TIDMVINO
RNS Number : 1735R
Virgin Wines UK PLC
25 October 2023
25 October 2023
Virgin Wines UK plc
("Virgin Wines", the "Company" or the "Group")
AUDITED ANNUAL RESULTS FOR THE PERIODED 30 JUNE 2023
Results in line with expectations; strategic initiatives on
track
Virgin Wines UK plc (AIM: VINO), one of the UK's largest
direct-to-consumer online wine retailers, today announces its
audited Annual Results for the period ended 30 June 2023
("FY23").
Financial highlights
-- Revenue - Group revenue of GBP59.0m (FY22: GBP69.2m, FY19:
GBP42.3m), in line with expectations
o Impacted by previously reported one-off exceptional events
including Group's implementation of new Warehouse Management System
("WMS")
o WineBank scheme revenue of GBP35.3m (FY22: GBP38.5m, FY19:
GBP19.4m)
-- Adjusted EBITDA (1) - FY23 GBP1.8m (FY22: GBP6.2m)
-- Adjusted profit before tax (2) - FY23 GBP0.6m (FY22: GBP5.2m)
-- (Loss)/earnings per share - FY23 (1.1)p (FY22: earnings per share 7.8p)
-- Cash - The Group's net cash balance at 30 June 2023 was
GBP5.5m (1 July 2022: GBP7.7m), with no debt
-- Inventory - 24% reduction in inventory, from GBP11m in December 2022 to GBP8.4m at year-end
-- Gross Margins (3) - FY23 29.6% (FY22: 31.4%), reflecting inflationary pressures
o DTC (Direct To Consumer) product margins on repeat sales
broadly flat at 40.5% (FY22: 41.0%)
FY23 FY22
audited audited
GBPm GBPm
------------------------ -------- --------
Revenue 59.0 69.2
Adjusted EBITDA
(1) 1.8 6.2
Adjusted PBT (2) 0.6 5.2
Operating (loss)/profit (0.7) 5.2
(Loss)/profit before
tax (0.7) 5.1
(Loss)/profit for
the period (0.6) 4.4
------------------------ -------- --------
(1) Adjusted EBITDA is after adding back exceptional costs
(FY23: GBP1.0m, FY22: nil) and share-based payments (FY23: GBP0.3m,
FY22: GBP0.1m).
(2) Adjusted profit before tax is after adding back exceptional
costs and share-based payments.
(3) Product margins exclude packaging and delivery costs.
Strategic highlights
-- Disciplined approach to new customer acquisition drives returns despite headwinds
o 91.5k new customers acquired in the Period
o Over 70% acquired through key partnership channel (FY22:
67.5%)
o Cost per recruit GBP11.99, one of the lowest recorded outside
of COVID-19 years (FY22: GBP13.22)
o Conversion rate broadly consistent to FY22 levels, at 46.8%
(FY22: 48.6%)
-- Active customer base of 173k (FY22: 186k), with a record 133k WineBank members (FY22: 130k)
o WineBank customer deposits at a seasonal high of GBP8m by
year-end (FY19: GBP4.5m)
o Customers on subscription schemes contributed 87% of DTC sales
(FY22: 82%)
o WineBank cancellation rates at 17.3% by year-end following
improvements in H2 (FY22: 16.7%)
-- Strong strategic partnerships drive advancements in
commercial channel and customer acquisition
o New partnerships agreed with WH Smith Travel, Saga, Go
Outdoors and OnTheMarket
o Commercial revenue contributed 11.6% of total FY23 sales
(FY22: 10%)
-- Significant progress made on ESG, including:
o Certified carbon neutral according to PAS 2060 standard for
carbon neutrality
o Reduced Scope 1 and 2 emissions by 24% and continued to reduce
Scope 3
o Committed to science-based targets under the SBTi
o Became a member of the Sustainable Wine Roundtable and Harpers
Sustainability Charter
Current trading and outlook
-- 12% increase in YOY sales achieved in Q1 2024, as conversion
and cancellation rates continue to improve. Sales through core
repeat channels were 15.5% ahead YOY.
-- The commercial sales channel also continues to show positive
YOY growth, +8% post Period end.
-- The strategic initiatives identified during the Group's
Business Review are expected to be introduced during Q2/Q3 2024
with the benefits starting from H2 2024. This includes a new value
proposition launching in late October, alongside a premium
Australian Wine Club, whilst a full creative brand refresh will be
rolled out over Q2/Q3 2024.
-- New WMS now operating robustly with Q1 2024 operating
variable cost reduced by 9.4% YOY and a 15.5% YOY reduction in Q124
warehouse cost per case against last year's highs . The Group sees
potential for future productivity benefits and increased
efficiency, with its growth plans futureproofed.
-- The business has carried out extensive planning for the peak
Christmas trading period, with operational preparation
prioritised.
-- As previously announced, the Board expects double-digit sales
growth in FY 2024, with EBITDA margin of c. 4-5% as inflationary
pressures, particularly on freight and glass, start to ease.
Jay Wright, Chief Executive Officer, said:
"FY23 has been a year affected by a number of challenges, from
well-documented macroeconomic headwinds to a number of one-off,
exceptional issues, most specifically relating to the
implementation of our new Warehouse Management System in H1.
Despite this, we have continued to grow our WineBank membership,
maintain excellent discipline in our customer acquisition channel
and deliver a healthy balance sheet, remaining debt free with
GBP5.5m cash reserves and much reduced levels of stock.
"Our unique wines, market-leading propositions and best-in-class
customer service continue to support our base of loyal customers,
and WineBank remains a great way for them to spread the cost of
enjoying high-quality wines. Looking ahead, the implementation of a
number of exciting new strategic initiatives following the
completion of our Business Review earlier in the year will support
our resilience, enhancing our ability to cater to a wider range of
customers. More broadly, we remain confident in our longer-term
prospects given the strength of the customer proposition and our
proven business model. Our continued focus on profit, generating
cash and driving efficiencies also positions us uniquely within the
sector. These pillars will remain consistent elements of our
strategy moving forward."
Investor Meet Company
Virgin Wines has postponed its presentation on IMC scheduled for
Friday 27 October due to unforeseen medical circumstances. The
meeting will be rearranged in due course and a date will be
announced as soon as practicable.
- Ends -
Enquiries:
Virgin Wines UK plc Via Hudson Sandler
Jay Wright, CEO
Graeme Weir, CFO
Liberum Capital Limited
(Nominated Adviser and Sole Broker)
Edward Thomas
Dru Danford
John Fishley
Hudson Sandler
(Public Relations)
Alex Brennan
Dan de Belder
Charlotte Cobb
Harry Griffiths
Tel: +44 20 3100 2222
virginwines@hudsonsandler.com
Tel: +44 20 7796 4133
Notes to editors:
About Virgin Wines
Virgin Wines is one of the UK's largest direct-to-consumer
online wine retailers. It is an award-winning business which has a
reputation for supplying and curating high quality products,
excellent levels of customer service and innovative ways of
retailing.
The Company, which is headquartered in Norwich, UK, was
established in 2000 by the Virgin Group and was subsequently
acquired by Direct Wines in 2005 before being bought out by the
Virgin Wines management team, led by CEO Jay Wright and CFO Graeme
Weir, in 2013. It listed on the London Stock Exchange's Alternative
Investment Market (AIM) in 2021.
Virgin Wines has almost 700 wines and c. 150 spirits in its
portfolio which it sells to an active customer base of more than
170,000 members. It has approximately 200 employees and more than
40 trusted winemaking partners and suppliers around the world.
The Company drives the majority of its revenue though its
fast-growing WineBank subscription scheme, using a variety of
marketing channels, as well as through its Wine Advisor team, Wine
Plan channel and Pay As You Go service.
Along with its extensive range of award-winning products, Virgin
Wines was delighted to be named Online Drinks Retailer of the Year
for 2022 at last year's Drinks Retailing Awards, as well as
receiving the bronze award for Contact Centre of the Year at the
2022 UK National Contact Centre Awards. In addition, in 2023 the
Group's Head of Buying, Sophie Lord, was also named Buyer of the
Year by Decanter magazine.
https://www.virginwinesplc.co.uk/
Chairman's Statement
Introduction
It has undoubtedly been a challenging year for the economy and
as with many other consumer-facing businesses, the Group continued
to experience a number of headwinds during the period, impacting
the supply chain, costs and underlying consumer demand. Despite
this, Virgin Wines has demonstrated a high level of resilience in
2023 that has been a testament to the Group's strategy and its
people.
The business' underlying fundamentals remain strong and
continues to perform robustly within the ecommerce segment of the
drinks market. The shift in attitudes and behaviours towards
working from home has supported underlying demand. Meanwhile, the
quality and consistency of the product and one of the leading
customer propositions in the marketplace leave Virgin Wines well
positioned to overcome the current macroeconomic pressures.
Whilst our revenues and profits are down on the prior year, much
of the growth has been retained when compared with pre-pandemic
levels. Our brand personality and values are unchanged and remain
critical to our success. I would like to thank all our customers,
suppliers, partners and, above all, our colleagues for making this
possible.
Strategy
During the year, the Board and senior leadership team held a
comprehensive strategy review where we evaluated the business'
fundamental proposition and considered various opportunities
including consumer segmentation, product range and geographical
expansion.
The Group has started to implement the outcomes of the session,
and benefits will be realised from FY24. These include - but are
not limited to - the introduction of new premium and value ranges
of wines, alongside an exit from the over-supplied beer category.
The Board is confident that these strategic developments will
solidify and enhance the Group's offer in order to continue to
capture wider demographics of customers.
Throughout the year more widely, the Group continued to make
good strategic progress against its wider strategic pillars. More
detail on this is included in the CEO Statement.
ESG
ESG remains an important driver of the business. It informs our
culture, strategy and stakeholder engagement. We are conscious of
our responsibility to the environment and the need to take this
into account in all our business practices. The Group remains
committed to operating an ethical, transparent business, delivering
value for all stakeholders in line with its long-term growth
strategy.
During the year, the business took a number of important steps
to drive its sustainability, including obtaining respected
accreditations as a Carbon Neutral business under PAS 2060. We
maintain a stable, experienced Board with a shared vision for the
Group's growth, and ambitions to realise meaningful shareholder
value into the future.
Outlook
While macroeconomic headwinds are expected to persist into FY24,
compounded by the additional alcohol duty increase implemented post
period end, there are a number of reasons to be excited at Virgin
Wines and its opportunities for further financial progress over
coming years.
Looking ahead, the Board and I remain highly optimistic of
Virgin Wines' future growth prospects. There is encouraging,
underlying consumer demand for the Group's leading proposition. The
business model remains robust with an excellent in-house team
driven to help the business grow through meaningful strategic
progress.
JOHN RISMAN
Chairman
Chief Executive's Review
Introduction
It is well-known that our sector experienced a year of
persistent macroeconomic challenges and inflationary pressures. At
Virgin Wines, our financial year 2023 also saw us overcome a number
of internal issues which impacted our performance particularly in
the first half. This included the previously reported operational
difficulties which took place during the early implementation of
our new Warehouse Management System (WMS) during our peak Christmas
trading period in 2022. Following further investment and rigorous
testing, we are pleased to have resolved these issues, and our
systems are now better placed to support trading in line with our
growth ambitions.
Despite these headwinds, the Group delivered results for the
year in line with expectations. We also continued to see positive
momentum on a number of our core strategic initiatives, including
an ongoing focus on low-cost, disciplined new customer acquisition,
driving the strength and loyalty of our key WineBank customer base
and delivering a number of new strategic partnerships in both our
acquisition and Commercial channels.
Meanwhile, the fundamental Virgin Wines business model remains
highly relevant, and we continue to be well positioned in the
sector, expecting to benefit considerably as trading conditions
start to improve. Demand for our uniquely sourced, high-quality
offering and market-leading expertise remains strong, our customers
remain loyal, and we look forward to realising the benefits from
the implementation of several new initiatives over the coming
months following our recent Business Review.
I am always inspired by the talent and resilience of my
colleagues who have remained unwaveringly positive throughout this
challenging year. Despite the pressures that the current climate
has placed on them both personally and professionally, the
enthusiasm, dedication, and energy that they possess and the
optimism they display day-in, day-out, is an inspiration to work
alongside. I am hugely proud to work with such outstanding people
and delighted that we have been able to retain our unique culture
in such volatile and uncertain times.
This all supports our ongoing optimism in our opportunities for
future growth into FY24 and beyond.
Business overview
During the year we delivered revenues of GBP59m, a 14.5%
decrease on the prior year but still a 39% increase on the last
pre-covid year. We also achieved an adjusted EBITDA of GBP1.8m, a
decrease from GBP6.2m the previous year.
