TIDMGUS
RNS Number : 9163N
Gusbourne PLC
28 September 2023
28 September 2023
Gusbourne Plc
("Gusbourne", the "Company" or the "Group")
Interim Results for the period ended 30 June 2023
Gusbourne Plc (AIM: GUS), the premium English sparkling wine
producer, is pleased to report the following unaudited results for
the six month period ended 30 June 2023 ("H1" or "H1 2023").
Strong UK wine sales growth in H1 of 24%
Highlights:
UK wine sales:
Strong UK wine sales (1) growth with H1 up by 24% to GBP2.3m (H1
2022: GBP1.9m), reflecting continued strong sales growth across our
direct to consumer ("DTC") and UK Trade sales channels:
-- DTC wine sales up by 21% to GBP650,000 (H1 2022 GBP586,000),
driven by investment in digital marketing and direct wine sales
arising from our tour and experience programme at the Nest,
Gusbourne's cellar door operation in Kent.
-- UK Trade wine sales up 25% to GBP1,685,000 (H1 2022:
GBP1,346,000), with number of key partnerships established with
prestigious, high-volume hotel and restaurant groups underpinning
this performance.
International wine sales:
-- International sales declined by 7%, due to the timing of
export orders. Gusbourne's ongoing success in international markets
generally involves large orders, the timing of which can distort
short term sales trends as they have in H1. The fall in sales was
caused by high levels of existing stock in two of our larger
markets at the start of 2023. Stock depletions and sales are
expected to grow in H2 as trade phasing normalises, with full year
revenue expected to provide double digit growth. Gusbourne has now
increased its distribution to over 33 international markets.
Strong financial performance
-- Gross margin improved significantly to 68.3% (H1 2022:
59.9%), reflecting improved price and sales mix dynamics, in line
with the Group's premium positioning and product strategy, as well
as a decreased mix in H1 of International sales that are at a lower
margin.
-- Adjusted EBITDA loss narrowed to GBP0.58m (H1 2022: GBP0.70m).
-- Net debt of GBP15.2m, (H1 2022 GBP10.3m), the increase since
30 June 2022 reflecting further investment in inventory and the
capital expenditure in land, acquired in August 2022.
Further critical acclaim for and expansion of the Gusbourne
portfolio
-- Several new wines introduced during the period, including the
limited-edition single vineyard sparkling wines, a sweet wine and a
still rosé.
-- In the H1, the Company received over 30 awards for its wines, including:
o 11 awards, including five golds, and four trophies; best
sustainably produced wine, best Chardonnay, top still wine and
retaining Estate Winery of the Year for the third consecutive year
at the Wine GB awards; and
o Seven medals, including a gold and winner of best in show
"Blanc de Blancs" for the 2018 vintage at the Decanter World Wine
Awards; and
o Three medals at the Texsom Awards in the USA, including
Judges' Selection, Platinum and Gold; and
o Two medals at the International Wine Challenge
o Exclusive partner for The Royal Collection Coronation English
Sparkling Wine
2023, another promising vintage and new Head Winemaker
appointed
-- The 2023 harvest is now underway and is expected to be a
bumper harvest in volume and quality.
-- Appointment of Mary Bridges as our Head Winemaker, promotion
of Alistair Benham to Head of Wine Operations and Tom Jones to
Winemaker. Together these individuals have been with Gusbourne for
more than 15 years and their promotions are the result of long term
succession planning.
GBPm H1 2023 H1 2022 % Change
Wine sales - UK 2.3 1.9 24%
-------- -------- ---------
Wine sales - Export 0.8 0.8 -7%
-------- -------- ---------
Non-wine sales 0.3 0.3 -11%
-------- -------- ---------
Net revenue (1) 3.4 3.0 12%
-------- -------- ---------
Gross margin % 68.3% 59.9% 840bps
-------- -------- ---------
Adjusted EBITDA (2) (0.6) (0.7) 17%
-------- -------- ---------
Operating costs 4.3 4.2 3.1%
-------- -------- ---------
Reported Pre-tax loss (1.0) (1.2) -19%
-------- -------- ---------
EPS (p) -2.37 -2.26 -5%
-------- -------- ---------
Net Debt 15.2 10.3 77%
-------- -------- ---------
(1) Net revenue is revenue reported by the Group after excise
duties payable
(2) Adjusted EBITDA means profit/(loss)from operations before
aborted planning and capital expenditure write-off, fair value
movement in biological produce, interest, tax, depreciation and
amortisation.
NET REVENUE BY DISTRIBUTION CHANNEL
H1 2023 H1 2022 Change FY 2022
GBP'000 GBP'000 % GBP'000
Direct to Consumer (DTC)* 650 536 21% 1,185
UK Trade 1,685 1,346 25% 3,058
Total UK net wine sales 2,335 1,882 24% 4,243
International 742 798 -7% 1,391
Net wine sales 3,077 2,680 15% 5,634
Tour and related income (DTC)* 264 297 -11% 525
Other income 32 37 -13% 84
Total net revenue 3,373 3,014 12% 6,243
PERCENTAGES OF NET REVENUE
Direct to Consumer (DTC) 27.0% 27.6% 27.4%
UK Trade 50.1% 44.7% 49.0%
International 22.0% 26.5% 22.3%
Other 0.9% 1.2% 1.3%
100.0% 100.0% 100.0%
*DTC total net revenue (including tour and related income) of
GBP914,000 for H1 2023, GBP833,000 for H1 2022 (10% growth) and
GBP1,710,000 for FY 2022.
