Source - RNS
RNS Number : 1994H
Gusbourne PLC
06 June 2017
 

 

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Gusbourne Plc

(London-AIM: GUS) ("Gusbourne", the "Company" or the "Group")

Results for the year ended 31 December 2016.

The Board of Gusbourne Plc announces its audited results for the year ended 31 December 2016.

Highlights

·      Sales up by 35% to £640,000 (2015: £473,000)

·      Gross profit up by 47% to £217,000 (2015: £148,000)

·      Continuing success in international wine competitions

·      New and prestigious awards gained in the United States for Gusbourne sparkling wines following its first exports to the United States in July 2016

·      A successful harvest in 2016 in terms of both yield and quality

·      Trading in 2017 remains in line with management's expectations

·      Announcement on 6 June 2017 of an Open Offer, underwritten by Lord Ashcroft KPMG PC, to raise up to £4.2m before expenses, providing further capital for growth 

Andrew Weeber, Chairman, commented:

"2016 has been another successful year of growth and development for the Company as we work towards our long-term goals. We remain dedicated to the production and sale of premium sparkling wines from grapes grown in our own vineyards and would like to thank both customers and staff for their ongoing support" 

 

Chairman's statement

I am pleased to report that 2016 was another successful year of further growth and development for the Group, in line with our long-term plans. The Gusbourne business was established over ten years ago in 2004 and has been selling its award-winning English sparkling wines since 2010. Sales have continued to grow steadily in line with product availability and in 2016 our sales increased by 35 per cent compared with 2015. Gusbourne remains one of England's premier sparkling wine businesses and is focused at the luxury end of the market.

·      A successful harvest in October 2016 in terms of both yield and quality, which has added to our wine stocks for future sale. The harvest included the first fruit from the vines planted on our sites in 2014.

·      Appointment of renowned United States based specialist wine importer, Broadbent Selections, with the first consignment of wine dispatched to the US in July 2016.

·      Continued success in major international wine competitions, including a number of prestigious awards for Gusbourne sparkling wines in the United States.

·      Ongoing investment in the Group's growing asset base including vineyards, wine inventories, buildings, plant and machinery and the award winning Gusbourne brand.

Finally, I should like to express my sincere thanks for the dedicated efforts of our employees, our loyal customers and last, but not least, the support of our shareholders in helping the Group achieve another successful year of growth and development in the business.

 

Andrew Weeber

 

Chairman

 

Chief Executive's review

I am pleased to report that 2016 has been another successful year of growth and development for the Group in line with our long term strategic development plans. Sales of £640,000 (2015: £473,000) are up 35% on the prior year and we continue to widen our distribution channels both in the UK and overseas.

The Gusbourne sparkling wine products remain at the luxury end of the English sparkling wines market and we remain committed to maintaining this premium position. We started exporting to the United States in July 2016 and have been delighted that the quality of our products has been recognised in this exciting new market for us by a number of prestigious awards for Gusbourne sparkling wines in the United States, as referred to below.

Activities

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 now has a total of 231 acres of vineyards with the first plantings dating back to 2004 and the most recent plantings in 2015.

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

Gusbourne continues to enjoy success in major international wine competitions. In May 2016 Gusbourne was awarded two Platinum Medals at the Decanter World Wine Awards ("DWWA") 2016. The wines recognised by the DWWA tasting panel were Gusbourne Blanc de Blancs 2011, which won the trophy for the "Best English Sparkling Wine", and Gusbourne Pinot Noir 2014, which won the trophy for the "Best English Red Wine". In April 2016, Gusbourne Blanc de Blancs 2011 and Gusbourne Brut Reserve 2011 also won Gold Medals at the 2016 Sommelier Wine Awards.

In December 2016 Gusbourne was the highest rated English sparkling wine by the Wine Enthusiast magazine tasting panel, a leading wine magazine in the United States.

The year 2016 was capped with Gusbourne Blanc de Blancs 2012 being voted one of Decanter Magazine's 'Most exciting wines of 2016'.

2017 to date has continued with this success and brought further awards. In the United States, Gusbourne became the first English wine to win a double Gold medal at the TEXSOM awards (one of the most influential wine competitions in the United States) for the Gusbourne Blanc de Blancs 2013 and Gusbourne Brut Reserve 2013 which also won the Best in Class trophy.

In May 2017, Gusbourne won another double Gold at the International Wine Challenge as well as a double Gold at the International Wine and Spirits Competition (IWSC) for the Gusbourne Blanc de Blancs 2012 and Gusbourne Blanc de Blancs 2013. In May 2017 Gusbourne was awarded a Platinum medal at the December World Wine Awards ("DWWA") 2017 for the Gusbourne Pinot Noir 2015, claiming consecutive Best English Red Wine trophies.

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 opening of a cellar door operation at the Company's winery in Kent during the summer of 2017. This will allow visitors to enjoy vineyard and winery tours and taste our award-winning wines. It will also help to promote a closer and more direct relationship with our customers.

·      The investment in additional plant and machinery to keep pace with production growth.

2016 Harvest

Our 2016 harvest was successfully completed in October. The quality of the grapes was excellent, with optimum levels of natural sugar and acidity, both of which met our own exacting quality standards. The high quality of grapes harvested in the year bodes well for 2016 becoming another great vintage for Gusbourne. Yield volumes were good and in line with expectations and the resulting wine production has added further to our inventory levels for sale in future years.

Results for the year

Sales for the year amounted to £640,000 (2015: £473,000) an increase of 35% over the prior year. Whilst these sales continue to reflect limited stock availability at this time, they do represent a consecutive like for like growth in the sale of Gusbourne wines since 2013. Administrative expenses of £1,385,000 (2015: £1,176,000), including depreciation of £357,000 (2015: £267,000) reflect continuing investment in the development and growth of the business and the Gusbourne brand in particular.

