Vranken Pommery UK Ltd. - Period Ending 2020-12-31

Vranken Pommery UK Ltd.

Contents

Vranken Pommery UK Ltd.

Company Information

Vranken Pommery UK Ltd.

Strategic Report for the Year Ended 31 December 2020

The directors present their strategic report for the year ended 31 December 2020.

Principal activity

The principal activity of the company is wholesale supply of champagne and other wine products.

Fair review of the business

The principal activity of the business continued to be the sales and marketing of group owned Champagnes and other wines through the on and off trades in the UK.

During the year the effect of government measures to manage the pandemic has overshadowed all else, including Brexit.

In the Champagne market the impact was significant. The Champagne Information Bureau has announced that UK imported volumes fell by 20% in the year, having stabilised in 2019, following three years of decline. Despite this, UK remained the largest global export market for Champagne by volume.

For much of 2020 the UK hospitality industry was either closed or operating under severe restrictions so consumer demand for beer, wine and spirits largely switched to the off trade channel. In this channel overall growth was led by beer and spirits.

For Champagne, whilst the first two quarters were depressed, growth returned in the second part of the year to leave the full year off trade sales volumes + 4.5% with brands increasing share at the expense of own label and tertiary products. Value growth of +9.5% underlined the consumer move towards more premium styles.

The Vranken Champagne portfolio outperformed in the off trade with year- on-year volume and value growth in excess of +30%. All major brand categories, Pommery Brut Royal range, Heidsieck Monopole and Charles Lafitte, registered double digit volume and value growth.

This strong brand result reflected distribution gains in 2019 and further new distribution during 2020. In addition, our Champagne supply relationship with Ocado, the leading on-line grocer, positioned our brands well for the accelerated consumer move towards on-line shopping.

In the on-trade the WSTA market report shows a full year on year decline for Champagne of -60% for both volume and value in 2020. This was a more resilient result than for Sparkling Wines which declined -63% by volume and -64% by value.

Vranken Pommery UK, excluding direct brand shipments to major off trade customers, was affected significantly by this closure of the hotel, restaurant and event trade for much of the year.

Our UK supplied volume fell by -49% across all product categories. The decline in the on-trade was even more severe as our business in that sector is heavily weighted to premium international hotels, restaurants and venues located in and around London.

The company took prompt action to reduce costs across all business areas and to tighten control of working capital. As a result the company was able to post a small net profit and a positive year end cash position. A loan from our French parent company was repaid prior to the end of the financial year.

Government initiatives, particularly the furlough scheme, VAT deferral and flexibility on rents and rates, played an important part in navigating the challenges of the year.

Vranken Pommery UK Ltd.

Strategic Report for the Year Ended 31 December 2020 (continued)

Fair Review of the Business (continued)

Despite the disruption, VP UK stayed focused on its strategy to concentrate on the customers and brands that offer long term sustainable value growth.

Market circumstances slowed the development of other categories like rose’ wine and our Louis Pommery English Sparkling, but the off trade performance of our Champagne marques reflected a consistent and effectively executed strategy.

Principal risks and uncertainties

Covid and Covid related issues remain the major risks.

Already the post Christmas lockdown has disrupted 2021 more than was envisaged twelve months ago.

The current assumption is that the vaccination programme should lead to the UK economy being reopened by the mid-year.

However, this presumes that there will be no interruption to the programme, no UK third wave of infections following re-opening, nor the emergence of any aggressive new virus mutation.

It is highly probable that the authorities would be quick to re-impose restrictions, notably in the hospitality and event sectors, were these risks to materialise. The third wave of infection in the EU could add UK border controls to any impact of Brexit on supply chains.

Approved and authorised by the Board on 20 December 2021 and signed on its behalf by:
 

Vranken Pommery UK Ltd.

Directors' Report for the Year Ended 31 December 2020

The directors present their report and the financial statements for the year ended 31 December 2020.

Director of the company

The directors who held office during the year were as follows:

Paul-Francois Vranken

Nicholas Hyde - Chairman

Nathalie Vranken

Cyrille Laupie

Sarah Hicks

Julien Lonneux

Financial instruments

The company's principal financial instrument relates to group loans. The purpose of this financial instrument is to raise finance for the company's operations. The company has various other financial instruments such as trade debtors which arise directly from operations. The main financial risks arising from the company's activities are credit risk, and liquidity risk. These are monitored by the board of directors and were not considered to be significant at the balance sheet date.

The company's principal financial assets are cash and trade debtors. The directors consider there to be minimal credit risk in respect of the company's cash balances as they are all held in reputable financial institutions. The directors manage credit risk in respect of trade debtors by reviewing outstanding balances and performing credit checks on new customers.

Future developments

We take a cautiously positive view of market recovery in 2021.

Despite the uncertainties, the expectation of a progressive economic rebound following the first quarter lockdown and improved consumer sentiment should benefit Champagne and sparkling wines.

There is a real opportunity in the off trade to use the strong distribution platforms and the sales momentum of Champagne Pommery and Heidsieck Monopole to premiumise and broaden our listings.

