TIDMGUS
RNS Number : 0017R
Gusbourne PLC
25 June 2020
25 June 2020
Gusbourne Plc
("Gusbourne", the "Company" or the "Group")
Results for the year ended 31 December 2019
The Board of Gusbourne Plc (AIM: GUS) is pleased to announce its
audited results for the year ended 31 December 2019.
2019 Highlights:
-- Net revenue* growth of 31% (2018: 26%);
-- A successful grape harvest in 2019 with another vintage of
high quality and record quantity;
-- Continuing success in major wine competitions with over 70
medals at national and international competitions, where Gusbourne
is judged against some of the finest wines from around the world.
This included "Best English Sparkling Wine" at the International
Wine Challenge held in Shanghai;
-- Ongoing growth of operations at the Nest - the Company's
cellar door, tour and wine tasting operation - which continued to
bring many new visitors and customers to our winery and vineyards
in Appledore, Kent; and
-- Increased investment in the Group's asset base including
vineyards, wine inventories, buildings, plant and machinery and the
award winning Gusbourne brand.
Chairman's statement
I am pleased to report that Gusbourne's net revenues continued
to grow in 2019, with net revenues for the year at GBP1,653,000
(2018: GBP1,261,000), an increase of 31% (2018: 26%) over the prior
year and we have expanded our customer base both in the UK and
overseas. The Gusbourne business was established sixteen years ago
in 2004 and has been selling its award-winning English sparkling
wines since 2010. Gusbourne remains one of England's premier
sparkling wine businesses and is focused at the luxury end of the
market.
The Company experienced a strong start to trading in the first
three months of the year, with revenue performance ahead of
directors' expectations. Since the end of March 2020, the Company's
distribution channels have been impacted by COVID-19, although the
Company has taken steps to mitigate this impact. Details of the
impact of COVID-19 on the Group are provided in the Chief
Executive's review.
I am delighted to report that in June 2020 we entered into a
GBP10.5 million asset-based lending facility with PNC Financial
Services UK Ltd ("PNC"). The new facility has been used to
refinance certain existing debts and provide additional liquidity
and long-term finance for the Company at a competitive rate.
I should like to express my sincere thanks for the dedicated
efforts of our employees, our loyal customers as well as the
support of our shareholders in helping the Group achieve another
successful year for the business.
Andrew Weeber
Chairman
* Net revenue represents Revenue after deducting excise
duties
Chief Executive's review
I am pleased to report that 2019 has been another year of
successful achievement for the Group, with net revenue increasing
31% on the prior year. We continue to widen our distribution
channels both in the UK and overseas, and I am delighted to report
that Gusbourne is now distributed to fifteen countries around the
world. We have continued to invest further in sales and marketing
through the period to help support further sales growth in the
coming years.
The Gusbourne sparkling wine products are at the luxury end of
the English sparkling wine market and we are committed to
maintaining this premium position. We are delighted that the
quality of our products has also been recognised in the United
States, an important contributor to our export sales, with a number
of prestigious awards for our sparkling wines.
2019 marked our second full year of operations at the Nest,
which provides Gusbourne's cellar door sales facilities, tours and
wine tasting operations. Situated amongst our vineyards and winery
operations in Kent this facility allows us to fully engage with our
customers, encouraging them to enjoy the vineyards, visit the
winery and taste our wines.
Activities
Gusbourne is engaged in the production and distribution of a
range of high quality and award winning English sparkling wines
from grapes grown in its own vineyards in Kent and West Sussex. The
majority of the Group's vineyards are located at its freehold
estate at Appledore in Kent where the winery is also based. The
Group now has a total of 231 acres of land under vine with the
first plantings dating back to 2004.
Gusbourne Wines
Gusbourne is dedicated to the production of premium sparkling
wines from grapes grown exclusively in its own vineyards. Our
processes, both in establishing and maintaining the vineyards and
in making wine, continue to follow the rigorous principles of
careful site selection and attention to detail in all aspects of
viticulture and wine production. An integral part of the Group's
approach is to age its traditional method sparkling wines for as
long as is necessary for the wines to meet optimum maturity. The
average production cycle for the wines is four years from harvest
to sale.
Recent awards
We have continued our success in major wine competitions winning
over 70 medals at national and international competitions, where we
are judged against some of the finest wines from around the world.
Awards received during the year include:
-- 6 gold medals at the Wine GB Awards, out of 8 wines entered
(highest ever awarded to one winery). In addition, Gusbourne
received 'Best Prestige Cuvée' for the Blanc de Blancs 2013, 'Best
Still Pinot Noir' for the Pinot Noir 2016 and 'Best Still Rosé for
the Cherry Garden Rosé 2018;
-- 3 gold medals at the Champagne and Sparkling Wine World Championship
-- 3 gold medals and Varietal Best in Show trophy for the
Guinevere 2016 at the London Wine Competition;
-- 3 gold medals at the Sommelier Wine Awards a UK based competition held in May 2019;
-- Gold medal at the Global Rosé Masters and Global Sparkling
Wine Masters competition, a UK based competition held in September
2019;
-- 2 gold medals at the Japan Wines Awards;
-- In China on 6 September 2019 Gusbourne was named 'Best
English Sparkling Wine' as well as overall 'IWC China Champion
Sparkling Wine 2019' at the International Wine Challenge held in
Shanghai; and
-- On 12 October 2019 'Best recent release: Non-Champagne
Sparkling Wine' at the Pinnacle Wine Awards held in Singapore.
Development strategy
Meeting growing customer demand for the Gusbourne wines requires
careful long-term planning and key elements of the Group's
development strategy include:
-- Continuing to produce wines of exceptional quality from grapes grown in our own vineyards;
-- The ongoing development and evolution of the award winning Gusbourne brand;
-- The further development of the Company's distribution
channels, including the promotion of exports as a significant
contributor to sales;
-- The promotion of the Company's cellar door operation at the
Company's winery in Kent. This allows visitors to enjoy vineyard
and winery tours and taste our award-winning wines and also helps
to promote a closer and more direct relationship with our
customers; and
-- The investment in additional plant and machinery to keep pace with production growth.
2019 Harvest
The 2019 harvest at Gusbourne has continued the precedent set in
recent years, with yet another vintage of high quality and record
quantity. Conditions throughout the growing season were generally
good, in particular during flowering in June and the critical
ripening months of July and August. Despite less favourable weather
conditions towards the end of the year the team were able to pick a
healthy and ripe crop. Early indications of the resulting wine
quality are high.
In accordance with Gusbourne's strict and self-imposed
detail-focussed techniques in the vineyard, the team began choosing
the best quality fruit during the green harvest towards the latter
part of the growing season. This was followed by rigorously
selecting only the finest fruit from each vine during harvest which
ultimately ensured that all of the grapes which were chosen for
pressing were suitably rich, ripe and pure. Desired levels of
natural sugar and acidity were present across all three of the
varieties that Gusbourne grow - Chardonnay, Pinot Noir and Pinot
Meunier.
The resulting wine production has added further to our inventory
levels for sale in future years.
Results for the year
Net revenue for the year amounted to GBP1,653,000 (2018:
GBP1,261,000), an increase of 31% (2018: 26%) over the prior year.
Whilst these sales continue to reflect limited stock availability
at this time, they do represent continuing like for like growth in
the sale of Gusbourne wines since 2013.
Gross profit represents net revenue less cost of sales (cost of
wine sold and direct selling costs). Over the last 5 years the
gross profit margin has increased from 17% in 2014 to 56% in 2019
(2018: 56%) reflecting economies of scale in respect of the Group's
increased production volumes.
It should be noted that the cost of sales relates to the wine
sold in the current year which is primarily the wine produced from
the 2014 and 2015 harvests, and the benefit of economies of scale
at gross margin level will continue, for some time, to trail
current year sales.
Operating expenses of GBP2,902,000 (2018: GBP2,246,000),
included depreciation of GBP699,000 (2018: GBP638,000) and also
included planned increased expenditure on sales and marketing costs
reflecting continuing investment in the development and future
growth of the business and its sales beyond the current financial
year. This increased investment in future growth is not fully
matched by increased revenues in the current year and is the main
reason for an increased loss in Adjusted EBITDA for the year.
Adjusted EBITDA for the year was a loss of GBP1,285,000 (2018:
GBP907,000). The operating loss for the year after depreciation and
amortisation was GBP2,156,000 (2018: GBP1,420,000). The loss before
tax was GBP2,601,000 (2018: GBP1,767,000) after net finance costs
of GBP445,000 (2018: GBP347,000).
These losses continue to be in line with expectations and the
long-term development strategy of the Group which is based on
continuing sales growth of the Gusbourne wines, supported by
increasing wine stocks, and which is planned to provide a positive
cashflow during the course of the next few years.
Balance Sheet
The changes in the Group's balance sheet during the year reflect
expenditure on the ongoing investment in, and development of, the
Group's business, net of income from wine sales. The Group invested
in plant and equipment for the vineyards and the winery amounting
to GBP310,000 (2018: GBP698,000) and in buildings of GBP22,000
(2018: GBP74,000). Total assets at 31 December 2019 of
GBP23,507,000 (2018: GBP19,727,000) include freehold land and
buildings of GBP6,383,000 (2018: GBP6,488,000), vineyards of
GBP3,144,000 (2018: GBP3,289,000), right of use assets of
GBP2,068,000 (2018: GBPnil) inventories of wine stocks amounting to
GBP7,463,000 (2018: GBP5,282,000), and cash of GBP1,009,000 (2018:
GBP1,311,000). Intangible assets of GBP1,007,000 (2018:
GBP1,007,000) arose on the acquisition of the Gusbourne Estate
business on 27 September 2013.
