22 October 2024
("Virgin Wines", the
"Company" or the "Group")
Audited Annual
Results
Robust FY outturn with
significant rise in profitability
Virgin Wines UK plc (AIM: VINO),
one of the UK's largest direct-to-consumer online wine retailers,
announces its audited Annual Results for the year ended 28 June
2024 ("FY24" or the "Period").
Financial highlights
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·
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Total revenue remained firm at £59
million (FY23: £59 million)
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·
|
Adjusted
EBITDA(1) up 59% to £2.8 million (FY23: £1.8 million) as a result of
enhanced margins and operational efficiencies
|
|
·
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Gross profit up 8% to £18.8
million (FY23: £17.4 million)
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|
·
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PBT increased by £2.4m to £1.7m
(FY23: loss £0.7m)
|
|
·
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Gross
Margins(2) increased by 230 bps to 31.9% (FY23: 29.6%)
o Reflecting our unique sourcing model
o Strong cost control and favourable sales channel
mix
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·
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Cash balances up £4.9m to £18.4
million (FY23: 13.5 million), with net cash of £10.3m (FY23: £5.5
million) and debt free
|
|
Results summary
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FY24
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FY23
|
|
|
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£'m
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£'m
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|
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Revenue
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59.0
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59.0
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|
|
Gross profit
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18.8
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17.4
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|
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Gross profit %
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31.9%
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29.6%
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|
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Adjusted EBITDA pre-exceptional costs and share based
payments
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2.8
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1.8
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Adjusted EBITDA post exceptional costs and pre share based
payments
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2.8
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0.8
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|
|
|
|
|
|
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Profit/(Loss) before tax
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1.7
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-0.7
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|
|
|
|
|
|
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Diluted earnings per
share
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2.4
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-1.1
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|
|
|
|
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Net assets
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23.3
|
21.8
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|
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Cash and cash equivalents
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18.4
|
13.5
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(1) EBITDA is pre
exceptional costs (FY24 £nil, FY23 £1m) and pre-share based
payments (FY24 £0.3m, FY23 £0.3m).
(2) Gross margins include
packaging and delivery costs.
Strategic highlights
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·
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Disciplined focus on driving new
customer acquisition at a low cost per recruit
o Fully costed cost per acquisition fell to £19.62 (FY23:
£19.91), driven by increased level of high-quality
customers
o Committed to increasing the volume of new customers, a key
priority as we move into FY25
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|
·
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A number of strategic
initiatives have been implemented
o Warehouse Wines has been launched with encouraging results,
and a particularly strong Q4
o Full creative brand refresh complete and being rolled out
across channels
o The bespoke Vineyard Collection and premium Australian Five
O'clock Somewhere Wine Club have been launched, with positive
customer feedback
o The Wine Advisor team continues to excel, achieving the
highest average order value among our main repeat
channels
o Our gift service continues to grow at double digit
rate
|
|
·
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Active and loyal customer base
with sales through existing customers up 1.5% despite a difficult
market environment
o New customer conversion rates for subscription schemes rose
to 55.5% (FY23: 49.2%)
o Customer deposits through the Company's flagship membership
service, WineBank, hit a record level of over £9 million
pre-Christmas, with a seasonal high of £8 million by year-end
(FY19: £4.5 million)
o WineBank cancellation rates improved to 16.1% (FY23:
17.3%)
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|
·
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Operational efficiency continues
to drive performance and enhance margins
o Fulfilment costs decreased to 11.8% of revenue (FY23: 14%),
despite a 10% increase in the national living wage and ongoing cost
pressures
o Improved warehouse accuracy resulted in a 50% reduction in
costs associated with customer returns and refunds
o Cost optimisation programme implemented with £1.4m annualised
savings
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|
·
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Strong strategic
focus on commercial partnerships
delivered 5% YOY growth in revenue from B2B
activity
o Partnership with Moonpig continues to develop with potential
for considerable future growth
o Agreements with all key rail partners extended, including
LNER, Avanti and GWR
|
Current trading and outlook
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·
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Trading through the last 4 months
remains in line with market expectations
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·
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We are encouraged by the progress
of our strategic initiatives launched this year, particularly the
strong growth of Warehouse Wines that now has over 8k customers,
and expect this channel will significantly contribute to our growth
over the next year and beyond
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·
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Post-year end, we agreed to a new
partnership with Ocado.com, providing the
Company with access to Ocado's considerable customer-base as the
world's largest dedicated online supermarket
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·
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With a healthy balance
sheet, the Board remains confident in
current market expectations for FY25 underpinned by our resilient
business model, loyal customer base and new strategic initiatives
to drive growth.
|
Jay Wright, Chief Executive Officer, said:
"In July 2024 we announced our FY24 Trading Update with both
EBITDA and PBT ahead of expectations. Today we are delighted to
reiterate a positive full year performance, with strong
profitability. Despite a tough consumer backdrop,
we are pleased to have increased new customer conversion rates,
lowered cancellation rates and delivered a competitive cost per
acquisition. We have also introduced several strategic initiatives
to enhance our growth and are particularly encouraged by the
initial results of our Warehouse Wines offering as well as the
Vineyard Collection and Five O'clock Somewhere Wine
Club.
While the sector remains challenging, demand remains strong
for our different subscription schemes and award-winning range of
wines. This differentiated offering, underpinned by our unique
open-source buying model and loyal customer base, positions us well
to continue delivering growth.
Looking ahead, and with Q1 trading being in line with our
expectations, we remain confident of delivering a strong outturn in
2025 and beyond."
- Ends
-
Enquiries:
|
Virgin Wines UK plc
Jay Wright, CEO
Graeme Weir, CFO
Panmure Liberum Limited
(Nominated Adviser and Sole
Broker)
Edward Thomas
Dru Danford
John Fishley
Hudson Sandler
(Public
Relations)
Alex Brennan
Dan de Belder
Harry Griffiths
Eloise Fleet
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Via Hudson Sandler
|
|
Tel: +44 20 3100 2222
virginwines@hudsonsandler.com
Tel: +44 20 7796 4133
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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 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 is headquartered in Norwich, with two fully bonded, national
distribution centres in Preston and Bolton. It stocks over 650
wines sourced from more than 40 trusted winemaking partners and
suppliers around the world which it sells to a large active
customer base, the majority of whom are on one of the Group's
subscription schemes.
The Company drives the majority of
its revenue though its fast-growing WineBank service, that has over
126k members, using a variety of marketing channels, as well as
through its 30 strong Wine Advisor team, its Wine Plan channel and
its Pay As You Go service.
Along with its extensive range of
award-winning products, Virgin Wines was delighted that its
flagship WineBank service was awarded 'Wine Club of the Year' at
the 2024 IWC Awards, was named Online Drinks Retailer of the Year
for 2022 at the 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 named Buyer of the Year by Decanter
magazine.
https://www.virginwinesplc.co.uk
Chairman's Statement
Introduction
This financial year has seen an
encouraging boost in profitability for Virgin Wines following a
sustained period of challenging trading conditions. It is a
testament to the team that this has been achieved despite some
continued economic headwinds. Whilst inflation has eased and
consumer confidence has improved slowly, this has yet to translate
to greater levels of consumer expenditure. However, we are
confident that the important operational work that was completed
this year positions the business well to capitalise on a
recovery.
Virgin Wines has a loyal base of
customers who recognise the value and quality of the product we
offer and, as a consequence, continue to commit to their
subscriptions and buy wine despite the difficult market
environment. This reinforces the strength of our core business
model. A tough market, however, is also characterised by new
customers being less willing to commit to subscriptions, and this
has affected our ability to acquire new customers at the same rate
as we have in previous years. We are tackling this challenge with
energy, determination and some innovative thinking which we are
confident will underpin our recovery in the coming
years.
