TIDMGUS
RNS Number : 1154Q
Gusbourne PLC
04 June 2018
Gusbourne Plc
(London-AIM: GUS) ("Gusbourne", the "Company" or the
"Group")
Results for the year ended 31 December 2017.
The Board of Gusbourne Plc announces its audited results for the
year ended 31 December 2017.
Highlights
-- Revenue up by 56% to GBP998,000 (2016: GBP640,000)
-- Export sales to 16 countries represented 25% of revenues (2016: 14%)
-- Continuing success in international wine competitions
including the IWSC award in 2017 for "English Wine Producer of the
Year"
-- A successful harvest in 2017 in terms of both yield and quality
-- Announcement on 31 May 2018 of intention to raise new equity
to support further growth and development of the Company
Andrew Weeber, Chairman, commented:
"2017 has been another successful year of growth as we work
towards our long-term goals based on the production and sale of our
premium sparkling wines. I am delighted with our export performance
which represented 25% of our revenues in 2017."
Chairman's statement
2017 has been another successful year of growth for the Group.
The Gusbourne business was established fourteen years ago in 2004
and has been selling its award-winning English sparkling wines
since 2010. Revenue has continued to grow in line with product
availability and in 2017 our revenue amounted to GBP998,000, an
increase of 56 per cent (2016: 35%) over the prior year. Gusbourne
remains one of England's premier sparkling wine businesses and is
focused at the luxury end of the market.
Highlights of 2017 include:
-- Revenue growth of 56% (2016: 35%).
-- A successful harvest in September and October 2017 in terms
of both yield and quality, which has added to our wine stocks for
future sale. The harvest included the first fruit from the vines
planted on our sites in 2015 and the second harvest from vines
planted on our sites in 2014.
-- Strong growth in exports which represented 25% of sales
(2016: 14%). The Company now exports to 16 countries.
-- Continued success in major international wine competitions,
including being awarded the IWSC 'English Wine Producer of the
Year' for 2017, the third time Gusbourne has received this award in
the last five years.
-- Gusbourne's cellar door operation (the "Nest") at Gusbourne's
winery and estate in Kent opened for business in July 2017 and
provides tours, wine tastings and event hosting to a growing number
of visitors.
-- Ongoing investment in the Group's growing asset base
including vineyards, wine inventories, buildings, plant and
machinery and the award winning Gusbourne brand.
I should like to express my sincere thanks for the dedicated
efforts of our employees, our loyal customers as well as the
support of our shareholders in helping the Group achieve another
successful year of growth and development in the business.
Andrew Weeber
Chairman
Chief Executive's review
The results for 2017 reflect another successful year of growth
and development for the Group in line with our long term strategic
development plans. Revenue of GBP998,000 (2016: GBP640,000) is up
56% (2016: 35%) on the prior year and we continue to widen our
distribution channels both in the UK and overseas. Exports were
particularly strong and represented 25% (2016: 14%) of our
revenues. This has been an area of significant focus over the last
year and I am delighted to report that Gusbourne is now distributed
to 16 countries around the world.
The Gusbourne sparkling wine products continue to remain at the
luxury end of the English sparkling wine market and we are
committed to maintaining this premium position. We are delighted
that the quality of our products has also been recognised in the
United States, an important contributor to our export sales, with a
number of prestigious awards for our sparkling wines.
2017 also saw the launch of the Nest, Gusbourne's new cellar
door and tasting room. Situated amongst our vineyards in Kent this
new facility allows us to fully engage with our customers,
encouraging them to enjoy the vineyards, visit the winery and taste
the wines.
Activities
Gusbourne PLC ("the Company") is engaged, through its wholly
owned subsidiary Gusbourne Estate Limited (together the "Group"),
in the production and distribution of a range of high quality and
award-winning English sparkling wines from grapes grown in its own
vineyards in Kent and West Sussex. The majority of the Group's
vineyards are located at its freehold estate at Appledore in Kent
where the winery is also based. The Group now has a total of 231
acres of vineyards with the first plantings dating back to 2004
with the most recent plantings in 2015.
Gusbourne Wines
Gusbourne is dedicated to the production of premium sparkling
wines from grapes grown exclusively in its own vineyards. Our
processes, both in establishing and maintaining the vineyards and
in making wine, continue to follow the rigorous principles of
careful site selection and attention to detail in all aspects of
viticulture and wine production. An integral part of the Group's
approach is to age its traditional method sparkling wines for as
long as is necessary for the wines to meet optimum maturity. The
average production cycle for the wines is four years from harvest
to sale.
Recent awards
2017 was another year of success for Gusbourne at international
wine competitions resulting in 36 medals including 8 gold medals
and 2 trophies. Our flagship wine, the Gusbourne Blanc de Blancs
2013, was particularly successful, achieving gold medals in 5
different competitions.
In the United States, Gusbourne became the first English wine to
win a double Gold medal at the TEXSOM awards in March 2017 (one of
the most influential wine competitions in the United States) for
the Gusbourne Blanc de Blancs 2013 and Gusbourne Brut Reserve 2013
which also won the Best in Class trophy.
In May 2017, Gusbourne won another double Gold at the
International Wine Challenge as well as a double Gold at the
International Wine and Spirits Competition (IWSC) for the Gusbourne
Blanc de Blancs 2012 and Gusbourne Blanc de Blancs 2013. In May
2017 Gusbourne was also awarded a Platinum medal at the Decanter
World Wine Awards ("DWWA") 2017 for the Gusbourne Pinot Noir 2015,
claiming consecutive Best English Red Wine trophies.
The 2017 awards season culminated with Gusbourne winning the
trophy for 'English Wine Producer of the Year' by the IWSC. This is
the third time Gusbourne has been awarded this trophy in the past
five years.
In May 2018, Gusbourne was awarded 4 titles at the inaugural
Harper's Wine Stars of England competition including 'Best
Sparkling Wine', 'Best Still Wine', 'Best Design' and overall 'Star
of England'. The Gusbourne Sparkling Rosé 2014 also won a gold
medal at the Drinks Business Global Rosé Masters competition.