Outlook
Gusbourne expects to deliver another year of strong growth
across all its distribution channels as consumer interest in
Gusbourne wine continues to grow globally. Our new products
continue to perform well, with products such as the still Rose and
2014 vintage Fifty One Degrees North, selling out ahead of plan. We
have expanded our cellar door operation, with the introduction of
two additional tasting rooms and launched our new luxury cuvee 2016
vintage of Fifty One Degrees North.
H2 2023 total net revenue growth is expected to be stronger than
H1 with full year net revenue growth expected to be around 20%,
dependent on export order timings and the headwinds in the wider
economy. As a result of such conditions, Gusbourne continues to
practice tight cost discipline in all of its operations and now
anticipates a successful continued narrowing of the full year
adjusted EBITDA loss. Longer-term, increases in production from new
vineyards are anticipated to drive further revenue growth and
margin improvement through scale.
Mike Paul, interim Chief Executive Officer, said:
"I am pleased to report another solid performance in the first
half of 2023 where Gusbourne delivered further growth and execution
of our strategy. Despite a challenging macroeconomic backdrop, we
have continued to see significant consumer demand for Gusbourne
wines with double digit sales growth, assisted by the luxury status
of the Gusbourne brand.
"The first quarter of the year was soft across the industry and
our International sales were held back by higher than normal
inventory levels; momentum improved during the second quarter. I am
particularly pleased with our gross margin improvement, reflecting
hard work on our pricing position, product offer and distribution
mix.
"Whilst we are mindful of the current economic headwinds, with
these strong results, an anticipated good harvest in 2023, new land
purchases made during last year and healthy inventory levels in our
cellars, the Board continues to look to the future with great
confidence as we further strengthen our position as one of the UK's
most significant fine wine producers."
Results presentation
A presentation by Mike Paul, interim Chief Executive Officer and
Katharine Berry, Chief Financial Officer, providing an overview of
the Group's Interim Results for the period ended 30 June 2023, will
be made available on the PIWORLD platform and can be accessed
through the following link.
This announcement together with the associated investors'
presentation are also available on:
www.gusbourneplc.com/
Enquiries:
Gusbourne Plc
+44 (0)12 3375
Katharine Berry 8666
----------------
Phil Clark, Investor Relations
----------------
Panmure Gordon (UK) Limited (Nomad and Sole
Broker)
----------------
James Sinclair-Ford / Ailsa Macmaster / Lauren + 44 (0)20 7886
Riley 2500
----------------
Hugh Rich
----------------
Media:
----------------
Houston
Kate Hoare / Ben Robinson / India Spencer +44 (0)20 4529
gusbourne@houston.co.uk 0549
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This announcement contains inside information for the purposes
of article 7 of the Market Abuse Regulation (EU) 596/2014 as
amended by regulation 11 of the Market Abuse (Amendment) (EU Exit)
Regulations 2019/310. With the publication of this announcement,
this information is now considered to be in the public domain. The
person responsible for arranging for the release of this
announcement on behalf of the Company is Katharine Berry, Chief
Financial Officer.
Gusbourne plc (AIM:GUS) is a premium English sparkling and fine
wine producer, specialising in the production and distribution of
award winning wines, produced from grapes grown across its
vineyards in Kent and West Sussex.
Since the Group planted its first vines in 2004, it has had a
clear vision and single goal: to create English Still and Sparkling
Wines that would stand up alongside the very finest offerings from
across the globe.
From these humble beginnings, Gusbourne has focussed on building
long-term assets to drive value creation for all stakeholders.
Today, the Group is an acknowledged leader in the rapidly expanding
English wine industry, achieving international brand recognition
across its product range.
Drawing on an estate of over 93 hectares of mature vineyards
with additional new land available to scale further, the Gusbourne
cellar continues to mature with ever expanding fine wine stocks
becoming available to service the growing demands of the Group's
increasingly international customer base.
Gusbourne's luxury brand enjoys premium price positioning and is
distributed in the finest establishments both in the UK and
overseas including premium hotels and restaurants, independent wine
merchants, and high-end stockists and retailers. The Group also
continues to invest in building strong relationships with its
growing and loyal direct customer base, including through its
immersive brand experience at its cellar door experiences, the Nest
in Kent.
