TIDMGUS
RNS Number : 0768C
Gusbourne PLC
27 September 2018
Gusbourne Plc
("Gusbourne" or the "Company")
Half Yearly Report
Gusbourne Plc, the English sparkling wine producer, today
announces its unaudited interim results for the six months ended 30
June 2018.
Highlights
-- Revenue up by 13% to GBP429,000 (30 June 2017: GBP378,000)
-- Gross profit up by 25% to GBP268,000 (30 June 2017: GBP214,000)
-- An EBITDA loss of GBP427,000 (30 June 2017: GBP329,000),
reflecting planned investment in line with management's
expectations at this stage of the Company's production and sales
maturity.
-- Ongoing success in major wine competitions including "Best
Sparkling Wine", Best Still Wine" and overall "Star of England" at
the inaugural Harpers Wine Stars of England competition.
Charlie Holland, Chief Winemaker and Chief Executive Officer
commented:
"Our results for the half year continue to show steady progress
towards our goals for Gusbourne, in line with our strategy to
further grow and develop the business in a manner which remains
consistent with our long term aspirations for the Gusbourne brand.
We intend to continue to produce and sell a range of vintage wines
of exceptional quality from grapes grown in our own vineyards."
Awards
Awards during the period and post period end have included:
-- In May 2018, Gusbourne was awarded "Best Sparkling Wine",
Best Still Wine" and overall "Star of England" at the inaugural
Harpers Wine Stars of England competition.
-- At the Wine GB awards in July 2018 Gusbourne was awarded Gold
medals for the Blanc de Blancs 2013, Pinot Noir 2016 and Guinevere
2014 and silver medals for the Brut Reserve 2014 and Rose 2014. The
Blanc de Blanc 2013 went on to win the trophy for most outstanding
Blanc de Blancs and the Pinot Noir 2016 was awarded the trophy for
most outstanding still red wine.
-- In August 2018 the Brut Reserve 2013 was awarded gold medal
and the 'best in class' trophy at the Champagne and Sparkling Wine
World Championships (CSWWC).
Financials
Results for the six months ended 30 June 2018
Revenue for the period amounted to GBP429,000 (30 June 2017:
GBP378,000). Administrative expenses of GBP1,028,000 (30 June 2017:
GBP746,000) includes depreciation of GBP307,000 (30 June 2017:
GBP220,000) reflecting the increased capital spend. Excluding
depreciation, administrative expenses amounted to GBP721,000 (30
June 2017: GBP526,000), the increase of GBP195,000 reflecting
additional staff and other costs required to support the ongoing
development and growth of the business.
The operating loss for the period was GBP734,000 (30 June 2017:
GBP549,000), and EBITDA (operating loss before depreciation and
amortisation) amounted to a loss of GBP427,000 (30 June 2017:
EBITDA loss of GBP329,000). The loss before tax was GBP906,000 (30
June 2017: GBP815,000) after finance expenses of GBP172,000 (30
June 2017: GBP266,000).The lower finance costs primarily related to
the discount expense on outstanding deep discount bonds.
These planned losses continue to be in line with management's
expectations at this stage of the Group's production and sales
maturity and in line with the long-term development plan for the
Group.
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. This expenditure
includes the ongoing investment in the vineyards established in
West Sussex and Kent between 2013 and 2015. This investment in
vineyards is reflected in capital expenditure during the period of
GBP39,000 (30 June 2017: GBP174,000).
In addition, the Group invested in additional plant and
equipment for the vineyards and the winery during the period
amounting to GBP415,000 (30 June 2017: GBP270,000).
Total assets at 30 June 2018 of GBP17,678,000 (31 December 2017:
GBP17,466,000) include freehold land and buildings of GBP6,518,000
(31 December 2017: GBP6,539,000), vineyards of GBP3,251,000 (31
December 2017: GBP3,260,000), inventories of wine stocks amounting
to GBP3,781,000 (31 December 2017: GBP3,484,000), and GBP462,000 of
cash (31 December 2017: GBP1,464,000). Intangible assets of
GBP1,007,000 (31 December 2017: GBP1,007,000) arose on the
acquisition of the Gusbourne Estate business on 27 September
2013.
An important aspect of the Group's balance sheet is the
increasing investment in the operating assets of the business. The
Group's inventories are reported at the lower of cost and net
realisable value. These inventories are expected to grow
significantly until the Group reaches full production maturity,
considering the long production cycle in relation to sparkling wine
and related vineyard establishment. The anticipated underlying
surplus of net realisable value over cost of these wine
inventories, which is not reflected in these accounts, is expected
to become an increasingly significant factor of the Group's asset
base.
