFRS 10 and IAS 28)
-- Annual Improvements to IFRSs (2012-2014 Cycle)
-- Disclosure Initiative: Amendments to IAS 1
-- IFRS 15 Revenue from Contracts with Customers
-- IFRS 9 Financial Instruments
The following standards and interpretations have not been
adopted early and when they come into effect will have an impact on
the Group's financial statements:
Amendments to IAS 16 and IAS 41: Agriculture: Bearer Plants
The amendments change the financial reporting for bearer plants,
such as grape vines.
It requires that bearer plants should be accounted for in the
same way as property, plant and equipment in IAS 16 Property, Plant
and Equipment, because their operation is similar to that of
manufacturing. Consequently, the amendments include them within the
scope of IAS 16, instead of IAS 41.
Basis of consolidation
The Group's financial statements consolidate the financial
statements of the Company and its subsidiary undertakings.
Subsidiaries are entities controlled by the Company. Control exists
when the Company has the power, directly or indirectly, to govern
the financial and operating policies of an entity so as to obtain
benefits from its activities and the ability to use its power over
the investee to affect the amounts of the Group's returns and which
generally accompanies interest of more than one half of the voting
rights. In assessing control, potential voting rights that
presently are exercisable or convertible are taken into account.
The results of any subsidiaries sold or acquired are included in
the Group income statement up to, or from, the date control passes.
Intra-Group sales and profits are eliminated fully on
consolidation.
On acquisition of a subsidiary, all of the subsidiary's
separable, identifiable assets and liabilities existing at the date
of acquisition are recorded at their fair values reflecting their
condition at that date. On disposal of a subsidiary, the
consideration received is compared with the carrying cost at the
date of disposal and the gain or loss is recognised in the income
statement. The excess of the cost of acquisition over the fair
value of the Group's share of the identifiable net assets is
recorded as goodwill. Intercompany transactions, balances and
unrealised gains on transactions between group companies are
eliminated. Subsidiaries' results are amended where necessary to
ensure consistency with the policies adopted by the Group.
Revenue
Revenue from the sales of goods is recognised when the Group has
transferred the significant risks and rewards of ownership to the
buyer and it is probable that the Group will receive the previously
agreed upon payment. These criteria are considered to be met when
the goods are delivered to the buyer. Where the buyer has a right
of return, revenue is recognised in the year where the goods are
delivered less an appropriate provision for returns based on past
experience.
Financial assets
Loans and receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
arise principally through the provision of goods to customers (e.g.
trade receivables), but also incorporate other types of contractual
monetary asset. They are initially recognised at fair value plus
transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised
cost using the effective interest rate method, less provision for
impairment.
Impairment provisions are recognised when there is objective
evidence (such as significant financial difficulties on the part of
the counterparty or default or significant delay in payment) that
the Group will be unable to collect all of the amounts due under
the terms receivable, the amount of such a provision being the
difference between the net carrying amount and the present value of
the future expected cash flows associated with the impaired
receivable. For trade receivables, which are reported net, such
provisions are recorded in a separate allowance account with the
loss being recognised within administrative expenses in the
consolidated statement of comprehensive income. On confirmation
that the trade receivable will not be collectable, the gross
carrying value of the asset is written off against the associated
provision.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held
at call with banks, other short term highly liquid investments with
original maturities of three months or less.
Financial liabilities
Borrowings
Borrowings are initially recognised at fair value net of any
transaction costs directly attributable to the loan. They are
subsequently measured at amortised cost with interest charged to
the statement of comprehensive income based on the effective
interest rate of the borrowings.
Convertible deep discount bonds
Convertible deep discount bonds are redeemable at their nominal
price at maturity. The bonds may be converted into the Company's
shares at the holders' option and are therefore classified as
compound financial instruments in accordance with the requirements
of IAS 32. The debt element is calculated as the present value of
future cash flows assuming the bonds are redeemed on the redemption
date, discounted at the market rate for an equivalent debt
instrument with no option to convert to equity. The difference
between the cash payable on maturity and the present value of the
debt element is recognised within equity. The discount is charged
over the life of the bond to the statement of comprehensive income
and included within finance expenses.