Interim Chief Executive review
2023 has showed further financial, operational, and strategic
progress for Gusbourne. Since our foundation in 2004, Gusbourne has
strived to create England's finest and most celebrated wines, by
leveraging our core assets - an unrelenting focus on quality;
excellent and carefully curated distribution, our enhanced product
portfolio and have taken advantage of the long-term investments
made into land and planting over the last 20 years. Combined with
the ongoing global appetite for English wine, the result has been
another six months of solid revenue growth. The Group reported
GBP3.4m of total net revenue, an increase of 12% compared to first
half of 2022, with all three distribution channels expanding the
customer base both in the UK and overseas, reinforcing Gusbourne's
brand as a leading light in the dynamic and fast growing English
fine wine sector. UK wine sales were up by 24% in H1, a very
pleasing performance.
Gross profit margin improved to 68.3% (2022: 59.9%) due to an
improvement in distribution channel and pricing mix. Our new and
wider product mix strategy helped deliver this improved margin.
Operating costs, especially administration expenses, remain
carefully managed. We continue to invest in the Gusbourne brand,
with discretionary marketing investment to help support brand
awareness and future sales growth. The Group narrowed its adjusted
EBITDA loss for the period to GBP0.6m (June 2022: GBP0.7m EBITDA
loss).
The continued success of the Group is a testament to the hard
work of the Gusbourne team. Their dynamism, enthusiasm and
dedication are the foundation of our business and, as always,
greatly appreciated and I thank them all for their ongoing efforts
that are driving Gusbourne forward.
I would like to particularly thank Charlie Holland, for his
fantastic dedication and incredible hard work over his tenure as
CEO at Gusbourne. Charlie has made some fantastic wines, reinforced
the Gusbourne culture and values, and leaves a strong team. We wish
him all the best in his new role.
Within the winemaking team Mary Bridges has been appointed as
our Head Winemaker, Alastair Benham promoted to Head of Wine
Operations and Tom Jones promoted to Winemaker. Together these
individuals have been with Gusbourne for more than 15 years and
their promotions are the result of long term succession
planning.
Group vision and growth strategy
The Group's vision is to continue to produce premium quality
vintage wines from grapes grown in our own vineyards and to promote
Gusbourne as a luxury brand. This is achieved through our ongoing
dedication to excellence in all aspects of our vineyard,
winemaking, branding and enhanced by our chosen commercial
relationships and curated distribution channels.
The Group's growth strategy is based on three strategic
pillars:
-- Growth and development of Gusbourne's luxury brand status :
Maintain and further develop Gusbourne's luxury brand status,
ensuring that the Group's premium quality and market positioning of
its products are maintained, through our ongoing product portfolio
development, distribution choices and pricing strategy. During the
period, Gusbourne became a member of The Walpole, a trade
organisation for British luxury brands.
-- Developing strong direct relationships with our customers :
Support the continuing strong growth in DTC sales with online sales
and marketing investment, and offline with planned further
investment in Gusbourne's cellar door operations. These operations
enable us to meet our customers in person and provide an immersive
brand experience, thus creating a more direct relationship with our
customers.
-- Careful expansion of our international trade footprint :
Invest in the continued growth of UK Trade and International sales
to deliver further market penetration in the UK and overseas.
Land
The Gusbourne business was founded in 2004 with the first
vineyard plantings at Appledore in Kent. The first wines were
released in 2010 to critical acclaim. In 2013 and 2015, additional
vineyards were planted in both Kent and West Sussex. At the end of
30 June 2023, the group had 93 hectares of mature planted
vineyards. The Group acquired a further 55 of hectares in Kent
during 2022, the majority of which we plan to plant in the near
future. We also plan to plant additional vineyards on land in
Sussex and by 2026 we plan to have a total of approximately 152
hectares of land under vine. The Group will continue to look to
acquire appropriate land to support our long-term growth
ambitions.
Products
Right from its beginning, Gusbourne's intention has always been
to produce the finest English sparkling wines. Starting with
carefully chosen sites, we use best practice in establishing and
maintaining the vineyards and conduct green harvests to ensure we
achieve the highest quality grapes for each vintage. A quest for
excellence is at the heart of everything we do. For our sparkling
wine, we blind taste hundreds of components before finalising our
blends and even after the wines are bottled, they spend extended
time on their lees to add depth and flavour. Once disgorged, extra
cork ageing further enhances complexity. Our winemaking process
remains traditional, but one that is open to innovation where
appropriate. It takes four years to bring a vineyard into full
production and a further four years to transform those grapes into
Gusbourne's premium sparkling wine.
2022 saw the launch of our luxury cuvee, 51 Degree's North, a
wine that represents the pinnacle of the Gusbourne range and is
positioned alongside the world's finest sparkling wines. The
response from the wine critics has been extremely positive in the
UK and international markets, with sell-out launches in many of our
key international markets and in the UK. We released the newest
vintage of this wine in September 2023, including to private
clients of a prestigious wine merchant. Other new product launches
during the period have included our limited-edition single vineyard
range.
Gusbourne also produce a growing range of premium vintage
English still wines which continue to win prestigious international
awards and regularly sellout. During the period, we launched our
still rose wine to much acclaim and some exclusive wines for our
DTC channel. We anticipate further expanding the range of our still
wines, which in line with other comparable still fine wines are
commercially released with less ageing in our cellars.
