TIDMGUS
RNS Number : 6611N
Gusbourne PLC
06 June 2022
6 June 2022
Gusbourne Plc
("Gusbourne", the "Company" or the "Group")
Final Results for the year ended 31 December 2021
The Board of Gusbourne Plc (AIM: GUS) is pleased to announce its
audited results for the year ended 31 December 2021.
2021 Highlights:
-- Net revenue* up by 99% to GBP4.191m (2020: GBP2.109m)
-- A five-year CAGR (compound annual growth rate) in net revenue of 46% (2020: 35%)
-- Significant growth in UK Trade sales as the sector continued
to recover from the prior year effects of COVID-19 with net wine
sales up by 168% (2020: minus 23%)
-- Direct to consumer (DTC) wine sales together with related
tour and tasting events income more than doubled in the year with
105% growth driven by online sales and cellar door operations in
Kent.
-- Significantly strengthened Group balance sheet with a
successful equity fund raising of GBP4.5m** and the conversion and
repayment of all short-term debt amounting to GBP6.2m***.
-- Ongoing success in international and UK wine competitions
with a total of 42 new medals, including twelve golds.
* Net revenue represents Revenue after deducting excise
duties
** before transaction expenses
*** Short-term debt comprised deep discount bonds and a
short-term loan. Further details of these and their conversion and
repayment are shown in note 8.
Chairman's statement
In so many ways, 2021 was the year in which Gusbourne
successfully positioned itself at the forefront of the burgeoning
English wine sector, as we successfully increased overall revenues
faster than at any other time in the Company's history.
Gusbourne's UK Trade sales made a strong recovery to deliver
GBP1.934m (2020: GBP0.721m) of sparkling and still wine sales, we
increased our global footprint to 25 markets, won more than 40
prestigious international awards, and delivered total net revenues
for the year of GBP4.191m (2020: GBP2.109m), an increase of 99%
year on year.
All short-term debt (GBP6.2m) was eliminated from the business
through repayment and conversion to equity in the year, and the
Company successfully raised a further GBP4.5m (before transaction
costs) to support the Company's investment strategy including
further investment in cellar door capacity in Kent and the
expansion of production capacity. We welcomed several key hires
into the Gusbourne family, including our new Global Sales Director,
Simon Bradbury, whose experienced direct sales team continues to
build Gusbourne's presence in the finest hotels, shops and
restaurants around the world.
Direct To Consumer (DTC) sales benefited from further
significant investment in our digital channel and we more than
doubled our DTC wine sales and related visitor centre income from
tours and tastings during the year with a 105% increase in sales
from GBP0.677m to GBP1.389m. We remain fully committed to driving
increasing revenue across a growing range of premium sparkling and
still wines and related experiential services which will help to
further cement the brand's luxury positioning in this market.
We are now planning to further extend our facilities at The Nest
- the company's retail, tour and wine- tasting headquarters in
Appledore, Kent - which remains an invaluable way for us to connect
with new customers and develop existing customer relationships.
Gourmet events in partnership with some of the best restaurants in
the country were a sell-out success in 2021 despite early year
Covid restrictions, and we continue to build our programme of tours
and tastings to cater for an ever-expanding audience while
developing new product offerings to ensure visitors continually
return.
Whilst we plan for continuing growth with a clear sales
strategy, a cellar full of world-class wine, and a deeply
passionate and talented team, we must also acknowledge our valued
customers and shareholders who have shown unwavering support over
many years. We are excited to repay their faith and loyalty as
Gusbourne remains very much on track to meet scale and
profitability targets in the near and medium term.
As ever, my thanks and gratitude to Gusbourne's CEO, Charlie
Holland, who has overseen another year of outstanding growth and
remains one of the most talented and respected winemakers on the
world stage.
Jim Ormonde
Chairman
Chief Executive's review
2021 marked a welcome return to normal trading for English wine,
and I am pleased to report that it has been another successful year
for Gusbourne. Over the past 12 months we have almost doubled our
revenues with Net revenues at GBP4.191m, up by 99% on the prior
year (2020: GBP2.109m 28% increase), as we continue to expand our
customer base across all distribution channels, both here in the UK
and overseas, and further grow the Gusbourne brand, now recognised
as a leading light in the dynamic and fast growing English wine
sector.
Direct to Consumer (DTC) sales, both from wine sales and tour
and tasting events based on our cellar door operations in Kent have
continued to flourish, more than doubling in the year with an
overall growth from this sales channel of 105%.
DTC wine sales grew by 84% and included year on year online
sales which grew by c.69% (2020: c. 400%) reflecting our ongoing
investment in digital marketing through the creation of rich and
engaging content, compelling wine offers and new and exciting
product releases. DTC remains a key strategic direction for
Gusbourne as we continue to develop our online and digital
presence.
DTC sales from tour and tasting events at Gusbourne's successful
cellar door facility in Kent (the Nest), tours and wine tasting
operations, is now in its fifth full year of operation. Situated
amongst our vineyards and winery operations in Kent this facility
offers an immersive experience allowing us to fully engage with our
customers, encouraging them to enjoy the vineyards, visit the
winery and taste our wines in a beautiful setting. Tour and tasting
events income based on our cellar door operations has been
particularly pleasing, more than trebling in the year with a growth
of 240% from GBP0.091m to GBP0.301m. We continue to improve and
expand these services, providing visitors with a unique and
unforgettable experience.
UK Trade continued its recovery from the effects of Covid during
2020 and, despite restrictions still impacting the first quarter of
2021, we achieved significant growth in this sector with UK Trade
net sales up by 168% (2020: minus 23%)
Our wines are now distributed to 25 countries around the world
as we grow the Gusbourne brand globally. International sales have
continued to thrive growing by 23% (2020: 117%). Continued
investment in sales and marketing has enabled us to develop and
grow existing markets and expand into exciting new territories with
significant growth potential.
Activities
Gusbourne's vintage English sparkling wines are positioned at
the top tier of the English sparkling wine market and we are
committed to maintaining that premium position, which reflects the
quality of our products and their luxury status. We are one of
England's most awarded producers and continue to win prestigious
awards at some of the world's most discerning wine
competitions.
The Gusbourne business was founded in 2004 by Andrew Weeber with
the first vineyard plantings at Appledore in Kent. The first wines
were released in 2010 to critical acclaim. Following additional
vineyard plantings in 2013 and 2015 in both Kent and West Sussex,
Gusbourne now has 231 acres of mature vineyards. The Nest visitor
centre was opened next to the winery in Appledore in 2017,
providing tours, tastings and a direct outlet for our wines.
Right from the beginning, Gusbourne's intention has always been
to produce the finest English sparkling wines. Starting with
carefully chosen sites, we use best practice in establishing and
maintaining the vineyards and conduct green harvests to ensure we
achieve the highest quality grapes for each vintage. A quest for
excellence is at the heart of everything we do. We blind taste
hundreds of components before finalising our blends and even after
the wines are bottled, they spend extended time on their lees to
add depth and flavour. Once disgorged, extra cork ageing further
enhances complexity. Our winemaking process remains traditional,
but one that is open to innovation where appropriate. It takes four
years to bring a vineyard into full production and a further four
years to transform those grapes into Gusbourne's premium sparkling
wine.
We also produce a range of premium vintage English still wines
which continue to win prestigious international awards
Recent awards
We have continued our success in major wine competitions winning
over 42 medals at national and international competitions,
including twelve gold medals, where we are judged against some of
the finest wines from around the world. Particular highlights
include a platinum medal at the Decanter World Wine Awards, the
Judges Selection Medal in the prestigious Texsom awards in the
United States in May, and trophies for 'Best Chardonnay' and
'Winery of the Year' at the WineGB awards in September.
