Information for prospective shareholders, February 2015
Background
Domaine du Grand Mayne is a 34 hectare vineyard in south-west France.
The vineyard was established in 1985 by an English wine merchant, Andrew Gordon, who established a
very successful business, with award-winning wines. Andrew sold the business in 2007, but the
business appears to have been poorly managed thereafter and it ran into financial difficulty, resulting in
it being sold again late in 2013.
The ambition of the new owners is to re-establish Domaine du Grand Mayne as one of the top
winemaking enterprises in south-west France.
As part of this process, we will be opening up the ownership of the business on a crowd-funded basis in
February/March 2015. Our new shareholders, as well as owning a part of the business, will be eligible
to discounts on wine purchases and will be able to rent the villa at the vineyard, also on favourable
terms.
In late 2013 the French company that owns the vineyard estate, SARL Grand Mayne, was bought by a
new UK company, Grand Mayne (Duras) Ltd. At this time, the finances of SARL Grand Mayne were also
in a very poor state, so the first priority for the new owners was to bring some financial stability and to
review how the enterprise might be made more secure in future.
What has become clear during this review is that Grand Mayne has a very loyal group of supporters,
many of whom had been buying Grand Mayne wine for decades. Secondly, the young winemaker,
Mathieu Crosnier, had continued to produce top quality wines, despite the poor strategic management
by the owners. And thirdly, we concluded that the vineyard is perfectly placed in terms of size, history
and location to thrive as a members-oriented business.
New shareholder plans and goals
Our proposal is that, through a crowdfunding campaign, future members will own a share in the
company that is the ultimate owner of the vineyard, the winery and the other buildings at Domaine du
Grand Mayne.
Our goal is to raise at least £450,000, with shares priced at £1 each. To qualify for full shareholder
discounts and member benefits, there is a minimum investment of £500.
Our goals can be summarised with a couple of complementary statements. Firstly, we will make the
best wines possible from the land and the facilities that we own. Secondly, we aim to make Domaine du
Grand Mayne a destination vineyard that will attract and delight visitors, thereby enhancing the brand
name of the Domaine. And finally, we will supply our wine direct to consumers (including members)
and to good quality restaurants.
Our philosophy is to be the best in everything we do. Our aim is to make the company profitable, with a
high proportion of profit reinvested, thereby protecting and increasing the value of the shareholders’
original investment.
The management and direction of the business
The day-to-day management of SARL Grand Mayne in France will continue to be covered by the existing
team in France, headed by the very capable winemaker and General Manager, Mathieu Crosnier, who
has steered the business through a challenging period.
Mathieu will be assisted by, and given direction by, the board of the UK company. The board of
directors for Grand Mayne (Duras) Limited was assembled through 2014 to bring broad and relevant
wine industry experience to the business:
Philip Addis, Chairman. Founder of Great Western Wines in Bath. Philip founded GWW in 1983
and successfully sold the business in 2010 with sales of towards £10m per year.
Andrew Gordon. Founder of Grand Mayne and Wineshare. Andrew is well known by the original
Wineshare membership, and, like Philip, is well regarded throughout the UK wine industry.
Graham Hazell. Entrepreneur and investor with experience across a wide range of businesses.
Tim Henderson-Ross. Finance Director. Amongst other general management and Board roles,
Tim was Finance Director for Great Western Wine Ltd working with Philip to build the business
prior to its sale.
Martin Meinert. One of South Africa's most respected winemakers, Martin has worked
throughout the world including at Chateau Lafite in Bordeaux. He set up Vergelegen, one of
South Africa's famous vineyards, and he also works with other major wineries as a consultant
and winemaker.
Financial structure, goals and projections
The UK company, Grand Mayne (Duras) Limited, owns the entire share capital in the French company
SARL Grand Mayne, which in turn owns all the assets in France:
the land (approximately 120 acres) including the 80 acre vineyard
buildings, including houses, winery, barrel cellar, shop, office
wine stocks (equivalent in volume to over 340,000 bottles as at 1 January 2015)
wine tanks, barrels, harvesting and other equipment needed by the business
As at 1 January 2015, Sarl Grand Mayne had a relatively small trading overdraft, normal trading
creditors, and loans totalling 476,000 Euros from Grand Mayne (Duras) Limited.
