REG - Gusbourne PLC - Final Results
07/06/2023 07:00
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RNS Number : 8753B Gusbourne PLC 07 June 2023
7 June 2023
Gusbourne Plc
("Gusbourne", the "Company" or the "Group")
Final Results for the year ended 31 December 2022 & Notice of AGM
The Board of Gusbourne Plc (AIM: GUS) is pleased to announce its audited
results for the year ended 31 December 2022.
Continuing strong growth in net revenue, with net revenue up 49% at
£6,243,000, and Adjusted EBITDA loss narrowed to £1,131,000, a 22% reduction
from the prior period.
2022 2021 Change
£'000 £'000 %
Net revenue & adjusted EBITDA
Net revenue ((1)) 6,243 4,191 49%
Gross profit 3,697 2,344 58%
Adjusted EBITDA ((2)) (1,131) (1,452) 22%
Gross profit % 59.2% 55.9%
Statutory results
Net revenue((1)) 6,243 4,191 49%
Gross profit 3,697 2,344 58%
Fair value movement in biological produce (239) (704)
Sales and marketing expenses (3,479) (2,460)
Administrative expenses (1,481) (1,336)
Depreciation (601) (600)
Total Administrative expenses (5,561) (4,396)
Operating profit/(loss) (2,103) (2,756)
Reconciliation of operating profit/(loss) to adjusted EBITDA
Operating profit/(loss) (2,103) (2,756)
Add back;
Depreciation 601 600
Aborted planning and capital expenditure write-off 132 -
Fair value movement in biological produce 239 704
Adjusted EBITDA((2)) (1,131) (1,452)
((1)) Net revenue is revenue reported by the Group after excise duties payable
((2)) Adjusted EBITDA means profit/(loss)from operations before aborted
planning and capital expenditure write-off, fair value movement in biological
produce, interest, tax, depreciation and amortisation.
Highlights of 2022 include:
• Net revenue* up by 49% to £6.24m (2021: £4.19m) with strong
growth across the Group's three main distribution channels:
• UK Trade sales up by 53% (2021: 177%) to £3.06m (2021: £2.00m)
• Direct to consumer ("DTC") net revenue which includes tours and
related cellar door operations in Kent, was up by 29% (2021: 96%)to £1.71m
(2021: £1.32m)
• International sales up by 78% (2021: 23%) to £1.39m (2021:
£0.78m)
• A five-year CAGR (compound annual growth rate) in net revenue of
44% (2021: 46%)
• Gross profit margin at 59.2% (2021: 55.9%)
• Adjusted EBITDA** loss narrowed to £1.13m (2021: £1.45m)
• Acquisition of a further 55 hectares of freehold land for
£1.7m, contiguous with the Group's existing Kent vineyards. The Group is
planning to plant most of this new land with new vineyards in 2024
• £6.0m increase of long term asset backed financing facility
from PNC from £10.5m to £16.5m
• Ongoing success in international and UK wine competitions with a
record number of awards for its wines, including a record number of gold
medals
* Net revenue represents Revenue after deducting excise duties
** Adjusted EBITDA means profit/(loss)from operations before aborted planning
and capital expenditure write-off, fair value movement in biological produce,
interest, tax, depreciation and amortisation.
Charlie Holland, Chief Executive Officer and Chief Winemaker, said:
"I am pleased to report another excellent performance in 2022 where Gusbourne
delivered further significant growth and execution of our strategy. Despite a
challenging macroenvironmental backdrop, we have continued to see significant
consumer demand for Gusbourne wines, reflecting the luxury status of the
Gusbourne brand and the underlying growth of the dynamic English wine sector.
"We have seen strong revenue growth across all our sales channels, both in the
UK and internationally, as the quality of Gusbourne's wines continue to gain
praise and critical recognition, further cementing our excellent reputation.
At the same time, price / mix was a positive driver of our gross margin.
"With these strong results, a fantastic harvest in 2022, the purchase of new
land during the year and healthy inventory levels in our cellars, the Board
continues to look to the future with great confidence as we further strengthen
our position as one of the UK's most significant fine wine producers."
Annual General Meeting
The Company's annual report and accounts for the year ended 31 December 2022
will be posted to shareholders on Wednesday 7 June 2023, together with notice
of the Annual General Meeting to be held at 12pm on Thursday 29 June 2023 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
Phil Clark, Investor Relations
Panmure Gordon (UK) Limited (Nomad and Sole Broker)
James Sinclair-Ford +44 (0)20 7886 2500
Hugh Rich
Media:
Kate Hoare (Houston) +44 (0)20 4529 0549
gusbourne@houston.co.uk (mailto:gusbourne@houston.co.uk)
Note: This and other press releases are available at the Company's
website: www.gusbourneplc.com (http://www.gusbourneplc.com/)
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.
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 93 hectares 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.
Gusbourne's luxury brand enjoys premium price positioning and is distributed
in 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.
Chairman's statement
The burgeoning global appetite for English fine wine continues to underpin
Gusbourne's significant
revenue growth as 2022 marked another year of strong progress for the Group
both at home and abroad.
Since our first vines were planted almost twenty years ago, Gusbourne has
focused on building long-term
assets to drive value creation for all our stakeholders, striving from the
outset to achieve international
brand recognition. The world class quality of our products remains of critical
importance and the latest
milestone in this journey was marked with the launch of our luxury cuvee,
Fifty One Degrees North, to
notable critical acclaim worldwide.