Trade and other payables
Comprises trade payables and other short-term monetary
liabilities, which are initially recognised at fair value and
subsequently carried at amortised cost using the effective interest
method.
Share capital
Financial instruments issued by the Group are classified as
equity only to the extent that they do not meet the definition of a
financial liability.
The Group's ordinary shares are classified as equity
instruments.
Deferred taxation
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability in the consolidated
statement of financial position differs from its tax base, except
for differences arising on:
-- the initial recognition of goodwill;
-- the initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of
the transaction affects neither accounting or taxable profit;
and
-- investments in subsidiaries and jointly controlled entities
where the Group is able to control the timing of the reversal of
the difference and it is probable that the difference will not
reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profit will be
available against which the difference can be utilised.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantively enacted by the
reporting date and are expected to apply when the deferred tax
liabilities/(assets) are settled/(recovered).
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either:
-- the same taxable group company; or
-- different group entities which intend either to settle
current tax assets and liabilities on a net basis, or to realise
the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax assets
or liabilities are expected to be settled or recovered.
Intangible Assets
Goodwill
Goodwill arises where a business is acquired and a higher amount
is paid for that business than the fair value of the assets and
liabilities acquired. Transaction costs attributable to
acquisitions are expensed to the income statement.
Goodwill is recognised as an asset in the statement of financial
position and is not amortised but is subject to an annual
impairment review. Impairment occurs when the carrying value of
goodwill is greater than the recoverable amount which is the higher
of the value in use and fair value less disposal costs. The present
value of the estimated future cash flows from the separately
identifiable assets, termed a 'cash generating unit' is used to
determine the fair value less cost of disposal to calculate the
recoverable amount. The Group prepares and approves formal long
term business plans for its operations which are used in these
calculations.
Brand
Brand names acquired as part of acquisitions of businesses are
capitalised separately from goodwill as intangible assets if their
value can be measured reliably on initial recognition and it is
probable that the expected future economic benefits that are
attributable to the asset will flow to the Group.
Brand names have been assessed as having an indefinite life and
are not amortised but are subject to an annual impairment review.
Impairment occurs when the carrying value of the brand name is
greater than the present value of the estimated future cash
flows.
Property, plant and equipment
Items of property, plant and equipment are initially recognised
at cost. As well as the purchase price, cost includes directly
attributable costs.
Freehold land is not depreciated.
Vineyard establishment represents the expenditure incurred to
plant and maintain new vineyards until the vines reach
productivity. Once the vineyards are productive the vines are
remeasured at fair value less costs to sell and transferred to
biological assets. The remaining vineyard establishment costs will
then be depreciated over their expected useful economic lives.
Depreciation is provided on all other items of property, plant
and equipment so as to write off their carrying value over their
expected useful economic lives. It is provided at the following
rates:
Freehold buildings 4% per annum straight
line
Plant, machinery and motor 5-20% per annum straight
vehicles line
Computer equipment 33% per annum straight
line
The carrying value of property, plant and equipment is reviewed
for impairment when events or changes in circumstances indicate
that the carrying value may not be recoverable.
Biological assets and produce
Biological assets consist of grape vines and are included in the
statement of financial position at fair value less costs to sell.
The determination of the fair value of grape vines requires
significant management judgement and, amongst others, the following
factors are considered: discount rate, the productive life and
yield of the vines, notional rents for land (to allow comparability
between freehold and leasehold vineyards) and expected sales
prices. Detailed explanations of the methods employed to value the
vines are described in note 14 to the accounts. Gains and losses
arising from changes in fair value are included in the income
statement in the year in which they arise.
Harvesting of the grape crop is ordinarily carried out in
October. The costs of growing the grapes are capitalised in the
year in which they are incurred. Grapes that are used in production
of the Group's own wine are included at fair value in wine
inventory. The fair value of grapes is determined by reference to
estimated market prices at the time of harvest.
