TIDMGUS
RNS Number : 6470I
Gusbourne PLC
03 June 2014
Gusbourne Plc
(London-AIM: GUS) ("Gusbourne" or the "Company")
Results for the period ended 31 December 2013.
The Board of Gusbourne Plc announces the audited results for the
9 months ended 31 December 2013.
Chairman's statement
I am delighted to report an exciting and solid period of
progress for the Group. The Gusbourne Estate business, based in
Kent, was acquired by the Group through an acquisition which
completed on 27 September 2013. The Group's existing business,
comprising vineyards in West Sussex, have merged into the enlarged
Gusbourne Estate business. The results for the acquired Gusbourne
Estate business are reflected in the results for the period from 27
September 2013; accordingly sales only represent three months of
activity.
The Gusbourne Estate business was started by me 10 years ago. I
selected and acquired land which was ideally suited for growing
vines at Appledore in Kent. My previous occupation was a consultant
orthopaedic surgeon in both the UK and South Africa. However, I
always maintained an active interest in wine making and held a
major stake in a large South African wine estate.
From the beginning at Gusbourne Estate I have been committed to
producing sparkling wine of the highest possible quality. This
starts with the meticulous selection of vineyard sites and vines
(in our case Burgundy clones for added complexity in the wine). It
extends to every part of the production process. We produce our
wines exclusively from grapes grown in our own vineyards. Most of
our sparkling wines receive a minimum of three years lees ageing
with the exception of the Rosé which receives a minimum of two
years.
These guiding principles of quality and excellence remain
uncompromised as we embark upon a new phase of development for
Gusbourne Estate. I am pleased to report that we have assembled an
experienced and professionally trained management team to continue
these traditions and who bring a wealth of local and international
experience.
At board level we are deeply saddened to report the loss of our
non-executive director Andrew Wilson. His brilliant mind, incisive
decision making, modesty and humour will be sadly missed.
Highlights of 2013
These include:
-- The planting of an additional 44.3 acres of vineyards, in May
2013. The new vineyards are located on long leasehold land within
the picturesque South Downs National Park in West Sussex. This is
one of the other main vine growing areas of England and will
provide a further regional dimension to our Gusbourne Estate
sparkling wines. We are convinced that our Sussex sites will
complement our Kent production and provide us with the opportunity
to produce complex and multifaceted wines, as well as mitigating
regional climatic risk. We look forward to making sparkling wine
from these grapes in a few years' time.
-- A very successful 2013 harvest. A late start to the growing
season resulted in a later than usual harvest. The quality was
excellent and the yield volumes were more than double our original
expectations. The resulting wine has added considerably to our wine
stocks for sale in future years and will help to satisfy the
growing demand for our wines in the United Kingdom and abroad.
-- Awards: Gusbourne Estate won the trophy for "English Wine
Producer of the Year" from the, International Wine and Spirit
Competition (IWSC) in November 2013. Gusbourne Estate's Brut
Reserve 2008 also won the IWSC international trophy for "Best
Bottle Fermented Sparkling Wine". It is worth noting that this
later trophy was based on competition from numerous sparkling wines
from around the world. We were also delighted to win a gold medal
in the IWC (International Wine Challenge) for our Blanc de Blancs
2008, and a gold medal (and trophy) for our 2011 Guinevere barrel
fermented Chardonnay, a still Burgundy style wine. These were proud
moments for us and a rewarding conclusion to a successful year.
Long term nature of the business and its funding
The production of premium quality wine from new vineyards is, by
its very nature, a long term project. It takes four years to bring
a vineyard into full production and a further four years to
transform these grapes into an exquisite sparkling wine.
As pretenders to the champagne crown our products have to be at
least as good and, with exacting standards and favourable climatic
conditions, perhaps even better.
This is a generational business and further equity issues are
planned to support additional investment in vineyards, winery
capacity, stocks of wine and, most importantly, brand development.
We appreciate the support our shareholders provide to us and we are
proud of our AIM quote which is unique in the English sparkling
wine industry.
Current trading
Currently we are trading in line with expectations and limited
stock availability. Our stocks are being targeted at premium
outlets both in the on and off trade to support our ongoing brand
development.
In May 2014 an additional 50 acres of vineyards were planted on
our estate in Kent in line with our long term development
strategy.
We are pleased to report that our wines have continued to win
awards in 2014. In May we were delighted to win an International
Wine Challenge gold medal for our Gusbourne Brut Reserve 2009.
Finally, I would like to thank all our staff at Gusbourne
Estate. Their ongoing dedication and hard work has made 2013 a year
of progress and solid achievement for the Company. We remain
passionate about our wines and firmly on track towards achieving
our long term goals.
Andrew Weeber
Chairman
Strategic Report
The paragraphs below have been extracted from the 'Strategic
Report' section of the Company's Annual Report and Accounts, which
may be found on the Company's website at www.gusbourneplc.com.
Results for the period
The results for the 9 month period ended 31 December 2013
include the results of the Gusbourne Estate business from 27
September 2013. Sales for the period, which comprise solely those
of Gusbourne Estate wines from 27 September 2013, amounted to
GBP129,000 and these are the first sales by the Group itself.