EBITDA for the year was a loss of £802,000 (2015: £856,000). The operating loss for the year after depreciation and amortisation was £1,159,000 (2015: £1,123,000). The loss before tax was £1,528,000 (2015: £1,426,000) after net finance costs of £369,000 (2015: £303,000).

These planned losses continue to be in line with expectations and the long-term development strategy of 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 year of £338,000 (2015: £786,000).

In addition, the Group invested in additional plant and equipment for the vineyards and the winery amounting to £363,000 (2015: £461,000) and in buildings of £414,000 (2015: £664,000). Total assets at 31 December 2016 of £14,621,000 (2015: £13,481,000) include freehold land and buildings of £5,543,000 (2015: £5,198,000), vineyards of £3,256,000 (2015: £2,972,000), inventories of wine stocks amounting to £2,247,000 (2015: £1,711,000), and £1,123,000 of cash (2015: £1,328,000). Intangible assets of £1,007,000 (2015: £1,007,000) arose on the acquisition of the Gusbourne Estate business on 27 September 2013.

The Group's net tangible assets at 31 December 2016 amount to £6,825,000 (2015: £8,353,000) and represent 87% of total equity (2015: 89%). Net tangible assets per share at 31 December 2016 were 28.9 pence per share (2015: 35.3 pence). The reduction of net tangible assets per share in the year reflects the planned losses incurred during 2016 in line with the long-term development strategy of the Group. However, 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 grow significantly until the Group reaches full production maturity, bearing in mind the long production cycle in relation to sparkling wine and related vineyard establishment. 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 shareholders equity, loans, other borrowings and convertible bonds. Loans, other borrowings and convertible bonds at 31 December 2016 amount in total to £6,537,000 (2015: £3,952,000) and represent 83% of total equity (2015: 42%).

On 20 July 2016, the Company announced its intention to place 5 year secured deep discount bonds at a discount of 9% per annum ("Bonds"). The Company also announced that it would issue share warrants ("Warrants") to Bond holders at the rate of one Warrant for every £2 of the Bonds. Each Warrant will, upon exercise, entitle the holder to subscribe for one new ordinary share in the Company at an exercise price of 75 pence per share. On 1 September 2016, the Company announced that it had received applications from investors to subscribe for Bonds totalling £4,073,034 and that all of these applications had been accepted in full. Following the repayment of the existing convertible bonds held by Andrew Weeber and his wife, the net cash proceeds received by the Company amounted to approximately £2,318,000. The net cash proceeds were used for working capital, and capital expenditure in line with the Company's long-term strategy to further expand production and sales of its international award-winning English sparkling wines.

On 6 June 2017, the Company announced an Open Offer, which will be underwritten by the Company's principal shareholder Lord Ashcroft KCMG PC, providing shareholders with the opportunity to subscribe for an aggregate of 10,506,560 new Ordinary Shares, to raise an additional £4.2m before expenses. Shareholders will be provided with a basic entitlement of four new Ordinary Shares for every nine existing Ordinary Shares, at 40 pence per share. On 6 June 2017 the Company also announced a short-term loan from Lord Ashcroft KCMG PC of £1,000,000 which will be offset against Lord Ashcroft KCMG PC's subscription under the Open Offer. The proceeds from this loan and the Open Offer will be used for working capital, and capital expenditure in line with the Company's long-term strategic plan.

On 6 June 2017, the Company also announced its intention, shortly after the Company's Annual General Meeting on 29 June 2017, to offer holders of the Bonds the opportunity to convert all or part of their Bonds into ordinary shares in the Company at a conversion price of 40 pence per ordinary share, the same price as that offered to shareholders in the Open Offer. If holders of Bonds opt to convert Bonds into ordinary shares in the Company, their Warrants will be unaffected. This offer is subject to the necessary allotment powers being approved at a General Meeting to be held on 29 June 2017, prior to the Company's Annual General Meeting. The purpose of this offer to Bond holders is to strengthen the Company's balance sheet and increase the funding options available to it in the future.

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 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.

Current trading and outlook

The Group's trading in 2017 remains in line with expectations and its long term strategic development plan. Gusbourne's luxury sparkling wines continues to win new sales orders from an expanding base of valued customers both in the UK and overseas. We look forward in particular to the opening of our cellar door operations during the Summer of 2017 and welcoming visitors to it.

The growing season in 2017 has started well although there has been some minor frost damage to our vines in both Kent and West Sussex as a result of an unusually cold spell at the beginning of the season. The vines will remain subject to the normal seasonal climatic and disease risks throughout the remaining part of the growing season.

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.

 

Key Performance Indicators

Years ended 31 December

2016
£'000

2015
£'000

2014
£'000

Sales

640

473

434

 

 

 

 

EBITDA*

(802)

 (856)

 (786)

 

 

 

 

Investment in tangible assets

 

 

 

 

 

 

 

Investment in vineyard establishment

338

786

588

Investment in freehold land and buildings

414

664

14

Investment in plant, machinery, vehicle and other equipment

364

473

145

Investment in property, plant and equipment

1,116

1,923

747

 

 

 

 

Increase in inventories

536

276

125

Total investment in tangible assets

1,652

2,199

872

 

 

 

 

 

 

 

 

At 31 December

2016
£'000

2015
£'000

2014
£'000

Net assets

 

 

 

 

 

 

 

Freehold land and buildings

5,543

 5,198

 4,578

Vineyards

3,256

 2,972

 2,236

Plant, machinery, vehicle and other equipment

1,131

 1,001

 715

Total non-current assets

9,930

 9,171

 7,529

Inventories

2,247

 1,711

 1,435

Net working capital (current receivables less current payables)

62

 95

 (123)

Cash

1,123

 1,328

 1,842

Net tangible assets before debt

13,362

 12,305

 10,683

Bonds, loans and other borrowings

(6,537)

 (3,952)

 (3,866)

Net tangible assets

6,825

 8,353

 6,817

Goodwill

1,007

 1,007

 1,007

Net assets and equity

7,832

 9,360

 7,824

 

 

 

 

Key balance sheet ratios

 

 

 

 

 

 

 

Net tangible assets as a percentage of total equity

87%

89%

87%

 

 

 

 

Gearing (Debt as percentage of equity)

83%

42%

49%

 

 

 

 

Number of shares in issue

23,639,762

 23,639,762

 17,853,276

 

 

 

 

Net tangible assets per share (pence)

28.9

 35.3

 38.2

 

* EBITDA means profit from operations/(loss from operations) before interest, tax, depreciation and amortisation.