Group vision and growth strategy
The Group's vision is to continue to produce premium quality
vintage wines from grapes grown in its own vineyards and to promote
Gusbourne as a luxury brand which is reflected by the premium
quality and premium market positioning of its products. The Group's
growth strategy is to:
-- Support the continuing strong growth in DTC sales with online
sales and marketing investment, and offline with planned further
investment in Gusbourne's cellar door operations. These operations
enable us to meet our customers in person and showcase our
operations and products on site, whilst promoting a closer and more
direct relationship with our customers which is a strategic
objective of our growth strategy
-- Invest in the further growth of UK Trade and International sales
-- Maintain and further develop the Gusbourne brand's luxury
status and ensure that the Group's premium quality and premium
market positioning of its products are maintained as a key part of
this growth strategy
-- Continue to innovate in all areas of the business including
planned new product development in respect of Gusbourne's vintage
premium wines
2021 Harvest
The 2021 harvest at Gusbourne was a challenging one and saw the
harvest finish on 4 November which was the latest harvest finish
for Gusbourne since 2013. Yield was down compared to previous years
which was in line with the industry generally and was reflective of
the challenging weather conditions during the growing season, in
particular cool weather and lack of sunshine in June/July which
inhibited flowering.
In accordance with our strict parameters to only produce the
best wines, rigorous selection of the best fruit from our
self-imposed detailed-focused techniques in the vineyards, the team
began choosing the best quality fruit during the green harvest
towards the later part of the growing season. This was followed by
rigorously selecting only the finest fruit from each vine during
harvest, which ultimately ensured that all of the grapes, which
were chosen for pressing, were suitably rich, ripe and pure.
Desired levels of natural sugar and acidity were present across all
three varieties that Gusbourne grow - Chardonnay, Pinot Noir and
Pinot Meunier. Despite less favourable weather conditions during
the growing season the team were able to pick a healthy and ripe
crop.
The resulting wine production has added further to our inventory
levels for sale in future years. Early indications of the resulting
wine quality are high.
Results for the year
Net revenue for the year amounted to GBP4.191m (2020:
GBP2.109m), an increase of 99% over the prior year. This reflects
continuing like for like growth in the sale of Gusbourne wines
since 2013 and a 5-year compound annual growth rate of 46%.
Gross profit represents net revenue less cost of sales (cost of
wine sold and direct selling costs). Over the last 5 years the
gross profit margin has increased from 34% in 2016 to 56% in 2021
(2020: 58%) reflecting economies of scale in respect of the Group's
increased production volumes and a shift in distribution mix in
recent years to DTC sales. The reduction in gross margin in 2021
compared with 2020 reflects the strong recovery of UK Trade sales
in that mix.
Operating expenses of GBP4.396m (2020: GBP3.198m), included
depreciation of GBP0.600m (2020: GBP0.647m) as well as planned
increased expenditure on sales and marketing costs of GBP2.460m
(2020: GBP1.478m) reflecting continuing investment in the growth of
the business and its sales beyond the current financial year. Sales
and marketing costs, which are largely discretionary, continue to
represent a relatively high proportion of net revenues during this
planned growth phase of the business but are now declining as a
percentage of net revenue from a peak of 84% in 2019 to 59% in
2021.
Adjusted EBITDA before fair value movement in biological
produce, interest, tax, depreciation and amortisation) for the year
was a loss of GBP1.452m (2020: GBP1.321m loss). The operating loss
for the year after depreciation and amortisation was GBP2.756m
(2020: GBP2.189m loss). The loss before tax was GBP3.573m
(2020:
GBP3.066m loss) after net finance costs of GBP0.817m (2020:
GBP0.877m). Finance costs are expected to reduce in 2022 following
the restructuring of the balance sheet in 2021. These adjusted
EBITDA losses continue to be in line with expectations and the
long-term growth strategy of the Group is intended for adjusted
EBITDA to become positive within the coming years.
Balance Sheet
The Group's balance sheet reflects the long-term nature of the
sparkling wine industry. The production of premium quality wine
from new vineyards is, by its very nature, a long-term project of
at least ten years. It takes around two years to select and prepare
optimal vineyard sites and order the appropriate vines for
planting. It takes a further four years from planting to bring a
vineyard into full production and a further four years to transform
these grapes into Gusbourne's premium sparkling wine. This requires
capital expenditure on vineyards and related property, plant and
equipment as well as significant working capital to support
inventories over the long production cycle.
The total assets employed in the business at 31 December 2021
was GBP27.305m (2020: GBP23.525m) represented by:
-- 362 acres of Freehold land and buildings of GBP6.134m (2020:
GBP6.263m) - with buildings at cost less depreciation.
-- 231 acres of mature vineyards of GBP2.858m (2020: GBP3.004m) - at cost less depreciation
-- Plant, machinery and other equipment of GBP1,375m (2020:
GBP1.504m) - at cost less depreciation
-- Right of use assets (under IFRS 16) of GBP1.976m (2020: GBP2.022m).
-- Inventories at 31 December 2021 at the lower of cost and net
realisable value amounted to GBP10.638m (2020: GBP9.325m). These
inventories represent wine in its various stages of production from
wine in tank from the last harvest to the finished products which
take around four years to produce from the time of harvest. These
additional four years reflect the time it takes to transform our
high-quality grapes into Gusbourne's premium sparkling wine. An
important point to note is that these wine inventories already
include the wine (at its various stages of production) to support
sales planned for the next four years. The anticipated underlying
surplus of net realisable value over the cost of these wine
inventories, which is not reflected in these accounts, will become
an increasingly significant factor of the Group's asset base as
these inventories continue to grow.
-- Other working capital of GBP0.189m (2020: GBP0.138m)
-- Cash of GBP3.128m (2020: GBP0.262m)
-- Intangible assets of GBP1.007m (2020: GBP1.007m) arose on the
acquisition of the Gusbourne Estate business on 27 September 2013.
Intangible assets, which includes the Gusbourne brand itself,
remain unimpaired at their historical amount and in accordance with
the relevant accounting standards. No account has been taken with
regards to any potential fair value uplift that may be
appropriate.
Financing
At 31 December 2021 the Group's total assets of GBP27.305m
(2020: GBP23.525m) were financed by:
-- Shareholder's equity of GBP15.885m (2020: GBP9.128m)
-- Long term secured debt from PNC of GBP9.326m (2020:
GBP6.613m). The PNC facilities are provided on a revolving basis
over a minimum period of 5 years from June 2020 and allow flexible
drawdown and repayments in line with the Company's working capital
requirements. The interest rate is at the annual rate of 2.75 per
cent (2020: 3.00 per cent) over the Bank of England Base Rate.
-- Lease liabilities under IFRS 16 of GBP2.094m (2020: GBP2.108m).
-- Short term secured debt of GBPnil (2020: GBP5.676m). On 29
October 2021 the Company's short-term debt was repaid or converted
into equity.
During Q4 2021 the Group completed a number of financing
transactions to achieve two main objectives. Firstly, to raise new
cash funding to support the ongoing business growth and development
of Gusbourne, and secondly to eliminate short-term debt from the
Company's balance sheet.
The transactions which were completed in Q4 2021 comprised:
-- On 18 October 2021, the Company's largest shareholder, Belize
Finance Limited ("BFL"), a related party of Lord Ashcroft,
exercised all its outstanding warrants to subscribe for ordinary
shares of 1 pence each in the Company. Pursuant to the exercise of
the BFL Warrants, BFL subscribed for 1,311,517 Ordinary Shares at
75p per Ordinary Share.
-- Following this exercise, other warrant holders held
outstanding warrants to subscribe for a further 707,500 Ordinary
Shares. At close of business on 29 October 2021, other Warrant
holders, including certain directors, had exercised 307,500
warrants to subscribe for 307,500 Ordinary Shares at 75p per
Ordinary Share.