Whilst these sales reflect the sale of limited stock availability
at this time, they were however approximately 105 per cent higher
than those made by the Gusbourne Estate business for the same
period in 2012 under its previous ownership and reflect a steady
like for like growth in the sale of Gusbourne wines. Administrative
expenses of GBP832,000 for the 9 month period ended 31 December
2013 compare with GBP611,000 for the year ended 31 March 2013 and
reflect the growth in the business following the acquisition of the
Gusbourne Estate business, additional staff and transaction
expenses. Transaction expenses for the period amounted to
GBP398,000 in respect of transactions reflected in the AIM re
admission on 27 September 2013 and compare with transaction
expenses of GBP259,000 for the year ended 31 March 2013 in respect
of transactions reflected in the AIM re admission on 25 October
2012.
The operating loss for the period was GBP636,000 (GBP610,000 for
the year ended 31 March 2013).The loss before tax was GBP666,000
(GBP454,000 for the year ended 31 March 2013) after net finance
costs of GBP30,000 (net finance income of GBP156,000 for the year
ended 31 March 2013). These planned losses reflect the long term
development strategy of the business.
Balance Sheet
The main change in the Group's balance sheet during the period
reflected the acquisition of the Gusbourne Estate business and its
related freehold land and buildings on 27 September 2013, details
of which are shown in note 11 to the accounts on page 37. The
acquisition cost of GBP7,063,000 (GBP7,316,000 at fair value) was
satisfied by the issue of shares amounting to a cash equivalent of
GBP1,050,000 (GBP1,303,000 at fair value), the issue of secured
convertible bonds of GBP1,750,000 and cash of GBP4,263,000.
The other changes in the Group's balance sheet during the period
reflect expenditure on the ongoing investment in, and development
of, the Group's business, net of income from wine sales. This
expenditure includes the establishment of additional vineyards in
West Sussex at a cost of GBP418,000, the purchase of additional
plant and equipment for the vineyards and the winery amounting to
GBP538,000 and the planned ongoing development of the business,
including transaction costs, which is reflected in the net loss for
the period of GBP726,000.
Total assets at 31 December 2013 of GBP11,235,000, (GBP4,061,000
at 31 March 2013) include freehold land and buildings of
GBP4,601,000 (GBP222,000 at 31 March 2013), inventories of wine
stocks amounting to GBP1,310,000 (GBP137,000 at 31 March 2013),
GBP1,240,000 of biological assets (GBP154,000 at 31 March 2013) and
GBP1,703,000 of cash (GBP3,128,000 at 31 March 2013). Intangible
assets of GBP1,007,000 (GBPnil at 31 March 2013) arise from the
acquisition of the Gusbourne Estate business. Biological assets
reflect the fair value of grape vines calculated in accordance with
International Accounting Standard 41.
It is worth noting that the Group's inventories are reported at
the lower of cost and net realisable value and that these
inventories are expected to grow significantly until the Group
reaches full production maturity, bearing in mind the long
production cycle in relation to sparkling wine and related vineyard
establishment. Accordingly, and in common with similar sparkling
wine businesses, the anticipated underlying surplus of net
realisable value over cost of these wine inventories will become an
increasingly significant factor of the Group's asset base.
The Group's net tangible assets at 31 December 2013 amount to
GBP6,124,000 (GBP3,817,000 at 31 March 2013) and represent 86% of
total equity (100% at 31 March 2013).
Financing
The Group's activities are financed by its own cash resources,
bank loans and convertible bonds. Bank loans and convertible bonds
at 31 December 2013 amount in total to GBP3,720,000 (GBPnil at 31
March 2013) and represent 52% of total equity.
On 27 September 2013, the Group obtained a bank loan of
GBP2,025,000 and completed a placing of ordinary shares by the
Group for cash proceeds of GBP2,851,000. The cash proceeds from the
bank loan and share placing amounted to a total of GBP4,876,000, of
which GBP4,263,000 was used to satisfy the cash element of the
consideration for the acquisition of the Gusbourne Estate business
and its related freehold land and buildings. The remaining cash
proceeds were added to the Group's existing cash resources to fund
its ongoing activities.
The achievement of the Group's long term development strategy
will depend on the raising of further equity and/or debt funds to
achieve those goals. The production of premium quality wine from
new vineyards is, by its very nature a long term project. It takes
four years to bring a vineyard into full production and a further
four years to transform these grapes into Gusbourne Estate's
premium sparkling wine. Additional funding will be sought by the
Company over the coming few years to invest in additional
vineyards, winery capacity, and stocks of wine as well as brand
development, in line with its development strategy.