Inventories
Inventories are initially recognised at cost, and subsequently
at the lower of cost and net realisable value. Cost comprises all
costs of purchase, costs of conversion and other costs incurred in
bringing the inventories to their present location and condition.
Grapes grown in the Group's vineyards are transferred into
inventory from biological assets at fair value less costs to sell
at the point of harvest which is the deemed cost for the
grapes.
Weighted average cost is used to determine the cost of
ordinarily interchangeable items.
Business combinations
Acquisitions of businesses are accounted for using the
acquisition method. The cost of the acquisition is measured at the
aggregate fair value of the consideration given. The related
transaction expenses are recognised in the statement of
comprehensive income as incurred.
The acquiree's identifiable assets, liabilities and contingent
liabilities are recognised at their fair value at the acquisition
date.
Operating Leases
Payments under operating leases are expensed to the income
statement on a straight-line basis over the period of the
lease.
2 Critical accounting estimates and judgements
The Group makes certain estimates and judgements regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates. The estimates and judgements that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
relate are set out below.
Biological assets valuation
Biological assets are stated at fair value which requires the
use of certain unobservable inputs in the Group's valuation model.
The techniques and assumptions used are set out in note 14.
Fair value of biological produce
The Group's biological produce is measured at fair value at the
point of harvest. This is based on a deemed market value less costs
to sell. Generally there is no readily obtainable market price for
the Group's grapes because they are not sold on the open market,
therefore management set the values based on their experience and
knowledge of the sector including past purchase transactions.
Impairment reviews
The Group is required to test annually whether goodwill and
brand names have suffered any impairment. The recoverable amount is
determined based on fair value less costs of disposal calculations,
which requires the estimation of the value and timing of future
cash flows and the determination of a discount rate to calculate
the present value of the cash flows. Further information is set out
in note 12.
Useful lives of plant, property and equipment
The charge in respect of depreciation is calculated based on
management's estimate of an asset's useful economic life and its
residual value at the end of that life. An increase in the useful
life or residual value would result in a decreased depreciation
charge in the statement of consolidated income.
3 Financial instruments - risk management
The Group is exposed to risks that arise from its use of
financial instruments. This note describes the Group's objectives,
policies and processes for managing those risks and the methods
used to measure them. Further quantitative information in respect
of these risks is presented throughout these financial
statements.
There have been no substantive changes in the Group's exposure
to financial instrument risks, its objectives, policies and
processes for managing those risks or the methods used to measure
them from previous periods unless otherwise stated in this
note.
Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument risk arises, are as follows:
Bank loans
Convertible debt
Trade receivables
Cash and cash equivalents
Trade and other payables
The carrying amounts are a reasonable estimate of fair values
because of the short maturity of such instruments or their interest
bearing nature.
Liquidity risk
The Group closely monitors and manages its liquidity risk. Cash
forecasts are regularly produced and sensitivities run for
different scenarios.
Capital risk management
The Group's objectives when managing capital are to safeguard
the group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital. In order to maintain or adjust the capital
structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares and
increase or decrease debt.
Credit risk
Credit risk arises from cash and cash equivalents and deposits
with banks and financial institutions and the risk of default by
these institutions. The Group reviews the creditworthiness of such
financial institutions on a regular basis to satisfy itself that
such risks are mitigated. The Group's exposure to credit risk
arises from default of the counterparty, with a maximum exposure
equal to the carrying amount of the cash and cash equivalents as
shown in the consolidated statement of financial position.
Interest rate risk
The Group's main debt is exposed to interest rate fluctuations.
The Group considers that the risk is not significant in the context
of its business plans. Should there be a 0.5% increase in the
bank's lending rate, the finance charge in the statement of
comprehensive income would increase by GBP10,000.
4 Segmental information
The Directors consider the Group to have only one operating
segment. Details of the sole operating segment are shown in the
consolidated statement of comprehensive income, statement of
financial position and consolidated statement of cash flows.
All operations are conducted in the United Kingdom.