In recent years, SARL Grand Mayne has made significant losses, resulting from a combination of factors
including bad debts (when Wineshare Ltd failed) and stock write-downs. The latter has largely been a
consequence of there being very limited sales, and what sales did take place were on heavily
discounted prices.
The imperative for returning SARL Grand Mayne to profitability is to re-open all the sales channels and
to sell wine at commercially viable prices. This is why our recruitment onto the Grand Mayne board of
directors has included two experienced campaigners with a proven record in wine sales: Philip Addis
and Andrew Gordon.
Our goal is to create a business with a long-term sustainable profit stream, based on the production of
good quality wine and an efficient operating model. In the short term, we are not expecting to produce
exciting financial results; we are more concerned about setting up the right long term structures. The
funds being raised in the 2015 crowd-funding campaign will enable the various investments underlying
this strategy.
If the next three years follow the plans that we are setting, the overall results for the business will be of
the following form:
£ 000s
2015
2016
2017
Total income
498
717
769
Total costs
610
659
689
Pre-tax profits
(112)
58
80
The sales forecast and budget allow for a moderate increase in prices and sales year on year. We
expect to see margins improve as our work to the winery and the vineyard takes effect, and the
opportunity to buy grapes from neighbouring vineyards will enable increased production and sales.
The principle of increasing our sales income more rapidly than the cost base should be possible given
the assets at our disposal, and our ability to buy in high quality grapes from neighbouring vineyards as
our brand grows in popularity. In the words of our Finance Director: “The investment of shareholders’
funds and retained profit should ensure that after 2017 the sales should show strong growth with a
concomitant increase in pre-tax profits.”
The balance sheet of Grand Mayne (Duras) Limited at 1st January 2015 had the following form:
Assets:
100% of the share capital of Sarl Grand Mayne
+ loans to SARL Grand Mayne of 476,000 Euros
Liabilities:
Loans from directors of £198,000 plus 476,000 Euros
By consolidating the assets and liabilities of SARL Grand Mayne into the parent company at 1 st January
2015, a broad-brush net asset value assessment of our company is given by the value of all the assets
held in France listed on the previous page less the total director loans of £555,000 (assuming 1 Euro =
75p). This is one of the factors that has justified our decision to pitch the share price at £1 per share,
with 1 million shares in issue at outset. If we simply equate the net asset value to the deemed preissue company valuation, it is equivalent to valuing all the assets held by SARL Grand Mayne at £1.55m.
It is interesting to note that the 2007 purchase of SARL Grand Mayne was at a price in excess of £2m.
The loans made by the directors, namely Graham and Philip, have been important in the financing of the
business. The loans run for a term of 5 years from January 2015 and carry interest at 4% per year.
They may be repaid earlier at the company’s discretion, although there is further agreement with the
board that the loans can be re-instated by the company if they are redeemed earlier. This gives the
company greater flexibililty in keeping its borrowing costs to a minimum, along with an assurance that
the funding is available should it be needed.
In a separate agreement with the company, Graham and Philip will not be drawing salaries for the
duration of the term of these loans. Their financial rewards for their contributions from the success of
this business are linked to the value of the shares they hold, and are therefore aligned to the interests
of the new shareholders. And in keeping with the spirit of keeping costs as low as possible, each of the
other three directors have agreed to receive only modest annual fees in return for the contributions
they are making.
Questions and Answers
Our thanks go to those customers who have asked a variety of questions about our future plans, and
these questions are answered below. We know that you will want more detail before committing, but
these notes will hopefully give you a fair understanding.
Can I invest more than £500?
Yes, if you like the look of Grand Mayne shares from an investment perspective, you may apply for more
shares than the minimum needed for full membership.
Are there any additional benefits from investing a larger sum?
This is not easy. What we cannot do is offer wine at such a large discount that it does not cover our
marginal costs. So in terms of member benefits, there is simply the one number that matters, and that
is the £500 investment.