There were a number of contributory factors to the FY23
financial performance with significant cost increases across the
supply chain, a Virgin brand directive to restrain from direct
marketing activity during the mourning period following the passing
of the Queen in September '22, as well as the well-documented
issues we experienced with the implementation of the new Warehouse
Management System.
In addition, the Consumer Confidence Index fell to record lows
during the past 12 months, driven by an especially challenging
macro- economic landscape following significant increases in
interest rates, the spiralling costs of energy, generationally high
levels of inflation and war in Ukraine.
Nonetheless, we are pleased to have been able to mitigate a
number of these headwinds. Our disciplined approach to customer
acquisition has ensured the marketing cost of recruiting new
customers has decreased 9% YOY, our open-source buying model has
allowed us to concentrate on sourcing wines with the best
quality/value ratios, whilst utilising UK bottling has allowed us
to minimise freight costs. Well executed margin discipline through
the sales channels ensured our gross margins for repeat sales to
existing customers achieved 40.5%*, just a slight dip from 41% the
previous year.
In addition, our balance sheet remained strong during the year,
ending with net cash of GBP5.5m, GBP8m of WineBank customer
deposits and no debt.
Strategic progress
We continued to focus strongly on delivering against our core
strategic pillars during FY23. These are:
-- Acquiring large numbers of high-quality, new customers, at a low cost per recruit.
-- Driving membership growth onto our WineBank scheme.
-- Maximising gross margins through our DTC channels.
-- Optimising working capital to maximise free cash flow.
-- Maintaining strict control of costs in a highly inflationary environment.
These pillars have supported the Group's growth and
profitability for many years, and we continue to focus on these
core pillars to deliver long-term, sustainable growth in both
revenue and profitability.
New customer acquisition
During FY23 we were pleased to acquire more than 91k new
customers, taking us to a total active customer base of 173k. Our
marketing cost per recruit was just GBP11.99, a decrease on FY22 of
9% and one of the lowest levels we have reported outside the Covid
affected years (FY22: GBP13.22). This remains industry- leading and
is testament to our disciplined approach to new customer
acquisition.
Strategic partnerships
We continued to focus on driving new partnerships with brands
where we have complementary product categories, a similar
demographic profile and where we believe our proposition and offers
would be well suited. During the year, new partnerships developed
included those with WHSmith Travel, Saga, Go Outdoors and On The
Market amongst many others. These have supported both our new
customer acquisition and the development of our Commercial
business.
We have a strong pipeline of further partnerships into next year
and look forward to continuing to introduce our exclusive high-
quality wines to new customers around the UK over the coming months
and years.
Subscription schemes
Our flagship subscription scheme, WineBank, continued to grow
over the year, achieving a seasonal high of GBP8m in customer
deposits by year-end. The scheme enables customers to spread the
cost of buying wine by saving money each month and in turn earning
20% 'interest' on the money they save to then spend on wine. This
has been particularly popular as many consumers find the
convenience of saving smaller amounts regularly an effective way of
budgeting for their wine purchases.
Despite a challenging environment, the resilience of the scheme
was highlighted by the membership growing 2.3% over the year to
133k (FY22: 130k) while cancellation rates only ticked up
marginally to 17.3% (FY22: 16.7%).
It is also pleasing to see much of the growth realised during
the Covid lockdown periods has been maintained with the WineBank
membership 52% higher than prior to that period.
The cash from the WineBank scheme is ring-fenced, held in a
separate account and is not used to help fund the business or for
working capital, and therefore not included in the Group's stated
net cash position.
The business also operates two quarterly wine plan schemes,
Discovery Club and justREDS. This year has been particularly
challenging for these types of service as the cost-of-living crisis
has intensified and put more pressure on traditional continuity
programmes. This has encouraged us to focus further on WineBank
where customers have the ability to make smaller, regular payments
and have the flexibility to purchase whatever they want, whenever
they want with the benefit of free express delivery and their 20%
'interest'.
Wine Advisors
Our 43-strong Wine Advisor team continues to offer a personal
and highly valued one-to-one service to over 50k customers,
delivering the highest levels of customer engagement alongside the
highest average order values and the highest average spend per
annum of any group of customers. The team delivers an exceptional
service, ensuring every wine purchased is perfectly suited to their
customers' tastes and that their personal client base receives the
'inside track' on new wines and special discoveries that they may
have otherwise missed. Our Wine Advisors also handle any service
queries that may occur, meaning they handle customers' entire
relationship with Virgin Wines. This focus on delivering an
unbeatable customer experience remains core to our proposition.
Conversion and cancellation rates
As previously reported, the conversion and cancellation rates
fluctuated over the course of the year. Given the pressure put on
consumer spending over H123, alongside the system issues over the
Christmas period, we saw a downturn in the conversion rate of new
customers during the first half of the year which then largely
recovered over the second half. The 12-month rolling conversion
rate for FY22 was 48.8% and while we saw it bottom out in December
'22, it has subsequently been on a consistent monthly upward trend,
finishing the year at 46.8%.
Similarly, we had seen the 12-month rolling WineBank
cancellation rate tick upwards over the first half of the year. It
started in July '22 at 17.8% before peaking in December '22. By
June '23 we had seen the rate reduce down to 17.3%, again showing a
positive trend throughout H223.
Gross margins
We have seen substantial cost increases across the business over
the past 12 months, several of which have placed direct pressure on
gross margins. In particular, the rising cost of energy, coupled
with the effects of the war in Ukraine, led to exceptional
increases in the cost of glass and the bottling of wine. Freight
costs, both over sea and land, increased at varying degrees of
severity depending on the region globally, as did packaging. All
these factors had the effect of increasing the cost price of a
bottle of wine without positively influencing the quality in any
way.
The business worked hard to mitigate the effects of these
wherever possible, whether that be reducing bottle weights,
shipping by tank into the UK or focusing more heavily than ever on
countries and regions that were able to deliver the best
quality/value ratios.
Our ability to curate our own case configurations also helped
deliver the flexibility to couple great quality wines with value
for money pricing, whilst managing the gross margins across the
individual channels of the business.
The result of these factors was a reduction in statutory gross
margin from 31.4% to 29.6%. Another contributory factor was the
continued success of the Commercial channel, where gross margins
are lower due to the wholesale element of a significant proportion
of the revenue. With this being a larger proportion of the overall
sales year-on-year, it has a negative effect on the overall gross
margin of the business.
Working capital and free cash flow
At the start of our financial year, we took the decision to
bring stock into the UK early for the peak Christmas trading period
due to the continued issues within the supply chain and the
sporadic, but extensive, delays we were still experiencing from
shippers and transporters globally, along with blockages in UK
ports. This increased our stock holding and, coupled with weaker
than planned trading over the peak period, resulted in us carrying
higher than desired levels of working capital into H2. We worked
hard over H223 to positively effect this and stock reduced by 24%
over the final six months of the year from GBP11m to GBP8.4m.
The introduction of the new Warehouse Management System
increased our capital expenditure this year. However, the business
still ended FY23 debt free and with GBP5.5m of cash on the balance
sheet, in addition to GBP8m in WineBank deposits.
Cost control
In addition to the pressure on gross margins through the
escalation of input costs, we have also seen the impact of the
inflationary environment on several additional areas. Of particular
note is the annual increase in the National Living Wage, more
general wage inflation across the business, and increases in the
cost of packaging and courier charges, all of which inflate our
operational costs or our fixed overhead.
In an increasingly heavily taxed environment, we have also seen
dramatic increases over the last two years in the waste levy
charged to businesses on all carboard and plastic packaging, glass
and metal imported into the UK. Since FY21 this has increased by
211%, equating to GBP283k of additional cost in FY23.
Wine sourcing model
Uniquely, we continue to source our wines from a large network
of trusted long-term winemaking partners and suppliers across the
globe using a data driven, customer focused, open-source supply
model. This means that we can focus our efforts on sourcing from
countries and regions across the globe that deliver the best
quality grapes for each individual vintage, while maintaining the
flexibility to ensure we can blend, and deliver, the very best
value wines to our customers.
96% of the wines we sell by volume are exclusive to Virgin
Wines. This control of the winemaking process ensures we have the
ability to blend our wines ourselves, matching the precise
stylistic qualities and taste profiles that we know our loyal
customers are looking for - this is achieved through the constant
use of extensive data and clever analytics from tens of thousands
of customer reviews.
We believe that our unique model differentiates Virgin Wines for
both our customers and investors, ensuring working capital can be
minimised, quality/value ratios can be maximised whilst delivering
the most advantageous gross margins. This sourcing model is key in
supporting the resilience of our business and the strength of our
investment case.
Our culture, values and people
At Virgin Wines, the welfare, support and development of our
people is a priority. As a business that has always prided itself
on placing its values and culture at its very centre, we continue
to adapt how we achieve that in an ever-changing working
environment.
Within our workplace we aim to create a fun and informal
environment but combine that with the highest of standards and
exemplary levels of professionalism. We also aim to be a supportive
and inclusive business where our team members are proud to
work.
Over the past year we have completed an externally managed
employee engagement survey to understand what we are doing well and
where we can improve. We have created an environment that
encourages hybrid working and flexibility, however, with that the
needs and expectations of our people have also changed, and it was
helpful to understand the various thoughts of our team in detail
through an anonymous, in-depth survey.
The introduction of our Employee Assistance Programme has been
well received and used extensively. The service allows all
employees to access a range of free services and support documents
from one-to- one counselling to advice on finances, health, and
personal welfare. We have also introduced a new HR system that that
allows us to have a consistent and thorough onboarding service,
instant access to policies and self-management of annual leave. It
is also the central hub for access to the Employee Assistance
Programme.
A welcoming and inclusive environment for all is paramount and
we continue to deliver a range of initiatives to promote this. This
year we have carried out an external inclusivity survey while a
large number of employees have completed an LGBTQ+ Awareness
Training course with a certificate awarded recognising the
continued professional development of individuals on the topic.
We continue to support a range of charities, including Bright
Start in South Africa that aims to give children from impoverished
backgrounds a chance of a quality education, Growing Well, a
specialist mental health charity that champions recovery through
outdoor activity in two Cumbrian market gardens, and The Drinks
Trust that aims to safeguard the drinks industry community as a
whole.
We also understand the importance of responsible drinking and
the dangers of alcohol abuse. As such we continue to actively
promote to our customers the importance of enjoying alcohol in
moderation and we continue to drive our unique messaging that
'Drinking is only fun when you don't overdo it'.
Progress on sustainability
As well as delivering on our commercial ambitions we understand
that it is our responsibility to have a positive impact on our
planet. Both the Board of Directors and our Senior Management are
committed to minimising our environmental impact through product
innovation, targeted operational initiatives and collaboration with
our stakeholders. We are also committed to operating in a
transparent manner and ensuring our products are sourced through a
visibly ethical supply chain.
I am delighted to say this year has been one of positive
progress for the business with several landmark achievements and
new initiatives.
In particular, we were delighted to be officially certified as
carbon neutral in October '22 to the PAS 2060 standard for carbon
neutrality. PAS 2060 is an internationally recognised standard and
one of few officially verified routes to achieving this status.
Whilst this is an excellent first step on our sustainability
journey, we had also targeted to reduce our Scope 1 and 2 emissions
by 25% in FY23 and through a variety of initiatives, including the
major project of installing LED lighting across our premises, we
are pleased to have beaten that target.
One of the ways we have been able to drive down our greenhouse
gas emissions in recent years has been the ever-increasing amount
of wine that we bottle in the UK. This is one of the most
significant ways we can positively affect our GHG emissions, and we
achieve this by shipping in tank and then using Greencroft
Bottling, itself a BRC Grade AA+ facility, to bottle the wine for
us at its state-of-the- art bottling plant just outside Durham.
This is a substantially more environmentally friendly way to import
wine for several reasons, but specifically due to the lower weight
involved, with no glass being shipped, and also because of the
reduced amount of space it takes to ship bulk liquid compared to
bottled product. In the last 12 months we used Greencroft to bottle
39.8% of our wines compared to 28% the year before, delivering a
material benefit on our GHG emissions.
We have also become a member of the Sustainable Wine Roundtable,
an industry-wide initiative that is committed to delivering best
practice across the wine industry, including a commitment to
reducing bottle weights to minimise the amount of glass used across
the sector.
In addition to our environmental impact efforts, we have also
reviewed and improved our supplier due diligence process. We have
undertaken a supplier review to ensure all partners are acting in a
sustainably responsible manner and with values that align with
ours. We are also introducing a company-wide sustainable
procurement policy.
