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(MCOZ.L) Cosentino Signature Wines PLC Buy/Sell
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| Date/Time | Headline | Source |
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| 24-12-09 | RNS |
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RNS Number : 6813E AIM 24 December 2009
NOTICE (904) 24/12/2009 7:30am
RESTORATION OF TRADING ON AIM
COSENTINO SIGNATURE WINES PLC The trading on AIM for the under-mentioned securities was temporarily suspended. The suspension is lifted from 24/12/2009 7:30am, the company's annual report and accounts having been published and half-yearly report notified.
Ordinary Shares of 1p each (B0PFWS1)(GB00B0PFWS12)
(REG S) If you have any queries relating to the above, please contact the company's nominated adviser on 020 7107 8000. Ref: AIMNOT904 This information is provided by RNS The company news service from the London Stock Exchange END
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| 24-12-09 | RNS |
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RNS Number : 6782E Cosentino Signature Wines plc 24 December 2009 24 December 2009 Cosentino Signature Wines plc Posting of Report and Accounts Cosentino Signature Wines plc ("Cosentino" or the "Company"), the AIM listed, ultra-premium brand Napa Valley based wine company, is pleased to confirm that its report and accounts for the year ended 31 December 2008 have been posted to shareholders and are available to be viewed on the Company's website, www.cosentinowinery.com.
For further information please contact: Cosentino Signature Wines plc Larry Soldinger, Chairman - c/o Financial Dynamics 020 7831 3113 Seymour Pierce Jonathan Wright - 020 7107 8000 Financial Dynamics Jonathon Brill / Billy Clegg / Ed Westropp - 020 7831 3113 This information is provided by RNS The company news service from the London Stock Exchange END
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| 24-12-09 | RNS |
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This news article is displayed preformatted as it may contain results tables
RNS Number : 6773E
Cosentino Signature Wines plc
24 December 2009
24 December 2009
COSENTINO SIGNATURE WINES PLC
INTERIM RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2009
CHAIRMAN's STATEMENT
Introduction
Following a very challenging 2008 for the entire wine industry, 2009 did not begin any better. The wine market was hit particularly hard at the end of 2008 by the economic downturn and the resulting challenges continued throughout 2009, especially in the luxury and ultrapremium wine sectors; since the end of 2008, demand has shifted to wines in the $10 to $15 price range. Winery sales to distributors in the first six months of 2009 dropped dramatically as distributors continued to struggle to get their inventories down to less than 30 days on the floor from their historic 2008 highs of seven and eight months. Wine club sales also are down from previous years as consumer credit has tightened.
As sales decreased sharply at the end of 2008 and continued into 2009, management and the Board of directors concluded that the wine industry would remain hard hit throughout 2009 and into 2010. At the end of 2008, the Company moved to drastically reduce its cost base and increase efficiencies. This included the abandonment of the Company's non essential properties and equipment that were the subject of its 2007 sale and leaseback agreement. Since March 2009 the Company has been operating only in its Yountville facility in the Napa Valley, California and through new affordable leased facilities in Woodbridge, California at substantial cost savings.
Financials
Turnover including discontinued operations for the period was US$ 3.56 million (2008: US$ 4.49 million). Loss per share including discontinued operations was US$(0.11) [2008 $(0.01)]. Loss before tax including discontinued operations was US$(2.78) million [2008 $(0.35) million]
Operations
During the first six months of 2009 the global credit crunch continued to take hold and wholesale and retail sales for the Company were well below average. To counter the effect of the sharp drop in revenues the Company embarked on a significant cost cutting plan, which started in the fourth quarter of 2008 and continued throughout all of 2009. A major component of the plan was the discontinuance of the operations and closure of three of the Company's production facilities. These operations included the facilities, vineyards and equipment at the Pope Valley, Clements and Lockeford properties that were the subject of the 2007 sale and leaseback transaction. In discontinuing the operations, the leased facilities and equipment were formally returned to the lessor in February 2009. Two of the Company's brands were discontinued and all operations in these facilities, other than the winding down, ceased in 2008. The decision to close down the brands and facilities was made because the facilities were operating at significantly less than 50% of capacity and management and the Board of directors became convinced that the wine industry would not recover quickly enough in the near term in order to allow the necessary increased production levels to operate these facilities profitably. As a result, management concluded that the Company could no longer afford to produce these brands and operate these facilities. Management estimates that the closure of these properties along with the additional company-wide cost cutting measures that management put in place at the end of 2008, will save the Company approximately $4 million annually in operating costs.
The focus of the Company and management in the near term will be directed to its core brand, Cosentino Winery, and its related operating facilities in Napa Valley, and newly leased production and storage facilities in Woodbridge California.