All sales channels delivered excellent growth during the year. Our Direct to
Consumer ("DTC") net revenue
grew by 29% to £1.7m, driven by online sales and cellar door operations in
Kent, as customers responded
positively to an expanded product offering. Our UK Trade revenue grew by 53%
to £3.1m as the industry
continued its recovery from COVID-19 and returned to normalised hospitality
market conditions. Our
international revenue grew by 78% to £1.4m as we expanded into 30 export
markets, with distribution in
more new territories planned in 2023 and beyond.
Our strategy is firmly on track to deliver against previously announced scale
and profitability ambitions.
We remain fully committed to driving increasing revenue across a growing range
of premium sparkling
and still wine product ranges combined with related experiential services
which will help to further cement
the brand's luxury positioning. Moving towards EBITDA breakeven is also a key
priority for 2023.
The Board
We made several changes to our Board during the year to support Gusbourne's
ongoing growth and
execution of our detailed corporate strategy. I am extremely pleased to
welcome Katharine Berry, who
was appointed as Chief Financial Officer ("CFO") in August 2022 and joined the
Board on 21 March 2023.
Two of our Non-Executive Directors retired, and I would like to thank Andrew
Weeber, Gusbourne's
founder, and Paul Bentham for all their dedication, hard work and
contributions to the success of
Gusbourne. Finally, Jon Pollard, Chief Operating Officer, stood down from the
Board but continues in his
Executive role.
The Gusbourne Team
I remain extremely proud of the hard work and dedication shown by the entire
Gusbourne team who
always show up with a winning attitude. No-one reflects this more prominently
than Charlie Holland, our
CEO, who has overseen another year of excellent strategic progress and remains
one of the most talented
and respected winemakers on the world stage.
Outlook
Although the macro-economic outlook remains uncertain with consumer confidence
still fragile, the Board
remains confident in the future success of Gusbourne as a leading light in the
rapidly growing English
fine wine market. We have all the key ingredients in place for long-term
success with great product, great
distribution, and a great team, and very much look forward to another exciting
year ahead.
Jim Ormonde
Chairman
Chief Executive Officer's review
2022 was another year of significant financial, operational and strategic
progress for Gusbourne. Since
our foundation in 2004, Gusbourne has strived to create England's finest and
most celebrated wines, by
leveraging our core assets - an unrelenting focus on quality; excellent and
carefully curated distribution,
our enhanced product portfolio and have taken advantage of the long-term
investments made into land
and planting over the last 20 years. Combined with the ongoing global appetite
for English wine, the
result has been another year of strong revenue growth. The Group reported
£6.2m revenue, an increase
of 49% compared to 2021, with all three distribution channels expanding the
customer base both in the
UK and overseas, reinforcing Gusbourne's brand as a leading light in the
dynamic and fast growing English
fine wine sector.
Gross profit margin improved to 59.2% (2021: 55.9%) due to an improvement in
distribution channel and
pricing mix. Our new and wider product mix strategy helped deliver this
improved margin. Operating
costs, especially administration expenses, remain carefully managed. We
continue to invest in the
Gusbourne brand, with discretionary marketing investment to help support brand
awareness and future
sales growth. The combination of good cost discipline and significant top-line
growth meant the Group
achieved a material improvement in our cost to sales ratio. The Group narrowed
its adjusted EBITDA loss
for the year to £1.1m (2021: £1.5m EBITDA loss).
The continued success of the Group 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 and I thank them all for their ongoing efforts that are driving
Gusbourne forward.
Group vision and growth strategy
The Group's vision is to continue to produce premium quality vintage wines
from grapes grown in our
own vineyards and to promote Gusbourne as a luxury brand. This is achieved
through our ongoing dedication to excellence in all aspects of our vineyard,
winemaking, branding and enhanced by our chosen
commercial relationships and curated distribution channels.
The Group's growth strategy is based on three strategic pillars:
• Growth and development of Gusbourne's luxury brand status: Maintain and
further develop Gusbourne's
luxury brand status, ensuring that the Group's premium quality and market
positioning of its products are
maintained, through our ongoing product portfolio development, distribution
choices and pricing strategy.
• Developing strong direct relationships with our customers: 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
provide an immersive brand experience, thus creating a more direct
relationship with our customers.
• Careful expansion of our international trade footprint: Invest in the
continued growth of UK Trade and
International sales to deliver further market penetration in the UK and
overseas.
Land
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.
In 2013 and 2015, additional
vineyards were planted in both Kent and West Sussex. At the end of 2022, the
group had 93 hectares of
mature planted vineyards. The Group acquired a further 55 of hectares in Kent
during 2022, the majority
of which we plan to plant in 2024. We also plan to plant additional vineyards
on land in Sussex and by
2025 we plan to have a total of approximately 152 hectares of land under vine.
The Group will continue to
look to acquire appropriate land to support our long-term growth ambitions.
Products
Right from its 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. For our sparkling
wine, 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.
2022 saw the launch of our luxury cuvee, 51 Degree's North, a wine that
represents the pinnacle of the
Gusbourne range and is positioned alongside the world's finest sparkling
wines. The response from the
wine critics has been extremely positive and we are excited about the next
vintage release of this wine.