Recent awards
In the first six months of 2023, the Company received over 30
awards for its wines, across a broad range of wines and vintages,
highlights include:
-- 11 awards, including five golds, and four trophies; best
sustainably produced wine, best Chardonnay, top still wine and
retaining Estate Winery of the Year for the third consecutive year
at the Wine GB awards;
-- Seven medals, including a gold and winner of best in show
"Blanc de Blancs" for the 2018 vintage at the Decanter World Wine
Awards;
-- Three medals at the Texsom Awards in the USA, including Judges' Selection, Platinum and Gold;
-- Two medals at the International Wine Challenge; and
-- Exclusive partner for The Royal Collection Coronation English Sparkling Wine
At the Institute of Masters of Wine (IMW) 10(th) anniversary
symposium a key tasting event was held of iconic wines over
important decades of wine history (from the 1950s to the present).
Each wine was high profile and representative of that decade's
innovation. The 2010s were dedicated to England, and Gusbourne's
2014 vintage of Fifty One Degrees North was selected to represent
the country and decade.
Distribution: Three sales channels
Gusbourne has three main sales channels, UK Trade, International
and Direct to Consumer, with DTC and UK Trade delivering
significant growth during the period.
UK Trade
UK Trade continued its strong progress, with net revenue up by
25% (2022: 126%). The Group has established new trade accounts
across premium hotels and restaurants, further strengthening its
already high penetration to Michelin star restaurants and 5-star
hotels. High profile new accounts include 1 Hotel in Mayfair,
London. Our nascent corporate sales continue to build momentum.
International
Our wines are now distributed to 33 countries around the world
as we grow the Gusbourne brand globally, working with specialist
distribution partners. International sales declined by 7% (2022:
158%). At the start of 2023 there were high levels of stock in two
of the larger markets, which created a different phasing pattern
for this year, but in more recent months trading has improved.
The brand's largest markets include the Nordics, Japan and the
US. Continued investment in sales and marketing has enabled us to
develop and grow existing markets and expand into exciting new
territories with significant growth potential.
Direct to Consumer
Both wine sales and tour and tasting events based on our cellar
door operations in Kent have continued to deliver strong growth,
with sales up 10% for 2023 compared to 2022.
DTC wine sales grew by 21% reflecting our ongoing investment in
digital marketing through the creation of rich and engaging
content, compelling wine offers and new and exciting product
releases. DTC remains a key strategic direction for Gusbourne as we
continue to develop our online and digital presence. Tour and
tasting events at Gusbourne's successful cellar door facility in
Kent (the Nest), are now in their sixth full year of operation.
Situated amongst our vineyards and winery operations in Kent, this
facility offers an immersive experience allowing us to fully engage
with our customers, encouraging them to enjoy the vineyards, visit
the winery and taste our wines in a beautiful setting.
Tour and tasting events income based on our cellar door
operations at the Nest is showing a decline of 11%, in part due to
disruption from work undertaken to the build of two more visitors
rooms ("the cellar" and "the winemakers library"), which were
completed at the end of H1 2023. This additional space improves and
expands our cellar door operation, providing capacity for more
visitors to have a unique and unforgettable experience and we
expect this to improve revenue in H2.
2023 Harvest
Following the warm weather in 2022, vines flourished over
winter, the spring and early summer mixed weather led to successful
and abundant flowering. The team's careful management of the vines
and rigorous quality controls is indicating another good harvest
for 2023 both in terms of volume and quality. The resulting
sparkling wines will be bottled during the summer of 2024, further
adding to our inventory levels for sale in future years.
The English wine market
The English wine market remains highly dynamic and has continued
to see significant growth, in terms of supply, demand by UK
consumers and demand in international markets. This is an exciting
time for English wines, with brands like Gusbourne at the forefront
of the creation of a fine wine market and putting the UK on the
global stage.
Data from WineGB, the industry body for the English wine trade,
reports plantings have increased by 130% over the last five years,
with Chardonnay, Pinot Noir and Pinot Meunier the most significant
varietals. Sparkling wines account for approximately 68% of total
production and still wines 32%.
Sales of UK wine in the UK market are over nine million bottles,
with a growing presence of UK wines in export markets. Key exports
markets for the industry are Norway, USA, Sweden, Japan and Hong
Kong. Gusbourne has a strong presence in all these markets, with
significant further growth potential ahead.
Current trading and outlook
The macro-economic environment remains complex with consumer
confidence affected by inflationary pressures and rising cost of
borrowing in many markets. At the same time, consumer interest in
Gusbourne wine and English wine generally continues to grow across
the globe. Against this backdrop, we remain confident about
Gusbourne's prospects and expect to deliver another year of solid
growth across all our distribution channels. Gusbourne has the
benefit of increased supply and inventories from the expansion of
the land planted in recent years and the ongoing expansion of its
international presence. Longer-term, increases in production from
new vineyards are anticipated to drive further revenue growth and
margin improvement through scale.