Strategy and Operations
The success of our long-term
strategy, by way of organic growth, is built upon our resilient
business model and we are determined not to deviate away from our
core proposition. We continue to make improvements across all areas
and develop new initiatives, such as the Warehouse Wines brand
which was launched during the year.
Customer acquisition remains a key
focus for the Group, and we are pleased to have recruited some
impressive new hires who are already breathing fresh energy into
this part of the business. The Group's strategy is set out in more
detail on page 7.
We have made good progress
operationally this year, particularly with improvements in our
warehouse management. The new system and processes we put in place
over 18 months ago have helped to improve our overall delivery
service and at a lower cost, all of which enhances the value of
offering for our loyal customers.
In December, we also launched
Warehouse Wines - a curated range of great wines at exceptional
value. This new proposition is ideally positioned to capture
incremental market share among customers who don't want a
subscription and has made a great start.
Governance
We are committed to achieving and
maintaining high standards of corporate governance and the Company
has adopted the QCA Code.
The Board keeps its composition
and performance under regular review to ensure we have the
appropriate skills, experience and resources to fulfil our
requirements and responsibilities. We undertake a regular formal
board effectiveness review with balanced and practical
contributions to strategy and operations.
Many businesses, particularly in
the consumer sector, have experienced greater vulnerability from
cyberattacks. Given this heightened threat, we have reviewed all
our processes, increased investment, and allocated more resources
to ensure all information and customer data are protected to the
highest level.
We continue to push forward with
our ESG strategy and report on this separately on pages 29 to
36.
Capital Allocation
We are mindful of the Company's
strong capital position and the need to put this capital to use in
the most effective way possible to maximise shareholder value. We
initiated a share buyback during the year and will continue to
explore further ways to invest capital in the near
future.
Outlook
The Board and I are cautiously
optimistic of continued growth, given an improvement in trading
conditions and consumer confidence. The Company has strong customer
loyalty, an excellent proposition and a resilient model which we
believe positions us well to achieve our growth targets, both in
the current financial year and in the medium to long
term.
JOHN RISMAN
Chairman
Chief Executive's Review
Introduction
It was encouraging to see
substantial progress made in a whole host of key areas over the
last 12 months. We have prided ourselves for many years on being
the lowest cost to serve in our sector and we were delighted to see
a significant increase in operational efficiency and productivity
this year, whilst reducing spend across our operating costs. This
has contributed to the business delivering a 260% increase in
EBITDA1 to £2.8m and a profit before tax of £1.7m.
Our customer base continues to
show great resilience despite the subdued consumer environment,
with several positive trends highlighting its health. These include
an improvement in our WineBank cancellation rate, a material
increase in our new customer conversion rate, and a reduction in
our lapse rate. We believe our continued focus and 'no compromise'
approach to delivering excellent quality wines, outstanding value
for money and exceptional levels of service are fundamental in
driving this customer loyalty.
We are vitally aware of the need
for a strong balance sheet. As well as remaining debt free, the
business increased its gross cash holding to £18.4m (FY23: £13.5m)
and our net cash position (excluding customer WineBank deposits) to
£10.3m (FY23: £5.5m). This has been achieved through excellent
inventory management and the profits generated by the trading
performance.
We have continued to be
disciplined in our approach to customer acquisition and recruit
excellent quality customers that will deliver a fast return on
investment. This has been shown by a year-on-year improvement in
our fully costed cost per recruit and the substantial increase in
the new customer conversion rate. We are now committed to
increasing the volume of new customers being acquired and that is a
priority moving into FY25.
We went into the year with several
new initiatives including the launch of our value brand, Warehouse
Wines. We have been encouraged by the initial results and have
committed to investing in the growth of the proposition over the
coming year.
We have been pleased with the
initial impact of the creative/brand review carried out during
FY24. We have also launched the first seven wines under our
Vineyard Collection banner, Virgin Wines' first foray into creating
wines from our 'own' vines, as exclusively allocated by our
winemaking partners around the world.
The last 12 months has, once
again, seen substantial headwinds including significant increases
in a variety of input costs, a consumer environment that continues
to be challenging and the largest single increase in alcohol duty
in recent times. Despite this, I am proud that the hard work and
dedication of our team has maintained revenue whilst delivering
significantly increased profitability.
The resilience, commitment and
unwavering enthusiasm of the Virgin Wines team is an inspiration,
and I would like to take this opportunity to highlight the energy
and talent that they possess. It is a never-ending privilege to
work with such a wonderful group of people.
The business has shown great
resilience alongside the ability to drive increased levels of
profit in a challenging environment, and we enter the coming
financial year with a strong and loyal customer base, encouraging
initial results on a number of new initiatives, continued growth in
both our commercial and gift channels, as well as a healthy balance
sheet that gives us numerous options for investing in
growth.
Business overview
During the year we delivered
revenues of £59m, like for like with the previous year. Enhanced
margins and operational efficiencies drove an improvement in
profitability, with EBITDA1 up 260% to £2.8m and Profit/ (Loss)
before tax up to £1.7m (FY23: Loss £0.7m).
Growth in our repeat sales
(+1.5%), our commercial revenues (+5%) and our gift service
(+10.8%) all helped to negate a YOY decline in revenue through
customer acquisition as we focused on the quality of our recruits
and managing our cost per acquisition, rather than chasing
unprofitable customers in a highly competitive
environment.
Gross product margin increased to
37.6% from 36.5%, partially due to the strength of our open-source
buying model that allowed us to maintain competitive pricing
despite the inflationary environment and duty increase, while the
higher proportion of repeat sales compared to lower margin
acquisition revenue also had a positive effect.
Progress was made operationally
with fulfilment costs reduced to just 11.8% of revenue from 14% the
previous year. This was despite a 10% increase in the national
living wage and a variety of increased input costs related to
energy, transport and packaging. In addition, the increased
accuracy in the pick and pack function within our warehouse
operation, a change in packaging to reduce cost but strengthen the
carton, and a close working relationship with our courier partners
to minimise delivery issues, led to a 50% reduction in costs
relating to customer returns or refunds.
As noted above, we have a strong
balance sheet with no debt, gross cash of £18.4m and net cash of
£10.3m, giving the business a variety of options to consider as
part of its capital allocation plan.
New customer acquisition
It has been a challenging
environment for acquiring new customers. The market has been
extremely competitive, there has been subdued consumer demand and
as such the cost of acquisition can escalate dramatically in those
circumstances. We have focused our efforts, and our investment, on
acquiring new customers of a high quality, that then convert at
higher rates to become long-term customers of Virgin Wines, whilst
delivering a lower fully costed cost per recruit at just £19.62
(FY23 £19.91).
Given the strength of our balance
sheet, we know we are in a strong position to increase our
investment in acquisition, but we are also determined to ensure
that investment delivers future value to the business in terms of
five-year payback and return on investment.
WineBank
Our flagship subscription scheme,
WineBank, has continued to deliver outstanding value to wine
enthusiasts across the UK by allowing them to spread the cost of
buying wine, giving 20% 'interest' on their monthly deposits that
can then be spent on our wines, while also giving all WineBank
customers free express delivery.
The total amount of customer money
held by the business hit a record level of over £9m pre-Christmas
'23 and finished the financial year at a seasonal high of over
£8m.
We should stress that WineBank
deposits are held in a separate ring- fenced account and are not
used to fund the day-to-day operations or working capital
requirements of our business.
It has been particularly pleasing
to see that our 12-month rolling WineBank membership cancellation
rate has improved from 17.3% in FY23 to just 16.1% this year. In
addition, the customer conversion rate for new WineBank recruits
has increased materially to 55.5% from 49.2% in FY23. The loyalty
of our existing customers and the attraction of the service for new
customers speaks volumes for the value it delivers to them, new and
old, particularly in the current consumer climate.
We were delighted that the
substantial benefits customers receive were recognised when
WineBank was awarded 'Wine Club of the Year' at the International
Wine Challenge awards earlier this year.