IFRS 16 Leases has been adopted during in the year. The impact
of this is the recognition of a "right of use" asset as at 31
December 2019 of GBP2,068,000 and additional lease liabilities as
at 31 December 2019 of GBP2,123,000. The impact on the consolidated
statement of income has been an increase in the loss before tax of
GBP55,000.
As noted above, our main operating assets continue to grow,
which provides further asset backing for our investors as well as
support for our planned future sales growth. In particular, the
cost of inventories of wine stocks has increased by 41% during the
course of the year, reflecting a further successful harvest of
grapes in 2019.
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.
The Group's net tangible assets at 31 December 2019 amount to
GBP11,187,000 (2018: GBP13,303,000) and represent 92% of total
equity (2018: 93%). Net tangible assets per share at 31 December
2019 was 24.1 pence (2018: 29.1 pence). It is important to note
that these net tangible assets figures do not necessarily reflect
underlying asset values, in particular in respect of the Group's
inventories, which are reported at the lower of cost and net
realisable value. These inventories are expected to continue
growing until approximately four years after vineyard maturity.
These additional four years reflect the time it takes to transform
our high-quality grapes into Gusbourne's premium sparkling wine.
The anticipated underlying surplus of net realisable value over
cost of these wine inventories, which is not reflected in these
accounts and in the net tangible assets per share quoted above,
will become an increasingly significant factor of the Group's asset
base as the inventories continue to grow.
Financing
The Group's activities are financed by shareholder's equity and
debt which comprises loans, lease liabilities, other borrowings and
deep discount bonds. At 31 December 2019 debt amounted to
GBP10,561,000 (2018: GBP4,934,000) and represents 87% of total
equity (2018: 34%). Excluding the impact of IFRS 16 and the
resulting right of use asset and lease liability, debt would amount
to GBP8,438,000 and represent 83% of total equity. Details of the
initial and continuing recognition of leases under IFRS 16 Leases
are shown in note 9.
On 31 May2019, Gusbourne entered into an agreement with a
company controlled by Lord Ashcroft KCMG PC, a substantial
shareholder in Gusbourne, to receive an unsecured loan facility of
up to GBP2,000,000, repayable on 31 October 2019. Under the terms
of the Loan Agreement, should the loan not be repaid on 31 October
2019, the loan will become repayable on demand subject to such
repayment not being in breach of the Company's existing banking
facilities or if such repayment caused the Company to be unable to
meet its creditors as they fall due. As at the 31 December 2019 the
loan had not been repaid and incurs interest of 15% per annum. The
lender can use its sole discretion to exercise any warrants held in
Gusbourne; the amount to be subscribed pursuant to such exercise,
will be deemed to be satisfied to the extent of the amount
outstanding in respect of the loan and amount of accrued but unpaid
interest at the time of exercise.
On 23 December 2019, Gusbourne announced that its subsidiary
Gusbourne Estate Limited entered into an agreement with Franove
Holdings Limited, a company wholly owned by Paul Bentham, a
Non-Executive Director of Gusbourne, to receive an unsecured
short-term loan facility of GBP1,250,000 which is repayable on 10
December 2020. Interest is payable on repayment of the debt at 15%
per annum.
Post period-end, on 1 June 2020, Gusbourne announced that its
subsidiary Gusbourne Estate Limited has entered into an agreement
with PNC Business Credit, a trading style of PNC Financial Services
UK Ltd, for up to GBP10.5m of asset-based lending facilities. (the
"PNC Facilities"). The PNC Facilities will primarily be used to
provide working capital for the Group. It will also be used to
refinance certain existing loan facilities.
The PNC Facilities will be provided on a revolving basis over a
minimum period of 5 years and allow flexible drawdown and
repayments in line with the Company's working capital requirements.
The interest rate will be at the annual rate of 3 per cent over the
Bank of England Base Rate. The facilities will be secured by way of
first priority charges over the Company's inventory, receivables
and freehold property as well as an all assets debenture.
On completion approximately GBP4.6m of the PNC Facilities was
drawn down by Gusbourne Estate Limited with approximately GBP2.1m
being used to repay the existing secured Barclays bank facilities
in full, GBP1.3m used to part repay the existing short term loans
to Franove Holdings Limited and a company controlled by Lord
Ashcroft KCMG PC. The balance of GBP1.2m will be used for working
capital. Further drawdowns will be made from time to time in line
with the needs of the business.
Of the GBP1.3m drawdown at completion to part repay existing
short-term loans, GBP0.8m was used to part repay a short-term loan
of GBP1.25m received on 23 December 2019 from Franove Holdings
Limited. GBP0.5m was used to part repay a short-term loan of
GBP2.0m received on 31 May 2019 from a company controlled by Lord
Ashcroft.
Following these repayments Franove Holdings Limited has agreed
to extend the repayment date of its outstanding loan of GBP0.5m to
15 August 2021, at the same 15% rate of interest, with the loan
becoming secured behind PNC at the same ranking as the existing
outstanding deep discount bonds issued by the Company. Gusbourne
Estate Limited has also agreed with Franove that in the event it
seeks to repay its loans (excluding its PNC facilities) further,
the repayment of the Franove Holdings Limited loan will take
priority.
The remaining Lord Ashcroft loan of GBP1.7m has been refinanced,
by a company controlled by him, with a new deep discount bond
maturing on 15 August 2021 and with a coupon of 15% per annum
rolled quarterly and secured behind PNC at the same ranking as the
existing outstanding bonds issued by the Company.
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's premium
sparkling wine. Additional funding will continue to be sought by
the Company over the coming few years to fund ongoing growth in the
Company's operations and asset base, in line with its development
strategy.
Going concern
The Directors believe the Group to be a going concern on the
basis that it has sufficient cash available from committed
facilities to continue operations for at least 12 months from the
date these financial statements were approved and in addition will
not breach any of its key covenants during this period.
In coming to their conclusion, the Directors have considered the
Group's profit and cash flow plans for the coming period, and in
the light of the outbreak of COVID-19 have run various downside
"stress test" scenarios. These scenarios assess the impact of
COVID-19 on the Group over the next 12 months and in particular on
the Group's sales through its key distribution channels. These
stress tests indicate the Group can withstand any ongoing adverse
impact on revenues for at least the next 12 months.
In addition, these stress test scenarios assess the Group's
potential debt requirements against the Group's GBP10.5m
asset-based lending facility, of which c. GBP5.8m is undrawn on the
date on which these financial statements were approved. The stress
test scenarios do not show a requirement in excess of the Group's
undrawn facilities nor do they show the Group breaching any of its
key covenant tests on the monthly testing points which start from
31 December 2020.
The stress test scenarios also include certain cost mitigation
actions, including but not limited to furloughing of certain staff,
operating cost reductions and reduced capital expenditure.
Under the significant stress test scenarios, we have run the
Group could withstand a material and prolonged adverse impact on
revenues and continue to operate within the available lending
facilities. Accordingly, the Group and the Company continues to
adopt the going concern basis in preparing its Financial
Statements.
The Board have also assessed the ability of the Group to repay
its existing deep discount bonds and a short- term loan which are
due for maturity in August 2021. Whilst these amounts fall due for
repayment outside of the stress test scenarios referred to above
the Board believe that the Group will be able to raise further
equity and/or debt funds to repay or refinance these amounts as and
when they fall due as well as providing additional funds for
further development of the Group.
Current trading and outlook
The growing season in 2020 has started slightly later than
average, but consistently warm spring weather has led to strong,
even growth and high potential fruitfulness. The vines will remain
subject to the normal seasonal climatic and disease risks
throughout the remaining part of the growing season. Above average
yields from the 2019 harvest have allowed us to increase our wine
stocks for future sales.
The Company experienced a strong start to trading in the first
three months of the year with revenue performance ahead of
directors' expectations. However, since the end of March 2020, the
Company's distribution channels have been impacted by COVID-19. The
Company has engaged in a number of new sales initiatives to
mitigate this impact and the directors are pleased to report
increasing demand for wine in some channels, especially online.
On the production side, both vineyard and winery operations have
continued to work through the lockdown with appropriate safety
protocols put in place. The Company has furloughed a number of
staff members, particularly in the sales function and taken various
steps to reduce costs at this time.
Whilst the immediate outlook for sales remains uncertain, the
directors remain confident about the Group's longer-term prospects
beyond COVID-19.
We are delighted to have secured significant asset-based
financing facilities from PNC and which aligns with the working
capital requirements of the business. We are pleased to welcome PNC
as a key stakeholder and look forward to working with them as we
continue to develop our business over the coming years.
Finally, I would like to thank all our employees for their hard
work, dedication, and attention to detail in applying their
considerable skills and talents to the production and sale of our
award-winning wines and in particular in dealing with the
challenges COVID-19 brings.