Development strategy
Meeting growing customer demand for the Gusbourne wines requires
careful long-term planning and key elements of the Group's
development strategy include:
-- Continuing to produce wines of exceptional quality from grapes grown in our own vineyards;
-- The ongoing development and evolution of the award winning Gusbourne brand;
-- The further development of the Company's distribution
channels, including the promotion of exports as a significant
contributor to sales;
-- The promotion of the Company's cellar door operation at the
Company's winery in Kent. This allows visitors to enjoy vineyard
and winery tours and taste our award-winning wines and also helps
to promote a closer and more direct relationship with our
customers; and
-- The investment in additional plant and machinery to keep pace with production growth.
2017 harvest
Our 2017 harvest took place during September and October, with
favourable growing conditions resulting in our earliest ever start
date. The quality of the grapes was excellent, with optimum levels
of natural sugar and acidity, both of which met our own exacting
quality standards. The high quality of grapes harvested in the year
bodes well for 2017 becoming another great vintage for Gusbourne.
Yield volumes were good and in line with expectations and the
resulting wine production has added further to our inventory levels
for sale in future years.
Results for the year
Revenue for the year amounted to GBP998,000 (2016: GBP640,000),
an increase of 56% over the prior year. Whilst these sales continue
to reflect limited stock availability at this time, they do
represent a consecutive like for like growth in the sale of
Gusbourne wines since 2013. Administrative expenses of GBP1,759,000
(2016: GBP1,385,000), including depreciation of GBP479,000 (2016:
GBP357,000) reflect continuing investment in the development and
growth of the business and the Gusbourne brand in particular.
EBITDA for the year was a loss of GBP690,000 (2016: GBP802,000).
The operating loss for the year after depreciation and amortisation
was GBP1,169,000 (2016: GBP1,159,000). The loss before tax was
GBP1,638,000 (2016: GBP1,528,000) after net finance costs of
GBP469,000 (2016: GBP369,000).
These planned losses continue to be in line with expectations
and the long-term development strategy of the Group.
Balance Sheet
The 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 ongoing investment in the vineyards established in
West Sussex and Kent between 2014 and 2015. This investment in
vineyards is reflected in capital expenditure during the year of
GBP86,000 (2016: GBP338,000).
In addition, the Group invested in additional plant and
equipment for the vineyards and the winery amounting to GBP607,000
(2016: GBP364,000) and in buildings of GBP1,090,000 (2016:
GBP414,000). Total assets at 31 December 2017 of GBP17,466,000
(2016: GBP14,621,000) include freehold land and buildings of
GBP6,539,000 (2016: GBP5,543,000), vineyards of GBP3,260,000 (2016:
GBP3,256,000), inventories of wine stocks amounting to GBP3,484,000
(2016: GBP2,247,000), and GBP1,464,000 of cash (2016:
GBP1,123,000). Intangible assets of GBP1,007,000 (2016:
GBP1,007,000) arose on the acquisition of the Gusbourne Estate
business on 27 September 2013.
The Group's net tangible assets at 31 December 2017 amount to
GBP11,323,000 (2016: GBP6,825,000) and represent 92% of total
equity (2016: 87%). Net tangible assets per share at 31 December
2017 were 28.8 pence per share (2016: 28.9 pence per share). It is
important to note that these net tangible assets figures do not
necessarily reflect underlying asset values, in particular in
respect of the Group's inventories, which are reported at the lower
of cost and net realisable value. 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, which is not reflected in these accounts and in the
net tangible assets per share quoted above, will become an
increasingly significant factor of the Group's asset base as the
inventories continue to grow.
Financing
The Group's activities are financed by shareholders equity,
loans, other borrowings and convertible bonds. Loans, other
borrowings and convertible bonds at 31 December 2017 amount in
total to GBP4,778,000 (2016: GBP6,537,000) and represent 39% of
total equity (2016: 83%).
On 29 June 2017, the Company completed an Open Offer with
existing shareholders, which was underwritten by the Company's
principal shareholder Lord Ashcroft KCMG PC, to raise proceeds of
GBP4.2m (before expenses). The Company simultaneously announced a
short-term loan from Lord Ashcroft KCMG PC of GBP1,000,000 which
was offset against Lord Ashcroft KCMG PC's subscription under the
Open Offer. The proceeds from this loan and the Open Offer were
applied towards working capital and capital expenditure in line
with the Company's long-term strategic plan.
On 29 June 2017 the Company also announced that the Share
Capital Reduction to subdivide each of the Company's existing
Ordinary shares of 50p each into one Ordinary share of 1 pence and
one Deferred share of 49 pence, was now effective.
On 30 June 2017, the Company announced a Conversion Offer to
Bondholders to apply to convert their Bonds into new Ordinary
shares in the Company at the Issue Price of 40p. On 1 August 2017,
the Company announced that it had received final acceptances in
respect of 5,136,662 Conversion Offer Shares, which represents a
conversion of approximately 46 per cent of the outstanding Bonds
and a Conversion Value of approximately GBP2.05 million, improving
the strength of the Company's balance sheet through reduced
borrowings. Following the admission on 2 August 2017, the Company
has 39,366,984 Ordinary 1p shares trading on AIM.
On 31 May 2018, the Company announced that it is intended to
arrange a subscription of new Ordinary shares in the Company with
Lord Ashcroft KCMG PC and other investors, which is expected to
proceed by 31 July 2018 (the Subscription). The proceeds from the
Subscription will continue to be applied towards working capital
and capital expenditure in line with the Company's long-term
strategic plan.
In order to meet immediate working capital requirements, the
Company entered into an agreement on 31 May 2018 with Lord Ashcroft
KCMG PC to receive an unsecured loan of GBP1,000,000 (the "Loan
Agreement") which is intended to be repaid in full, through
conversion into new Ordinary shares as part of the Subscription,
when it concludes. The loan carries interest for a period of 3
months following the date of the loan agreement at the rate of 7%
per annum above the base rate as varied from time to time by
Barclays Bank plc, and thereafter at 10% per annum.