Wine Advisors
Our team of Wine Advisors continue
to offer customers an outstanding experience as well as delivering
exceptional results. We have driven productivity through the team
with revenue up 1% year-on-year despite streamlining the team from
44 advisors to 29 by year-end. Each active Wine Advisor delivered
an average of 10% increased sales year-on-year to achieve this
commendable result.
With around 1k customers each to
look after, the team are able to offer an exceptionally personal,
one-to-one service. This ensures every wine purchased is perfectly
suited to the customers' tastes, and that they receive the 'inside
track' on new wines and special discoveries that they may have
otherwise missed. Wine Advisors also handle any rare service
queries that may arise, meaning they oversee the entire customer
relationship.
The team also delivers the highest
average order value amongst our main repeat channels, 27% higher
than those through the email channel and 11% higher than orders
through the website.
Commercial and gift channels
It has been a positive year for
two of our growth channels with a 5% increase in sales through our
Commercial/B2B business and an 11% increase in sales through our
gift service.
The Commercial team have continued
to secure new opportunities while developing existing
relationships. Our travel partners have continued to perform well,
and we are pleased to have extended supply agreements with Avanti,
LNER and Great Western Railways. Our partnership with Moonpig
continues to go from strength to strength and we are optimistic
about the potential for increased scale as both businesses focus on
growth.
Our 2023 advent calendar campaign
was a great success, and we were delighted to see 25% sales growth
across our range of calendars over the 2023 festive period, despite
this becoming an increasingly competitive market. We have also
continued to develop our gift range with innovative new products
that are beautifully packaged - this diligent approach to our
gifting category has helped deliver double digit growth through the
channel.
Open-source wine buying 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.
We saw first-hand the benefit of
this approach over the past year as it has allowed us to mitigate,
as much as possible, the effect of the 20% duty increase the
industry was subjected to in August 2023. Our buyers have been able
to work with their wide network of winemaking partners to secure
increased volumes from areas where we can see the most attractive
quality/value ratios and reduce volumes from areas where it was
less beneficial. This helped contribute to us minimising the price
increases we needed to pass on to customers in the short term, as
well as enabling us to increase our gross product margins over the
year.
The other benefit of not
contracting volumes into the future is inventory management, not
least because we are always ordering based on recent sales and
market information and purchasing based on our expected sales
volumes. This gives us much greater visibility than doing so
months, or even years, in advance.
I am delighted that this unique
approach to buying and the skill and expertise it requires has been
independently recognised with Sophie Lord, our Head of Buying,
being awarded 'Buyer of the Year' by Decanter magazine, an accolade
richly deserved but also reflecting the outstanding work of our
buying team as a whole.
New initiatives
Last year, we announced a number
of new initiatives that we were looking to launch over FY24 with
the most significant being the development of a new brand that
would focus on the value end of the DTC market. Warehouse Wines
soft-launched over the Christmas period and since then has
delivered encouraging results. We have committed to investing in
its growth and are excited about the potential of the
opportunity.
The Virgin Wines brand went
through a creative refresh and brand review during FY24, the
results of which are being rolled out across the business during
FY25. We are delighted with the results and, alongside a new logo,
we have a more premium and aspirational identity being incorporated
into our marketing materials and website.
The Vineyard Collection is our
most ambitious venture into bespoke winemaking, where we are
showcasing our credentials by creating a small number of wines from
our 'own' vines. We have been lucky to team up with our winemaking
friends at some of our best-loved wineries around the world, who
have secured us a series of select vines and small plots to craft
seven outstanding wines in strictly limited quantities. This is an
ongoing project which will continue to deliver new wines made from
our own vineyard locations annually.
Finally, our Five O'clock
Somewhere Wine Club has launched, showcasing the talents of Steve
Grimley and his winemaking team out in McLaren Vale, Australia.
These are 'renegade' wines made in tiny quantities that show the
variety and complexity of incredibly made boutique Aussie wine.
Nearly 2,000 customers are now part of a limited community who
receive early access to reserve these wines when they first leave
Australia, and there is an ongoing schedule of new wines under the
5OS banner being created on a continuous basis.
Operational excellence
It has been a year of excellent
progress regarding our operational performance. The warehouse
management system that we implemented in late 2022 has delivered
substantial efficiencies, not only in terms of productivity but
also in the accuracy of the pick and pack. Despite increases in
costs and wage inflation, the business improved fulfilment costs to
represent just 11.8% of revenue from 14% the previous
year.
In addition, our damage rate
reduced by 32%, while mis-picks equated to just three cases per 1k.
This contributed positively to a 50% reduction in the amount of
returns or refunds the business was required to fund.
Our customer service team have
also delivered an outstanding level of service to our members with
a reduction in call waiting times of 54% and 77% of all customers
having their query resolved within a single contact.
Our Trustpilot score has increased
to 4.6 out 5 (rated 'Excellent') with over 18k 5-star reviews, of
which over 1.2k have come in the past 12 months.
Our culture, values and people
Virgin Wines has always been a
business where the people come first. The welfare, support and
development of our team is a priority and this is supported by the
tenure so many of our people have in the business and the
incredible journeys they have been on to fulfil their professional
ambitions here at Virgin Wines, all while adding immeasurably to
the fun, informal environment that has been created.
We continue to listen to our
people and act on the feedback we receive. Hybrid working has
changed how our teams interact, and we must adapt to ensure we
maintain the culture we have been so proud of developing. With that
in mind, formalising communication has become more important than
ever. Over the past year we have introduced quarterly business
updates from myself that are held in person to all members of
staff, Listening Groups hosted by Helen Jones, one our
Non-Executive Directors, that allow members of our team to speak
freely about any subjects that they may wish to raise, as well as
having a more informal, regular staff newsletter 'Just the
Juice'.
We have also introduced an
enhanced holiday entitlement to reward the loyalty of our team by
adding up to five additional days holiday each year to staff who
have been with us from upwards of two years. We have also revamped
our appraisal process this year, formalising the format across the
business while adding a section that celebrates the contribution
our team are making to embracing and 'living' our brand
values.
The development of our people
remains a priority, and we are expanding the learning and
development we can offer in a number of ways, from helping explore
development and training opportunities for individuals through to
funding external courses, as we look to maximise the talent we have
within the business.
We continue to offer an Employee
Assistance programme that has been used extensively over the three
years since we first introduced it. The programme allows all
employees access to a range of free services and support documents,
from one-to-one counselling to advice on finances, health, and
personal welfare.
A welcoming and inclusive
environment for all is paramount and we continue to deliver a range
of initiatives to promote this. We are in the process of
formalising our training programmes, with plans to continue
offering additional courses such as LGBTQ+ awareness and sexual
harassment prevention training to all staff. We've also taken part
in Virgin's Dyslexic Thinking training.
We continue to support a range of
charities. These include Bright Start, which aims to give children
from impoverished backgrounds a chance of a quality education.
Growing Well, meanwhile, is a specialist mental health charity that
champions recovery through outdoor activity in two Cumbrian market
gardens. Another charity we support is the Drinks Trust, which
works to safeguard the drinks industry community, both those
currently employed as well as others now retired. We are also a
community partner for Virgin StartUp, something close to my heart
as it supports entrepreneurs and small businesses as they launch
and grow.
We also understand the importance
of responsible drinking and the dangers of alcohol abuse. As such
we actively promote to our customers the importance of enjoying
alcohol in moderation and we continue to drive our unique messaging
that 'Drinking's only fun when you don't overdo it'.
Progress on sustainability
Virgin Wines is fully committed to
having a positive impact on our planet as well as delivering on our
commercial objectives. 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.
Over the last 12 months, we have
conducted our first double- materiality assessment, internally
audited our ESG position and formed a new three-year sustainability
strategy. The assessment helped us identify and prioritise the
topics where we can have the greatest impact with those areas
identified as people development, climate adaption and carbon
emissions.