Moving forwards our key initiatives include shifting our focus
away from offsetting and towards insetting. By generating real
change within our own value chain, we will lower our GHG emissions
and contribute to the creation of carbon reduction solutions for
the wine industry as a whole.
Our focus on insetting will go beyond carbon emissions, however,
and we will pay attention to other areas that put our environmental
future at risk. We're in the process of conducting our first
double-materiality assessment, so we can discover where our
stakeholder priorities lie, and ensure we're focusing on the
environmental issues that are most important to all of us.
Business Review
We have completed our Business Review, which has identified
several strategic initiatives that we are planning to start
implementing over Q224. We believe these will either add further
credibility to the existing Virgin Wines offering or allow growth
into an area of the market where the business is currently
under-represented.
These initiatives are aimed at enhancing our trading with a
wider range of consumers, as well as refining and refreshing the
appeal of the core business. We expect these to predominantly
benefit trading from H224 onwards. This includes a new value
proposition, Warehouse Wines, launching in late October, alongside
a premium Australian Wine Club, Five O'clock Somewhere (5OS). In
addition, the Board remains open to exploring future opportunities
for growth, including strategic partnerships or geographical
expansion.
Outlook
As previously announced, the Board expects double digit sales
growth in FY24, alongside EBITDA margin of circa 4% - 5% as
inflationary pressures, particularly on freight and glass, start to
ease. This will be supported by the elimination of the previously
reported one-off factors that negatively affected this year's
performance, alongside the development of the Group's new strategic
initiatives and a return to operational efficiency.
I am pleased to report that we have finished our Q1 period with
year-on-year revenue growth of 12%, with the ongoing loyalty of our
existing customer base particularly encouraging to see. In
addition, both new customer conversion rates and WineBank
cancellation rates continue to trend positively from our year-end
position and revenue through our core repeat sales channels are up
15% up year-on-year. Customer acquisition continues to be the most
challenging area of the business, however, we continue to see
encouraging year-on-year growth through our Commercial channel.
We remain confident in the long-term prospects of the business
given the strength of the customer proposition and proven business
model. We look forward to pushing further forward in both our
financial and operational progress in the months and years
ahead.
JAY WRIGHT
Chief Executive Officer
Financial Review
Business summary
The financial performance for FY23 was affected by several
factors impacting both revenue and cost, the most significant being
the disruption caused by the launch of the new Warehouse Management
System in late Q1 FY23. This drove an additional GBP1m in
operational costs which are categorised as exceptional in FY23 due
their scale and one-off nature. The negative impact on revenue and
net contribution is not included in exceptional costs. With the WMS
now performing as expected the Group is in a position to start to
deliver the planned benefits in efficiency and customer
service.
High inflation driven by food and energy costs, hikes in
interest rates particularly in 2023 calendar year and the unwinding
of any remaining Covid impact resulted in much tougher underlying
market conditions in FY23. Despite these headwinds many of the core
fundamentals of the Virgin Wines model were unchanged. The
disciplined approach to new customer acquisition delivering new
recruits at a marketing cost of only GBP11.99 per recruit (FY22:
GBP13.22), with 70% of the new recruits joining via the partnership
model, up from 67% in FY22. The conversion of new recruits into
active customers recovered strongly in H2, finishing the year at
46.8% (FY22: 48.6%). Despite a drop in order frequency WineBank
customers continue to be the main source of repeat revenue. The
scheme membership increased again in the year to 133k (FY22: 130k)
with membership cancellation from the active base edging up only
marginally from 16.7% to 17.3% and WineBank deposits grew to
GBP8.0m from GBP7.4m in FY22 which should reflect pent up demand
and future Group revenue.
The Group remains debt free and in a strong position to benefit
from improvements in consumer confidence.
Loss/profit before tax
Loss before tax for FY23 was GBP0.6m compared to a profit of
GBP4.4m in FY22. After adjusting for exceptional costs and share
based payments profit before tax was GBP0.6m, (FY22: GBP5.2m). The
Group does not propose to pay a dividend.
Adjusted EBITDA
Given the trading challenges in FY23, adjusted EBITDA was lower
at GBP1.8m, down from GBP6.2m in FY22. As a percentage of revenue,
the adjusted EBITDA margin was 3.0% compared to 9.0% in FY22. The
adjusted EBITDA for FY23 is calculated after adding back
exceptional costs of GBP1.0m (FY22: nil), share based payments of
GBP0.3m (FY22: GBP0.1m) and depreciation/amortisation to the
reported operating loss of GBP0.7m. Adjusted EBITDA is not a
statutory reporting measure but is included as an additional
performance measure consistent with previous reporting.
Exceptional costs
The reported results include GBP1m of exceptional items (FY22:
nil). The exceptional items relate solely to additional costs
incurred as a result of operational issues following the
implementation of a new Warehouse Management System. Impacts
related to the loss of revenue due to early Christmas cut off have
not been included in exceptional costs. The Board is satisfied that
the additional costs incurred are non recurring in scale and
nature. Significant progress has been made throughout the second
half of FY23 to improve the system stability and performance. Along
with enhanced staff training and experience the system is now
operating as planned.
Revenue
Reported revenue for the 52-week period to 30 June 2023 fell by
GBP10.2m (14.7%) to GBP59m (FY22: GBP69.2m). The revenue was
impacted by the exceptional events referred to in the business
summary and by the challenging trading environment throughout FY23.
Commercial revenues were unchanged at GBP6.9m. The proportion of
repeat revenue from subscription customers, WineBank and Wine Plan
increased to 87% from 82% in FY22, with the revenue contribution
from non subscription (PAYG) customers continuing to fall.
Gross margin
Reported gross margin for the 52-week period to 30 June 2023
declined by 186 basis points to 29.6%, (FY22: 31.4%). This
reflected a full year of lower margins on recruitment activity that
started back in H2 of FY22 and the impact of inflationary pressure
on dry good input costs in what remains a highly competitive
pricing landscape. Gross profit in these Financial Statements is
stated as revenue less wine cost, packaging, and carrier delivery
costs. UK Duty, inbound packaging, and freight costs are included
in the wine cost. Direct to consumer (DTC) product margins on
repeat sales held up well despite the cost pressures, achieving
40.5% compared to 41.0% in FY22. Product margins exclude packaging
and delivery costs.
Operating expenses
Operating expenses excluding exceptional costs increased by
GBP0.2m to GBP15.7m, (FY22: GBP15.5m). Selling and distribution
expenses fell due to lower volumes in FY23. However, administration
expenses increased, reflecting inflationary cost pressures and
ongoing investment in future growth opportunities. Energy and waste
levy costs increased sharply, and the business continued to invest
in IT development and staff retention.
Finance income and expense
Finance income relates to interest received on company cash
deposits and increased by GBP0.13m to GBP0.16m, (FY22: GBP0.03) as
interest rates increased during FY23. Finance expenses increased
slightly to GBP0.17m (FY22: GBP0.13m) due to the increased cost of
borrowing on right of use assets. The charge in financial
statements for both years relates solely to the interest charge on
right of use assets and the adoption of IFRS 16 for leases.
Further details are available in notes 11 and 12 of the
Financial Statements.
Amortisation and depreciation
Amortisation and depreciation increased to GBP1.2m in FY23 from
GBP0.9m in FY22 as the Group continued to invest in IT developments
and the new WMS which went live in the year.
Impairment review
At the reporting date the Directors tested goodwill for
impairment in accordance with the requirements of IAS 36 Impairment
of Assets. The total carrying amount of the Group's single
cash-generating unit was compared to its estimated value in use. No
impairment was identified. For further details see note 15.
Taxation
The tax credit in the Financial Statements for FY23 is GBP0.14m,
tax charge (FY22: GBP0.7m). The tax credit relates to the loss for
the period. This resulted in an increase in the deferred tax asset
and has no cash impact. The deferred taxes have been measured using
the tax rate of 25% (FY22: 25%).
Earnings Per Share (EPS)
The Group reported loss for the year equates to a loss per share
of 1.1p. This compares to earnings per share of 7.8p in FY22. The
diluted loss per share is 1.1p, FY22 diluted earnings per share
7.8p. The weighted average number of shares in issue for FY23 was
55.8m, FY22 55.8m (see note 14 of the Financial Statements for more
details).
Cash and working capital
The Group end of year cash balance for FY23 was GBP13.5m (FY22:
GBP15.1m). These balances include cash deposits from WineBank
customers of FY23 GBP8.0m, (FY22: GBP7.4m). The WineBank customer
deposits are not used to fund working capital and are kept in a
ring- fenced client account separate from Group cash. Net of
WineBank customer deposits and the deferred payments the net cash
position was year end GBP5.5m, (FY22: GBP7.7m). The Group funded
investment in capital projects of GBP0.9m in FY23, (FY22: GBP1.0m).
As signposted in our Interim Report, as supply chain risks reduced,
in H2 the Group commenced a programme to reduce inventory levels.
As a result inventories fell from a peak of GBP11.0m by the year
end in December 2022 by GBP2.6m to GBP8.4m, (FY22: GBP8.7m). Trade
and other payables reduced in FY23 to GBP14.2m from GBP15.4m in
FY22 reflecting the slowdown in purchasing activity in the latter
part of H2 FY23.
The Group has cash reserves, no borrowing, ring-fenced client
funds and can continue to deploy working capital to achieve future
growth plans and manage any downside financial risk.
GRAEME WEIR
Chief Financial Officer
Consolidated Statement of Comprehensive Income
for the 52-week period ended 30 June 2023
Note 30 June 1 July
2023 2022
GBP'000 GBP'000
Revenue 5 58,998 69,152
Cost of sales (41,560) (47,429)
---------------------------------------------- ---- -------- --------
Gross profit 17,438 21,723
Administrative expenses before exceptional
items (5,981) (4,356)
Administrative expenses before exceptional
items (5,981) (4,356)
Exceptional items 6 (990) -
Administrative expenses (6,971) (4,356)
Selling and distribution costs (11,189) (12,166)
============================================== ==== ======== ========
Operating (loss)/profit 7 (722) 5,201
Finance income 11 159 31
Finance costs 12 (174) (134)
============================================== ==== ======== ========
(Loss)/profit before taxation (737) 5,098
Taxation credit/(expense) 13 143 (747)
============================================== ==== ======== ========
(Loss)/profit for the financial period and
total comprehensive (expense)/income (594) 4,351
============================================== ==== ======== ========
Basic and diluted (loss)/earnings per share
(pence) 14 (1.1) 7.8
============================================== ==== ======== ========
The results for the periods shown above are derived entirely
from continuing activities.
The Group has no other comprehensive income or expense other
than the (loss)/profit above and therefore no separate statement of
other comprehensive income has been presented.
Consolidated Statement of Financial Position
as at 30 June 2023
30 June 1 July
2023 2022
Company number 13169238 Note GBP'000 GBP'000
================================= ====== ========== ==========
ASSETS
Non-current assets
Intangible assets 15 11,350 11,113
Property, plant and equipment 16 402 400
Right of use assets 17 2,870 3,262
Deferred tax asset 18 496 428
================================= ====== ========== ==========
Total non-current assets 15,118 15,203
========================================= ========== ==========
Current assets
Inventories 19 8,367 8,653
Trade and other receivables 20 2,615 2,477
Derivative financial instruments 24 - 16
Cash and cash equivalents 21 13,514 15,070
================================= ====== ========== ==========
Total current assets 24,496 26,216
========================================= ========== ==========
Total assets 39,614 41,419
========================================= ========== ==========
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables 22 (14,206) (15,451)
Derivative financial instruments 24 (12) -
Lease liability 17 (521) (456)
================================= ====== ========== ==========
Total current liabilities (14,739) (15,907)
========================================= ========== ==========
Non-current liabilities
Provisions 23 (321) (290)
Lease liability 17 (2,732) (3,149)
================================= ====== ========== ==========
Total non-current liabilities (3,053) (3,439)
========================================= ========== ==========
Total liabilities (17,792) (19,346)
========================================= ========== ==========
Net assets 21,822 22,073
========================================= ========== ==========
Equity
Share capital 25 558 558
Share premium 11,989 11,989
Own share reserve - (36)
Merger reserve 65 65
Share based payment reserve 402 95
Retained earnings 8,808 9,402
================================= ====== ========== ==========
Total equity 21,822 22,073
========================================= ========== ==========
The Financial Statements on pages 77 to 104 were approved by the
Board of Directors and authorised for issue on 25 October 2023.