Mike Paul
Interim Chief Executive Officer
CHIEF FINANCIAL OFFICER'S REVIEW
Continuing growth in net revenue in the first half, with net
revenue up 12% at GBP3.4m, and Adjusted EBITDA loss narrowed to
GBP576k, a 17% reduction from the corresponding prior period
H1 2023 H1 2022 Change FY 2022
GBP'000 GBP'000 % GBP'000
NET REVENUE AND ADJUSTED EBITDA
Net revenue (1) 3,373 3,014 14% 6,243
Gross profit 2,302 1,806 31% 3,697
Adjusted EBITDA (2) (576) (697) 17% (1,131)
Gross profit % 68% 60% 59%
STATUTORY RESULTS
Net revenue (1) 3,373 3,014 14% 6,243
Gross profit 2,302 1,806 31% 3,697
Fair value movement in biological
produce (27) (216) (239)
Sales and marketing expenses (1,875) (1,801) (3,479)
Administrative expenses (1,003) (702) (1,481)
Depreciation (347) (294) (601)
Profit/(loss) on disposal - 28 -
Total Administrative expenses (3,225) (2,769) (5,561)
Operating profit/(loss) (950) (1,179) (2,103)
RECONCILIATION OF OPERATING
PROFIT/(LOSS)
TO ADJUSTED EBITDA
Operating profit/(Loss) (950) (1,179) (2,103)
Add back;
Depreciation 347 294 601
Aborted planning and capital
expenditure write-off - - 132
Fair value movement in biological
produce 27 216 239
Adjusted EBITDA (2) (576) (697) (1,131)
(1) Net revenue is revenue reported by the Company after excise
duties payable
(2) Adjusted EBITDA means profit/(loss)from operations before
fair value movement in biological produce, interest, tax,
depreciation and amortisation.
OPERATIONS AND FINANCIAL REVIEW
Results
Net revenue for the period amounted to GBP3.4m (H1 2022:
GBP3.0m), an increase of 12% on the corresponding period last
year.
Strong UK wine sales growth, with H1 up by 24% to GBP2.3m (June
2022: GBP1.9m), reflecting continued strong sales growth across our
direct to consumer ("DTC") and UK Trade sales channels:
-- DTC wine sales up by 21% to GBP650,000 (June 2022
(GBP586,000), driven by investment in digital marketing and direct
wine sales arising from our tour and experience programme at the
Nest, Gusbourne's cellar door operation in Kent.
-- UK Trade wine sales up 25% to GBP1,685,000 (June 2022:
GBP1,346,000), with number of key partnerships established with
prestigious, high-volume hotel and restaurant groups underpinning
this performance.
International sales declined by 7%, due to the timing of export
orders. Gusbourne's ongoing success in international markets
generally involves large orders, the timing of which can distort
short term sales trends as they have in H1. The fall in sales was
caused by high levels of existing stock in two of our larger
markets at the start of 2023. Stock depletions and sales are
expected to grow in H2 as trade phasing normalises, with full year
revenue expected to provide double digit growth. Gusbourne has now
increased its distribution to over 33 international markets.
Gross margin improved significantly to 68.3% (June 2022: 59.9%),
reflecting improved price and sales mix dynamics, in line with the
Group's premium positioning and product strategy, as well as a
decreased mix in H1 of International sales that are at a lower
margin.
Administrative expenses for the six months, excluding
depreciation, amounted to GBP2.9m (H1 2022: GBP2.5m), included
planned increased expenditure on sales and marketing costs of
GBP1.9m (H1 2022: GBP1.8m) reflecting continuing investment in the
growth of the business and its sales beyond the current financial
period. Sales and marketing costs, which are largely discretionary,
continue to represent a relatively high proportion of net revenues
during this planned growth phase of the business but are now
declining as a percentage of net revenue from a peak of 84% in FY
2019 to 59% in FY 2021. Sales and marketing costs represented 56%
of H1 2022 net revenue (H1 2022 60%).
Adjusted EBITDA for the six months was a loss of GBP0.6m (H1
2022: GBP0.7m). The operating loss for the period after
depreciation and amortisation was GBP1.0m (H1 2022: GBP1.2m loss).
The loss before tax was GBP1.4m (H1 2022: GBP1.4m loss) after net
finance costs of GBP0.5m (H1 2022: GBP0.2m). Finance costs have
increased in 2023 due to the movement in the base rate and
additional debt. These adjusted EBITDA losses are slightly less
than forecast due to the sales in H1 being below expectations and
measures have been implemented to mitigate further losses.
Balance Sheet
The Group's balance sheet reflects the long-term nature of the
sparkling wine industry. The production of premium quality wine
from new vineyards is, by its very nature, a long-term project of
at least ten years. It takes around two years to select and prepare
optimal vineyard sites and order the appropriate vines for
planting. It takes a further four years from planting to bring a
vineyard into full production and a further four years to transform
these grapes into Gusbourne's premium sparkling wine. This requires
capital expenditure on vineyards and related property, plant and
equipment as well as significant working capital to support
inventories over the long production cycle.