We have also carried out an
internal audit to assess the current ESG position of the business
which has led to a three-year sustainability strategy. We are proud
of the progress we have made in recent years, particularly being
officially certified carbon neutral for each of the past three
years under the internationally recognised PAS 2060 standards. But
we are keen to continue progressing. Whilst our new sustainability
strategy is a helpful roadmap, it isn't a fixed plan and can adapt
as new research and technologies come into play.
We continue to tackle greenhouse
gas (GHG) emissions and are targeting to reduce our Scope 1 and
Scope 2 GHG emissions by 42% by 2030, alongside lowering Scope 3
emissions. Reductions this year have been delivered through
installing LED lighting across all our premises and increasing the
amount of wine we ship in tank and bottle in the UK to over 45%
(compared to 39.8% last year).
Looking ahead to the next year, we
are committed to mapping our entire carbon footprint, including all
downstream activity, which will help us finalise our carbon
reduction roadmap.
Capital allocation
As highlighted earlier, we are in
the fortunate position of having a healthy balance sheet with cash
at our disposal to allocate where we believe it will deliver most
value. Options include investment in organic growth, our new
initiatives, and M&A, through to additional buybacks or the
introduction of a dividend policy. I would reiterate that it is the
preference of the Board to use our cash to drive growth and we
continue to actively discuss the topic. A more detailed update will
follow once we have delivered our H1 trading
performance.
Outlook
The business has completed its
first quarter and trading remains in line with current market
guidance. We have been encouraged by the progress made with our new
Warehouse Wines proposition and our expectation is that this will
be a significant contributor to our growth over the next year and
beyond.
We are pleased that our customers
have remained so loyal to the business and that they continue to
drive growth in our repeat core sales. The continued expansion of
our B2B channel is exciting with a new, long-term partnership with
Ocado recently launched that gives their customers the ability to
buy from a selection of 52 different wines exclusively sourced from
the Virgin Wines range.
The operational efficiency the
business delivers gives us a solid platform from which to grow and
we remain both hugely motivated and optimistic about the prospects
for the business.
Jay Wright
Chief Executive Officer
Financial Review
Financial summary
At the onset of FY24 we identified
three main financial priorities for the Group. Firstly, to
demonstrate the continued robustness of the core business model by
quickly returning the Group to profitability. Secondly, to reduce
working capital, in particular lower Inventory levels and thereby
improve cash balances. Thirdly, to ensure the cost structure is
appropriate for the size of the Group and it is fit and lean to
take advantage of future growth opportunities. These priorities
were delivered across the financial year.
The business model
The robust nature of the business
model is demonstrated in a number of ways, but fundamentally the
focus is on acquiring quality new customers at a competitive cost
per recruit to ensure a quick positive payback. The fully costed
investment in new customers remained stable in FY24 at £19.62 per
recruit, (FY23: £19.92). This is supported by a marketing strategy
and operational efficiency to maximise the contribution from repeat
loyal customers. Throughout FY24 the business delivered progress in
a number of key performance measures. These included increases in
the sales retention rate, new customer conversion rates, revenue
per customer, gross margins, with this supported by a reduction in
fulfilment expenses, lower membership cancellations and lapsed
rates. Together these advances delivered a Profit before Tax of
£1.7m compared to the prior year loss of £0.7m, a turnaround of
£2.4m.
Working Capital and Cash
With no borrowing the Group
retains a strong Balance Sheet, enabling it to manage risk and be
agile to take advantage of growth opportunities. A particular focus
for FY24 was to quickly reset inventory to a level suitable to both
supply risk and business size. The net result was a £2.5m reduction
in inventory and an increase in the cash balance. The net cash
balance (excluding WineBank deposits) increased by £4.8m to £10.3m
(FY23: £5.5m).
Cost structure
Inflationary cost pressure for
supplies, services and salaries has not gone away, albeit the rate
of increase declined during the course of FY24. The Group carried
out a major review of the cost base, including IT services and the
retendering of key supplies for good and services, to ensure value
for money, resize the cost base for the size of the business and
repurpose expenditure into growth channels. This contributed
towards a drop in order fulfilment costs to 11.8% of revenue from
14.0% in FY23. These measures have ensured the business is now well
positioned to take advantage of improving market conditions and
growth opportunities.
Profit/Loss before tax
Profit before tax for the year was
£1.7m compared to a prior year loss of £0.7m. This uplift in
performance of £2.4m was the result of improved gross margin and
the elimination of the exceptional operating expenses incurred in
FY23. The Group does not propose to pay a dividend for
FY24.
Adjusted EBITDA
Adjusted EBITDA for FY24 was
£2.8m, up £1m (59%) on FY23 £1.8m. This equates to an adjusted
EBITDA margin of 4.8% of revenue (FY23: 3.0%). The adjusted EBITDA
for FY24 is calculated after adding back share based payment costs
of £0.3m, FY23 add backs include exceptional costs of £1.0m and
share based payments of £0.3m. Adjusted EBITDA is not a statutory
reporting measure but is included as an additional performance
measure consistent with previous reporting.
Exceptional costs
There are no exceptional items to
report in the results for FY24:£0.0m (FY23: £1.0m). The prior year
exceptional item related solely to additional costs incurred
following the implementation of the new warehouse management system
(WMS). As stated in our report last year the Board is satisfied the
additional costs incurred are non-recurring in both scale and
nature. The new WMS performed consistently well across the whole of
FY24 in terms of costs and accuracy, reducing the rate of picking
errors and service credits. The management expectations are for
more productivity gains as the WMS system continues to be
optimised. Exceptional items are added back in the adjusted EBITDA
performance for FY23.
Revenue
Reported revenue for the 52-week
period to 28 June 2024 was unchanged at £59m (FY23: £59m). Repeat
D2C revenue increased by 1.5% to £48.2m (FY23: £47.5m). This
increase was underpinned by the loyalty and stability of the
customer base with a sales retention rate of 93% in FY24 compared
to 76% in FY23. Key to this is the performance of the WineBank
members with revenue up 1.6% from the prior year. Commercial
revenues continued their progress up 5.1% to £7.2m (FY23 £6.8m),
thanks to a combination of growth from existing B2B customers and
the securing of new contracts. Revenue from new customer
acquisition was down £1.1m, reflecting the lower volumes in
FY24.
Gross margin
Both reported gross margin and
product margin improved in FY24. Reported gross margin for the
52-week period to 28 June 2024 improved by 230 basis points to
31.9%, (FY23: 29.6%). 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. Inflationary pressures on wine input costs eased
throughout FY24. These gains were to a large extent offset by the
increase in excise duty imposed on 1 August 2023. The use of UK
bottling and our wine sourcing model enabled the wine buying team
to continue to find wines to achieve our margin expectations.
Product margins which exclude packaging and delivery costs improved
to 37.6% (FY23: 36.5%).
Operating expenses
Reported operating expenses fell
by £0.6m in FY24 to £17.6m, (FY23: £18.2m). Focus on reducing order
fulfilment costs and the cost reduction exercise in H2 FY24 helped
to offset the ongoing impact of inflation on goods, services and
salaries. Operating expenses adjusted for exceptional costs
increased by £0.3m to £16.0m, (FY23: £15.7m).
Finance income and expense
Finance income increased as a
result the improvement in cash balances and the higher interest
rates available throughout most of FY24. Interest received on
company cash deposits increased by £0.4m to £0.6m, (FY23: £0.2m).
Finance expenses were unchanged at £0.2m (FY23: £0.2m). 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
The business continues to invest
in IT development where we can demonstrate a business case that
improves operational performance or enhances consumer propositions.
Amortisation and depreciation for FY24 was £1.3m, up £0.1m from
prior year (FY23: £1.2m). The increase was due to the amortisation
of intangible assets, depreciation of tangible assets and right of
use assets remaining unchanged.
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 charge in the Financial
Statements for FY24 is £0.3m, compared to a tax credit of £0.14m in
FY23, reflecting the return to profitability in the period. The tax
charge relates to the movement in the deferred tax provision and
measured using the tax rate of 25% (FY23: 25%).