Annual General Meeting

The Company's annual report and accounts for the year ended 31 December 2016 are being posted to shareholders today, together with notice of the Annual General Meeting to be held at 11am on 29 June 2016 at the offices of Cenkos Securities PLC at 6.7.8 Tokenhouse Yard, London EC2R 7AS. The annual report and accounts are available to view on the Company's website at www.gusbourneplc.com 

Enquiries:

Gusbourne Plc

Andrew Weeber/Charlie Holland                      +44 (0)12 3375 8666

Cenkos Securities plc

Nicholas Wells                                                     +44 (0)20 7397 8900

Note: This and other press releases are available at the Company's web site: 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 year ended 31 December 2016

 

 

 

Note

Year ended
31 December
2016
£'000

Year ended
31 December
2015

£'000

Revenue

 

640

473

 

 

 

 

Cost of sales

 

(423)

(325)

 

 

 

 

Gross profit

 

217

148

 

 

 

 

Fair value movement in biological produce

13

9

(95)

 

 

 

 

Administrative expenses

 

(1,385)

(1,176)

 

 

 

 

Loss from operations

5

(1,159)

(1,123)

Finance income

8

13

22

Finance expenses

 

(382)

(210)

Exceptional items

 

-

(115)

Total finance expenses

 8

(382)

(325)

 

 

 

 

Loss before tax

 

(1,528)

(1,426)

Tax expense

9

-

-

 

 

 

 

Loss for the year attributable to owners of the parent

 

(1,528)

(1,426)

 

 

 

 

Total comprehensive loss attributable to owners of the parent

 

(1,528)

(1,426)

 

 

 

 

Loss per share attributable to the ordinary equity holders of the parent:

10

 

 

Basic and diluted (pence)

 

(6.46)

(6.83)

 

 

 

 

 

Consolidated statement of financial position at 31 December 2016

 

 

 

Note

31 December
2016

£'000

31 December

2015

 £'000

Assets

 

 

 

Non-current assets

 

 

 

Intangibles

11

1,007

1,007

Property, plant and equipment

12

9,930

9,171

 

 

10,937

10,178

Current assets

 

 

 

Biological produce

13

-

-

Inventories

14

2,247

1,711

Trade and other receivables

15

314

264

Cash and cash equivalents

 

1,123

1,328

 

 

3,684

3,303

Total assets

 

14,621

13,481

 

 

 

 

Liabilities

 

 

 

Current liabilities

 

 

 

Trade and other payables

16

(252)

(169)

Finance leases

18

(51)

(41)

Loans and borrowings

17

(34)

(34)

 

 

(337)

(244)

Non-current liabilities

 

 

 

Loans and borrowings

17

(6,322)

(2,161)

Finance leases

18

(130)

(133)

Convertible deep discount bonds

19

-

(1,583)

 

 

(6,452)

(3,877)

Total liabilities

 

(6,789)

(4,121)

 

 

 

 

Net assets

 

7,832

9,360

 

 

 

 

 

Note

31 December

2016

£'000

31 December

2015

£'000

Issued capital and reserves attributable to owners of the parent

 

 

 

Share capital

21

11,820

11,820

Share premium

22

815

815

Merger reserve

22

(13)

(13)

Convertible bond reserve

22

-

95

Retained earnings

22

(4,790)

(3,357)

Total equity

 

7,832

9,360

 

Consolidated statement of cash flows for the year ended 31 December 2016

 

 

 

 

Note

31 December

2016

£'000

31 December

2015

£'000

Cash flows from operating activities

 

 

 

Loss for the year before tax

 

(1,528)

(1,426)

Adjustments for:

 

 

 

Depreciation of property, plant and equipment

12

357

267

Finance expense

8

382

325

Finance income

8

(13)

(22)

Fair value movement in biological produce

13

(9)

95

(Increase) in trade and other receivables

 

(60)

(56)

Increase in inventories

 

(536)

(371)

Increase /(decrease) in trade and other payables

 

109

(137)

Cash outflow from operations

 

(1,298)

(1,325)

 

 

 

 

Investing activities

 

 

 

Purchases of property, plant and equipment, excluding vineyard establishment

12

(778)

(1,137)

Investment in vineyard establishment

12

(338)

(786)

Sale of property, plant and equipment

 

-

14

Interest received

 

-

9

Net cash from investing activities

 

(1,116)

(1,900)

 

 

 

 

Financing activities

 

 

 

Drawdown of bank loan

 

-

170

Capital loan repayments

 

(34)

-

Issue of Deep Discount Bond

17

4,073

-

Repayment of Convertible Deep Discount Bond

19

(1,755)

-

Finance lease agreements entered into

 

53

181

Repayment of finance leases

 

(46)

(24)

Interest paid

 

(82)

(74)

Issue of ordinary shares

21

-

2,504

Share issue expenses

 

-

(46)

Net cash from financing activities

 

2,209

2,711

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

(205)

(514)

 

 

 

 

Cash and cash equivalents at the beginning of the year

 