The total assets employed in the business at 30 June 2023 was
GBP30.0m (H1 2022: GBP26.9m) represented by:
-- 196 hectares of Freehold land and buildings of GBP8.0m (H1
2022: GBP6.2m) - with buildings at cost less depreciation.
-- 93 hectares of mature vineyards of GBP2.6m (H1 2022: GBP2.8m) - at cost less depreciation
-- Plant, machinery and other equipment of GBP1.8m (H1 2022:
GBP1.4m) - at cost less depreciation
-- Right of use assets (under IFRS 16) of GBP2.7m (H1 2022: GBP2.0m).
-- Biological assets of GBP0.9m (H1 2022: GBP0.8m).
-- Inventories at 30 June 2023 at the lower of cost and net
realisable value amounted to GBP12.7m (H1 2022: GBP10.4m). These
inventories represent wine in its various stages of production from
wine in tank from the last harvest to the finished products which
take around four years to produce from the time of harvest. These
additional four years reflect the time it takes to transform our
high-quality grapes into Gusbourne's premium sparkling wine. An
important point to note is that these wine inventories already
include the wine (at its various stages of production) to support
sales planned for the next four years. The anticipated underlying
surplus of net realisable value over the cost of these wine
inventories, which is not reflected in these accounts, will become
an increasingly significant factor of the Group's asset base as
these inventories continue to grow.
-- Other working capital (representing trade and other
receivables less trade and other payables) of GBP0.0m (H1 2022:
GBP0.5m)
-- Cash of GBP0.2m (H1 2022: GBP1.8m)
-- Intangible assets of GBP1.0m (H1 2022: GBP1.0m) arose on the
acquisition of the Gusbourne Estate business on 27 September 2013.
Intangible assets, which includes the Gusbourne brand itself,
remain unimpaired at their historical amount and in accordance with
the relevant accounting standards. No account has been taken with
regards to any potential fair value uplift that may be
appropriate.
Financing
At 30 June 2023 the Group's total assets of GBP30.0m (H1 2022:
GBP26.9m) were financed by:
-- Shareholder's equity of GBP12.0m (H1 2022: GBP14.5m)
-- Long term secured debt from PNC of GBP15.2m (H1 2022:
GBP10.3m). At 30 June 2023 the PNC facilities are provided on a
revolving basis over a minimum period of 5 years to 12 August 2027
and allow flexible drawdown and repayments in line with the
Company's working capital requirements. The GBP16.5m (H1 2022:
GBP10.5m) facility has an interest rate at the annual rate of 2.50
per cent (H1 2022: 2.75 per cent) over Sterling Overnight Index
Average ("SONIA") (2021: Bank of England Base Rate).
-- Lease liabilities under IFRS 16 of GBP2.8m (H1 2021: GBP2.1m).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2023
Unaudited Unaudited Audited
Six months Six months Year ended
to to
30 June 30 June 31 December
Notes 2023 2022 2022
GBP'000 GBP'000 GBP'000
Revenue 2 3,648 3,290 6,858
Excise duties (275) (276) (615)
Net revenue 3,373 3,014 6,243
Cost of sales (1,071) (1,208) (2,546)
Gross profit 2,302 1,806 3,697
Fair value movement in biological
assets 6 (27) (216) -
Fair movement in biological
produce 6 - - (239)
Administrative expenses (3,225) (2,768) (5,561)
Loss from operations (950) (1,178) (2,103)
Finance expense 4 (490) (196) (496)
Loss before tax (1,440) (1,374) (2,599)
Tax credit - - 74
Loss and total comprehensive
loss for the period attributable
to
period attributable to owners
of the parent (1,440) (1,374) (2,525)
Loss per share attributable
to
the ordinary equity holders
of the parent:
Basic and diluted (2.37p) (2.26p) (4.17p)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2023
Unaudited Unaudited Audited
30 June 30 June 31 December
Notes 2023 2022 2022
Assets GBP'000 GBP'000 GBP'000
Non-current assets
Intangibles 1,007 1,007 1,007
Property, plant and equipment 5 15,144 12,397 14,198
Other receivables 19 25 16
16,170 13,429 15,221
--------- --------- -----------
Current assets
Biological assets 6 1,026 756 -
Inventories 7 12,670 10,423 12,579
Trade and other receivables 1,799 1,826 1,291
Cash and cash equivalents 151 1,768 269
--------- --------- -----------
15,646 14,773 14,139
--------- --------- -----------
Total assets 31,816 28,202 29,360
--------- --------- -----------
Liabilities
Current liabilities
Trade and other payables (1,795) (1,309) (1,500)
Lease liabilities (100) (100) (84)
(1,895) (1,409) (1,584)
--------- --------- -----------
Non-current liabilities
Loans and borrowings 8 (15,212) (10,294) (12,373)
Lease liabilities (2,740) (1,970) (1,994)
(17,952) (12,264) (14,367)
Total liabilities (19,847) (13,673) (15,951)
NET ASSETS 11,969 14,529 13,409
--------- --------- -----------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
At 30 June 2023
Issued capital and reserves attributable
to
owners of the parent
Share capital 9 12,191 12,190 12,191
Share premium 21,144 21,121 21,144
Merger reserve (13) (13) (13)
Share option reserve 7 - 7
Retained earnings (21,360) (18,769) (19,920)
-------- -------- --------
TOTAL EQUITY 11,969 14,529 13,409
-------- -------- --------
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2023