Charlie Holland
Chief Executive
Key Performance Indicators
Years ended 31 December 2019 2018 2017 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
===================================== ========== ========== ========== ========== ==========
Net revenue* 1,653 1,261 998 640 473
===================================== ========== ========== ========== ========== ==========
Gross profit percentage 56% 56% 62% 34% 31%
===================================== ========== ========== ========== ========== ==========
Adjusted EBITDA** (1,285) (907) (663) (811) (761)
===================================== ========== ========== ========== ========== ==========
Investment in tangible assets by year
=================================================================================================
Investment in vineyard establishment 0 141 86 338 786
===================================== ========== ========== ========== ========== ==========
Investment in freehold land
and buildings 22 74 1,090 414 664
===================================== ========== ========== ========== ========== ==========
Investment in plant, machinery,
vehicle and other equipment 317 727 607 364 473
===================================== ========== ========== ========== ========== ==========
Investment in property, plant
and equipment 339 942 1,783 1,116 1,923
===================================== ========== ========== ========== ========== ==========
Increase in inventories 2,204 1,798 1,237 536 276
===================================== ========== ========== ========== ========== ==========
Total investment in tangible
assets 2,543 2,740 3,020 1,652 2,199
===================================== ========== ========== ========== ========== ==========
At 31 December 2019 2018 2017 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
===================================== ========== ========== ========== ========== ==========
Key balance sheet ratios
=================================================================================================
Net tangible assets as a percentage
of total equity 92% 93% 92% 87% 89%
===================================== ========== ========== ========== ========== ==========
Gearing (Debt as percentage
of equity) 87% 34% 39% 83% 42%
===================================== ========== ========== ========== ========== ==========
Number of shares in issue 46,478,619 45,671,683 39,366,986 23,639,762 23,639,762
===================================== ========== ========== ========== ========== ==========
Net tangible assets per share
(pence) 24.1 29.1 28.8 28.9 35.3
===================================== ========== ========== ========== ========== ==========
Net assets
=================================================================================================
Freehold land and buildings 6,383 6,488 6,539 5,543 5,198
===================================== ========== ========== ========== ========== ==========
Vineyards 3,144 3,289 3,260 3,256 2,972
===================================== ========== ========== ========== ========== ==========
Right of use assets 2,068 - - - -
===================================== ========== ========== ========== ========== ==========
Plant, machinery, vehicle and
other equipment 1,636 1,757 1,431 1,131 1,001
===================================== ========== ========== ========== ========== ==========
Total non-current assets 13,231 11,534 11,230 9,930 9,171
===================================== ========== ========== ========== ========== ==========
Inventories 7,463 5,282 3,484 2,247 1,711
===================================== ========== ========== ========== ========== ==========
Net working capital (current
receivables less current payables) 45 110 (77) 62 95
===================================== ========== ========== ========== ========== ==========
Cash 1,009 1,311 1,464 1,123 1,328
===================================== ========== ========== ========== ========== ==========
Net tangible assets before
debt 21,748 18,237 16,101 13,362 12,305
===================================== ========== ========== ========== ========== ==========
Bonds, loans, lease liabilities
and other borrowings (10,561) (4,934) (4,778) (6,537) (3,952)
===================================== ========== ========== ========== ========== ==========
Net tangible assets 11,187 13,303 11,323 6,825 8,353
===================================== ========== ========== ========== ========== ==========
Goodwill 1,007 1,007 1,007 1,007 1,007
===================================== ========== ========== ========== ========== ==========
Net assets and equity 12,194 14,310 12,330 7,832 9,360
===================================== ========== ========== ========== ========== ==========
* Net revenue represents Revenue after deducting excise
duties.
** Adjusted EBITDA means profit from operations/ (loss from
operations) before fair value movement in biological produce,
interest, tax, depreciation and amortisation.
The Directors believe that Adjusted EBITDA provides shareholders
with a useful representation of the underlying earnings from the
Group's business. The Directors have therefore excluded the fair
value movement in biological produce on the basis that the charge
is non-cash in nature and does not reflect the underlying
performance of business.
Annual General Meeting
The Company's annual report and accounts for the year ended 31
December 2019 will be posted to shareholders on Monday 29 June
2020, together with notice of the Annual General Meeting to be held
at 11am on Thursday 23 July 2020 at Gusbourne Estate, Kenardington
Road, Appledore, Kent, TN26 2BE. In light of the compulsory
government measures in force restricting public gatherings and
non-essential travel measures, we are planning for the AGM this
year to be run as a closed meeting. Shareholders must not attend
the AGM in person and anyone seeking to attend in person will be
refused entry. The Company will make arrangements for a quorum to
be present to transact the formal business of the meeting. Your
vote is important to Gusbourne and the Board of Directors wishes to
ensure that your vote is counted at the AGM, therefore, all
Shareholders are encouraged to submit their vote using the proxy
form that will be enclosed with the AGM Notice.
Enquiries:
Gusbourne Plc
Charlie Holland +44 (0)12 3375 8666
Canaccord Genuity Limited
Bobbie Hilliam/Georgina McCooke +44 (0)20 7523 8000
Note: This and other press releases are available at the
Company's website: www.gusbourneplc.com
Note to Editors
Gusbourne PLC ("the Company") is engaged, through its wholly
owned subsidiary Gusbourne Estate Limited (together the "Group"),
in the production and distribution of a range of high quality and
award-winning English sparkling wines from grapes grown in its own
vineyards in Kent and West Sussex. The majority of the Group's
vineyards are located at its freehold estate at Appledore in Kent
where the winery is also based.
Consolidated statement of comprehensive income for the year
ended 31 December 2019
Year ended Year ended
============================================
31 December 31 December
2019 2018
Note GBP'000 GBP'000
============================================ ==== =========== ===========
Revenue 1,845 1,388
============================================ ==== =========== ===========
Excise duties (192) (127)
============================================ ==== =========== ===========
Net revenue 1,653 1,261
============================================ ==== =========== ===========
Cost of sales (735) (560)
============================================ ==== =========== ===========
Gross profit 918 701
============================================ ==== =========== ===========
Fair value movement in biological produce (172) 125
============================================ ==== =========== ===========
Administrative expenses (2,902) (2,246)
============================================ ==== =========== ===========
Loss from operations (2,156) (1,420)
============================================ ==== =========== ===========
Finance expenses (445) (347)
============================================ ==== =========== ===========
Loss before tax (2,601) (1,767)
============================================ ==== =========== ===========
Tax expense - -
============================================ ==== =========== ===========
Loss and total comprehensive for the year
attributable to owners of the parent (2,601) (1,767)
============================================ ==== =========== ===========
Loss per share attributable to the ordinary
equity holders of the parent:
============================================ ==== =========== ===========
Basic (pence) 4 (5.67) (4.62)
============================================ ==== =========== ===========
Diluted (pence) 4 (5.67) (4.62)
============================================ ==== =========== ===========
Consolidated statement of financial position at 31 December
2019
31 December 31 December
2019 2018
Note GBP'000 GBP'000
============================== ====== =========== ===========
Assets
============================== ====== =========== ===========
Non-current assets
============================== ====== =========== ===========
Intangibles 1,007 1,007
============================== ====== =========== ===========
Property, plant and equipment 5 13,231 11,534
============================== ====== =========== ===========
Other receivables 90 97
============================== ====== =========== ===========
14,328 12,638
============================== ====== =========== ===========
Current assets
============================== ====== =========== ===========
Biological Produce 6 - -
============================== ====== =========== ===========
Inventories 7 7,463 5,282
============================== ====== =========== ===========
Trade and other receivables 707 496
============================== ====== =========== ===========
Cash and cash equivalents 1,009 1,311
============================== ====== =========== ===========
9,179 7,089
============================== ====== =========== ===========
Total assets 23,507 19,727
============================== ====== =========== ===========
Liabilities
============================== ====== =========== ===========
Current liabilities
============================== ====== =========== ===========
Trade and other payables (752) (483)
============================== ====== =========== ===========
Loans and borrowings 8 (3,379) (34)
============================== ====== =========== ===========
Lease liabilities 9 (123) (47)
============================== ====== =========== ===========
(4,254) (564)
============================== ====== =========== ===========
Non-current liabilities
============================== ====== =========== ===========
Loans and borrowings 8 (5,026) (4,820)
============================== ====== =========== ===========
Lease liabilities 9 (2,033) (33)
============================== ====== =========== ===========
(7,059) (4,853)
============================== ====== =========== ===========
Total liabilities (11,313) (5,417)
============================== ====== =========== ===========
Net assets 12,194 14,310
============================== ====== =========== ===========
Issued capital and reserves attributable to owners of the parent
=======================================================================
Share capital 10 12,048 12,040
================================== === =============== =============
Share premium 10,915 10,438
================================== === =============== =============
Merger reserve (13) (13)
================================== === =============== =============
Retained earnings (10,756) (8,155)
================================== === =============== =============
Total equity 12,194 14,310
================================== === =============== =============
Consolidated statement of cash flows for the year ended 31
December 2019
31 December 31 December
2019 2018
Note GBP'000 GBP'000
============================================== ====== =========== ===========
Cash flows from operating activities
============================================== ====== =========== ===========
Loss for the year before tax (2,601) (1,767)
============================================== ====== =========== ===========
Adjustments for:
============================================== ====== =========== ===========
Depreciation of property, plant and equipment 5 699 638
============================================== ====== =========== ===========
Finance expense 445 347
============================================== ====== =========== ===========
Fair value movement in biological produce 6 172 (125)
============================================== ====== =========== ===========
Increase in trade and other receivables (209) (316)
============================================== ====== =========== ===========
Increase in inventories (2,220) (1,673)
============================================== ====== =========== ===========
Increase in trade and other payables 269 125
============================================== ====== =========== ===========
Cash outflow from operations (3,445) (2,771)
============================================== ====== =========== ===========
Investing activities
============================================== ====== =========== ===========
Purchases of property, plant and equipment,
excluding vineyard establishment 5 (339) (801)
============================================== ====== =========== ===========
Investment in vineyard establishment 5 - (141)
============================================== ====== =========== ===========
Sale of property, plant and equipment 11 -
============================================== ====== =========== ===========
Net cash from investing activities (328) (942)
============================================== ====== =========== ===========
Financing activities
============================================== ====== =========== ===========
Capital loan repayments (34) (34)
============================================== ====== =========== ===========
Short term loan - 1,000
============================================== ====== =========== ===========
New loans issued 3,250 -
============================================== ====== =========== ===========
Repayment of lease liabilities (125) (49)
============================================== ====== =========== ===========
Interest paid (90) (104)
============================================== ====== =========== ===========
Loan issue costs (15) -
============================================== ====== =========== ===========
Issue of ordinary shares 10 485 2,783
============================================== ====== =========== ===========
Share issue expenses - (36)
============================================== ====== =========== ===========
Net cash from financing activities 3,471 3,560
============================================== ====== =========== ===========
Net increase/(decrease) in cash and cash
equivalents (302) (153)
============================================== ====== =========== ===========
Cash and cash equivalents at the beginning
of the year 1,311 1,464
============================================== ====== =========== ===========
Cash and cash equivalents at the end
of the year 1,009 1,311
============================================== ====== =========== ===========
*Non-cash transaction
The short-term loan of GBP1,000,000 received in the year ended
31 December 2018 was used as part settlement monies due under the
share subscription which completed on 11 September 2018.