They were signed on its behalf by:
Jay Wright
Chief Executive Officer
The notes on pages 81 to 104 of the Annual Report 2023 form part
of these Financial Statements.
Consolidated Statement of Changes in Equity
for the 52-week period ended 30 June 2023
Share Share Own share Merger Share Retained Total
capital premium reserve reserve based earnings Shareholders'
payment funds
reserve
================================
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================================ ======== ======== ========= ======== ========== ========= ==============
3 July 2021 558 11,989 (36) 65 - 5,051 17,627
Profit for the financial period - - - - - 4,351 4,351
================================ ======== ======== ========= ======== ========== ========= ==============
Total comprehensive income
for the period - - - - - 4,351 4,351
================================ ======== ======== ========= ======== ========== ========= ==============
Share-based payments (note
10) - - - - 95 - 95
================================ ======== ======== ========= ======== ========== ========= ==============
Total transactions with owners
recognised in equity - - - - 95 - 95
================================ ======== ======== ========= ======== ========== ========= ==============
1 July 2022 558 11,989 (36) 65 95 9,402 22,073
2 July 2022 558 11,989 (36) 65 95 9,402 22,073
Loss for the financial period - - - - - (594) (594)
================================ ======== ======== ========= ============ ====== ========= ==============
Total comprehensive income
for the period - - - - - (594) (594)
================================ ======== ======== ========= ============ ====== ========= ==============
Share-based payments (note
10) - - - - 307 - 307
================================ ======== ======== ========= ============ ====== ========= ==============
Own shares distributed - - 36 - - - 36
================================ ======== ======== ========= ============ ====== ========= ==============
Total transactions with owners
recognised in equity - - 36 - 307 - 343
================================ ======== ======== ========= ============ ====== ========= ==============
30 June 2023 558 11,989 - 65 402 8,808 21,822
================================ ======== ======== ========= ============ ====== ========= ==============
The notes on pages 81 to 104 of the Annual Report 2023 form part
of these Financial Statements.
Consolidated Statement of Cash Flows
for the 52-week period ended 30 June 2023
30 June 1 July
2023 2022
GBP'000 GBP'000
========================================================= ======== ========
Cash flows from operating activities Note
(Loss)/profit before taxation (737) 5,098
Adjustments for:
Depreciation and amortisation 7 1,195 963
Share-based payment expense 10 307 95
Own shares distributed 25 36 -
Net finance costs 11, 12 15 103
Increase in trade and other receivables (122) (941)
Decrease/(increase) in inventories 286 (1,414)
Decrease in trade and other payables (1,126) (2,928)
================================================ ======= ======== ========
Net cash (used in)/generated from operating activities (146) 976
========================================================= ======== ========
Cash flows from investing activities
Interest received 11 159 31
Disposal of intangible fixed assets 15 35 -
Purchase of intangible and tangible
fixed assets 15, 16 (968) (969)
================================================ ======= ======== ========
Net cash used in investing activities (774) (938)
========================================================= ======== ========
Cash flows from financing activities
Payment of lease liabilities 17 (462) (494)
Payment of lease interest 12 (174) (134)
================================================ ======= ======== ========
Net cash used in financing activities (636) (628)
========================================================= ======== ========
Net (decrease)/increase in cash and cash equivalents (1,556) (590)
========================================================= ======== ========
Cash and cash equivalents at beginning of period 15,070 15,660
========================================================= ======== ========
Cash and cash equivalents at end of period 13,514 15,070
========================================================= ======== ========
Cash and cash equivalents comprise:
Cash at bank and in hand 13,514 15,070
========================================================= ======== ========
The notes on pages 81 to 104 of the Annual Report 2023 form part
of these Financial Statements.
Notes Forming Part of the Financial Statements
for the 52-week period ended 30 June 2023
1. General information
The principal activity of the Group is import and distribution
of wine.
The Company was incorporated on 1 February 2021 in the United
Kingdom and is a public company limited by shares registered in
England and Wales. The registered office is 37-41 Roman Way
Industrial Estate, Longridge Road, Ribbleton, Preston, Lancashire,
United Kingdom, PR2 5BD. The registered company number is
13169238.
2. Accounting policies
This note provides a list of the significant accounting policies
adopted in the preparation of these consolidated Financial
Statements to the extent that they have not already been disclosed
in the other notes above. These policies have been consistently
applied to all the years presented, unless otherwise stated. The
Financial Statements are for the Group consisting of Virgin Wines
UK plc and its subsidiaries.
Basis of preparation
On 31 December 2020, IFRS as adopted by the European Union at
that date were brought into UK law and became UK-adopted
International Accounting Standards, with future changes being
subject to endorsement by the UK endorsement Board. The Group
transitioned to the UK- adopted International Accounting Standards
in the Group Financial Statements on 1 July 2021. This change
constitutes a change in accounting framework. However, there is no
impact on recognition, measurement or disclosure in the periods
reported as a result of the change in framework. The Group
Financial Statements have been prepared in accordance with
UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies
reporting under these standards.
The financial information set out in this announcement does not
constitute the Group's financial statements for the period ended 30
June 2023 as defined by Section 434 of the Companies Act. This
financial information should be read in conjunction with the
financial statements of the Group for the period ended 1 July 2022
(the "Prior year financial statements"), which are available from
the Registrar of Companies. The Prior year financial statements
were prepared in accordance with UK adopted international
accounting standards and the applicable legal requirements of the
Companies Act 2006. The auditors, PricewaterhouseCoopers LLP,
reported on those accounts and their report was unqualified, did
not contain an emphasis of matter paragraph and did not contain any
statement under Section 498 (2) or (3) of the Companies Act
2006.
Accounting reference date
UK company law permits a company to draw up Financial Statements
to a date seven days either side of its accounting reference date.
For operational reasons the Company has adopted an accounting
period of 52 weeks, and as a result of this, the exact year-end was
30 June 2023 (2022: 1 July 2022).
Historical cost convention
The Financial Statements have been prepared on a historical cost
basis except for certain financial assets and liabilities
(including derivative instruments), measured at fair value through
the income statement.
New standards, interpretations and amendments issued not yet
effective
There are a number of standards, amendments to standards, and
interpretations which have been issued that are effective in future
accounting periods that the group has decided not to adopt
early.
The following standards were in issue but have not come into
effect:
Amendments to
-- IFRS 17 and IFRS 4, 'Insurance contracts', deferral of IFRS
9, as amended in June 2020 - effective for the year ending 30 June
2024
-- IAS 1, Presentation of Financial Statements' on
classification of liabilities - effective for the year ending 30
June 2024
-- IAS 1, Practice statement 2 and IAS 8 (narrow scope) -
effective for the year ending 30 June 2024
-- IAS 12- deferred tax related to assets and liabilities
arising from a single transaction - effective for the year ending
30 June 2024
-- IFRS 17, 'Insurance contracts' - effective for the year ending 30 June 2024
The Directors anticipate that the adoption of planned standards
and interpretations in future periods will not have a material
impact on the Financial Statements of the Group.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Strategic Report and the Directors' Report,
which also describes the financial position of the Group. The
Group's financial risk management objectives and its exposure to
credit risk and liquidity risk are set out in note 24.
During the period the Group met its day-to-day working capital
requirements through its trading activities. The Group's forecasts
and projections, taking account of a severe but plausible change in
trading performance, show that the Group should be able to operate
using cash generated from operations, and that no additional
borrowing facilities will be required.
Having assessed the principal risks, the Directors considered it
appropriate to adopt the going concern basis of accounting in
preparing its consolidated Financial Statements.
Basis of consolidation
The Financial Statements consolidate the financial information
of the Group and companies controlled by the Group (its
subsidiaries) at each reporting date.
Control is achieved where the Company has the power to govern
the financial and operating policies of an investee entity, has the
rights to variable returns from its involvement with the investee
and has the ability to use its power to affect its returns. The
results of subsidiaries acquired or sold are included in the
financial information from the effective date of acquisition or up
to the effective date of disposal, as appropriate. Where necessary,
adjustments are made to the results of acquired subsidiaries to
bring their accounting policies into line with those used by the
Group.
All intra-Group transactions, balances, income and expenses are
eliminated on consolidation.
The Financial Statements of all Group companies are adjusted,
where necessary, to ensure the use of consistent accounting
policies.
Employee Benefit Trust
The assets and liabilities of the Employee Benefit Trust (EBT)
have been included in the consolidated financial statements. Any
assets held by the EBT cease to be recognised on the Consolidated
Statement of Financial Position when the assets vest
unconditionally in identified beneficiaries.
The costs of purchasing own shares held by the EBT are shown as
a deduction against equity. The proceeds from the sale of own
shares held increase equity. Neither the purchase nor sale of own
shares leads to a gain or loss being recognised in the Consolidated
Statement of Comprehensive Income.
Revenue recognition
Revenue from contracts with customers contains one performance
obligation, unless it is a WineBank sale, in which case there are
two performance obligations and this is described separately
further below. The single performance obligation is the supply of
goods. The transaction price is fully allocated to the single
performance obligation for non-WineBank sales. The Group recognises
revenue at a point in time when the single performance obligation
is satisfied. The performance obligation is satisfied when control
is passed to the customer. Control is deemed to pass to the
customer upon delivery of the goods.
Revenue is recognised at the transaction price of the sale of
goods, net of discounts and excluding value added tax, in the
ordinary course of business.
The Group uses its accumulated historical experience to estimate
the level of returns on a portfolio level using the expected value
method. Credit terms are only provided to corporate customers, and
the average days are 60.
WineBank
Amounts deposited by customers for WineBank are initially
reported as a liability in the Statement of Financial Position. On
registering as a WineBank customer, subscription customers agree to
lodge a regular monthly sum into their WineBank account. These sums
accumulate in the customer account and build a balance to use
against their next purchase from the Group.
Amounts deposited by WineBank customers are reported within the
Group cash balance but are held separate to Group funds. WineBank
deposits are not used to fund the working capital of the business.
WineBank customers can cancel their WineBank account at any time
and may request to receive their money back immediately with no
penalty whatsoever.
Using funds deposited through the WineBank scheme entitles
account holders to benefit from an extra discount on the Group's
website prices. This discount represents a 'material right' under
IFRS 15 Revenue from Contracts with Customers when customers spend
their WineBank cash balance but not the associated interest. The
material right performance obligation is calculated on a portfolio
basis taking into account inactive customers and expected future
cash receipts which reduce the portfolio value of the material
right. The material right provision is included within contract
liabilities and deferred until the customer uses the discount on a
future order.
Orders placed through the WineBank scheme also contain the same
performance obligation as for other sales, as described above. The
transaction price allocated to this performance obligation is the
remaining amount after allocating the element to the material
right, and is recognised upon delivery to the customer.
Finance costs
Finance costs on financial liabilities are recognised in the
profit and loss account over the term of such instruments at a
constant rate on the carrying amount. Issue costs relating to
financial instruments are recognised in the income statement over
the term of the debt at a constant rate over the instrument's
life.
Interest on leases is calculated based on the interest rate
implicit in the lease. If that rate cannot be readily determined,
which is generally the case for leases in the Group, the lessee's
incremental borrowing rate is used (see lease accounting
policy).
Taxation
Tax on the profit or loss for the year comprises current and
deferred tax.
Tax is recognised in the Consolidated Statement of Comprehensive
Income except to the extent that it relates to items recognised
directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates and laws enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition
of goodwill, the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit other than in a
business combination, and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in
the foreseeable future.
The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates and laws enacted or
substantively enacted at the reporting date. A deferred tax asset
is recognised only to the extent that it is probable that future
taxable profits will be available against which the asset can be
utilised.
The carrying amounts of deferred tax assets are reviewed at each
reporting date.
Foreign currencies
Functional and presentational currency
Items included in the Financial Statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates (the functional
currency). The functional currency of the Group is Pounds Sterling.
The Financial Statements have been rounded to thousands.
Transactions and balances
Transactions denominated in foreign currencies are translated
into the functional currency at the exchange rates prevailing on
the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated at quoted rates of
exchange ruling at the balance sheet date. Exchange profits and
losses arising from current trading are included in operating
profit.
Goodwill
Goodwill arising on the acquisition of subsidiary undertakings
and businesses, representing any excess of the fair value of the
consideration given over the fair value of the identifiable assets
and liabilities acquired is capitalised.
The goodwill in the consolidated financial statements represents
the goodwill recognised in the predecessor holding company
Financial Statements at the original carrying value.