Management
Our management team is fully in place and all top executive positions are reporting directly to me.
At the end of the six month period under review, business began to stabilize and it has continued to remain stable throughout the remainder of the year, while once again beginning to build. I again want to thank our small and tireless management team and the loyal and hard working employees of the Group for their tireless work. As we continue to deal with the challenges facing our Company and industry throughout the rest of the year, I am proud to have our strong team with me every step of the way.
Current status of our Senior and Subordinated Notes and the Sale and Leaseback Agreement
Although the Company is in default on its senior and subordinated notes payable and is currently operating under a forbearance agreement, the Company currently has two signed term sheets, from two separate lenders, for the refinancing of our entire current senior and subordinated debt along with the funding of the necessary working capital required to adequately run our business. Both term sheets are still subject to additional due diligence by the potential lenders. Also, we have been able to reach an agreement in principle regarding our release from our 2007 sale and leaseback agreement through a court sanctioned mediation. The agreement will be contingent on our ability to obtain new financing over the next two months. This agreement is in the process of being documented.
Summary
Operations for the Company are now stable and we have begun to recover lost ground along with the rest of the wine industry. As a result of our quick and decisive cost cutting measures which were instituted in late 2008, the Company has been able to reduce its operating costs by nearly $4 million dollars annually. Those annual cost savings have more than compensated for the lost revenue and lower pricing that the Company and the industry are now enduring.
The Board of Directors and I have been working diligently to obtain new financing for the Company in this very difficult lending environment and we now have two nonbinding signed term sheets in hand. We also have an agreement in principal settling our 2007 sale and leaseback agreement. We look forward to be in a position to make additional favourable announcements in the future.
********
Larry J Soldinger
Chairman
23 December 2009 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended Six months ended
30 June 2009 30 June 2008
US$ US$
Continuing operations Re-presented
Note
Revenue
Distributors 1,091,784 844,164
Retail 1,520,362 1,405,934
Other 137,972 -
Total Revenues 2,750,118 2,250,098
Cost of revenues (3,334,221) (2,131,916)
Operating (loss)/profit (584,103) 118,182
Other (expense)/income (80,463) 1,813
Finance costs (882,529) (933,985)
Loss from continuing operations before (1,547,095) (813,990)
discontinued operations and taxes
(Loss)/Profit from discontinued 8 (1,232,660) 459,007
operations
Income tax income/(expense) (5,778) 139,600
Loss for the period (2,785,533) (215,383)
(Loss)/ Earnings per share
Number of shares outstanding, basic and 24,717,864 22,403,451
fully diluted
Basic and fully diluted - continuing (0.06) (0.03)
operations
Basic and fully diluted - discontinued (0.05) 0.02
operations
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note 30 June 2009 31 December 2008 30 June 2008
US$ US$ US$
ASSETS
Non-current assets
Property plant and equipment 4 21,456,060 21,834,373 21,066,334
Intangible assets 241,216 273,832 6,357,396
Deferred tax assets - 6,711,990
Other assets 413,720 609,500 584,121
Total non-current assets 22,110,996 22,717,705 34,719,841
Current assets
Inventories 12,868,619 13,000,992 16,163,562
Trade and other receivables 945,041 734,426 1,587,148
Cash - restricted - -
Cash and cash equivalents 46,934 66,103 187,032
Total current assets 13,860,594 13,801,521 17,937,742
Total assets 35,971,590 36,519,226 52,657,583
EQUITY AND LIABILITIES
Equity
Share capital 420,453 420,453 387,220
Share premium 91,392 91,392 -
Retained earnings 3,898,042 6,683,575 27,230,306
Total equity 4,409,887 7,195,420 27,617,526
Non-current liabilities
Borrowings - - 15,000,000
Obligations under finance 2,127,559 2,277,506 2,252,957
leases
Redeemable preference shares 1,217,284 1,184,734 1,148,920
Subordinated borrowings - - 2,500,000
Loan notes 587,500 587,500 587,500
Total non-current liabilities 3,932,343 4,049,740 21,489,377
Current liabilities
Obligations in default 5 18,000,000 18,000,000 -
Obligations under finance 1,273,843 1,273,843 1,044,621
leases
Trade and other payables 8,355,517 6,000,223 2,506,059
Total current liabilities 27,629,360 25,274,066 3,550,680
Total liabilities 31,561,703 29,323,806 25,040,057
Total liabilities and equity 35,971,590 36,519,226 52,657,583
STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY
Share Share Retained
capital premium earnings Total
US$ US$ US$ US$
Balance 1 January 2007 387,220 43,268,657 (15,894,308) 27,761,569
Cancellation of share premium - (43,268,657) 43,268,657 -
account
Costs associated with
cancellation of
share premium account - - (130,085) (130,085)
Income for the period - - 201,425 201,425
Balance at 31 December 2007 387,220 - 27,445,689 27,832,909
Loss for the period - - (215,383) (215,383)
Balance at 30 June 2008 387,220 - 27,230,336 27,617,526