Consolidated statement of changes in equity for the year ended
31 December 2019
Total attributable
to equity
holders of
Share Share premium Merger Retained parent
capital GBP'000 reserve earnings GBP'000
GBP'000 GBP'000 GBP'000
========================== =========== =============== ========= ============ ===================
1 January 2018 11,977 6,754 (13) (6,388) 12,330
========================== =========== =============== ========= ============ ===================
Comprehensive loss for
the year - - - (1,767) (1,767)
========================== =========== =============== ========= ============ ===================
Contributions by and
distributions to owners:
========================== =========== =============== ========= ============ ===================
Share issue 63 3,720 - - 3,783
========================== =========== =============== ========= ============ ===================
Share issue expenses - (36) - - (36)
========================== =========== =============== ========= ============ ===================
31 December 2018 12,040 10,438 (13) (8,155) 14,310
========================== =========== =============== ========= ============ ===================
1 January 2019 12,040 10,438 (13) (8,155) 14,310
========================== ====== ====== ==== ======== =======
Comprehensive loss
for the year - - - (2,601) (2,601)
========================== ====== ====== ==== ======== =======
Contributions by and
distributions to owners:
========================== ====== ====== ==== ======== =======
Share issue 8 477 - - 485
========================== ====== ====== ==== ======== =======
31 December 2019 12,048 10,915 (13) (10,756) 12,194
========================== ====== ====== ==== ======== =======
1 Accounting policies
Gusbourne PLC (the "Company") is a company incorporated and
domiciled in the United Kingdom and quoted on the London Stock
Exchange's AIM market. The consolidated financial statements of the
Group for the year ended 31 December 2019 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 year ended 31 December 2019 or
the year ended 31 December 2018, but is derived from those
accounts. The Group's statutory accounts for 31 December 2018 have
been delivered to the Registrar of Companies and those for 31
December 2019 will be delivered following the Company's Annual
General Meeting. The Auditor's reports on both the 31 December 2018
and 31 December 2019 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 and the Company's
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 produce is stated at fair value.
Going concern
The Directors believe the Group to be a going concern on the
basis that it has sufficient cash available from committed
facilities to continue operations for at least 12 months from the
date these financial statements were approved and in addition will
not breach any of its key covenants during this period.
In coming to their conclusion, the Directors have considered the
Group's profit and cash flow plans for the coming period, and in
the light of the outbreak of COVID-19 have run various downside
"stress test" scenarios. These scenarios assess the impact of
COVID-19 on the Group over the next 12 months and in particular on
the Group's sales through its key distribution channels. These
stress tests indicate the Group can withstand any ongoing adverse
impact on revenues for at least the next 12 months.
In addition, these stress test scenarios assess the Group's
potential debt requirements against the Group's GBP10.5m
asset-based lending facility, of which c. GBP5.8m is undrawn on the
date on which these financial statements were approved. The stress
test scenarios do not show a requirement in excess of the Group's
undrawn facilities nor do they show the Group breaching any of its
key covenant tests on the monthly testing points which start from
31 December 2020.
The stress test scenarios also include certain cost mitigation
actions, including but not limited to furloughing of certain staff,
operating cost reductions and reduced capital expenditure.
Under the significant stress test scenarios, we have run, the
Group could withstand a material and prolonged adverse impact on
revenues and continue to operate within the available lending
facilities. Accordingly, the Group and the Company continues to
adopt the going concern basis in preparing its Financial
Statements.
The Board have also assessed the ability of the Group to repay
its existing deep discount bonds and a short-term loan which are
due for maturity in August 2021. Whilst these amounts fall due for
repayment outside of the stress test scenarios referred to above
the Board believe that the Group will be able to raise further
equity and/or debt funds to repay or refinance these amounts as and
when they fall due as well as providing additional funds for
further development of the Group.
The financial statements do not include any adjustments should
the going concern basis of preparation be inappropriate.
New accounting standards and changes to existing accounting
standards
i. New standards and interpretations adopted in the current
year:
-- IFRS 16 Leases
IFRS 16 Leases
The Group has entered into a number of long term leases in
respect of land and buildings in West Sussex on which the Group has
planted vineyards. The leases have a remaining life of 43 and 50
years. The Group has assessed the leases under IFRS 16 and a right
of use asset and lease liability have been recognised in the
consolidated statement of financial position for the first time in
respect of its current operating leases. The Group has reviewed its
leases and decided to account for IFRS 16 on the modified
retrospective approach using a single discount rate for leases with
similar characteristics.
The Group has performed a quantitative assessment based on the
current leases in place and a right of use asset and associated
lease liability of
GBP1,488,000 has been recognised on adoption of IFRS 16 with a
further amount of GBP626,000 recognised on leases entered into
during the period. The impact on the consolidated statement of
income has been an increase in the loss before tax of GBP55,000. No
amounts have been restated in prior periods.
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease term, with
the discount rate determined by reference to the rate inherent in
the lease unless this is not readily determinable, in which case
The Group's incremental borrowing rate on commencement of the lease
is used. Variable lease payments are only included in the
measurement of the lease liability if they depend on an index or
rate. In such cases, the initial measurement of the lease liability
assumes the variable element will remain unchanged throughout the
lease term. Other variable lease payments are expensed in the
period to which they relate.
Right-of-use assets are initially measured at the amount of the
lease liability.
Subsequent to initial measurement lease liabilities increase as
a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use
assets are amortised on a straight-line basis over the remaining
term of the leases. When The Group revises its estimate of the term
of any lease (because, for example, it re- assesses the probability
of a lessee extension or termination option being exercised), it
adjusts the carrying amount of the lease liability to reflect the
payments to make over the revised term, which are discounted at the
same discount rate that applied on lease commencement. The carrying
value of lease liabilities is similarly revised when the variable
element of future lease payments dependent on a rate or index is
revised. In both cases an equivalent adjustment is made to the
carrying value of the right-of-use asset, with the revised carrying
amount being amortised over the remaining (revised) lease term.
Basis of consolidation
The Group's financial statements consolidate the financial
statements of the Company and its subsidiary undertakings.
Subsidiaries are entities controlled by the Company. Control exists
when the Company has the power, directly or indirectly, to govern
the financial and operating policies of an entity so as to obtain
benefits from its activities and the ability to use its power over
the investee to affect the amounts of the Group's returns and which
generally accompanies interest of more than one half of the voting
rights. In assessing control, potential voting rights that
presently are exercisable or convertible are taken into account.
The results of any subsidiaries sold or acquired are included in
the Group income statement up to, or from, the date control passes.
Intra-Group sales and profits are eliminated fully on
consolidation.
On acquisition of a subsidiary, all of the subsidiary's
separable, identifiable assets and liabilities existing at the date
of acquisition are recorded at their fair values reflecting their
condition at that date. On disposal of a subsidiary, the
consideration received is compared with the carrying cost at the
date of disposal and the gain or loss is recognised in the income
statement. The excess of the cost of acquisition over the fair
value of the Group's share of the identifiable net assets is
recorded as goodwill. Intercompany transactions, balances and
unrealised gains on transactions between group companies are
eliminated. Subsidiaries' results are amended where necessary to
ensure consistency with the policies adopted by the Group.
Revenue
The majority of the group's revenue is derived from selling
goods with revenue recognised at a point in time when control of
the goods has transferred to the customer. This is generally when
the goods are delivered to the customer. However, for export sales,
control might also be transferred when the goods are dispatched by
the Group or delivered either to the port of departure or port of
arrival, depending on specific terms of the contract with a
customer. There is limited judgement needed in identifying the
point control passes: once physical delivery of the products to the
agreed location has occurred, the group no longer has physical
possession, usually will have a present right to payment and
retains none of the significant risks and rewards of the goods in
question.
All of the Group's revenue is derived from fixed price contracts
and therefore the amount of revenue to be earned from each contract
is determined by reference to those fixed prices.
For all contracts there is a fixed unit price for each product
sold. Therefore, there is no judgement involved allocating the
contract price to each unit ordered in such contracts (it is the
number of units multiplied by the fixed unit price for each product
sold). Where a customer orders more than one product line, the
Group is able to determine the split of the total contract price
between each product line by reference to each product's standalone
selling prices (all product lines are capable of being, and are,
sold separately).