Key Performance Indicators
9 months ended Year ended
31 December 31 March
2013 2013
GBP'000 GBP'000
Sales 129 -
Operating cash outflow
Transaction expenses (398) (259)
Other (355) (492)
Total operating cash outflow (753) (751)
Capital expenditure
Investment in vineyard establishment 418 40
Other capital expenditure 653 257
Total capital expenditure 1,071 297
At 31 December At 31 March
2013 2013
GBP'000 GBP'000
Total assets 11,235 4,061
Net tangible assets 6,124 3,817
Total equity 7,131 3,817
Net tangible assets as per cent
of total equity 86% 100%
Gearing 52% 0%
Annual General Meeting
The annual report and accounts are being posted to shareholders
today, together with notice of the Annual General Meeting to be
held at 10.30 a.m. on 26 June 2014 at the offices of Allen and
Overy LLP, One Bishops Square, London E1 6AD. The annual report and
accounts are available to view on the Company's website at
www.gusbourneplc.com
Enquiries:
Gusbourne Plc
Andrew Weeber/Ben Walgate +44 (0)20 7654 5574
Cenkos Securities plc
Nicholas Wells +44 (0)20 7397 8920
Note: This and other press releases are available at the
Company's web site: www.gusbourneplc.com
Consolidated statement of comprehensive income for the period
ended 31 December 2013
December March
2013 2013
Note GBP'000 GBP'000
Revenue 129 -
Cost of sales (78) -
Gross profit 51 -
Change in fair value of biological
assets 14 145 1
Transaction expenses - stamp
duty land tax 11 (211) -
Transaction expenses - other 11 (187) (259)
Other administrative expenses (434) (352)
Total administrative expenses (832) (611)
Loss from operations 5 (636) (610)
Finance income 8 29 156
Finance expense 8 (59) -
Loss before tax (666) (454)
Tax expense 9 (60) -
Loss for the period attributable
to owners of the parent (726) (454)
Total comprehensive loss attributable
to owners of the parent (726) (454)
Loss per share attributable
to the ordinary equity holders
of the parent: 10
Basic (pence) (6.88) (5.68)
Diluted (pence) (6.88) (5.68)
Consolidated statement of financial position as at 31 December
2013
December March
2013 2013
Note GBP'000 GBP'000
Assets
Non-current assets
Intangibles 12 1,007 -
Property, plant and equipment 13 5,724 347
Biological assets 14 1,240 154
7,971 501
Current assets
Inventories 16 1,310 137
Trade and other receivables 17 251 295
Cash and cash equivalents 1,703 3,128
3,264 3,560
Total assets 11,235 4,061
Liabilities
Current liabilities
Trade and other payables 18 (324) (194)
Redeemable preference shares 21 - (50)
(324) (244)
Non-current liabilities
Loans and borrowings 19 (2,025) -
Convertible deep discount bonds 20 (1,695) -
Deferred tax liabilities 22 (60) -
(3,780) (244)
Total liabilities (4,104) (244)
Net assets 7,131 3,817
Issued capital and reserves attributable
to owners of the parent
Share capital 23 7,612 4,000
Share premium 24 346 266
Merger reserve 24 (13) (266)
Convertible bond reserve 24 95 -
Retained earnings 24 (909) (183)
Total equity 7,131 3,817
Consolidated statement of cashflows for the period ended 31
December 2013
December March
2013 2013
Note GBP'000 GBP'000
Cash flows from operating activities
(Loss)/profit for the period before
tax (666) (454)
Adjustments for:
Depreciation of property, plant and
equipment 13 36 18
Profit on disposal of property, plant
and equipment (8) -
Finance expense 8 59 -
Finance income 8 (29) (156)
Movement in biological assets 14 (302) (1)
(910) (593)
Decrease/(increase) in trade and other
receivables 44 (275)
Increase in inventories (17) (53)
Increase in trade and other payables 130 170
Cash outflow from operations (753) (751)
Income taxes paid - -
Investing activities
Purchases of property, plant and equipment,
excluding vineyard establishment 13 (653) (257)
Investment in vineyard establishment 13 (418) (40)
Purchase of biological assets - (153)
Acquisition of Gusbourne Estate business 11 (4,263) -
Sale of property, plant and equipment 35 -
Interest received 29 156
Net cash from investing activities (5,270) (294)
Financing activities
Bank loan 19 2,025 -
(Redemption)/issue of redeemable preference
shares 21 (50) 50
Interest paid (19) -
Issue of ordinary shares 23 2,851 -
Share issue expenses (209) -
Net cash from financing activities 4,598 50
Net decrease in cash and cash equivalents (1,425) (995)
Cash and cash equivalents at the beginning
of the period 3,128 4,123
Cash and cash equivalents at the end
of the period 1,703 3,128
Consolidated statement of changes in equity for the period ended
31 December 2013
Total attributable
to equity
Share Share Merger Convertible Retained holders
capital premium reserve bond earnings of parent
GBP'000 GBP'000 GBP'000 reserve GBP'000 GBP'000
31 March 2012 4,000 266 (266) - 271 4,271
Comprehensive loss for
the year - - - - (454) (454)
----------------------- -------- -------- -------- ----------- --------- ------------------
Total comprehensive
loss for the year - - - - (454) (454)
31 March 2013 4,000 266 (266) - (183) 3,817
31 March 2013 4,000 266 (266) (183) 3,817
Shares issued 3,612 80 - - - 3,692
Equity recognised on issue
of convertible bonds - - - 95 - 95
Excess of fair value over
nominal value of shares
issued - - 253 - - 253
Comprehensive loss for
the period - - - - (726) (726)
=========================== ====== === ===== ====== =====
Total comprehensive loss
for the period 3,612 80 253 95 (726) 3,314
31 December 2013 7,612 346 (13) 95 (909) 7,131
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 period ended 31 December 2013 comprise the Company
and its subsidiaries (together referred to as the "Group").
Basis of preparation
The financial information does not constitute the Group's
statutory accounts for either the period ended 31 December 2013 or
the year ended 31 March 2013, but is derived from those accounts.