Under the terms of the Loan Agreement, if the Subscription does
not proceed, or if the subscription price is not agreed between the
Company and Lord Ashcroft by 31 July 2018, the loan and interest
will become repayable on demand subject to such repayment not being
in breach of the Company's existing banking facilities or if such
repayment caused the Company to be unable to meet its creditors as
they fall due.
The Group's bank loan of GBP2,025,000 is due for repayment in
full in September 2018. While discussions with the bank are
ongoing, as at the date of signing the financial statements, no
extension to the loan agreement or refinancing had been agreed.
In the event that the bank was not prepared to refinance this
secured debt, or if further funding could not be obtained, Lord
Ashcroft KCMG PC has confirmed that he would be prepared to provide
secured debt funding for a period of at least 12 months to replace
Gusbourne PLC's secured bank debt on terms to be agreed.
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 fund ongoing growth in the Company's
operations and asset base, in line with its development
strategy.
Outlook
The growing season in 2018 has started slightly later than last
year, due to a cold start to the year, but warm spring weather has
led to strong even growth and high potential fruitfulness. The
vines will remain subject to the normal seasonal climatic and
disease risks throughout the remaining part of the growing
season.
Good yields from the 2017 harvest have allowed us to
significantly increase our wine stocks for future sales. The
Company continues to make steady progress in line with its long
term strategic plans and looks forward to reporting further
progress in the current year.
Finally, I would like to thank all our employees for their hard
work, dedication, and attention to detail in applying their
considerable skills and talents to the production and sale of our
award-winning wines.
Key Performance Indicators
Years ended 31 December 2017 2016 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------- ---------- ---------- ----------- -----------
Sales 998 640 473 434
----------------------------------------------- ---------- ---------- ----------- -----------
Gross profit percentage 62% 34% 31% 17%
----------------------------------------------- ---------- ---------- ----------- -----------
EBITDA* (690) (802) (856) (786)
----------------------------------------------- ---------- ---------- ----------- -----------
Investment in tangible assets
=============================================== ========== ========== =========== ===========
Investment in vineyard establishment 86 338 786 588
=============================================== ========== ========== =========== ===========
Investment in freehold land and buildings 1,090 414 664 14
=============================================== ========== ========== =========== ===========
Investment in plant, machinery, vehicle
and other equipment 607 364 473 145
=============================================== ========== ========== =========== ===========
Investment in property, plant and equipment 1,783 1,116 1,923 747
=============================================== ========== ========== =========== ===========
Increase in inventories 1,237 536 276 125
=============================================== ========== ========== =========== ===========
Total investment in tangible assets 3,020 1,652 2,199 872
----------------------------------------------- ---------- ---------- ----------- -----------
At 31 December 2017 2016 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------- ---------- ---------- ----------- -----------
Net assets
=============================================== ========== ========== =========== ===========
Freehold land and buildings 6,539 5,543 5,198 4,578
=============================================== ========== ========== =========== ===========
Vineyards 3,260 3,256 2,972 2,236
=============================================== ========== ========== =========== ===========
Plant, machinery, vehicle and other equipment 1,431 1,131 1,001 715
=============================================== ========== ========== =========== ===========
Total non-current assets 11,230 9,930 9,171 7,529
=============================================== ========== ========== =========== ===========
Inventories 3,484 2,247 1,711 1,435
=============================================== ========== ========== =========== ===========
Net working capital (current receivables
less current payables) (77) 62 95 (123)
=============================================== ========== ========== =========== ===========
Cash 1,464 1,123 1,328 1,842
=============================================== ========== ========== =========== ===========
Net tangible assets before debt 16,101 13,362 12,305 10,683
=============================================== ========== ========== =========== ===========
Bonds, loans and other borrowings (4,778) (6,537) (3,952) (3,866)
=============================================== ========== ========== =========== ===========
Net tangible assets 11,323 6,825 8,353 6,817
=============================================== ========== ========== =========== ===========
Goodwill 1,007 1,007 1,007 1,007
=============================================== ========== ========== =========== ===========
Net assets and equity 12,330 7,832 9,360 7,824
----------------------------------------------- ---------- ---------- ----------- -----------
Key balance sheet ratios
=============================================== ========== ========== =========== ===========
Net tangible assets as a percentage of
total equity 92% 87% 89% 87%
=============================================== ========== ========== =========== ===========
Gearing (Debt as percentage of equity) 39% 83% 42% 49%
=============================================== ========== ========== =========== ===========
Number of shares in issue 39,366,986 23,639,762 23,639,762 17,853,276
=============================================== ========== ========== =========== ===========
Net tangible assets per share (pence) 28.8 28.9 35.3 38.2
----------------------------------------------- ---------- ---------- ----------- -----------
* EBITDA means profit from operations/(loss from operations)
before interest, tax, depreciation and amortisation.
Annual General Meeting
The Company's annual report and accounts for the year ended 31
December 2017 will be posted to shareholders on Wednesday 6 June
2018, together with notice of the Annual General Meeting to be held
at 2pm on 29 June 2018 at the offices of Cenkos Securities PLC at
6.7.8 Tokenhouse Yard, London EC2R 7AS.
Enquiries:
Gusbourne Plc
Andrew Weeber/Charlie Holland +44 (0)12 3375 8666
Cenkos Securities plc
Nicholas Wells/Callum Davidson +44 (0)20 7397 8920
Note: This and other press releases are available at the
Company's web site: www.gusbourneplc.com
Note to Editors
Gusbourne PLC ("the Company") is engaged, through its wholly
owned subsidiary Gusbourne Estate Limited (together the "Group"),
in the production and distribution of a range of high quality and
award-winning English sparkling wines from grapes grown in its own
vineyards in Kent and West Sussex. The majority of the Group's
vineyards are located at its freehold estate at Appledore in Kent
where the winery is also based. The Group has a total of 231 acres
of vineyards.