-- On 18 October 2021 Gusbourne PLC issued, for cash, 3,493,329
new ordinary shares of 1 pence each at a price of 75 pence per
share. These shares were fully subscribed and paid up.
-- On 29 October 2021 BFL converted its interest in the DDBs
into Ordinary Shares at 75p per Ordinary Share. BFL has converted
its DDBs into 2,838,765 Ordinary Shares at the 75p per Ordinary
Share in respect of money owed for the 2020 DDB and 2,306,314
Ordinary Shares at the 75p per Ordinary Share in respect of money
owed for the 2016 DDB.
-- On 29 October 2021 the sole holder of the short-term loan
Franove, a related party of Paul Bentham, a director of the
Company, converted its short-term loan amounting to GBP610,445 into
813,926 Ordinary Shares at the 75p per Ordinary Share.
-- On 29 October 2021, following an invitation to all other
holders of DDBs to convert amounts owed to them by the Company via
the DDBs into Ordinary Shares, other holders of DDBs amounting to
GBP373,177 converted their DDBs into 497,568 Ordinary Shares at the
75p per Ordinary Share. The remaining DDBs amounting to
GBP1,218,573 were repaid.
-- On 16 December 2021 Gusbourne PLC issued, for cash, 2,666,667
new ordinary shares of 1 pence each at a price of 75 pence per
share under the terms of an Open Offer announced on 22 November
2021. These shares were fully subscribed and paid up.
These transactions raised total cash funding, before transaction
expenses, of GBP4,484,437 and eliminated the Group's short-term
debt which amounted to GBP6,192,000. These transactions have also
broadened the Company's shareholder base.
On 17 December 2021, following the completion of the above
transactions the Company issued transferrable one-year warrants to
subscribe for 4,002,259 Ordinary Shares at 75p per Ordinary Share
to all Shareholders on the register on 16 December 2021. The
Warrants have a final exercise date of 16 December 2022.
Current trading and outlook
Net revenue of the Company continues to demonstrate strong year
on year growth in line with management forecasts. The Company is
mindful of the inflationary pressures that are being seen across
all areas of the business as a result of an uncertain political and
economic environment generally, but believe it is in a position to
mitigate these pressures through its sales and product strategies
and increased business efficiencies through scale and careful cost
management.
The continued success of the business is a testament to the hard
work of the Gusbourne team. Their dynamism, enthusiasm and
dedication are the foundation of our business and, as always,
greatly appreciated.
Charlie Holland
Chief Executive
Key Performance Indicators
Net revenue and adjusted EBITDA - 5 year summary
Years ended 2017 2018 2019 2020 2021
31 December GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net revenue* 998 1,261 1,653 2,109 4,191
Cost of sales (381) (560) (735) (879) (1,847)
Gross profit 617 701 918 1,230 2,344
Sales and
marketing
expenses (560) (914) (1,389) (1,478) (2,460)
Administration
expenses ** (720) (694) (814) (1,073) (1,336)
Adjusted
EBITDA (loss)/profit*** (663) (907) (1,285) (1,321) (1,452)
Fair value
movement in
biological
produce (27) 125 (172) (221) (704)
EBITDA**** (690) (782) (1,457) (1,542) (2,156)
Net revenue
annual growth
% 55.9% 26.4% 31.1% 27.6% 98.7%
Net revenue 5 year CAGR 30.7% 34.8% 45.6%
Gross profit
% 61.8% 55.6% 55.5% 58.3% 55.9%
* Net revenue represents Revenue after deducting excise duties
** Excluding depreciation
** Adjusted EBITDA means profit from operations/(loss from operations)
before fair value movement in biological produce, interest, tax, depreciation
and amortisation
**** EBITDA means profit from operations/(loss from operations) before
interest, tax, depreciation and amortisation.
Net revenue by distribution channel - 5 year summary
Years ended 31 December 2017 2018 2019 2020 2021 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 % Growth % Growth
======================== ======== ======== ======== ======== ======== ========= =========
Net revenue
Direct to Consumer
(DTC) 74 144 299 586 1,080 84.3 96.0
======================== ======== ======== ======== ======== ======== ========= =========
UK Trade 607 827 934 721 1,934 168.2 (22.8)
======================== ======== ======== ======== ======== ======== ========= =========
International 251 179 292 634 781 23.2 117.1
======================== ======== ======== ======== ======== ======== ========= =========
Net wine sales 932 1,150 1,525 1,941 3,795 95.5 27.3
======================== ======== ======== ======== ======== ======== ========= =========
Other Income * 66 111 128 168 396 135.7 31.3
======================== ======== ======== ======== ======== ======== ========= =========
Total net revenue 998 1,261 1,653 2,109 4,191 98.7 27.6
======================== ======== ======== ======== ======== ======== ========= =========
Percentages of net wine sales
Direct to Consumer
( DTC) 7.9% 12.5% 19.6% 30.2% 28.5%
======================== ======== ======== ======== ======== ======== ========= =========
UK Trade 65.1% 71.9% 61.2% 37.1% 51.0%
======================== ======== ======== ======== ======== ======== ========= =========
International 26.9% 15.6% 19.1% 32.7% 20.6%
======================== ======== ======== ======== ======== ======== ========= =========
Total 100.0% 100.0% 100.0% 100.0% 100.0%
======================== ======== ======== ======== ======== ======== ========= =========
*Number for 2021 includes tour and related income of GBP309,000
(2020: GBP91,000)
Balance Sheet assets* - 5 year summary
Years ended 2017 2018 2019 2020 2021
31 December GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Assets
Freehold land
and buildings 6,539 6,488 6,383 6,263 6,134
Right of use
assets** - - 2,068 2,022 1,976
Vineyards 3,260 3,289 3,144 3,004 2,858
Plant, machinery
and other
equipment 1,431 1,757 1,636 1,504 1,375
Other receivables 97 90 38 32
Total non
current assets 11,230 11,631 13,321 12,831 12,375
Inventories 3,484 5,282 7,463 9,325 10,638
Trade and
other receivables 281 496 707 869 1,275
Trade and
other payables (358) (483) (752) (769) (1,118)
Working capital 3,407 5,295 7,418 9,425 10,795
Total operating
assets 14,637 16,926 20,739 22,256 23,170
Cash 1,464 1,311 1,009 262 3,128
Goodwill 1,007 1,007 1,007 1,007 1,007
Total assets 17,108 19,244 22,755 23,525 27,305
* Net of trade and other payables
** per IFRS 16
Balance Sheet liabilities and equity*
Years ended 2017 2018 2019 2020 2021
31 December GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Debt
PNC Business Credit
(Asset finance facilities) - - - 6,613 9,326
Other bank
debt 2,256 2,173 2,058 - -
Deep discount
bonds 2,522 2,761 3,001 5,132 -
Short term
debt - - 3,379 544 -
Lease liabilities** - - 2,123 2,108 2,094
Total debt 4,778 4,934 10,561 14,397 11,420
Equity 12,330 14,310 12,194 9,128 15,885
Total liabilities
and equity 17,108 19,244 22,755 23,525 27,305
* Excluding trade and other payables
** per IFRS 16
Annual General Meeting
The Company's annual report and accounts for the year ended 31
December 2021 will be posted to shareholders on Tuesday 7 June
2022, together with notice of the Annual General Meeting to be held
at 11am on Thursday 30 June 2022 at the offices of Fieldfisher LLP
at Riverbank House, 2 Swan Lane, London EC4R 3TT.
