Company registration number 06350591 (England and Wales)
CULT WINES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
CULT WINES LIMITED
COMPANY INFORMATION
Directors
P Gearing
T Gearing
Company number
06350591
Registered office
Clockwork Building
45 Beavor Lane
Ravenscourt Park
London
United Kingdom
W6 9AR
Auditor
Azets Audit Services
2nd Floor
Regis House
45 King William Street
London
United Kingdom
EC4R 9AN
CULT WINES LIMITED
CONTENTS
Page
Strategic report
1 - 5
Directors' report
6 - 8
Directors' responsibilities statement
9
Independent auditor's report
10 - 12
Group statement of comprehensive income
13
Group balance sheet
14
Company balance sheet
15
Group statement of changes in equity
16
Company statement of changes in equity
17
Group statement of cash flows
18
Company statement of cash flows
19
Notes to the financial statements
20 - 40
CULT WINES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The directors present the strategic report for the year ended 31 December 2023.

 

In preparing the strategic report, the directors have complied with s414C of the Companies Act 2006. The accounts for Cult Wines Limited "Cult Wines" are prepared on a consolidated basis. This report has been prepared for the Group in its entirety.

 

Principal activities

Cult Wines is a fine wine investment company, buying and selling to private individuals and trade businesses globally, with a focus on key markets including the United Kingdom, Asia, North America, and, as of 2023, the UAE and Japan. Additionally, the Group has started engaging self-directed wine buyers through the beta launch of CultX, marking an evolution in our digital and direct-to-consumer (DTC) strategy.

Review of the business

2023 was a year of significant challenges and strategic transformation for Cult Wines. The fine wine market experienced a 14% decline in prices, following a two-year pandemic-fuelled bull run. High interest rates and a strong equity market further impacted investor appetite for alternative assets, particularly those requiring longer holding periods, such as fine wine. These macroeconomic headwinds, coupled with a slowing Chinese economy, created a challenging environment for liquidity and sales.

In response, the business undertook a strategic pivot, focusing on cost efficiencies, technology investments, and operational restructuring to ensure long-term resilience and growth. Despite top-line revenue declines, the company successfully maintained and grew its recurring management fee revenue, reinforcing the strength of its business model.

Financial Performance

The financial year 2023 saw a decline in overall revenue due to market conditions, but the company successfully managed costs and maintained a strong foundation for future growth.

Revenue Summary:

 

2022

£m

2023

£m

% Change

New Investment Sales

£59.8

£34.7

-40.3%

Reinvestment

£14.8

£11.8

-20.3%

Trade Sales

£8.5

£6.8

-20.0%

Other

 

£0.8

 

Total Sales Revenue

-

£83.1

£0.8

£54.1

100%

-34.7%

Management Fee Revenue (adjusted*)

£4.0

£4.7

+17.5%

 

 

 

 

Total Gross Revenue

£87.1

£58.8

-31.3%

 

 

 

 

 

*adjusted management fees to show total as per calculation period, not booking period

To mitigate declining revenues, Cult Wines undertook a global headcount reduction in August 2023, streamlining operations and reducing monthly operating expenses by 20% by year-end. This strategic restructuring allowed the company to preserve financial stability while continuing key investment initiatives.

CULT WINES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Technology & Operational Transformation

 

A major milestone in 2023 was the strategic decision to completely overhaul the company’s operating platform. The project, VinTrade 2, was initiated in July 2023 and completed in May 2024. The new proprietary platform enhances efficiency, drives automation, and enables cost reductions, forming the foundation for future scalability and operational improvements.

Key benefits of VinTrade 2:

CultX, the Group’s marketplace platform, launched in beta in 2023, with further advancements in 2024 following the completion of VinTrade 2.

Assets Under Management (AUM)

Future Developments & Outlook

Despite the challenging 2023, Cult Wines has positioned itself for a strong recovery:

  1. £4.25m capital raised from Coterie Holdings (June 2024) to support growth and liquidity

  2. VinTrade 2 launched, delivering cost efficiencies and improved service

  3. Expected EBITDA profitability in Q1 2025, driven by:

    1. Lower operating expenses (from >£860k/month in Q1 2024 to c. £560k by Q4)

    2. Revenue recovery as market conditions improve

    3. Expansion of CultX as a multi-channel sales tool

  4. Fine wine market expected to recover as interest rates continue to decline and investor demand returns

  5. Consolidation of customer holdings into Coterie Vaults, set for completion by June 2025

Conclusion

Cult Wines remains committed to its mission: Making investing in wine as effortless as drinking it. Our strategy combines market-leading technology, deep industry expertise, and a client-centric approach to create a robust, scalable business model. Despite short-term market headwinds, the foundational investments made in 2023 will enable the business to capitalise on future opportunities and cement its position as an industry leader.

 

CULT WINES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Greenhouse gas emissions, energy consumption and energy efficiency action

Cult Wines is committed to continually reviewing its practices and partners to minimise and, where possible, mitigate carbon emissions where achievable.