Consolidated statement of comprehensive income for the year
ended 31 December 2017
Year ended Year ended
31 December 31 December
2017 2016
Note GBP'000 GBP'000
Revenue 998 640
Cost of sales (381) (423)
----------------------------------------------- ---- ------------ ------------
Gross profit 617 217
Fair value movement in biological produce 6 (27) 9
----------------------------------------------- ---- ------------ ------------
Administrative expenses (1,759) (1,385)
----------------------------------------------- ---- ------------ ------------
Loss from operations (1,169) (1,159)
Finance income - 13
Finance expenses (469) (382)
Loss before tax (1,638) (1,528)
----------------------------------------------- ---- ------------ ------------
Tax expense - -
----------------------------------------------- ---- ------------ ------------
Loss and total comprehensive loss for the year
attributable to owners of the parent (1,638) (1,528)
----------------------------------------------- ---- ------------ ------------
Loss per share attributable to the ordinary
equity holders of the parent:
----------------------------------------------- ---- ------------ ------------
Basic and diluted (pence) 4 (5.26) (6.46)
----------------------------------------------- ---- ------------ ------------
Consolidated statement of financial position at 31 December
2017
31 December 31 December
2017 2016
Note GBP'000 GBP'000
Assets
Non-current assets
Intangibles 1,007 1,007
Property, plant and equipment 5 11,230 9,930
------------------------------ ---- ----------- -----------
12,237 10,937
Current assets
Biological produce 6 - -
Inventories 7 3,484 2,247
Trade and other receivables 281 314
Cash and cash equivalents 1,464 1,123
------------------------------ ---- ----------- -----------
5,229 3,684
------------------------------ ---- ----------- -----------
Total assets 17,466 14,621
------------------------------ ---- ----------- -----------
Liabilities
Current liabilities
Trade and other payables (358) (252)
Finance leases (49) (51)
Loans and borrowings 8 (2,059) (34)
------------------------------ ---- ----------- -----------
(2,466) (337)
Non-current liabilities
Loans and borrowings 8 (2,590) (6,322)
Finance leases (80) (130)
(2,670) (6,452)
------------------------------ ---- ----------- -----------
Total liabilities (5,136) (6,789)
------------------------------ ---- ----------- -----------
Net assets 12,330 7,832
------------------------------ ---- ----------- -----------
31 December 31 December
2017 2016
Note GBP'000 GBP'000
Issued capital and reserves attributable to
owners of the parent
Share capital 9 11,977 11,820
Share premium 6,754 815
Merger reserve (13) (13)
Retained earnings (6,388) (4,790)
-------------------------------------------- ---- ----------- -----------
Total equity 12,330 7,832
-------------------------------------------- ---- ----------- -----------
Consolidated statement of cash flows for the year ended 31
December 2017
31 December 31 December
2017 2016
Note GBP'000 GBP'000
Cash flows from operating activities
Loss for the year before tax (1,638) (1,528)
Adjustments for:
Depreciation of property, plant and equipment 5 479 357
Gain on shares issued to directors in the year 40 -
Profit on disposal of property plant and equipment (3) -
Finance expense 469 382
Finance income - (13)
Fair value movement in biological produce 6 27 (9)
Decrease/(Increase) in trade and other receivables 28 (60)
Increase in inventories (1,264) (536)
Increase in trade and other payables 45 109
----------------------------------------------------- ---- ----------- -----------
Cash outflow from operations (1,817) (1,298)
Investing activities
Purchases of property, plant and equipment,
excluding vineyard establishment 5 (1,636) (778)
Investment in vineyard establishment 5 (86) (338)
Sale of property, plant and equipment 7 -
Net cash from investing activities (1,715) (1,116)
Financing activities
Capital loan repayments (34) (34)
Issue of Deep Discount Bond 8 - 4,073
Repayment of Convertible Deep Discount Bond - (1,755)
Short term loan* 1,000 -
Finance lease agreements entered into - 53
Repayment of finance leases (52) (46)
Interest paid (82) (82)
Issue of ordinary shares* 9 3,203 -
Share issue expenses (162) -
----------------------------------------------------- ---- ----------- -----------
Net cash from financing activities 3,873 2,209
Net increase/(decrease) in cash and cash equivalents 341 (205)
Cash and cash equivalents at the beginning of
the year 1,123 1,328
----------------------------------------------------- ---- ----------- -----------
Cash and cash equivalents at the end of the
year 1,464 1,123
----------------------------------------------------- ---- ----------- -----------
*Non-cash transaction
The short-term loan of GBP1,000,000 received in the year ended
31 December 2017 was used as part settlement of monies due under
the share subscription which completed on 29 June 2017.
Consolidated statement of changes in equity for the year ended
31 December 2016
Total attributable
Convertible to equity
Share Share Merger bond Retained holders
capital premium reserve reserve earnings of parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
1 January 2016 11,820 815 (13) 95 (3,357) 9,360
Convertible bond reserve
transferred to retained
earnings at redemption - - - (95) 95 -
Comprehensive loss
for the year - - - - (1,528) (1,528)
------------------------- -------- -------- -------- ----------- --------- ------------------
Total comprehensive
loss for the year - - - - (1,433) (1,433)
------------------------- -------- -------- -------- ----------- --------- ------------------
31 December 2016 11,820 815 (13) - (4,790) 7,832
------------------------- -------- -------- -------- ----------- --------- ------------------
1 January 2017 11,820 815 (13) -(4,790) 7,832
Comprehensive loss
for the year - - - -(1,638) (1,638)
Contributions by and
distributions to owners:
Share issue 106 4,098 - - - 4,204
Share issue expenses - (162) - - - (162)
Bond conversion 51 2,003 - - - 2,054
Gain on shares issued
to directors in the
year - - - - 40 40
-------------------------- ------ ----- ---- ------- -------
31 December 2017 11,977 6,754 (13) -(6,388) 12,330
-------------------------- ------ ----- ---- ------- -------
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 2017 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 2017 or
the year ended 31 December 2016, but is derived from those
accounts. The Group's statutory accounts for 31 December 2016 have
been delivered to the Registrar of Companies and those for 31
December 2017 will be delivered following the Company's Annual
General Meeting. The Auditor's reports on both the 31 December 2016
and 31 December 2017 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 and the Company's
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 produce is stated at 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.