The Directors do not consider the Group place's reliance on any
major customers.
5 Loss from operations
Loss from operations has been arrived at after charging:
Period
1 April
Year ended to
December 31 December
2014 2013
GBP'000 GBP'000
Depreciation of property, plant and equipment 130 36
Profit on disposal of property, plant and equipment (4) (8)
Staff costs (see note 7) 516 201
6 Auditor's remuneration
Period
1 April
Year ended to
31 December 31 December
2014 2013
GBP'000 GBP'000
Auditor's remuneration
- Audit: consolidation and parent 26 27
- Audit: subsidiaries 9 7
Auditor's remuneration: services relating to corporate
finance transactions - 132
35 166
7 Staff costs
Period
Year ended 1 April to
31 December 31 December
2014 2013
GBP'000 GBP'000
Staff costs (including Directors) comprise:
Wages and salaries 471 188
Social security contributions and similar
taxes 45 13
516 201
The average number of employees of the Group, including
Directors, during the year was 17 (December 2013: 8). Directors'
remuneration was as follows:
Period
1 April
Year ended to
31 December 31 December
Salaries Fees 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Andrew Weeber 50 - 50 13
Ben Walgate 80 - 80 60
Paul Bentham 15 - 15 5
Ian Robinson - 15 15 30
Andrew Wilson - 7 7 15
145 22 167 123
Ben Walgate is the highest paid director. Fees in respect of Ian
Robinson and Andrew Wilson (deceased) are payable to Anne Street
Partners Limited under the terms of agreements dated 8 October
2012.
The Directors are considered to be key management.
Period
Year ended 1 April to
31 December 31 December
2014 2013
GBP'000 GBP'000
Key management personnel
costs were as follows:
Short term employment benefits 167 123
Social security contributions 17 8
184 131
8 Finance income and expense
Period
Year ended 1 April to
31 December 31 December
2014 2013
GBP'000 GBP'000
Finance income
Amortisation of bank loan incentive 14 -
Interest received on bank deposits 24 29
Total finance income 38 29
Finance expense
Interest payable on borrowings 72 19
Amortisation of bank transaction costs 5 -
Convertible deep discount bond charge 146 40
Total finance expense 223 59
9 Taxation
Period
Year ended 1 April to
31 December 31 December
2014 2013
GBP'000 GBP'000
Current tax expense
Current tax on profits for the year - -
Total current tax - -
Deferred tax expense
Origination and reversal of temporary differences (60) 60
Total deferred tax (60) 60
Total tax (Income)/expense (60) 60
Period
Year ended 1 April to
31 December 31 December
2014 2013
GBP'000 GBP'000
Loss on ordinary activities before tax (1,104) (666)
Loss on ordinary activities at the standard
rate of corporation tax in the UK for the year
of 21.49% (December 2013: 23.25%) (237) (155)
Effects of:
Expenses not deductible for tax purposes 62 77
Unprovided deferred tax movements on short
term temporary differences (113) (67)
Unrecognised losses c/f 325 81
Effect of changes in tax rate in prior years 23 4
Tax charge for the year (60) 60
No deferred tax asset has been recognised on unutilised taxable
losses due to the lack of certainty over the taxable profits being
available against which deductible temporary differences can be
utilised. The unutilised tax losses carried forward are
GBP2,153,260 (December 2013: GBP833,000)
10 Loss per share
Basic earnings per ordinary share are based on a loss of
GBP1,044,000 (December 2013: GBP726,000) and 15,592,073 ordinary
shares (December 2013: 10,548,391) of 50 pence each, being the
weighted average number of shares in issue during the year. There
is no adjustment to be made for diluted earnings per ordinary
share.
Weighted
average Loss per
Loss number of ordinary
GBP'000 shares share pence
Year ended 31 December 2014 (1,044) 15,592,073 (6.70)
Period ended 31 December 2013 (726) 10,548,391 (6.88)
11 Business combinations
On 27 September 2013 Gusbourne Estate Limited, a wholly owned
subsidiary of the Group, acquired the Gusbourne Estate business and
related freehold property for a total consideration of
GBP7,316,000. The principal reason for this acquisition was to
invest in, and further develop, the Gusbourne Estate business
including, in particular, its award winning Gusbourne brand to take
advantage of further anticipated market growth in this sector of
the wine industry.