Earnings Per Share (EPS)
The Group reported an improvement
in earnings per share. The basic earnings per share for FY24 was
2.5p compared to a loss per share of 1.1p in FY23. The weighted
average number of shares in issue for FY24 was 55.9m (FY23: 55.8m).
Diluted earnings per share for FY24 was 2.4p, FY23 loss per share
1.1p with the weighted average number of shares FY24 58.3m (FY23:
58.7m), (see note 14 of the Financial Statements for more
details).
Cash and working capital
Reflecting the reduced risk of
supply chain disruption, the Group continued the programme of
reducing inventory levels throughout FY24. As a result, year end
Inventory decreased by £2.5m to £5.9m from £8.4m in FY23. We will
continue to keep the inventory levels under review to manage supply
risk and maintain the optimum inventory levels to achieve our
business growth plans. Combined with cash generated from
operations, this resulted in a significant improvement in the Group
cash position.
The Group end of year gross cash
balance for FY24 was £18.4m (FY23: £13.5m). These balances include
cash deposits from WineBank customers of FY24 £8.1m, (FY23:£8.0m),
leaving Group net cash at £10.3m FY24, (FY23: £5.5m). The WineBank
customer deposits are not used to fund working capital and are kept
in a ring-fenced client account separate from Group cash. The Group
funded investment in capital projects of £0.45m in FY24 (FY23
£1.0m).
With no borrowing and cash
reserves, the Group continues to be mindful of our Capital
Allocation policy. Our clear priority is to utilise cash to fund
growth opportunities through Capex, Opex or M&A opportunities.
During FY24 the Group carried out a limited share buyback, spending
£0.15m to hedge against future LTIP liabilities and shareholder
dilution.
Consolidated Statement of Comprehensive
Income
for the 52-week period ended 28
June 2024
|
|
Note
|
28
June
2024
£'000
|
30 June
2023
£'000
|
|
|
Revenue
|
5
|
59,005
|
58,998
|
|
|
Cost of sales
|
|
(40,200)
|
(41,560)
|
|
|
Gross profit
|
|
18,805
|
17,438
|
|
|
Administrative expenses
before
Exceptional items
|
6
|
|
(5,981)
(990)
|
|
|
Administrative expenses
|
|
(6,261)
|
(6,971)
|
|
Selling and distribution
costs
|
|
(11,311)
|
(11,189)
|
|
Operating profit/(loss)
|
7
|
1,233
|
(722)
|
|
Finance income
|
11
|
602
|
159
|
|
Finance costs
|
12
|
(154)
|
(174)
|
|
Profit/(loss) before taxation
|
|
1,681
|
(737)
|
|
Taxation (expense)/credit
|
13
|
(302)
|
143
|
|
Profit/(loss) for the financial
period and total comprehensive (expense)/income
|
|
1,379
|
(594)
|
|
Basic and diluted earnings/(loss)
per share (pence)
|
14
|
2.5
|
(1.1)
|
|
Diluted earnings/(loss) per share
(pence)
|
14
|
2.4
|
(1.1)
|
|
|
|
|
|
|
|
|
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 28 June 2024
|
Company number 13169238
|
Note
|
28
June
2024
£'000
|
30 June
2023
£'000
|
|
ASSETS
|
|
|
|
|
Non-current assets
|
|
|
|
|
Intangible assets
|
15
|
11,159
|
11,350
|
|
Property, plant and
equipment
|
16
|
202
|
402
|
|
Right of use assets
|
17
|
2,370
|
2,870
|
|
Deferred tax asset
|
18
|
194
|
496
|
|
Total non-current assets
|
13,925
|
15,118
|
|
Current assets
|
|
|
|
|
Inventories
|
19
|
5,868
|
8,367
|
|
Trade and other receivables
|
20
|
2,684
|
2,615
|
|
Cash and cash equivalents
|
21
|
18,370
|
13,514
|
|
Total current assets
|
26,922
|
24,496
|
|
Total assets
|
40,847
|
39,614
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
Current liabilities
|
|
|
|
|
Trade and other payables
|
22
|
(14,425)
|
(14,206)
|
|
Derivative financial instruments
|
24
|
(3)
|
(12)
|
|
Lease liability
|
17
|
(539)
|
(521)
|
|
Total current liabilities
|
(14,967)
|
(14,739)
|
|
Non-current liabilities
|
|
|
|
|
Provisions
|
23
|
(367)
|
(321)
|
|
Lease liability
|
17
|
(2,193)
|
(2,732)
|
|
Total non-current liabilities
|
(2,560)
|
(3,053)
|
|
Total liabilities
|
(17,527)
|
(17,792)
|
|
Net assets
|
23,320
|
21,822
|
|
Equity
|
|
|
|
|
Share capital
|
25
|
560
|
558
|
|
Share premium
|
|
11,989
|
11,989
|
|
Own share reserve
|
|
(3)
|
-
|
|
Merger reserve
|
|
65
|
65
|
|
Share based payment reserve
|
|
552
|
402
|
|
Retained earnings
|
|
10,157
|
8,808
|
|
Total equity
|
23,320
|
21,822
|
The Financial Statements on pages 81
to 108 were approved by the Board of Directors and authorised for
issue on 21 October 2024. They were signed on its behalf
by:
Graeme Weir
Chief Financial Officer
The notes on pages 85 to 108 form
part of these Financial Statements.
Consolidated Statement of Changes in Equity
for the 52-week period ended 28
June 2024
|
|
Share capital
|
Share premium
|
Own
share reserve
|
Merger reserve
|
Share based
payment reserve
|
Retained earnings
|
Total Shareholders'
funds
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
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
|
|
1 July 2023
Profit for the financial
period
|
558
-
|
11,989
-
|
-
-
|
65
-
|
402
-
|
8,808
1,379
|
21,822
1,379
|
|
Total comprehensive income for the
period
|
-
|
-
|
-
|
-
|
-
|
1,379
|
1,379
|
|
Share-based payments (note
10)
|
-
|
-
|
-
|
-
|
266
|
-
|
266
|
|
Shares issued on exercise of
share-based payment
|
2
|
-
|
-
|
-
|
(116)
|
116
|
2
|
|
Shares repurchased, held in
treasury
|
-
|
-
|
(3)
|
-
|
-
|
(146)
|
(149)
|
|
Total transactions with owners
recognised in equity
|
2
|
-
|
(3)
|
-
|
150
|
(30)
|
119
|
|
28 June 2024
|
560
|
11,989
|
(3)
|
65
|
552
|
10,157
|
23,320
|
The notes on pages 85 to 108 form
part of these Financial Statements.
Consolidated Statement of Cash Flows
for the 52-week period ended 28
June 2024
|
Note
|
28
June
2024
£'000
|
30 June
2023
£'000
|
|
Cash flows from operating
activities
|
|
|
|
|
Profit/(loss) before taxation
|
|
1,681
|
(737)
|
|
Adjustments for:
|
|
|
|
|
Depreciation and amortisation
|
7
|
1,311
|
1,195
|
|
Loss on disposal of intangible
asset
|
15
|
23
|
-
|
|
Share-based payment expense
|
10
|
266
|
307
|
|
Own shares distributed
|
|
-
|
36
|
|
Net finance costs
|
11, 12
|
(448)
|
15
|
|
Increase in trade and other
receivables
|
|
(70)
|
(122)
|
|
Decrease in inventories
|
|
2,499
|
286
|
|
Increase/(decrease) in trade and
other payables
|
|
257
|
(1,126)
|
|
Net cash generated from/(used in)
operating activities
|
5,519
|
(146)
|
|
Cash flows from investing
activities
|
|
|
|
|
Interest received
|
11
|
602
|
159
|
|
Disposal of intangible fixed
assets
|
15
|
-
|
35
|
|
Purchase of intangible and tangible
fixed assets
|
15, 16
|
(443)
|
(968)
|
|
Net cash used in investing
activities
|
159
|
(774)
|
|
Cash flows from financing
activities
|
|
|
|
|
Payment of lease liabilities
|
17
|
(521)
|
(462)
|
|
Payment of lease interest
|
12
|
(154)
|
(174)
|
|
Share issue
|
25
|
2
|
-
|
|
Purchase of own shares
|
|
(149)
|
-
|
|
Net cash used in financing
activities
|
(822)
|
(636)
|
|
Net increase/(decrease) in cash and
cash equivalents
|
4,856
|
(1,556)
|
|
Cash and cash equivalents at
beginning of period
|
13,514
|
15,070
|
|
Cash and cash equivalents at end of
period
|
18,370
|
13,514
|
|
Cash and cash equivalents
comprise:
Cash at bank and in hand
|
18,370
|
13,514
|
The notes on pages 85 to 108 form
part of these Financial Statements.