 

 

 

Unit

Tonnes

2023

Tonnes

2022

Emissions from combustion of gas

TCO2e

0.90

0.90

Emissions from consumption of fuel from transport

TCO2e

21.92

23.07

Emissions from purchased electricity

TCO2e

47.88

50.12

Emissions from business travel rental cars

TCO2e

0.00

0.00

Outsourced Freight (Scope 3)

TCO2e

13.11

13.80

Total Gross Emissions

TCO2e

83.81

87.89

 

 

 

 

Emissions

 

 

 

Intensity Ratio

 

0.00155

0.00101

 

The carbon footprint appraisal is derived from a combination of client data collection and data computation by third party analysts. The analysts used the 2020 conversion factors developed by the UK Department for Environment, Food and Rural Affairs (Defra) and the Department for Business, Energy & Industrial Strategy (BEIS). These factors are multiplied with the company’s GHG activity data.

CULT WINES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
Principal Risks and Uncertainties

The Company is subject to potential financial assets and liabilities which along with its day to day operations exposes it to Interest Rate, cyber security & inventory risk.

 

Interest Rate

High interest rates have the potential to impact business performance through reducing demand in alternative asset classes and the underlying asset prices being affected by reduced demand for luxury goods.

Cyber Security

 

During the period, management have considered the increasing threat to cyber security, we continue to work with our IT partners to monitor any potential risk and have appropriate insurance coverage in this area.

 

Inventory Risk

 

The Company’s final major risk is the demand for fine wines, this is mitigated by holding an optimal stock level to negate any potential negative price movement along with a diversified sales strategy.

Reputation Risk & Market positioning

As a recognised leader in the fine wine investment industry, Cult Wines continues to be a trusted voice in the market, regularly featured in leading financial and industry publications such as The Financial Times, The Times, The Times Money Mentor, and Digital Frontier in 2024 alone.

 

Like many businesses operating in high-value investment sectors, we have encountered online speculation and criticism, particularly during the recent market downturn. However, much of this commentary has been unfounded or lacking full context, and we remain committed to transparency and open communication with our stakeholders.

 

To further strengthen our market positioning and brand perception, we are working with a strategic PR firm as part of our ongoing business transformation. This ensures that our messaging accurately reflects our industry leadership, commitment to innovation, and long-term strategy while actively engaging with clients, partners, and the wider market.

 

Prior Year Adjustment

 

The group performed an appraisal of its accounting system and controls on receipt of several late invoices post year end from various suppliers covering multiple past accounting periods.  It was found out that there was an under accrual of costs pertaining from either inconsistent suppliers’ statements which is common in the sector, previously written off balances or under accrual which demonstrated an anomaly in the group’s accounting systems. The directors have undertaken immediate remedial measures in terms of upgrading the group’s accounting systems to ensure better visibility over the integrity of financial information, implementing tighter controls over the recording of costs and performing periodic reviews with the wider team to ensure completeness of costs.  On the basis that the late invoices span over more than one accounting period, and highly material in nature, the directors have decided to affect a prior year adjustment as it represents a fundamental error in relation to the completeness of late invoices’ accrual.

 

CULT WINES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
Statement by the directors relating to their statutory duties under s172(1) Companies Act 2006

The Board of Directors considers, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s172(1)(a-f) of the Act) in the decisions taken during the period ended 31 December 2023. The Board has developed a rolling business plan which is based around achieving our long-term goal of being regarded as the global leader in fine wine investment recognised for the excellence of our portfolio and for the service that we provide to our customers.

 

 

 

 

 

 

 

 

On behalf of the board

T Gearing
Director
17 March 2025
CULT WINES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 6 -

The directors present their annual report and financial statements for the year ended 31 December 2023.

Principal activities

The principal activity of the company and group continued to be that of fine wine investment.

Results and dividends

The results for the year are set out on page 13.

Ordinary dividends were paid amounting to £105,000. The directors do not recommend payment of a further dividend.

 

At the time the dividend was paid the directors were not aware that there were insufficient profits available for distribution and the directors acknowledge that no further distributions can be made until there are sufficient profits available for that purpose.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

P Gearing
T Gearing
Qualified third party indemnity provisions

The Group has in place, a Directors’ and officers’ liability insurance policy with a limit of indemnity of two million pounds.

 

Going concern

At the year end, the Group had net liabilities of £16,171,786 (2022: £11,065,285). The net liabilities position including the possibility of deviations on the key assumptions such as the rate of cash collection and payments might heighten the need for further cash injection in the business, and could therefore indicate a material uncertainty with regard to going concern.

The directors have assessed the Group’s ability to continue as a going concern, taking into account the financial performance in 2023, the ongoing macroeconomic conditions, and the strategic actions undertaken to ensure long-term sustainability. While the fine wine market faced significant headwinds, leading to a decline in sales revenue and AUM, the Group successfully executed cost reduction measures, streamlined operations, and secured £4.25m in capital funding from Coterie Holdings in June 2024.

Additionally, the successful deployment of VinTrade 2 has enabled improved operational efficiency, reduced fixed costs, and enhanced scalability. The Group projects a return to EBITDA profitability by Q1 2025, supported by a stabilised cost structure and expected market recovery. Given these factors, including the review the Group’s budgets and cash flow forecasts for at least a 12-month period from the date of signing these financial statements, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and, therefore, have adopted the going concern basis in preparing these financial statements.

CULT WINES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
Financial risk management objectives and policies

The company is subject to potential financial assets and liabilities which, along with its day to day operations, exposes it to credit risk, liquidity risk & currency risk.

 

Credit risk

The Company’s trade receivables present a potential credit risk. All credit terms are verified and receivables are monitored on an ongoing basis to minimise the potential of any financial loss to the business through bad debt. In addition, the risk is distributed over a large number of clients. Therefore, we perceive no significant threat of exposure to credit risk.