Revenue from vineyard tours and tastings is recognised on the
date on which the tour or tasting takes place.
Net revenue is revenue less excise duties. The Group incurs
excise duties in the United Kingdom and is a production tax which
becomes payable once the Group's products are removed from bonded
premises and are not directly related to the value of revenue. It
is not included as a separate item on invoices issued to customers.
Where a customer fails to pay for the Group's products the Group
cannot reclaim the excise duty. The Group therefore recognises
excise duty as a cost of the Group.
Financial assets
Debt instruments at amortised cost
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
arise principally through the provision of goods to customers (e.g.
trade receivables), but also incorporate other types of contractual
monetary asset. They are initially recognised at fair value plus
transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised
cost using the effective interest rate method, less provision for
impairment. The financial assets meet the SPPI test and are held in
a 'hold to collect' business model and therefore classified at
amortised cost.
Impairment provisions for current and non-current trade
receivables are recognised based on the simplified approach within
IFRS 9 using a provision matrix in the determination of the
lifetime expected credit losses. During this process the
probability of the non-payment of the trade receivables is
assessed. This probability is then multiplied by the amount of the
expected loss arising from default to determine the lifetime
expected credit loss for trade receivables. The historical loss
rates are adjusted for current and forward looking information
relevant to the Group's customers.
For trade receivables, which are reported net, such expected
credit losses are recognised within administrative expenses in the
consolidated statement of comprehensive income. On confirmation
that the trade receivable will not be collectable, the gross
carrying value of the asset is written off against the associated
provision.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held
at call with banks, other short term highly liquid investments with
original maturities of three months or less.
Financial liabilities
Borrowings
Borrowings are initially recognised at fair value net of any
transaction costs directly attributable to the loan. They are
subsequently measured at amortised cost with interest charged to
the statement of comprehensive income based on the effective
interest rate of the borrowings.
Deep discount bonds
Deep discount bonds are redeemable at their nominal price at
maturity. The discount is charged over the life of the bond to the
statement of comprehensive income and included within finance
expenses.
Warrants
Warrants issued to shareholders as part of an equity fund raise
are accounted for as equity instruments. Details of Warrants are
shown in note 10.
Trade and other payables
Comprises trade payables and other short-term monetary
liabilities, which are initially recognised at fair value and
subsequently carried at amortised cost using the effective interest
method.
Share capital
Financial instruments issued by the Group are classified as
equity only to the extent that they do not meet the definition of a
financial liability.
The Group's ordinary shares are classified as equity
instruments.
Deferred taxation
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability in the consolidated
statement of financial position differs from its tax base, except
for differences arising on:
-- the initial recognition of goodwill;
-- the initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of
the transaction affects neither accounting or taxable profit;
and
-- investments in subsidiaries and jointly controlled entities
where the Group is able to control the timing of the reversal of
the difference and it is probable that the difference will not
reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profit will be
available against which the difference can be utilised.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantively enacted by the
reporting date and are expected to apply when the deferred tax
liabilities/(assets) are settled/ (recovered).
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either:
-- the same taxable group company; or
-- different group entities which intend either to settle
current tax assets and liabilities on a net basis, or to realise
the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax assets
or liabilities are expected to be settled or recovered.
Intangible Assets
Goodwill
Goodwill arises where a business is acquired and a higher amount
is paid for that business than the fair value of the assets and
liabilities acquired. Transaction costs attributable to
acquisitions are expensed to the income statement.
Goodwill is recognised as an asset in the statement of financial
position and is not amortised but is subject to an annual
impairment review. Impairment occurs when the carrying value of
goodwill is greater than the recoverable amount which is the higher
of the value in use and fair value less disposal costs. The present
value of the estimated future cash flows from the separately
identifiable assets, termed a 'cash generating unit' is used to
determine the fair value less cost of disposal to calculate the
recoverable amount. The Group prepares and approves formal long
term business plans for its operations which are used in these
calculations.
Brand
Brand names acquired as part of acquisitions of businesses are
capitalised separately from goodwill as intangible assets if their
value can be measured reliably on initial recognition and it is
probable that the expected future economic benefits that are
attributable to the asset will flow to the Group.
Brand names have been assessed as having an indefinite life and
are not amortised but are subject to an annual impairment review.
Impairment occurs when the carrying value of the brand name is
greater than the present value of the estimated future cash
flows.
Property, plant and equipment
Items of property, plant and equipment are initially recognised
at cost. As well as the purchase price, cost includes directly
attributable costs.
Freehold land is not depreciated.
Vineyard establishment represents the expenditure incurred to
plant and maintain new vineyards until the vines reach
productivity. Once the vineyards are productive the accumulated
cost is transferred to mature vineyards and depreciated over the
expected useful economic life of the vineyard. Vineyard
establishment is not depreciated.
Depreciation is provided on all other items of property, plant
and equipment so as to write off their carrying value over their
expected useful economic lives. It is provided at the following
rates:
Freehold buildings 4% per annum straight line Plant, machinery
and motor vehicles
5-25% per annum straight line Computer equipment
33% per annum straight line
Mature vineyards 4% per annum straight line
The carrying value of property, plant and equipment is reviewed
for impairment when events or changes in circumstances indicate
that the carrying value may not be recoverable.
Biological assets and produce
Agricultural produce is accounted for under IAS 41 Agriculture.
Harvesting of the grape crop is ordinarily carried out in October.
The grapes are therefore measured at fair value less costs to sell
in accordance with IAS 41 with any fair value gain or loss shown in
the consolidated statement of comprehensive income. The fair value
of grapes is determined by reference to estimated market prices at
the time of harvest. Generally there is no readily obtainable
market price for the Group's grapes because they are not sold on
the open market, therefore management set the values based on their
experience and knowledge of the sector including past purchase
transactions. This measurement of fair value less costs to sell is
the deemed cost of the grapes that is transferred into inventory
upon harvest.
Under IAS 41, the agricultural produce is also valued at the end
of each reporting period, with any fair value gain or loss shown in
the consolidated statement of comprehensive income.
Bearer plants are accounted for under IAS 16 and are held at
cost.
Inventories
Inventories are initially recognised at cost, and subsequently
at the lower of cost and net realisable value. Cost comprises all
costs of purchase, costs of conversion and other costs, including
depreciation on right of use assets and interest on lease
liabilities, incurred in bringing the inventories to their present
location and condition. Grapes grown in the Group's vineyards are
included in inventory at fair value less costs to sell at the point
of harvest which is the deemed cost for the grapes.
Weighted average cost is used to determine the cost of
ordinarily interchangeable items.
Leased assets - year ended 31 December 2018
Where substantially all of the risks and rewards incidental to
ownership of a leased asset have been transferred to the Group (a
"finance lease"), the asset is treated as if it had been purchased
outright. The amount initially recognised as an asset is the lower
of the fair value of the leased property and the present value of
the minimum lease payments payable over the term of the lease. The
corresponding lease commitment is shown as a liability. Lease
payments are analysed between capital and interest. The interest
element is charged to the consolidated statement of comprehensive
income over the period of the lease and is calculated so that it
represents a constant proportion of the lease liability. The
capital element reduces the balance owed to the lessor.
Where substantially all of the risks and rewards incidental to
ownership are not transferred to the Group (an "operating lease"),
the total rentals payable under the lease are charged to the
consolidated statement of comprehensive income on a straight-line
basis over the lease term. The aggregate benefit of lease
incentives is recognised as a reduction of the rental expense over
the lease term on a straight-line basis. During the year ended 31
December 2018 GBP88,000 in respect of operating leases was
capitalised as part of inventory.
Leased assets - year ended 31 December 2019
All leases are accounted for by recognising a right-of-use asset
and a lease liability except for leases of low value assets and
leases with an expected full term of 12 months or less.
Lease liabilities are measured at the present value of the
unpaid contractual payments over the expected lease term, with the
discount rate determined by reference to the rate inherent in the
lease unless (as is typically the case) this is not readily
determinable, in which case the Group's incremental borrowing rate
on commencement of the lease is used.
On initial recognition, the carrying value of the lease
liability also includes amounts expected to be payable under any
residual value guarantee; the exercise price of any purchase option
granted in favour of the Group if it is reasonably certain to
exercise that option; and any penalties payable for
terminating the lease, if the term of the lease has been
estimated on the basis of termination option being exercised.
Right-of-use assets are initially measured at the amount of the
lease liability, reduced for any lease incentives received, and
increased for lease payments made at or before commencement of the
lease and initial direct costs incurred.
Subsequent to initial measurement, lease liabilities increase as
a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use
assets are amortised on a straight-line basis over the remaining
term of the lease or over the remaining economic life of the asset
if this is judged to be shorter than the lease term.
When the Group revises its estimate of the term of any lease, it
adjusts the carrying amount of the lease liability to reflect the
payments to make over the revised term, which are discounted at a
revised discount rate that is implicit in the lease for the
remainder of the lease term. The carrying value of lease
liabilities is similarly revised if any variable element of future
lease payments dependent on a rate or index is revised. In both
cases, an
equivalent adjustment is made to the carrying value of the
right-of-use asset, with the revised carrying amount being
amortised over the remaining lease term.
Right-of-use assets are reviewed regularly to ensure that the
useful economic life of the asset is still appropriate based on the
usage of the asset. Where the asset has reduced in value the Group
considers the situation on an asset-by-asset basis and either
treats the reduction as an acceleration of depreciation or as an
impairment under IAS 36 'Impairment of Assets'. An acceleration of
depreciation occurs in those cases where there is no opportunity or
intention to utilise the asset before the end of the lease.