Details of the fair value of identifiable assets and liabilities
acquired, purchase consideration and goodwill are as follows:
Fair value
Book value adjustment Fair value
Net assets at the acquisition date GBP'000 GBP'000 GBP'000
=================================== ========== =========== ==========
Property, plant and equipment 4,369 - 4,369
=================================== ========== =========== ==========
Biological assets 1,074 - 1,074
=================================== ========== =========== ==========
Inventories 641 225 866
=================================== ========== =========== ==========
Brand - 230 230
=================================== ========== =========== ==========
Total net assets 6,084 455 6,539
=================================== ========== =========== ==========
Fair value of consideration paid: GBP'000
Cash 4,263
Shares 1,303
Convertible bond - present value of debt element 1,655
Convertible bond - equity element 95
Total consideration 7,316
Goodwill 777
Transaction costs of GBP187,000 and Stamp Duty Land Tax of
GBP211,000 in connection with the acquisition have been recognised
in the statement of comprehensive income in the period ended 31
December 2013.
The fair value of the Group's shares issued in consideration for
the acquisition has been based on the acquisition date share price
of GBP0.67 per share. The convertible bond was also fair valued at
the date of acquisition.
The main factors leading to the recognition of goodwill are the
presence of intangible assets, such as the workforce of the
acquired entity, which do not qualify for separate recognition, and
synergies resulting from material cost savings and sharing of
expertise and systems which will enable future growth.
12 Intangibles
Goodwill Brand Total
GBP'000 GBP'000 GBP'000
Cost
At 1 January 2014 and 31 December 2014 777 230 1,007
Impairment losses
At 1 January 2014 and 31 December 2014 - - -
Net book value
At 31 December 2013 and 31 December 2014 777 230 1,007
The carrying value of goodwill is allocated to the following
cash-generating units:
December December
2014 2013
GBP'000 GBP'000
Gusbourne Estate 777 777
Goodwill is the premium paid to acquire the Gusbourne Estate
business over the fair value of its net assets.
The Group's management prepare long term cash flow forecasts for
up to 12 years, and then apply a discount rate to determine the
present value of the future cash flows of the cash-generating unit
to arrive at the fair value less costs of disposal. Where this
amount is lower than the carrying value of goodwill allocated to
the cash-generating unit an impairment charge is made. The discount
rate used is 17% based on the Group's estimated weighted cost of
capital. A growth rate of 3% has been applied over the term of the
long term cash flow forecasts.
13 Property, plant and equipment
Freehold Plant,
Land machinery
and and motor Vineyard Computer
Buildings vehicles establishment equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 April 2013 222 108 40 3 373
Acquisition of the Gusbourne Estate
business 4,289 80 - - 4,369
Additions 99 538 418 16 1,071
Disposals - (40) - - (40)
At 31 December 2013 4,610 686 458 19 5,773
At 1 January 2014 4,610 686 458 19 5,773
Additions 14 137 588 8 747
Disposals - (1) - - (1)
At 31 December 2014 4,624 822 1,046 27 6,519
Plant,
Freehold Machinery
land and and motor Vineyard Computer
buildings Vehicles establishment equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Accumulated depreciation
At 1 April 2013 - 25 - 1 26
Depreciation charge for the year 9 26 - 1 36
Depreciation on disposals - (12) - - (12)
At 31 December 2013 9 39 - 2 50
At 1 January 2014 9 39 - 2 50
Depreciation charge for the year 37 85 - 8 130
Depreciation on disposals - - - - -
At 31 December 2014 46 124 - 10 180
Net book value
At 31 December 2013 4,601 647 458 17 5,723
At 31 December 2014 4,578 698 1,046 17 6,339
14 Biological assets
The fair value of biological assets at the balance sheet date
was:
Vines
GBP'000
At 1 April 2013 154
Arising on acquisition of Gusbourne Estate business 1,074
Fair value of grapes harvested and transferred to inventory (290)
Crop growing costs 157
Change in fair value due to price, yield and maturity 145
At 31 December 2013 1,240
At 1 January 2014 1,240
Fair value of grapes harvested and transferred to inventory (210)
Crop growing costs 281
Change in fair value due to price, yield and maturity (74)
At 31 December 2014 1,237
The Group owns bearer biological assets in the form of grape
vines, which are cultivated on land owned by the Group. The grapes
produced from these vines are used in the production of the Group's
own wines.
