TIDMMCOZ
RNS Number : 6365D
Cosentino Signature Wines plc
04 December 2009
4th December 2009
COSENTINO SIGNATURE WINES PLC
FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008
Chairman's Statement
Introduction
2008 was a very challenging year for the entire wine industry. Our Company had
been operating at record profits and revenue through September 2008 when the
economic downturn hit in the USA. The wine industry was hit particularly hard,
especially the luxury and ultrapremium wine sectors. Demand quickly shifted to
wines in the $10 to $15 price range, sales to distributors dropped dramatically
as distributors struggled to get their inventories down to less than 30 days on
the floor from their historic highs of seven and eight months, and wine club
sales began decreasing as consumer credit tightened.
Management and the board of directors reacted quickly. After concluding that the
wine industry would remain hard hit throughout 2009 and perhaps would only
barely begin to recover in 2010, the Company moved to drastically reduce its
cost base and increase efficiencies. This included the abandonment of the
Company's non essential properties and equipment that were the subject of its
2007 sale and leaseback agreement. The Company is now operating only in its
Yountville facility in the Napa Valley, California and through new affordable
leased facilities in Woodbridge, California at substantial cost savings.
Financials
Turnover for the period was US$10.2 million (2007: US$11.0 million). Loss per
share was US$(0.92) relative to income per share of US$0.01 in 2007. Loss before
tax but including discontinued operations was US$(14.2) million relative to
income before tax, but including income from discontinued operations of US$0.3
million in 2007.
The Directors are not recommending a dividend for the full year.
Operations
In the fourth quarter of 2008, after experiencing record trading through
September 2008, the global credit crunch took hold and wholesale and retail
sales for the Company were well below average. To counter the sharp drop in
revenue for the foreseeable future, the Company embarked on a significant cost
cutting plan. As a major component of the plan, the Company decided to
discontinue the operations and abandon three of its production facilities. These
operations included the facilities, vineyards and equipment at the Pope Valley,
Clements and Lockeford properties that were the subject of the 2007 sale and
leaseback transaction. In discontinuing the operations, the leased facilities
and equipment were formally returned to the lessor in February 2009. Two of the
Company's brands were discontinued and all operations in these facilities, other
than the winding down, ceased in 2008. The decision to abandon the brands and
facilities was made because the facilities were operating at significantly less
than 50% of capacity and because due to the general economic decline, management
and the board of directors became convinced that the wine industry would not
recover quickly enough in the near term future in order to allow the necessary
increased production levels to operate these facilities profitably. As a result,
management concluded that the Company could no longer afford to produce these
brands and operate these facilities. Management estimates that the abandonment
of these properties along with the additional company-wide cost cutting measures
that management put in place at the end of 2008, will save the Company
approximately $4 million annually in operating costs. Management strongly
believes that all near term Company efforts should be directed to its core
brand, Cosentino Winery, and its related operating facilities in Napa Valley,
and newly leased production and storage facilities in Woodbridge California.
Management
Our management team is fully in place and all top executive positions are
reporting directly to me.
Although 2008 has been a very disappointing year, I want to thank our small and
tireless management team and the loyal and hard working employees of the Group.
I would like to take this opportunity to thank all of our colleagues for their
hard work during this difficult year. As we deal with the challenges facing our
Company and industry in 2009, I am proud to have our strong team with me every
step of the way.
Current status of our Senior and Subordinated Notes and the Sale and Leaseback
Agreement
The Company is currently in default on its senior and subordinated notes payable
as well as the 2007 sale and leaseback agreement covering the returned abandoned
properties and equipment. We are currently operating under forbearance
agreements with our senior and subordinated lenders and our relationships with
our lenders are good. We are in negotiations with several potential lenders to
refinance our existing debt and to provide additional working capital to the
Company. We are also mediating the dispute over our sale and leaseback
arrangement.