Financing
The Group's activities are financed by shareholders' equity,
bank loans and other borrowings. Bank loans and other borrowings at
30 June 2018 amounted in total to GBP5,860,000 (31 December 2017:
GBP4,778,000) and represent 51% of total equity (31 December 2017:
39%).
On 5 September 2018, Gusbourne announced that it had raised
approximately GBP3.7 million by way of an issue of 6,221,699 new
ordinary shares at a price of 60 pence per share. In addition.,
6,221,699 warrants have been issued on a 1 for 1 basis to
subscribers of these new shares, at an exercise price of 60p. These
warrants can be exercised at any time up to 30 September 2019.
Lord Ashcroft KCMG PC subscribed for GBP2,702,517 representing
4,504,510 new ordinary shares., of which GBP1,000,000 together with
accrued interest was satisfied through the repayment of the
shareholder loan, in full, which was provided to the Company on 31
May 2018.
The Company's secured loan of GBP2m with Barclays Bank was due
for repayment on 25 September 2018. The Company is currently
negotiating an extended loan facility with the bank and a further
announcement will be made in due course.
The achievement of the Group's long-term development strategy is
expected to require 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 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.
For further information contact:
Gusbourne Plc
Charlie Holland +44 (0)1233 758 666
Cenkos Securities plc
Nicholas Wells +44 (0)20 7397 8920
Note: This announcement and other press releases are available
to view 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
mature vineyards are located at its freehold estate at Appledore in
Kent where the winery is also based. The Group has a total of 231
acres of vineyards.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2018
Unaudited Unaudited Audited
Six months Six months Year ended
to to
30 June 30 June 31 December
Notes 2018 2017 2017
GBP'000 GBP'000 GBP'000
Revenue 429 378 998
Cost of sales (161) (164) (381)
Gross profit 268 214 617
Fair value movement in biological
assets 6 26 (17) -
Fair movement in biological
produce 6 - - (27)
Administrative expenses (1,028) (746) (1,759)
Loss from operations (734) (549) (1,169)
Finance expense 3 (172) (266) (469)
Loss before tax (906) (815) (1,638)
Tax expense - - -
Loss for the period attributable
to
owners of the parent (906) (815) (1,638)
Loss per share attributable
to
the ordinary equity holders
of the parent:
Basic and diluted (2.30p) (3.43p) (3.2 (5.26p)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2018
Unaudited Unaudited Audited
30 June 30 June 31 December
Notes 2018 2017 2017
Assets GBP'000 GBP'000 GBP'000
Non-current assets
Intangibles 4 1,007 1,007 1,007
Property, plant and equipment 5 11,377 10,743 11,230
12,384 11,750 12,237
--------- --------- -----------
Current assets
Biological assets 6 625 389 -
Inventories 7 3,781 2,386 3,484
Trade and other receivables 426 668 281
Cash and cash equivalents 462 3,136 1,464
--------- --------- -----------
5,294 6,579 5,229
--------- --------- -----------
Total assets 17,678 18,329 17,466
--------- --------- -----------
Liabilities
Current liabilities
Trade and other payables (394) (558) (358)
Finance leases (47) (52) (49)
Loans and borrowings 8 (3,064) (34) (2,059)
--------- --------- -----------
(3,505) (644) (2,466)
--------- --------- -----------
Non-current liabilities
Loans and borrowings 8 (2,692) (6,524) (2,590)
Finance leases (57) (104) (80)
Convertible deep discount bonds - - -
(2,749) (6,628) (2,670)
Total liabilities (6,254) (7,272) (5,136)
NET ASSETS 11,424 11,057 12,330
--------- --------- -----------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
At 30 June 2018
Issued capital and reserves attributable
to
owners of the parent
Share capital 11,977 11,924 11,977
Share premium 6,754 4,751 6,754
Merger reserve (13) (13) (13)
Retained earnings (7,294) (5,605) (6,388)
------- ------- -------
TOTAL EQUITY 11,424 11,057 12,330
------- ------- -------
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2018
Unaudited Unaudited Audited
Six months to months to Six months to Year ended
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
Cashflows from operating
activities
Loss for the period/year before tax (906) (815) (1,638)
Adjustments for:
Depreciation of property, plant and
equipment 307 220 479
Gain on shares issued to directors in
the year - - 40
Profit on disposal of property,
plant and equipment - - (3)
Finance expense 172 266 469
Movement in biological assets (625) (389) -
Fair value movement in biological
produce - - 27
(Increase)/decrease in trade and
other receivables (148) (373) 28
Increase in inventories (297) (137) . (1,264)