Enquiries:
Gusbourne Plc
Charlie Holland +44 (0)12 3375 8666
Canaccord Genuity Limited (Nomad and Joint Broker)
Andrew Potts +44 (0)20 7523 8000
Bobbie Hilliam
Georgina McCooke
Panmure Gordon (UK) Limited (Joint Broker)
Oliver Cardigan + 44 (0)20 7886 2500
Hugh Rich
Ailsa MacMaster
Note: This and other press releases are available at the
Company's website: www.gusbourneplc.com
Note to Editors
Gusbourne produces and distributes a range of high quality and
award winning vintage English sparkling wines from grapes grown in
its own vineyards in Kent and West Sussex.
The Gusbourne business was founded by Andrew Weeber in 2004 with
the first vineyard plantings at Appledore in Kent. The first wines
were released in 2010 to critical acclaim. Following additional
vineyard plantings in 2013 and 2015 in both Kent and West Sussex,
Gusbourne now has 231 acres of mature vineyards. The NEST visitor
centre was opened next to the winery in Appledore in 2017,
providing tours, tastings and a direct outlet for our wines.
Right from the beginning, Gusbourne's intention has always been
to produce the finest English sparkling wines. Starting with
carefully chosen sites, we use best practice in establishing and
maintaining the vineyards and conduct green harvests to ensure we
achieve the highest quality grapes for each vintage. A quest for
excellence is at the heart of everything we do. We blind taste
hundreds of samples before finalising our blends and even after the
wines are bottled, they spend extended time on their lees to add
depth and flavour. Once disgorged, extra cork ageing further
enhances complexity. Our winemaking process remains traditional,
but one that is open to innovation where appropriate. It takes four
years to bring a vineyard into full production and a further four
years to transform those grapes into Gusbourne's premium sparkling
wine.
We are one of England's most awarded wine producers. Highlights
include:
-- Three times winner of the International Wine & Spirits
Challenge (IWSC) English Wine Producer of the Year, having won the
award in 2013, 2015 and 2017- a unique achievement
-- Winner of 'Winery of the Year' at the 2021 WineGB Competition
-- Highest rated English sparkling wine by the Wine Enthusiast in 2020
-- Trophy for best English Still Red Wine at Wine GB awards 2018-2020
-- Best in Class trophies at the Champagne & Sparkling World
Championships in both 2018 and 2019
-- 'Best English Sparkling Wine' as well as overall 'IWC China
Champion Sparkling Wine 2019' at the International Wine Challenge
held in Shanghai
Gusbourne's luxury brand enjoys premium price positioning, and
its wines are distributed in some of the finest establishments both
in the UK and abroad. Our wines can be found in leading luxury
retailers, restaurants, hotels and stockists, always being aware
that where we are says a lot about who we are.
This announcement contains inside information for the purposes
of article 7 of the Market Abuse Regulation (EU) 596/2014 as
amended by regulation 11 of the Market Abuse (Amendment) (EU Exit)
Regulations 2019/310. With the publication of this announcement,
this information is now considered to be in the public domain.
Consolidated statement of comprehensive income for the year
ended 31 December 2021
Year ended Year ended
============================================
31 December 31 December
2021 2020
Note GBP'000 GBP'000
============================================ ==== =========== ===========
Revenue 4,613 2,294
============================================ ==== =========== ===========
Excise duties (422) (185)
============================================ ==== =========== ===========
Net revenue 4,191 2,109
============================================ ==== =========== ===========
Cost of sales (1,847) (879)
============================================ ==== =========== ===========
Gross profit 2,344 1,230
============================================ ==== =========== ===========
Fair value movement in biological produce (704) (221)
============================================ ==== =========== ===========
Administrative expenses (4,396) (3,198)
============================================ ==== =========== ===========
Loss from operations (2,756) (2,189)
============================================ ==== =========== ===========
Finance expenses (817) (877)
============================================ ==== =========== ===========
Loss before tax (3,573) (3,066)
============================================ ==== =========== ===========
Tax expense - -
============================================ ==== =========== ===========
Loss and total comprehensive for the year
attributable to owners of the parent (3,573) (3,066)
============================================ ==== =========== ===========
Loss per share attributable to the ordinary
equity holders of the parent:
============================================ ==== =========== ===========
Basic (pence) 4 (7.29) (6.60)
============================================ ==== =========== ===========
Diluted (pence) 4 (7.29) (6.60)
============================================ ==== =========== ===========
Consolidated statement of financial position at 31 December
2021
31 December 31 December
2021 2020
Note GBP'000 GBP'000
============================== ====== =========== ===========
Assets
============================== ====== =========== ===========
Non-current assets
============================== ====== =========== ===========
Intangibles 1,007 1,007
============================== ====== =========== ===========
Property, plant and equipment 5 12,343 12,793
============================== ====== =========== ===========
Other receivables 32 38
============================== ====== =========== ===========
13,382 13,838
============================== ====== =========== ===========
Current assets
============================== ====== =========== ===========
Biological Produce 6 - -
============================== ====== =========== ===========
Inventories 7 10,638 9,325
============================== ====== =========== ===========
Trade and other receivables 1,275 869
============================== ====== =========== ===========
Cash and cash equivalents 3,128 262
============================== ====== =========== ===========
15,041 10,456
============================== ====== =========== ===========
Total assets 28,423 24,294
============================== ====== =========== ===========
Liabilities
============================== ====== =========== ===========
Current liabilities
============================== ====== =========== ===========
Trade and other payables (1,118) (769)
============================== ====== =========== ===========
Loans and borrowings 8 - (5,676)
============================== ====== =========== ===========
Lease liabilities 9 (89) (92)
============================== ====== =========== ===========
(1,207) (6,537)
============================== ====== =========== ===========
Non-current liabilities
============================== ====== =========== ===========
Loans and borrowings 8 (9,326) (6,613)
============================== ====== =========== ===========
Lease liabilities 9 (2,005) (2,016)
============================== ====== =========== ===========
(11,331) (8,629)
============================== ====== =========== ===========
Total liabilities (12,538) (15,166)
============================== ====== =========== ===========
Net assets 15,885 9,128
============================== ====== =========== ===========
Issued capital and reserves attributable to owners of the parent
=======================================================================
Share capital 10 12,090 12,048
================================= ==== ============== ==============
Share premium 21,103 10,915
================================= ==== ============== ==============
Merger reserve (13) (13)
================================= ==== ============== ==============
Retained earnings (17,395) (13,822)
================================= ==== ============== ==============
Total equity 15,885 9,128
================================= ==== ============== ==============
Consolidated statement of cash flows for the year ended 31
December 2021
31 December 31 December
2021 2020
Note GBP'000 GBP'000
============================================== ====== =========== ===========
Cash flows from operating activities
============================================== ====== =========== ===========
Loss for the year before tax (3,573) (3,066)
============================================== ====== =========== ===========
Adjustments for:
============================================== ====== =========== ===========
Depreciation of property, plant and equipment 5 599 647
============================================== ====== =========== ===========
Finance expense 817 877
============================================== ====== =========== ===========
Fair value movement in biological produce 6 704 221
============================================== ====== =========== ===========
(Increase) in trade and other receivables (318) (143)
============================================== ====== =========== ===========
Increase in inventories (1,886) (1,978)
============================================== ====== =========== ===========
Increase in trade and other payables 349 17
============================================== ====== =========== ===========
Cash outflow from operations (3,308) (3,425)
============================================== ====== =========== ===========
Investing activities
============================================== ====== =========== ===========
Purchases of property, plant and equipment,
excluding vineyard establishment 5 (195) (254)
============================================== ====== =========== ===========
Net cash from investing activities (195) (254)
============================================== ====== =========== ===========
Financing activities
============================================== ====== =========== ===========
Capital loan repayments (2,944) (3,253)
============================================== ====== =========== ===========
New loans issued 5,584 6,796
============================================== ====== =========== ===========
Repayment of lease liabilities (99) (142)
============================================== ====== =========== ===========
Interest paid (289) (281)
============================================== ====== =========== ===========
Loan issue costs (20) (188)
============================================== ====== =========== ===========
Issue of ordinary shares 10 5,715 -
============================================== ====== =========== ===========
Share issue expense (359) -
============================================== ====== =========== ===========
Repayment of deep discount bonds (1,219) -
============================================== ====== =========== ===========
Net cash from financing activities 6,369 2,932
============================================== ====== =========== ===========
Net increase/(decrease) in cash and
cash equivalents 2,866 (747)
============================================== ====== =========== ===========
Cash and cash equivalents at the beginning
of the year 262 1,009
============================================== ====== =========== ===========
Cash and cash equivalents at the end
of the year 3,128 262
============================================== ====== =========== ===========
Consolidated statement of changes in equity for the year ended
31 December 2021
Total attributable
to equity
holders of
Share Share premium Merger Retained parent
capital GBP'000 reserve earnings GBP'000
GBP'000 GBP'000 GBP'000
======================= =========== =============== ========= ============ ===================
1 January 2020 12,048 10,915 (13) (10,756) 12,194
======================= =========== =============== ========= ============ ===================
Comprehensive loss for
the year - - - (3,066) (3,066)
======================= =========== =============== ========= ============ ===================
31 December 2020 12,048 10,915 (13) (13,822) 9,128
======================= =========== =============== ========= ============ ===================
1 January 2021 12,048 10,915 (13) (13,822) 9,128
==================== ====== ====== ===== ========== =========
Comprehensive loss
for the year - - - (3,573) (3,573)
==================== ====== ====== ===== ========== =========
Share issue 142 10,547 - - 10,689
===================== ===== ======= ======== ====== =========
Share issue expenses - (359) - - (359)
===================== ===== ======= ======== ====== =========
31 December 2021 12,190 21,103 (13) (17,395) 15,885
==================== ====== ====== ===== ========== =========
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 2021 comprise the Company and
its subsidiaries (together referred to as the "Group").