Summation
Operations for the Company are now stable and we have begun to recover lost
ground along with the rest of the wine industry. As a result of our quick and
drastic cost cutting measures which were instituted in the fourth quarter of the
year, the Company has been able to reduce its operating costs by nearly $4
million dollars annually. Those annual cost savings have more than compensated
for the lost revenue and lower pricing that the Company and the industry are now
enduring.
The Board of Directors and I have been working diligently to obtain new
financing for the Company in this very difficult lending environment. We look
forward to be in a position to make favorable announcements in the future.
........................
Larry J Soldinger
Chairman
2 December 2009
+------------------------------+-------+---+----------+---+-----------+---+-----------+----+--+----------------+
| COSENTINO SIGNATURE WINES, PLC | | | | | | |
+------------------------------------------+----------+---------------+---------------+----+--+----------------+
| CONSOLIDATED INCOME STATEMENT | | | | | | |
+------------------------------------------+----------+---------------+---------------+----+--+----------------+
| YEAR ENDED DECEMBER 31, 2008 | | | | | |
+--------------------------------------+------------------------------+---------------+----+--+----------------+
| | | 2008 | | 2007 |
+------------------------------+-------+---------------------------------------------------+--+----------------+
| Continuing Operations |Notes | Before | Impairment | Total | | Total |
| | | Impairment of | of | | | |
| | | Goodwill and | Goodwill | | | |
| | | Deferred Taxes | and | | | |
| | | | Deferred | | | |
| | | | Taxes | | | |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| | | | | | | Re-presented |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| Revenues | 5 | | | | | |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| Distributors | | 1,876,909 | - | 1,876,909 | | 1,980,588 |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| Retail | | 2,593,851 | - | 2,593,851 | | 2,086,113 |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| Other | | 68,885 | - | 68,885 | | - |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| | | | | | | |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| Total Revenues | | 4,539,645 | - | 4,539,645 | | 4,066,701 |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| | | | | | | |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| Cost of Revenues | 6 | (5,723,042) | - | (5,723,042) | | (3,936,534) |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| | | | | | | |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| Operating (Loss)/Profit | | (1,183,397) | - | (1,183,397) | | 130,167 |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| | | | | | | |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| Other income/(expense) | 8 | 26,305 | - | 26,305 | | 43,358 |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| Issuance cost written off on | | - | - | - | | (414,000) |
| early redemption of | | | | | | |
| preference shares | | | | | | |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| Finance costs | 9 | (1,920,983) | - | (1,920,983) | | (2,641,775) |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| Loss from continuing | | (3,078,075) | - | (3,078,075) | | (2,882,250) |
| operations before | | | | | | |
| discontinued operations and | | | | | | |
| taxes | | | | | | |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| Profit/loss from | 31 | (5,376,618) | (5,733,541) | (11,110,159) | | 3,197,603 |
| discontinued operations, net | | | | | | |
| of tax | | | | | | |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| Income tax expense | 10 | (1,890) | (6,571,990) | (6,573,880) | | (113,928) |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| | | | | | | |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| (Loss)/profit for the year | | (8,456,583) | (12,305,531) | (20,762,114) | | 201,425 |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| | | | | | | |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| (Loss)/Earnings per share | 11 | | | | | |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| Basic and fully diluted - | | | | (0.68) | | (0.12) |
| continuing operations | | | | | | |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| Basic and fully diluted - | | | | (0.24) | | 0.13 |
| discontinued operations | | | | | | |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| | | | | | | |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| | | | | | | |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| | | | | | | |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| | | | | | | |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| | | | | | | |
+------------------------------+-------+------------------+---------------+----------------+--+----------------+
| |
+------------------------------+-------+---+----------+---+-----------+---+-----------+----+--+----------------+
+----------------------------------+------+-------------------+----+------------------+
| COSENTINO SIGNATURE WINES, PLC | | | |
+-----------------------------------------+-------------------+----+------------------+
| CONSOLIDATED BALANCE SHEET | | | | |
+----------------------------------+------+-------------------+----+------------------+
| AS AT 31 DECEMBER 2008 | | | | |