Even with shopping habits starting to normalise, we anticipate that on-line sales will remain strong. There is scope to further develop our close relationship with Ocado particularly in the development of the Charles Lafitte marque and our wider Champagne and wines portfolio.

Our hospitality customers are unlikely to make a significant recovery until the second half of 2021 when it is planned that most Covid restrictions will have been lifted.

Securing our major customers as they reopen will be the immediate priority as they have a significant impact on both the sales and awareness of Champagne Pommery.

Beyond this, the focus will be selective new business development which will prioritise value creation and enhance on-trade profitability.

In both the off trade and hospitality we will look for opportunities to grow our wider sparkling wine and wines portfolio.

Vranken Pommery UK Ltd.

Directors' Report for the Year Ended 31 December 2020 (continued)

Future developments (cotinued)

We are well positioned for development in the English sparkling wine category where our premium brand, Louis Pommery England, should benefit from negotiating synergies in the off trade and in hospitality. VP UK is also responsible for developing the international potential of the brand.

We are well positioned for development in the English sparkling wine category where our premium brand, Louis Pommery England, should benefit from negotiating synergies in the off trade and in hospitality. VP UK is also responsible for developing the international potential of the brand.

The Directors are conscious that navigating the pace of transition back to full operating capacity will demand fine judgement and timing.

They are encouraged by the robust foundation of off trade market share and value growth, by the established status of the major VP UK hospitality customers and the quality its Champagnes and wine portfolio.

They also appreciate the commitment that the VP UK team has shown during a difficult period. Their skills and energy will be vital to achieving a successful rebound this year.

Whilst the market will not regain pre-pandemic scale before 2022, the Directors believe that the actions taken last year have provided a secure basis for building a sustainable and progressive recovery in 2021.

Going concern

Accounting standards require the directors to consider the appropriateness of the going concern basis when preparing the financial statements. The directors confirm that they consider that the going concern basis remains appropriate. The directors believe that the company has sufficient resources to continue in operational existence for the foreseeable future. The directors believe this to be the case as the group headed by parent company Vranken Pommery Monopole S A has positive reserves and cash balances. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Disclosure of information to the auditors

Reappointment of auditors

Carbon Accountancy Limited have indicated their their willingness to to continue in office and a resolution concerning their reappointment will be proposed in accordance with section 485 of the Companies Act 2006.

Approved and authorised by the Board on 20 December 2021 and signed on its behalf by:
 

Vranken Pommery UK Ltd.

Statement of Directors' Responsibilities

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 company and of the profit or loss of the company 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 company's transactions and disclose with reasonable accuracy at any time the financial position of the 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 company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Vranken Pommery UK Ltd.

Independent Auditor's Report to the Members of Vranken Pommery UK Ltd.

Opinion

We have audited the financial statements of Vranken Pommery UK Ltd. (the 'company') for the year ended 31 December 2020, which comprise the Profit and Loss Account, Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Statement of Cash Flows, and Notes to the Financial Statements, including a summary of 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 responsibilities for the audit of the financial statements section of our report. We are independent of the 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.

Conclusions relating 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.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the original financial statements were authorised for issue.

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 directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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.

We have nothing to report in this regard.

Vranken Pommery UK Ltd.

Independent Auditor's Report to the Members of Vranken Pommery UK Ltd. (continued)

Opinion on other matter prescribed by the Companies Act 2006

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

Matters on which we are required to report by exception

In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.

Auditor 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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:

Vranken Pommery UK Ltd.

Independent Auditor's Report to the Members of Vranken Pommery UK Ltd. (continued)

• the nature of the industry and sector, control environment and business performance;
• results of our enquiries of management about their own identification and assessment of the risks of irregularities;
• any matters we identified having obtained and reviewed the company’s documentation of their policies and procedures relating to:
- identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of noncompliance;
- detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
- the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
• the matters discussed among the audit engagement team and involving relevant internal specialists, including tax, and business advisory specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

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

• the nature of the industry and sector, control environment and business performance;
• results of our enquiries of management about their own identification and assessment of the risks of irregularities;
• any matters we identified having obtained and reviewed the company’s documentation of their policies and procedures relating to:
- identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of noncompliance;
- detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
- the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
• the matters discussed among the audit engagement team and involving relevant internal specialists, including tax, and business advisory specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

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

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.

......................................
John Leyden FCA (Senior Statutory Auditor)
For and on behalf of Carbon Accountancy Limited, Statutory Auditor

80-83 Long Lane
London
EC1A 9ET

20 December 2021

Vranken Pommery UK Ltd.

Profit and Loss Account for the Year Ended 31 December 2020

The above results were derived from continuing operations.

The company has no recognised gains or losses for the year other than the results above.

Vranken Pommery UK Ltd.

Statement of Comprehensive Income for the Year Ended 31 December 2020

Vranken Pommery UK Ltd.

(Registration number: 03297840)
Balance Sheet as at 31 December 2020

Approved and authorised by the Board on 20 December 2021 and signed on its behalf by:
 

Vranken Pommery UK Ltd.