Stock issued in payment of
director
services 33,233 91,392 - 124,625
Loss for the period - - (20,546,731) (20,546,731)
Balance at 31 December 2008 420,453 91,392 6,683,575 7,195,420
Loss for the period - - (2,785,533) (2,785,533)
Balance 30 June 2009 420,453 91,392 3,898,042 4,409,887
STATEMENTS OF CONSOLIDATED CASH FLOWS
Six months ended Six months ended
30 June 2009 30 June 2008
US$ US$
Re-presented
Cash flows from operating activities
Cash receipts from customers 3,335,381 4,155,204
Cash paid to suppliers (2,596,147) (6,680,462)
Cash generated from operations 739,234 (2,525,258)
Interest paid (515,197) (918,464)
Income taxes (paid) refunded (5,778) (400)
Net cash flows from operating 218,259 (3,444,122)
activities
Investing activities
Investment in intangibles (17,690) (128,692)
Interest received - 1,814
Purchases of property plant and (69,791) (628,685)
equipment
Net cash used in investing activities (87,481) (755,563)
Financing activities
Proceeds from new loans raised - 4,000,000
(Repayment of)/Proceeds from capital (149,947) 8,901
leases
Net cash (used in)/provided by (149,947) 4,008,901
financing activities
Net decrease in cash and cash (19,169) (190,784)
equivalents
Cash and cash equivalents at beginning 66,103 377,816
of period
Cash and cash equivalents at end of 46,934 187,032
period
NOTES TO THE FINANCIAL INFORMATION
General Information and Going Concern
Cosentino Signature Wines plc (the "Company") and its operating subsidiaries (together the "Group") produce wines from the Northern California region of the US. The Group sells ultra-premium and luxury wines to fine dining restaurants through third party wholesale distributors and directly to consumers at its wine tasting rooms and through its wine club.
The Company is a public company incorporated and domiciled in the United Kingdom and has its primary listing on the AIM Stock Exchange.
The Company is currently in default with its senior and subordinated secured lenders and operating under forbearance agreements that expire on December 31, 2009. Additionally during the first six months of 2009 and during the year of 2008 the Company experienced a net loss before tax, but including discontinued operations of US$2.8 and $14.2 million, respectively. The loss included the discontinuance and abandonment of the operations and facilities associated with two of its major brands, Crystal Valley Cellars and CE2V and the related properties and equipment which are subject to a 2007 sale and leaseback agreement, to which the Company has an ongoing dispute with the lessor.
Should the Company be unable to timely secure a re-financing of its senior and subordinated debt or should the Company's current senior and subordinated lenders decide not to extend their current forbearance agreements before the Company is able to re-finance those obligations the Company's ability to continue as a going concern could be in doubt.
The Company currently has two signed term sheets, from two separate lenders, for the refinancing of its entire current senior and subordinated debt along with the funding of the necessary working capital required to adequately run its business. Both term sheets are still subject to additional due diligence by the potential lenders. The Company also has an agreement in principle regarding the release of its 2007 sale and leaseback agreement through court sanctioned mediation. The agreement will be contingent on the Company's ability to obtain new financing by 28 February 2010. This agreement is in the process of being documented. Based on the current status and the quality and constructiveness of negotiations with potential lenders and leasing parties, the directors believe the negotiations in securing refinancing for the group and in securing favorable settlement of any outstanding lease obligations will be successful. The directors believe that such refinancing will provide additional liquidity and allow the Company to continue operating.
In the light of these actions, cost cutting measures implemented by management and management's focus on the group's core brand, the directors consider it appropriate to adopt the going concern basis in preparing the accounts.
This condensed consolidated interim financial information was approved for issue on 23 December 2009.
1. Basis of presentation
The condensed consolidated interim financial information for the six months ended 30 June 2009 has been prepared in accordance with IAS 34, 'Interim Financial Reporting'. The condensed consolidated interim financial information should be read in conjunction with the annual financial statement for the year ended 31 December 2008, which have been prepared in accordance with IFRS.
2. Accounting policies
Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2008, as described in those annual financial statements.
The results of operations for the six months ended June 30, 2008 have been re-presented to adjust the accounts for the effect of the discontinuance of operations as more fully discussed in Note 8.
Tax expense in the interim periods is accrued using the tax rate that would be applicable to expected total annual earnings or losses.
The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 January 2009 but are not currently relevant for the group.