+----------------------------------+------+-------------------+----+------------------+
| | Note | 2008 | | 2007 |
+----------------------------------+------+-------------------+----+------------------+
| ASSETS | | US$ | | US$ |
+----------------------------------+------+-------------------+----+------------------+
| Non-current assets | | | | |
+----------------------------------+------+-------------------+----+------------------+
| Property plant and equipment | | 21,834,373 | | 20,821,607 |
+----------------------------------+------+-------------------+----+------------------+
| Intangible assets | | 273,832 | | 6,355,103 |
+----------------------------------+------+-------------------+----+------------------+
| Deferred tax assets | 10 | - | | 6,571,990 |
+----------------------------------+------+-------------------+----+------------------+
| Other assets | 14 | 609,500 | | 219,370 |
+----------------------------------+------+-------------------+----+------------------+
| Total non-current assets | | 22,717,705 | | 33,968,070 |
+----------------------------------+------+-------------------+----+------------------+
| | | | | |
+----------------------------------+------+-------------------+----+------------------+
| Current assets | | | | |
+----------------------------------+------+-------------------+----+------------------+
| Inventories | 15 | 13,000,992 | | 14,270,100 |
+----------------------------------+------+-------------------+----+------------------+
| Trade and other receivables | | 734,426 | | 942,787 |
+----------------------------------+------+-------------------+----+------------------+
| Cash - restricted | | - | | 123,147 |
+----------------------------------+------+-------------------+----+------------------+
| Cash and cash equivalents | | 66,103 | | 254,669 |
+----------------------------------+------+-------------------+----+------------------+
| Total current assets | | 13,801,521 | | 15,590,703 |
+----------------------------------+------+-------------------+----+------------------+
| | | | | |
+----------------------------------+------+-------------------+----+------------------+
| Total assets | | 36,519,226 | | 49,558,773 |
+----------------------------------+------+-------------------+----+------------------+
| | | | | |
+----------------------------------+------+-------------------+----+------------------+
| EQUITY AND LIABILITIES | | | | |
+----------------------------------+------+-------------------+----+------------------+
| Equity | | | | |
+----------------------------------+------+-------------------+----+------------------+
| Share capital | 17 | 420,453 | | 387,220 |
+----------------------------------+------+-------------------+----+------------------+
| Share premium account | | 91,392 | | - |
+----------------------------------+------+-------------------+----+------------------+
| Retained earnings | | 6,683,575 | | 27,445,689 |
+----------------------------------+------+-------------------+----+------------------+
| Total equity | | 7,195,420 | | 27,832,909 |
+----------------------------------+------+-------------------+----+------------------+
| | | | | |
+----------------------------------+------+-------------------+----+------------------+
| Non-current liabilities | | | | |
+----------------------------------+------+-------------------+----+------------------+
| Borrowings | 21 | - | | 13,500,000 |
+----------------------------------+------+-------------------+----+------------------+
| Obligations under finance leases | | 2,277,506 | | 2,115,534 |
+----------------------------------+------+-------------------+----+------------------+
| Redeemable preference shares | | 1,184,734 | | 1,119,634 |
+----------------------------------+------+-------------------+----+------------------+
| Loan notes | | 587,500 | | 587,500 |
+----------------------------------+------+-------------------+----+------------------+
| Total non-current liabilities | | 4,049,740 | | 17,322,668 |
+----------------------------------+------+-------------------+----+------------------+
| | | | | |
+----------------------------------+------+-------------------+----+------------------+
| Current liabilities | | | | |
+----------------------------------+------+-------------------+----+------------------+
| Obligations in default | 21 | 18,000,000 | | - |
+----------------------------------+------+-------------------+----+------------------+
| Obligations under finance leases | 22 | 1,273,843 | | 808,392 |
+----------------------------------+------+-------------------+----+------------------+
| Trade and other payables | | 6,000,223 | | 3,594,804 |
+----------------------------------+------+-------------------+----+------------------+
| Total current liabilities | | 25,274,066 | | 4,403,196 |
+----------------------------------+------+-------------------+----+------------------+
| Total liabilities | | 29,323,806 | | 21,725,864 |
+----------------------------------+------+-------------------+----+------------------+
| | | | | |
+----------------------------------+------+-------------------+----+------------------+
| Total liabilities and equity | | 36,519,226 | | 49,558,773 |
+----------------------------------+------+-------------------+----+------------------+
The financial statements were approved by the board of directors on 2 December
2009 and were signed on its behalf by Cristopher Crosthwaite. .