The Group's statutory accounts for 31 March 2013 have been
delivered to the Registrar of Companies and those for 31 December
2013 will be delivered following the Company's Annual General
Meeting. The Auditor's reports on both the 31 March 2013 and 31
December 2013 accounts were unqualified, did not draw attention to
any matters by way of an emphasis and did not contain any statement
under Section 498 of the Companies Act 2006.
The Group's consolidated financial statements have been prepared
in accordance with International Financial Reporting Standards as
adopted for use in the EU ("IFRS").
The following accounting policies have been applied consistently
in dealing with items which are considered material in relation to
the Group's financial statements.
The financial statements are presented in pounds sterling. They
have been prepared on the historical cost basis except that
biological assets and convertible bonds are stated at their fair
value.
Going concern
The directors have reviewed the Group's cash flow forecasts and
note that the achievement of the Group's long term development
strategy will depend on the raising of further equity and/or debt
funds to achieve those goals. The production of premium quality
wine from new vineyards is, by its very nature a long term project.
It takes four years to bring a vineyard into full production and,
an average of four years to transform these grapes into the Group's
premium sparkling wine. Additional funding will be sought by the
Group over the coming few years to invest in additional vineyards,
winery capacity, and stocks of wine as well as brand development,
in line with its development strategy. The directors believe that
future fundraisings will be successful and have therefore prepared
the financial statements on a going concern basis.
New accounting standards and changes to existing accounting
standards
i. New standards and interpretations adopted in the current period:
IFRS 7 (amended) - Offsetting Financial Assets and Financial
Liabilities
IFRS 13 - Fair Value Measurement
IAS 1 (amended) - Presentation of Items of Other Comprehensive
Income
IAS 12 (amended) - Deferred Tax: Recovery of Underlying
Assets
IAS 19 (revised) - Employee Benefits.
These had no material impact on the financial statements, but
the adoption of IFRS 13 Fair Value Measurement has resulted in
additional disclosure.
ii. Standards, amendments and interpretations to existing
standards that are not yet effective and have not been early
adopted by the Group:
At the date of authorisation of these financial statements, the
following standards and interpretations applicable to the Group's
financial statements were in issue but not yet effective at the
period end. They have not been adopted early and when they come
into effect are deemed not relevant to the Group or to have no
material impact on its financial statements:
IFRS 9 - Financial Instruments
IFRS 10 - Consolidated Financial Statements IFRS 11 - Joint
Arrangements
IFRS 12 - Disclosure of Interests in Other Entities
IAS 19 (amended) - Defined Benefit Plans - Employee
Contributions IAS 27 (revised) - Separate Financial Statements
IAS 28 (revised) - Investments in Associates and Joint
Ventures
IAS 32 (amended) - Offsetting Financial Assets and Financial
Liabilities
IAS 36 (amended) - Recoverable Amounts Disclosures for
Non-Financial Assets
IAS 39 (amended) - Novation of Derivatives and Continuation of
Hedge Accounting
Annual Improvements to IFRSs (2010-2012 Cycle)
Annual Improvements to IFRSs (2011-2013 Cycle)
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. In assessing control, potential
voting rights that presently are exercisable or convertible are
taken into account. The results of any subsidiaries sold or
acquired are included in the Group income statement up to, or from,
the date control passes. Intra-Group sales and profits are
eliminated fully on consolidation.
On acquisition of a subsidiary, all of the subsidiary's
separable, identifiable assets and liabilities existing at the date
of acquisition are recorded at their fair values reflecting their
condition at that date. On disposal of a subsidiary, the
consideration received is compared with the carrying cost at the
date of disposal and the gain or loss is recognised in the income
statement. The excess of the cost of acquisition over the fair
value of the Group's share of the identifiable net assets is
recorded as goodwill. Intercompany transactions, balances and
unrealised gains on transactions between group companies are
eliminated. Subsidiaries' results are amended where necessary to
ensure consistency with the policies adopted by the Group.
Revenue
Revenue from the sales of goods is recognised when the Group has
transferred the significant risks and rewards of ownership to the
buyer and it is probable that the Group will receive the previously
agreed upon payment. These criteria are considered to be met when
the goods are delivered to the buyer. Where the buyer has a right
of return, revenue is recognised in the period where the goods are
delivered less an appropriate provision for returns based on past
experience.
Financial assets
Loans and receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
arise principally through the provision of goods to customers (e.g.
trade receivables), but also incorporate other types of contractual
monetary asset. They are initially recognised at fair value plus
transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised
cost using the effective interest rate method, less provision for
impairment.
Impairment provisions are recognised when there is objective
evidence (such as significant financial difficulties on the part of
the counterparty or default or significant delay in payment) that
the Group will be unable to collect all of the amounts due under
the terms receivable, the amount of such a provision being the
difference between the net carrying amount and the present value of
the future expected cash flows associated with the impaired
receivable. For trade receivables, which are reported net, such
provisions are recorded in a separate allowance account with the
loss being recognised within administrative expenses in the
consolidated statement of comprehensive income. On confirmation
that the trade receivable will not be collectable, the gross
carrying value of the asset is written off against the associated
provision.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held
at call with banks, other short term highly liquid investments with
original maturities of three months or less.