Standard Details of amendment
IFRS 2, Share Based Payments Amendments to vesting
conditions and
cancellations
IFRS 7 Financial Instruments: -Presentation of finance
Disclosures costs
-Amendment dealing with
improving disclosures
about Financial
Instruments
-Amendments enhancing
disclosures about fair
value and liquidity risk
IFRS 8, Operating Segments New standard on segment
reporting (replaces IAS
14)
IAS 1, Presentation of -Amendments to structure
Financial Statements of Financial Statements
-Current/non-current
classification of
derivatives
IAS 8 Accounting Policies, Status of implementation
Changes in guidance
Accounting Estimates and
Errors
IAS 10 Events after the Dividends declared after
Reporting Period the end of the reporting
period
IAS 16 Property, Plant and -Recoverable amount
Equipment -Sale of assets held for
rental
IAS 18 Revenue -Costs of originating a
loan
IAS 19 Employee Benefits -Curtailments and negative
past service cost
-Plan administration costs
-Replacement of term 'fall
due'
-Guidance on contingent
liabilities
IAS 20 Accounting for -Government loans with a
Government Grants and below-market rate of
Disclosure of Government interest
Assistance -Consistency of
terminology with other
IFRSs
IAS 23 Borrowing Costs -Amendment requiring
capitalisation only model
-Components of borrowing
costs
IAS 27 Consolidated and Amendment dealing with
Separate Financial Statements measurement of the cost of
investments when adopting
IFRS for the first time.
IAS 28 Investments in -Required disclosures when
Associates investments in associates
are accounted for at fair
value through profit or
loss
-Impairment of investment
in associate
IAS 29 Financial Reporting in -Description of
Hyperinflationary Economies measurement basis in
financial statements
-Consistency of
terminology with other
IFRSs
IAS 31 Interests in Joint Required disclosures when
Ventures interests in jointly
controlled entities are
accounted for at fair
value through profit or
loss
IAS 32 Financial Instruments: Certain financial
Presentation instruments will be
classified as equity
whereas, prior to these
amendments, they would
have been classified as
financial liabilities
IAS 36 Impairment of Assets Disclosure of estimates
used to determine
recoverable amount
IAS 38 Intangible Assets -Advertising and
promotional activities
-Unit of production method
of amortization
IAS 39 Financial Instruments: -Reclassification of
Recognition derivatives into or out of
and Measurement the classification of at
fair value through profit
or loss
-Designating and
documenting hedges at the
segment level
-Applicable effective
interest rate on cessation
of fair value hedge
accounting
IAS 40 Investment Property -Property under
construction or
development for future use
as investment property
-Consistency of
terminology with IAS 8
-Investment property held
under lease
IAS 41 Agriculture -Discount rate for fair
value calculations
-Additional biological
transformation
-Examples of agricultural
produce and products
-Point-of-sale costs
The following new standards, amendments to standards and interpretations have been issued but are not effective for the financial year beginning 1 January 2009 and have not been early adopted.
- Revised IAS 27 Consolidated and Separate Financial Statements (effective 1 July 2009)
- IFRS 3 (revised) Business Combinations (effective 1 July 2009)
- IAS 27 Consolidated and Separate Financial Statements (effective 1 July 2009)
- IAS 39 Financial Instruments: Recognition and Measurement (Amendment): Eligible
Hedged Items
The adoption of these standards, amendments and interpretations is not expected to have a material impact on the Group's loss for the period or equity. The adoptions may affect disclosures in the Group's financial statements.
3. Financial information
The comparative figures for the year ended December 31, 2008 were derived from the statutory accounts for that year which have been delivered to the Registar of Companies. Those accounts received unqualified audit report which did not contain statements under sections 498(2) or (3) (accounting records or returns inadequate, accounts not agreeing with records and returns or failure to obtain necessary information and explanations) of the Companies Act of 2006.