Notes Forming Part of the Financial
Statements
for the 52-week period ended 28
June 2024
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 28 June 2024 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 30 June 2023 (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 previous 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 28 June 2024 (2023: 30 June
2023).
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.
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 cash generated
from operating activities. The Group's forecasts and projections,
prepared to the period to June 2026, 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.
Climate change
The Group recognises the risks of
climate change. The Group's current climate change strategy focuses
on reducing its carbon footprint through carbon neutral
certification and sustainability initiatives to reduce waste and
Greenhouse gas emmissions. The impact of climate change has been
considered in the preparation of these Financial Statements,
including the risks identified as part on page 50. None of these
risks had a material effect on the consolidated Financial
Statements of the Group. In particular, the Directors have
considered the impact of climate change in respect of the following
areas:
• Going concern and
viability of the Group over the next three years;
• Carrying value and
useful economic lives of property, plant and equipment;
and
• The discounted cash
flows included in the value in use calculation used in the annual
goodwill impairment testing.
Whilst there is currently no
material impact expected from climate change, the Group is aware of
the ever-changing risks related to climate change and will continue
to developing its assessment of the impact on the 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 the prior period 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
28 June 2024 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 6 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 28 June 2024 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 share based payments and any exceptional items, see table
on page 46). 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 (2023:
no customers).
6. Exceptional items
Prior year exceptional items
relate to additional labour costs and goodwill compensation given
to customers 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.
7. Operating profit/(loss)
Operating profit/(loss) is stated
after charging/(crediting):
|
|
28 June
2024
£'000
|
30 June
2023
£'000
|
|
Inventory charged to cost of
sales
|
37,063
|
37,548
|
|
Depreciation (note 16)
|
228
|
232
|
|
Depreciation of right of use asset
(note 17)
|
500
|
501
|
|
Staff costs (note 8)
|
8,367
|
8,192
|
|
Shared-based payments (note
10)
|
266
|
307
|
|
Net exchange gains (including
movements on fair value through profit and loss derivatives)
|
(75)
|
(11)
|
|
Movement in inventory provision
|
67
|
(98)
|
|
Intangible asset amortisation
(note 15)
|
583
|
462
|
|
Low value and short-term rentals
excluded from right of use asset
|
59
|
70
|
|
Auditors' remuneration:
|
|
|
|
- for the audit of the Group and
Parent Company Financial Statements
|
132
|
219
|
|
- non audit fees (tax compliance
services)
|
-
|
13
|
8. Staff costs
|
|
28 June
2024
£'000
|
30 June
2023
£'000
|
|
Staff costs (including directors)
consist of:
|
|
|
|
Wages and salaries
|
7,123
|
6,948
|
|
Social security costs
|
773
|
790
|
|
Other pension costs
|
471
|
454
|
|
|
8,367
|
8,192
|
The amount recognised in the
Consolidated Statement of Comprehensive Income as an expense in
relation to the Group's defined contribution schemes is £471,000
(2023: £454,000).
The monthly average number of
employees (including directors) during the period was as
follows:
|
By function
|
28 June
2024
Number
|
30 June
2023
Number
|
|
Sales
Management and administrative
|
151
40
|
164
36
|
|
|
191
|
200
|
The majority of employees are
eligible to join the defined contribution pension plan.
9. Key management personnel
|
|
28 June
2024
£'000
|
30 June
2023
£'000
|
|
Short-term employee benefits
Post employment benefits
|
686
25
|
675
24
|
|
|
711
|
699
|
During the period, retirement
benefits were accruing to two directors (2023: 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 28
June 2024 the Group operated an equity-settled share-based payment
plan as described below. The charge in the period attributed to the
plan was £266,000 (2023: £307,000).
The total amount recognised in
relation to share based payments is £668,000 (2023: £402,000).
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 £0.01.
Awards are forfeited if the
employee leaves the Group before the awards vest, except under
circumstances where the employee is considered a 'Good
Leaver'.
|
Grant date
|
Vesting date
|
Expiration date
|
28
June 2024
|
30 June 2023
|
|
Share price at grant
|
Number of share options issued
|
Share price at grant
|
Number of
share options issued
|
|
PSA Share Awards
|
|
|
|
|
|
|
|
6 December 2022
|
6 December 2025
|
6 December 2032
|
-
|
-
|
70p
|
1,606,003
|
|
30 April 2024
|
30 April 2027
|
30 April 2034
|
48p
|
2,077,748
|
-
|
-
|
|
|
2,077,748
|
1,606,003
|
|
RSA Share Awards
|
|
|
|
|
|
|
|
6 December 2022
|
6 December 2023
|
6 December 2032
|
-
|
-
|
70p
|
 204,654
|
|
6 December 2022
|
6 December 2024
|
6 December 2032
|
-
|
-
|
70p
|
204,654
|
|
6 December 2022
|
6 December 2025
|
6 December 2032
|
-
|
-
|
70p
|
275,949
|
|
|
-
|
685,257
|
|
|
Number of Shares
28 June
2024
|
Number of Shares
30 June
2023
|
|
Outstanding at start of
period
|
2,811,645
|
1,204,217
|
|
Granted during the period
|
2,077,748
|
2,291,260
|
|
Lapsed during the period
|
(564,773)
|
(305,451)
|
|
Exercised during the period
|
(134,845)
|
-
|
|
Forfeitures in the period
|
-
|
(378,381)
|
|
Outstanding at end of period
|
4,189,775
|
2,811,645
|
The average remaining time for
awards to vest is 2.0 years (2023: 1.9 years). The awards
outstanding at 28 June 2024 have a weighted average remaining
contractual life of 9.1 years (2023: 7.1 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
|
|
28 June
2024
£'000
|
30 June
2023
£'000
|
|
Bank interest
|
602
|
159
|
12. Finance costs
|
|
28 June
2024
£'000
|
30 June
2023
£'000
|
|
Interest payable for lease
liabilities
|
154
|
174
|
13. Taxation
|
|
28 June
2024
£'000
|
30 June
2023
£'000
|
|
Analysis of charge for the
period
|
|
|
|
Current tax
|
|
|
|
Adjustment in respect of prior
period
|
-
|
(75)
|
|
Charge for the year
|
-
|
-
|
|
Total current tax
|
-
|
(75)
|
|
Deferred tax
|
|
|
|
Origination and reversal of timing
differences
|
414
|
(165)
|
|
Adjustment in respect of prior
period
|
(112)
|
97
|
|
Total deferred tax
|
302
|
(68)
|
|
Tax charge/(credit) on
profit/(loss) on ordinary activities
|
302
|
(143)
|
Factors that may affect future tax
charges:
Deferred taxes at the balance
sheet date have therefore been measured using the effective tax
rate (25%).