Goodwill is not amortised but is reviewed for impairment at
least annually. For the purpose of impairment testing, goodwill is
allocated to each of the Group's cash-generating units (or groups
of cash-generating units) expected to benefit from the synergies of
the combination. Cash- generating units to which goodwill has been
allocated are tested for impairment annually, or more frequently
when there is an indication that the unit may be impaired. If the
recoverable amount of the cash-generating unit is less than the
carrying amount of the unit, the impairment loss is allocated first
to reduce the carrying amount of any goodwill allocated to the unit
and then to the other assets of the unit pro rata on the basis of
the carrying amount of each asset in the unit. An impairment loss
recognised for goodwill is not reversed in a subsequent period.
Intangible assets
Computer software is stated at cost less accumulated
amortisation and impairment losses. Software is amortised over its
estimate useful life, of between five and eight years, on a
straight line basis.
Where factors, such as technological advancement or changes in
market prices, indicate that residual value or useful life have
changed, the residual value, useful life or amortisation rate are
amended prospectively to reflect the new circumstances.
Property, plant and equipment
Property, plant and equipment are stated at historic purchase
cost less accumulated depreciation and impairment losses. Cost
includes the original purchase price of the asset and the costs
attributable to bringing the asset to its working condition for its
intended use.
Depreciation is calculated so as to write off the cost of an
asset, less its estimated residual value, over the useful economic
life of that asset as follows:
-- Leasehold Property - over the life of the lease
-- Fixtures and fittings - 33.33% per annum
-- Computer hardware and warehouse equipment - 33.33% per annum
Assets classified as 'work in progress' are not depreciated as
such assets are not currently available for (or in) use. Once in
use, assets will be re- categorised and depreciated at the rate
appropriate to their classification.
The gain or loss arising on the disposal or retirement of an
asset is determined as the difference between the net sale proceeds
and the carrying amount of the asset and is recognised in the
Statement of Comprehensive Income.
Impairment of non-financial assets (excluding goodwill)
At each reporting date, the Group reviews the carrying amounts
of its tangible and intangible assets to determine whether there is
any indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the asset
is estimated to determine the extent of the impairment loss (if
any). Where the asset does not generate cash flows that are
independent from other assets, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
The recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in
comprehensive income.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (or cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognised immediately in profit or loss
to the extent that it eliminates the impairment loss which has been
recognised for the asset in prior years.
Leases
A contract, or a portion of a contract, is accounted as a lease
when it conveys the right to use an asset for a period of time in
exchange for consideration. Leases are those contracts that satisfy
the following criteria:
-- There is an identified asset;
-- The Group obtains substantially all the economic benefits from use of the asset; and
-- The Group has the right to direct use of the asset.
The Group considers whether the supplier has substantive
substitution rights. If the supplier does have those rights, the
contract is not identified as giving rise to a lease. In
determining whether the Group obtains substantially all the
economic benefits from use of the asset, the Group considers only
the economic benefits that arise from use of the asset. In
determining whether the Group has the right to direct use of the
asset, the Group considers whether it directs how and for what
purpose the asset is used throughout the period of use. If the
contract or portion of a contract does not satisfy these criteria,
the Group applies other applicable IFRS rather than IFRS 16.
The group leases various offices, warehouses and equipment.
Rental contracts are typically made for fixed periods of five to
ten years, but may have extension options as detailed in note
16.
Contracts may contain both lease and non-lease components. The
group allocates the consideration in the contract to the lease and
non-lease components based on their relative stand-alone
prices.
Lease terms are negotiated on an individual basis and contain a
wide range of different terms and conditions. The lease agreements
do not impose any covenants other than the security interests in
the leased assets that are held by the lessor. Leased assets may
not be used as security for borrowing purposes.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-- fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
-- variable lease payment that are based on an index or a rate,
initially measured using the index or rate as at the commencement
date;
-- amounts expected to be payable by the group under residual value guarantees;
-- the exercise price of a purchase option if the group is
reasonably certain to exercise that option; and
-- payments of penalties for terminating the lease, if the lease
term reflects the group exercising that option.
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily determined,
which is generally the case for leases in the group, the lessee's
incremental borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the funds necessary
to obtain an asset of similar value to the right-of-use asset in a
similar economic environment with similar terms, security and
conditions.
To determine the incremental borrowing rate, the Group:
-- where possible, uses recent third-party financing received by
the individual lessee as a starting point, adjusted to reflect
changes in financing conditions since third party financing was
received;
-- uses a build-up approach that starts with a risk-free
interest rate adjusted for credit risk for leases held by Virgin
Wines UK plc, which does not have recent third-party financing;
and
-- makes adjustments specific to the lease, for example term and security.
If a readily observable amortising loan rate is available to the
individual lessee (through recent financing or market data) which
has a similar payment profile to the lease, then the group entities
use that rate as a starting point to determine the incremental
borrowing rate.
The Group is exposed to potential future increases in variable
lease payments based on an index or rate, which are not included in
the lease liability until they take effect. When adjustments to
lease payments based on an index or rate take effect, the lease
liability is reassessed and adjusted against the right-of-use
asset.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to profit or loss over the lease period
so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
The Group has elected not to recognise right of use assets and
lease liabilities for leases of low-value assets and short-term
leases. The Group recognises the lease payments associated with
these leases as an expense on a straight-line basis over the lease
term.
Inventory
Inventories are valued at the lower of cost and net realisable
value on a FIFO basis. Cost comprises purchase price plus
associated freight and duty costs for imported goods. Inventories
are regularly assessed for evidence of impairment. Where such
evidence is identified, a provision is recognised to reduce the
value of inventories to its selling price after incurring any
future costs to sell.
Cash and cash equivalents
Cash and cash equivalents include cash on hand and with banks,
as well as any deposits made with financial institutions with a
maturity period of less than three months from the date of deposit.
Cash and cash equivalents also includes amounts received from
WineBank customers which are not restricted and as such are
presented as cash and cash equivalents.
Financial instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when
the Group becomes a party to the contractual provisions of the
financial instrument and are measured initially at fair value
adjusted by transactions costs, except for those carried at fair
value through profit or loss which are measured initially at fair
value. Subsequent measurement of financial assets and financial
liabilities are described below.
Financial assets are derecognised when the contractual rights to
the cash flows from the financial asset expire, or when the
financial asset and all substantial risks and rewards are
transferred. A financial liability is derecognised when it is
extinguished, discharged, cancelled or expires.
Classification and subsequent measurement of financial
assets
For the purpose of subsequent measurement, financial assets are
classified into the following categories upon initial
recognition:
-- financial assets at amortised cost; and
-- financial assets/liabilities held at fair value through profit or loss (FVTPL).
Financial assets at amortised cost
Financial assets at amortised cost are non-derivative financial
assets with fixed or determinable payments that are not quoted in
an active market. After initial recognition, these are measured at
amortised cost using the effective interest method, less provision
for impairment. Discounting is omitted where the effect of
discounting is immaterial. The Group's cash and cash equivalents,
trade and most other receivables fall into this category of
financial instruments.
The Group recognises a loss allowance for expected credit losses
(ECL) on financial assets that are measured at amortised cost. The
amount of expected credit losses is updated at each reporting date
to reflect changes in credit risk since initial recognition of the
respective financial instrument.
The Group always recognises lifetime ECL on trade receivables.
The expected credit losses on these financial assets are estimated
using a provision matrix based on the Group's historical credit
loss experience, adjusted for factors that are specific to the
debtors, general economic conditions and an assessment of both the
current as well as the forecast direction of conditions at the
reporting date, including time value of money where
appropriate.
All income and expenses relating to financial assets that are
recognised in the Consolidated Statement of Comprehensive Income
are presented within finance costs or finance income, except for
impairment of trade receivables which is presented within other
administrative expenses.
Classification and subsequent measurement of financial
liabilities
The Group's financial liabilities include trade and other
payables, accruals and contract liabilities, loans and borrowings
and derivative financial instruments.
Financial liabilities are measured at amortised cost using the
effective interest method, except for financial liabilities held
for trading or designated at FVTPL, that are carried at fair value
with gains or losses recognised in the Consolidated Statement of
Comprehensive Income.
All interest-related charges and, if applicable, changes in an
instrument's fair value that are reported in Consolidated Statement
of Comprehensive Income are included within finance costs or
finance income.
Derivative financial liabilities
Derivatives are initially recognised at fair value at the date a
derivative is entered into and are subsequently remeasured to their
fair value at each reporting date. A derivative with a positive
fair value is recognised as a financial asset whereas a derivative
with a negative fair value is recognised as a financial liability.
The resulting gain or loss is recognised in the Consolidated
Statement of Comprehensive Income immediately. A derivative is
presented as a non-current asset or non-current liability if the
Group has an unconditional right to defer payment beyond 12 months.
Otherwise derivatives are presented as current assets or
liabilities.
Exceptional items
The Company presents certain items as "exceptional" on the face
of the Consolidated Statement of Comprehensive Income account in
arriving at operating profit. These are items which in management's
judgement need to be disclosed separately by virtue of their size,
nature and occurrence.
Employee benefits
The Group provides a range of benefits to employees, including
annual bonus arrangements, paid holiday arrangements and defined
contribution pension plans.
(i) Short-term benefits
Short-term benefits, including holiday pay and other similar
non-monetary benefits, are recognised as an expense in the period
in which the service is received.
(ii) Defined contribution pension plans
The Group operates a number of country-specific defined
contribution plans for its employees. A defined contribution plan
is a pension plan under which the Group pays fixed contributions
into a separate entity. Once the contributions have been paid the
Group has no further payment obligations. The contributions are
recognised as an expense when they are due. Amounts not paid are
shown in accruals in the balance sheet. The assets of the plan are
held separately from the Group in independently administered
funds.
(iii) Share-based payments
A transaction is accounted for as a share-based payment where
the Group receives services for employees, Directors or third
parties and pays for these in shares or similar equity
instruments.
The Group makes equity-settled share-based payments to certain
employees and Directors. Equity-settled share-based schemes are
measured at fair value (excluding the effect of non-market-based
vesting conditions) at the date of grant, measured by use of an
appropriate valuation model. The expected life used in the model
has been adjusted, based on management's best estimate, for the
effects of non-transferability, exercise restrictions and
behavioural considerations.
The fair value determined at the grant date of the
equity-settled share-based payments is expensed on a straight-line
basis over the period services are received, based on the Group's
estimate of shares that will eventually vest. Share options are
forfeited when an employee ceases to be employed by the Group
unless determined to be a 'Good Leaver'. A 'Good Leaver' is a
participant who ceases employment by reason of death, injury,
ill-health or disability.
The Group has discretion to recover the employer's National
Insurance liability from the employee. For the current active
schemes the company has chosen to do so.
Merger reserve
The merger reserve was created during FY21 as a result of the
share for share exchange under which Virgin Wines UK plc became the
parent undertaking prior to the IPO. Under merger accounting
principles, the assets and liabilities of the subsidiaries were
consolidated at book value in the Group Financial Statements and
the consolidated reserves of the Group were adjusted to reflect the
statutory share capital, share premium and other reserves of the
Company as if it had always existed, with the difference presented
as the merger reserve.
Retained earnings
Retained earnings includes all current and prior period retained
profits and losses, including foreign currency translation
differences arising from the translation of Financial Statements of
the Group's foreign entities.
All transactions with owners of the parent are recorded
separately within equity.
Dividends are recognised when approved by the Group's
shareholders or, in the case of interim dividends, when the
dividend has been paid.
Section 479c Companies Act 2006 Audit exemption
The subsidiaries Virgin Wine Online Limited (registered number
03800762) and Virgin Wines Holding Company Limited (registered
number 07970057) are exempt from the requirements of the Act
relating to the audit of accounts under section 479A of the
Companies Act 2006.
3. Judgements in applying accounting policies and key sources of estimation uncertainty
In preparing these Financial Statements, the Directors have made
the following key judgements and estimates:
Goodwill impairment assessment (note 15)
At each reporting date, the Group tests goodwill for impairment
in accordance with the requirements of IAS 36. The recoverable
amount of the Group's single cash-generating unit (CGU) is
determined by calculating its value in use. The value-in-use
calculation requires the Group to estimate the future cash flows
expected to arise from the single CGU and to use a suitable
discount rate in order to calculate their present value. The value
in use is then compared to the total of the relevant assets and
liabilities of the CGU. See note 15 for details of the test for
impairment and the relevant key assumptions.