 

Liquidity risk

Liquidity risk to the business is mitigated through robust cash flow forecasting and budgetary control. There is constant review of the cash position and we utilise robust credit terms with suppliers along with effective receivables management which has facilitated all growth activities to be self-funded with no reliance on short or long-term financing.

 

Currency risk

The business is open to foreign currency risk through transacting with suppliers and customers worldwide and is therefore subject to foreign exchange rate fluctuation which can impact trade profitability. This is minimised through continual review and dynamic approach to our forward exchange contract policy.

 

 

Matters covered in the Group strategic report

The directors have included a business review within the strategic report. Also included in the strategic report are details for the future development of the Company, the principal risk and uncertainties, the streamlined carbon emission reporting, a review of the key performance indicators as assessed by the directors and engagement with customers and suppliers in accordance with section 414C (11) of the Companies Act 2006.

CULT WINES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
Post reporting date events

On the 12 June 2024, the company entered into a loan facility of £1,250,000 repayable in 3 years time with an interest rate of 4% per annum.

 

On the same day, the company entered into a debenture agreement for a facility of £3m repayable in 3 years time with an interest rate between 7% per annum.

 

These loans carry fixed and floating charges over the assets of the company.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

Auditor

The auditor, Azets Audit Services, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

On behalf of the board
T Gearing
Director
17 March 2025
CULT WINES LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

CULT WINES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CULT WINES LIMITED
- 10 -
Opinion

We have audited the financial statements of Cult Wines Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

However, we draw attention to note 1.4 to the financial statements, which indicates the Group is in a net liabilities position at the year end and though management has prepared budgets and cash flow forecasts based on past business trends and clients’ behaviour patterns; there may still be a shortfall in the cash flow cycle should there be deviations on the key assumptions. These conditions indicate a material uncertainty exists that may cast significant doubt on the group's ability to continue as a going concern without further cash injection. Our opinion is not modified in respect of this matter.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

CULT WINES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CULT WINES LIMITED
- 11 -

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

CULT WINES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CULT WINES LIMITED
- 12 -

Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.

 

We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework.  Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.  This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.

 

In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:

 

 

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation.  This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.  The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Ravi Hungsraz (Senior Statutory Auditor)
For and on behalf of Azets Audit Services
17 March 2025
Chartered Accountants
Statutory Auditor
2nd Floor
Regis House
45 King William Street
London
United Kingdom
EC4R 9AN
CULT WINES LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
2023
2022
as restated
Notes
£
£
Turnover
3
58,778,810
87,123,200
Cost of sales
(50,447,597)
(77,103,416)
Gross profit
8,331,213
10,019,784
Administrative expenses
(14,978,224)
(14,321,554)
Other operating income
683,679
-
Exceptional item
4
-
0
(317,615)
Operating loss
5
(5,963,332)
(4,619,385)
Interest receivable and similar income
1,679
1,213
Fair value gain on investments
8
501,967
-
Loss before taxation
(5,459,686)
(4,618,172)
Tax on loss
9
184,352
(256,093)
Loss for the financial year
20
(5,275,334)
(4,874,265)
Other comprehensive income
Currency translation gain/(loss) arising in the year
273,833
(223,761)
Total comprehensive income for the year
(5,001,501)
(5,098,026)
Loss for the financial year is all attributable to the owners of the parent company.
Total comprehensive income for the year is all attributable to the owners of the parent company.
CULT WINES LIMITED
GROUP BALANCE SHEET
AS AT 31 DECEMBER 2023
31 December 2023
- 14 -
2023
2022
as restated
Notes
£
£
£
£
Fixed assets
Intangible assets
11
6,241,490
6,159,515
Tangible assets
12
417,522
882,327
Investments
13
877,906
375,939
7,536,918
7,417,781
Current assets
Stocks
15
1,511,955
1,410,186
Debtors
16
7,327,807
9,993,382
Cash at bank and in hand
710,590
1,670,520
9,550,352
13,074,088
Creditors: amounts falling due within one year
17
(33,259,056)
(31,557,154)
Net current liabilities
(23,708,704)
(18,483,066)
Net liabilities
(16,171,786)
(11,065,285)
Capital and reserves
Called up share capital
19
10
10
Other reserves
20
70,512
(203,321)
Profit and loss reserves
20
(16,242,308)
(10,861,974)
Total equity
(16,171,786)
(11,065,285)
The financial statements were approved by the board of directors and authorised for issue on 17 March 2025 and are signed on its behalf by:
17 March 2025
T Gearing
Director
Company registration number 06350591 (England and Wales)
CULT WINES LIMITED
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2023
31 December 2023
- 15 -
2023
2022
as restated
Notes
£
£
£
£
Fixed assets
Intangible assets
11
3,693,702
5,798,508
Tangible assets
12
112,531
284,619
Investments
13
298,328
674,267
4,104,561
6,757,394
Current assets
Stocks
15
1,507,017
1,384,007
Debtors
16
20,566,072
18,980,551
Cash at bank and in hand
446,624
1,290,127
22,519,713
21,654,685
Creditors: amounts falling due within one year
17
(27,090,741)
(25,082,180)
Net current liabilities
(4,571,028)
(3,427,495)
Net (liabilities)/assets
(466,467)
3,329,899
Capital and reserves
Called up share capital
19
10
10
Profit and loss reserves
20
(466,477)
3,329,889
Total equity
(466,467)
3,329,899

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £3,691,366 (2022 - £2,329,846 profit).