1,328

1,842

 

 

 

 

Cash and cash equivalents at the end of the year

 

1,123

1,328

 

 

 

Consolidated statement of changes in equity for the year ended 31 December 2016

 

 

 

 

Share
 capital

£'000

Share
premium

£'000

Merger
reserve

£'000

Convertible bond
reserve

£'000

Retained earnings

£'000

Total attributable to equity holders of parent

£'000

1 January 2015

8,927

815

(13)

95

(2,000)

7,824

Shares issued

2,504

-

-

-

-

2,504

Shares issued on conversion of bond (note 19)

389

-

-

-

115

504

Share issue expenses

-

-

-

-

(46)

(46)

Comprehensive loss for the year

-

-

-

-

(1,426)

(1,426)

Total comprehensive
loss for the year

-

-

-

-

(1,357)

(1,357)

31 December 2015

11,820

815

(13)

95

(3,357)

9,360

 

 

1 January 2016

11,820

815

(13)

95

(3,357)

9,360

Convertible bond reserve transferred to retained earnings at redemption

-

-

-

(95)

95

-

Comprehensive loss for the year

-

-

-

-

(1,528)

(1,528)

31 December 2016

11,820

815

(13)

-

(4,790)

7,832

 

 

 

 

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 2016 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 2016 or the year ended 31 December 2015, but is derived from those accounts.  The Group's statutory accounts for 31 December 2015 have been delivered to the Registrar of Companies and those for 31 December 2016 will be delivered following the Company's Annual General Meeting.  The Auditor's reports on both the 31 December 2015 and 31 December 2016 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 to continue operations for at least 12 months from the date these financial statements were approved.

The Directors have reviewed the Group's cash flow forecasts and note that the achievement of the Group's long term development strategy will depend on the raising of further equity and/or debt funds to achieve those goals. The production of premium quality wine from new vineyards is, by its very nature a long term project. It takes four years to bring a vineyard into full production and, an average of four years to transform these grapes into the Group's premium sparkling wine. On 6 June 2017, the Company announced an Open Offer, which will be underwritten by the Company's principal shareholder Lord Ashcroft KCMG PC, providing shareholders with the opportunity to subscribe for an aggregate of 10,506,560 new Ordinary Shares, to raise an additional £4.2m before expenses. Shareholders will be provided with a basic entitlement of four new Ordinary Shares for every nine existing Ordinary Shares, at 40 pence per share.

On 6 June 2017, a short-term loan from Lord Ashcroft KCMG PC of £1,000,000 was received, which will be offset against Lord Ashcroft PC's subscription under the Open Offer. The proceeds from this loan and the Open Offer will be used for working capital, and capital expenditure in line with the Company's long-term strategic plan.

Additional funding will be sought by the Group over the coming few years to invest in additional vineyards, winery capacity, and stocks of wine as well as brand development, in line with its development strategy. The Directors believe that future fundraisings will be successful to aid the future growth of the business and have prepared the financial statements on a going concern basis.

New accounting standards and changes to existing accounting standards

i.   New standards and interpretations adopted in the current year:

The IASB has issued no new standards, amendments to published standards and interpretations to existing standards with effective dates on or prior to 1 January 2016 which have a material effect on the Group.

ii.  Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group:

·      IFRS 16 Leases*

·      IFRS 9 Financial Instruments

·      IFRS 15 Revenue from Contracts with Customers

·      IAS 12 (amended) Recognition of Deferred Tax Asset for Unrealised Losses

·      IAS 7 Disclosure Initiative

·      IFRS 2 (amended) Classification and Measurement of Share

* Not yet endorsed by the EU.

The only standards which are anticipated to be significant or relevant to the Group are:

IFRS 15 Revenue from Contracts with Customers

The Group has assessed its current revenue recognition policy under IFRS 15. Based on existing terms of sale, the Group does not currently foresee any significant change to the timing of revenue recognition on sales under IFRS 15.

IFRS 16 Leases

The Group has entered into a number of long term leases in respect of land and buildings in West Sussex. The Group has planted vineyards on the leased land. The leases have a remaining life of 46 years. The Group has assessed the leases under IFRS 16 and expects an impact as the right of use assets and lease liabilities will come onto the consolidated statement of financial position for the first time in respect of its current operating leases. The Group expects that IFRS 16 will have an impact on the financial statements of the Group, however the Group are currently assessing the impact.

IFRS 9 Financial Instruments

IFRS 9 introduces significant changes to the classification, measurement and impairment requirements (introducing an expected loss method) for financial instruments. Management are currently assessing the impact of this standard.

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

Revenue from the sales of goods is recognised when the Group has transferred the significant risks and rewards of ownership to the buyer and it is probable that the Group will receive the previously agreed upon payment.

These criteria are considered to be met when the goods are delivered to the buyer. Where the buyer has a right of return, revenue is recognised in the year where the goods are delivered less an appropriate provision for returns based on past experience.

Financial assets

Loans and receivables

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable.

 

For trade receivables, which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less.

Financial liabilities

Borrowings

Borrowings are initially recognised at fair value net of any transaction costs directly attributable to the loan. They are subsequently measured at amortised cost with interest charged to the statement of comprehensive income based on the effective interest rate of the borrowings.

Convertible deep discount bonds

Convertible deep discount bonds are redeemable at their nominal price at maturity. The bonds may be converted into the Company's shares at the holders' option and are therefore classified as compound financial instruments in accordance with the requirements of IAS 32. The debt element is calculated as the present value of future cash flows assuming the bonds are redeemed on the redemption date, discounted at the market rate for an equivalent debt instrument with no option to convert to equity. The difference between the cash payable on maturity and the present value of the debt element is recognised within equity. The discount is charged over the life of the bond to the statement of comprehensive income and included within finance expenses.

