REG - Gusbourne PLC - Interim results to 30 June 2023
28/09/2023 07:00
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RNS Number : 9163N Gusbourne PLC 28 September 2023
28 September 2023
Gusbourne Plc
("Gusbourne", the "Company" or the "Group")
Interim Results for the period ended 30 June 2023
Gusbourne Plc (AIM: GUS), the premium English sparkling wine producer, is
pleased to report the following unaudited results for the six month period
ended 30 June 2023 ("H1" or "H1 2023").
Strong UK wine sales growth in H1 of 24%
Highlights:
UK wine sales:
Strong UK wine sales ((1)) growth with H1 up by 24% to £2.3m (H1 2022:
£1.9m), reflecting continued strong sales growth across our direct to
consumer ("DTC") and UK Trade sales channels:
· DTC wine sales up by 21% to £650,000 (H1 2022 £586,000), driven by
investment in digital marketing and direct wine sales arising from our tour
and experience programme at the Nest, Gusbourne's cellar door operation in
Kent.
· UK Trade wine sales up 25% to £1,685,000 (H1 2022: £1,346,000),
with number of key partnerships established with prestigious, high-volume
hotel and restaurant groups underpinning this performance.
International wine sales:
· International sales declined by 7%, due to the timing of export
orders. Gusbourne's ongoing success in international markets generally
involves large orders, the timing of which can distort short term sales trends
as they have in H1. The fall in sales was caused by high levels of existing
stock in two of our larger markets at the start of 2023. Stock depletions and
sales are expected to grow in H2 as trade phasing normalises, with full year
revenue expected to provide double digit growth. Gusbourne has now increased
its distribution to over 33 international markets.
Strong financial performance
· Gross margin improved significantly to 68.3% (H1 2022: 59.9%),
reflecting improved price and sales mix dynamics, in line with the Group's
premium positioning and product strategy, as well as a decreased mix in H1 of
International sales that are at a lower margin.
· Adjusted EBITDA loss narrowed to £0.58m (H1 2022: £0.70m).
· Net debt of £15.2m, (H1 2022 £10.3m), the increase since 30 June
2022 reflecting further investment in inventory and the capital expenditure in
land, acquired in August 2022.
Further critical acclaim for and expansion of the Gusbourne portfolio
· Several new wines introduced during the period, including the
limited-edition single vineyard sparkling wines, a sweet wine and a still
rosé.
· In the H1, the Company received over 30 awards for its wines,
including:
o 11 awards, including five golds, and four trophies; best sustainably
produced wine, best Chardonnay, top still wine and retaining Estate Winery of
the Year for the third consecutive year at the Wine GB awards; and
o Seven medals, including a gold and winner of best in show "Blanc de Blancs"
for the 2018 vintage at the Decanter World Wine Awards; and
o Three medals at the Texsom Awards in the USA, including Judges' Selection,
Platinum and Gold; and
o Two medals at the International Wine Challenge
o Exclusive partner for The Royal Collection Coronation English Sparkling Wine
2023, another promising vintage and new Head Winemaker appointed
· The 2023 harvest is now underway and is expected to be a bumper
harvest in volume and quality.
· Appointment of Mary Bridges as our Head Winemaker, promotion of
Alistair Benham to Head of Wine Operations and Tom Jones to Winemaker.
Together these individuals have been with Gusbourne for more than 15 years and
their promotions are the result of long term succession planning.
£m H1 2023 H1 2022 % Change
Wine sales - UK 2.3 1.9 24%
Wine sales - Export 0.8 0.8 -7%
Non-wine sales 0.3 0.3 -11%
Net revenue ((1)) 3.4 3.0 12%
Gross margin % 68.3% 59.9% 840bps
Adjusted EBITDA ((2)) (0.6) (0.7) 17%
Operating costs 4.3 4.2 3.1%
Reported Pre-tax loss (1.0) (1.2) -19%
EPS (p) -2.37 -2.26 -5%
Net Debt 15.2 10.3 77%
((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.
