Half Yearly Report

RNS Number : 6104A
Gusbourne PLC
30 September 2015
 

Gusbourne Plc

(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 2015.

Highlights

·     Construction of new winery building underway to provide increased winemaking capacity to cater for increasing production;

·     Awarded two Gold Outstanding medals from the International Wine and Spirit Competition for Gusbourne Blanc de Blancs 2010 and Gusbourne Blanc de Blancs 2007 Late Disgorged in May 2015. A further four gold medals were awarded to Gusbourne wines in other major international competitions during the period;

·     An additional 76 acres of vineyards planted in May 2015 which, together with the Group's existing vineyards in Kent and West Sussex, bring the total acreage under vine to 232 acres; and

·     Net loss for the period of £726,000 (H1 2014 - £501,000) in line with expectations and the Company's long term development plan.

 

Ben Walgate, CEO, commented:

"

The production of premium quality wine from new vineyards is, by its very nature, a long-term proposition. With the rigorous standards that we employ it is an eight year cycle from planting a vine to selling the finished product.

I would like to take this opportunity to thank our customers, our dedicated and passionate staff and our supportive shareholders, all of whom make it possible for us to continue producing some of the world's finest sparkling wines."

Financials

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 and still 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. Additional vineyards were planted in both Kent and West Sussex in 2013, 2014 and 2015.

Results for the six months ended 30 June 2015

Sales for the period amounted to £190,000 (H1 2014 - £194,000). These sales, which are broadly unchanged from the comparative period in 2014, reflect the limited stock availability of earlier year vintages. Cost of sales remains higher than the Group's anticipated longer term run rates. This is due to the continuing impact of fair valuing initial stocks of wine which were acquired as part of the acquisition of the Gusbourne Estate business in September 2013. This impact will diminish over time. Gross profit in the period was £61,000 (H1 2014 - £26,000). The increase is largely due to a reduced cost of sales as a result of the diminishing impact of the fair value stocks acquired in September 2013.  Gross profit margin in the period was 32% (H1 2014 - 13 %). This margin is expected to continue to increase over time as a result of economies of scale arising from increased production. Administrative expenses for the period of £574,000 (H1 2014 - £450,000) reflect continuing investment in the development and growth of the business and the Gusbourne brand in particular. The operating loss for the period was £513,000 (H1 2014 - £424,000). The exceptional item of £115,000 reflects a charge to the income statement in respect of the amendment to the terms of the Convertible Bonds on 27 May 2015. This charge is a non-cash adjustment and does not affect the net assets of the Group as the corresponding entry is a credit to retained earnings. The loss before tax was £726,000 (H1 2014 - £516,000) after net finance costs of £98,000 (H1 2014 - £92,000). 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 period to 30 June 2015 reflect the ongoing investment in, and development of, the Group's business, net of income from wine sales. This includes the investment in additional vineyards planted in Kent and West Sussex in May 2015 and includes the ongoing investment in the vineyards established in West Sussex and Kent during 2013 and 2014. This investment in vineyards is reflected in capital expenditure of £565,000 (H1 2014 - £345,000).

In addition the Group invested in additional plant and equipment for the vineyards and the winery amounting to £436,000 (H1 2014 - £62,000). Total assets at 30 June 2015 of £14,258,000 (H1 2014 - £11,057,000) include freehold land and buildings of £4,615,000 (H1 2014 - £4,596,000), inventories of wine stocks amounting to £1,473,000 (H1 2014 - £1,260,000), £1,391,000 of biological assets (H1 2014 - £1,413,000) and £2,885,000 of cash (H1 2014 - £1,074,000). Intangible assets of £1,007,000 (H1 2014 - £1,007,000) arise from the acquisition of the Gusbourne Estate business on 27 September 2013. Biological assets reflect the fair value of grape vines calculated in accordance with International Accounting Standard 41.

It is worth noting that the Group's inventories are reported at the lower of cost and net realisable value and that these inventories are expected to grow significantly until the Group reaches full production maturity, bearing in mind the long production cycle in relation to sparkling wine and related vineyard establishment. The anticipated underlying surplus of net realisable value over cost of these wine inventories will become an increasingly significant factor of the Group's asset base.

The Group's net tangible assets at 30 June 2015 amount to £8,778,000 (H1 2014 - £5,623,000) and represent 90% of total equity (H1 2014 - 85%).

Financing

The Group's activities are financed by its own cash resources, loans, other borrowings and convertible bonds. Loans, other borrowings and convertible bonds at 30 June 2015 amount in total to £3,679,000 (H1 2014 - £3,792,000) and represent 38% of total equity (H1 2014 - 57%).

 

On 17 June 2015, the Company completed an open offer to existing shareholders. The total consideration was £2,525,000 of which gross cash received by the Company was £2,136,000. The Company also benefited from a reduction of £389,000 in the debt of due under the Convertible Bond.