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 are accounted for as a derivative financial liability measured on inception at fair value through profit or loss. Details of Warrants are shown in note 21.

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

Plant, machinery and motor vehicles

Computer equipment

Mature vineyards

4% per annum straight line

5-20% per annum straight line

5-33% per annum straight line

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. Prior to harvest the costs of growing the grapes are carried forward in inventory. Upon harvest the grapes become agricultural produce and 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 PPE 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 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

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.

 

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.

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 13 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. Further information is set out in note 11. Management does not believe that any reasonably possible change in a key assumption would result in an impairment.

 

Useful lives of plant, property and equipment

The charge in respect of depreciation is calculated based on management's estimate of an asset's useful economic life and its residual value at the end of that life. An increase in the useful life or residual value would result in a decreased depreciation charge in the statement of consolidated income.

 

3        Financial instruments - risk management

 

The Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.

Principal financial instruments

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

     Bank loans

     Convertible debt

     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:

At 31 December 2015

Up to 3

months

£'000

Between
3 and 12 months

£'000

Between
1 and 2 years

£'000

Between
2 and 5 years

£'000

Over 5

years

£'000

Total

£'000

Trade and other payables

 88

 57

 -

 -

 -

 145

Finance leases

 11

35

47

105

 -

 198

Loans and borrowings

27

84

111

2,199

 -

2,421

Convertible deep discount bonds

 -

 -

1,880

 -

 -

1,880

Total

 126

 176

2,038

2,304

 -

4,644

 

 

 

 

 

 

 

At 31 December 2016

Up to 3

months

£'000

Between
3 and 12 months

£'000

Between
1 and 2 years

£'000

Between
2 and 5 years

£'000

Over 5

years

£'000

Total

£'000

Trade and other payables

195

43

-

-

-

238

Finance leases

15

44

56

92

-

207

Loans and borrowings

28

83

2,118

79

-

2,308

Deep Discount Bonds

-

-

-

6,267

-

6,267

Total

238

170

2,174

6,438

-

9,020

 

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. Trade receivable balances are monitored on an ongoing basis to ensure that the Group's bad debts are kept to a minimum.

Further disclosures regarding trade and other receivables, which are neither past due nor impaired, are provided in note 15.

 

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 £10,000.

4        Segmental information

 

The Directors consider the Group to have only one operating segment. Details of the sole operating segment are shown in the consolidated statement of comprehensive income, consolidated statement of financial position and consolidated statement of cash flows.

The analysis of the Group's turnover is set out as below:

 

 Year ended
31 December

2016

£'000

Year ended
31 December

2015

£'000

Segment

 

 

UK

553

456

USA

48

-

Other

39

17

 

640

473

 

The Directors do not consider the Group place's reliance on any major customers.

 

 

5        Loss from operations

Loss from operations has been arrived at after charging:

 

Year ended December

2016

£'000

Year ended
31 December

2015

£'000

Depreciation of property, plant and equipment

357

267

Staff costs expensed to consolidated statement
of income

220

232

 

6        Auditor's remuneration

 

 Year ended
31 December

2016

£'000

Year ended
31 December

2015

£'000

Auditor's remuneration

 

 

- Audit: consolidation and parent

30

30

- Audit: subsidiaries

9

10

 

 39

40

 

7        Staff costs

 

Year ended
31 December

2016

£'000

Year ended
31 December

2015

£'000

Staff costs (including Directors) comprise:

 

 

Wages and salaries

528

480

Social security contributions and similar taxes

49

46

 

577

526

 

The average number of employees of the Group, including Directors, during the year was 21 (December 2015: 18).

Directors' remuneration was as follows:

 

Year ended
31 December

2016

£'000

Year ended
31 December

2015

£'000

The total emoluments of all Directors during the year was:

 

Emoluments (including benefits)

144

154

Compensation for loss of office

30

-

 

174

154

Contributions to defined contribution pension plans

1

-

Total

175

154

 

 

Year ended
31 December

2016

£'000

Year ended
31 December

2015

£'000

Total emoluments for all directors excluding pension contributions:

 

 

A Weeber

50

50

M Paul

8

-

B Walgate

45

84

C Holland

12

-

J Pollard

9

-

Lord Arbuthnot PC

-

-

P Bentham

10

10

M Clapp

-

-

I Robinson

10

10

Total

144

154

 

 

 

Year ended
31 December

2016

£'000

Year ended
31 December

2015

£'000

Pension contributions

 

 

J Pollard

1

-

 

 

 

The emoluments of the highest paid Director during the year were:

50

84

 

The total emoluments for B Walgate and C Holland include benefits to the value of £2,000 (2015: £4,000) and £1,000 (2015: £nil).

The £10,000 (2015: £10,000) paid regarding I Robinson is paid directly to Anne Street Partners Limited for the provision of his services as a NonExecutive Director.

The Directors are considered to be key management

 

Year ended
31 December

2016

£'000

Year ended
31 December

2015

£'000

Key management personnel

 

 

costs were as follows:

 

 

Short term employment benefits

144

154

Social security contributions

13

16

 

157

166

 

8        Finance income and expense

 

Year ended
31 December

2016

£'000

Year ended
31 December

2015

£'000

Finance income

 

 

Amortisation of bank loan incentive

13

13

Interest received on bank deposits

-

9

Total finance income

13

22

 

 

 

Finance expense

 

 

Interest payable on borrowings

82

74

Amortisation of bank transaction costs

5

5

Discount expense on convertible bond

78

131

Discount expense on deep discount bond

122

-

Settlement amount in excess of carrying value at redemption

95

-

Exceptional item (note 19)

-

115

Total finance expense

382

325

 

9        Taxation

There is no current or deferred tax charge for the year (2015: £nil).