NET REVENUE BY DISTRIBUTION CHANNEL
H1 2023 H1 2022 Change FY 2022
£'000 £'000 % £'000
Direct to Consumer (DTC)* 650 536 21% 1,185
UK Trade 1,685 1,346 25% 3,058
Total UK net wine sales 2,335 1,882 24% 4,243
International 742 798 -7% 1,391
Net wine sales 3,077 2,680 15% 5,634
Tour and related income (DTC)* 264 297 -11% 525
Other income 32 37 -13% 84
Total net revenue 3,373 3,014 12% 6,243
PERCENTAGES OF NET REVENUE
Direct to Consumer (DTC) 27.0% 27.6% 27.4%
UK Trade 50.1% 44.7% 49.0%
International 22.0% 26.5% 22.3%
Other 0.9% 1.2% 1.3%
100.0% 100.0% 100.0%
*DTC total net revenue (including tour and related income) of £914,000 for H1
2023, £833,000 for H1 2022 (10% growth) and £1,710,000 for FY 2022.
Outlook
Gusbourne expects to deliver another year of strong growth across all its
distribution channels as consumer interest in Gusbourne wine continues to grow
globally. Our new products continue to perform well, with products such as the
still Rose and 2014 vintage Fifty One Degrees North, selling out ahead of
plan. We have expanded our cellar door operation, with the introduction of two
additional tasting rooms and launched our new luxury cuvee 2016 vintage of
Fifty One Degrees North.
H2 2023 total net revenue growth is expected to be stronger than H1 with full
year net revenue growth expected to be around 20%, dependent on export order
timings and the headwinds in the wider economy. As a result of such
conditions, Gusbourne continues to practice tight cost discipline in all of
its operations and now anticipates a successful continued narrowing of the
full year adjusted EBITDA loss. Longer-term, increases in production from new
vineyards are anticipated to drive further revenue growth and margin
improvement through scale.
Mike Paul, interim Chief Executive Officer, said:
"I am pleased to report another solid performance in the first half of 2023
where Gusbourne delivered further growth and execution of our strategy.
Despite a challenging macroeconomic backdrop, we have continued to see
significant consumer demand for Gusbourne wines with double digit sales
growth, assisted by the luxury status of the Gusbourne brand.
"The first quarter of the year was soft across the industry and our
International sales were held back by higher than normal inventory levels;
momentum improved during the second quarter. I am particularly pleased with
our gross margin improvement, reflecting hard work on our pricing position,
product offer and distribution mix.
"Whilst we are mindful of the current economic headwinds, with these strong
results, an anticipated good harvest in 2023, new land purchases made during
last 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."
Results presentation
A presentation by Mike Paul, interim Chief Executive Officer and Katharine
Berry, Chief Financial Officer, providing an overview of the Group's Interim
Results for the period ended 30 June 2023, will be made available on the
PIWORLD platform and can be accessed through the following link.
(https://www.piworld.co.uk/)
This announcement together with the associated investors' presentation are
also available on:
www.gusbourneplc.com/ (http://www.gusbourneplc.com/)
Enquiries:
Gusbourne Plc
Katharine Berry +44 (0)12 3375 8666
Phil Clark, Investor Relations
Panmure Gordon (UK) Limited (Nomad and Sole Broker)
James Sinclair-Ford / Ailsa Macmaster / Lauren Riley +44 (0)20 7886 2500
Hugh Rich
Media:
Houston +44 (0)20 4529 0549
Kate Hoare / Ben Robinson / India Spencer
gusbourne@houston.co.uk (mailto:gusbourne@houston.co.uk)
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. The person responsible for arranging for the release of this
announcement on behalf of the Company is Katharine Berry, Chief Financial
Officer.
Gusbourne plc (https://www.gusbourne.com/investors) (AIM:GUS) is a premium
English sparkling and fine wine producer, specialising in the production and
distribution of award winning wines, produced from grapes grown across its
vineyards in Kent and West Sussex.
Since the Group planted its first vines in 2004, it has had a clear vision and
single goal: to create English Still and Sparkling Wines that would stand up
alongside the very finest offerings from across the globe.
From these humble beginnings, Gusbourne has focussed on building long-term
assets to drive value creation for all stakeholders. Today, the Group is an
acknowledged leader in the rapidly expanding English wine industry, achieving
international brand recognition across its product range.
Drawing on an estate of over 93 hectares of mature vineyards with additional
new land available to scale further, the Gusbourne cellar continues to mature
with ever expanding fine wine stocks becoming available to service the growing
demands of the Group's increasingly international customer base.
Gusbourne's luxury brand enjoys premium price positioning and is distributed
in the finest establishments both in the UK and overseas including premium
hotels and restaurants, independent wine merchants, and high-end stockists and
retailers. The Group also continues to invest in building strong relationships
with its growing and loyal direct customer base, including through its
immersive brand experience at its cellar door experiences, the Nest in Kent.