4. Property plant and equipment and intangible assets
Property plant and equipment Intangible assets
Six months ended 30 June 2008
Opening net book amount as at 20,821,607 6,355,103
1 January 2008
Additions 628,685 128,692
Disposals - -
Depreciation and amortisation ( 383,958) ( 126,399)
Closing net book amount as at 21,066,334 6,357,396
30 June 2008
Six months ended 30 June 2009
Opening net book amount as at 21,834,373 273,832
1 January 2009
Additions 237,524 -
Disposals and abandonments (150,311) -
Depreciation and amortisation (465,526) (32,616)
Closing net book amount as at 21,456,060 241,216
30 June 2009
5. Borrowings
30 June 2009 31 December 2008
US$ US$
Loan from PRI (i) 12,000,000 12,000,000
Loan from CSW (ii) 3,000,000 3,000,000
Loan from CSW (iii) 3,000,000 3,000,000
18,000,000 18,000,000
(i) PRI Line of Credit
On December 1, 2005, the Company, VGI and CSEL entered into a $15,000,000 credit facility arrangement with Physician Reciprocal Insurers ("PRI") which was subsequently increased to $18,000,000, having a maturity date of March 31, 2007 at December 31, 2006. The credit facility is secured by all of the assets of the Company. Interest originally accrued at the "prime rate" as published in the Wall Street Journal plus 2.0%, adjusted at the end of each quarter. On March 31, 2007, the credit facility was converted to a $20,000,000 two-year term loan, PRI advanced an additional $2,000,000, the maturity date was extended to March 31, 2009 and PLC granted 1,182,677 A warrants to PRI. In June 2007 PLC granted an additional 170,989 A warrants to PRI. During August 2007 in conjunction with the sale of the property and equipment, the Company paid down US$13,000,000 of the outstanding debt under the credit facility, converted the term loan to a non-revolving US$ 12,000,000 line of credit, extended the maturity date to 31 December 2009 and lowered the interest rate from the prime rate plus 2% to the prime rate. In May 2008, the Company entered into an additional loan agreement with CSW Sub Lender L.P. and agreed to a floor of 6% on the interest rate accruing on the PRI loan. In 2009, the Company defaulted on the PRI Loan. The Company and PRI are currently operating under a forbearance agreement that expires on December 31, 2009 (see Note 1).
At the time of the re-finance in March 2007, the Company believes that the interest rate obtained of prime plus 2% was a premium to its then prevailing market rate for secured borrowings. The premium was offset in equal amounts by the warrants issued to the lender in consideration for the re-finance. The Company thus treated the fair value of the loan notes as approximating its nominal value. The directors consider the carrying amount of CSW Loan to approximate its fair value as of June 30, 2009.
(ii) CSW Loan
In June 2006, the Company entered into a loan agreement with CSW Lender, LP ("CSW") and borrowed an amount of $5,000,000. The loan is secured by a second mortgage on all of the Company's real estate, initially accrued interest at the prime rate plus 2% and had an extended maturity date of March 31, 2007. In August 2007, the company paid the loan down $2,000,000, and the interest rate was reduced to the prime rate on the $3,000,000 balance. The maturity date was also extended to December 31, 2009.
In May 2008, a floor of 6% was placed on the interest rate in conjunction with the closing of the loan agreement with CSW Sub.
In 2009, the Company defaulted on the CSW Loan. The Company and CSW are currently operating under a forbearance agreement that expires on December 31, 2009 (see Note 1).
The directors consider the carrying amount of CSW Loan to approximate its fair value given the assumptions noted above.
(iii) CSW Sublender Loan
In May 2008, the Company entered into an additional line of credit agreement with CSW Sub amounting to $5,000,000, with an interest rate of 12% and a maturity date of December 31, 2009. The loan is secured by all of the Company's assets, but is junior to the secured interest of PRI and CSW. The Company borrowed $3,000,000 during 2008 under this line of credit. In 2009, the Company defaulted on this loan and the Company and CSW Sub are currently operating under a forbearance agreement that expires on December 31, 2009 (see Note 1).
The directors consider the carrying amount of the CSW Sublender Loan to approximate its fair value.
6. Preference shares, warrants and options
At 30 June 2009, 208,268 (2008:332,972) options were outstanding under the Cosentino Signature Wines plc 2005 Equity Compensation Plan with exercise prices ranging from £0.245 to £1.25. Of these options, 84,286 (2008:27,972) were vested at the end of the interim period.
During the period no options have become exercisable due to the conditions attached to the options. No charge has been made to the profit and loss account for any options granted.
7. Seasonality
The retail and wholesale sales for wines are subject to seasonal fluctuations with peak demand in the third and fourth quarter. This is due to seasonal harvest activities and holiday periods. For the six months ended 30 June 2009, the level of retail and wholesale sales represented 35% (six months ended 30 June 2008: 39%) of the annual level retail and wholesale sales in the year ended 31 December 2008.
8. Discontinued Operations
In the fourth quarter of 2008, the Group abandoned its operations and discontinued the production of two of its three main brands, CE2V and Crystal Valley Cellars, along with its custom crush business which was being operated out of its Lockeford facility. These operations were primarily conducted from the facilities and equipment at the Pope Valley, Clements and Lockeford facilities and vineyards that were the subject of the 2007 sale leaseback transaction. In discontinuing the operations, the leased facilities and equipment were formally returned to the lessor in February 2009 after the Company had completed the removal of its property and equipment that had not been included in the sale leaseback transaction. The brands were discontinued in October 2008 and all operations in these facilities, other than the winding down, ceased in 2008. The decision to abandon the brands and facilities was made as the facilities were operating at significantly less than 50% of capacity and because of the general economic decline that was being experienced in the United States, convinced management and the board of directors that the wine industry would not recover in 2009 and perhaps would begin to recover only slowly in 2010. As a result, management concluded that the Company could no longer afford to produce these brands and operate the returned facilities. Management believes that all Company efforts should be directed to its core brand, Cosentino Winery, and its related facilities in Napa Valley, California. Because the returned facilities were operating at significantly less than full capacity, the costs to maintain these facilities and brands had become uneconomic as of the fourth quarter of 2008.