Assessment of carrying values of plc company investments and
amounts due from Group undertakings
In relation to the plc company's investments in subsidiaries,
the Directors are required to assess whether there are any
indicators of impairment at each reporting date. All relevant
potential indicators are considered, including the performance of
the underlying trading subsidiary and the results of the Group's
impairment assessment performed as at the same date as described
above. The Directors exercise their judgement in determining
whether any such indicators exist. Where an indicator of impairment
is identified in relation to the company's investments or
intercompany receivable balances, a full impairment review is
performed. The Directors performed their assessment and concluded
that no impairment indicators existed at 30 June 2023 and, as such,
a full impairment review over the company's investments in
subsidiaries and intercompany receivables was not performed.
In relation to the amounts due from Group undertakings, the
Directors are required to assess their carrying amount for any
impairment using the expected credit losses ("ECL") model. As set
out in note 5 to the Company Financial Statements, the amounts owed
by Group undertakings are unsecured, interest free and repayable on
demand. Consistent with the ECL model, the Directors have assessed
the carrying amount for impairment on the assumption that repayment
of the amounts were demanded at the reporting date. The Directors,
having determined that the borrower had insufficient highly liquid
resources at the reporting date, considered the expected manner of
recovery and recovery period of these loans (the company's
'recovery scenarios'). The Directors determined that the only
non-trivial recovery scenario would be realised by way of a
dividend distribution by the Group's trading subsidiary, Virgin
Wine Online Limited. The Directors, amongst other factors,
considered the ability and intent of the subsidiary to make such a
distribution if required, and ultimately determined that any
reduction in the carrying amount of these receivables would be
inconsequential to the company's financial statements. On that
basis, no ECL provision has been recognised.
Sources of estimation uncertainty
The Group has considered other estimates and assumptions that,
whilst not deemed to represent a significant risk of material
adjustment, do represent important estimates at 30 June 2023 and
are disclosed accordingly. The valuation of the material right
provision is disclosed as an other estimate in the current
year.
4. Segmental reporting
IFRS 8 requires operating segments to be determined based on the
Group's internal reporting to the Chief Operating Decision Maker
(CODM). The CODM has been determined to be the Board as it is
primarily responsible for the allocation of resources to segments
and the assessment of performance of the segments.
The level of aggregation of results reported to and assessed by
the CODM supports that there are not operating segments smaller
than the business as a whole, there is only one operating segment,
which comprises all of the operations of the Group. Performance of
this operating segment is assessed on revenue and Adjusted EBITDA
(being operating profit excluding any adjusted items). These are
the financial performance measures that are reported to the CODM,
along with other operational performance measures, and are
considered to be useful measures of the underlying trading
performance of the segment. Adjusted items are not allocated to the
operating segment as this reflects how they are reported to the
Board.
5. Revenue
The Directors have considered the requirement of IFRS 15 with
regards to disaggregation of revenue and do not consider this to be
required as the Group has only one operating segment which is the
sale of alcohol.
There is one geographical market being the UK, all revenue
streams having similar recognition policies and whilst the Group
provides services, Management do not believe such analysis would
provide meaningful information for users of the Financial
Statements.
There were no major customers that individually accounted for
more than 10% of total revenues (2022: no customers).
6. Exceptional items
Exceptional items relate to additional labour costs (GBP687k),
goodwill compensation given to customers (GBP97k) and other
incremental costs (GBP206k) due to operational issues following the
implementation of the new Warehouse Management System. These costs
are deemed exceptional due to their size and non recurring nature
(2022: GBPnil).
7. Operating (loss)/profit
Operating (loss)/profit is stated after
charging/(crediting):
30 June 1 July
2023 2022
GBP'000 GBP'000
========================================================== ======== ========
Inventory charged to cost of sales 37,548 43,060
Depreciation (note 16) 232 139
Depreciation of right of use asset (note 17) 501 502
Staff costs (note 8) 8,192 7,660
Share based payments (note 10) 307 89
Movement in inventory provision (98) 38
Intangible asset amortisation (note 15) 462 322
Low value and short-term rentals excluded from right
of use asset 70 51
Auditors' remuneration:
- for the audit of the Group and parent company Financial
Statements 219 187
- non audit fees (tax compliance services) 13 11
========================================================== ======== ========
8. Staff costs
30 June 1 July
2023 2022
GBP'000 GBP'000
============================================== ======== ========
Staff costs (including directors) consist of:
Wages and salaries 6,948 6,477
Social security costs 790 707
Other pension costs 454 476
============================================== ======== ========
8,192 7,660
============================================== ======== ========
The amount recognised in the Consolidated Statement of
Comprehensive Income as an expense in relation to the Group's
defined contribution schemes is GBP454,000 (2022: GBP476,000).
The monthly average number of employees (including directors)
during the period was as follows:
30 June 1 July
2023 2023
By function Number Number
=============================== ======= =======
Sales 164 164
Management and administrative 36 36
=============================== ======= =======
200 200
=============================== ======= =======
The majority of employees are eligible to join the defined
contribution pension plan.
9. Key management personnel
30 June 1 July
2023 2022
GBP'000 GBP'000
============================= ======== ========
Short-term employee benefits 675 669
Post employment benefits 24 31
============================= ======== ========
699 700
============================= ======== ========
During the period, retirement benefits were accruing to two
directors (2022: two) in respect of defined contribution pension
schemes. Key management personnel include only the Directors and as
such no further disclosures in respect of compensation are
given.
Additional analysis can be found in the Remuneration Committee
report.
10. Share-based payments
In the 52-week period ended 30 June 2023 the Group operated an
equity-settled share-based payment plan as described below. The
charge in the period attributed to the plan was GBP307,000 (2022:
GBP89,000).
The total amount recognised in relation to share based payments
is GBP402,000 (2022: GBP95,000).
Under the Virgin Wines UK plc Long-Term Incentive Plan, the
Group gives performance share awards (PSA) and restricted share
awards (RSA) to Directors and senior staff subject to the
achievement of a pre-agreed revenue and net profit figure for the
financial year of the Group, three
financial years subsequent to the date of the award. These
shares vest after the delivery of the audited revenue and profit
figure for the relevant financial period has been announced.
Awards are granted under the plan for no consideration and carry
no dividend or voting rights. Awards are exercisable at the nominal
share value of GBP0.01.
Awards are forfeited if the employee leaves the Group before the
awards vest, except under circumstances where the employee is
considered a 'Good Leaver'.
30 June 2023 1 July 2022
================= ================ ================= =================
Share Number Share Number
price of share price of share
at options at options
Grant date Vesting Date grant grant
================= ================ ====== ========= ====== =========
PSA Share Awards
6 December 2021 1 November 2024 193p 696,393
6 December 2022 6 December 2025 70p 1,606,003 -
================= ================ ====== ========= ====== =========
1,606,003 696,393
=================================== ================= =================
RSA Share Awards
6 December 2021 1 November 2024 193p 87,058
6 December 2022 6 December 2023 70p 204,654 -
6 December 2022 6 December 2024 70p 204,654 -
6 December 2022 6 December 2025 70p 275,949 -
================= ================ ====== ========= ====== =========
685,257 87,058
=================================== ================= =================
Number of Number of
Shares Shares
30 June 1 July
2023 2022
=============================== ========= =========
Outstanding at start of period 1,204,217 433,288
Granted during the period 2,291,260 783,451
Lapsed during the period (305,451) -
Forfeitures in the period (378,381) (12,522)
=============================== ========= =========
Outstanding at end of period 2,811,645 1,204,217
=============================== ========= =========
The awards outstanding at 30 June 2023 have a weighted average
remaining contractual life of 1.9 years (2022: 2.0 years).
The fair value at grant date was determined with reference to
the share price at grant date, as there are no market-based
performance conditions and the expected dividend yield is 0%.
Therefore there was no separate option pricing model used to
determine the fair value of the awards.
11. Finance income
30 June 1 July
2023 2022
GBP'000 GBP'000
============== ======== ========
Bank interest 159 31
============== ======== ========
12. Finance costs
30 June 1 July
2023 2022
GBP'000 GBP'000
======================================= ======== ========
Interest payable for lease liabilities 174 134
======================================= ======== ========
13. Taxation
30 June 1 July
2023 2022
GBP'000 GBP'000
=============================================== ======== ========
Analysis of charge for the period
Current tax
Adjustment in respect of prior period 75 -
Charge for the year - 75
=============================================== ======== ========
Total current tax 75 75
=============================================== ======== ========
Deferred tax
Origination and reversal of timing differences 165 857
Adjustment in respect of prior period (97) (82)
Effect of changes in tax rates - (103)
=============================================== ======== ========
Total deferred tax 68 672
=============================================== ======== ========
Tax charge on profit on ordinary activities 143 747
=============================================== ======== ========
Factors that may affect future tax charges:
On 3 March 2021, the 2021 UK Budget announced an increase to the
corporation tax rate from 19% to 25% effective from April 2023.
This was substantively enacted on 24 May 2021.
Deferred taxes at the balance sheet date have therefore been
measured using the effective tax rate (25%).
The tax assessed for the period is higher (2022: lower) than the
standard rate of corporation tax in the UK applied to profit before
tax. The differences are explained below:
30 June 1 July
2023 2022
GBP'000 GBP'000
============================================================= ======== ========
(Loss)/profit before tax (737) 5,098
============================================================= ======== ========
(Loss)/profit before tax at the standard rate of corporation
tax in the UK of 25% (period ended 1 July 2022 - 19%) (184) 969
Effects of:
Expenses not deductible for tax purposes 77 -
Tax rate change - (103)
Adjustment in respect of prior period 22 (82)
Other permanent differences (58) (37)
============================================================= ======== ========
Total tax (credit)/charge for the period (143) 747
============================================================= ======== ========
For further information on deferred tax balances see note
18.
14. Earnings per share
Basic and diluted earnings per share are calculated by dividing
the earnings attributable to equity shareholders by the weighted
average number of ordinary shares in issue during the period.
At 30 June the total number of potentially dilutive shares
issued under the Virgin Wines UK plc long term incentive plan was
2,811,645
(2022: 1,204,217). Due to the contingent nature of options under
the long term incentive scheme, these share have no dilutive effect
on the loss per share.
The calculation of basic profit per share is based on the
following data:
Statutory EPS
30 June 1 July
2023 2022
====================================================== ========== ==========
Earnings (GBP'000)
(Loss)/profit after tax (594) 4,351
Dividend attributed to preference shareholders - -
------------------------------------------------------ ---------- ----------
(Loss)/earnings for the purpose of basic earnings per
share (594) 4,351
------------------------------------------------------ ---------- ----------
Number of shares
Adjusted average number of shares for the purposes
of basic earnings per share 55,837,560 55,837,560
Adjusted average number of shares for the purposes
of diluted earnings per share 55,837,560 55,945374
Basic and diluted (loss)/earnings per ordinary share
(pence) (1.1) 7.8
------------------------------------------------------ ---------- ----------
Adjusted EPS
The calculation of adjusted earnings per share is based on the
after tax adjusted operating profit after adding back certain costs
as detailed in the table below. Adjusted earnings per share figures
are given to exclude the effects of exceptional items and pre
restructuring finance costs, all net of taxation, and are
considered to show the underlying performance of the Group.
30 June 1 July
2023 2022
====================================================== ========== ==========
Earnings (GBP'000)
(Loss)/earnings for the purpose of basic earnings per
share (594) 4,351
Exceptional items 990 -
Tax effect of above (248) -
====================================================== ========== ==========
Earnings for the purpose of adjusted earnings per
share 148 4,351
====================================================== ========== ==========
Number of shares
Adjusted average number of shares for the purposes
of basic earnings per share 55,837,560 55,837,560
Adjusted average number of shares for the purposes
of diluted earnings per share 58,649,205 55,945,374
Basic earnings per ordinary share (pence) 0.3 7.8
Diluted earnings per ordinary share (pence) 0.25 7.8
====================================================== ========== ==========
15. Intangible assets
Goodwill Software Total
GBP'000 GBP'000 GBP'000
========================================== ======== ======== =======
Cost
At 3 July 2021 9,623 2,188 11,811
Additions - 593 593
========================================== ======== ======== =======
At July 2022 9,623 2,781 12,404
Additions - 734 734
Disposals - (35) (35)
------------------------------------------ ======== ======== -------
30 June 2023 9,623 3,480 13,103
========================================== ======== ======== =======
Accumulated amortisation and impairment
At 3 July 2021 - 969 969
Amortisation charge - 322 322
========================================== ======== ======== =======
At 1 July 2022 - 1,291 1,291
Amortisation charge - 462 462
========================================== ======== ======== =======
30 June 2023 - 1,753 1,753
========================================== ======== ======== =======
Net book value
30 June 2023 9,623 1,727 11,350
========================================== ======== ======== =======
1 July 2022 9,623 1,490 11,113
========================================== ======== ======== =======
Included within Software is GBP0.4m (2022: GBP0.6m) net book
value in relation to development of the Mantiki core IT platform,
which has a remaining amortisation period of two (2022: three)
years and GBP0.6m (2022: GBP0.2m) in relation to development of the
Korber Warehouse Management System, which has a remaining
amortisation period of four years (2022: five years).