Basis of preparation
The financial information does not constitute the Group's
financial statements for the years ended 31 December 2020 or 31
December 2021 but is derived from those financial statements.
Financial statements for the year ended 31 December 2020 have been
delivered to the Registrar of Companies and those for the year
ended 31 December 2021 will be delivered following the Company's
Annual General Meeting. The auditors' reports on both the 31
December 2020 and 31 December 2021 financial statements were
unqualified and did not contain statements under section 498 (2) or
(3) of the Companies Act 2006. The report for the year ended 31
December 2020 did include a paragraph drawing attention to the
material uncertainty as regards the ability of the entity to
continue as a going concern. The opinion was not modified in
respect of this matter.
The Group's consolidated financial statements and the Company's
financial statements have been prepared in accordance with UK
adopted international accounting standards.
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 consolidated financial statements have been prepared on a
going concern basis in accordance with UK adopted international
accounting standards.
In coming to their conclusion the Directors have considered the
Group's profit and cash flow based on the Group's approved 3 year
plans for the period of at least 12 months from the date these
financial statements were approved. These plans, based on ongoing
discussions with the Group's secured lender, include an assumption
that the Group will continue to be supported by its secured lender
in connection with its current lending facility and be able to
obtain increased facilities from its secured lender in line with
the Group's working capital needs over the coming period. Whilst
the directors are confident that such additional facilities will be
provided, there is no guarantee that such additional lending will
be forthcoming.
The Directors have considered a scenario in which the only cash
available is from existing resources and committed facilities
remains available. As at 31 December 2021 GBP4.16m was available to
the Group represented by cash in hand and at bank of GBP3.13m and
undrawn funds from the Group's asset-based lending facility of
GBP1.03m. Under this scenario the directors have modelled the
impact of certain cost mitigation actions, in relation to variable
and discretionary costs and believe that there are sufficient cost
savings which could be achieved from pausing capital expenditure
plans, reducing sales and marketing and administrative costs to
enable the Group to continue as a going concern for the next 12
months. Under this scenario, the Group could continue to operate
within the available lending facilities and cash held at bank
without the need for an increased lending facility.
In coming to their going concern conclusion, and in the light of
the uncertainty due to current economic conditions, the Directors
have also run various downside "stress test" scenarios. These
scenarios assess the impact of potential worsening economic
conditions on the Group over the next 12 months and in particular a
reduction of 17.5% of gross sales from that included within the
Group 3-year plan. These stress tests indicate the Group can
withstand this ongoing adverse impact on revenues and cashflow for
at least the next 12 months. Under this scenario the directors have
modelled the impact of additional certain cost mitigation actions
to those mentioned in the paragraph above, in relation to variable
and discretionary costs. The directors believe that further
sufficient cost savings could be achieved from reducing sales and
marketing and administrative costs to enable the Group to continue
as a going concern for the next 12 months without any reduction in
the forecasted spend on the winery and vineyard production costs.
Under this scenario, the Group could continue to operate within the
available lending facilities and cash held at bank without the need
for an increased lending facility.
IFRS 16 Leases
The Group has entered into a number of long term leases in
respect of land and buildings in West Sussex on which the Group has
planted vineyards. The leases have a remaining life of 43 and 48
years.
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease term, with
the discount rate determined by reference to the rate inherent in
the lease unless this is not readily determinable, in which case
The Group's incremental borrowing rate on commencement of the lease
is used. Variable lease payments are only included in the
measurement of the lease liability if they depend on an index or
rate. In such cases, the initial measurement of the lease liability
assumes the variable element will remain unchanged throughout the
lease term. Other variable lease payments are expensed in the
period to which they relate.
Right-of-use assets are initially measured at the amount of the
lease liability.
Subsequent to initial measurement lease liabilities increase as
a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use
assets are amortised on a straight-line basis over the remaining
term of the leases. When the Group revises its estimate of the term
of any lease (because, for example, it reassesses the probability
of a lessee extension or termination option being exercised), it
adjusts the carrying amount of the lease liability to reflect the
payments to make over the revised term, which are discounted at the
same discount rate that applied on lease commencement. The carrying
value of lease liabilities is similarly revised when the variable
element of future lease payments dependent on a rate or index is
revised. In both cases an equivalent adjustment is made to the
carrying value of the right-of-use asset, with the revised carrying
amount being amortised over the remaining (revised) lease term.
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
The majority of the group's revenue is derived from selling
goods with revenue recognised at a point in time when control of
the goods has transferred to the customer. This is generally when
the goods are delivered to the customer. However, for export sales,
control might also be transferred when the goods are dispatched by
the Group or delivered either to the port of departure or port of
arrival, depending on specific terms of the contract with a
customer. There is limited judgement needed in identifying the
point control passes: once physical delivery of the products to the
agreed location has occurred, the group no longer has physical
possession, usually will have a present right to payment and
retains none of the significant risks and rewards of the goods in
question.
All of the Group's revenue is derived from fixed price contracts
and therefore the amount of revenue to be earned from each contract
is determined by reference to those fixed prices.
For all contracts there is a fixed unit price for each product
sold. Therefore, there is no judgement involved allocating the
contract price to each unit ordered in such contracts (it is the
number of units multiplied by the fixed unit price for each product
sold). Where a customer orders more than one product line, the
Group is able to determine the split of the total contract price
between each product line by reference to each product's standalone
selling prices (all product lines are capable of being, and are,
sold separately).
Revenue from vineyard tours and tastings is recognised on the
date on which the tour or tasting takes place.
Net revenue is revenue less excise duties. The Group incurs
excise duties in the United Kingdom and is a production tax which
becomes payable once the Group's products are removed from bonded
premises and are not directly related to the value of revenue. It
is not included as a separate item on invoices issued to customers.
Where a customer fails to pay for the Group's products the Group
cannot reclaim the excise duty. The Group therefore recognises
excise duty as a cost of the Group.