Gusbourne also produce a growing range of premium vintage English still wines
which continue to win
prestigious international awards and regularly sellout. We anticipate further
expanding the range of our
still wines, which in line with other comparable still fine wines are
commercially released with less ageing
in our cellars.
Recent awards
We have continued our success in major wine competitions, with 2022 proving
our most successful year
ever, winning over 40 medals at national and international competitions,
including 21 gold and platinum
medals, where we are judged against some of the finest wines from around the
world. Particular highlights
include:
• four trophies, including retaining Estate Winery of the Year at the WineGB
award, the Vintage Sparkling
Wine trophy at the 2022 International Wine Challenge (along with eleven other
medals)
• thirteen medals (including two golds) at the Decanter World Wine Awards
• five gold medals and Best in Class at the Champagne and Sparkling Wine
World Championships
• the Judges Selection Medal in the prestigious Texsom awards in the United
States in May, and
• two editor's Choice listings in Wine Enthusiast
Distribution: Three sales channels
Gusbourne has three main sales channels, UK Trade, International and Direct to
Consumer, which all have
delivered significant growth during the year.
• UK Trade
UK Trade continued its strong progress, net revenue up by 53% (2021: 177%).
The Group has
established new trade accounts across premium hotels and restaurants, further
strengthening its
already high penetration to Michelin star restaurants and 5-star hotels.
• International
Our wines are now distributed to 30 countries around the world as we grow the
Gusbourne brand
globally, working with specialist distribution partners. International sales
have continued to thrive
growing by 78% (2021: 23%). The brand has seen particularly strong momentum in
the Nordics, Japan and the US. 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. The Group expects
to add further countries in 2023.
• Direct to Consumer
Both wine sales and tour and tasting events based on our cellar door
operations in Kent have
continued to deliver strong growth, with sales up 29% for 2022 compared to
2021.
DTC wine sales grew by 17% 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. Tour and tasting events at Gusbourne's successful cellar door
facility in Kent (the Nest),
are now in their sixth 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 robust, with
a growth of 70% to £0.53m from £0.31m. We continue to improve and expand
these services, having
carried out reconfiguration of space at the Nest, providing capacity for more
visitors to have a unique
and unforgettable experience.
2022 Harvest
We anticipate the wines from the 2022 harvest to be among some of the best we
have produced, ranking
alongside the excellent 2014, 2016, 2018 and 2020. We harvested one of our
biggest yields to date, which
is crucially important, but it is the high quality of the fruit which
particularly excites us.
The 2022 growing season was nearly perfect, dominated by warm, dry weather in
which the vineyards
thrived. The team's careful management of the vines throughout the summer,
which included two heatwaves
and a rigorous quality-controlling green harvest, meant that the fruit quality
and quantity was superb.
The resulting sparkling wines will be bottled during the summer of 2023,
further adding to our inventory
levels for sale in future years.
The English wine market
The English wine market remains highly dynamic and has continued to see
significant growth, in terms of
supply, demand by UK consumers and demand in international markets. This is an
exciting time for English
wines, with brands like Gusbourne at the forefront of the creation of a fine
wine market and putting the
UK on the global stage.
Data from WineGB, the industry body for the English wine trade, reports
plantings have increased by
70% over the last five years, with Chardonnay, Pinot Noir and Pinot Meunier
the most significant varietals.
Sparkling wines account for approximately 70% of total production and still
wines 30%.
Sales of UK wine in the UK market are over nine million bottles, with a
growing presence of UK wines in the
exports markets. Key exports markets for the industry are Norway, USA, Sweden,
Japan and Hong Kong.
Gusbourne has a strong presence in all of these markets, with significant
further growth potential ahead.
Current trading and outlook
The macro-economic environment remains complex including the effect of the
Russia-Ukraine war, with consumer confidence affected by inflationary
pressures in many markets. At the same time, consumer interest in Gusbourne
wine and English wine generally continues to grow across the globe. Against
this backdrop, we remain confident about Gusbourne's future prospects and
expect to deliver another year of strong growth across all our distribution
channels. Gusbourne has the benefit of increased supply and inventories from
the expansion
of the land planted in recent years and the ongoing expansion of its
international presence. The increased
revenue base combined with anticipated improvement in gross margin and cost
discipline is expected to
see the Group move towards EBITDA breakeven for the current financial year.
Longer-term, increases in
production from new vineyards are anticipated to drive further revenue growth
and margin improvement
through scale.