The results of discontinued operations in respect of CE2V, Crystal Valley Cellars and the custom crush business consisted of the following for the six months ended:
30 June, 2009 30 June, 2008
Net Sales 812,252 2,236,061
Cost of Sales (607,906) (738,287)
Gross Profit 204,346 1,497,774
Operating Expenses (153,335) (1,038,737)
Income from discontinued operations before 51,011 459,007
taxes
Income taxes - -
Costs to settle obligations of discontinued (1,141,093) -
operation
Loss on abandoned assets (142,578) -
(Loss) Income from discontinued operations (1,232,660) 459,007
9. Events After the Balance Sheet Date and Contingent Liabilities
During the first six months of 2009, the Company was sued by a number of creditors as a result of being unable to pay amounts due within agreed-upon terms. All lawsuits have since been settled, allowing the Company extended payment terms, or dismissed, with the exception of two minor lawsuits to which the Company disputes the amount of the claims.
The Company is subject to certain other legal proceedings and claims that have arisen in the ordinary course of business and have not been fully adjudicated. In the opinion of management, the Company does not have a potential liability related to any current legal proceedings and claims that would individually or in the aggregate have a material adverse effect on its consolidated financial condition or operating results.
In August 2007 the Company entered into a sale and leaseback transaction relating to land, land improvements, buildings and equipment. The Company has been in a dispute regarding these leases, has made no rental payments since September 2008 and returned the properties and equipment to the lessor in February, 2009. The lessor filed a lawsuit against the Company in early 2009. In December 2009, through a court supervised mediation, the Company and the lessor came to an agreement in principal to settle all outstanding obligations. The settlement is contingent upon the Company closing on its refinancing (see Note 1). The Company believes that any further disclosures regarding this pending settlement would be seriously prejudicial to the outcome of any settlement agreement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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| 04-12-09 | RNS |
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This news article is displayed preformatted as it may contain results tables
RNS Number : 6365D
Cosentino Signature Wines plc
04 December 2009
4th December 2009
COSENTINO SIGNATURE WINES PLC
FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008
Chairman's Statement
Introduction
2008 was a very challenging year for the entire wine industry. Our Company had been operating at record profits and revenue through September 2008 when the economic downturn hit in the USA. The wine industry was hit particularly hard, especially the luxury and ultrapremium wine sectors. Demand quickly shifted to wines in the $10 to $15 price range, sales to distributors dropped dramatically as distributors struggled to get their inventories down to less than 30 days on the floor from their historic highs of seven and eight months, and wine club sales began decreasing as consumer credit tightened.
Management and the board of directors reacted quickly. After concluding that the wine industry would remain hard hit throughout 2009 and perhaps would only barely begin to recover in 2010, the Company moved to drastically reduce its cost base and increase efficiencies. This included the abandonment of the Company's non essential properties and equipment that were the subject of its 2007 sale and leaseback agreement. The Company is now operating only in its Yountville facility in the Napa Valley, California and through new affordable leased facilities in Woodbridge, California at substantial cost savings.
Financials
Turnover for the period was US$10.2 million (2007: US$11.0 million). Loss per share was US$(0.92) relative to income per share of US$0.01 in 2007. Loss before tax but including discontinued operations was US$(14.2) million relative to income before tax, but including income from discontinued operations of US$0.3 million in 2007.
The Directors are not recommending a dividend for the full year.
Operations
In the fourth quarter of 2008, after experiencing record trading through September 2008, the global credit crunch took hold and wholesale and retail sales for the Company were well below average. To counter the sharp drop in revenue for the foreseeable future, the Company embarked on a significant cost cutting plan. As a major component of the plan, the Company decided to discontinue the operations and abandon three of its production facilities. These operations included the facilities, vineyards and equipment at the Pope Valley, Clements and Lockeford properties that were the subject of the 2007 sale and leaseback transaction. In discontinuing the operations, the leased facilities and equipment were formally returned to the lessor in February 2009. Two of the Company's brands were discontinued and all operations in these facilities, other than the winding down, ceased in 2008. The decision to abandon the brands and facilities was made because the facilities were operating at significantly less than 50% of capacity and because due to the general economic decline, management and the board of directors became convinced that the wine industry would not recover quickly enough in the near term future in order to allow the necessary increased production levels to operate these facilities profitably. As a result, management concluded that the Company could no longer afford to produce these brands and operate these facilities. Management estimates that the abandonment of these properties along with the additional company-wide cost cutting measures that management put in place at the end of 2008, will save the Company approximately $4 million annually in operating costs. Management strongly believes that all near term Company efforts should be directed to its core brand, Cosentino Winery, and its related operating facilities in Napa Valley, and newly leased production and storage facilities in Woodbridge California.