2 Critical accounting policies
Estimates and judgements
The Group makes certain estimates and judgements regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates. The estimates and judgements that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
relate are set out below.
There were no areas of judgement in the year. Where estimates
and assumptions have been used these are outlined below.
Fair value of biological produce
The Group's biological produce is measured at fair value less
costs to sell at the point of harvest. The fair value of grapes is
determined by reference to estimated market prices at the time of
harvest. Generally there is no readily obtainable market price for
the Group's grapes because they are not sold on the open market,
therefore management set the values based on their experience and
knowledge of the sector including past purchase transactions. Refer
to note 6 which provides information on sensitivity analysis around
this.
Impairment reviews
The Group is required to test annually whether goodwill and
brand names have suffered any impairment. The recoverable amount is
determined based on fair value less costs of disposal calculations,
which requires the estimation of the value and timing of future
cash flows and the determination of a discount rate to calculate
the present value of the cash flows. Management does not believe
that any reasonably possible change in a key assumption would
result in impairment.
Lease interest rates
When calculating the lease liability and related right-of-use
asset under IFRS 16 'Leases', unless stipulated clearly when taking
on the liability the Group uses an incremental borrowing rate
calculation to determine the relevant rate. Consideration is taken
over the term of the lease and any specific risks relating to the
assets acquired by an individual lease.
Fair value measurement
A number of assets and liabilities included in the Group's
financial statements require measurement at, and/or disclosure of,
fair value.
The fair value measurement of the Group's financial and
non-financial assets and liabilities utilises market observable
inputs and data as far as possible. Inputs used in determining fair
value measurements are categorised into different levels based on
how observable the inputs used in the valuation technique utilised
are (the 'fair value hierarchy'):
-- Level 1: Quoted prices in active markets for identical items (unadjusted)
-- Level 2: Observable direct or indirect inputs other than Level 1 inputs
-- Level 3: Unobservable inputs (i.e. not derived from market data).
The classification of an item into the above levels is based on
the lowest level of the inputs used that has a significant effect
on the fair value measurement of the item. Transfers of items
between levels are recognised in the period they occur.
-- Intangibles
-- Biological Produce (Note 6)
For more detailed information in relation to the fair value
measurement of the items above, please refer to the applicable
notes.
3 Financial instruments - risk management
The Group is exposed to risks that arise from its use of
financial instruments. This note describes the Group's objectives,
policies and processes for managing those risks and the methods
used to measure them. Further quantitative information in respect
of these risks is presented throughout these financial
statements.
There have been no substantive changes in the Group's exposure
to financial instrument risks, its objectives, policies and
processes for managing those risks or the methods used to measure
them from previous periods unless otherwise stated in this
note.
Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument risk arises, are as follows:
Bank loans
Deep discount bonds Trade receivables
Cash and cash equivalents Finance leases
Trade and other payables
In addition, at the Company level: Intercompany loans.
The carrying amounts are a reasonable estimate of fair values
because of the short maturity of such instruments or their interest
bearing nature.
Liquidity risk
Liquidity risk arises from the Group's management of working
capital and the finance charges and principal repayments on its
debt instruments. It is the risk that the Group will encounter
difficulty in meeting its financial obligations as they fall
due.
The Group's policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they
become due. The liquidity risk of the Group is managed centrally by
the group treasury function. Budgets are set and agreed by the
board in advance, enabling the Group's cash requirements to be
anticipated.
The following table sets out the contractual maturities
(representing undiscounted contractual cash flows) of financial
liabilities:
Between Between Between
Up to 3 3 and 1 and 2 and 5 Over 5
months 12 months 2 years years years Total
At 31 December 2018 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================= ============ =============== ========== ========== ============ =========
Trade and other payables 388 95 - - - 483
========================= ============ =============== ========== ========== ============ =========
Other borrowings 13 40 32 7 92
========================= ============ =============== ========== ========== ============ =========
Loans and borrowings 29 87 116 2,095 - 2,327
========================= ============ =============== ========== ========== ============ =========
Deep discount bonds - - - 3,390 - 3,390
========================= ============ =============== ========== ========== ============ =========
Total 430 222 148 5,492 - 6,292
========================= ============ =============== ========== ========== ============ =========
Between Between Between
Up to 3 3 and 1 and 2 and 5 Over 5
months 12 months 2 years years years Total
At 31 December 2019 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================= ============ =============== ========== ========== ============ =========
Trade and other payables 436 250 - - - 686
========================= ============ =============== ========== ========== ============ =========
Other borrowings 12 15 6 - 33
========================= ============ =============== ========== ========== ============ =========
Loans and borrowings 2,190 1,539 2,082 - - 5,811
========================= ============ =============== ========== ========== ============ =========
Deep discount bonds - - 3,390 - - 3,390
========================= ============ =============== ========== ========== ============ =========
Lease liabilities 25 75 100 298 4,185 4,683
========================= ============ =============== ========== ========== ============ =========
Total 2,663 1,879 5,578 298 4,185 14,603
========================= ============ =============== ========== ========== ============ =========
Capital risk management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital. In order to maintain or adjust the capital
structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares and
increase or decrease debt.
Credit risk
Credit risk arises from cash and cash equivalents and deposits
with banks and financial institutions and the risk of default by
these institutions. The Group reviews the creditworthiness of such
financial institutions on a regular basis to satisfy itself that
such risks are mitigated. The Group's exposure to credit risk
arises from default of the counterparty, with a maximum exposure
equal to the carrying amount of the cash and cash equivalents as
shown in the consolidated statement of financial position.
Credit risk also arises from credit exposure to trade customers
included in trade and other receivables.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses using a lifetime expected credit loss
provision for trade receivables. The expected loss rates are based
on the Group's historical credit losses experienced over the
three-year period to the period end. Trade receivable balances are
monitored on an ongoing basis to ensure that the Group's bad debts
are kept to a minimum. The maximum trade credit risk exposure at 31
December 2019 in respect of trade receivables is GBP344,000 (2018:
GBP213,000) and due to the prompt payment cycle of these trade
receivables, the expected credit loss is negligible at GBP13,000
(2018: GBP3,000).
Interest rate risk
The Group's main debt is exposed to interest rate fluctuations.
The Group considers that the risk is not significant in the context
of its business plans. Should there be a 0.5% increase in the
bank's lending rate, the finance charge in the statement of
comprehensive income would increase by GBP10,000.
4 Loss per share
Basic earnings per ordinary share are based on a loss of
GBP2,601,000 (December 2018: GBP1,767,000) and ordinary shares
45,848,874 (December 2018: 38,265,254) of 1 pence each, being the
weighted average number of shares in issue during the year.
Weighted
average number Loss per
Loss of Ordinary
GBP'000 shares share pence
============================ ========= ================== ==================
Year ended 31 December 2019 (2,601) 45,848,874 (5.67)
============================ ========= ================== ==================
Year ended 31 December 2018 (1,767) 38,265,254 (4.62)
============================ ========= ================== ==================
Diluted earnings per share are based on a loss of GBP2,601,000
and ordinary shares of 45,848,373 and no dilutive warrant
options.
Diluted number Loss per
Loss of Ordinary
GBP'000 shares share pence
============================ ========= ====================== =================
Year ended 31 December 2019 (2,601) 45,848,874 (5.67)
============================ ========= ====================== =================
Year ended 31 December 2018 (1,767) 38,265,254 (4.62)
============================ ========= ====================== =================
5 Property, plant and equipment
Freehold Plant,
Land machinery Right
and and motor Vineyard of use Mature Computer
Buildings vehicles establishment asset Vineyards equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January
2018 6,792 2,213 863 - 2,633 55 12,556
Additions 74 698 141 - - 29 942
Transfers - - (1,004) - 1,004 - -
Disposals - - - - - - (6)
--------------- ---------- ---------- -------------- --------- ---------- ---------- --------
At 31 December
2018 6,866 2,911 - - 3,637 84 13,498
--------------- ---------- ---------- -------------- --------- ---------- ---------- --------
At 1 January
2019 6,866 2,911 - - 3,637 84 13,498
Additions
- adoption
of IFRS 16 - - - 1,488 - - 1,488
Additions 22 310 - 626 - 7 965
Disposals - (23) - - - (1) (24)
--------------- ---------- ---------- -------------- --------- ---------- ---------- --------
At 31 December
2019 6,888 3,198 - 2,114 3,637 90 15,927
--------------- ---------- ---------- -------------- --------- ---------- ---------- --------
Plant,
Freehold Machinery
land and and motor Vineyard Right of Mature Computer
buildings Vehicles establishment use asset vineyards equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Accumulated
depreciation
At 1 January
2018 253 806 - - 236 31 1,326
Depreciation
charge for
the year 125 389 - - 112 12 638
Depreciation
on disposals - - - - - - (2)
--------------- ---------- ----------- -------------- ----------- ---------- ---------- ---------
At 31 December
2018 378 1,195 - - 348 43 1,964
--------------- ---------- ----------- -------------- ----------- ---------- ---------- ---------
At 1 January
2019 378 1,195 - - 348 43 1,964
Depreciation
charge for
the year 127 412 - 46 145 15 745
Depreciation
on disposals - (13) - - - - (13)
--------------- ---------- ----------- -------------- ----------- ---------- ---------- ---------
At 31 December
2019 505 1,594 - 46 493 58 2,696
--------------- ---------- ----------- -------------- ----------- ---------- ---------- ---------
Net book value
At 31 December
2018 6,488 1,716 - - 3,289 41 11,534
--------------- ---------- ----------- -------------- ----------- ---------- ---------- ---------
At 31 December
2019 6,383 1,604 - 2,068 3,144 32 13,231
--------------- ---------- ----------- -------------- ----------- ---------- ---------- ---------
Within property, plant and equipment are assets with a carrying
value of GBP27,000 (2018: GBP79,000) held under hire purchase
contracts and shown within other borrowings.