Government grants
Government grants are recognised against expenses in the period
in which they are intended to compensate. Grants are only
recognised when there is reasonable assurance that any conditions
attached to the grant will be complied with and that the grant will
be received.
Financial assets
Debt instruments at amortised cost
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. The financial assets meet the SPPI test and are held in
a 'hold to collect' business model and therefore classified at
amortised cost.
Impairment provisions for current and non-current trade
receivables are recognised based on the simplified approach within
IFRS 9 using a provision matrix in the determination of the
lifetime expected credit losses. During this process the
probability of the non-payment of the trade receivables is
assessed. This probability is then multiplied by the amount of the
expected loss arising from default to determine the lifetime
expected credit loss for trade receivables. The historical loss
rates are adjusted for current and forward looking information
relevant to the Group's customers.
For trade receivables, which are reported net, such expected
credit losses are 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.
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 issued to shareholders as part of an equity fund raise
are accounted for as equity instruments. Details of Warrants are
shown in note 10.
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.
The grapes 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 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
depreciation on right of use assets and interest on lease
liabilities, 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
All leases are accounted for by recognising a right-of-use asset
and a lease liability except for leases of low value assets and
leases with an expected full term of 12 months or less.
Lease liabilities are measured at the present value of the
unpaid contractual payments over the expected lease term, with the
discount rate determined by reference to the rate inherent in the
lease unless (as is typically the case) this is not readily
determinable, in which case the Group's incremental borrowing rate
on commencement of the lease is used. On initial recognition, the
carrying value of the lease liability also includes amounts
expected to be payable under any residual value guarantee; the
exercise price of any purchase option granted in favour of the
Group if it is reasonably certain to exercise that option; and any
penalties payable for terminating the lease, if the term of the
lease has been estimated on the basis of termination option being
exercised.
Right-of-use assets are initially measured at the amount of the
lease liability, reduced for any lease incentives received, and
increased for lease payments made at or before commencement of the
lease and initial direct costs incurred.
Subsequent to initial measurement, lease liabilities increase as
a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use
assets are amortised on a straight-line basis over the remaining
term of the lease or over the remaining economic life of the asset
if this is judged to be shorter than the lease term.
When the Group revises its estimate of the term of any lease, it
adjusts the carrying amount of the lease liability to reflect the
payments to make over the revised term, which are discounted at a
revised discount rate that is implicit in the lease for the
remainder of the lease term. The carrying value of lease
liabilities is similarly revised if any variable element of future
lease payments dependent on a rate or index is revised. In both
cases, an equivalent adjustment is made to the carrying value of
the right-of-use asset, with the revised carrying amount being
amortised over the remaining lease term.
Right-of-use assets are reviewed regularly to ensure that the
useful economic life of the asset is still appropriate based on the
usage of the asset. Where the asset has reduced in value the Group
considers the situation on an asset-by-asset basis and either
treats the reduction as an acceleration of depreciation or as an
impairment under IAS 36 'Impairment of Assets'. An acceleration of
depreciation occurs in those cases where there is no opportunity or
intention to utilise the asset before the end of the lease.
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.
There were no areas of judgement in the year. Where estimates
and assumptions have been used these are outlined 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 impairment.
Fair value measurement
A number of assets and liabilities included in the Group's
financial statements require measurement at, and/or disclosure of,
fair value.
The fair value measurement of the Group's financial and
non-financial assets and liabilities utilises market observable
inputs and data as far as possible. Inputs used in determining fair
value measurements are categorised into different levels based on
how observable the inputs used in the valuation technique utilised
are (the 'fair value hierarchy'):
-- Level 1: Quoted prices in active markets for identical items (unadjusted)
-- Level 2: Observable direct or indirect inputs other than Level 1 inputs
-- Level 3: Unobservable inputs (i.e. not derived from market data).
The classification of an item into the above levels is based on
the lowest level of the inputs used that has a significant effect
on the fair value measurement of the item. Transfers of items
between levels are recognised in the period they occur.
-- Biological Produce (Note 6)
For more detailed information in relation to the fair value
measurement of the items above, please refer to the applicable
notes.
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
Deep discount bonds
Other loans
Trade receivables
Cash and cash equivalents
Finance leases
Trade and other payables
In addition, at the Company level: Intercompany loans.
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
3 3 and 1 and 2 and Over 5
At 31 December months 12 months 2 years 5 years years Total
2020 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================== ============= =============== ============= ============= ============= =============
Trade and other
payables 426 288 - - - 714
========================== ============= =============== ============= ============= ============= =============
Loans and borrowings 51 748 205 7,126 - 8,130
========================== ============= =============== ============= ============= ============= =============
Deep discount
bonds - 5,458 - - - 5,458
========================== ============= =============== ============= ============= ============= =============
Lease liabilities 25 75 101 297 4,086 4,584
========================== ============= =============== ============= ============= ============= =============
Total 502 6,569 306 7,423 4,086 18,886
-------------------------- ------------- --------------- ------------- ------------- ------------- -------------
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
2021 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================== ============= =============== ============= ============= ============= =============
Trade and other
payables 788 330 - - - 1,118
========================== ============= =============== ============= ============= ============= =============
Loans and borrowings 71 213 284 10,154 - 10,722
========================== ============= =============== ============= ============= ============= =============
Lease liabilities 25 75 99 297 3,987 4,483
========================== ============= =============== ============= ============= ============= =============
Total 884 618 383 10,451 3,987 16,323
-------------------------- ------------- --------------- ------------- ------------- ------------- -------------
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.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses using a lifetime expected credit loss
provision for trade receivables. The expected loss rates are based
on the Group's historical credit losses experienced over the
three-year period to the period end. Trade receivable balances are
monitored on an ongoing basis to ensure that the Group's bad debts
are kept to a minimum. The maximum trade credit risk exposure at 31
December 2021 in respect of trade receivables is GBP563,000 (2020:
GBP213,000) and due to the prompt payment cycle of these trade
receivables, the expected credit loss is negligible at GBP31,000
(2020: GBP31,000).
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 GBP47,000 (2020:
GBP34,000).
4 Loss per share
Basic earnings per ordinary share are based on a loss of
GBP3,573,000 (December 2020: GBP3,066,000) and ordinary shares
48,989,920 (December 2020: 46,478,619) of 1 pence each, being the
weighted average number of shares in issue during the year.
Weighted
average number Loss per
Loss of Ordinary
GBP'000 shares share pence
--- =========================== ============= ==================== ====================
Year ended 31 December 2021 (3,573) 48,989,920 (7.29)
------------------------------- --------- ------------------- ----------------------
Year ended 31 December 2020 (3,066) 46,478,619 (6.60)
------------------------------- --------- ------------------- ----------------------
Diluted earnings per share are based on a loss of GBP3,573,000
and ordinary shares of 48,989,920 and no dilutive warrant
options.