On 31 May 2018, the Company announced that it is intended to
arrange a subscription of new Ordinary shares in the Company with
Lord Ashcroft KCMG PC and other investors, which is expected to
proceed by 31 July 2018 (the Subscription). The proceeds from the
Subscription will continue to be applied towards working capital
and capital expenditure in line with the Company's long-term
strategic plan.
In order to meet immediate working capital requirements, the
Company entered into an agreement on 31 May 2018 with Lord Ashcroft
KCMG PC to receive an unsecured loan of GBP1,000,000 (the "Loan
Agreement" which is intended to be repaid in full, through
conversion into new Ordinary shares as part of the Subscription,
when it concludes. The loan carries interest for a period of 3
months following the date of the loan agreement at the rate of 7%
per annum above the base rate as varied from time to time by
Barclays Bank plc, and thereafter at 10% per annum.
Under the terms of the Loan Agreement, if the Subscription does
not proceed, or if the subscription price is not agreed between the
Company and Lord Ashcroft by 31 July 2018, the loan and interest
will become repayable on demand subject to such repayment not being
in breach of the Company's existing banking facilities or if such
repayment caused the Company to be unable to meet its creditors as
they fall due.
The Group's bank loan of GBP2,025,000 is due for repayment in
full in September 2018. While discussions with the bank are
ongoing, as at the date of signing these financial statements, no
extension to the loan agreement or refinancing had been agreed.
In the event that the bank was not prepared to refinance this
secured debt, or if further funding could not be obtained, Lord
Ashcroft KCMG PC has confirmed that he would be prepared to provide
secured debt funding for a period of at least 12 months to replace
Gusbourne PLC's secured bank debt on terms to be agreed.
The Director's 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 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 to aid the future growth of the business and have
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:
The IASB has issued no new standards, amendments to published
standards and interpretations to existing standards with effective
dates on or prior to 1 January 2017 which have a material effect on
the Group, although an amendment to IAS 7 Statement of Cash Flows
has resulted in a reconciliation of liabilities.
ii. Standards, amendments and interpretations to existing
standards that are not yet effective and have not been early
adopted by the Group:
-- IFRS 16 Leases
-- IFRS 9 Financial Instruments
-- IFRS 15 Revenue from Contracts with Customers
-- IFRS 2 (amended) Classification and Measurement of Share
The only standards which are anticipated to be significant or
relevant to the Group are:
IFRS 15 Revenue from Contracts with Customers
The Group has assessed its current revenue recognition policy
under IFRS 15. Based on existing terms of sale, the Group does not
currently foresee any significant change to the timing of revenue
recognition on sales under IFRS 15.
IFRS 16 Leases
The Group has entered into a number of long term leases in
respect of land and buildings in West Sussex. The Group has planted
vineyards on the leased land. The leases have a remaining life of
45 years. The Group has assessed the leases under IFRS 16 and
expects an impact as the right of use assets and lease liabilities
will come onto the consolidated statement of financial position for
the first time in respect of its current operating leases. The
Group have performed a quantitative assessment based on the current
leases in place and envisage that a right of use asset and
associated lease liability of c.GBP0.9m will be recognised on
adoption of IFRS 16. The Group does not currently expect any
material impact on profit before tax, however, it is noted that the
expense will be split between depreciation and the interest
expense.
IFRS 9 Financial Instruments
IFRS 9 "Financial instruments" is designed to simplify the
classification and measurement of financial assets and financial
liabilities. IFRS 9 defines three measurement categories for
financial assets: amortised cost, fair value through other
comprehensive income (OCI) and fair value through profit or
loss.
Classification depends on the entity's business model and the
contractual cash flow of the financial asset. Investments in equity
instruments are required to be measured at fair value through
profit or loss with the irrevocable option at inception to present
changes in fair value in OCI. A new model for recognizing
provisions based on expected credit losses has been introduced
which replaces the incurred loss impairment model used in IAS 39.
Given the financial instruments currently in place, the Group does
not expect the adoption of IFRS 9 to have a material impact on the
Group financial statements. The Company has a loan to the 100%
owned subsidiary, which is the main operating entity.
Management are still undertaking a full assessment but do not
expect there to be any material impact as, in line with the future
long term profitability of the Company, there is currently no
reason to expect a loss from this loan.
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.
Revenue from vineyard tours and tastings is recognised on the
date on which the tour or tasting takes place.
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 into a fixed number of shares 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.
Deep discount bonds
Deep discount bonds are redeemable at their nominal price at
maturity. The discount is charged over the life of the bond to the
statement of comprehensive income and included within finance
expenses.
Warrants
Warrants are accounted for as a derivative financial liability
measured on inception at fair value through profit or loss. Details
of Warrants are shown in note 9.
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 accumulated
cost is transferred to mature vineyards and depreciated over the
expected useful economic life of the vineyard. Vineyard
establishment is not depreciated.
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:
4% per annum straight
line
5-25% per annum straight
Freehold buildings line
Plant, machinery and motor 33% per annum straight
vehicles line
Computer equipment 4% per annum straight
Mature vineyards 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
Agricultural produce is accounted for under IAS 41 Agriculture.
Harvesting of the grape crop is ordinarily carried out in October.
Prior to harvest the costs of growing the grapes are carried
forward in inventory. Upon harvest the grapes become agricultural
produce and are therefore measured at fair value less costs to sell
in accordance with IAS 41 with any fair value gain or loss shown in
the consolidated statement of comprehensive income. The fair value
of grapes is determined by reference to estimated market prices at
the time of harvest. 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. This measurement of fair value less costs to sell is
the deemed cost of the grapes that is transferred into inventory
upon harvest.