Right of use assets comprise land leases on which vines have
been planted and property leases from which vineyard operations are
carried out. These assets have been created under IFRS 16 - Leases.
GBP1,488,000 of the additions shown in the table above relate to
leases in place as at 1 January 2019 with the remaining GBP626,000
relating to a new lease entered into during the year.
6 Biological produce
The fair value of biological produce was:
December December
2019 2018
GBP'000 GBP'000
=============================================== ======== ========
At 1 January - -
=============================================== ======== ========
Crop growing costs 1,510 1,191
=============================================== ======== ========
Fair value of grapes harvested and transferred
to inventory (1,338) (1,316)
=============================================== ======== ========
Fair value movement in biological produce (172) 125
=============================================== ======== ========
At 31 December - -
=============================================== ======== ========
The fair value of grapes harvested is determined by reference to
estimated market prices less cost to sell at the time of harvest.
The estimated market price for grapes used in respect of the 2019
harvest is GBP2,300 per tonne (2018: GBP2,300 per tonne).
A 10% increase in the estimated market price of grapes to
GBP2,530 per tonne would result in an increase of GBP134,000 (2018:
GBP132,000) in the fair value of the grapes harvested in the year.
A 10% decrease in the estimated market price of grapes to GBP2,070
per tonne would result in a decrease of GBP134,000 (2018:
GBP132,000) in the fair value of the grapes harvested in the
year.
A fair value loss of GBP172,000 (2018: GBP125,000 gain) was
recorded during the year and included within the consolidated
statement of comprehensive income. This measurement of fair value
less costs to sell is the deemed cost of the grapes that is
transferred into inventory upon harvest.
As a result of the adoption of IFRS16 in the year the fair value
loss is GBP55,000 higher than if IFRS 16 had not been adopted.
The fair value of biological produce is categorised as a level 3
recurring fair value measurement.
7 Inventories
December December
2019 2018
GBP'000 GBP'000
Finished goods 440 123
Work in progress 7,023 5,159
------------------ -------- --------
Total inventories 7,463 5,282
------------------ -------- --------
During the year GBP547,000 (December 2018: GBP449,000) was
transferred to cost of sales.
8 Loans and borrowings
December December
2019 2018
GBP'000 GBP'000
Current liabilities:
Bank loans 34 34
Other loans 3,345 -
--------------------------- -------- --------
3,379 34
--------------------------- -------- --------
Non-current liabilities
Bank loans 2,025 2,059
Deep Discount Bonds 3,001 2,761
--------------------------- -------- --------
Total loans and borrowings 5,026 4,820
--------------------------- -------- --------
The bank loan of GBP2,025,000 carries interest at an annual rate
of 3% over Barclays Bank plc base rate and is due for repayment in
full on 15 November 2021. It is secured by way of a fixed charge
over the Group's land and buildings at Appledore, Kent, shown at a
cost of GBP5,390,000 (2018:GBP5,390,000) within property, plant and
equipment and a floating charge over all other property and
undertakings.
Other bank loans of GBP34,000 carry a fixed interest rate of 6%
per annum secured against certain items of plant and equipment.
This loan is repayable via monthly instalments over 5 years from
January 2016.
The redemption amount of the deep discount bonds is
GBP3,390,000, redeemable on 15 August 2021. Accrued discount of
GBP240,000 (2018: GBP239,000) has been charged to the statement of
comprehensive income during the year.
On 31 May 2019, Gusbourne entered into an agreement with Lord
Ashcroft KCMG PC, a substantial shareholder in Gusbourne, to
receive an unsecured loan facility of up to GBP2,000,000, repayable
on 31 October 2019. Under the terms of the Loan Agreement, should
the loan not be repaid on 31 October 2019, the loan will become
repayable on demand subject to such repayment not being in breach
of the Company's existing banking facilities or if such repayment
caused the Company to be unable to meet its creditors as they fall
due. The loan has not been repaid and incurs interest of 15% per
annum. The lender can use its sole discretion to exercise any
warrants held in Gusbourne, to the amount to be subscribed pursuant
to such exercise will be deemed to be satisfied to the extent of
the amount outstanding in respect of the Loan and amount of accrued
but unpaid interest at the time of exercise.
On 23 December 2019 a subsidiary of Gusbourne PLC, Gusbourne
Estate Limited entered into an agreement with Franove Holdings
Limited, a company wholly owned by a Non-Executive Director of
Gusbourne Plc to receive an unsecured short term loan facility of
GBP1,250,000. The loan is repayable on 10 December 2020 and carries
interest at an annual rate of 15% per annum.
An analysis of the maturity of loans and borrowings is given
below:
December December
2019 2018
GBP'000 GBP'000
====================== ======== ========
Bank and other loans:
====================== ======== ========
Within 1 year 3,379 34
====================== ======== ========
1-2 years 2,025 34
====================== ======== ========
2-5 years - 2,025
====================== ======== ========
Deep Discount Bonds:
====================== ======== ========
Within 1 year - -
====================== ======== ========
1-2 years 3,001 -
====================== ======== ========
2-5 years - 2,761
====================== ======== ========
9 Lease liabilities
The Group has reviewed its leases and decided to account for
IFRS 16 on the modified retrospective approach using a single
discount rate for leases with similar characteristics. The Group is
using the methodology to set the right of use asset equal to the
lease liability on adoption of IFRS 16.
During the period the Group accounted for 6 leases under IFRS
16. The lease contracts provide for payments to increase each year
by inflation or at a fixed rate and on others to be reset
periodically to market rental rates. The leases also have
provisions for early termination. The weighted average Incremental
Borrowing Rate used to calculate the lease liability was 4.25%.
Plant, machinery
Land and motor vehicles Total
GBP'000 GBP'000 GBP'000
================================= ============ ============================ ==============
Net carrying value - 1 January
2019 0 80 80
================================= ============ ============================ ==============
On adoption 1,488 - 1,488
================================= ============ ============================ ==============
Additions 626 - 626
================================= ============ ============================ ==============
Interest 87 11 98
================================= ============ ============================ ==============
Payments (78) (58) (136)
================================= ============ ============================ ==============
Net carrying value - 31 December
2019 2,123 33 2,156
================================= ============ ============================ ==============
The undiscounted lease payments payable under the leases as at 1
January 2019 were GBP2,944,000. The difference of GBP1,456,000
between this and the IFRS 16 lease liability recognised on 1
January 2019 of GBP1,488,000 relates to the effect of discounting
using the incremental borrowing rate.
In applying the modified retrospective approach, The Group has
taken advantage of the following practical expedients:
-- A single discount rate has been applied to portfolios of leases with reasonably similar characteristics;
-- Initial direct costs have not been included in the
measurement of the right-of-use asset as at the date of initial
application.
-- For the purposes of measuring the right-of-use asset
hindsight has been used. Therefore, it has been measured based on
prevailing estimates at the date of initial application and not
retrospectively by making estimates and judgements (such as the
term of leases) based on circumstances on or after the lease
commencement date.
December December
2019 2018
GBP'000 GBP'000
=================================== ======== ========
The lease payments under long term
leases liabilities fall due as
follows:
=================================== ======== ========
Current lease liabilities 123 -
=================================== ======== ========
Non current lease liabilities 2,033 -
=================================== ======== ========
Total liabilities 2,156 -
=================================== ======== ========
During the period an interest charge of GBP87,000 arose on the
lease liability in respect of land leases. This interest cost has
been added to growing crop costs on the basis that the lease
liability solely relates to the production of grapes.
The Groups leases include break clauses. On a case-by-case
basis, The Group will consider whether the absence of a break
clause exposes the Group to excessive risk. Typically factors
considered in deciding to negotiate a break clause include:
-- The length of the lease term;
-- The economic stability of the environment in which the property is located; and
-- Whether the location represents a new area of operations for the Group.
At both 31 December 2019 and 2018 the carrying amounts of lease
liabilities are not reduced by the amount of payments that would be
avoided from exercising break clauses because on both dates it was
considered reasonably certain that the Group would not exercise its
right to exercise any right to break the lease.
10 Share capital
Deferred Ordinary
shares of shares
49p each of 1p each
Number Number GBP'000
Issued and fully paid
At 1 January 2018 23,639,762 39,366,984 11,977
Issued for cash during the
year - 6,304,699 63
----------------------------- ----------- ------------ ---------
At 31 December 2018 23,639,762 45,671,683 12,040
----------------------------- ----------- ------------ ---------
Issued for cash during the
year - 806,936 8
----------------------------- ----------- ------------ ---------
At 31 December 2018 23,639,762 46,478,619 12,048
----------------------------- ----------- ------------ ---------
The Deferred shares of 49 pence each have no rights attached to
them.
On 17 September 2019 the Company issued 44,459 new ordinary
shares of 1p each pursuant to an exercise of Warrants. All Warrants
were exercised at 60p per share.