Interim Chief Executive review
2023 has showed further 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 six
months of solid revenue growth. The Group reported £3.4m of total net
revenue, an increase of 12% compared to first half of 2022, 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. UK wine sales were up by 24% in H1, a very
pleasing performance.
Gross profit margin improved to 68.3% (2022: 59.9%) 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 Group narrowed its adjusted
EBITDA loss for the period to £0.6m (June 2022: £0.7m 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.
I would like to particularly thank Charlie Holland, for his fantastic
dedication and incredible hard work over his tenure as CEO at Gusbourne.
Charlie has made some fantastic wines, reinforced the Gusbourne culture and
values, and leaves a strong team. We wish him all the best in his new role.
Within the winemaking team Mary Bridges has been appointed as our Head
Winemaker, Alastair Benham promoted to Head of Wine Operations and Tom Jones
promoted to Winemaker. Together these individuals have been with Gusbourne
for more than 15 years and their promotions are the result of long term
succession planning.
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. During the period, Gusbourne became a member of The Walpole, a trade
organisation for British luxury brands.
· 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 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 30 June 2023, 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 the near future. We also plan
to plant additional vineyards on land in Sussex and by 2026 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 in the UK and international markets, with sell-out launches
in many of our key international markets and in the UK. We released the newest
vintage of this wine in September 2023, including to private clients of a
prestigious wine merchant. Other new product launches during the period have
included our limited-edition single vineyard range.
Gusbourne also produce a growing range of premium vintage English still wines
which continue to win prestigious international awards and regularly sellout.
During the period, we launched our still rose wine to much acclaim and some
exclusive wines for our DTC channel. 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
In the first six months of 2023, the Company received over 30 awards for its
wines, across a broad range of wines and vintages, highlights include:
· 11 awards, including five golds, and four trophies; best sustainably
produced wine, best Chardonnay, top still wine and retaining Estate Winery of
the Year for the third consecutive year at the Wine GB awards;
· Seven medals, including a gold and winner of best in show "Blanc de
Blancs" for the 2018 vintage at the Decanter World Wine Awards;
· Three medals at the Texsom Awards in the USA, including Judges'
Selection, Platinum and Gold;
· Two medals at the International Wine Challenge; and
· Exclusive partner for The Royal Collection Coronation English
Sparkling Wine
At the Institute of Masters of Wine (IMW) 10(th) anniversary symposium a key
tasting event was held of iconic wines over important decades of wine history
(from the 1950s to the present). Each wine was high profile and representative
of that decade's innovation. The 2010s were dedicated to England, and
Gusbourne's 2014 vintage of Fifty One Degrees North was selected to represent
the country and decade.
Distribution: Three sales channels
Gusbourne has three main sales channels, UK Trade, International and Direct to
Consumer, with DTC and UK Trade delivering significant growth during the
period.
UK Trade
UK Trade continued its strong progress, with net revenue up by 25% (2022:
126%). 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. High profile new accounts include 1
Hotel in Mayfair, London. Our nascent corporate sales continue to build
momentum.
International
Our wines are now distributed to 33 countries around the world as we grow the
Gusbourne brand globally, working with specialist distribution partners.
International sales declined by 7% (2022: 158%). At the start of 2023 there
were high levels of stock in two of the larger markets, which created a
different phasing pattern for this year, but in more recent months trading has
improved.
The brand's largest markets include 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.
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 10%
for 2023 compared to 2022.
DTC wine sales grew by 21% 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 at the Nest
is showing a decline of 11%, in part due to disruption from work undertaken to
the build of two more visitors rooms ("the cellar" and "the winemakers
library"), which were completed at the end of H1 2023. This additional space
improves and expands our cellar door operation, providing capacity for more
visitors to have a unique and unforgettable experience and we expect this to
improve revenue in H2.
2023 Harvest
Following the warm weather in 2022, vines flourished over winter, the spring
and early summer mixed weather led to successful and abundant flowering. The
team's careful management of the vines and rigorous quality controls is
indicating another good harvest for 2023 both in terms of volume and quality.
The resulting sparkling wines will be bottled during the summer of 2024,
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 130% over the last five years, with Chardonnay,
Pinot Noir and Pinot Meunier the most significant varietals. Sparkling wines
account for approximately 68% of total production and still wines 32%.