 

Post period end, on 30 July 2015, the Company completed a placing of ordinary shares for cash proceeds of £368,000.

 

The cash proceeds of the Open Offer and Placing will be used for the ongoing investment in new vineyards planted in 2015, an expansion of the winery capacity and for working capital, represented primarily by the Group's sparkling wine stocks.

 

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 invest in vineyards, winery capacity, and stocks of wine as well as brand development, in line with its development strategy.

 

 

For further information contact:

Gusbourne Plc

Andrew Weeber/Ben Walgate              +44 (0)1233 758 666                            

Cenkos Securities plc

Nicholas Wells                                     +44 (0)20 7397 8900

Note: This announcement and other press releases are available to view at the Company's website: www.gusbourneplc.com           



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2015

 

 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

Six months to

Six months to

 

 Year ended

 

 

 

30 June

 

30 June

31 December

 

 

Notes

 

2015

 

2014

 

2014

 

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

190

 

194

 

434

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

(129)

 

(168)

 

(361)

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

61

 

26

 

73

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of biological assets

5

 

-

 

-

 

(74)

 

 

 

 

 

 

 

 

 

 

Administrative expenses

 

 

(574)

 

(450)

 

(918)

 

Total administrative expenses

 

 

(574)

 

(450)

 

(918)

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(513)

 

(424)

 

(919)

 

 

 

 

 

 

 

 

 

 

Exceptional item

 

 

(115)

 

-

 

-

 

Finance income

2

 

15

 

15

 

38

 

Finance expense

2

 

(113)

 

(107)

 

(223)

 

 

 

 

 

 

 

 

 

 

Loss before tax

 

 

(726)

 

(516)

 

(1,104)

 

 

 

 

 

 

 

 

 

 

Tax expense

 

 

-

 

15

 

60

 

 

 

 

 

 

 

 

 

 

Loss for the period attributable to

 

 

 

 

 

 

 

 

owners of the parent

 

 

(726)

 

(501)

 

(1,044)

 

 

 

 

 

 

 

 

 

 

Loss per share attributable to

 

 

 

 

 

 

 

 

the ordinary equity holders of the parent:

 

 

 

 

 

 

 

 

Basic

 

 

(3.98p)

 

(3.29p)

 

(6.70p)

 

Diluted

 

 

(3.98p)

 

(3.29p)

 

(6.70p)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2015

 

 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

 

30 June

 

30 June

31 December

 

 

Notes

 

2015

 

2014

 

2014

 

Assets

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

Intangibles

3

 

1,007

 

1,007

 

1,007

 

Property, plant and equipment

4

 

7,229

 

6,071

 

6,339

 

Biological assets

5

 

1,391

 

1,413

 

1,237

 

 

 

 

9,627

 

8,491

 

8,583

 










Current assets

 

 

 

 

 

 

 

 

Inventories

6

 

1,473

 

1,260

 

1,435

 

Trade and other receivables

 

 

273

 

232

 

213

 

Cash and cash equivalents

 

 

2,885

 

1,074

 

1,842

 

 

 

 

4,631

 

2,566

 

3,490

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

14,258

 

11,057

 

12,073

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Trade and other payables

 

 

(794)

 

(590)

 

(336)

 

Loans and borrowings

7

 

(29)

 

-

 

-

 

 

 

 

(823)

 

(590)

 

(336)

 

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

 

Loans and borrowings

7

 

(2,126)

 

(2,025)

 

(2,025)

 

Convertible deep discount bonds

8

 

(1,524)

 

(1,767)

 

(1,841)

 

Deferred tax liabilities

 

 

-

 

(45)

 

-

 

 

 

 

(3,650)

 

(3,837)

 

(3,866)

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

(4,473)

 

(4,427)

 

(4,202)

 

 

 

 

 

 

 

 

 

 

 

 

NET ASSETS

 

 

9,785

 

6,630

 

7,871

 

 

 

 

 

 

 

 

 

 

 

Issued capital and reserves attributable to

 

 

 

 

 

 

 

 

owners of the parent

 

 

 

 

 

 

 

 

Share capital

9

 

11,452

 

7,612

 

8,927

 

Share premium

 

 

815

 

346

 

815

 

Merger reserve

 

 

(13)

 

(13)

 

(13)

 

 

Convertible bond reserve

 

 

95

 

95

 

95

 

Retained earnings

 

 

(2,564)

 

(1,410)

 

(1,953)

 

 

 

 

 

 

 

 

 

 

TOTAL EQUITY

 

 

9,785

 

6,630

 

7,871

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2015

 

 

 

 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

Six months to months to

Six months to

 

Period to

 

 

 

 

30 June

 

30 June

31 December

 

 

 

 

2015

 

2014

 

2014

 

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

Cashflows from operating activities

 

 

 

 

 

 

 

 

 

Loss for the year/period before tax

 

 

(726)

 

(516)

 

(1,104)

 

Adjustments for:

 

 

 

 

 

 

 

 

Exceptional item

 

 

115

 

-

 

-

 

Depreciation of property, plant and equipment

 

 

96

 

60

                .