The total area of vines at December 2014 amounted to 155.5 acres
(December 2013: 104.8 acres) of which approximately 58.5 acres
(December 2013: 58.5 acres) can be classified as mature (i.e. four
years after planting). The average peak productive life of grape
vines is estimated to be 25 years.
The fair value of mature grape vines was calculated by
discounting the net cash flows thereof over their remaining lives
at a pre-tax discount rate of 17% (December 2013: 17%).
The net cash flows were calculated with reference to the
following significant assumptions
December December
2014 2013
i) Average remaining life of grape vines 25 years 25 years
ii) Average yield per acre of mature vineyards 3.0 tonnes 3.0 tonnes
per acre per acre
iii) Market price of grapes GBP2,000 GBP2,000
per tonne per tonne
iv) Annual rate of inflation to cost and revenue inputs 3% 3%
v) Vineyard maintenance costs GBP2,710 GBP2,710
per acre per acre
Planting expenditure is carried forward at cost in the statement
of financial position with property, plant and equipment until the
vines reach maturity, at which point they are re-measured at fair
value and re-classified as biological assets.
Fair value
The fair value of vines is determined based on a level 3
valuation method, that is, using valuation methods that include
inputs that are not based on market data. The significant
unobservable inputs used in the discounted cash flow model
developed to value the vines are the discount rate, yields and fair
value of grapes.
For example, a 10% increase in the discount rate to 18.7% would
result in a decrease in fair value of the biological assets by
GBP103,200. In addition cashflows are projected over a number of
years and based on estimated harvest yields. Yields are based on an
average of the performance of the Group's vines over previous
harvests.
Changes in these estimates could materially impact estimates of
future cashflows used in the assessment of the fair values.
15 Inventories
December December
2014 2013
GBP'000 GBP'000
Finished goods 126 171
Work in progress 1,309 1,139
Total inventories 1,435 1,310
During the year GBP334,000 (December 2013: GBP66,000) was
transferred to cost of sales.
16 Trade and other receivables
December December
2014 2013
GBP'000 GBP'000
Trade receivables 107 66
Prepayments 28 19
Other receivables 78 166
Total trade and other receivables 213 251
Trade and other receivables are due within 1 year apart from
GBP50,000 (December 2013: GBP50,000) included within other
receivables which is due in more than 1 year.
17 Trade and other payables
December December
2014 2013
GBP'000 GBP'000
Trade payables 192 173
Accruals 72 86
Other payables 59 54
Total financial liabilities, excluding loans and borrowings
classified as financial liabilities measured at amortised
cost 323 313
Other payables - tax and social security payments 13 11
Total trade and other payables 336 324
Book values are approximate to fair value at 31 December 2014
and 31 December 2013.
18 Loans and borrowings
December December
2014 2013
GBP'000 GBP'000
Bank loans 2,025 2,025
Total loans and borrowings 2,025 2,025
The bank loan of GBP2,025,000 is at an interest rate of 3% over
Barclays Bank plc base rate and is due for repayment in full in
September 2018. It is secured by way of a fixed charge over the
Group's land and buildings at Appledore, Kent, shown at a cost of
GBP4,356,000 within property, plant and equipment and a floating
charge over all other property and undertakings.