 

Year ended
31 December

2016

£'000

Year ended
31 December

2015

£'000

Loss on ordinary activities before tax

(1,528)

(1,426)

 

 

 

Loss on ordinary activities at the standard rate of corporation tax in the UK for the year of 20% (December 2015: 20.25%)

(306)

(289)

 

 

 

Effects of:

 

 

Expenses not deductible for tax purposes

93

77

Unprovided deferred tax movements on short term temporary differences

(76)

(127)

Unrecognised losses carried forward

285

318

Effect of changes in tax rate in prior years

4

21

 

 

 

Tax charge/(credit) for the year

-

-

 

No deferred tax asset has been recognised on unutilised taxable losses due to the lack of certainty over the taxable profits being available against which deductible temporary differences can be utilised. The unutilised tax losses carried forward are £5,457,000 (December 2015: £4,049,000).

10      Loss per share

Basic earnings per ordinary share are based on a loss of £1,528,000 (December 2015: £1,426,000) and ordinary shares 23,639,762 (December 2015: 20,889,716) of 50 pence each, being the weighted average number of shares in issue during the year. There is no adjustment to be made for diluted earnings per ordinary share.

 

 

Loss

£'000

Weighted average number of shares

Loss per
 ordinary
share pence

Year ended 31 December 2016

(1,528)

23,639,762

(6.46)

Year ended 31 December 2015

(1,426)

20,889,716

(6.83)

 

11      Intangibles

 

Goodwill

£'000

Brand

£'000

Total

£'000

Cost

 

 

 

At 1 January 2016 and 31 December 2016

777

230

1,007

 

 

 

 

Impairment losses

 

 

 

At 1 January 2016 and 31 December 2016

-

-

-

 

 

 

 

Net book value

 

 

 

At 31 December 2015 and
31 December 2016

777

230

1,007

 


 

 

 

The carrying value of goodwill and the brand is allocated to the following cash-generating units:

 

December

2016

£'000

December

2015

£'000

Gusbourne Estate

1,007

1,007

 


The brand value is the fair value of the brand name acquired as part of the acquisition of Gusbourne Estate in September 2013, and separately identified as an intangible.

Goodwill is the premium paid to acquire the Gusbourne Estate business over the fair value of its net assets.

Given the long term nature of vineyard establishment and wine production the Group's management prepare long term cash flow forecasts for up to 9 years, and then apply a discount rate to determine the present value of the future cash flows of the cash-generating unit to arrive at the fair value less costs of disposal. Where this amount is lower than the carrying value of the brand and goodwill allocated to the cash-generating unit an impairment charge is made. The discount rate used is 17% based on the Group's estimated weighted cost of capital. A growth rate of 2% has been applied over the term of the long term cash flow forecasts. The growth rate used is based on the long term average growth rate of the UK economy.

 

12      Property, plant and equipment

 

Freehold
Land and
Buildings

£'000

Plant,
machinery
and motor
vehicles

£'000

Vineyard
establishment
£'000

Mature Vineyards

£'000

Computer
equipment

£'000

Total

£'000

Cost

 

 

 

 

 

 

At 1 January 2015

4,624

822

1,046

1,240

27

7,759

Additions

664

461

786

-

12

1,923

Disposals

-

(15)

-

-

-

(15)

At 31 December 2015

5,288

1,268

1,832

1,240

39

9,667

 

 

 

 

 

 

 

At 1 January 2016

5,288

1,268

1.832

1,240

39

9,667

Additions

414

363

338

-

1

1,116

Transfers

-

-

(698)

698

-

-

Disposals

-

(1)

-

-

(3)

(4)

At 31 December 2016

5,702

1,630

1,472

1,938

37

10,779

 

 

Freehold land and buildings

£'000

 Plant, Machinery and motor Vehicles

£'000

Vineyard establishment

£'000

Mature vineyards £'000

Computer equipment

£'000

 

Total

£'000

Accumulated depreciation

 

 

 

 

 

 

At 1 January 2015

46

124

-

50

10

230

Depreciation charge for the year

44

163

-

50

10

267

Depreciation on disposals

-

(1)

-

-

-

(1)

At 31 December 2015

90

286

-

100

20

496

 

 

 

 

 

 

 

At 1 January 2016

90

286

-

100

20

496

Depreciation charge for the year

69

226

-

54

8

357

Depreciation on disposals

-

(1)

-

-

(3)

(4)

At 31 December 2016

159

511

-

154

25

849

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

At 31 December 2015

5,198

982

1,832

1,140

19

9,171

At 31 December 2016

5,543

1,119

1,472

1,784

12

9,930

               

 

Within property, plant and equipment are assets with a carrying value of £191,000 (2015: £185,000) held under finance leases.

During the year £698,000 (2015 - £nil) of vineyard establishment costs were transferred to mature vineyards at cost.

 

13      Biological produce

The fair value of biological produce was:

 

2016

£'000

2015

£'000

At 1 January

-

 -

Crop growing costs

488

 384

Fair value of grapes harvested and transferred
to inventory

(497)

 (289)

Fair value movement in biological produce

9

 (95)

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 2016 harvest is £2,000 per tonne (2015: £2,000 per tonne).

A 10% increase in the estimated market price of grapes to £2,200 per tonne would result in an increase of £49,000 in the fair value of the grapes harvested in the year. A 10% decrease in the estimated market price of grapes to £1,800 per tonne would result in a decrease of £50,000 in the fair value of the grapes harvested in the year.

 

A fair value gain of £9,000 (2015: £95,000 loss) was recorded during the year and included within the consolidated statement of comprehensive income. This measurement of fair value less costs to sell is the deemed cost of the grapes that is transferred into inventory upon harvest.

 

14      Inventories

 

December

2016

£'000

December

2015

£'000

Finished goods

96

130

Work in progress

2,151

1,581

Total inventories

2,247

1,711

 

During the year £381,000 (December 2015: £299,000) was transferred to cost of sales.