Statement of Changes in Equity for the Year Ended 31 December 2020

Vranken Pommery UK Ltd.

Statement of Cash Flows for the Year Ended 31 December 2020

Vranken Pommery UK Ltd.

Notes to the Financial Statements for the Year Ended 31 December 2020

The company is a private company limited by share capital, incorporated in England .

The address of its registered office is:
128 Buckingham Palace Road
London
SW1W 9SA

These financial statements were authorised for issue by the Board on 20 December 2021.

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

Basis of preparation

Going concern

Accounting standards require the directors to consider the appropriateness of the going concern basis when preparing the financial statements. The directors confirm that they consider that the going concern basis remains appropriate. The directors believe that the company and group have sufficient resources to continue in operational existence for the foreseeable future. The directors believe this to be the case as the group has positive reserves and cash balances and thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Judgements in applying accounting policies and key sources of estimation uncertainty

Vranken Pommery UK Ltd.

Notes to the Financial Statements for the Year Ended 31 December 2020 (continued)

Revenue recognition

Government grants

Foreign currency transactions and balances

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the respective functional currency of the entity at the rates prevailing on the reporting period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rate on the date when the fair value is re-measured.

Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.

Taxation

Vranken Pommery UK Ltd.

Notes to the Financial Statements for the Year Ended 31 December 2020 (continued)

Tangible assets

Depreciation

Intangible assets

Amortisation

Cash and cash equivalents

Trade debtors

Vranken Pommery UK Ltd.

Notes to the Financial Statements for the Year Ended 31 December 2020 (continued)

Stocks

Trade creditors

Leases

Share capital

Company pension scheme

Vranken Pommery UK Ltd.

Notes to the Financial Statements for the Year Ended 31 December 2020 (continued)

Financial instruments

The company 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 company's statement of financial position when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statemen ts, 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.

 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 assets, which include trade and other receivables 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 unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

 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.

Basic financial liabilities, including trade and other payables, are initially recognisedat transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value though profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Vranken Pommery UK Ltd.

Notes to the Financial Statements for the Year Ended 31 December 2020 (continued)

Financial instruments

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.

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, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Financial liabilities are derecognized when the company's contractual obligations expire or are discharged or cancelled.

The analysis of the company's revenue for the year from continuing operations is as follows:

The analysis of the company's other operating income for the year is as follows:

Vranken Pommery UK Ltd.

Notes to the Financial Statements for the Year Ended 31 December 2020 (continued)

Arrived at after charging/(crediting)

The aggregate payroll costs (including directors' remuneration) were as follows:

The average number of persons employed by the company (including directors) during the year, analysed by category was as follows:

Vranken Pommery UK Ltd.

Notes to the Financial Statements for the Year Ended 31 December 2020 (continued)

The directors' remuneration for the year was as follows:

During the year the number of directors who were receiving benefits and share incentives was as follows:

The tax on profit before tax for the year is the same as the standard rate of corporation tax in the UK (2019 - the same as the standard rate of corporation tax in the UK) of 19% (2019 - 19%).

The differences are reconciled below:

Deferred tax

Deferred tax assets and liabilities

Vranken Pommery UK Ltd.

Notes to the Financial Statements for the Year Ended 31 December 2020 (continued)

Included within the net book value of land and buildings above is £32,778 (2019 - £49,167) in respect of short leasehold land and buildings.
 

Vranken Pommery UK Ltd.

Notes to the Financial Statements for the Year Ended 31 December 2020 (continued)

Details of non-current trade and other debtors

£160,714 (2019 -£160,714) of deferred tax asset is classified as non current. The deferred tax asset relates to acumulated trading losses at 31 December 2016. Deferred tax assets are recognized only to the extent that it is probable that sufficient taxable profit will be available against which those unused tax losses, unused tax credits or deductible temporary differences can be utilized.

Vranken Pommery UK Ltd.

Notes to the Financial Statements for the Year Ended 31 December 2020 (continued)

Allotted, called up and fully paid shares

Operating leases

The total of future minimum lease payments is as follows:

The amount of non-cancellable operating lease payments recognised as an expense during the year was £60,990 (2019 - £59,263).

Vranken Pommery UK Ltd.

Notes to the Financial Statements for the Year Ended 31 December 2020 (continued)

Income and receivables from related parties

Expenditure with and payables to related parties

Loans from related parties

Vranken Pommery UK Ltd.

Notes to the Financial Statements for the Year Ended 31 December 2020 (continued)

The company's immediate parent is Vranken Pommery Monopole SA, incorporated in France .

  These financial statements are available upon request from the company's website www.vrankenpommery.com.

 The ultimate controlling party is Paul-Francois Vranken.

Vranken Pommery UK Ltd.

Detailed Profit and Loss Account for the Year Ended 31 December 2020

Vranken Pommery UK Ltd.

Detailed Profit and Loss Account for the Year Ended 31 December 2020 (continued)

Vranken Pommery UK Ltd.

Detailed Profit and Loss Account for the Year Ended 31 December 2020 (continued)