130

 

Profit on disposal of property, plant

 

 

 

 

 

 

 

 

and equipment

 

 

-

 

-

 

(4)

 

Finance expense

 

 

113

 

107

 

223

 

Finance income

 

 

(15)

 

(15)

 

(38)

 

Movement in biological assets

 

(154)

 

(173)

 

74

 

Decrease/(increase) in trade and other receivables

 

 

(60)

 

19

 

38

 

Decrease/(increase) in inventories

 

 

 

(38)

 

50

                .

(195)

 

Increase in trade and other payables

 

 

 

458

 

266

 

12

 

Cash outflow from operations

 

 

(211)

 

(202)

 

(864)

 

 

 

 

 

 

 

 

 

 

Income taxes paid

 

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash out flows from operating activities

 

 

(211)

 

(202)

 

(864)

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

Purchases of property, plant and equipment,

 

 

 

 

 

 

 

 

excluding vineyard establishment

 

 

(436)

 

(62)

 

(159)

 

Investment in vineyard establishment

 

 

(565)

 

(345)

 

(588)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sale of property, plant and equipment

 

 

15

 

-

 

5

 

Interest received

 

 

12

 

15

 

33

 

Net cash from investing activities

 

 

(974)

 

(392)

 

(709)

 

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

Hire purchase finance

137

 

-

 

-

 

Hire purchase repayments

(7)

 

-

 

-

 

Interest paid

 

 

(38)

 

(35)

 

(72)

 

Issue of ordinary shares

 

 

2,136

 

-

 

1,788

 

Share issue expenses

 

 

-

 

-

 

(4)

 

Net cash from financing activities

 

2,228

 

(35)

 

1,712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS (continued)

For the six months ended 30 June 2015

 

 

 

 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

Six months to Six months to

Six months to

 

Period to

 

 

 

 

30 June

 

30 June

31 December

 

 

 

 

2015

 

2014

 

2014

 

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

 

 

1,043

 

(629)

 

139

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

1,842

 

1,703

 

1,703

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

 

2,885

 

1,074

 

1,842

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2015

 

 

 

 



NOTES TO THE ACCOUNTS

For the six months ended 30 June 2015

 

 

1      Statement of accounting policies

 

Basis of preparation

 

The interim financial statements have been prepared in accordance International Financial Reporting Standards (IFRSs) 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 period ended 31 December 2014 and are consistent with the accounting policies expected to apply in its financial statements for the year ended 31 December 2015.

 

 

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 2014. 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      Finance income and expenses

 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

30 June

 

30 June

 

31 December

 

 

 

2015

 

2014

 

2014

 

 

 

£'000

 

£'000

 

£'000

 

Finance income

 

 

 

 

 

 

 

Amortisation of bank loan incentive

 

7

 

-

 

14

 

Interest received on bank deposits

 

8

 

15

 

24

 

Total finance income

 

15

 

15

 

38

 

 

 

 

 

 

 

 

 

Finance expense

 

 

 

 

 

 

 

Interest payable on borrowings

 

38

 

35

 

72

 

Amortisation of bank transaction costs

 

3

 

-

 

5

 

Convertible deep discount bond charge

 

72

 

72

 

146

 

Total finance expense

 

113

 

107

 

223

 

 

 

3    Intangibles

 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

30 June

 

30 June

 

31 December

 

 

 

2015

 

2014

 

2014

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

Goodwill 

 

777

 

777

 

777

 

Brand

 

230

 

230

 

230

 

 

 

1,007

 

1,007

 

1,007

 

 

 

4    Property, plant and equipment

 

 


Freehold
Land and
Buildings

£'000

Plant,
machinery
and motor
vehicles

£'000

Vineyard establishment


£'000

Computer
equipment

£'000

Total

£'000

Cost












At 1 January 2014

4,610

686

458

19

5,773

Additions

14

137

588

8

747

Disposals

-

(1)

-

-

(1)

At 31 December 2014

4,624

822

1,046

27

6,519







At 1 January 2015

4,624

822

1,046

27

6,519

Additions

56

371

565

9

1,001

Disposals

-

(15)

-

-

(15)

At 30 June 2015

4,680

1,178

1,611

36

7,505







Accumulated depreciation












At 1 January 2014

9

39

-

2

50

Depreciation charge for the year

37

85

-

8

130

Depreciation on disposals

-

-

-

-

-

At 31 December 2014

46

124

-

10

180







At 1 January 2015

46

124

-

10

180

Depreciation charge for the year

19

73

-

4

96

Depreciation on disposals

-

-

-

-

-

At 30 June 2015

65

197

-

14

276







Net book value






At 31 December 2014

4,578

698

1,046

17

6,339

At 30 June 2015

4,615

981

1,611

22

7,229

 

Vineyard establishment expenditure includes planting expenditure in relation to vineyards which is carried forward at cost until the vines reach maturity at which point they are re-measured and transferred to biological assets.