Charlie Holland
Chief Executive
Chief Financial Officer's review
Net revenue and adjusted EBITDA - 5 year summary
Years ended 31 December 2018 2019 2020 2021 2022
£'000 £'000 £'000 £'000 £'000
Net revenue* 1,261 1,653 2,109 4,191 6,243
Cost of sales (560) (735) (879) (1,847) (2,546)
Gross profit 701 918 1,230 2,344 3,697
Sales and marketing expenses (914) (1,389) (1,478) (2,460) (3,479)
Administration expenses ** (694) (814) (1,073) (1,336) (1,349)
Adjusted EBITDA (loss)/profit*** (907) (1,285) (1,321) (1,452) (1,131)
Aborted planning and capital expenditure write-off - - - - (132)
Fair value movement in biological produce 125 (172) (221) (704) (239)
EBITDA**** (782) (1,457) (1,542) (2,156) (1,502)
Net revenue annual growth % 26.4% 31.1% 27.6% 98.7% 49.0%
Net revenue 5 year CAGR 30.7% 34.8% 45.6% 44.3%
Gross profit % 55.6% 55.5% 58.3% 55.9% 59.2%
Sales and marketing % 72% 84% 70% 59% 56%
Administration expenses % 55% 49% 51% 32% 22%
Adjusted EBITDA (loss)/profit % -72% -78% -63% -35% -18%
* Net revenue represents revenue after deducting
excise duties
** Excluding depreciation
** Adjusted EBITDA means profit/(loss)from operations
before aborted planning and capital expenditure write-off, 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 2018 2019 2020 2021 2022 2022 2021
£'000 £'000 £'000 £'000 £'000 % Growth % Growth
Net revenue
Direct to Consumer (DTC)* 144 299 586 1,016 1,185 16.5 73.4
UK Trade 827 934 721 1,997 3,058 53.2 177.0
International 179 292 634 781 1,391 78.0 23.2
Net wine sales 1,150 1,525 1,941 3,795 5,634 48.5 95.5
Tour and related income (DTC)* 43 71 90 309 525 69.9 242.3
Other Income 68 57 78 87 84 -3.4 11.5
Total net revenue 1,261 1,653 2,109 4,191 6,243 49.0 98.7
Percentages of total net revenue
Direct to Consumer (DTC) 14.8% 22.4% 32.1% 31.6% 27.4%
UK Trade 65.6% 56.5% 34.2% 47.6% 49.0%
International 14.2% 17.7% 30.1% 18.6% 22.3%
Other Income 5.4% 3.4% 3.7% 2.1% 1.3%
Total 100.0% 100.0% 100.0% 100.0% 100.0%
*DTC total net revenue £1,710,000 (2021: £1,325,000), 29% growth versus
prior year (2021: 96%)
Net revenue
Net revenue for the year was up by 49% (2021: 99%) to £6.24m (2021: £4.19m,
2020: £2.11m and 2019 :
£1.65m), reflecting continued robust sales growth across our three main
distribution channels:
• UK Trade sales grew by 53% to £3.06m. UK Trade sales represent 49% (2021:
48%) of net revenue.
The Group has established new trade accounts across premium hotels and
restaurants to support the
Gusbourne brand;
• Direct to consumer net revenue which includes tours and related cellar
door operations in Kent grew
by 29% to £1.71m. DTC represents 27% (2021: 32%) of net revenue for the year.
Revenues from tours and
experiences have increased by 70% compared to 2021 and our Gusbourne Reserved
customer base
increased by over 45%; and
• International sales grew by 78% (2021: 23%) to £1.39m (2021: £0.78m) and
represented 22% of total net
revenue (2021: 19%).
Gross profit
The gross profit margin on net revenue increased to 59.2% (2021: 55.9%),
largely due to distribution
channel and pricing mix factors. Gross profit margin is one of the main KPI's
of the Group which it aims to
maintain and enhance, and which derives from a number of key variables:
• The historic cost of wine inventories, based on production costs up to
four years prior to sale;
• The sales distribution mix, with DTC generally at higher margins at gross
profit level than the other two
main channels;
• The product distribution mix with more premium product offerings now being
introduced and further
enhancing overall gross margins;
• Selected inflationary price adjustments to recover the Group's own
increasing costs, where and when
appropriate; and
• Direct distribution costs
These variables are monitored and optimized as part of the Group's forward
planning to maintain and
enhance its gross profit margins.
Adjusted EBITDA loss
The Group narrowed its adjusted EBITDA operating loss for the year to £1.1m
(2021: £1.5m). This was after
charging sales and marketing expenses of £3.5m (2021: £2.5m) and
administrative expenses of £1.3m
(2021: £1.3m).
Administrative expenses have remained relatively unchanged over the year.
Sales and marketing expenses
have increased by £1.0m over the year and continue to include key planned
elements of discretionary
investment spend to support the ongoing brand development and the potential
longer-term sales growth
of the Group.
Sales and marketing costs as a percentage of net revenue has continued to
decline in recent years and
represented 56% of net revenue for the year, down from 59% in 2021. It is
expected that these costs will
continue to decline as a percentage of net revenue over the coming years.
£132,000 costs were written-off in relation to planning and capital
expenditure pre-pandemic which has
been aborted.
Finance expenses
Finance expenses for the year amounted to £0.5m (2021: £0.8m) and reflect
the interest expense on
the Group's long-term secured debt from PNC together with the amortisation of
bank transaction costs.
The prior year charge included the discount expense of short-term deep
discount bonds which were
converted into equity or repaid in that year.
Tax
The Group reported a tax credit of £74,000 (2021: nil) relating to research
and development tax credits. At
31 December 2022, the Group had tax loses available to carry forward of
£20.7m (2021: £17.7m).
Earnings per share
The Group reported a basic loss per share of 4.17 pence (2021: 7.29 pence).