The financial statements were approved by the board of directors and authorised for issue on 17 March 2025 and are signed on its behalf by:
17 March 2025
T Gearing
Director
Company registration number 06350591 (England and Wales)
CULT WINES LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
Share capital
Currency translation reserve
Profit and loss reserves
Total
Notes
£
£
£
£
As restated for the period ended 31 December 2022:
Balance at 1 January 2022
10
20,440
(5,530,283)
(5,509,833)
Year ended 31 December 2022:
Loss for the year
-
-
(4,874,265)
(4,874,265)
Other comprehensive income:
Currency translation differences
-
(223,761)
-
0
(223,761)
Total comprehensive income
-
(223,761)
(4,874,265)
(5,098,026)
Dividends
10
-
-
(457,426)
(457,426)
Balance at 31 December 2022
10
(203,321)
(10,861,974)
(11,065,285)
Year ended 31 December 2023:
Loss for the year
-
-
(5,275,334)
(5,275,334)
Other comprehensive income:
Currency translation differences
-
273,833
-
0
273,833
Total comprehensive income
-
273,833
(5,275,334)
(5,001,501)
Dividends
10
-
-
(105,000)
(105,000)
Balance at 31 December 2023
10
70,512
(16,242,308)
(16,171,786)
CULT WINES LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
As restated for the period ended 31 December 2022:
Balance at 1 January 2022
10
1,457,469
1,457,479
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
2,329,846
2,329,846
Dividends
10
-
(457,426)
(457,426)
Balance at 31 December 2022
10
3,329,889
3,329,899
Year ended 31 December 2023:
Profit and total comprehensive income
-
(3,691,366)
(3,691,366)
Dividends
10
-
(105,000)
(105,000)
Balance at 31 December 2023
10
(466,477)
(466,467)
CULT WINES LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
2023
2022
as restated
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
22
1,247,646
5,461,763
Income taxes refunded/(paid)
304,618
(193,433)
Net cash inflow from operating activities
1,552,264
5,268,330
Investing activities
Purchase of intangible assets
(2,509,628)
(4,627,707)
Purchase of tangible fixed assets
(16,741)
(79,995)
Foreign exchange gains/(losses)
18,763
(28,165)
Loans made to related parties
(136,159)
(1,182,933)
Interest received
1,679
1,213
Net cash used in investing activities
(2,642,086)
(5,917,587)
Financing activities
Payment of finance leases obligations
(38,941)
-
Dividends paid to equity shareholders
(105,000)
(457,426)
Net cash used in financing activities
(143,941)
(457,426)
Net decrease in cash and cash equivalents
(1,233,763)
(1,106,683)
Cash and cash equivalents at beginning of year
1,670,520
3,000,964
Effect of foreign exchange rates
273,833
(223,761)
Cash and cash equivalents at end of year
710,590
1,670,520
CULT WINES LIMITED
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
2023
2022
as restated
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
23
1,265,075
5,623,709
Income taxes refunded/(paid)
305,154
(209,073)
Net cash inflow from operating activities
1,570,229
5,414,636
Investing activities
Purchase of intangible assets
(2,125,689)
(3,778,071)
Purchase of tangible fixed assets
(9,220)
(54,134)
Proceeds from disposal of subsidiaries
-
0
(1,021)
Loans made to related parties
(136,159)
(1,182,933)
Interest received
1,277
1,213
Net cash used in investing activities
(2,269,791)
(5,014,946)
Financing activities
Payment of finance leases obligations
(38,941)
-
Dividends paid to equity shareholders
(105,000)
(457,426)
Net cash used in financing activities
(143,941)
(457,426)
Net decrease in cash and cash equivalents
(843,503)
(57,736)
Cash and cash equivalents at beginning of year
1,290,127
1,347,863
Cash and cash equivalents at end of year
446,624
1,290,127
CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
1
Accounting policies
Company information

Cult Wines Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Clockwork Building, 45 Beavor Lane, Ravenscourt Park, London, United Kingdom, W6 9AR.

 

The group consists of Cult Wines Limited and all of its subsidiaries.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

1.2
Prior period error

A prior year error was noted in respect of understated liabilities for late invoices received. This resulted in an adjustment to the financial statements as disclosed in note 27.

 

1.3
Basis of consolidation

The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

 

The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.

1.4
Going concern

At the year end, the Group had net liabilities of £16,171,786 (2022: £11,065,285). The net liabilities position including the possibility of deviations on the key assumptions such as the rate of cash collection and payments might heighten the need for further cash injection in the business, and could therefore indicate a material uncertainty with regard to going concern.

The directors have assessed the Group’s ability to continue as a going concern, taking into account the financial performance in 2023, the ongoing macroeconomic conditions, and the strategic actions undertaken to ensure long-term sustainability. While the fine wine market faced significant headwinds, leading to a decline in sales revenue and AUM, the Group successfully executed cost reduction measures, streamlined operations, and secured £4.25m in capital funding from Coterie Holdings in June 2024.

Additionally, the successful deployment of VinTrade 2 has enabled improved operational efficiency, reduced fixed costs, and enhanced scalability. The Group projects a return to EBITDA profitability by Q1 2025, supported by a stabilised cost structure and expected market recovery. Given these factors, including the review the Group’s budgets and cash flow forecasts for at least a 12-month period from the date of signing these financial statements, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and, therefore, have adopted the going concern basis in preparing these financial statements.

CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 21 -
1.5
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods provided in the normal course of business, and is shown net of VAT.

 

Revenue from the sale of wines is recognised when the rights and obligations under the terms of the sale have been fully transferred to the buyer.

 

Revenue in respect of en primeur sales is recognised at the point where the entity has transferred to the buyer the significant risks and rewards of ownership of the goods, the amount of revenue can be recognised reliably, it is probable that economic benefits associated with the transaction will flow to the entity and the cost incurred in respect of the transaction can be measured reliably. From the point of sale, the en primeur investment belongs to the customer, and the customer retains all future risks and rewards including price fluctuations and inventory risk.

 

Cult Wines has continuing managerial involvement after the sale, this is covered by a separate management fee and as such the conditions for revenue recognition have been satisfied, being accrued monthly from purchase and being invoiced on the anniversary of the client's first purchase.

1.6
Intangible fixed assets other than goodwill

Intangible assets are valued at cost less accumulated amortisation. Amortisation is calculated to write off the cost in equal annual instalments over their estimated useful life of four years.

1.7
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Leasehold land and buildings
10% per annum straight line
Plant and equipment
25% per annum reducing balance basis
Fixtures and fittings
25% per annum reducing balance basis
Computer equipment
25% per annum reducing balance basis
Motor vehicles
25% per annum reducing balance basis
Office equipment
25% per annum reducing balance basis

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.

1.8
Fixed asset investments

Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

 

A subsidiary is an entity controlled by the Company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 22 -

An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

 

Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.

 

Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.

 

In the parent company financial statements, investments in associates are accounted for at cost less impairment.

Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.

1.9
Impairment of fixed assets

At each reporting end date, the Company 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 in order to determine the extent of the impairment loss (if any).

 

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset is estimated to be less than its carrying amount, the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss. Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply.

1.10
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.

 

Cost is calculated as the cost of purchase and bottled products including delivery charges and non-refundable duty.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.11

Debtors

Short-term debtors are measured at transaction price less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

1.12
Cash and cash equivalents

Cash and cash equivalents include cash in hand and deposits held at call with banks.

1.13

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 23 -
1.14
Financial instruments

The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the Company transfers the financial asset and substantially all the risks and rewards of ownership to another entity.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including trade and other payables, are initially recognised at transaction price.

CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 24 -

Trade payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss.

Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

1.15
Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the Company.

1.16
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 25 -
1.17
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.18
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.19
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

1.20
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting date end, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in profit or loss for the period.

1.21

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.

 

CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 26 -
2
Judgements and key sources of estimation uncertainty

In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

 

The Group makes a number of assessments which require judgement and estimate in preparing the accounts and can have a significant effect upon the financial statements.

 

(a) En-primeur

The most significant judgement in applying the Group's accounting policies is in relation to en-primeur revenue. All revenue is recognised when the rights and obligations of the sale have fully transferred.

 

(b) Stock

The company review stock for impairment comparing purchase price to market value. The company would consider impairment should market value fall below the purchase price. Having carried out the review for the period, no impairment is necessary.

 

(c) Joint venture

The company has adopted the consolidation method of accounting for Cult Wines Canada Limited in which it owns a 50% holding as Cult Wines Limited possesses effective control and the entity is controlled and managed as 100% owned subsidiaries within the Group.

 

(d) Trade debtors

The Group makes estimates and assumptions concerning the future. Significant accounting estimates include any provision against doubtful trade debtors.

 

(e) Transfer pricing agreement

The Group applies a mark-up on intra group transactions to ensure the arm's length principle. The mark-up is derived by referring to benchmark analysis akin to similar transactions.

3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Sale of goods
52,136,629
83,139,064
Sale of services
6,642,181
3,984,136
58,778,810
87,123,200
CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
3
Turnover and other revenue
(Continued)
- 27 -
2023
2022
£
£
Turnover analysed by geographical market
UK
18,985,424
30,843,396
Europe
8,135,210
12,161,399
US + The Americas
4,641,616
7,686,684
Asia
22,836,700
32,796,568
Other
4,179,860
3,635,153
58,778,810
87,123,200
2023
2022
£
£
Other revenue
Interest income
1,679
1,213
4
Exceptional item
2023
2022
£
£
Expenditure
Write-offs
-
317,615
-
317,615

The exceptional items relate to the write off of historical debtors and creditors at the year end.

5
Operating loss
Year ended 31 December 2023
Period ended 31 December 2022
£
£
Operating loss for the year is stated after charging/(crediting):
Exchange losses/(gains)
264,953
(94,292)
Fees payable to the Company's auditors for the audit of the Company's financial statements
108,000
92,250
Fees payable to the Company's auditor - accounts preparation
5,500
5,000
Fees payable to the Company's auditor - tax compliance
3,500
3,000
Fees payable to the Company's auditor - tax advisory
-
7,750
Depreciation of owned tangible fixed assets
298,933
259,846
Amortisation of intangible assets
2,370,775
719,572
Operating lease charges
1,020,401
993,655
CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 28 -
6
Employees

The average monthly number of persons (including directors) employed by the group and company during the year was:

Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
73
82
53
63

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
6,178,979
6,430,110
4,401,976
4,388,478
Social security costs
756,421
675,376
594,741
578,023
Pension costs
132,264
306,357
76,407
200,459
7,067,664
7,411,843
5,073,124
5,166,960
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
90,877
-
Company pension contributions to defined contribution schemes
587
-
91,464
-

 

8
Amounts written off investments
2023
2022
£
£
Fair value gains/(losses) on financial instruments
Gain on financial assets held at fair value through profit or loss
501,967
-
CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 29 -
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
-
0
225,220
Adjustments in respect of prior periods
(294,198)
140,535
Total UK current tax
(294,198)
365,755
Foreign current tax on profits for the current period
-
0
184
Total current tax
(294,198)
365,939
Deferred tax
Origination and reversal of timing differences
-
0
53,160
Write down or reversal of write down of deferred tax asset
109,846
(163,006)
Total deferred tax
109,846
(109,846)
Total tax (credit)/charge
(184,352)
256,093

The actual (credit)/charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
Loss before taxation
(5,459,686)
(4,618,172)
Expected tax credit based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
(1,284,118)
(877,453)
Tax effect of expenses that are not deductible in determining taxable profit
453,019
285,601
Adjustments in respect of prior years
(294,198)
(140,535)
Adjustments in respect of financial assets
(83,253)
(153,143)
Effect of overseas tax rates
-
552,424
Write down or reversal of write down of deferred tax asset
109,846
-
0
Movement in deferred tax not recognised
914,352
589,199
Taxation (credit)/charge
(184,352)
256,093

Estimated carried forward trading losses for the group are £6,659,530. No deferred tax asset in respect of these losses has been recognised as the group has insufficient evidence that future taxable profits will be available for which these tax losses may be utilised. As such the directors have taken the judgement to not recognise any deferred tax asset at this stage but this will be assessed on an annual basis.

CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 30 -
10
Dividends
2023
2022
Recognised as distributions to equity holders:
£
£
Final paid
105,000
457,426

At the time the dividend was paid the directors were not aware that there were insufficient profits available for distribution and the directors acknowledge that no further distributions can be made until there are sufficient profits available for that purpose.

11
Intangible fixed assets
Group
Development costs
£
Cost
At 1 January 2023
7,347,160
Additions
2,509,628
Disposals
(316,047)
Exchange adjustments
(29,340)
At 31 December 2023
9,511,401
Amortisation and impairment
At 1 January 2023
1,187,645
Amortisation charged for the year
2,370,775
Disposals
(273,572)
Exchange adjustments
(14,937)
At 31 December 2023
3,269,911
Carrying amount
At 31 December 2023
6,241,490
At 31 December 2022
6,159,515
CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
11
Intangible fixed assets
(Continued)
- 31 -
Company
Development costs
£
Cost
At 1 January 2023
6,791,778
Additions
2,125,689
Disposals
(263,558)
Transfers
(2,678,323)
At 31 December 2023
5,975,586
Amortisation and impairment
At 1 January 2023
993,270
Amortisation charged for the year
1,535,318
Disposals
(246,704)
At 31 December 2023
2,281,884
Carrying amount
At 31 December 2023
3,693,702
At 31 December 2022
5,798,508
CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 32 -
12
Tangible fixed assets
Group
Leasehold land and buildings
Plant and equipment
Fixtures and fittings
Computer equipment
Motor vehicles
Office equipment
Total
£
£
£
£
£
£
£
Cost
At 1 January 2023
558,257
468,024
595,497
477,855
108,220
38,408
2,246,261
Additions
-
0
3,701
-
0
7,287
-
0
5,753
16,741
Disposals
-
0
(265,409)
(545,941)
(261,639)
(108,220)
(22,226)
(1,203,435)
Exchange adjustments
(23,624)
(29,171)
(8,235)
(2,968)
-
0
(1,055)
(65,053)
At 31 December 2023
534,633
177,145
41,321
220,535
-
0
20,880
994,514
Depreciation and impairment
At 1 January 2023
206,063
285,519
466,419
295,340
89,197
21,396
1,363,934
Depreciation charged in the year
52,549
110,890
41,367
66,902
19,023
8,202
298,933
Eliminated in respect of disposals
-
0
(196,258)
(476,386)
(226,603)
(108,220)
(17,715)
(1,025,182)
Exchange adjustments
(8,136)
(40,625)
(5,520)
(4,701)
-
0
(1,711)
(60,693)
At 31 December 2023
250,476
159,526
25,880
130,938
-
0
10,172
576,992
Carrying amount
At 31 December 2023
284,157
17,619
15,441
89,597
-
0
10,708
417,522
At 31 December 2022
352,194
182,505
129,078
182,515
19,023
17,012
882,327
CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 33 -
Company
Leasehold land and buildings
Fixtures and fittings
Computer equipment
Motor vehicles
Office equipment
Total
£
£
£
£
£
£
Cost
At 1 January 2023
57,206
401,026
447,885
108,220
24,518
1,038,855
Additions
-
0
-
0
7,287
-
0
1,933
9,220
Disposals
-
0
(396,721)
(249,807)
(108,220)
(21,296)
(776,044)
At 31 December 2023
57,206
4,305
205,365
-
0
5,155
272,031
Depreciation and impairment
At 1 January 2023
27,439
342,736
279,123
89,197
15,741
754,236
Depreciation charged in the year
5,842
17,371
60,903
19,023
3,250
106,389
Eliminated in respect of disposals
-
0
(358,692)
(217,194)
(108,220)
(17,019)
(701,125)
At 31 December 2023
33,281
1,415
122,832
-
0
1,972
159,500
Carrying amount
At 31 December 2023
23,925
2,890
82,533
-
0
3,183
112,531
At 31 December 2022
29,767
58,290
168,762
19,023
8,777
284,619
13
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
14
-
0
-
0
298,328
298,328
Unlisted investments
877,906
375,939
-
0
375,939
877,906
375,939
298,328
674,267
Movements in fixed asset investments
Group
Investments
£
Cost or valuation
At 1 January 2023
375,939
Valuation changes
501,967
At 31 December 2023
877,906
Carrying amount
At 31 December 2023
877,906
At 31 December 2022
375,939
CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
13
Fixed asset investments
(Continued)
- 34 -
Movements in fixed asset investments
Company
Shares in subsidiaries
Other investments
Total
£
£
£
Cost or valuation
At 1 January 2023
298,328
375,939
674,267
Disposals
-
(375,939)
(375,939)
At 31 December 2023
298,328
-
298,328
Carrying amount
At 31 December 2023
298,328
-
298,328
At 31 December 2022
298,328
375,939
674,267
14
Subsidiaries