Sales of UK wine in the UK market are over nine million bottles, with a
growing presence of UK wines in export markets. Key exports markets for the
industry are Norway, USA, Sweden, Japan and Hong Kong. Gusbourne has a strong
presence in all these markets, with significant further growth potential
ahead.
Current trading and outlook
The macro-economic environment remains complex with consumer confidence
affected by inflationary pressures and rising cost of borrowing 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 prospects and expect to deliver another
year of solid 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. Longer-term, increases in production from new vineyards are
anticipated to drive further revenue growth and margin improvement through
scale.
Mike Paul
Interim Chief Executive Officer
CHIEF FINANCIAL OFFICER'S REVIEW
Continuing growth in net revenue in the first half, with net revenue up 12% at
£3.4m, and Adjusted EBITDA loss narrowed to £576k, a 17% reduction from the
corresponding prior period
( )
H1 2023 H1 2022 Change FY 2022
£'000 £'000 % £'000
NET REVENUE AND ADJUSTED EBITDA
Net revenue ((1)) 3,373 3,014 14% 6,243
Gross profit 2,302 1,806 31% 3,697
Adjusted EBITDA((2) ) (576) (697) 17% (1,131)
Gross profit % 68% 60% 59%
STATUTORY RESULTS
Net revenue((1)) 3,373 3,014 14% 6,243
Gross profit 2,302 1,806 31% 3,697
Fair value movement in biological produce (27) (216) (239)
Sales and marketing expenses (1,875) (1,801) (3,479)
Administrative expenses (1,003) (702) (1,481)
Depreciation (347) (294) (601)
Profit/(loss) on disposal - 28 -
Total Administrative expenses (3,225) (2,769) (5,561)
Operating profit/(loss) (950) (1,179) (2,103)
RECONCILIATION OF OPERATING PROFIT/(LOSS)
TO ADJUSTED EBITDA
Operating profit/(Loss) (950) (1,179) (2,103)
Add back;
Depreciation 347 294 601
Aborted planning and capital expenditure write-off - - 132
Fair value movement in biological produce 27 216 239
Adjusted EBITDA((2) ) (576) (697) (1,131)
( )
((1)) Net revenue is revenue reported by the Company after excise duties
payable
((2) )Adjusted EBITDA means profit/(loss)from operations before fair value
movement in biological produce, interest, tax, depreciation and amortisation.
OPERATIONS AND FINANCIAL REVIEW
Results
Net revenue for the period amounted to £3.4m (H1 2022: £3.0m), an increase
of 12% on the corresponding period last year.
Strong UK wine sales growth, with H1 up by 24% to £2.3m (June 2022: £1.9m),
reflecting continued strong sales growth across our direct to consumer ("DTC")
and UK Trade sales channels:
· DTC wine sales up by 21% to £650,000 (June 2022 (£586,000), driven
by investment in digital marketing and direct wine sales arising from our tour
and experience programme at the Nest, Gusbourne's cellar door operation in
Kent.
· UK Trade wine sales up 25% to £1,685,000 (June 2022: £1,346,000),
with number of key partnerships established with prestigious, high-volume
hotel and restaurant groups underpinning this performance.
International sales declined by 7%, due to the timing of export orders.
Gusbourne's ongoing success in international markets generally involves large
orders, the timing of which can distort short term sales trends as they have
in H1. The fall in sales was caused by high levels of existing stock in two of
our larger markets at the start of 2023. Stock depletions and sales are
expected to grow in H2 as trade phasing normalises, with full year revenue
expected to provide double digit growth. Gusbourne has now increased its
distribution to over 33 international markets.
Gross margin improved significantly to 68.3% (June 2022: 59.9%), reflecting
improved price and sales mix dynamics, in line with the Group's premium
positioning and product strategy, as well as a decreased mix in H1 of
International sales that are at a lower margin.
Administrative expenses for the six months, excluding depreciation, amounted
to £2.9m (H1 2022: £2.5m), included planned increased expenditure on sales
and marketing costs of £1.9m (H1 2022: £1.8m) reflecting continuing
investment in the growth of the business and its sales beyond the current
financial period. 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 FY 2019 to 59% in FY 2021. Sales and
marketing costs represented 56% of H1 2022 net revenue (H1 2022 60%).
