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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Gusbourne Plc | LSE:GUS | London | Ordinary Share | GB00B8TS4M09 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 59.00 | 57.00 | 61.00 | 59.00 | 59.00 | 59.00 | 0.00 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Wine,brandy & Brandy Spirits | 6.86M | -2.53M | -0.0415 | -14.22 | 35.9M |
From Apr 2022 to Apr 2024
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
Hot Features
Premium
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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END
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June 06, 2022 02:01 ET (06:01 GMT)
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