Increase in trade and other payables 36 222 45
----------------------- ------------- ----------
Cash outflow from operations (1,461) (1,006) (1,817)
Investing activities
Purchases of property, plant and
equipment,
excluding vineyard establishment (415) (760) (1,636)
Investment in vineyard establishment (39) (174) (86)
Sale of property, plant and equipment - - 7
Net cash from investing activities (454) (934) (1,715)
----------------------- ------------- ----------
Financing activities
Capital loan repayments (17) (17) (34)
Short term loan* 1,000 1,000 1,000
Repayment of finance leases (25) (26) (52)
Interest paid (45) (44) (82)
Issue of ordinary shares - 3,202 3,203
Share issue expenses - (162) (162)
Net cash from financing activities 913 3,953 3,873
----------------------- ------------- ----------
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
For the six months ended 30 June 2018
Unaudited Unaudited Audited
Six months to Six months to Six months to Period to
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
Net (decrease)/increase in cash and cash
equivalents (1,002) 2,013 341
Cash and cash equivalents at beginning of
period 1,464 1,123 1,123
---------------------------- ------------- ------------
Cash and cash equivalents at end of period 462 3,136 1,464
============================ ============= ============
*Non- cash transaction
The short-term loan of GBP1,000,000 shown in the period ended 30
June 2017 and, in the year, ended 31 December 2017 was used as part
settlement of monies due under the share subscription, which
completed on 29 June 2017.
The unsecured loan of GBP1,000,000 received in the period ended
30 June 2018 from Lord Ashcroft KCMG PC was repaid, with interest,
as part settlement of monies due under the share subscription,
which completed in September 2018.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2018
Total
attributable
to equity
holders
Share Share Merger Retained of
Audited: capital premium reserve earnings parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
31 December
2016 11,820 815 (13) (4,790) 7,832
Share issue 104 4,098 - - 4,202
Share issue
expenses - (162) - - (162)
Comprehensive
loss for the
period - - - (815) (815)
______ ______ ______ _____ ______
30 June 2017 11,924 4,751 (13) (5,605) 11,057
______ ______ ______ ______ ______
Share issue 2 - - - 2
Bond conversion 51 2,003 - - 2,054
Comprehensive
loss for the
period - - - (823) (823)
Gain on shares
issued to
directors
in the year - - - 40 40
______ ______ ______ _____ ______
31 December
2017 11,977 6,754 (13) (6,388) 12,330
Unaudited:
Comprehensive
loss for
the period - - - (906) (906)
______ ______ ______ _____ ______
30 June 2018 11,977 6,754 (13) (7,294) 11,424
______ ______ ______ ______ ______
NOTES TO THE ACCOUNTS
For the six months ended 30 June 2018
1 Statement of accounting policies
The interim financial statements have been prepared in
accordance with the recognition and measurement principles as
adopted by the EU, applying the accounting policies and
presentation that were applied in the preparation of the Company's
published consolidated financial statements for the year ended 31
December 2017 and are consistent with the accounting policies
expected to apply in its financial statements for the year ended 31
December 2018.
The financial information for the six months ended 30 June 2018
has not been subject to an audit nor a review in accordance with
International Standard on Review Engagements 2410, Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity, issued by the Auditing Practices Board. The
comparative financial information presented herein for the year
ended 31 December 2017 does not constitute full statutory accounts
within the meaning of Section 434 of the Companies Act 2006. The
Group's annual report and accounts for the year ended 31 December
2017 have been delivered to the Registrar of Companies. The Group's
independent auditor's report was unqualified and did not include
references to any matters to which the auditors drew attention by
way of emphasis without qualifying their report and did not contain
a statement under section 498(2) or 498(3) of the Companies Act
2006.
Basis of preparation
The Board of the Company continually assesses and monitors the
key risks of the business. These risks have not significantly
changed from those set out in the Company's Annual Report for the
period ended 31 December 2017. The Board has reviewed forecasts and
remains satisfied with the Company's funding and liquidity
position. On the basis of its forecast and available facilities and
cash balances held on the balance sheet, the Board has concluded
that the going concern basis of preparation continues to be
appropriate.