Adjusted EBITDA for the six months was a loss of £0.6m (H1 2022: £0.7m). The
operating loss for the period after depreciation and amortisation was £1.0m
(H1 2022: £1.2m loss). The loss before tax was £1.4m (H1 2022: £1.4m loss)
after net finance costs of £0.5m (H1 2022: £0.2m). Finance costs have
increased in 2023 due to the movement in the base rate and additional debt.
These adjusted EBITDA losses are slightly less than forecast due to the sales
in H1 being below expectations and measures have been implemented to mitigate
further losses.
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 30 June 2023 was £30.0m (H1
2022: £26.9m) represented by:
· 196 hectares of Freehold land and buildings of £8.0m (H1 2022:
£6.2m) - with buildings at cost less depreciation.
· 93 hectares of mature vineyards of £2.6m (H1 2022: £2.8m) - at cost
less depreciation
· Plant, machinery and other equipment of £1.8m (H1 2022: £1.4m) - at
cost less depreciation
· Right of use assets (under IFRS 16) of £2.7m (H1 2022: £2.0m).
· Biological assets of £0.9m (H1 2022: £0.8m).
· Inventories at 30 June 2023 at the lower of cost and net realisable
value amounted to £12.7m (H1 2022: £10.4m). 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 (representing trade and other receivables less
trade and other payables) of £0.0m (H1 2022: £0.5m)
· Cash of £0.2m (H1 2022: £1.8m)
· Intangible assets of £1.0m (H1 2022: £1.0m) 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 30 June 2023 the Group's total assets of £30.0m (H1 2022: £26.9m) were
financed by:
· Shareholder's equity of £12.0m (H1 2022: £14.5m)
· Long term secured debt from PNC of £15.2m (H1 2022: £10.3m). At
30 June 2023 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 Company's working capital requirements. The
£16.5m (H1 2022: £10.5m) facility has an interest rate at the annual rate of
2.50 per cent (H1 2022: 2.75 per cent) over Sterling Overnight Index Average
("SONIA") (2021: Bank of England Base Rate).
· Lease liabilities under IFRS 16 of £2.8m (H1 2021: £2.1m).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2023
Unaudited Unaudited Audited
Six months to Six months to Year ended
30 June 30 June 31 December
Notes 2023 2022 2022
£'000 £'000 £'000
Revenue 2 3,648 3,290 6,858
Excise duties (275) (276) (615)
Net revenue 3,373 3,014 6,243
Cost of sales (1,071) (1,208) (2,546)
Gross profit 2,302 1,806 3,697
Fair value movement in biological assets 6 (27) (216) -
Fair movement in biological produce 6 - - (239)
Administrative expenses (3,225) (2,768) (5,561)
Loss from operations (950) (1,178) (2,103)
Finance expense 4 (490) (196) (496)
Loss before tax (1,440) (1,374) (2,599)
Tax credit - - 74
Loss and total comprehensive loss for the period attributable to
period attributable to owners of the parent (1,440) (1,374) (2,525)
Loss per share attributable to
the ordinary equity holders of the parent:
Basic and diluted (2.37p) (2.26p) (4.17p)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2023
Unaudited Unaudited Audited
30 June 30 June 31 December
Notes 2023 2022 2022
Assets £'000 £'000 £'000
Non-current assets
Intangibles 1,007 1,007 1,007
Property, plant and equipment 5 15,144 12,397 14,198
Other receivables 19 25 16
16,170 13,429 15,221
Current assets
Biological assets 6 1,026 756 -
Inventories 7 12,670 10,423 12,579
Trade and other receivables 1,799 1,826 1,291
Cash and cash equivalents 151 1,768 269
15,646 14,773 14,139
Total assets 31,816 28,202 29,360
Liabilities
Current liabilities
Trade and other payables (1,795) (1,309) (1,500)
Lease liabilities (100) (100) (84)
(1,895) (1,409) (1,584)
Non-current liabilities
Loans and borrowings 8 (15,212) (10,294) (12,373)
Lease liabilities (2,740) (1,970) (1,994)
(17,952) (12,264) (14,367)
Total liabilities (19,847) (13,673) (15,951)
NET ASSETS 11,969 14,529 13,409
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
At 30 June 2023
Issued capital and reserves attributable to
owners of the parent
Share capital 9 12,191 12,190 12,191
Share premium 21,144 21,121 21,144
Merger reserve (13) (13) (13)
Share option reserve 7 - 7
Retained earnings (21,360) (18,769) (19,920)
TOTAL EQUITY 11,969 14,529 13,409
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2023
Unaudited Unaudited Audited
Six months to months to Six months to Year ended
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Cashflows from operating activities
Loss for the year/period before tax (1,440) (1,374) (2,525)
Adjustments for:
Depreciation of property, plant and equipment 347 293 601