Included in Software is GBP0.7m (2022: GBP0.5m) of internally
generated asset.
Amortisation is charged to administrative expenses in the
consolidated statement of comprehensive income. Software is
amortised over its estimated useful economic life.
The Group is required to test, on an annual basis, whether
goodwill has suffered any impairment. The recoverable amount is
determined based on value in use calculations. The use of this
method requires the estimation of future cash flows and the
determination of a discount rate in order to calculate the present
value of the cash flows.
The goodwill figure has been derived from the acquisition of
100% of the share capital of Virgin Wine Online Limited by Virgin
Wines Holding Company Limited in 2013 and as such there is only one
cash-generating unit.
The Group has estimated the value in use of the business as a
cash generating unit based on a discounted cashflow model which
adjusts for risks associated with the assets. The discount rate
applied is a pre-tax rate of 13.8% (2022: 11.5%)
The forecasts for the business are based over a five-year
projection period, use past experience and apply a forecast annual
growth rate. The key assumptions used in the discounting cashflow
were the sales and EBITDA figures (based on board approved plans),
the future growth rate (including long-term growth rate of 2%) and
the discount rate.
The Directors have assessed the sensitivity of the impairment
test to reasonably possible changes in the key assumptions
described above, and noted that sufficient headroom existed in all
cases.
16. Property, plant and equipment
Leasehold property Computer Fixtures Total
hardware & fittings
& warehouse
equipment
GBP'000 GBP'000 GBP'000 GBP'000
=========================== ================== ============ =========== =======
Cost
At 3 July 2021 20 631 277 928
Additions - 268 108 376
=========================== ================== ============ =========== =======
At 1 July 2022 20 899 385 1,304
Additions - 81 153 234
=========================== ================== ============ =========== =======
At 30 June 2023 20 980 538 1,538
=========================== ================== ============ =========== =======
Accumulated depreciation
At 3 July 2021 20 516 229 765
Charge for the period - 96 43 139
=========================== ================== ============ =========== =======
At 1 July 2022 20 612 272 904
Charge for the period - 138 94 232
=========================== ================== ============ =========== =======
At 30 June 2023 20 750 366 1,136
=========================== ================== ============ =========== =======
Net book value
=========================== ================== ============ =========== =======
At 30 June 2023 - 230 172 402
=========================== ================== ============ =========== =======
At 1 July 2022 - 287 113 400
=========================== ================== ============ =========== =======
Depreciation is charged to administrative expenses in the
consolidated statement of comprehensive income.
17. Right of use assets
The Group leases a number of properties across the UK, in
Norwich, Preston and Bolton.
On 14 June 2022 the Group extended the lease on its offices in
Norwich to 24 September 2032. The lease has a break clause on 24
September 2026 and on 24 September 2030.
The Group entered into a lease for a warehouse in Preston on 19
October 2016 under a ten-year lease term ending on 18 October 2026.
The Group sometimes negotiates break clauses in its property
leases. The factors considered in deciding to negotiate a break
clause include:
-- the length of the lease term and,
-- whether the location represents a new area of operations for
the group. The Preston Warehouse lease has a second break clause on
18 October 2024.
The Group entered into a lease for a bulk storage facility in
Bolton on 1 September 2020 under a ten-year lease term ending on 31
August 2030. The first break clause in is on 31 August 2026.
For all of the property leases, the periodic rent is fixed over
the lease term.
The Group also leases certain items of plant and equipment.
Leases of plant and equipment comprise fixed payments over the
lease terms. The full retrospective approach was adopted to
calculate the cost of the right-of-use asset.
Leasehold property Computer Total
hardware
& warehouse
equipment
GBP'000 GBP'000 GBP'000
Cost
At 3 July 2021 4,202 104 4,306
Additions 858 39 897
=========================== ================== ============ =======
At 1 July 2022 5,060 143 5,203
Additions - 109 109
--------------------------- ================== ============ -------
At 30 June 2023 5,060 252 5,312
=========================== ================== ============ =======
Accumulated depreciation
At 3 July 2021 1,415 24 1,439
Charge for the period 476 26 502
=========================== ================== ============ =======
At 1 July 2022 1,891 50 1,941
Charge for the period 466 35 501
=========================== ================== ============ =======
At 30 June 2023 2,357 85 2,442
=========================== ================== ============ =======
Net book value
At 30 June 2023 2,703 167 2,870
=========================== ================== ============ =======
At 1 July 2022 3,169 93 3,262
=========================== ================== ============ =======
Lease liability
Computer Total
Leasehold property hardware
& warehouse
equipment
GBP'000 GBP'000 GBP'000
================= ==================== ============ =======
At 3 July 2021 3,120 82 3,202
Additions 858 39 897
Interest expense 130 4 134
Lease payments (599) (29) (628)
================= ==================== ============ =======
At 2 July 2022 3,509 96 3,605
Additions - 109 109
Interest expense 169 5 174
Lease payments (596) (39) (635)
----------------- -------------------- ------------ -------
At 30 June 2023 3,082 171 3,253
----------------- -------------------- ------------ -------
18. Deferred tax
30 June 1 July
2023 2022
GBP'000 GBP'000
===================================== ======== ========
Brought forward 428 1,100
Utilisation through income statement 68 (672)
===================================== ======== ========
Carried forward 496 428
===================================== ======== ========
The balance comprises temporary differences attributable to:
Fixed asset Other timing Tax losses Total
differences differences
==================================
GBP'000 GBP'000 GBP'000 GBP'000
================================== ============ ============ ========== =======
Deferred tax asset at 3 July 2021 593 15 492 1,100
Recognised in the period through
income statement (175) (5) (492) (672)
================================== ============ ============ ========== =======
Deferred tax asset at 2 July 2022 418 10 - 428
Recognised in the period through
income statement (323) 10 381 68
---------------------------------- ------------ ------------ ---------- -------
Deferred tax asset at 30 June
2023 95 20 381 496
---------------------------------- ------------ ------------ ---------- -------
The Directors consider that sufficient future taxable profits
will be available and as such deferred tax assets have been
recognised in full for Virgin Wine Online Limited and Virgin Wines
UK plc.
A deferred tax asset has been recognised on losses in Virgin
Wines Holding Company Limited to the extent to which the losses can
be utilised through group relief. The deferred tax asset not
recognised in Virgin Wines Holding Company is GBP0.9m (2022:
GBP0.9m).
The deferred tax asset is expected to be utilised in more than
one year. Deferred tax is calculated based on the expected tax rate
in force when the timing differences reverse of 25% (2022:
25%).
19. Inventories
30 June 1 July
2023 2022
GBP'000 GBP'000
========================== ======== ========
Finished goods for resale 8,367 8,653
========================== ======== ========
There is no difference between the replacement cost of stocks
and carrying value (1 July 2022: GBPnil). Inventories are stated
after provision for impairment of GBP195,000 (2022:
GBP293,000).
20. Trade and other receivables
30 June 1 July
2023 2022
GBP'000 GBP'000
========================================== ======== ========
Amounts falling due within one year:
Gross carrying amount - trade receivables 821 946
Loss allowance (7) (13)
========================================== ======== ========
Net carrying amount - trade receivables 814 933
Prepayments 1,582 1,331
Other receivables 219 213
========================================== ======== ========
2,615 2,477
========================================== ======== ========
Trade receivables are considered past due once they have passed
their contracted due date. Trade receivables and contract assets
are assessed for impairment based upon the expected credit losses
model.
The Group applies the IFRS 9 Simplified Approach to measuring
expected credit losses using a lifetime expected credit loss
provision for trade receivables and contract assets. To measure
expected credit losses on a collective basis, trade receivables and
contract assets are grouped based on similar credit risk and aging.
The contract assets have similar risk characteristics to the trade
receivables for similar types of contracts.
The expected loss rates are based on the Group's historical
credit losses experienced over the three years prior to the period
end. The historical loss rates are then adjusted for current and
forward-looking information on macroeconomic factors affecting the
Group's customers.
The average credit period on sales is 30 days after the invoice
has been issued. No interest is charged on outstanding trade
receivables.
At 30 June 2023 there were two (1 July 2022: three) customers
who owed in excess of 10% of the total trade debtor balance. These
customers were operating within their agreed credit terms and the
Directors do not foresee an increased credit risk associated with
these customers. As such no provision for impairment has been
recognised on these balances.
Trade receivables and contract assets are written off where
there is no reasonable expectation of recovery. Indicators that
there is no reasonable expectation of recovery include, amongst
others, the failure of a debtor to engage in a repayment plan with
the Group, and a failure to make contractual payments for a period
of greater than 60 days past due. There are no amounts outstanding
on financial assets that were written off during the reporting
period and which are still subject to enforcement activity.
Impairment losses on trade receivables and contract assets are
presented as net impairment losses within operating profit.
Subsequent recoveries of amounts previously written off are
credited against the same line item.
Other receivables relates to uncleared sales receipts from
customers, processed in the normal course of business. The maturity
analysis of trade receivables and other debtors is shown below:
30 June 2023 1 July 2022
==================================== =========================== ===========================
Gross Provision Net Gross Provision Net
====================================
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
==================================== ======= ========= ======= ======= ========= =======
Trade receivables and other debtors
Not yet due 776 - 776 823 - 823
Overdue 45 (7) 38 123 (13) 110
==================================== ======= ========= ======= ======= ========= =======
821 (7) 814 946 (13) 933
==================================== ======= ========= ======= ======= ========= =======
Movements in the impairment allowance for trade receivables and
contract assets are as follows:
30 June 1 July
2023 2022
GBP'000 GBP'000
====================================================== ======== ========
Opening provision for impairment of trade receivables
and contract assets 13 13
Recovered provided debt 5 -
Increase during the period (10) -
Write off of provided debt (1) -
====================================================== ======== ========
Carried forward 7 13
====================================================== ======== ========
21. Cash and cash equivalents
Included in Cash and cash equivalents is a balance of GBP8.0m (1
July 2022: GBP7.4m) relating to advance payments received from
WineBank customers. The corresponding creditor to customers is
included in contract liabilities.
GBP3.1m of the cash balance is held on 95 day notice (2022:
GBP2.0m) at a preferential interest rate of 4.75% (1 July 2022:
1.45%).
22. Trade and other payables
30 June 1 July 2022
2023 Restated
GBP'000 GBP'000
============================= ======== ===========
Trade payables 2,227 2,810
Taxation and social security 1,581 2,928
Contract liabilities 8,721 8,091
Accruals and other creditors 1,677 1,622
============================= ======== ===========
14,206 15,451
============================= ======== ===========
The Directors consider the fair value of creditors to be equal
to the book value given their short-term nature. Contract
liabilities includes a GBP0.5m material rights provision related to
WineBank (FY22: GBP0.4m).
Trade and other payables at 1 July 2022 have been restated to
reclassify the WineBank material right provision of GBP0.4m from
accruals and other creditors to contract liabilities. This balance
was previously included in accruals and other creditors. However,
the Directors have concluded its nature is more in line with
contract liabilities. The overall balance on Trade and other
payables has remained unchanged.
23. Provisions
Leasehold dilapidation provision
30 June 1 July
2023 2022
GBP'000 GBP'000
============================ ======== ========
Brought forward 290 275
Charged in income statement 31 15
============================ ======== ========
Carried forward 321 290
============================ ======== ========
Leasehold dilapidations relate to the estimated cost of
returning a leasehold property to its original state at the end of
the lease as a result of general 'wear and tear'. The cost is
recognised as an expense in the Consolidated Statement of
Comprehensive Income and accrued for over the term of the lease, on
the basis that the 'wear and tear' increases over the period of the
lease. The main uncertainty relates to estimating the cost that
will be incurred at the end of the lease.
Maturity analysis for provisions
Dilapidation provisions are expected to mature at the end of the
lease term as follows:
30 June 1 July
2023 2022
GBP'000 GBP'000
============= ======== ========
October 2026 254 248
August 2030 67 42
============= ======== ========
321 290
============= ======== ========
24. Financial instruments and financial risk management
The principal financial instruments used by the Group, from
which financial instrument risk arises, are as follows:
-- trade and other receivables;
-- cash and cash equivalents;
-- trade and other payables; and
-- lease liabilities.
The existence of these financial instruments exposes the Group
to the following financial risks:
-- credit risk;
-- liquidity risk;
-- foreign currency risk; and
-- capital management.