Under IAS 41, the agricultural produce is also valued at the end
of each reporting period, with any fair value gain or loss shown in
the consolidated statement of comprehensive income.
Bearer plants are accounted for under IAS 16 PPE and are held at
cost.
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, including
operating lease rentals, incurred in bringing the inventories to
their present location and condition. Grapes grown in the Group's
vineyards are included in inventory 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.
Leased assets
Where substantially all of the risks and rewards incidental to
ownership of a leased asset have been transferred to the Group (a
"finance lease"), the asset is treated as if it had been purchased
outright. The amount initially recognised as an asset is the lower
of the fair value of the leased property and the present value of
the minimum lease payments payable over the term of the lease. The
corresponding lease commitment is shown as a liability. Lease
payments are analysed between capital and interest. The interest
element is charged to the consolidated statement of comprehensive
income over the period of the lease and is calculated so that it
represents a constant proportion of the lease liability. The
capital element reduces the balance owed to the lessor.
Where substantially all of the risks and rewards incidental to
ownership are not transferred to the Group (an "operating lease"),
the total rentals payable under the lease are capitalised as part
of inventory on a straight-line basis over the lease term. The
aggregate benefit of lease incentives is recognised as a reduction
of the rental expense over the lease term on a straight-line basis.
During the year GBP74,000 (2016: GBP74,000) in respect of operating
leases was capitalised as part of inventory.
2 Critical accounting policies
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.
Fair value of biological produce
The Group's biological produce is measured at fair value less
costs to sell at the point of harvest. The fair value of grapes is
determined by reference to estimated market prices at the time of
harvest. 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. Refer
to note 6 which provides information on sensitivity analysis around
this.
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. Management does not believe
that any reasonably possible change in a key assumption would
result in an impairment.
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
Deep discount bonds
Trade receivables
Cash and cash equivalents
Finance leases
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
Liquidity risk arises from the Group's management of working
capital and the finance charges and principal repayments on its
debt instruments. It is the risk that the Group will encounter
difficulty in meeting its financial obligations as they fall
due.
The Group's policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they
become due. The liquidity risk of the Group is managed centrally by
the group treasury function. Budgets are set and agreed by the
board in advance, enabling the Group's cash requirements to be
anticipated.
The following table sets out the contractual maturities
(representing undiscounted contractual cash flows) of financial
liabilities:
Up to Between Between Between Over
3 3 and 1 and 2 and 5
At 31 December months 12 months 2 years 5 years years Total
2016 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
===================== ======== ========== ======== ======== ======== ========
Trade and other
payables 195 43 - - - 238
===================== ======== ========== ======== ======== ======== ========
Finance leases 15 44 56 92 - 207
===================== ======== ========== ======== ======== ======== ========
Loans and borrowings 28 83 2,118 79 - 2,308
===================== ======== ========== ======== ======== ======== ========
Deep Discount
Bonds - - - 6,267 - 6,267
===================== ======== ========== ======== ======== ======== ========
Total 238 170 2,174 6,438 - 9,020
--------------------- -------- ---------- -------- -------- -------- --------
Up to Between Between Between Over
3 3 and 1 and 2 and 5
At 31 December months 12 months 2 years 5 years years Total
2017 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
===================== ======== ========== ======== ======== ======== ========
Trade and other
payables 170 188 - - - 358
===================== ======== ========== ======== ======== ======== ========
Finance leases 15 41 53 39 - 148
===================== ======== ========== ======== ======== ======== ========
Loans and borrowings 28 2,090 40 40 - 2,198
===================== ======== ========== ======== ======== ======== ========
Deep Discount
Bonds - - - 3,390 - 3,390
===================== ======== ========== ======== ======== ======== ========
Total 213 2,319 93 3,469 - 6,094
--------------------- -------- ---------- -------- -------- -------- --------
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.
Credit risk also arises from credit exposure to trade customers
included in trade and other receivables. Trade receivable balances
are monitored on an ongoing basis to ensure that the Group's bad
debts are kept to a minimum. The maximum credit risk exposure at 31
December 2017 in respect of trade receivables is GBP165,000 (2016:
GBP120,000).
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 Loss per share
Basic earnings per Ordinary share are based on a loss of
GBP1,638,000 (December 2016: GBP1,528,000) and Ordinary shares
31,169,077 (December 2016: 23,639,762) of 1 pence each (December
2016: 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
2017 (1,638) 31,169,077 (5.26)
Year ended 31 December
2016 (1,528) 23,639,762 (6.46)
5 Property, plant and equipment
Freehold Plant,
Land machinery
and and motor Vineyard Mature Computer
Buildings vehicles establishment Vineyards equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January
2016 5,288 1,268 1,832 1,240 39 9,667
Additions 414 363 338 - 1 1,116
Transfers - - (698) 698 - -
Disposals - (1) - - (3) (4)
--------------- ---------- ---------- -------------- ---------- ---------- --------
At 31 December
2016 5,702 1,630 1,472 1,938 37 10,779
--------------- ---------- ---------- -------------- ---------- ---------- --------
At 1 January
2017 5,702 1,630 1,472 1,938 37 10,779
Additions 1,090 589 86 - 18 1,783
Transfers - - (695) 695 - -
Disposals - (6) - - - (6)
--------------- ---------- ---------- -------------- ---------- ---------- --------
At 31 December
2017 6,792 2,213 863 2,633 55 12,556
--------------- ---------- ---------- -------------- ---------- ---------- --------
Plant,
Freehold Machinery
land and motor Vineyard Mature Computer
and buildings Vehicles establishment vineyards equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Accumulated
depreciation
At 1 January
2016 90 286 - 100 20 496
Depreciation
charge for
the year 69 226 - 54 8 357
Depreciation
on disposals - (1) - - (3) (4)
--------------- -------------- ----------- -------------- ---------- ---------- ---------
At 31 December
2016 159 511 - 154 25 849
--------------- -------------- ----------- -------------- ---------- ---------- ---------
At 1 January
2017 159 511 - 154 25 849
Depreciation
charge for
the year 94 297 - 82 6 479
Depreciation
on disposals - (2) - - - (2)
--------------- -------------- ----------- -------------- ---------- ---------- ---------
At 31 December
2017 253 806 - 236 31 1,326
--------------- -------------- ----------- -------------- ---------- ---------- ---------
Net book value
At 31 December
2016 5,543 1,119 1,472 1,784 12 9,930
--------------- -------------- ----------- -------------- ---------- ---------- ---------
At 31 December
2017 6,539 1,407 863 2,397 24 11,230
--------------- -------------- ----------- -------------- ---------- ---------- ---------
Within property, plant and equipment are assets with a carrying
value of GBP131,000 (2016: GBP191,000) held under finance
leases.