Prior to harvest, the costs of growing the grapes are included in inventory.

 

15      Trade and other receivables

 

December

2016

£'000

December

2015

£'000

Trade receivables

120

111

Prepayments

111

79

Other receivables

83

74

Total trade and other receivables

314

264


Trade and other receivables are due within 1 year apart from £50,000 (December 2015: £50,000) included within other receivables which is due in more than 1 year.

As at 31 December 2016 trade receivables of £7,000 (2015: £22,000) were past due but not impaired. They relate to customers with no default history. The ageing analysis of these receivables is as follows:

 

 

December

2016

£'000

December

2015

£'000

< 3 months

4

13

3 to 6 months

3

7

> 6 months

-

2

 

7

22

 

 

16      Trade and other payables

 

December

2016

£'000

December

2015

£'000

Trade payables

107

25

Accruals

109

92

Other payables

22

27

Total financial liabilities, excluding loans and borrowings classified as financial liabilities measured at amortised cost

238

144

Other payables - tax and social security payments

14

25

Total trade and other payables

252

169

 

Book values are approximate to fair value at 31 December 2016 and 31 December 2015.

 

17      Loans and borrowings

 

December

2016

£'000

December

2015

£'000

Current liabilities:

 

 

Bank loans

34

34

 

34

34

 

 

 

Non current liabilities

 

 

Bank loans

2,127

2,161

Deep Discount Bonds

4,195

-

Total loans and borrowings

6,322

2,195

 

The bank loan of £2,025,000 carries interest at an annual rate of 3% over Barclays Bank plc base rate and is due for repayment in full in September 2018. It is secured by way of a fixed charge over the Group's land and buildings at Appledore, Kent, shown at a cost of £5,390,000 (2015: £4,976,000) within property, plant and equipment and a floating charge over all other property and undertakings.

Other bank loans of £136,000 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.

On 2 September 2016 the Company issued a deep discount bond totalling £4,073,034. Accrued discount of £122,000 has been charged to the statement of comprehensive income during the year. 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 discounts bonds is £6,266,868.

An analysis of the maturity of loans and borrowings is given below:-

 

 

December
2016
£'000

December
2015
£'000

Bank loans:

 

 

Within 1 year

34

34

1-2 years

2,059

34

2-5 years

68

2,127

 

 

 

Deep Discount Bonds:

 

 

Within 1 year

-

-

1-2 years

-

-

5 years

4,195

-

 

 

18      Finance Leases

 

December

2016

£'000

December

2015

£'000

 

 

 

The minimum lease payments under finance leases fall due as follows:

 

 

Within 1 year

59

46

2-5 years

148

152

More than 5 years

-

-

 

207

198

Future value of finance lease payments

(26)

(24)

Present value of finance lease liabilities

181

174


Of which:

 

 

Within 1 year

51

41

2-5 years

130

133

More than 5 years

-

-

 

181

174

 

Finance leases comprise hire purchase agreements which the Group has used to purchase various items of plant, machinery and motor vehicles. The carrying value of the assets acquired held under these finance leases amounts to £191,000 (2015: £185,000) and are shown within property, plant and equipment (note 12).

 

19      Convertible deep discount bonds

 

2016

£'000

2015

£'000

Present value of debt element at 1 January

1,583

1,841

Converted into shares during the year

-

(389)

Discount expense for the year

77

131

Settlement amount in excess of carrying value at redemption

95

 

Repaid to bond holder during the year

(1,755)

-

Present value of debt element at 31 December

-

1,583

Equity element at 31 December

-

95

Total carrying value at 31 December

-

1,678

 

Convertible deep discount bonds represented the debt element of convertible deep discount bonds issued to Mr A C V Weeber and Mrs C Weeber as part of the consideration for the acquisition of the Gusbourne Estate business on 27 September 2013. The bonds were secured by a fixed charge over the Group's land and buildings at Appledore, Kent. The bonds were redeemable on 27 September 2017 and attracted a coupon rate of 7.5% per annum which was rolled up annually. From 27 September 2015 until the 26 September 2016 the holders of the bonds were able to convert some or all of the bonds into Gusbourne PLC ordinary shares at a price of 66 pence per share.

On 27th May 2015 the Company, Mr A C V Weeber and Mrs C Weeber entered into a variation of the bonds. The variation of the bonds allowed for the conversion to take place as part of an Open Offer of Gusbourne PLC at the issue price of the Open Offer. On 17 June 2015, as part of the Open Offer announced by the Company on 28th May 2015, £339,846 of the bonds plus accrued discount of £49,043 were converted into 777,778 50 pence ordinary shares at a price of 50 pence per share. As a result of the amendment to the terms of the bonds on 27 May 2015, this conversion of bonds into shares resulted in a charge to the consolidated statement of income for the year ended 31 December 2015 of £115,000 and is shown within finance costs as an exceptional item. This charge is a non-cash adjustment and does not affect the net assets of the Group as the corresponding entry is to retained earnings.The bonds are classified as a compound financial instrument containing an element of debt and equity. The debt element is calculated as the present value of future cash flows assuming the bonds are redeemed on the redemption date, discounted at the market rate for an equivalent debt instrument with no option to convert to equity. A rate of 9% has been used. The difference between the cash payable on maturity and the present value of the debt element is recognised in equity. The discount is charged over the life of the bonds to the statement of comprehensive income and included within finance expenses.

On 2 September 2016 the convertible deep discount bonds were redeemed in full and the security discharged.

 

 

20      Operating lease commitments

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

 

December

2016

£'000

As restated

December

2015

£'000

Operating leases which expire:

 

 

Within one year

58

55

Within two to five years

258

252

More than five years

2,751

2,798

 

3,067

3,105

 

The Group has entered into a number of long term leases in respect of land and buildings in West Sussex. The Group has planted vineyards on the leased land.