Key Performance Indicators
Balance Sheet assets* - 5 year summary
Years ended 31 December 2018 2019 2020 2021 2022
£'000 £'000 £'000 £'000 £'000
Assets
Freehold land and buildings 6,488 6,383 6,263 6,134 7,830
Right of use assets - 2,068 2,022 1,976 1,930
Vineyards 3,289 3,144 3,004 2,858 2,712
Plant, machinery and other equipment 1,757 1,636 1,504 1,375 1,726
Other receivables 97 90 38 32 16
Total non current assets 11,631 13,321 12,831 12,375 14,214
Inventories 5,282 7,463 9,325 10,638 12,579
Trade and other receivables 496 707 869 1,275 1,291
Trade and other payables (483) (752) (769) (1,118) (1,500)
Working capital 5,295 7,418 9,425 10,795 12,370
Total operating assets 16,926 20,739 22,256 23,170 26,584
Cash 1,311 1,009 262 3,128 269
Goodwill 1,007 1,007 1,007 1,007 1,007
Total assets 19,244 22,755 23,525 27,305 27,860
Assets
Freehold land and buildings
6,488
6,383
6,263
6,134
7,830
Right of use assets
-
2,068
2,022
1,976
1,930
Vineyards
3,289
3,144
3,004
2,858
2,712
Plant, machinery and other equipment
1,757
1,636
1,504
1,375
1,726
Other receivables
97
90
38
32
16
Total non current assets
11,631
13,321
12,831
12,375
14,214
Inventories
5,282
7,463
9,325
10,638
12,579
Trade and other receivables
496
707
869
1,275
1,291
Trade and other payables
(483)
(752)
(769)
(1,118)
(1,500)
Working capital
5,295
7,418
9,425
10,795
12,370
Total operating assets
16,926
20,739
22,256
23,170
26,584
Cash
1,311
1,009
262
3,128
269
Goodwill
1,007
1,007
1,007
1,007
1,007
Total assets
19,244
22,755
23,525
27,305
27,860
Balance Sheet liabilities and equity*
Years ended 31 December 2018 2019 2020 2021 2022
£'000 £'000 £'000 £'000 £'000
Debt
PNC Business Credit (Asset finance facilities) - - 6,613 9,326 12,373
Other bank debt 2,173 2,058 - - -
Deep discount bonds 2,761 3,001 5,132 - -
Short term debt - 3,379 544 - -
Lease liabilities - 2,123 2,108 2,094 2,078
Total debt 4,934 10,561 14,397 11,420 14,451
Equity 14,310 12,194 9,128 15,885 13,409
Total liabilities 19,244 22,755 23,525 27,305 27,860
Debt
PNC Business Credit (Asset finance facilities)
-
-
6,613
9,326
12,373
Other bank debt
2,173
2,058
-
-
-
Deep discount bonds
2,761
3,001
5,132
-
-
Short term debt
-
3,379
544
-
-
Lease liabilities
-
2,123
2,108
2,094
2,078
Total debt
4,934
10,561
14,397
11,420
14,451
Equity
14,310
12,194
9,128
15,885
13,409
Total liabilities
19,244
22,755
23,525
27,305
27,860
* Excluding trade and other payables
Balance Sheet
The Group's balance sheet reflects the long-term nature of the sparkling wine
industry and the important
investments that have already been made to support the long-term growth
ambitions of the Group.
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 2022 was £27.9m
(2021: £27.3m) represented by
the following principle operating assets:
Fixed assets
• 196 hectares of Freehold land and buildings of £7.8m (2021: £6.1m) -
with buildings at cost less
depreciation
• 93 hectares of mature vineyards of £2.7m (2021: £2.9m) - at cost less
depreciation
• Plant, machinery and other equipment of £1.7m (2021: £1.4m) - at cost
less depreciation
• Right of use assets (under IFRS 16) of £1.9m (2021: £2.0m)
Inventories
Inventories at 31 December 2022 at the lower of cost and net realisable value
amounted to £12.6m (2021:
£10.6m). 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.
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.
Cash flow
The Group's operating cash outflow flow for the year was £2.9m (2021:
£3.3m). This represented an
Adjusted EBITDA loss of £1.1m (2021: £1.5m loss) and net working capital
outflows (mostly an increase in
wine inventories) of £1.8m (2021: £1.8m).
Capital expenditure was £2.5m for 2022 (2021: £0.2m) and included the
purchase of an additional 55
hectares of freehold land in Kent (£1.7m), plant and machinery (£0.7m) and
building improvements
(£0.1m).
The capital expenditure was financed by the Group's own cash resources and the
working capital was
financed by additional drawings from the PNC facility.
Financing and net debt
At 31 December 2022 the Group's total assets of £27.9m (2021: £27.3m) were
financed by:
• Shareholder's equity of £13.4m (2021: £15.9m).
• Long term secured debt from PNC of £12.4m (2021: £9.3m). The PNC
facilities are provided on a revolving
basis over a minimum period of 5 years to 12 August 2027 and allow flexible
drawdown and repayments in
line with the Group's working capital requirements. On 15 August 2022 these
asset-based lending facilities
were extended by an additional £6.0m from the existing £10.5m to £16.5m.
The interest rate is at the annual
rate of 2.50% per cent (2021: 2.75 per cent) over Sterling Overnight Index
Average ("SONIA"), (2021: Bank
of England Base Rate). Further details are shown in note 8.
• Lease liabilities under IFRS 16 of £2.1m (2021: £2.1m).