During the year GBP695,000 (2016: GBP698,000) of vineyard
establishment costs were transferred to mature vineyards at
cost.
6 Biological produce
The fair value of biological produce was:
2017 2016
GBP'000 GBP'000
================================== ======== ========
At 1 January - -
================================== ======== ========
Crop growing costs 1,048 488
================================== ======== ========
Fair value of grapes harvested
and transferred
to inventory (1,021) (497)
================================== ======== ========
Fair value movement in biological
produce (27) 9
================================== ======== ========
At 31 December - -
---------------------------------- -------- --------
The fair value of grapes harvested is determined by reference to
estimated market prices less cost to sell at the time of harvest.
The estimated market price for grapes used in respect of the 2017
harvest is GBP2,300 per tonne (2016: GBP2,000 per tonne).
A 10% increase in the estimated market price of grapes to
GBP2,530 per tonne would result in an increase of GBP102,000 in the
fair value of the grapes harvested in the year. A 10% decrease in
the estimated market price of grapes to GBP2,070 per tonne would
result in a decrease of GBP102,000 in the fair value of the grapes
harvested in the year.
A fair value loss of GBP27,000 (2016: GBP9,000 gain) was
recorded during the year and included within the consolidated
statement of comprehensive income. This measurement of fair value
less costs to sell is the deemed cost of the grapes that is
transferred into inventory upon harvest.
7 Inventories
December December
2017 2016
GBP'000 GBP'000
Finished goods 90 96
Work in progress 3,394 2,151
------------------ -------- --------
Total inventories 3,484 2,247
------------------ -------- --------
During the year GBP334,000 (December 2016: GBP381,000) was
transferred to cost of sales.
Prior to harvest, the costs of growing the grapes are included
in inventory.
8 Loans and borrowings
December December
2017 2016
GBP'000 GBP'000
Current liabilities:
Bank loans 2,059 34
--------------------------- -------- --------
2,059 34
--------------------------- -------- --------
Non-current liabilities
Bank loans 68 2,127
Deep Discount Bonds 2,522 4,195
--------------------------- -------- --------
Total loans and borrowings 2,590 6,322
--------------------------- -------- --------
The bank loan of GBP2,025,000 carries interest at an annual 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 GBP6,325,000 (2016: GBP5,390,000) within property, plant and
equipment and a floating charge over all other property and
undertakings.
Other bank loans of GBP102,000 carry a fixed interest rate of 6%
per annum secured against certain items of plant and equipment.
This loan is repayable via monthly instalments over 5 years from
January 2016.
On 2 September 2016 the Company issued a deep discount bond
totalling GBP4,073,034. The bond is secured by a fixed charge over
the Group's land and buildings at Appledore, Kent. The bond is
redeemable on 15 August 2021 and attracts a coupon rate of 9% per
annum which is rolled up annually. The redemption amount of the
deep discount bonds at the time they were issued was
GBP6,266,868.
On 30 June 2017 the Company offered Bondholders the opportunity
to convert their bonds into new Ordinary shares at an Issue price
of 40p. The company announced, on 1 August, that it received final
acceptances of 5,136,662 Conversion Offer Shares, raising
GBP2,055,000 and resulting in a reduction of the final redemption
amount of the deep discount bonds to GBP3,390,000.
Accrued discount of GBP381,000 has been charged to the statement
of comprehensive income during the year.
An analysis of the maturity of loans and borrowings is given
below: -
December December
2017 2016
GBP'000 GBP'000
Bank loans:
Within 1 year 2,059 34
1-2 years 34 2,059
2-5 years 34 68
Deep Discount Bonds:
Within 1 year - -
1-2 years - -
5 years 2,522 4,195
9 Share capital
Ordinary
shares Deferred Ordinary
of 50p shares of shares
each 49p each of 1p each
Number Number Number GBP'000
Issued and
fully paid
At 1 January
2016 23,639,762 - - 11,820
Issued for
cash during
the
year - - - -
At 31
December
2016 23,639,762 - - 11,820
Subdivision
of Ordinary
shares of
50p each (23,639,762) 23,639,762 23,639,762 -
Issued for
cash during
the
period - - 10,506,560 105
Share awards
to
directors - - 84,000 1
Bond
conversion - - 5,136,662 51
At 31
December
2017 - 23,639,762 39,366,984 11,977
On 29 June 2017 each Ordinary share of 50 pence each in the
capital of the Company was divided into one Ordinary share of 1
pence and one Deferred share of 49 pence. The Ordinary shares of 1
pence each have the same rights as the previous Ordinary shares of
50 pence each. The Deferred shares of 49 pence each have no rights
attached to them.
On 29 June 2017 Gusbourne PLC issued, for cash, 10,506,560
ordinary shares of 1 pence each at a price of 40 pence per share.
These shares were fully subscribed and paid up.
On 25 July 2017 Gusbourne PLC issued 42,000 new Ordinary shares
of 1 pence each in the Company to Charlie Holland, Chief Executive
Officer and 42,000 new Ordinary shares of 1 pence each to Jon
Pollard, Chief Operating Officer.