2 Loss from operations
Loss from operations has been arrived at after charging:
Unaudited Unaudited Audited
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
Depreciation of property, plant
and equipment 307 220 479
Staff costs expensed to consolidated
statement of income 256 104 310
3 Finance expense
Unaudited Unaudited Audited
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
Finance expense
Interest payable on borrowings 50 45 82
Amortisation of bank transaction
costs 3 2 5
Deep discount bond charge 119 219 382
Total finance expense 172 266 469
--------- --------- -----------
4 Intangibles
Unaudited Unaudited Audited
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
Goodwill 777 777 777
Brand 230 230 230
1,007 1,007 1,007
--------- --------- -----------
5 Property, plant and equipment
Unaudited Unaudited Audited
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
Freehold land and buildings 6,518 5,527 6,539
Plant, machinery and motor vehicles 1,562 1,249 1,407
Vineyard establishment 907 1,650 863
Mature vineyards 2,344 1,746 2,397
Computer equipment 46 24 24
Asset in the course of construction - 547 -
11,377 10,743 11,230
--------- --------- -----------
6 Biological assets
Biological assets represent grapes growing on the Group's vines.
Once the grapes are harvested they are deemed to be Biological
produce and transferred to inventories.
Unaudited Unaudited Audited
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
Crop growing costs 599 406 1,048
Fair value of grapes harvested and
transferred
to inventories - - (1,021)
Fair value movement in biological
assets 26 (17) -
Fair value movement in biological
produce - - (27)
--------- --------- -----------
Fair value of biological assets at
the reporting date 625 389 -
--------- --------- -----------
The fair value of biological assets at the reporting date is
determined by reference to estimated market prices less costs to
sell. The estimated market price for grapes used in respect of 2018
is GBP2,300 (2017: GBP2,300) per tonne. The fair value is subject
to a discount factor of 50% due to the grapes, as at the reporting
date, being approximately 3 months away from being ready for
harvest.
A 10% increase in the estimated market price of grapes to
GBP2,530 per tonne would result in an increase of GBP65,000 in the
fair value of biological assets at the reporting date. A 10%
decrease in the estimated market price of grapes to GBP2,070 per
tonne would result in a decrease of GBP65,000 fair value of
biological asset (at the reporting date in the fair value of the
grapes harvested in the year.
7 Inventories
Unaudited Unaudited Audited
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
Finished goods 83 100 90
Work in progress 3,698 2,286 3,394
3,781 2,386 3,484
--------- --------- -----------
8 Loans, borrowings and finance leases
Unaudited Unaudited Audited
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
Current liabilities
Short term loan 1,006 - -
Bank loans 2,058 34 2,059
--------- --------- -----------
3,064 34 2,059
--------- --------- -----------
Non-current liabilities
Bank loans 51 2,110 68
Deep Discount Bonds 2,641 4,414 2,522
--------- --------- -----------
Total loans and borrowings 2,692 6,524 2,590
--------- --------- -----------
The Company entered into an agreement on 31 May 2018 with Lord
Ashcroft KCMG PC to receive a short term unsecured loan of
GBP1,000,000. The loan carries interest for a period of 3 months
following the date of the loan agreement at the rate of 7% per
annum above the base rate as varied from time to time by Barclays
Bank plc, and thereafter at 10% per annum. The short-term loan has
subsequently been repaid in full as part consideration for Lord
Ashcroft KCMG PC's subscription for new ordinary shares announced
on 5 September 2018.
The bank loan of GBP2,025,000 is at an interest rate of 3% over
Barclays Bank plc base rate and was due for repayment in full on 25
September 2018. It is secured by way of a fixed charge over the
group's land and buildings at Appledore, Kent and a floating charge
over all other property and undertakings. The Company is currently
negotiating an extended loan facility with the bank and a further
announcement will be made in due course.
Other bank loans of GBP86,000 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.
On 2 September 2016 the Company issued a deep discount bond
totalling GBP4,073,034. The bond is secured by a fixed charge over
the Group's land and buildings at Appledore, Kent. The bond is
redeemable on 15 August 2021 and attracts a coupon rate of 9% per
annum which is rolled up annually. The redemption amount of the
deep discount bonds at the time they were issued was
GBP6,266,868.
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, 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.
9 Post balance sheet events
On 5 September 2018, Gusbourne announced that it had raised
approximately GBP3.7 million by way of an issue of 6,221,699 new
shares at a price of 60 pence per share. Furthermore, 6,221,699
Warrants have been issued on a 1 for 1 basis to subscribers of
these new Shares, at an exercise price of 60p. The warrants can be
exercised at any time up to 30 September 2019.
Lord Ashcroft KCMG PC has subscribed for GBP2.7 million
representing 4,504,510 New Shares, of which GBP1 million together
with accrued interest has been satisfied through the repayment of
the short term loan, in full, which was provided to the Company on
31 May 2018.
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END
IR EAXNKAAAPEFF
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