Management
Our management team is fully in place and all top executive positions are reporting directly to me.
Although 2008 has been a very disappointing year, I want to thank our small and tireless management team and the loyal and hard working employees of the Group. I would like to take this opportunity to thank all of our colleagues for their hard work during this difficult year. As we deal with the challenges facing our Company and industry in 2009, I am proud to have our strong team with me every step of the way.
Current status of our Senior and Subordinated Notes and the Sale and Leaseback Agreement
The Company is currently in default on its senior and subordinated notes payable as well as the 2007 sale and leaseback agreement covering the returned abandoned properties and equipment. We are currently operating under forbearance agreements with our senior and subordinated lenders and our relationships with our lenders are good. We are in negotiations with several potential lenders to refinance our existing debt and to provide additional working capital to the Company. We are also mediating the dispute over our sale and leaseback arrangement.
Summation
Operations for the Company are now stable and we have begun to recover lost ground along with the rest of the wine industry. As a result of our quick and drastic cost cutting measures which were instituted in the fourth quarter of the year, the Company has been able to reduce its operating costs by nearly $4 million dollars annually. Those annual cost savings have more than compensated for the lost revenue and lower pricing that the Company and the industry are now enduring.
The Board of Directors and I have been working diligently to obtain new financing for the Company in this very difficult lending environment. We look forward to be in a position to make favorable announcements in the future.
********
Larry J Soldinger
Chairman
2 December 2009
COSENTINO SIGNATURE WINES, PLC
CONSOLIDATED INCOME STATEMENT
YEAR ENDED DECEMBER 31, 2008
2008 2007
Continuing Operations Notes Before Impairment of Goodwill and Deferred Taxes Impairment of Goodwill and Deferred Taxes Total Total
Re-presented
Revenues 5
Distributors 1,876,909 - 1,876,909 1,980,588
Retail 2,593,851 - 2,593,851 2,086,113
Other 68,885 - 68,885 -
Total Revenues 4,539,645 - 4,539,645 4,066,701
Cost of Revenues 6 (5,723,042) - (5,723,042) (3,936,534)
Operating (Loss)/Profit (1,183,397) - (1,183,397) 130,167
Other income/(expense) 8 26,305 - 26,305 43,358
Issuance cost written off on - - - (414,000)
early redemption of preference
shares
Finance costs 9 (1,920,983) - (1,920,983) (2,641,775)
Loss from continuing (3,078,075) - (3,078,075) (2,882,250)
operations before discontinued
operations and taxes
Profit/loss from discontinued 31 (5,376,618) (5,733,541) (11,110,159) 3,197,603
operations, net of tax
Income tax expense 10 (1,890) (6,571,990) (6,573,880) (113,928)
(Loss)/profit for the year (8,456,583) (12,305,531) (20,762,114) 201,425
(Loss)/Earnings per share 11
Basic and fully diluted - (0.68) (0.12)
continuing operations
Basic and fully diluted - (0.24) 0.13
discontinued operations
COSENTINO SIGNATURE WINES, PLC
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2008
Note 2008 2007
ASSETS US$ US$
Non-current assets
Property plant and equipment 21,834,373 20,821,607
Intangible assets 273,832 6,355,103
Deferred tax assets 10 - 6,571,990
Other assets 14 609,500 219,370
Total non-current assets 22,717,705 33,968,070
Current assets
Inventories 15 13,000,992 14,270,100
Trade and other receivables 734,426 942,787
Cash - restricted - 123,147
Cash and cash equivalents 66,103 254,669
Total current assets 13,801,521 15,590,703
Total assets 36,519,226 49,558,773
EQUITY AND LIABILITIES
Equity
Share capital 17 420,453 387,220
Share premium account 91,392 -
Retained earnings 6,683,575 27,445,689
Total equity 7,195,420 27,832,909
Non-current liabilities
Borrowings 21 - 13,500,000
Obligations under finance leases 2,277,506 2,115,534
Redeemable preference shares 1,184,734 1,119,634
Loan notes 587,500 587,500
Total non-current liabilities 4,049,740 17,322,668
Current liabilities
Obligations in default 21 18,000,000 -
Obligations under finance leases 22 1,273,843 808,392
Trade and other payables 6,000,223 3,594,804
Total current liabilities 25,274,066 4,403,196
Total liabilities 29,323,806 21,725,864
Total liabilities and equity 36,519,226 49,558,773
The financial statements were approved by the board of directors on 2 December 2009 and were signed on its behalf by Cristopher Crosthwaite. .