Details of the company's subsidiaries at 31 December 2023 are as follows:

Name of undertaking
Country
Class of
% Held
shares held
Direct
Cult Wines HK Limited
Hong Kong
Ordinary
100.00
Cult Wines (SG) Pte. Limited
Singapore
Ordinary
100.00
Cult Wines Ltd. (Shanghai)
China
Ordinary
100.00
Cult Wines Inc
USA
Ordinary
100.00
Cult Wines Canada Limited
Canada
Ordinary
50.00
Cult X Limited
United Kingdom
Ordinary
100.00
Cult Wines GK
Japan
Ordinary
100.00
Cult Wines Ireland Limited - Dormant
Ireland
Ordinary
100.00
Cult Wines Trading Ltd - Dormant
United Kingdom
Ordinary
100.00
Cult Wines (PCI) Ltd - Dormant
United Kingdom
Ordinary
100.00
Cult Wines Arabia FZE
Dubai
Ordinary
100.00

Registered office addresses:

1
1001B-2 Kinwick Centre, 32 Hollywood Road, Hong Kong
2
9 Battery Road, 09-01 MYP Centre, Singapore, 049910
3
2441 CITIC Square, 1168 Nanjing West Road, Shanghai 200041
4
425 Madison Avenue, Suite 600, New York, NY 10017
5
Suite 3400, 22 Adelaide Street, Toronto, Ontario, Canada, M5H 4E3
6
Clockwork Building, 45 Beavor Lane, London, England, W6 9AR
7
303 Urbanex, Jimbochol -46-2, Kandajimbocho, Chiyoda-ku, Tokyo, 101-0051 Japan
8
Unit 3D North Point House, North Point Business Park, New Mallow Road Cork, County Cork, Cork, Ireland
9
Clockwork Building, 45 Beavor Lane, London, England, W6 9AR
10
Clockwork Building, 45 Beavor Lane, London, England, W6 9AR
11
Marina Plaza, Level 29/2902, Dubai Marina, Dubai, U.A.E. PO Box 112229
CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 35 -
15
Stocks
Group
Company
2023
2022
2023
2022
£
£
£
£
Finished goods and goods for resale
1,511,955
1,410,186
1,507,017
1,384,007
16
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
2,383,308
6,576,500
1,635,457
3,235,187
Corporation tax recoverable
684,215
409,872
683,679
409,872
Amounts owed by group undertakings
-
-
14,156,371
12,355,310
Other debtors
1,509,269
1,707,694
1,510,176
1,707,695
Prepayments and accrued income
2,751,015
1,299,316
2,580,389
1,272,487
7,327,807
9,993,382
20,566,072
18,980,551

Amounts owed by group undertakings are unsecured, interest free and payable on demand.

17
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Obligations under finance leases
-
0
38,941
-
0
38,941
Trade creditors
24,078,496
24,084,406
18,354,447
17,796,127
Amounts owed to group undertakings
-
0
-
0
239,918
-
0
Corporation tax payable
-
0
289,070
-
0
289,070
Other taxation and social security
105,588
382,787
141,891
374,317
Other creditors
2,075,775
149,231
1,912,512
13,293
Accruals and deferred income
6,999,197
6,612,719
6,441,973
6,570,432
33,259,056
31,557,154
27,090,741
25,082,180

Trade creditors include clients' monies of £12,452,630 (2022: £5,474,033) earmarked for the procurement of wine and payment of wine as part of the ordinary course of business.

18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
132,264
306,357
CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
18
Retirement benefit schemes
(Continued)
- 36 -

The Group operates a defined contributions pensions scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounts to £76,407 (2022: £306,357). Contributions totalling £12,512 (2022: £17,944) were payable to the fund at the reporting date and are included in creditors.

19
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Class A ordinary shares of £0.0001 each
40,000
40,000
4
4
Class B ordinary shares of £0.0001 each
40,000
40,000
4
4
Class C ordinary shares of £0.0001 each
20,000
20,000
2
2
100,000
100,000
10
10
20
Reserves

Translation reserve

 

Includes exchange gains / (losses) arising from consolidating subsidiaries with a different presentational currency.

 

Profit and loss account

 

Includes all current and prior period retained profit and losses.