Sale of property, plant and equipment - (28) (28)
Finance expense 490 196 496
Equity share options issued - - 7
Fair value movement in biological asset 27 216 -
Fair value movement in biological produce - - 239
Operating cash flow before changes in working capital (576) (697) (1,453)
(Increase)/decrease in trade and other receivables (511) (544) 74
(Increase)/decrease in inventories (49) 257 . (2,049)
(Increase) in biological assets (1,053) (972) -
Increase in trade and other payables 295 191 385
Cash outflow from operations (1,894) (1,765) (2,874)
Investing activities
Purchases of property, plant and equipment,
excluding vineyard establishment (531) (348) (2,502)
Sale of property, plant and equipment - 28 28
Net cash from investing activities (531) (320) (2,474)
Financing activities
Revolving facility repayments (2,325) (2,235) (4,547)
Revolving facility drawdowns 5,145 3,182 7,620
Loan issue costs - - (66)
Repayment of lease liabilities (42) (66) (101)
Interest paid (471) (174) (456)
Issue of ordinary shares - 18 46
Share issue expense - - (7)
Net cash from financing activities 2,307 725 2,489
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
For the six months ended 30 June 2023
Unaudited Unaudited Audited
Six months to Six months to Six months to Period to
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Net increase/(decrease) in cash and cash equivalents (118) (1,360) (2,859)
Cash and cash equivalents at beginning of period 269 3,128 3,128
Cash and cash equivalents at end of period 151 1,768 269
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2023
Audited: Share Share Merger Share option Retained Total
Capital premium reserve reserve earnings attributable
to equity
holders of
parent
£'000 £'000 £'000 £'000 £'000 £'000
31 December 2021 12,190 21,103 (13) - (17,395) 15,885
Share issue - 18 - - - 18
- - - - (1,374) (1,374)
Comprehensive loss for the period
______ ______ ______ ______ _____ ______
30 June 2022 12,190 21,121 (13) - (18,769) 14,529
______ ______ ______ ______ ______ ______
Share issue 1 30 - - - 31
Share issue expenses - (7) - - - (7)
Equity share options issued - - - 7 - 7
- - - - (1,151) (1,151)
Comprehensive loss for the period
______ ______ ______ ______ _____ ______
31 December 2022 12,191 21,144 (13) 7 (19,920) 13,409
Unaudited
Share issue - - - - - -
- - - - (1,440) (1,440)
Comprehensive loss for the period
______ ______ ______ ______ _____ ______
30 June 2023 12,191 21,144 (13) - (21,360) 11,969
______ ______ ______ ______ ______ ______
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1 Basis of preparation
Statement of compliance
The interim financial statements in this report have been prepared in
accordance with International Financial Reporting Standards (IFRS) and the
IFRS Interpretations Committee (IFRIC) interpretations that were applied in
the preparation of the Company's published consolidated financial statements
for the year ended 31 December 2022 and are consistent with the accounting
policies expected to apply in its financial statements for the year ended 31
December 2023. As permitted, this interim report has been prepared in
accordance with the AIM Rules for Companies and does not seek to comply with
IAS 34 "Interim Financial Reporting".
Statutory information
The financial information for the six months ended 30 June 2023 has not been
subject to an audit nor a review in accordance with International Standard on
Review Engagements 2410, Review of Interim Financial Information Performed by
the Independent Auditor of the Entity, issued by the Auditing Practices
Board. The comparative financial information presented herein for the year
ended 31 December 2022 does not constitute full statutory accounts within the
meaning of Section 434 of the Companies Act 2006. The Group's annual report
and accounts for the year ended 31 December 2022 have been delivered to the
Registrar of Companies. The Group's independent auditor's report was
unqualified and did not contain a statement under section 498(2) or 498(3) of
the Companies Act 2006.
The Board of the Company continually assesses and monitors the key risks of
the business. The Board continues to consider the Group's profit and cash flow
plans for at least the next 12 months and run forecasts and downside "stress
test" scenarios, and consider cost and other mitigation actions, including but
not limited to, operating cost reductions and reduced capital expenditure,
which enable the company to operate within existing facilities.