Director
COSENTINO SIGNATURE WINES, PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2008
2008 2007
US$ US$
Cash flows from operating activities
Cash receipts from customers 9,311,580 10,800,985
Cash paid to suppliers (10,620,245) (15,507,759)
Cash used in operations (1,308,665) (4,706,774)
Interest paid (1,601,558) (2,598,417)
Income taxes paid (1,890) (3,927)
Net cash flows used in operating activities (2,912,113) (7,309,118)
Investing activities
Investment in intangibles (272,923) (624,291)
Interest received 1,544 43,358
Proceeds from the sale of property plant - 19,818,058
and equipment
Purchases of property plant and equipment (282,589) (1,453,910)
Net cash provided by/(used in) investing (553,968) 17,783,215
activities
Financing activities
Costs related to share capital - (836,951)
Proceeds from new loans raised 4,500,000 5,500,000
Net proceeds from issuance of convertible - 3,250,000
notes
Proceeds from issuance of preference shares - 234,880
Repayment of borrowings - (15,234,880)
Redemption of preference shares - (2,000,000)
Repayment of capital leases (1,021,957) (1,094,507)
Finance costs related to new borrowings (323,675) -
Net cash provided by (used in) financing 3,154,368 (10,181,458)
activities
(Decrease)/Increase in cash and cash (311,713) 292,639
equivalents
Cash and cash equivalents at beginning of 377,816 85,177
the year
Cash and cash equivalents at end of the 66,103 377,816
year
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR CKQKKABDDPBK
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Will the drop in production from Chile cause the cost of wine to go up ?
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Cosentino: Legal, Regulatory Hurdles Mount
Cosentino Winery’s legal, regulatory and financial hurdles continue to mount with: The VA Filtration trial which opened Feb. 18. Carpenter Ranch lawsuit scheduled for trial May 14. An imminent CDFA decision on whether or not to revoke its license to buy winegrapes. Two lawsuits by wine brokers claiming unpaid commissions. A major judgment obtained by Mustard’s Grill moving closer to enforcement. A new California State Tax lien filed by EDD. An unpaid-wage judgment from the California Labor Commission. VA FILTRATION TRIAL STARTS WITH DISPUTED BILLING AND MULTIPLE BUSINESS ENTITIES Napa-based VA Filtration filed against Cosentino Winery LLC to recover $33,445 plus $4,900.40 in interest it stated was owed for work performed in 2008. According to court documents and testimony in open court, VA Filtration was hired by Cosentino Winery to reduce volatile acidity in 22,166 gallons of Petite Syrah, Cabernet Sauvignon, Cabernet Franc and Merlot at Crystal Valley Cellars near Lodi. The cost of that treatment was $20,745. Crystal Valley Cellars LLC, like Cosentino Winery LLC, is a subsidiary of CSEL (see diagram, below). VIP Subscribers click here to read the complete, un-redacted article. -------------------------------------------------------------------------------- Also In This Article: The full text of the following sections is available to VIP Premium Subscribers). VOLATILE ACIDITY REDUCTION ON 12,000 GALLONS OF ZINFANDEL DISPUTED COSENTINO DENIES LIABILITY, SAYS WRONG CORPORATE ENTITY SUED JUDGE URGES SETTLEMENT, RESULT UNKNOWN CARPENTER RANCH SUES FOR $569,759 AFTER PAYMENT AGREEMENT FAILS CDFA RULING IMMINENT: COULD BAR PURCHASE OF WINEGRAPES BROKER LAWSUITS CLAIM SALES COMMISSIONS UNPAID MUSTARD’S GRILL ESTABLISHES LIEN AGAINST WINERY PROPERTY CALIF. EDD LIEN CLAIMS UNPAID EMPLOYMENT TAXES STATE LABOR COMMISSION OBTAINS JUDGMENT FOR UNPAID WAGES |
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:-)
LOL.... Hedging my bets.... Heads I win, tails you lose... :-) Trying to keep positive about this stock.... After all that time of accepting my cash was lost in this to suddenly be presented with a situation where all "may not be lost" is quite encouraging... What I am not going to do though is spend the cash before I get it... Cheers AE |
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The contents of the postings summarised here represents the opinions of the authors and not of Interactive Investor Trading Limited.
They have not been approved or issued by Interactive Investor Trading Limited.
They have not been approved or issued by Interactive Investor Trading Limited.
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