19 Convertible bonds
GBP'000
Present value of debt element at issue on 27 September 2013 1,655
Equity element 95
Nominal value of bond at issue date 1,750
Present value of debt element at 1 January 2014 1,695
Discount expense for the year 146
Fair value of debt element at 31 December 2014 1,841
Equity element at 31 December 2014 95
Total carrying value at 31 December 2014 1,936
Convertible bonds represent the debt element of a deep discount
convertible bond issued to Mr A C V Weeber and Mrs C Weeber as part
of the consideration for the acquisition of the Gusbourne Estate
business on 27 September 2013. The bond is secured by a fixed
charge over the Group's land and buildings at Appledore, Kent. The
bond is redeemable on 27 September 2017 and attracts a coupon rate
of 7.5% per annum which is rolled up annually. From 27 September
2015 until the 26 September 2016 the holders of the bond can
convert some or all of the bond into Gusbourne PLC ordinary shares
at a price of 66 pence per share.
The bond is classified as a compound financial instrument
containing an element of debt and equity. The debt element is
calculated as the present value of future cash flows assuming the
bond is redeemed on the redemption date, discounted at the market
rate for an equivalent debt instrument with no option to convert to
equity. A rate of 9% has been used. The difference between the cash
payable on maturity and the present value of the debt element is
recognised in equity. The discount is charged over the life of the
bond to the statement of comprehensive income and included within
finance expenses.
20 Deferred tax liabilities
GBP'000
At 1 January 2014 60
Reversal of timing differences (60)
At 31 December 2014 -
21 Operating lease commitments
The future aggregate minimum lease payments under
non-cancellable operating leases are as follows:
December December
2014 2013
GBP'000 GBP'000
Operating leases which expire:
Within one year 47 15
Within two to five years 189 61
More than five years 2,015 663
2,251 739
22 Share capital
Ordinary shares of 50p each
Number GBP'000
Issued and fully paid
At 1 April 2013 8,000,003 4,000
Issued for cash during the year 5,280,367 2,640
Issued as consideration for acquisition 1,944,444 972
At 31 December 2013 15,224,814 7,612
Issued for cash during the year 2,628,462 1,315
At 31 December 2014 17,853,276 8,927
On 11 November 2014 Gusbourne PLC issued 2,628,462 50 pence
ordinary shares at a price of 68 pence per share. The shares were
fully subscribed and paid up.
23 Reserves
The following describes the nature and purpose of each reserve
within equity:
Reserve Description and purpose
------------------------ ----------------------------------------------------
Share Premium The share premium account arose on the issue of
shares by the Company at a premium to their nominal
value. Expenses of share issues are charged to this
account.
------------------------ ----------------------------------------------------
Merger reserve The merger reserve arose on the business combination
and is the difference between the nominal value
of the shares issued and the market value of the
shares acquired.
------------------------ ----------------------------------------------------
Convertible bond reserve The convertible bond reserve is the equity element
of the bonds as disclosed in note 20.
------------------------ ----------------------------------------------------
Retained earnings The retained earnings represent cumulative net gains
and losses recognised in the Group's statement of
consolidated income.
24 Related party transactions
At 31 December 2014 GBP1,493,000 (31 December 2013 -
GBP1,500,000) of cash and cash equivalents were held on deposit at
British Caribbean Bank Limited ('BCBL'), a related party. BCBL is a
wholly owned subsidiary of Waterloo Investment Holdings Limited
('WIHL'). Lord Ashcroft, KCMG PC, is a controlling shareholder in
both the Company and WIHL.
Anne Street Partners Limited is considered a related party by
virtue of the fact that Ian Robinson, a director of Gusbourne PLC,
is also a director of Anne Street Partners Limited. During the year
Anne Street Partners Limited charged the Company in total GBP62,473
(December 2013 - GBP137,500). Of this, GBP22,473 was in relation to
directors fees (December 2013 - GBP45,000) and GBP40,000 relates to
management services (December 2013 - GBP92,500). At 31 December
2014 an amount of GBP77,000 inclusive of VAT (December 2013 -
GBP111,000) was due to Anne Street Partners Limited and is shown
within trade and other payables.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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