Loss per
Loss Diluted number Ordinary
GBP'000 of shares share pence
---------------------------- -------- -------------- ------------
Year ended 31 December 2021 (3,573) 48,989,920 (7.29)
---------------------------- -------- -------------- ------------
Year ended 31 December 2020 (3,066) 46,478,619 (6.60)
---------------------------- -------- -------------- ------------
5 Property, plant and equipment
Freehold Plant,
Land machinery Right
and and motor of use Mature Computer
Buildings vehicles asset Vineyards equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January
2020 6,888 3,198 2,114 3,637 90 15,927
---------
Additions 8 234 - - 12 254
Disposals - - - - - -
--------------- ---------- ---------- --------- ---------- ---------- --------
At 31 December
2020 6,896 3,432 2,114 3,637 102 16,181
--------------- ---------- ---------- --------- ---------- ---------- --------
At 1 January
2021 6,896 3,432 2,114 3,637 102 16,181
---------
Additions - 179 - - 16 195
Disposals - - - - - -
--------------- ---------- ---------- --------- ---------- ---------- --------
At 31 December
2021 6,896 3,611 2,114 3,637 118 16,376
--------------- ---------- ---------- --------- ---------- ---------- --------
Plant,
Freehold Machinery Right
land and and motor of use Mature Computer
buildings Vehicles asset vineyards equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Accumulated
depreciation
At 1 January
2020 505 1,594 46 493 58 2,696
---------
Depreciation
charge for
the year 128 362 140 16 692
Depreciation
on disposals - - - - - -
--------------- ---------- ----------- --------- ---------- ---------- ---------
At 31 December
2020 633 1,956 92 633 74 3,388
--------------- ---------- ----------- --------- ---------- ---------- ---------
At 1 January
2021 633 1,956 92 633 74 3,388
---------
Depreciation
charge for
the year 129 313 46 146 11 645
Depreciation
on disposals - - - - - -
--------------- ---------- ----------- --------- ---------- ---------- ---------
At 31 December
2021 762 2,269 138 779 85 4,033
--------------- ---------- ----------- --------- ---------- ---------- ---------
Net book value
At 31 December
2020 6,263 1,476 2,022 3,004 28 12,793
--------------- ---------- ----------- --------- ---------- ---------- ---------
At 31 December
2021 6,134 1,342 1,976 2,858 33 12,343
--------------- ---------- ----------- --------- ---------- ---------- ---------
Right of use assets comprise land leases on which vines have
been planted and property leases from which vineyard operations are
carried out. These assets have been created under IFRS 16 -
Leases.
6 Biological produce
The fair value of biological produce was:
December December
2021 2020
GBP'000 GBP'000
=============================================== ======== ========
At 1 January - -
=============================================== ======== ========
Crop growing costs 1,609 1,421
=============================================== ======== ========
Fair value of grapes harvested and transferred
to inventory (905) (1,200)
=============================================== ======== ========
Fair value movement in biological produce (704) (221)
=============================================== ======== ========
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 2021
harvest is GBP2,500 per tonne (2020: GBP2,300 per tonne).
A 10% increase in the estimated market price of grapes to
GBP2,750 per tonne would result in an increase of GBP90,000 (2020:
GBP136,000) in the fair value of the grapes harvested in the year.
A 10% decrease in the estimated market price of grapes to GBP2,250
per tonne would result in a decrease of GBP90,000 (2020:
GBP126,000) in the fair value of the grapes harvested in the
year.
A fair value loss of GBP709,000 (2020: GBP221,000 loss) 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.
This fair value loss was partly generated by the yields on
harvest being lower than in previous years while there was little
movement in the estimated market price for grapes used to value the
harvest to offset this. The group did not buy or sell grapes in the
current year
7 Inventories
December December
2021 2020
GBP'000 GBP'000
Finished goods 985 687
Work in progress 9,653 8,638
------------------ -------- --------
Total inventories 10,638 9,325
------------------ -------- --------
During the year GBP1,261,000 (December 2020: GBP649,000) was
transferred to cost of sales.
8 Loans and borrowings
December December
2021 2020
GBP'000 GBP'000
Current liabilities:
Other loans - 544
Deep Discount Bonds - 5,132
--------------------------------------- -------- --------
Total current loans and borrowings - 5,676
--------------------------------------- -------- --------
Non-current liabilities
Bank loans 9,468 6,796
Unamortised bank transaction costs (142) (183)
Total non current loans and borrowings 9,326 6,613
--------------------------------------- -------- --------
The bank loan of GBP9,326,000 with PNC Business Credit shown
above is net of transaction costs of GBP142,000 which are being
amortised over the life of the loan.
On 1 June 2020 Gusbourne Estate Ltd entered into an agreement
with PNC Business Credit for up to GBP10,500,000 of asset-based
lending facilities. The PNC facilities are provided on a revolving
basis over a minimum period of 5 years and allow flexible drawdown
and repayments in line with the Company's working capital
requirements. The interest rate is at the annual rate of 2.75 per
cent (2020: 3.00%) over the Bank of England Base Rate. The
facilities are secured by way of first priority charges over the
Company's inventory, receivables and freehold property as well as
an all assets debenture.
On 29 October 2021 Belize Finance Limited ("BFL") converted its
interest in the company's Deep Discount Bonds into Ordinary Shares
at 75p per Ordinary Share . BFL has converted its DDBs into
2,838,765 Ordinary Shares at 75p per Ordinary Share in respect of
money owed for the 2020 DDB, amounting to GBP2,129,074, and
2,306,314 Ordinary Shares at 75p per Ordinary Share in respect of
money owed for the 2016 DDB, amounting to GBP1,729,735.
On 29 October 2021 the sole holder of the short-term loan
Franove, a related party of Paul Bentham, a director of the
Company, converted its short-term loan amounting to GBP610,445 into
813,926 Ordinary Shares at 75p per Ordinary Share on 29 October
2021.
On 29 October 2021, following an invitation to all other holders
of DDBs to convert amounts owed to them by the Company via the DDBs
into Ordinary Shares, other holders of DDBs amounting to GBP373,177
converted their DDBs into 497,568 Ordinary Shares at 75p per
Ordinary Share and used GBP131,250 of DDB proceeds to exercise
175,000 Warrants. The remaining DDBs amounting to GBP1,218,573 have
been repaid, and all short-term debt on the Company's balance sheet
has therefore now been eliminated.
The total Ordinary Shares issued pursuant to the BFL Conversion,
the Franove Conversion and the Other DDBs Conversion amounts to
6,456,573 Ordinary Shares.
The Company did not receive any cash proceeds from the DDBs and
Franove Conversion.
An analysis of the maturity of loans and borrowings is given
below:
December December
2021 2020
GBP'000 GBP'000
====================== ======== ========
Bank and other loans:
====================== ======== ========
Within 1 year - 544
====================== ======== ========
1-2 years - -
====================== ======== ========
2-5 years 9,326 6,613
====================== ======== ========
Deep Discount Bonds:
====================== ======== ========
Within 1 year - 5,132
====================== ======== ========
1-2 years - -
====================== ======== ========
2-5 years - -
====================== ======== ========
9 Lease liability
During the period the Group accounted for six leases under IFRS
16. The lease contracts provide for payments to increase each year
by inflation or at a fixed rate and on others to be reset
periodically to market rental rates. The leases also have
provisions for early termination. The weighted average Incremental
Borrowing Rate used to calculate the lease liability was 4.25%.
Land
GBP'000
================================= ============
Net carrying value - 1 January
2021 2,108
================================= ============
Interest 86
================================= ============
Payments (100)
================================= ============
Net carrying value - 31 December
2021 2,094
================================= ============
December December
2021 2020
GBP'000 GBP'000
=================================== ======== ========
The lease payments under long term
leases liabilities fall due as
follows:
=================================== ======== ========
Current lease liabilities 89 92
=================================== ======== ========
Non current lease liabilities 2,005 2,016
=================================== ======== ========
Total liabilities 2,094 2,108
=================================== ======== ========
During the period an interest charge of GBP86,000 (2020:
GBP85,000) arose on the lease liability in respect of land leases.
This interest cost has been added to growing crop costs on the
basis that the lease liability solely relates to the production of
grapes.
The Groups leases include break clauses. On a case-by-case
basis, the Group will consider whether the absence of a break
clause exposes the Group to excessive risk. Typically factors
considered in deciding to negotiate a break clause include:
-- The length of the lease term;
-- The economic stability of the environment in which the property is located; and
-- Whether the location represents a new area of operations for the Group.