Financial liabilities
Borrowings
Borrowings are initially recognised at fair value net of any
transaction costs directly attributable to the loan. They are
subsequently measured at amortised cost with interest charged to
the statement of comprehensive income based on the effective
interest rate of the borrowings.
Convertible deep discount bonds
Convertible deep discount bonds are redeemable at their nominal
price at maturity. The bonds may be converted into the Company's
shares at the holders' option and are therefore classified as
compound financial instruments in accordance with the requirements
of IAS 32. The debt element is calculated as the present value of
future cash flows assuming the bonds are redeemed on the redemption
date, discounted at the market rate for an equivalent debt
instrument with no option to convert to equity. The difference
between the cash payable on maturity and the present value of the
debt element is recognised within equity. The discount is charged
over the life of the bond to the statement of comprehensive income
and included within finance expenses.
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.
Redeemable preference shares
The Group's redeemable preference shares are classified as
financial liabilities. The shares are redeemable at the option of
the Directors of the Company or the holder of the redeemable
preference shares.
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.
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 present value of the estimated future
cash flows from the separately identifiable assets, termed a 'cash
generating unit'. 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 and the estimated present value of any future
unavoidable costs of dismantling and removing items. The
corresponding liability is recognised within provisions.
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 vines are
remeasured at fair value less costs to sell and transferred to
biological assets. The remaining vineyard establishment costs will
then be depreciated over their expected useful economic lives.
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 land and buildings 4% per annum straight line
Plant, machinery and motor vehicles 5-20% per annum straight line
Computer equipment 33% per annum straight line
Biological assets and produce
Biological assets consist of grape vines and are included in the
statement of financial position at fair value less costs to sell.
The determination of the fair value of grape vines requires
significant management judgement and, amongst others, the following
factors are considered: discount rate, the productive life and
yield of the vines, notional rents for land (to allow comparability
between freehold and leasehold vineyards) and expected sales
prices. Detailed explanations of the methods employed to value the
vines are described in note 14. Gains and losses arising from
changes in fair value are included in the income statement in the
period in which they arise.
Harvesting of the grape crop is ordinarily carried out in
October. The costs of growing the grapes are capitalised in the
period in which they are incurred. Grapes that are used in
production of the Group's own wine are included at fair value in
wine inventory. The fair value of grapes is determined by reference
to market prices at the time of harvest.
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 incurred in
bringing the inventories to their present location and condition.
Grapes grown in the Group's vineyards are transferred into
inventory from biological assets 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.
Business combinations
Acquisitions of businesses are accounted for using the
acquisition method. The cost of the acquisition is measured at the
aggregate fair value of the consideration given. The related
transaction expenses are recognised in the statement of
comprehensive income as incurred.
The acquiree's identifiable assets, liabilities and contingent
liabilities are recognised at their fair value at the acquisition
date.
2 Critical accounting 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 period
relate are set out below.
Biological assets valuation
Biological assets are stated at fair value which requires the
use of certain unobservable inputs in the Group's valuation model.
The techniques and assumptions used are set out in note 14.
Fair value of biological produce
The Group's biological produce is measured at fair value at the
point of harvest. This is based on a deemed market value less costs
to sell. 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.
Business combinations
Assets and liabilities acquired and consideration given are
recognised and measured at fair value. This requires a degree of
judgement by management, for example, the fair value of inventory
is measured as estimated selling prices less deductions for
estimated costs to bring the items to a saleable state and selling
costs, discounted to present values.
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 value in use 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. Further information is set out in note 12.
Useful lives of plant, property and equipment
The charge in respect of depreciation is calculated based on
management's estimate of an asset's useful economic life and its
residual value at the end of that life. An increase in the useful
life or residual value would result in a decreased depreciation
charge in the statement of consolidated income.
Convertible debt
The equity element of convertible debt is calculated by
reference to a market rate for a similar, non-convertible, bond. A
higher rate would result in a greater proportion of the instrument
being recognised as equity on the statement of financial
position.
3 Financial instruments - risk management
The Group is exposed to risks that arise from its use of
financial instruments. This note describes the Group's objectives,
policies and processes for managing those risks and the methods
used to measure them. Further quantitative information in respect
of these risks is presented throughout these financial
statements.
There have been no substantive changes in the Group's exposure
to financial instrument risks, its objectives, policies and
processes for managing those risks or the methods used to measure
them from previous periods unless otherwise stated in this
note.
Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument risk arises, are as follows:
Bank loans
Convertible debt
Trade receivables
Cash and cash equivalents
Trade and other payables
Liquidity risk
The Group closely monitors and manages its liquidity risk. Cash
forecasts are regularly produced and sensitivities run for
different scenarios.
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.
Interest rate risk
The Group's main debt is exposed to interest rate fluctuations.
The Group considers that the risk is not significant in the context
of its business plans. Should there be a 0.5% increase in the
bank's lending rate, the finance charge in the statement of
comprehensive income would increase by GBP10,000.