At 31 December 2022, the Group's net debt (PNC facility less Cash, excluding
IFRS16 lease liabilities)
amounted to £12.1m (2021:£6.2m).
Katharine Berry
Chief Financial Officer
Consolidated statement of comprehensive income for the year ended 31 December
2022
Year ended Year ended
31 December 31 December
2022 2021
Note £'000 £'000
Revenue 6,858 4,613
Excise duties (615) (422)
Net revenue 6,243 4,191
Cost of sales (2,546) (1,847)
Gross profit 3,697 2,344
Fair value movement in biological produce (239) (704)
Administrative expenses (5,561) (4,396)
Loss from operations (2,103) (2,756)
Finance expenses (496) (817)
Loss before tax (2,599) (3,573)
Tax credit 74 -
Loss and total comprehensive for the year attributable to owners of the parent (2,525) (3,573)
Loss per share attributable to the ordinary equity holders of the parent:
Basic (pence) 4 (4.17) (7.29)
Diluted (pence) 4 (4.17) (7.29)
Consolidated statement of financial position at 31 December 2022
31 December 31 December
2022 2021
Note £'000 £'000
Assets
Non-current assets
Intangibles 1,007 1,007
Property, plant and equipment 5 14,198 12,343
Other receivables 16 32
15,221 13,382
Current assets
Biological Produce 6 - -
Inventories 7 12,579 10,638
Trade and other receivables 1,291 1,275
Cash and cash equivalents 269 3,128
14,139 15,041
Total assets 29,360 28,423
Liabilities
Current liabilities
Trade and other payables (1,500) (1,118)
Lease liabilities 9 (84) (89)
(1,584) (1,207)
Non-current liabilities
Loans and borrowings 8 (12,373) (9,326)
Lease liabilities 9 (1,994) (2,005)
(14,367) (11,331)
Total liabilities (15,951) (12,538)
Net assets 13,409 15,885
Issued capital and reserves attributable to owners of the parent
Share capital 10 12,191 12,190
Share premium 21,144 21,103
Merger reserve (13) (13)
Share option reserve 7 -
Retained earnings (19,920) (17,395)
Total equity 13,409 15,885
Consolidated statement of cash flows for the year ended 31 December 2022
31 December 31 December
2022 2021
Note £'000 £'000
Cash flows from operating activities
Loss for the year before tax (2,599) (3,573)
Adjustments for:
Depreciation of property, plant and equipment 5 601 599
Sale of property, plant and equipment (28) -
Finance expense 496 817
Fair value movement in biological produce 6 239 704
Equity share options issued 7 -
Increase in trade and other receivables 74 (318)
Increase in inventories (2,049) (1,886)
Increase in trade and other payables 385 349
Cash outflow from operations (2,874) (3,308)
Investing activities
Purchases of property, plant and equipment, excluding vineyard establishment 5 (2,502) (195)
Sale of property, plant and equipment 28 -
Net cash from investing activities (2,474) (195)
Financing activities
Revolving facility repayments (4,547) (2,944)
Revolving facility drawdowns 7,620 5,584
Repayment of lease liabilities (101) (99)
Interest paid (456) (289)
Loan issue costs (66) (20)
Issue of ordinary shares 10 46 5,715
Share issue expense (7) (359)
Repayment of deep discount bonds - (1,219)
Net cash from financing activities 2,489 6,369
Net increase/(decrease) in cash and cash equivalents (2,859) 2,866
Cash and cash equivalents at the beginning of the year 3,128 262
Cash and cash equivalents at the end of the year 269 3,128
Consolidated statement of changes in equity for the year ended 31 December
2022
Share Capital Share premium Merger reserve Share option reserve Retained earnings Total attributable to equity holders of parent £'000
£'000 £'000 £'000 £'000 £'000
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 January 2022 12,190 21,103 (13) - (17,395) 15,885
Comprehensive loss for the year - - - - (2,525) (2,525)
Share issue 1 48 - - - 49
Share issue expenses - (7) - - - (7)
Equity share options issued - - - 7 - 7
31 December 2022 12,191 21,144 (13) 7 (19,920) 13,409
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
2022 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 2021 or 31 December 2022 within the meaning of
section 435 of the Companies Act 2006 but is derived from those financial
statements. Financial statements for the year ended 31 December 2021 have
been delivered to the Registrar of Companies and those for the year ended 31
December 2022 will be delivered following the Company's Annual General
Meeting. The auditors' reports on both the 31 December 2021 and 31 December
2022 financial statements were unqualified and did not contain statements
under section 498 (2) or (3) of the Companies Act 2006.
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.
The Directors have considered a scenario in which the only cash available is
from existing resources and committed facilities and planned but not yet
committed capital expenditure is deferred. As at 31 December 2022 £16.5m was
available to the Group, of which £4.2m was unutilised; represented by cash in
hand and at bank of £0.3m and undrawn funds from the Group's asset-based
lending facility of £3.9m. Under this scenario the available lending
facilities and cash held at bank, cover working capital requirements 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 20% 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 certain
additional cost mitigation actions, in relation to variable and discretionary
costs. The directors believe that sufficient cost savings could be achieved
from reducing sales and marketing and administrative costs and reducing
capital expenditure 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 42 and 47 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.