The Group's financial instruments may be analysed as
follows:
30 June 1 July 2022
2023 Restated
GBP'000 GBP'000
============================================================== ======== ===========
Trade and other receivables 1,033 1,146
Cash and cash equivalents 13,514 15,070
============================================================== ======== ===========
Financial assets measured at amortised cost 14,547 16,216
Derivative financial assets measured at fair value
through profit or loss - 16
============================================================== ======== ===========
Financial assets measured at fair value through comprehensive
income - 16
Derivative financial liabilities measured at fair value
through profit or loss (12) -
============================================================== ======== ===========
Financial liabilities measured at fair value through
comprehensive income (12) -
Trade and other payables, excluding non-financial liabilities (3,904) (4,432)
Lease liabilities (3,253) (3,605)
============================================================== ======== ===========
Financial liabilities measured at amortised cost (7,157) (8,037)
============================================================== ======== ===========
Financial assets which are debt measured at amortised cost
comprise trade receivables, other debtors and cash and cash
equivalents.
Financial assets measured at fair value through comprehensive
income represent the Group's derivative financial instruments,
being foreign exchange forward contracts.
Financial liabilities measured at amortised cost comprise trade
payables, accruals and other creditors, lease liabilities and loans
and borrowings.
Trade and other payables, excluding non-financial liabilities at
1 July 2022 has been restated to exclude GBP0.4m of material right
provision (see note 22).
Credit risk
The Group's maximum exposure to credit risk is limited to the
carrying amount of the financial assets recognised at the reporting
date, as summarised below:
30 June 1 July
2023 2022
GBP'000 GBP'000
============================================================== ======== ========
Financial assets measured at amortised cost 14,547 16,216
Financial assets measured at fair value through comprehensive
income - 16
============================================================== ======== ========
The Group's cash and cash equivalents are all held on deposit
with leading international banks and hence the Directors consider
the credit risk associated with such balances to be low.
The Group provides credit to customers in the normal course of
business. The principal credit risk therefore arises from the
Group's trade receivables. In order to manage credit risk the
Directors set credit limits for corporate customers based on a
combination of payment history, credit references and a financial
review of the business. Credit limits are reviewed on a regular
basis in conjunction with debtor ageing and payment history.
Historic credit losses of the Group have been negligible as
referenced in note 20.
Details of the trade receivables impairment policy can be found
in note 20.
Liquidity risk
Liquidity risk arises from the Group's management of working
capital and the amount of funding required for growth. It is the
risk that the Group will encounter difficulty in meeting its
financial obligations as they fall due.
The Group manages its cash and borrowing requirements through
preparation of annual cash flow forecasts reflecting known
commitments and anticipated projects in order to maximise interest
income and minimise interest expense, whilst ensuring that the
Group has sufficient liquid resources to meet the operating needs
of the Group. Borrowing facilities are arranged as necessary to
finance requirements.
The following table shows the maturities of gross undiscounted
cash flows of financial liabilities as at 30 June 2023:
Carrying amount Contractual
GBP'000 cash flows <1 year 1-5 years >5 years
GBP'000 GBP'000 GBP'000 GBP'000
========================================= =========== ========= =========== ==========
Non-derivative financial
liabilities:
Trade and other payables 3,904 3,904 3,904 - -
Lease liabilities 3,253 3,872 675 2,096 1,101
================================== ===== =========== ========= =========== ==========
7,157 7,776 4,579 2,096 1,101
================================== ===== =========== ========= =========== ==========
Derivative financial liabilities:
=====
Foreign currency forwards
=====
(Inflow) (1,376) (1,376) - -
Outflow 1,364 1,364 - -
================================== ===== =========== ========= =========== ==========
(12) (12) (12) - -
================================== ===== =========== ========= =========== ==========
Total 7,145 7,764 4,567 2,096 1,101
================================== ===== =========== ========= =========== ==========
Contractual maturities of financial liabilities as at 1 July
2022 are as follows:
Carrying amount Contractual <1 year 1-5 years >5 years
cash flows
==================================
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================================== =============== =========== ========= ========= ========
Non-derivative financial
liabilities:
Trade and other payables
- Restated 4,432 4,432 4,432 - -
Lease liabilities 3,605 4,384 629 2,284 1,471
================================== =============== =========== ========= ========= ========
8,037 8,816 5,061 2,284 1,471
================================== =============== =========== ========= ========= ========
Derivative financial liabilities:
Foreign currency forwards
(Inflow) (1,463) (1,463) - -
Outflow 1,447 1,447 - -
================================== =============== =========== ========= ========= ========
(16) (16) (16) - -
================================== =============== =========== ========= ========= ========
Total 8,021 8,800 5,045 2,284 1,471
================================== =============== =========== ========= ========= ========
Trade and other payables, excluding non-financial liabilities at
1 July 2022 has been restated to exclude GBP0.4m of material right
provision (see note 22).
Foreign currency risk
Foreign exchange risk is the risk that movements in exchange
rates affect the profitability of the business. The Group purchases
goods from overseas suppliers and is invoiced in currencies other
than GBP. It is therefore exposed to movements in the GBP exchange
rate against the currencies in which suppliers invoice the Group.
The Group monitors exchange rate movements closely and ensures
adequate funds are maintained in appropriate currencies to meet
known liabilities.
The Group enters into forward foreign currency contracts to
mitigate the exchange rate risk for certain foreign currency
payables. At 30 June 2023, the outstanding contracts all mature
within 6 months (2022: 6 months) of the period end. The Group is
committed to buy Euro and Australian Dollars (2022: Euro,
Australian Dollars and US Dollars) with a Sterling value of
GBP1.38m (2022: GBP1.44m).
The forward currency contracts are measured at fair value, by
reference to the spot rate. This is a level 1 valuation in that the
spot rate is a directly observable input.
The Group's exposure to foreign currency risk at the end of the
respective reporting period was as follows:
30 June 1 July
2023 2022
GBP'000 GBP'000
======== ======== ========
AUS EUR 128 - 197 -
USD - 140
======== ======== ========
Total 128 337
======== ======== ========
Liabilities include the monetary assets and liabilities of
subsidiaries denominated in foreign currency.
The Group is exposed to foreign currency risk on the
relationship between the functional currencies of Group companies
and the other currencies in which the Group's material assets and
liabilities are denominated. The table below summarises the effect
on reserves had the functional currencies of the Group weakened or
strengthened against these other currencies, with all other
variables held constant.
30 June 1 July
2023 2022
GBP'000 GBP'000
================================================= ======== ========
Loss on 10% strengthening of functional currency (104) (103)
Gain on 10% weakening of functional currency 128 126
================================================= ======== ========
Capital risk management
The Group's capital management objectives are:
-- to ensure the Group's ability to continue as a going concern
so that it can continue to provide returns for shareholders and
benefits for other stakeholders; and
-- to provide an adequate return to shareholders by pricing
products and services commensurate with the level of risk.
To meet these objectives, the Group reviews the budgets and
forecasts on a regular basis to ensure there is sufficient capital
to meet the needs of the Group.
The capital structure of the Group consists of shareholders'
equity as set out in the Consolidated Statement of Changes in
Equity. All working capital requirements are financed from existing
cash resources.
30 June 1 July
2023 2022
GBP'000 GBP'000
========= ======== ========
Net cash 10,261 11,465
Equity 21,822 22,073
========= ======== ========
25. Share capital
30 June 1 July
2023 2022
GBP'000 GBP'000
========================================================== ======== ========
Authorised, Allotted, called up and fully paid
55,837,560 (2022: 55,837,560) ordinary shares of GBP0.01
each 558 558
========================================================== ======== ========
Virgin Wines UK plc was incorporated on 1 February 2021 with
authorised, allocated and fully paid share capital of 5,000,000
Ordinary Shares of GBP0.01 each.
Prior to the transaction referred to in the next paragraph, the
previous ultimate parent undertaking, Virgin Wines Holding Company
Limited, issued 1,604,900 new shares to existing shareholders.
These shares form part of the share capital of Virgin Wines Holding
Company Limited which was subject to the transaction referred to
below.
On 2 March 2021 the Group underwent a reorganisation in which
Virgin Wines UK plc became the ultimate parent undertaking of the
Group. As part of the reorganisation 6,615,413 new Ordinary Shares
of GBP0.01 each were created.
The new shares were fully paid and will rank pari passu in all
respects with the existing Ordinary Shares, including the right to
receive all dividends and other distributions.
GBP0.98m of costs in relation to the issue of new shares have
been charged to the share premium account. Nil (2022: 3,660,100)
Ordinary Shares of GBP0.01 are held within the Group by the
Employee Benefit Trust.
The Directors have not approved and interim dividend and do not
recommend the payment of a final dividend (2022: nil).
26. Analysis and reconciliation of net cash
This section sets out an analysis of the movements in net cash,
which includes cash and cash equivalents and liabilities arising
from financing activities.
3 July Other non-cash 1 July
=========================
2021 New Leases changes Cashflow 2022
=========================
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================= ======= ========== ============== ======== =======
Cash at bank and in hand 15,660 - - (590) 15,070
Lease liabilities (3,202) (897) (134) 628 (3,605)
========================= ======= ========== ============== ======== =======
Net cash 12,458 (897) (134) 38 11,465
========================= ======= ========== ============== ======== =======
Decrease in cash in the
period (590)
New leases (897)
Lease interest (134)
Lease payments 628
========================= ======= ========== ============== ======== =======
Movement in net cash in
the period (993)
========================= ======= ========== ============== ======== =======
Net cash at 2 July 2021 12,458
========================= ======= ========== ============== ======== =======
At 1 July 2022 11,465
========================= ======= ========== ============== ======== =======
2 July Other non-cash 30 June
2022 New Leases changes Cashflow 2023
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================= ======== ============ ============== ========== ========
Cash at bank and in hand 15,070 - - (1,556) 13,514
Lease liabilities (3,605) (109) (174) 635 (3,253)
========================= ======== ============ ============== ========== ========
Net cash 11,465 (109) (174) (921) 10,261
========================= ======== ============ ============== ========== ========
Decrease in cash in the
period (1,556)
New leases (109)
Lease interest (174)
Lease payments 635
========================= ======== ============ ============== ========== ========
Movement in net cash in
the period (1,204)
========================= ======== ============ ============== ========== ========
Net cash at 1 July 2022 11,465
========================= ======== ============ ============== ========== ========
At 30 June 2023 10,261
========================= ======== ============ ============== ========== ========
27. Related Party disclosures
During the period ended 30 June 2023, sales of GBP800,654 (2022:
GBP618,367) were made by Virgin Wines UK plc to Virgin Wine Online
Limited. These have been eliminated on consolidation.
Balances between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation. Details of
remuneration of key management personnel can be found in note
8.
During the period the Group paid GBP47,203 (2022: GBP41,397) in
monitoring fees and expenses to Gresham House Asset Management
Limited. At 30 June 2023 GBP3,900 (2022: GBP4,500) was due to
Gresham House Asset management Limited. Gresham House Asset
Management Limited has significant influence over the Group by
virtue of their appointment of a board member.
During the period sales of GBPnil (2022: GBP1,221) were made to
Gresham House Asset Management Limited.
During the period sales of GBP24,405 (2022: GBP20,499) were made
to LKB Enterprises Limited. At 30 June 2023 GBP4,695 (2022:
GBP3,440) remaining outstanding from LKB Enterprises Limited, a
company in which Virgin Wines UK plc's CEO's wife has significant
control.
28. Ultimate parent undertaking
In the opinion of the Directors, there is no single controlling
party.
29. Events after the end of the reporting period
There have been no matters arising after the balance sheet date
that would require disclosure in the Financial Statements.
30. Capital commitments and contingent liabilities
There are no capital commitments and no contingent liabilities
not provided in the Financial Statements for the period ended and
as at 30 June 2023 (1 July 2022: GBP0.3m commitment for new
Warehouse Management System).
The Group has a bank guarantee in place of GBP0.1m in relation
to the operation of its bonded warehouses.
31. Nature of each reserve
Share premium
Amount subscribed for share capital in excess of nominal
value.
Own shares reserve
Shares held within the EBT (Employee Benefits Trust).
Merger reserve
The difference between the nominal value of shares issued in
exchange for the book value of assets acquired.
Share-based payment reserve
The movements on share based payments.
Retained earnings
All other net gains and losses and transactions with owners
(e.g. dividends) not recognised elsewhere.
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END
FR USAKROAURUAA
(END) Dow Jones Newswires
October 25, 2023 02:00 ET (06:00 GMT)
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