2 Revenue
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Wine sales 3,077 2,680 5,634
Other income 296 334 609
Net revenue 3,373 3,014 6,243
Excise duties 275 276 615
Total Revenue 3,648 3,290 6,858
3 Loss from operations
Loss from operations has been arrived at after charging:
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Depreciation of property, plant and equipment 347 294 601
Profit on disposal - 28 28
Staff costs expensed to consolidated
statement of income 1,279 893 1,770
4 Finance expense
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Finance expense
Interest payable on borrowings 472 175 456
Amortisation of bank transaction costs 18 21 40
Total finance expense 490 196 496
5 Property, plant and equipment
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Freehold land and buildings 7,985 6,178 7,830
Plant, machinery and motor vehicles 1,774 1,447 1,676
Mature vineyards 2,642 2,785 2,712
Computer equipment 52 34 50
Right of use assets 2,691 1,953 1,930
15,144 12,397 14,198
Right of use assets
Right of use assets comprise land leases on which vines have been planted and
property leases from which vineyard and winery operations are carried out.
These assets have been created under IFRS 16 - Leases.
6 Biological assets
Biological assets represent grapes growing on the Group's vines. Once the
grapes are harvested, they are deemed to be biological produce and transferred
to inventories.
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Crop growing costs 1,053 972 1,830
Fair value of grapes harvested and transferred
to inventories - - (1,591)
Fair value movement in biological assets (27) (216) -
Fair value movement in biological produce - - (239)
Fair value of biological assets at the reporting date 1,026 756 -
The fair value of biological assets at the reporting date is determined by
reference to estimated market prices less costs to sell. The estimated market
price for grapes used in respect of 2023 is £3,000 (2022: £3,000) per tonne.
The fair value is subject to a discount factor of 55% (2022: 55%) due to the
grapes, as at the reporting date, being approximately a month away from being
ready for harvest.
A 10% increase in the estimated market price of grapes to £3,300 per tonne
would result in an increase of £102,000 in the fair value of biological
assets at the reporting date. A 10% decrease in the estimated market price of
grapes to £2,700 per tonne would result in a decrease of £102,000 in the
fair value of biological assets at the reporting date.
7 Inventories
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Finished goods 1,474 998 1,249
Work in progress 11,196 9,425 11,330
12,670 10,423 12,579
8 Loans and borrowings
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Non-current liabilities
Bank loans 15,374 10,415 12,541
Unamortised bank transaction costs (162) (121) (168)
Total loans and borrowings 15,212 10,294 12,373
The bank loans of £15,212,000 with PNC Financial Services UK Limited ("PNC")
shown above is net of transaction costs of £162,000 which are being amortised
over the life of the loan.
In August 2022 the Group entered into an amended and restated agreement with
PNC for a £16.5 million asset-based lending facilities for a minimum period
of 5 years to 12 August 2027. The facility are being provided on a revolving
basis and are used to provide further working capital for the Company covering
inventory and accounts receivables, to support growth plans and allow flexible
drawdown and repayments in line with the Company's working capital
requirements. The interest rate is at the annual rate of 2.50 per cent (2022:
2.75 per cent) over Sterling Overnight Index Average ("SONIA") (2021: 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 and contain financial and general covenants
and customary events of default. The financial covenants include cash burn,
fixed charge cover, capital expenditure restrictions and minimum headroom
levels, and are tested monthly.
9 Share capital
Deferred shares of 49p each Ordinary shares of 1p each
Number Number £'000
Issued and fully paid
At 1 January 2022 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
Issued in the period - 2,174 -
At 30 June 2023 23,639,762 60,776,161 12,191
On 17 January 2023 the Company issued 2,174 new ordinary shares of 1p each
pursuant to an exercise of Warrants. All Warrants were exercised at 75p per
share.
Unexercised Warrants as at 30 June 2023 amount to 3,957,803 Ordinary Shares of
1 pence each. These Warrants are excisable at a price of 75 pence per share
and have a final exercise date of 16 December 2023.
10 Post balance sheet events
Shares issued
On 1 September 2023 the Company issued 7,838 new ordinary shares of 1p each
pursuant to an exercise of Warrants. All Warrants were exercised at 75p per
share.
Unexercised Warrants as at 30 June 2023 amount to 3,949,965 Ordinary Shares of
1 pence each. These Warrants are exercisable at a price of 75 pence per share
and have a final exercise date of 16 December 2023.
Board Resignation
On 6 September 2023 Charles Holland resigned as a director.
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