4 Segmental information
The directors consider the Group to have only one operating
segment. Details of the sole operating segment are shown in the
consolidated statement of comprehensive income, statement of
financial position and consolidated statement of cash flows
All operations are conducted in the United Kingdom. Loss from
operations has been arrived at after charging:
5 Loss from operations
Loss from operations has been arrived at after charging:
December March
2013 2013
GBP'000 GBP'000
Depreciation of property, plant and equipment
(owned assets) 36 18
Profit on disposal of property, plant and
equipment (8) -
Staff costs (see note 7) 201 99
6 Auditor's remuneration
December March
2013 2013
GBP'000 GBP'000
Auditor's remuneration
- Audit: consolidation 27 16
- Audit: subsidiaries 7 5
Auditor's remuneration: services relating
to corporate finance transactions 132 34
166 55
7 Staff Costs
December March
2013 2013
GBP'000 GBP'000
Staff costs (including Directors) comprise:
Wages and salaries 188 94
Social security contributions and similar
taxes 13 5
201 99
The average number of employees of the Group, including
Directors, during the period was 8 (March 2013: 3). Directors'
remuneration was as follows:-
December March
Salaries Fees 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
Andrew Weeber 13 - 13 -
Ben Walgate 60 - 60 60
Paul Bentham 5 - 5 -
Ian Robinson - 30 30 24
Andrew Wilson - 15 15 10
78 45 123 94
Ben Walgate is the highest paid director. Fees in respect of Ian
Robinson and Andrew Wilson are payable to Anne Street Partners
Limited under the terms of agreements dated 8 October 2012.
The Directors are considered to be key management.
December March
2013 2013
GBP'000 GBP'000
Key management personnel
costs were as follows:
Short term employment benefits
including social security contributions 131 99
131 99
8 Finance income and expense
December March
2013 2013
GBP'000 GBP'000
Finance income
Interest received on bank deposits 29 156
Total finance income 29 156
Finance expense
Interest payable on borrowings 19 -
Convertible deep discount bond charge 40 -
Total finance expense 59 -
====================================== ======== ========
9 Taxation
December March
2013 2013
GBP'000 GBP'000
Current tax expense
Current tax on profits for the year - -
Total current tax - -
Deferred tax expense
Origination and reversal of temporary differences 60 -
Total deferred tax 60 -
Total tax expense 60 -
December March
2013 2013
GBP'000 GBP'000
(Loss) on ordinary activities before tax (666) (454)
(Loss) on ordinary activities at the standard
rate of corporation tax in the UK for the period
of 23.25%
(March 2013: 24%) (155) (109)
Effects of:
Tax losses carried forward 155 109
Tax charge for the year - -
No deferred tax asset has been recognised on unutilised taxable
losses due to the lack of certainty over the taxable profits being
available against which deductible temporary differences can be
utilised. The unutilised tax losses carried forward are GBP833,000
(March 2013: GBP235,000)
10 Loss per share
Basic earnings per ordinary share are based on an equity loss of
GBP726,000 (March 2013: GBP454,000) and 10,548,391 ordinary shares
(March 2013: 8,000,003) of 50 pence each, being the weighted
average number of shares in issue during the period. There is no
adjustment to be made for diluted earnings per ordinary share.
Weighted Loss per
average ordinary
Loss number share
GBP'000 of shares pence
Period ended 31 December 2013 (726) 10,548,391 (6.88)
Year ended 31 March 2013 (454) 8,000,003 (5.68)
11 Business combinations
On 27 September 2013 Gusbourne Estate Limited, a wholly owned
subsidiary of the Group, acquired the Gusbourne Estate business and
related freehold property for a total consideration of
GBP7,316,000. The principal reason for this acquisition was to
invest in, and further develop, the Gusbourne Estate business
including, in particular, its award winning Gusbourne brand to take
advantage of further anticipated market growth in this sector of
the wine industry.
Details of the fair value of identifiable assets and liabilities
acquired, purchase consideration and goodwill are as follows:
Fair value
Book value adjustment Fair value
Net assets at the acquisition date GBP'000 GBP'000 GBP'000
Property, plant and equipment 4,369 - 4,369
Biological assets 1,074 - 1,074
Inventories 641 225 866
Brand - 230 230
Total net assets 6,084 455 6,539
Fair value of consideration paid: GBP'000
Cash 4,263
Shares 1,303
Convertible bond - present value of debt element 1,655
Convertible bond - equity element 95
Total consideration 7,316
Goodwill 777
Transaction costs of GBP187,000 and Stamp Duty Land Tax of
GBP211,000 in connection with the acquisition have been recognised
in the statement of comprehensive income. The acquisition of the
Gusbourne Estate business generated post acquisition revenue of
GBP129,000 and profits before interest and tax of GBP39,000.
The fair value of the Group's shares issued in consideration for
the acquisition has been based on the acquisition date share price
of GBP0.67 per share. The convertible bond was also fair valued at
the date of acquisition.
The main factors leading to the recognition of goodwill are the
presence of intangible assets, such as the workforce of the
acquired entity, which do not qualify for separate recognition, and
synergies resulting from material cost savings and sharing of
expertise and systems which will enable future growth.
12 Intangibles
Goodwill Brand Total
GBP'000 GBP'000 GBP'000
Cost
At 1 April 2013 - - -
Arising on acquisition of the
Gusbourne Estate business 777 230 1,007
At 31 December 2013 777 230 1,007
Impairment losses
At 1 April 2013 - - -
Charge for the period - - -
At 31 December 2013 - - -
Net book value
At 1 April 2013 - - -
At 31 December 2013 777 230 1,007
The carrying value of goodwill is allocated to the following
cash-generating units:
December March
2013 2013
GBP'000 GBP'000
Gusbourne Estate 777 -
Goodwill is the premium paid to acquire the Gusbourne Estate
business over the fair value of its net assets.