What level of discount will apply for qualifying members?
Discounts for full shareholders buying wine will usually be 25% on the cellar door prices.
Can our friends join in as shareholders?
Yes, that would be great. Please do let your friends know about this opportunity to own a share in our
vineyard.
What is the rationale behind the valuation of the company, and hence the share price of £1?
Our aim has been to strike the right balance, so that the shares are attractive to potential investors,
and reflecting (a) the underlying value of the properties, vineyard, winery, equipment and wine stocks,
and (b) the value of the business itself.
When will the shares go on sale?
We expect that shares will be available from the last week of February 2015.
Will you be publishing a business plan and company accounts?
Yes, these will be made available early in 2015. Other company documents, for those who are
interested, will also be made available.
How will you use the funds raised?
We will be using a portion of the funds to improve the quality of La Maison and to develop additional
facilities at the vineyard to enhance our visitor appeal (eg creating an outside restaurant area). Some
of the funds will be used to remove the company’s bank borrowing and we will need some funds to
support the wine-making operations early in 2015, during which time we will be establishing our sales
channels. And finally, we will be investing in new marketing, rebranding and sales channels, including
an updated website.
As shareholders, what should we do to help our business?
Fundamentally, the most important thing for the business is to keep the sales of wine flowing through
channels that provide a fair return. Therefore, spreading the word and encouraging people to buy (and
drink!) Grand Mayne wine should be our focus.
Can our friends and family buy Grand Mayne wine?
That would be great. And as an inducement, all shareholders will be given an access code so that their
friends and family can buy wines at a discount direct from the website. The discounts will be at a level
to provide a win-win outcome for the company and the wine buyer.
What sort of events will be available to members?
Our aim is to offer a variety of weekend vineyard experiences throughout the year. These will include
the harvest festival, a wine-blending weekend, food and wine matching weekends, a mid-summer party,
a camping weekend (although we know this won’t appeal to all!) and whatever else is dreamt up by the
team.
In the UK we will arrange member suppers and dinners from time to time at a variety of venues. We will
also have the annual general meeting at which the annual results and other business themes will be
covered.
How will you attract visitors to the vineyard?
It is clear that vineyards in other parts of the world provide a more interesting visitor experience than
the average French vineyard. It is our intention to learn from these other vineyards and offer visitors a
more complete vineyard experience including winery tours, tastings, vineyard lunches and picnics.
What wines will be produced and at what prices?
We will continue to make very affordable reds and whites using the grape varieties available from the
vineyard: largely Merlot-based for the reds and Sauvignon-based for the whites. We will also offer
speciality wines from time to time when the conditions are right. In short, the range of wines will be
similar to what has been produced in the past.
How will I buy the wine?
The wines will be available without UK excise duty from the vineyard and from Calais. You can also have
your wines delivered to your door in the UK, but we will need to include the additional costs of UK duty,
VAT and delivery charges. Either way, you will be able to order your wines through the website or by
phone.
I have not visited the vineyard before. What is there?
At the centre of the estate is the large, well equipped winery, complete with an array of steel tanks in a
traditional stone barn. Just beyond this is a range of ancillary buildings, including the shop, wine cellar
and office. The winemaker, Mathieu, lives in the traditional stone farmhouse on site, then further up the
hill is “La Maison”, the 6-bedroom villa that is available for shareholders to rent. And around all these
buildings lie 34 hectares of vineyard and other land around the Domaine.
All in all, it’s a rather lovely set up!
How will shareholders get to book La Maison?
There will be 104 available slots for booking La Maison each year, which is Tuesday-to-Saturday and
Friday-to-Sunday for 52 weeks each year. Prices will vary according to the time of year, and bookings
by shareholders can be made up to 400 days in advance. Taking a group of friends to stay in the villa
off-season is likely to be a great treat for those shareholders keen to stay at their own vineyard! A full
programme of regional visits and in house catering can be provided if required.
What is the long term plan for our shareholding?
Although no specific exit plan exists, our aim is to develop the business so that it would be attractive as
an investment to third parties in 2020 or soon after, thus giving shareholders an opportunity to realise
their investment at that time.