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.
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:
Freehold buildings 4% per annum straight line
Plant, machinery and motor vehicles 5-25% per annum straight line
Computer equipment 33% per annum straight line
Mature vineyards 4% per annum straight line
The carrying value of property, plant and equipment is reviewed for impairment
when events or changes in circumstances indicate that the carrying value may
not be recoverable.
Biological assets and produce
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 tobe
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.
Exceptional items
Exceptional items are those which, by virtue of their nature, size or
incidence, either individually or in aggregate, need to be disclosed
separately to allow full understanding of the underlying performance of the
Group.
Share based payments
The Group has issued share options to certain employees, in return for which
the Group receives services from employees. The fair value of the employee
services received in exchange for the grant of the options is recognised as an
expense, the Group recognise the options at their fair value at the grant date
to establish the relevant fair values for PSP & CSOP options.
The total amount to be expensed is determined by reference to the fair value
of the options granted including any market performance conditions (for
example the Group's share price) but excluding the impact of any service or
non-market performance vesting conditions (for example the requirement of the
grantee to remain an employee of the Group).
Non-market vesting conditions are included in the assumptions regarding the
number of options that are expected to vest. The total expense is recognised
over the vesting period. At the end of each period the Group revises its
estimates of the number of options expected to vest based on the non- market
vesting conditions. It recognises the impact of any revision in the income
statement with a corresponding adjustment to equity.
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
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:
At 31 December 2021 Up to 3 Between Between Between Over 5 Total
3 and 12 months
1 and 2 years
2 and 5 years
months
years £'000
£'000 £'000 £'000
£'000 £'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
At 31 December 2022 Up to 3 Between Between Between Over 5 Total
3 and 12 months
1 and 2 years
2 and 5 years
months
years £'000
£'000 £'000 £'000
£'000 £'000
Trade and other payables 1,146 354 - - - 1,500
Loans and borrowings 201 603 804 14,317 - 15,925
Lease liabilities 25 74 99 298 3,887 4,383
Total 1,372 1,031 903 14,615 3,887 22,808
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 2022 in respect of trade receivables is £957,000 (2021: £563,000)
and due to the prompt payment cycle of these trade receivables, the expected
credit loss is negligible at £8,000 (2021: £31,000).
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 £61,000
(2021:
£47,000).
4 Loss per share
Basic earnings per ordinary share are based on a loss of £2,525,000 (December
2021: £3,573,000) and ordinary shares 60,595,919 (December 2021: 48,989,920)
of 1 pence each, being the weighted average number of shares in issue during
the year.
Weighted average number of
shares Loss per Ordinary share pence
Loss
£'000
Year ended 31 December 2022 (2,525) 60,595,919 (4.17)
Year ended 31 December 2021 (3,573) 48,989,920 (7.29)
Diluted earnings per share are based on a loss of £3,573,000 and ordinary
shares of 48,989,920 and no dilutive warrant options.
Loss Diluted number of shares Loss per
Ordinary
£'000
share pence
Year ended 31 December 2022 (2,525) 60,595,919 (4.17)
Year ended 31 December 2021 (3,573) 48,989,920 (7.29)
5 Property, plant and equipment
Freehold Plant, Mature Vineyards Computer Total
Land and
machinery
equipment
Buildings
and motor £'000
£'000
vehicles
£'000
£'000
Right of use asset
£'000
£'000
Cost
At 1 January 2021 6,896 3,432 3,637 102 16,181
2,114
Additions - 179 - - 16 195
Disposals - - - - - -
At 31 December 2021 6,896 3,611 3,637 118 16,376
2,114
At 1 January 2022 6,896 3,611 3,637 118 16,376
2,114
Additions 1,824 645 - - 33 2,502
Disposals - (65) - - - (65)#
At 31 December 2022 8,720 4,191 3,637 151 18,813
2,114
Freehold land and buildings Plant, Machinery and motor Vehicles Mature vineyards £'000 Computer equipment
£'000 £'000 £'000 Total
Right of use asset £'000
£'000
Accumulated depreciation
At 1 January 2021 633 1,956 633 74 3,388
92
Depreciation charge for the year 129 313 146 11 645
46
Depreciation on disposals - - - - -
-
At 31 December 2021 762 2,269 779 85 4,033
138
At 1 January 2022 762 2,269 138 779 85 4,033
Depreciation charge for the year 128 311 146 16 647
46
Depreciation on disposals - (65) - - (65)
-
At 31 December 202 890 2,515 925 101 4,615
184
Net book value
At 31 December 2021 6,134 1,342 2,858 33 12,343
1,976
At 31 December 2022 7,830 1,676 2,712 50 14,198
1,930
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.
Depreciation on right of use assets is included in the cost of inventory,
therefore £46,000 (2021: £46,000) transferred into stock in the year.
6 Biological produce
The fair value of biological produce was:
December December
2022 2021
£'000 £'000
At 1 January - -
Crop growing costs 1,830 1,609
Fair value of grapes harvested and transferred to inventory (1,591) (905)
Fair value movement in biological produce (239) (704)
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 2022 harvest is £3,000 per tonne
(2021: £2,500 per tonne).