On 27 September 2019 the Company issued 175,776 new ordinary
shares of 1p each pursuant to an exercise of Warrants. All Warrants
were exercised at 60p per share.
On 7 October 2019 the Company issued 195,001 new ordinary shares
of 1p each pursuant to an exercise of Warrants. All Warrants were
exercised at 60p per share.
On 22 October 2019 the Company issued 178,367 new ordinary
shares of 1p each pursuant to an exercise of Warrants. All Warrants
were exercised at 60p per share.
On 29 October 2019 the Company issued 213,333 new ordinary
shares of 1p each pursuant to an exercise of Warrants. All Warrants
were exercised at 60p per share.
Gusbourne PLC has Warrants to subscribe for 2,036,517 Ordinary
shares of 1 pence each in issue. These Warrants are exercisable at
any time by the Warrant Holder, with an exercise price of 75 pence
per share until 31 July 2021.
Unexercised Warrants as at 31 December 2019 amount to 2,036,517
Ordinary Shares of 1 pence each.
11 Related party transactions
Deacon Street Partners Limited is considered a related party by
virtue of the fact that Lord Ashcroft KCMG PC, the Company's
ultimate controlling party, is also the ultimate controlling party
of Deacon Street Partners Limited. During the year Deacon Street
Partners Limited charged the Company in total GBP84,000 (December
2018 - GBP78,107). Of this GBP84,000 relates to management services
(December 2018 - GBP78,107). There was GBP84,000 due to Deacon
Street Partners Limited as at 31 December 2019 (December 2018 -
GBP18,000).
Devonshire Club Limited is considered a related party by virtue
of the fact that Lord Ashcroft KCMG PC, the Company's ultimate
controlling party, is indirectly a shareholder of the parent
company of Devonshire Club Limited. During the year the Company
sold wine to Devonshire Club Limited amounting to GBP4,537
(December 2018 - GBP10,131). A balance due from Devonshire Club
Limited of GBPnil (2018: GBP2,219) is shown within trade
receivables.
On 18 June 2018, the company lent GBP50,000 to a director as an
interest free loan, repayable by instalments from July 2019. The
loan will be repaid in full by May 2024. The balance due from the
director as at 31 December 2019 was GBP47,500 (December 2018 -
GBP50,000).
On 2 September 2016, the Company issued deep discount bonds with
a subscription price of GBP4,073,034 together with 2,036,517
separable warrants to subscribe for Ordinary shares at an exercise
price of 75 pence per share. On 30 June 2017 the Company offered
Bondholders the opportunity to convert their bonds into new
Ordinary shares at an Issue price of 40p. The company announced, on
1 August 2017, that it received final acceptances of 5,136,662
Conversion Offer Shares, raising GBP2,055,000 and resulting in a
reduction of the final redemption amount of the deep discount bonds
to GBP3,390,000.
Details of related parties who subscribed for the deep discount
bonds and warrants are shown in the table below:
Deep discount bonds
Accrued Accrued
Balance as discount Balance discount Balance
at 31 December to 31 as at 31 to 31 as at 31
2017 December December December December
Name 2018 2018 2019 2019
==================== ==================== ==================== ============== ==================== ==============
Lord Ashcroft KCMG
PC 1,263,282 120,024 1,383,306 120,037 1,503,343
==================== ==================== ==================== ============== ==================== ==============
A Weeber 686,692 65,243 751,935 65,249 817,184
==================== ==================== ==================== ============== ==================== ==============
1,949,974 185,267 2,135,241 185,286 2,320,527
==================== ==================== ==================== ============== ==================== ==============
Warrants exercisable at
75 pence each
Held as at 31 December Held as at
2019 31 December
Number 2018
Name Number
========================= ================================================ =================
Lord Ashcroft KCMG PC 1,311,517 1,311,517
========================= ================================================ =================
A Weeber 300,000 300,000
========================= ================================================ =================
I Robinson 50,000 50,000
========================= ================================================ =================
Lord Arbuthnot PC 5,000 5,000
========================= ================================================ =================
M Paul 5,000 5,000
========================= ================================================ =================
M Clapp 5,000 5,000
========================= ================================================ =================
1,676,517 1,676,517
========================= ================================================ =================
On 5 September 2018, the Company issued, for cash, 6,221,699 new
ordinary shares of 1 pence each with 6,221,699 separable warrants
to subscribe for 1 pence Ordinary shares at an exercise price of 60
pence each. The warrants lapsed on 25 October 2019.
Details of related parties who subscribed for warrants are shown
in the table below:
Warrants exercisable at 60 pence each
Held as at Held as at
31 December Warrants Warrants lapsed 31 December
2018 exercised Number 2019
Name Number Number Number
=================== ================= ============== ====================== =================
Lord Ashcroft KCMG
PC 4,504,510 - (4,504,510) -
=================== ================= ============== ====================== =================
I Robinson 41,667 (41,667) - -
=================== ================= ============== ====================== =================
M Paul 83,334 (20,000) (63,334) -
=================== ================= ============== ====================== =================
M Clapp 16,667 - (16,667) -
=================== ================= ============== ====================== =================
P Bentham 83,334 (83,334) - -
=================== ================= ============== ====================== =================
4,729,512 (145,001) (4,584,511) -
=================== ================= ============== ====================== =================
12 Subsequent events
FINANCING
On 1 June 2020, Gusbourne announced that its subsidiary
Gusbourne Estate Limited has entered into an agreement with PNC
Business Credit, a trading style of PNC Financial Services UK Ltd,
for up to GBP10.5m of asset-based lending facilities. (the "PNC
Facilities"). The PNC Facilities will primarily be used to provide
working capital for the Group. It will also be used to refinance
certain existing loan facilities.
The PNC Facilities will be provided on a revolving basis over a
minimum period of 5 years and allow flexible drawdown and
repayments in line with the Company's working capital requirements.
The interest rate will be at the annual rate of 3 per cent over the
Bank of England Base Rate. The facilities will be secured by way of
first priority charges over the Company's inventory, receivables
and freehold property as well as an all assets debenture.
On completion approximately GBP4.6m of the PNC Facilities was
drawn down by Gusbourne Estate Limited with approximately GBP2.1m
being used to repay the existing secured Barclays bank facilities
in full, GBP1.3m used to part the existing short term loans to
Franove Holdings Limited and a company
controlled by Lord Ashcroft KCMG PC. The balance of GBP1.2m will
be used for working capital. Further drawdowns will be made from
time to time in line with the needs of the business.
Of the GBP1.3m drawdown at completion to part repay existing
short-term loans, GBP0.8m was used to part repay a short-term loan
of GBP1.25m received on 23 December 2019 from Franove Holdings
Limited. GBP0.5m was used to part repay a short-term loan of
GBP2.0m received on 31 May 2019 from a company controlled by Lord
Ashcroft.
Following these repayments Franove Holdings Limited has agreed
to extend the repayment date of its outstanding loan of GBP0.5m to
15 August 2021, at the same 15% rate of interest, with the loan
becoming secured behind PNC at the same ranking as the existing
outstanding deep discount bonds issued by the Company. Gusbourne
Estate Limited has also agreed with Franove that in the event it
seeks to repay its loans (excluding its PNC facilities) further,
the repayment of the Franove Holdings Limited loan will take
priority.
The remaining Lord Ashcroft loan of GBP1.7m has been refinanced,
by a company controlled by him, with a new deep discount bond
maturing on 15 August 2021 and with a coupon of 15% per annum
rolled quarterly and secured behind PNC at the same ranking as the
existing outstanding bonds issued by the Company.
COVID-19
In line with the FRC's guidance that COVID-19 should be treated
as a non- adjusting post balance sheet event given our year-end and
the development of the pandemic after that date, we have performed
a re-assessment (but not adjustment) of the carrying value of the
reported assets and liabilities.
Intangibles
The Group has goodwill and brand assets which if downside
scenarios were applied may result in impairments. Although there is
short term uncertainty of future trading as a result of COVID-19,
if such a downturn is temporary the future cash flow models would
not include the major impacted year of 2020 and as a result at this
stage the Directors do not consider it appropriate to model any
impairment until there is a clearer picture of longer-term trading.
The directors remain confident about the Group's long-term
prospects beyond Covid-19.
Inventories
Inventories are initially recognised at cost, and subsequently
at the lower of cost and net realisable value. Cost comprises all
costs of purchase, costs of conversion and other costs, including
operating lease rentals, incurred in bringing the inventories to
their present location and condition. Grapes grown in the Group's
vineyards are included in inventory at fair value less costs to
sell at the point of harvest which is the deemed cost for the
grapes. There is no indication that the net realisable value of the
Group's inventories has reduced as a result of COVID-19 and the
Directors do not consider that there is any impairment of the
Group's inventories.
Right of use asset
Right of use assets relate to land and property leases on which
some of the Groups vineyards are planted. The Group expects to
continue to use these leases and do not consider these to be
impaired.
Trade receivables
The Group supply's a wide range of customers including
restaurants, bars, hotels and other hospitality providers, at the
date of these financial statements there had been no specific
issues identified in the recoverability of the amounts due from the
Group's customers as at 31 December 2019. There is however an
increased risk associated with the trading of our customers and
their ability to meet their obligations following the impact of
COVID-19 on their business. The Group's credit loss provision as at
31 December 2019 was GBP13,000 representing 4% of outstanding trade
receivables. For illustration, if the Group's estimated credit loss
provision were to increase to 20% of outstanding trade receivables,
the credit loss provision would be GBP65,000.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR BIGDLBDDDGGS
(END) Dow Jones Newswires
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