The leases have lives remaining of 46 years (2015: 47 years) and include various terms including regular break clauses at the Group's option.

 

 

21      Share capital

 

Ordinary shares of 50p each

 

Number

£'000

Issued and fully paid

 

 

At 1 January 2015

17,853,276

8,927

Bonds converted into shares during the period

777,778

389

Issued for cash during the year

5,008,708

2,504

At 31 December 2015

23,639,762

11,820

 

 

 

Issued for cash during the year

-

-

At 31 December 2016

23,639,762

11,820

 

On 17 June 2015 Gusbourne PLC issued 5,050,738 ordinary shares of 50 pence each at a price of 50 pence per share. 4,272,960 of these shares were issued for cash and 777,778 shares were subscribed for by way of the conversion of bonds into shares.

On 30 July 2015 Gusbourne PLC issued, for cash, 735,748 ordinary shares of 50 pence each at a price of 50 pence per share.

The shares were fully subscribed and paid up.

On 2 September 2016 Gusbourne PLC issued Warrants to subscribe for 2,036,517 Ordinary shares of 50 pence each. The Warrants are exercisable at any time by the Warrantholder with an exercise price of 75 pence per share. The Warrants are accounted for as a derivative financial liability measured on inception at fair value through profit or loss. On inception, the fair value of the warrants was deemed to be £nil and thus no fair value was recognised.

Unexercised Warrants as at 31 December 2016 amount to 2,036,517 Ordinary Shares of 50 pence each.

 

22      Reserves

The following describes the nature and purpose of each reserve within equity:

 

Reserve

Description and purpose

Share premium

The share premium account arose on the issue of shares by the Company at a premium to their nominal value. Expenses of share issues are charged to this account.

Merger reserve

The merger reserve arose on the business combination and is the difference between the nominal value of the shares issued and the market value of the shares acquired.

Convertible bond reserve

The convertible bond reserve is the equity element of the bonds as disclosed in note 19.

Retained earnings

The retained earnings represent cumulative net gains and losses recognised in the Group's statement of consolidated income.

 

 

 

23      Related party transactions

SUSD Limited ("SUSD") provided architectural and project management services to the Group during the year amounting to £31,300 (December 2015 - £63,615). There was no balance due to SUSD as at 31 December 2016 (December 2015 - £nil). Lord Ashcroft KCMG PC, the Company's ultimate controlling party, is also the ultimate controlling party of SUSD.

Anne 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 Anne Street Partners Limited. During the year Anne Street Partners Limited charged the Company in total £108,000 (December 2015 - £70,000). Of this, £10,000 was in relation to directors fees (December 2015 - £10,000) and £98,000 relates to management services (December 2015 - £60,000). There was no balance due to Anne Street Partners Limited as at 31 December 2016 (December 2015 - £nil).

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 also the ultimate controlling party of Devonshire Club Limited. During the year the Company sold wine to the Devonshire Club Limited amounting to £25,918 (December 2015 - £nil). A balance due from the Devonshire Club Limited of £3,138 (2015: nil) is shown within trade receivables. The amount of £3,138 has been received by the Group since 31 December 2016.

On 27th May 2015 the Group, Mr Andrew Weeber, Non-Executive Chairman, and Mrs C Weeber entered into a variation of the convertible deep discount bonds. The variation of the bonds allowed for the conversion to take place as part of an Open Offer of Gusbourne PLC at the issue price of the Open Offer. On 17 June 2015, as part of the Open Offer announced by the Company on 28th May 2015, £339,846 of the bonds plus accrued discount of £49,043 were converted into 777,778 50 pence ordinary shares at a price of 50 pence per share. As a result of the amendment to the terms of the bonds on 27 May 2015, this conversion of bonds into shares resulted in a charge to the consolidated statement of income of £115,000 for the year ended 31 December 2015 and is shown within finance costs as an exceptional item. This charge is a non-cash adjustment and does not affect the net assets of the Group as the corresponding entry is to retained earnings.

On 2 September 2016 the convertible deep discount bond was redeemed in full and security was discharged. The redemption price of the bonds was £1,755,000 and was satisified by the payment, in cash to Mr Andrew Weeber, of £1,155,000 and the subscription by Mr Weeber in new deep discount bonds amounting to £600,000.

On 2 September 2016, the Company issued deep discount bonds with a subscription price of £4,073,034 together with 2,036,517 separable warrants to subscribe for Ordinary Shares at an exercise price of 75 pence per share. Details of related parties who subscribed for the deep discount bonds and warrants are shown in the table below:-

 

Deep discount bonds

Warrants

Name

Subscription
 price as at
2 September 2016
£

Accrued discount to
31 December 2016
£

Held as at
31 December
2016
Number

Lord Ashcroft KCMG PC

 2,623,034

 78,375

 1,311,517

A Weeber

 600,000

 17,928

 300,000

I Robinson

 100,000

 2,988

 50,000

Lord Arbuthnot PC

 10,000

 299

 5,000

M Clapp

 10,000

 299

 5,000

 

 3,343,034

 99,889

 1,671,517

 

 

24      Subsequent events

On 6 June 2017, the Company announced an Open Offer, which will be underwritten by the Company's principal shareholder Lord Ashcroft KCMG PC, providing shareholders with the opportunity to subscribe for an aggregate of 10,506,560 new Ordinary Shares, to raise an additional £4.2m before expenses. Shareholders will be provided with a basic entitlement of four new Ordinary Shares for every nine existing Ordinary Shares, at 40 pence per share. On 6 June 2017 a short-term loan from Lord Ashcroft KCMG PC of £1,000,000 was received, which will be offset against Lord Ashcroft KCMG PC's subscription under the Open Offer.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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