Unaudited Unaudited Audited
Six months to months to Six months to Year ended
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
Cashflows from operating
activities
Loss for the year/period before tax (1,440) (1,374) (2,525)
Adjustments for:
Depreciation of property, plant and
equipment 347 293 601
Sale of property, plant and equipment - (28) (28)
Finance expense 490 196 496
Equity share options issued - - 7
Fair value movement in biological
asset 27 216 -
Fair value movement in biological
produce - - 239
----------------------- ------------- ----------
Operating cash flow before changes
in working capital (576) (697) (1,453)
(Increase)/decrease in trade and
other receivables (511) (544) 74
(Increase)/decrease in inventories (49) 257 . (2,049)
(Increase) in biological assets (1,053) (972) -
Increase in trade and other payables 295 191 385
----------------------- ------------- ----------
Cash outflow from operations (1,894) (1,765) (2,874)
Investing activities
Purchases of property, plant and
equipment,
excluding vineyard establishment (531) (348) (2,502)
Sale of property, plant and equipment - 28 28
Net cash from investing activities (531) (320) (2,474)
----------------------- ------------- ----------
Financing activities
Revolving facility repayments (2,325) (2,235) (4,547)
Revolving facility drawdowns 5,145 3,182 7,620
Loan issue costs - - (66)
Repayment of lease liabilities (42) (66) (101)
Interest paid (471) (174) (456)
Issue of ordinary shares - 18 46
Share issue expense - - (7)
Net cash from financing activities 2,307 725 2,489
----------------------- ------------- ----------
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
For the six months ended 30 June 2023
Unaudited Unaudited Audited
Six months to Six months to Six months to Period to
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
Net increase/(decrease) in cash and cash
equivalents (118) (1,360) (2,859)
Cash and cash equivalents at beginning of period 269 3,128 3,128
--------------------------- ------------- ------------
Cash and cash equivalents at end of period 151 1,768 269
=========================== ============= ============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2023
Total
attributable
to equity
Share holders
Share Share Merger option Retained of
Audited: Capital premium reserve reserve earnings parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
31 December
2021 12,190 21,103 (13) - (17,395) 15,885
Share issue - 18 - - - 18
Comprehensive
loss for the
period - - - - (1,374) (1,374)
______ ______ ______ ______ _____ ______
30 June 2022 12,190 21,121 (13) - (18,769) 14,529
______ ______ ______ ______ ______ ______
Share issue 1 30 - - - 31
Share issue
expenses - (7) - - - (7)
Equity share
options issued - - - 7 - 7
Comprehensive
loss for the
period - - - - (1,151) (1,151)
______ ______ ______ ______ _____ ______
31 December
2022 12,191 21,144 (13) 7 (19,920) 13,409
Unaudited
Share issue - - - - - -
Comprehensive
loss for the
period - - - - (1,440) (1,440)
______ ______ ______ ______ _____ ______
30 June 2023 12,191 21,144 (13) - (21,360) 11,969
______ ______ ______ ______ ______ ______
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1 Basis of preparation
Statement of compliance
The interim financial statements in this report have been
prepared in accordance with International Financial Reporting
Standards (IFRS) and the IFRS Interpretations Committee (IFRIC)
interpretations that were applied in the preparation of the
Company's published consolidated financial statements for the year
ended 31 December 2022 and are consistent with the accounting
policies expected to apply in its financial statements for the year
ended 31 December 2023. As permitted, this interim report has been
prepared in accordance with the AIM Rules for Companies and does
not seek to comply with IAS 34 "Interim Financial Reporting".
Statutory information
The financial information for the six months ended 30 June 2023
has not been subject to an audit nor a review in accordance with
International Standard on Review Engagements 2410, Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity, issued by the Auditing Practices Board. The
comparative financial information presented herein for the year
ended 31 December 2022 does not constitute full statutory accounts
within the meaning of Section 434 of the Companies Act 2006. The
Group's annual report and accounts for the year ended 31 December
2022 have been delivered to the Registrar of Companies. The Group's
independent auditor's report was unqualified and did not contain a
statement under section 498(2) or 498(3) of the Companies Act
2006.
The Board of the Company continually assesses and monitors the
key risks of the business. The Board continues to consider the
Group's profit and cash flow plans for at least the next 12 months
and run forecasts and downside "stress test" scenarios, and
consider cost and other mitigation actions, including but not
limited to, operating cost reductions and reduced capital
expenditure, which enable the company to operate within existing
facilities.