At both 31 December 2021 and 2020 the carrying amounts of lease
liabilities are not reduced by the amount of payments that would be
avoided from exercising break clauses because on both dates it was
considered reasonably certain that the Group would not exercise its
right to exercise any right to break the lease.
10 Share capital
Deferred Ordinary
shares of shares
49p each of 1p each
Number Number GBP'000
Issued and fully paid
At 1 January 2020 23,639,762 46,478,619 12,048
------------------------ ----------- ------------ ---------
Issued in the year - - -
----------------------- ----------- ------------ ---------
At 31 December 2020 23,639,762 46,478,619 12,048
------------------------ ----------- ------------ ---------
Issued in the year - 14,253,086 142
------------------------ ----------- ------------ ---------
At 31 December 2021 23,639,762 60,731,705 12,190
------------------------ ----------- ------------ ---------
The Deferred shares of 49 pence each have no rights attached to
them.
On 18 June 2021 the Company issued 5,000 new ordinary shares of
1p each pursuant to an exercise of Warrants. All Warrants were
exercised at 75p per share.
On 23 July 2021 the Company issued 7,500 new ordinary shares of
1p each pursuant to an exercise of Warrants. All Warrants were
exercised at 75p per share.
On 16 August 2021 the Company issued 5,000 new ordinary shares
of 1p each pursuant to an exercise of Warrants. All Warrants were
exercised at 75p per share.
On 18 October 2021, the Company's largest shareholder, Belize
Finance Limited, a related party of Lord Ashcroft, exercised all
its outstanding warrants to subscribe for ordinary shares of 1
pence each in the Company. Pursuant to the exercise of the BFL
Warrants, BFL subscribed for 1,311,517 Ordinary Shares at 75p per
Ordinary Share.
Following this exercise, other warrant holders held outstanding
warrants to subscribe for a further 707,500 Ordinary Shares. At
close of business on 29 October 2021, other Warrant holders,
including certain directors, had exercised 307,500 warrants to
subscribe for 307,500 Ordinary Shares at 75p per Ordinary Share
.
On 18 October 2021 Gusbourne PLC issued, for cash, 3,493,329 new
ordinary shares of 1 pence each at a price of 75 pence per share.
These shares were fully subscribed and paid up.
On 29 October 2021 BFL converted its interest in the DDBs into
Ordinary Shares at 75p per Ordinary Share . BFL has converted its
DDBs into 2,838,765 Ordinary Shares at 75p per Ordinary Share in
respect of money owed for the 2020 DDB and 2,306,314 Ordinary
Shares at 75p per Ordinary Share in respect of money owed for the
2016 DDB.
On 29 October 2021 the sole holder of the short-term loan
Franove, a related party of Paul Bentham, a director of the
Company, converted its short-term loan amounting to GBP610,445 into
813,926 Ordinary Shares at 75p per Ordinary Share .
On 29 October 2021, following an invitation to all other holders
of DDBs to convert amounts owed to them by the Company via the DDBs
into Ordinary Shares, other holders of DDBs amounting to GBP373,177
converted their DDBs into 497,568 Ordinary Shares at 75p per
Ordinary Share . The remaining DDBs amounting to GBP1,218,573 were
repaid.
On 16 December 2021 Gusbourne PLC issued, for cash, 2,666,667
new ordinary shares of 1 pence each at a price of 75 pence per
share. These shares were fully subscribed and paid up.
On 17 December 2021, following the completion of the above
transactions the Company made a issued transferrable one-year
warrants to subscribe for 4,002,259 Ordinary Shares at 75p per
Ordinary Share to all Shareholders on the register on 16 December
2021, The Warrants have a final exercise date of 16 December 2022.
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 2021 amount to 4,002,259
Ordinary Shares of 1 pence each.
11 Related party transactions
Deacon 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 GBP70,000 (December 2020 -
GBP70,000) in relation to management services. There was GBP22,000
due to Deacon Street Partners Limited as at 31 December 2021
(December 2020 - GBP21,000).
Jaywing PLC is considered a related party by virtue of the fact
that Ian Robinson, a director of Gusbourne PLC is also
Non-Executive Chairman of Jaywing PLC. During the year Jaywing PLC
charged the Company GBP102,000 (December 2020 - GBPNIL) in relation
to marketing services and GBP138,000 in relation to third party
digital advertising. There was GBP8,400 due to Jaywing PLC as at 31
December 2021 (December 2020 - GBPNIL).
On 18 June 2018, the company lent GBP50,000 to a director as an
interest free loan, repayable by instalments from July 2019. The
loan will be repaid in full by May 2024. The balance due from the
director as at 31 December 2021 was GBP38,000 (December 2020 -
GBP44,000).
On 29 October 2021 the sole holder of the short-term loan
Franove, a related party of Paul Bentham, a director of the
Company, converted its short-term loan amounting to GBP610,445 into
813,926 Ordinary Shares at the Issue Price on 29 October 2021.
Details of transactions with related parties in respect of deep
discount bonds and warrants are shown below:-
Balance Accrued Conversion Balance
as at discount into equity Repaid as at
31 December to 29 29 October on 29 31 December
Name 2020 October 2021 October 2021
2021 2021
============== ================= ========= ============= ========== =================
Lord Ashcroft
KCMG PC* 3,515,312 343,497 (3,858,809) - -
============== ================= ========= ============= ========== =================
Andrew Weeber 882,605 57,641 - (940,246) -
============== ================= ========= ============= ========== =================
4,397,917 401,138 (3,858,809) (940,246) -
============== ================= ========= ============= ========== =================
* via Belize Finance Limited, a related party of Lord Ashcroft
KCMG PC
Warrants exercisable at 75 pence each
Exercised
Held as in period Lapsed Issued Held as
at to 29 on 29 on 17 at
31 October October December 31
December 2021 2021 2021 December
Name 2020 Number Number Number 2021
Number Number
================ ========== ================= ============ =============== ==========
Lord Ashcroft
KCMG PC* 1,311,517 (1,311,517) - 2,660,158 2,660,158
================ ========== ================= ============ =============== ==========
Andrew Weeber 300,000 - (300,000) 179,566 179,566
================ ========== ================= ============ =============== ==========
Paul Bentham** - - - 121,083 121,083
================ ========== ================= ============ =============== ==========
Ian Robinson 50,000 (10,000) (40,000) 35,801 35,801
================ ========== ================= ============ =============== ==========
Jim Ormonde - - - 19,788 19,788
================ ========== ================= ============ =============== ==========
Mike Paul 5,000 (5,000) - 10,607 10,607
================ ========== ================= ============ =============== ==========
Lord Arbuthnot
PC 5,000 (5,000) - 7,345 7,345
================ ========== ================= ============ =============== ==========
Matthew Clapp 5,000 - (5,000) 4,816 4,816
================ ========== ================= ============ =============== ==========
Jon Pollard - - - 3,171 3,171
================ ========== ================= ============ =============== ==========
Charlie Holland - - - 2,770 2,770
================ ========== ================= ============ =============== ==========
1,676,517 (1,331,517) (345,000) 3,045,105 3,045,105
================ ========== ================= ============ =============== ==========
* via Belize Finance Limited, a related party of Lord Ashcroft
KCMG PC
**via Franove Holdings Limited, a related party of Paul
Bentham
12 Post balance sheet events
On 2 March 2022, the Group issued 23,970 new ordinary shares of
1 pence each in the capital of the Company ("Ordinary Shares")
pursuant to an exercise of warrants by certain investors in the
Company.
On 29 March 2022, the Group issued 226 new ordinary shares of 1
pence each in the capital of the Company ("Ordinary Shares")
pursuant to an exercise of warrants by certain investors in the
Company.
On 3 May 2022, the Group issued 419 new ordinary shares of 1
pence each in the capital of the Company ("Ordinary Shares")
pursuant to an exercise of warrants by certain investors in the
Company.
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