The tax assessed for the period is
lower (2023: higher) than the standard rate of corporation tax in
the UK applied to profit before tax. The differences are explained
below:
|
|
28 June
2024
£'000
|
30 June
2023
£'000
|
|
(Loss)/profit before tax
|
1,681
|
(737)
|
|
Profit before tax at the standard
rate of corporation tax in the UK of 25% (period ended 30 June 2023
- 25%)
|
420
|
(184)
|
|
Effects of:
|
|
|
|
Expenses not deductible for tax
purposes
|
68
|
77
|
|
Adjustment in respect of prior
period
|
(112)
|
22
|
|
Other permanent differences
|
(74)
|
(58)
|
|
Total tax (credit)/charge for the
period
|
302
|
(143)
|
For further information on
deferred tax balances see note 18.
13. 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 28 June 2024 the total number
of potentially dilutive shares issued under the Virgin Wines UK plc
long term incentive plan was 4,189,775
(2023: 2,811,645). 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
|
|
28 June
2024
|
30 June
2023
|
|
Earnings (£'000)
|
|
|
|
(Loss)/earnings for the purpose of
basic earnings per share
|
1,379
|
(594)
|
|
Number of shares
|
|
|
|
Adjusted average number of shares
for the purposes of basic earnings per share
|
55,862,155
|
55,837,560
|
|
Adjusted average number of shares
for the purposes of diluted earnings per share
|
58,310,962
|
55,837,560
|
|
Basic and diluted (loss)/earnings
per ordinary share (pence)
|
2.5
|
(1.1)
|
|
|
2.4
|
(1.1)
|
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.
|
|
28 June
2024
|
30 June
2023
|
|
Earnings (£'000)
(Loss)/earnings for the purpose of
basic earnings per share Exceptional items
Tax effect of above
|
1,379
-
-
|
(594)
990
(248)
|
|
Earnings for the purpose of
adjusted earnings per share
|
1,379
|
148
|
|
Number of shares
|
|
|
|
Adjusted average number of shares
for the purposes of basic earnings per share
|
55,862,155
|
55,837,560
|
|
Adjusted average number of shares
for the purposes of diluted earnings per share
|
58,310,962
|
58,649,205
|
|
Basic earnings per ordinary share
(pence)
|
2.5
|
0.3
|
|
Diluted earnings per ordinary
share (pence)
|
2.4
|
0.3
|
|
15.
Intangible assets
|
|
|
|
Goodwill
£'000
|
Software
£'000
|
Total
£'000
|
|
Cost
|
|
|
|
|
At 2 July 2022
|
9,623
|
2,781
|
12,404
|
|
Additions
|
-
|
734
|
734
|
|
Disposals
|
-
|
(35)
|
(35)
|
|
At 30 June 2023
|
9,623
|
3,480
|
13,103
|
|
Additions
|
-
|
415
|
415
|
|
Disposals
|
-
|
(23)
|
(23)
|
|
28 June 2024
|
9,623
|
3,872
|
13,495
|
|
Accumulated amortisation and
impairment
|
|
|
|
|
At 2 July 2022
|
-
|
1,291
|
1,291
|
|
Amortisation charge
|
-
|
462
|
462
|
|
At 30 June 2023
|
-
|
1,753
|
1,753
|
|
Amortisation charge
|
-
|
583
|
583
|
|
28 June 2024
|
-
|
2,336
|
2,336
|
|
Net book value
|
|
|
|
|
28 June 2024
|
9,623
|
1,536
|
11,159
|
|
30 June 2023
|
9,623
|
1,727
|
11,350
|
Included within Software is £0.2m
(2023: £0.4m) net book value in relation to development of the
Mantiki core IT platform, which has a remaining amortisation period
of one (2023: two) years and £0.4m (2023: £0.6m) in relation to
development of the Korber Warehouse Management System, which has a
remaining amortisation period of three years (2023: four
years).
Included in Software is £1.0m
(2023: £0.7m) 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 15.2%
(2023: 13.8%).
The forecasts for the business are
based over a 5-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
£'000
|
Computer hardware & warehouse
equipment
£'000
|
Fixtures & fittings
£'000
|
Total
£'000
|
|
Cost
|
|
|
|
|
|
At 2 July 2022
|
20
|
899
|
385
|
1,304
|
|
Additions
|
-
|
81
|
153
|
234
|
|
At 30 June 2023
|
20
|
980
|
538
|
1,538
|
|
Additions
|
-
|
14
|
14
|
28
|
|
At 28 June 2024
|
20
|
994
|
552
|
1,566
|
|
Accumulated depreciation
|
|
|
|
|
|
At 2 July 2022
|
20
|
612
|
272
|
904
|
|
Charge for the period
|
-
|
138
|
94
|
232
|
|
At 30 June 2023
|
20
|
750
|
366
|
1,136
|
|
Charge for the period
|
-
|
132
|
96
|
228
|
|
At 28 June 2024
|
20
|
882
|
462
|
1,364
|
|
Net book value
|
|
|
|
|
|
At 28 June 2024
|
-
|
112
|
90
|
202
|
|
At 30 June 2023
|
-
|
230
|
172
|
402
|
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
£'000
|
Computer hardware & warehouse equipment
£'000
|
Total
£'000
|
|
Cost
|
|
|
|
|
At 2 July 2022
Additions
|
5,060
-
|
143
109
|
5,203
109
|
|
At 30 June 2023
|
5,060
|
252
|
5,312
|
|
At 28 June 2024
|
5,060
|
252
|
5,312
|
|
Accumulated depreciation
|
|
|
|
|
At 2 July 2022
|
1,891
|
50
|
1,941
|
|
Charge for the period
|
466
|
35
|
501
|
|
At 30 June 2023
|
2,357
|
85
|
2,442
|
|
Charge for the period
|
450
|
50
|
500
|
|
At 28 June 2024
|
2,807
|
135
|
2,942
|
|
Net book value
|
|
|
|
|
At 28 June 2024
|
2,253
|
117
|
2,370
|
|
At 30 June 2023
|
2,703
|
167
|
2,870
|
|
Lease liability
|
Leasehold property
£'000
|
Computer hardware
& warehouse
equipment
£'000
|
Total
£'000
|
|
At 2 July 2022
|
3,509
|
96
|
3,605
|
|
Additions
|
-
|
109
|
109
|
|
Interest expense
|
169
|
5
|
174
|
|
Lease payments
|
(596)
|
(39)
|
(635)
|
|
At 1 July 2023
|
3,082
|
171
|
3,253
|
|
Interest expense
|
148
|
6
|
154
|
|
Lease payments
At 28 June 2024
|
(619)
2,611
|
(56)
121
|
(675)
2,732
|
18. Deferred tax
|
|
28
June
2024
£'000
|
30 June
2023
£'000
|
|
Brought forward
|
496
|
428
|
|
Utilisation through income
statement
|
(302)
|
68
|
|
Carried forward
|
194
|
496
|
|
The balance comprises temporary
differences attributable to:
|
|
|
|
Fixed asset differences
£'000
|
Other timing differences
£'000
|
Tax losses
£'000
|
Total
£'000
|
|
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 1 July
2023
|
95
|
20
|
381
|
496
|
|
Recognised in the period through
income statement
Deferred tax asset at 28 June
2024
|
(22)
73
|
3
23
|
(283)
98
|
(302)
19
|
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 £0.9m (2023: £0.9m).
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% (2023: 25%).
19. Inventories
|
|
28 June
2024
£'000
|
30 June
2023
£'000
|
|
Finished goods for resale
|
5,868
|
8,367
|
There is no difference between the
replacement cost of stocks and carrying value (30 June 2023: £nil).
Inventories are stated after provision for impairment of £262,000
(2023: £195,000).