2 Revenue
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
Wine sales 3,077 2,680 5,634
Other income 296 334 609
Net revenue 3,373 3,014 6,243
--------- --------- -----------
Excise duties 275 276 615
Total Revenue 3,648 3,290 6,858
--------- --------- -----------
3 Loss from operations
Loss from operations has been arrived at after charging:
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
Depreciation of property, plant
and equipment 347 294 601
Profit on disposal - 28 28
Staff costs expensed to consolidated
statement of income 1,279 893 1,770
4 Finance expense
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
Finance expense
Interest payable on borrowings 472 175 456
Amortisation of bank transaction
costs 18 21 40
Total finance expense 490 196 496
--------- --------- -----------
5 Property, plant and equipment
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
Freehold land and buildings 7,985 6,178 7,830
Plant, machinery and motor vehicles 1,774 1,447 1,676
Mature vineyards 2,642 2,785 2,712
Computer equipment 52 34 50
Right of use assets 2,691 1,953 1,930
15,144 12,397 14,198
--------- --------- -----------
Right of use assets
Right of use assets comprise land leases on which vines have
been planted and property leases from which vineyard and winery
operations are carried out. These assets have been created under
IFRS 16 - Leases.
6 Biological assets
Biological assets represent grapes growing on the Group's vines.
Once the grapes are harvested, they are deemed to be biological
produce and transferred to inventories.
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
Crop growing costs 1,053 972 1,830
Fair value of grapes harvested and
transferred
to inventories - - (1,591)
Fair value movement in biological
assets (27) (216) -
Fair value movement in biological
produce - - (239)
Fair value of biological assets
at the reporting date 1,026 756 -
--------- --------- -----------
The fair value of biological assets at the reporting date is
determined by reference to estimated market prices less costs to
sell. The estimated market price for grapes used in respect of 2023
is GBP3,000 (2022: GBP3,000) per tonne. The fair value is subject
to a discount factor of 55% (2022: 55%) due to the grapes, as at
the reporting date, being approximately a month away from being
ready for harvest.
A 10% increase in the estimated market price of grapes to
GBP3,300 per tonne would result in an increase of GBP102,000 in the
fair value of biological assets at the reporting date. A 10%
decrease in the estimated market price of grapes to GBP2,700 per
tonne would result in a decrease of GBP102,000 in the fair value of
biological assets at the reporting date.
7 Inventories
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
Finished goods 1,474 998 1,249
Work in progress 11,196 9,425 11,330
12,670 10,423 12,579
--------- --------- -----------
8 Loans and borrowings
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
Non-current liabilities
Bank loans 15,374 10,415 12,541
Unamortised bank transaction costs (162) (121) (168)
Total loans and borrowings 15,212 10,294 12,373
--------- --------- -----------
The bank loans of GBP15,212,000 with PNC Financial Services UK
Limited ("PNC") shown above is net of transaction costs of
GBP162,000 which are being amortised over the life of the loan.
In August 2022 the Group entered into an amended and restated
agreement with PNC for a GBP16.5 million asset-based lending
facilities for a minimum period of 5 years to 12 August 2027. The
facility are being provided on a revolving basis and are used to
provide further working capital for the Company covering inventory
and accounts receivables, to support growth plans and allow
flexible drawdown and repayments in line with the Company's working
capital requirements. The interest rate is at the annual rate of
2.50 per cent (2022: 2.75 per cent) over Sterling Overnight Index
Average ("SONIA") (2021: Bank of England Base Rate). The facilities
are secured by way of first priority charges over the Company's
inventory, receivables and freehold property as well as an
all-assets debenture and contain financial and general covenants
and customary events of default. The financial covenants include
cash burn, fixed charge cover, capital expenditure restrictions and
minimum headroom levels, and are tested monthly.
9 Share capital
Deferred Ordinary
shares of shares
49p each of 1p each
Number Number GBP'000
Issued and fully paid
At 1 January 2022 23,639,762 60,731,705 12,190
------------------------ ----------- ------------ --------
Issued in the year - 42,282 1
------------------------ ----------- ------------ --------
At 31 December 2022 23,639,762 60,773,987 12,191
------------------------ ----------- ------------ --------
Issued in the period - 2,174 -
----------------------- ----------- ------------ --------
At 30 June 2023 23,639,762 60,776,161 12,191
------------------------ ----------- ------------ --------
On 17 January 2023 the Company issued 2,174 new ordinary shares
of 1p each pursuant to an exercise of Warrants. All Warrants were
exercised at 75p per share.
Unexercised Warrants as at 30 June 2023 amount to 3,957,803
Ordinary Shares of 1 pence each. These Warrants are excisable at a
price of 75 pence per share and have a final exercise date of 16
December 2023.
10 Post balance sheet events
Shares issued
On 1 September 2023 the Company issued 7,838 new ordinary shares
of 1p each pursuant to an exercise of Warrants. All Warrants were
exercised at 75p per share.
Unexercised Warrants as at 30 June 2023 amount to 3,949,965
Ordinary Shares of 1 pence each. These Warrants are exercisable at
a price of 75 pence per share and have a final exercise date of 16
December 2023.
Board Resignation
On 6 September 2023 Charles Holland resigned as a director.
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IR FFFLFALIDFIV
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