21
Operating lease commitments
Lessee

At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Group
Company
2023
2022
2023
2022
£
£
£
£
Within one year
693,937
1,554,225
416,776
1,103,966
Between two and five years
755,061
1,236,411
737,000
941,189
1,448,998
2,790,636
1,153,776
2,045,155
CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 37 -
22
Cash generated from group operations
2023
2022
£
£
Loss for the year after tax
(5,275,334)
(4,874,265)
Adjustments for:
Taxation & R&D (credited)/charged
(868,031)
256,093
Investment income
(1,679)
(1,213)
Loss on disposal of tangible fixed assets
220,728
-
Amortisation and impairment of intangible assets
2,370,775
719,572
Depreciation and impairment of tangible fixed assets
298,933
259,846
Other gains and losses
(501,967)
-
Movements in working capital:
(Increase)/decrease in stocks
(101,769)
1,808,244
Decrease in debtors
3,076,077
3,993,999
Increase in creditors
2,029,913
3,299,487
Cash generated from operations
1,247,646
5,461,763
23
Cash generated from operations - company
2023
2022
£
£
(Loss)/profit for the year after tax
(3,691,366)
2,329,846
Adjustments for:
Taxation & R&D (credited)/charged
(868,031)
271,623
Investment income
(1,277)
(1,213)
Loss on disposal of tangible fixed assets
113,860
-
Amortisation and impairment of intangible assets
1,535,318
618,262
Depreciation and impairment of tangible fixed assets
106,389
118,699
Movements in working capital:
(Increase)/decrease in stocks
(123,010)
1,814,851
Decrease in debtors
1,895,561
5,092,734
Increase/(decrease) in creditors
2,297,631
(214,813)
Cash generated from operations
1,265,075
10,029,989
CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 38 -
24
Analysis of changes in net funds - group
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
1,670,520
(959,930)
710,590
Obligations under finance leases
(38,941)
38,941
-
1,631,579
(920,989)
710,590
25
Analysis of changes in net funds - company
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
1,290,127
(843,503)
446,624
Obligations under finance leases
(38,941)
38,941
-
1,251,186
(804,562)
446,624
26
Related party transactions
Transactions with related parties

At the start of the year, the amount owed to the Company in the directors accounts was £1,182,933 (2022: £1,130,538). During the year, this increased to £1,319,092 (2022: £1,182,933). These amounts are interest free and repayable on demand. Dividends of £105,000 (2022: £457,426) were awarded to directors.

 

The directors are considered key management personnel during the period and the prior year. Salary disclosure is included in note 7.

27
Prior period adjustment
Reconciliation of changes in equity - group
1 January
31 December
2022
2022
£
£
Adjustments to prior year
Understated accruals for late invoices received
(2,191,094)
(4,956,450)
Equity as previously reported
(3,318,739)
(6,108,835)
Equity as adjusted
(5,509,833)
(11,065,285)
CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
27
Prior period adjustment
(Continued)
- 39 -
Reconciliation of changes in loss for the previous financial period
2022
£
Adjustments to prior year
Understated accruals for late invoices received
(2,765,356)
Loss as previously reported
(2,108,909)
Loss as adjusted
(4,874,265)
Reconciliation of changes in equity - company
1 January
31 December
2022
2022
£
£
Adjustments to prior year
Understated accruals for late invoices received
(2,191,094)
(4,956,450)
Understated royalty income
2,034,209
4,462,044
Recharged costs under transfer pricing agreement
1,311,240
3,289,685
Total adjustments
1,154,355
2,795,279
Equity as previously reported
303,124
534,620
Equity as adjusted
1,457,479
3,329,899
Reconciliation of changes in loss for the previous financial period
2022
£
Adjustments to prior year
Understated accruals for late invoices received
(2,765,356)
Understated royalty income
1,978,445
Recharged costs under transfer pricing agreement
2,427,835
Total adjustments
1,640,924
Profit as previously reported
688,922
Profit as adjusted
2,329,846
CULT WINES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
27
Prior period adjustment
(Continued)
- 40 -
Notes to reconciliation

The group performed an appraisal of its accounting system and controls on receipt of several late invoices post year end from various suppliers covering multiple past accounting periods.  It was found out that there was an under accrual of costs pertaining from either inconsistent suppliers’ statements which is common in the sector, previously written off balances or under accrual which demonstrated an anomaly in the group’s accounting systems. The directors have undertaken immediate remedial measures in terms of upgrading the group’s accounting systems to ensure better visibility over the integrity of financial information, implementing tighter controls over the recording of costs and performing periodic reviews with the wider team to ensure completeness of costs.  On the basis that the late invoices span over more than one accounting period, and highly material in nature, the directors have decided to affect a prior year adjustment as it represents a fundamental error in relation to the completeness of late invoices’ accrual.

The group initiated a transfer pricing agreement in February 2021 covering back-office support to the overseas subsidiaries and royalties for the operational right and brand position to facilitate distribution. The omission of these transactions since inception represents a fundamental error and have therefore been incorporated in the financial statements as a prior year adjustment.

 

28
Events after the reporting date

On the 12 June 2024, the company entered into a loan facility of £1,250,000 repayable in 3 years time with an interest rate of 4% per annum.

 

On the same day, the company entered into a debenture agreement for a facility of £3m repayable in 3 years time with an interest rate between 7% per annum.

 

These loans carry fixed and floating charges over the assets of the company.

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