20. Trade and other
receivables
|
|
28
June
2024
£'000
|
30 June
2023
£'000
|
|
Amounts falling due within one
year:
|
|
|
|
Gross carrying amount - trade
receivables
|
1,040
|
821
|
|
Loss allowance
|
(6)
|
(7)
|
|
Net carrying amount - trade
receivables
|
1,034
|
814
|
|
Prepayments
|
1,523
|
1,582
|
|
Other receivables
|
127
|
219
|
|
|
2,684
|
2,615
|
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 28 June 2024 there were two (30
June 2023: two) 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:
|
|
28
June 2024
|
30 June 2023
|
|
Gross
£'000
|
Provision
£'000
|
Net
£'000
|
Gross
£'000
|
Provision
£'000
|
Net
£'000
|
|
Trade receivables and other
debtors
Not yet due
Overdue
|
941
99
|
-
(6)
|
941
93
|
776
45
|
-
(7)
|
776
38
|
|
|
1,040
|
(6)
|
1,034
|
821
|
(7)
|
814
|
Movements in the impairment
allowance for trade receivables and contract assets are as
follows:
|
|
28 June
2024
£'000
|
30 June
2023
£'000
|
|
Opening provision for impairment
of trade receivables and contract assets
|
7
|
13
|
|
Recovered provided debt
|
(4)
|
5
|
|
Increase during the period
|
5
|
(10)
|
|
Write off of provided debt
|
(2)
|
(1)
|
|
Carried forward
|
6
|
7
|
21. Cash and cash equivalents
Included in Cash and cash
equivalents is a balance of £8.1m (30 June 2023: £8.0m) relating to
advance payments received from WineBank customers. The
corresponding creditor to customers is included in contract
liabilities.
£5.1m of the cash balance is held
on 95 day notice (2023: £3.1m) at a preferential interest rate of
5.4% (30 June 2023: 4.75%).
22. Trade and other payables
|
|
28 June
2024
£'000
|
30 June
2023
£'000
|
|
Trade payables
|
2,398
|
2,227
|
|
Taxation and social security
|
1,675
|
1,581
|
|
Contract liabilities
|
8,703
|
8,721
|
|
Accruals and other creditors
|
1,649
|
1,677
|
|
|
14,425
|
14,206
|
The Directors consider the fair
value of creditors to be equal to the book value given their
short-term nature.
23. Provisions
Leasehold dilapidation provision
|
|
28 June
2024
£'000
|
30 June
2023
£'000
|
|
Brought forward
|
321
|
290
|
|
Charged in income statement
|
46
|
31
|
|
Carried forward
|
367
|
321
|
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:
|
|
28 June
2024
£'000
|
30 June
2023
£'000
|
|
October 2026
|
271
|
254
|
|
August 2030
|
96
|
67
|
|
|
367
|
321
|
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:
|
|
28
June
2024
£'000
|
30 June
2023
£'000
|
|
Trade and other receivables
|
1,161
|
1,033
|
|
Cash and cash equivalents
|
18,370
|
13,514
|
|
Financial assets measured at
amortised cost
|
19,531
|
14,547
|
|
Derivative financial liabilities
measured at fair value through profit or loss
|
(3)
|
(12)
|
|
Financial liabilities measured at
fair value through comprehensive income
|
(3)
|
(12)
|
|
Trade and other payables, excluding
non-financial liabilities
|
(4,047)
|
(3,904)
|
|
Lease liabilities
|
(2,732)
|
(3,253)
|
|
Financial liabilities measured at
amortised cost
|
(6,779)
|
(7,157)
|
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.
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:
|
|
28 June
2024
£'000
|
30 June
2023
£'000
|
|
Financial assets measured at
amortised cost
|
19,531
|
14,547
|
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 28 June 2024:
|
Carrying amount
£'000
|
Contractual
cash flows
£'000
|
<1 year
£'000
|
1-5 years
£'000
|
>5 years
£'000
|
|
Non-derivative financial
liabilities:
|
|
|
|
|
|
|
Trade and other payables
|
4,047
|
4,047
|
4,047
|
-
|
-
|
|
Lease liabilities
|
2,732
|
3,197
|
667
|
1,804
|
726
|
|
|
6,779
|
7,244
|
4,714
|
1,804
|
726
|
|
Derivative financial
liabilities:
|
|
|
|
|
|
|
Foreign currency forwards
|
|
|
|
|
|
(Inflow)
|
(1,568)
|
(1,568)
|
-
|
-
|
|
Outflow
|
1,565
|
1,565
|
-
|
-
|
|
|
(3)
|
(3)
|
(3)
|
-
|
-
|
|
Total
|
6,776
|
7,241
|
4,711
|
1,804
|
726
|
Contractual maturities of
financial liabilities as at 30 June 2023 are as follows:
|
|
Carrying
amount
|
Contractual
cash flows
|
<1 year
|
1-5 years
|
>5 years
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'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
|
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 28 June 2024, the outstanding
contracts all mature within 6 months (2023: 6 months) of the period
end. The Group is committed to buy Euro and Australian Dollars
(2023: Euro, Australian Dollars and US Dollars) with a Sterling
value of £1.57m (2023: £1.38m).
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:
|
|
28 June
2024
£'000
|
30 June
2023
£'000
|
|
AUS
|
-
|
128
|
|
Total
|
-
|
128
|
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.
|
|
28 June
2024
£'000
|
30 June
2023
£'000
|
|
Loss on 10% strengthening of
functional currency
|
(75)
|
(104)
|
|
Gain on 10% weakening of
functional currency
|
91
|
128
|
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.
|
|
28 June
2024
£'000
|
30 June
2023
£'000
|
|
Net cash
|
15,638
|
10,261
|
|
Equity
|
23,320
|
21,822
|
25. Share capital
|
|
28 June
2024
£'000
|
30 June
2023
£'000
|
|
Authorised, allotted, called up
and fully paid
55,972,405 (2023: 55,837,560)
ordinary shares of £0.01 each
|
560
|
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
£0.01 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 £0.01 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.
£0.98m of costs in relation to the
issue of new shares have been charged to the share premium account.
During the year 134,845 (2023: nil) Ordinary Shares of £0.01 were
issued by Virgin Wines UK plc.
During the year Virgin Wines UK
plc acquired 310,735 (2023: nil) of its Ordinary Shares of £0.01
for £149,547. These shares are held in treasury within the
Group.
The Directors have not approved an
interim dividend and do not recommend the payment of a final
dividend (2023: 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.
|
|
2
July
2022
£'000
|
New leases
£'000
|
Other non-cash
changes
£'000
|
Cashflow
£'000
|
30 June
2023
£'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 2 July 2022
|
|
|
|
|
11,465
|
|
At 30 June 2023
|
|
|
|
|
10,261
|
|
|
1
July
2023
£'000
|
New leases
£'000
|
Other non-cash
changes
£'000
|
Cashflow
£'000
|
28
June
2024
£'000
|
|
Cash at bank and in hand
|
13,514
|
-
|
-
|
4,856
|
18,370
|
|
Lease liabilities
|
(3,253)
|
-
|
(154)
|
675
|
(2,732)
|
|
Net cash
|
10,261
|
-
|
(154)
|
5,531
|
15,638
|
|
Decrease in cash in the period
|
|
|
|
|
4,856
|
|
New leases
|
|
|
|
|
-
|
|
Lease interest
|
|
|
|
|
(154)
|
|
Lease payments
|
|
|
|
|
675
|
|
Movement in net cash in the
period
|
|
|
|
|
5,377
|
|
Net cash at 30 June 2023
|
|
|
|
|
10,261
|
|
At 28 June 2024
|
|
|
|
|
15,638
|
27. Related Party disclosures
During the period ended 28 June
2024, sales of £756,770 (2023: £800,654) 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
£46,948 (2023: £47,203) in monitoring fees and expenses to Gresham
House Asset Management Limited. At 28 June 2024 £3,900 (2023:
£3,900) 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 £22,803
(2023: £24,405) were made to LKB Enterprises Limited. At 28 June
2024 £3,715 (2023: £4,695) 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 28 June 2024 or 30 June
2023.
The Group has a bank guarantee in
place of £0.1m 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
Nominal value of shares held in
treasury.
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