On 1 August 2017 Gusbourne PLC announced it received final
acceptances in respect of 5,136,662 Conversion Offer Shares and
issued Ordinary shares of 1 pence each at a price of 40 pence per
share.
Gusbourne PLC has Warrants to subscribe for 2,036,517 Ordinary
shares of 1 pence each in issue. The Warrants are exercisable at
any time by the Warrantholder with an exercise price of 75 pence
per share. The Warrants are accounted for as a derivative financial
liability measured on inception at fair value through profit or
loss. On inception, the fair value of the warrants was deemed to be
GBPnil and thus no fair value was recognised.
Unexercised Warrants as at 31 December 2017 amount to 2,036,517
Ordinary shares of 1 pence each.
10 Related party transactions
SUSD Limited ("SUSD") provided architectural and project
management services to the Group during the year amounting to
GBPnil (December 2016 - GBP31,300). There was no balance due to
SUSD as at 31 December 2017 (December 2016 - GBPnil). Lord Ashcroft
KCMG PC, the Company's ultimate controlling party, is also the
ultimate controlling party of SUSD.
Deacon Street Partners Limited (formerly Anne Street Partners
Limited) is considered a related party by virtue of the fact that
Lord Ashcroft KCMG PC, the Company's ultimate controlling party, is
also the ultimate controlling party of Deacon Street Partners
Limited. During the year Deacon Street Partners Limited charged the
Company in total GBP139,923 (December 2016 - GBP108,000). Of this,
GBPnil was in relation to directors fees (December 2016 -
GBP10,000) and GBP139,923 relates to management services (December
2016 - GBP98,000). There was GBP18,000 due to Deacon Street
Partners Limited as at 31 December 2017 (December 2016 -
GBPnil).
Devonshire Club Limited is considered a related party by virtue
of the fact that Lord Ashcroft KCMG PC, the Company's ultimate
controlling party, is also the ultimate controlling party of
Devonshire Club Limited. During the year the Company sold wine to
the Devonshire Club Limited amounting to GBP10,534 (December 2016 -
GBP25,918). A balance due from the Devonshire Club Limited of
GBP1,254 (2016: GBP3,138) is shown within trade receivables.
On 2 September 2016 the convertible deep discount bond was
redeemed in full and security was discharged. The redemption price
of the bonds was GBP1,755,000 and was satisfied by the payment, in
cash to Mr Andrew Weeber, of GBP1,155,000 and the subscription by
Mr Weeber in new deep discount bonds amounting to GBP600,000.
On 2 September 2016, the Company issued deep discount bonds with
a subscription price of GBP4,073,034 together with 2,036,517
separable warrants to subscribe for Ordinary shares at an exercise
price of 75 pence per share. On 30 June 2017 the Company offered
Bondholders the opportunity to convert their bonds into new
Ordinary shares at an Issue price of 40p. The company announced, on
1 August, that it received final acceptances of 5,136,662
Conversion Offer Shares, raising GBP2,055,000 and resulting in a
reduction of the final redemption amount of the deep discount bonds
to GBP3,390,000.
Details of related parties who subscribed for the deep discount
bonds and hold warrants are shown in the tables below:-
Deep Discount Bonds
Converted
Subscription Balance Accrued into Ordinary Balance
Price as Accrued Discount as at Discount shares as at
at 2 September to 31 December 31 December to 31 December of 1p 31 December
Name 2016 2016 2016 2017 each 2017
Lord Ashcroft
KCMG PC 2,623,034 78,375 2,701,409 231,373 (1,669,500) 1,263,282
A Weeber 600,000 17,928 617,928 68,764 - 686,692
I Robinson 100,000 2,988 102,988 6,903 (109,891) -
Lord Arbuthnot
PC 10,000 299 10,299 690 (10,989) -
M Paul 10,000 299 10,299 690 (10,989) -
M Clapp 10,000 299 10,299 690 (10,989) -
--------------- --------------- ---------------- ------------ --------------- -------------- ------------
3,353,034 100,188 3,453,222 309,110 (1,812,358) 1,949,974
--------------- --------------- ---------------- ------------ --------------- -------------- ------------
Warrants
Held as at 31 Held as at 31
December December
2016 2017
Name Number Number
Lord Ashcroft KCMG PC 1,311,517 1,311,517
A Weeber 300,000 300,000
I Robinson 50,000 50,000
Lord Arbuthnot PC 5,000 5,000
M Paul 5,000 5,000
M Clapp 5,000 5,000
1,676,517 1,676,517
On 25 July 2017 Gusbourne PLC issued 42,000 new Ordinary shares
of 1 pence each in the Company to Charlie Holland, Chief Executive
Officer and 42,000 new Ordinary shares of 1 pence each to Jon
Pollard, Chief Operating Officer.
On 6 June 2017 a short-term loan from Lord Ashcroft KCMG PC of
GBP1,000,000 was received, which was offset against Lord Ashcroft
KCMG PC's subscription under the Open Offer which completed on 29
June 2017.
11 Subsequent events
On 31 May 2018, the Company announced that it is intended to
arrange a subscription of new Ordinary shares in the Company with
Lord Ashcroft KCMG PC and other investors, which is expected to
proceed by 31 July 2018 (the Subscription). The proceeds from the
Subscription will continue to be applied towards working capital
and capital expenditure in line with the Company's long-term
strategic plan.
In order to meet immediate working capital requirements, the
Company entered into an agreement on 31 May 2018 with Lord Ashcroft
KCMG PC to receive an unsecured loan of GBP1,000,000 (the "Loan
Agreement") which is intended to be repaid in full, through
conversion into new Ordinary shares
as part of the Subscription, when it concludes. The loan carries
interest for a period of 3 months following the date of the loan
agreement at the rate of 7% per annum above the base rate as varied
from time to time by Barclays Bank plc, and thereafter at 10% per
annum.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR DGGDLXBGBGIX
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