The Group's management prepare long term cash flow forecasts for
13 years, and then applies a discount rate to determine the present
value of the future cash flows arising from the cash-generating
unit to arrive at a recoverable amount. Where the recoverable
amount is lower than the carrying value of goodwill allocated to
the cash-generating unit an impairment charge is made. The discount
rate used is 17% based on the Group's estimated weighted cost of
capital. No growth rate has been applied over the term of the long
term cash flow forecasts. This is a level 3 fair value
hierarchy.
13 Property, plant and equipment
Plant,
machinery
Freehold and
Land and motor Vineyard Computer
Buildings vehicles establishment equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost or valuation
At 1 April 2012 - 76 - - 76
Additions 222 32 40 3 297
At 31 March 2013 222 108 40 3 373
At 1 April 2013 222 108 40 3 373
Acquisition of the Gusbourne
Estate business 4,289 80 - - 4,369
Additions 99 538 418 16 1,071
Disposals - (40) - - (40)
At 31 December 2013 4,610 686 458 19 5,773
Plant,
Freehold Machinery
land and and motor Vineyard Computer
buildings Vehicles establishment equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Accumulated depreciation
At 1 April 2012 - 8 - - 8
Depreciation charge for
the year - 17 - 1 18
At 31 March 2013 - 25 - 1 26
At 1 April 2013 - 25 - 1 26
Depreciation
charge for the year 9 26 - 1 36
Depreciation on disposals - (12) - - (12)
At 31 December 2013 9 39 - 2 50
Net book value
At 31 March 2013 222 83 40 2 347
At 31 December 2013 4,601 647 458 17 5,723
14 Biological assets
The fair value of biological assets at the balance sheet date
was:
Vines
GBP'000
At 1 April 2013 154
Arising on acquisition of Gusbourne Estate business 1,074
Fair value of grapes harvested and transferred to
inventory (290)
Crop growing costs 157
Change in fair value due to price, yield and maturity 145
At 31 December 2013 1,240
====================================================== ========
The Group owns bearer biological assets in the form of grape
vines, which are cultivated on land owned by the Group. The grapes
produced from these vines are used in the production of the Group's
own wines.
The total area of vines at December 2013 amounted to 104.8 acres
(March 2013: 7.7 acres) of which approximately 58.5 acres (March
2013: 7.7 acres) can be classified as mature (i.e. four years after
planting). The average peak productive life of grape vines is
estimated to be 25 years.
The fair value of mature grape vines was calculated by
discounting the net cash flows thereof over their remaining lives
at a pre-tax discount rate of 17% (March 2013: 17%). The net cash
flows were calculated with reference to grape varieties, expected
yields, estimated future market value of grapes and estimated
future production costs based on anticipated costs and third party
sale prices achieved. Future prices are adjusted for inflation.
Planting expenditure is carried forward at cost in the statement
of financial position with property, plant and equipment until the
vines reach maturity, at which point they are re-measured at fair
value and re-classified as biological assets.
Fair value
The fair value of vines is determined based on a level 3
valuation method, that is, using valuation methods that include
inputs that are not based on market data. The significant
unobservable inputs used in the discounted cash flow model
developed to value the vines are the discount rate, yields and fair
value of grapes.
For example, a 10% increase in the discount rate to 18.7% would
result in a decrease in fair value of the biological assets by
GBP103,500. In addition cashflows are projected over a number of
years and based on estimated harvest yields. Yields are based on an
average of the performance of the Group's vines over previous
harvests.
Changes in these estimates could materially impact estimates of
future cashflows used in the assessment of the fair values.
15 Subsidiaries
The principal subsidiaries of Gusbourne PLC, all of which have
been included in these consolidated financial statements, are as
follows:
Proportion of ownership
interest at
December March
Name Country of incorporation 2013 2013
Gusbourne Estate Limited England and Wales 100% 100%
Gusbourne Wines Limited England and Wales 100% n/a
Gusbourne Estate Limited is involved in the production, sale and
distribution of English sparkling wine. Gusbourne Wines Limited is
dormant.
16 Inventories
December March
2013 2013
GBP'000 GBP'000
Finished goods 171 -
Work in progress 1,139 137
Total inventories 1,310 137
17 Trade and other receivables
December March
2013 2013
GBP'000 GBP'000
Trade receivables 66 -
Prepayments 19 156
Other receivables 166 139
Total trade and other receivables 251 295
Trade and other receivables are due within 1 year apart from
GBP50,000 (March 2013: Nil) included within other receivables which
is due in more than 1 year.
18 Trade and other payables
December March
2013 2013
GBP'000 GBP'000
Trade payables 173 160
Accruals 86 31
Other payables 54 -
Total financial liabilities, excluding loans
and borrowings classified as financial liabilities
measured at amortised cost 313 191
Other payables - tax and social security payments 11 3
Total trade and other payables 324 194
Book values are approximate to fair value at 31 December 2013
and 31 March 2013.
19 Loans and borrowings
December March
2013 2013
GBP'000 GBP'000
Bank loans 2,025 -
Total loans and borrowings 2,025 -
The bank loan of GBP2,025,000 is at an interest rate of 3% over
Barclays Bank plc base rate and is due for repayment in full in
September 2018. It is secured by way of a fixed charge over the
group's land and buildings at Appledore, Kent and a floating charge
over all other property and undertakings.