A 10% increase in the estimated market price of grapes to £3,300 per tonne
would result in an increase of £159,000 (2021: £90,000) in the fair value of
the grapes harvested in the year. A 10% decrease in the estimated market price
of grapes to £2,700 per tonne would result in a decrease of £159,000 (2021:
£90,000) in the fair value of the grapes harvested in the year.
A fair value loss of £239,000 (2021: £704,000 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.
7 Inventories
December December
2022 2021
£'000 £'000
Finished goods 1,249 985
Work in progress 11,330 9,653
Total inventories 12,579 10,638
During the year £1,858,000 (December 2021: £1,261,000) was transferred to
cost of sales.
8 Loans and borrowings
December December
2022 2021
£'000 £'000
Non-current liabilities
Bank loans 12,541 9,468
Unamortised bank transaction costs (168) (142)
Total non current loans and borrowings 12,373 9,326
The bank loan of £12,373,000 with PNC Business Credit shown above is net of
transaction costs of £168,000 which are being amortised over the life of the
loan.
In August 2022 the Group entered into an amended and restated agreement with
PNC Financial Services UK Limited to increase its existing £10.5 million
5-year asset-based lending facilities by an additional £6.0 million to
provide the Group with a total £16.5 million asset-based lending facilities.
The New PNC facilities have been made available to the Group for a minimum
period of 5 years to 12 August 2027. The interest rate is at the annual rate
of 2.50% (2021: 2.75%) over Sterling Overnight Index Average ("SONIA"), (2021:
Bank of England Base Rate).
The facilities are secured by way of first priority charges over the Group's
inventory, receivables and freehold property as well as an all assets
debenture.
An analysis of the maturity of loans and borrowings is given below:
December December
2022 2021
£'000 £'000
Bank and other loans:
Within 1 year - -
1-2 years - -
2-5 years 12,373 9,326
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
£'000
Net carrying value - 1 January 2022 2,094
Interest 85
Payments (101)
Net carrying value - 31 December 2022 2,078
December December
2022 2021
£'000 £'000
The lease payments under long term leases liabilities fall due as follows:
Current lease liabilities 84 89
Non current lease liabilities 1,994 2,005
Total liabilities 2,078 2,094
During the period an interest charge of £85,000 (2021: £86,000) 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 2022 and 2021 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 shares of 49p each Ordinary shares of 1p each
Number Number £'000
Issued and fully paid
At 1 January 2021 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
Issued in the year - 42,282 1
At 31 December 2022 23,639,762 60,773,987 12,191
The Deferred shares of 49 pence each have no rights attached to them.
On 2 March 2022 the Company issued 23,970 new ordinary shares of 1p each
pursuant to an exercise of Warrants. All Warrants were exercised at 75p per
share.
On 29 March 2022 the Company issued 226 new ordinary shares of 1p each
pursuant to an exercise of Warrants. All Warrants were exercised at 75p per
share.
On 3 May 2022 the Company issued 419 new ordinary shares of 1p each pursuant
to an exercise of Warrants. All Warrants were exercised at 75p per share.
On 4 October 2022 the Company issued 4,580 new ordinary shares of 1p each
pursuant to an exercise of Warrants. All Warrants were exercised at 75p per
share.
On 16 December 2022 the Company issued 13,087 new ordinary shares of 1p each
pursuant to an exercise of Warrants. All Warrants were exercised at 75p per
share.
Unexercised Warrants at 31 December 2022 amounted to 3,959,977 (2021:
4,002,259) Ordinary Shares of 1 pence each. The warrants have a final exercise
date of 16 December 2023 at 75p per Ordinary Share.The warrants are accounted
for as a derivative financial liability measured on inception at fair value
through the profit or loss. On inception, the fair value of the warrants was
deemed to be £nil and thus no fair value was recognised.
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 £70,000 (December
2021: £70,000) in relation to management services. There was £44,000 due to
Deacon Street Partners Limited as at 31 December 2022 (December 2021:
£22,000).
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 £108,000
(December 2021: £102,000) in relation to marketing services and £352,000 in
relation to third party digital advertising. There was £36,000 due to Jaywing
PLC as at 31 December 2022 (December 2021: £8,400).
On 18 June 2018, the company lent £50,000 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 2022 was
22,000 (December 2021: £38,000).
On the 24 August 2022 the Group purchased 55 hectares of freehold agricultural
land located in Appledore, Ashford in Kent (the "Land Purchase") from Andrew
Weeber, Non-Executive Director and a shareholder of the Company, and his
spouse. The property is adjacent to and contiguous with the Company's existing
freehold estate in Kent, where the majority of the Company's existing mature
vineyards are planted. The purchase price for the Land Purchase was £1.6
million plus related acquisition costs.
Details of related parties who subscribed for the warrants are shown in the
table below:
Warrants exercisable at 75 pence each
Held as at Held as at
31 31
December December
2021 2022
Name Number Number
Lord Ashcroft KCMG PC* 2,660,158 2,660,158
Andrew Weeber 179,566 179,566
Paul Bentham** 121,083 121,083
Ian Robinson 35,801 35,801
Jim Ormonde 19,788 19,788
Mike Paul 10,607 10,607
Lord Arbuthnot PC 7,345 7,345
Matthew Clapp 4,816 4,816
Jon Pollard 3,171 3,171
Charlie Holland 2,770 2,770
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 16 January 2023, the Group issued 2,174 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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