Director
+----------------------------------------+--+------------------+--+--------------------+
| COSENTINO SIGNATURE WINES, PLC | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| CONSOLIDATED STATEMENTS OF CASH FLOWS | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| FOR THE YEAR ENDED 31 DECEMBER 2008 | | | |
+-------------------------------------------+------------------+--+--------------------+
| | | 2008 | | 2007 |
+----------------------------------------+--+------------------+--+--------------------+
| | | US$ | | US$ |
+----------------------------------------+--+------------------+--+--------------------+
| Cash flows from operating activities | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| Cash receipts from customers | | 9,311,580 | | 10,800,985 |
+----------------------------------------+--+------------------+--+--------------------+
| Cash paid to suppliers | | (10,620,245) | | (15,507,759) |
+----------------------------------------+--+------------------+--+--------------------+
| Cash used in operations | | (1,308,665) | | (4,706,774) |
+----------------------------------------+--+------------------+--+--------------------+
| Interest paid | | (1,601,558) | | (2,598,417) |
+----------------------------------------+--+------------------+--+--------------------+
| Income taxes paid | | (1,890) | | (3,927) |
+----------------------------------------+--+------------------+--+--------------------+
| Net cash flows used in operating | | (2,912,113) | | (7,309,118) |
| activities | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| Investing activities | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| Investment in intangibles | | (272,923) | | (624,291) |
+----------------------------------------+--+------------------+--+--------------------+
| Interest received | | 1,544 | | 43,358 |
+----------------------------------------+--+------------------+--+--------------------+
| Proceeds from the sale of property | | - | | 19,818,058 |
| plant and equipment | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| Purchases of property plant and | | (282,589) | | (1,453,910) |
| equipment | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| Net cash provided by/(used in) | | (553,968) | | 17,783,215 |
| investing activities | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| Financing activities | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| Costs related to share capital | | - | | (836,951) |
+----------------------------------------+--+------------------+--+--------------------+
| Proceeds from new loans raised | | 4,500,000 | | 5,500,000 |
+----------------------------------------+--+------------------+--+--------------------+
| Net proceeds from issuance of | | - | | 3,250,000 |
| convertible notes | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| Proceeds from issuance of preference | | - | | 234,880 |
| shares | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| Repayment of borrowings | | - | | (15,234,880) |
+----------------------------------------+--+------------------+--+--------------------+
| Redemption of preference shares | | - | | (2,000,000) |
+----------------------------------------+--+------------------+--+--------------------+
| Repayment of capital leases | | (1,021,957) | | (1,094,507) |
+----------------------------------------+--+------------------+--+--------------------+
| Finance costs related to new | | (323,675) | | - |
| borrowings | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| Net cash provided by (used in) | | 3,154,368 | | (10,181,458) |
| financing activities | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| (Decrease)/Increase in cash and cash | | (311,713) | | 292,639 |
| equivalents | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| Cash and cash equivalents at beginning | | 377,816 | | 85,177 |
| of the year | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| | | | | |
+----------------------------------------+--+------------------+--+--------------------+
| Cash and cash equivalents at end of | | 66,103 | | 377,816 |
| the year | | | | |
+----------------------------------------+--+------------------+--+--------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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