 

 

5    Biological assets

 

 

 

 

 

 

 

 

Vines

 

 

 

 

 

 

 

 

£'000

 

 

 

 

 

 

 

 

 

 

At 1 January 2014

 

 

 

 

 

 

1,240

 

 

 

 

 

 

 

 

 

 

Fair value of grapes harvested and transferred to inventory

 

 

 

(210)

 

Crop growing costs

 

 

 

 

 

 

281

 

Change in fair value due to price, yield and maturity

 

 

 

 

(74)

 

 

 

 

 

 

 

 

 

 

At 31 December 2014

 

 

 

 

 

 

1,237

 

 

 

 

 

 

 

 

 

 

Crop growing costs

 

 

 

 

154

 

 

 

 

 

 

 

 

 

 

At 30 June 2015

 

 

 

 

 

 

1,391

 

 

 

 

 

 

 

 

 

 

 

6    Inventories

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

30 June

 

30 June

 

31 December

 

 

 

2015

 

2014

 

2014

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

Finished goods

 

98

 

100

 

126

 

Work in progress

 

1,375

 

1,160

 

1,309

 

 

 

 

 

 

 

 

 

 

 

1,473

 

1,260

 

1,435

 

 

 

7      Loans and borrowings

 

 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

 

30 June

 

30 June

 

31 December

 

 

 

 

2015

 

2014

 

2014

 

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

Bank loan

 

 

2,025

 

2,025

 

2,025

 

Hire purchase (all payable within 1- 5 years)

 

 

101

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

2,126

 

2,025

 

2,025

 

 

The bank loan of £2,025,000 is at an interest rate of 3% over Barclays Bank plc base rate and is due for repayment in full in September 2018. It is secured by way of a fixed charge over the group's land and buildings at Appledore, Kent and a floating charge over all other property and undertakings.

 

Hire purchase balances of £29,000 payable within one year are shown within loans and borrowing under current liabilities.

 

8      Convertible bonds

 

 

 

 

 

 

 

 

£'000

 

Present value of debt element at 1 January 2015

 

 

 

1,841

 

Discount expense for the period

 

 

 

 

 

 

72

 

Converted into shares during the period

 

 

 

 

 

 

(389)

 

Present value of debt element at 30 June 2015

 

 

 

 

 

 

1,524

 

Equity element at 1 January and 30 June 2015

 

 

 

 

 

 

95

 

Total carrying value at 30 June 2015

 

 

 

 

 

 

1,619

 

 

Convertible bonds represent the debt element of a deep discount bond issued to Mr A C V Weeber and Mrs C Weeber as part of the consideration for the acquisition of the Gusbourne Estate business on 27 September 2013. The Bond is secured by a fixed charge over the group's land and buildings at Appledore, Kent. The Bond is redeemable on 27 September 2017 and attracts a coupon rate of 7.5% per annum which is rolled up annually. From 27 September 2015 until 26 September 2016 the holders of the Bond can convert some or all of the bonds into Gusbourne PLC ordinary shares at a price of 66 pence per share. On 27 May 2015 the Company, Mr A C V Weeber and Mrs C Weeber entered into a variation of the Bond. The variation of the Bond allows for the conversion to take place as part of an Open Offer of Gusbourne PLC at the issue price of that Open Offer. On 17 June 2015, as part of the Open Offer announced by the Company on 28 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.

 

 

In accordance with the requirements of IAS 32 the Bond is classified as a compound financial instrument containing an element of debt and equity. The debt element is calculated as the present value of future cash flows assuming the Bond is redeemed on the redemption date, discounted at the market rate for an equivalent debt instrument with no option to convert to equity. A rate of 9% has been used. The difference between the cash payable on maturity and the present value of the debt element is recognised in equity. The discount is charged over the life of the Bond to the statement of comprehensive income and included within finance expenses.

 

 

 

 

9      Share Capital

 

Ordinary  shares of 50p each

Issued and fully paid

 

 

 

 

Number

 

£'000

 

At 1 January 2015

 

17,853,276

 

8,927

 

Issued for cash during the period

 

 

 

 

4,272,960

 

2,136

 

Bond converted into shares during the period

 

 

 

 

777,778

 

389

 

At 30 June 2015

 

 

 

 

22,904,014

 

11,452

 

 

On 17 June 2015, by way of an Open Offer announced by the Company on 28 May 2015, the Company issued 5,050,738 50 pence ordinary shares at a price of 50 pence per share.

 

 


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