20 Convertible bonds
GBP'000
Present value of debt element at issue on
27 September 2013 1,655
Equity element 95
Nominal value of bond at issue date 1,750
Present value of debt element at issue date 1,655
Discount expense for the period 40
Carrying value of debt element at 31 December
2013 1,695
Equity element at 31 December 2013 95
Total fair value at 31 December 2013 1,790
Convertible bonds represent the debt element of a deep discount
bond issued to Mr A C V Weeber and Mrs C Weeber as part of the
consideration for the acquisition of the Gusbourne Estate business
on 27 September 2013. The Bond is secured by a fixed charge over
the group's land and buildings at Appledore, Kent. The Bond is
redeemable on 27 September 2017 and attracts a coupon rate of 7.5%
per annum which is rolled up annually. From 27 September 2015 until
the 26 September 2016 the holders of the Bond can convert some or
all of the bonds into Gusbourne PLC ordinary shares at a price of
66 pence per share.
In accordance with the requirements of IAS 32 the Bond is
classified as a compound financial instrument containing an element
of debt and equity. The debt element is calculated as the present
value of future cash flows assuming the Bond is redeemed on the
redemption date, discounted at the market rate for an equivalent
debt instrument with no option to convert to equity. A rate of 9%
has been used. The difference between the cash payable on maturity
and the present value of the debt element is recognised in equity.
The discount is charged over the life of the bond to the statement
of comprehensive income and included within finance expenses.
21 Redeemable preference shares
Redeemable preference
shares of 50p
each
Issued and fully paid Number GBP'000
At 1 April 2012 & 31 March 2013 99,999 50
Redeemed during the period (99,999) (50)
At 31 December 2013 - -
On 26 September 2013 Gusbourne PLC redeemed 99,999 redeemable
preference shares of fifty pence each against the proceeds of the
new ordinary share issue (note 23). The shares were redeemable at
the option of the Directors of the Company or the holder of the
redeemable preference shares.
22 Deferred tax liabilities
GBP'000
At 1 April 2013 -
Movement on fair value of biological assets 60
At 31 December 2013 60
23 Share capital
Ordinary shares
of 50p each
Issued and fully paid Number GBP'000
At 1 April 2012 8,000,002 4,000
Other issues for cash during the year 1 -
At 31 March 2013 8,000,003 4,000
Issued for cash during the year 5,280,367 2,640
Issued as consideration for acquisition 1,944,444 972
At 31 December 2013 15,224,814 7,612
On 27 September 2013 Gusbourne PLC (formerly Shellproof PLC)
issued 5,280,367 50 pence ordinary shares. The shares were fully
subscribed and paid up. A further 1,944,444 were issued to the
vendor of Gusbourne Estate as part of the consideration for the
acquisition on the same date. Further details in respect of the
acquisition can be found in Note 11.
24 Reserves
The following describes the nature and purpose of each reserve
within equity:
Reserve Description and purpose
----------------- --------------------------------------------
Share Premium The share premium account arose on the
issue of shares by the Company at a premium
to their nominal value. Expenses of share
issues are charged to this account.
----------------- --------------------------------------------
Merger reserve The merger reserve is the difference
between the fair value of the shares
issued and the market value of the shares
acquired.
----------------- --------------------------------------------
Convertible bonds The convertible bonds reserve is the
equity element of the bonds as disclosed
in note 20.
----------------- --------------------------------------------
Retained earnings The retained earnings represent cumulative
net gains and losses recognised in the
Group's statement of consolidated income.
----------------- --------------------------------------------
25 Related party transactions
At 31 December 2013 GBP1,500,000 (31 March 2013 - GBP3,009,000)
of cash and cash equivalents were held on deposit at British
Caribbean Bank Limited ('BCBL'), a related party. BCBL is a wholly
owned subsidiary of Waterloo Investment Holdings Limited ('WIHL').
Lord Ashcroft, KCMG PC, is a controlling shareholder in both the
Company and WIHL.
On 27 September 2013 Gusbourne PLC redeemed 99,999 redeemable
preference shares of fifty pence each from Lord Ashcroft KCMG PC
for the amount of GBP50,000.
Anne Street Partners Limited is considered a related party by
virtue of the fact that Ian Robinson, a director of Gusbourne PLC,
is also a director of Anne Street Partners Limited. During the
period Anne Street Partners Limited charged the Company in total
GBP137,500 (March 2013 - GBP83,769). Of this, GBP45,000 was in
relation to directors fees (March 2013 - GBP33,769) and GBP92,500
management services (March 2013 - GBP50,000). At 31 December 2013
an amount of GBP111,000 inclusive of VAT (March 2013 - GBP60,000)
was due to Anne Street Partners Limited and is shown within trade
and other payables.
Included within other receivables at 31 December 2013 is an
amount of GBP41,000 due from Andrew Weeber, Non-Executive Chairman.
This represents net amounts received by Andrew Weeber on behalf of
the Group in respect of trading items post acquisition of the
Gusbourne Estate business on 27 September 2013. These amounts have
been received by the Group since 31 December 2013.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BLGDLSXGBGSD
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