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Hotel Chocolat (HOTC) has repaid £6.4m of ‘chocolate bonds’ that its customers bought in 2010 and 2014 to fund growth at the chocolatier.

Subsidiary Chocolate Tasting Club issued the two bonds in 2010 and 2014, which paid a return in the form of luxury boxes of chocolate or Hotel Chocolat Gift Cards.

The bond proceeds were invested in capital projects that supported the growth of the company and developed cocoa sustainability projects in St Lucia and Ghana.

Hotel Chocolat said the bonds have helped fund the creation of 600 jobs in the UK, new store openings, investment in manufacturing and sustainability projects including the creation of four model farms that supply disease-resistant cocoa seedlings and develop cocoa growing techniques to improve yields and farm incomes

At inception, the net cash proceeds received for these bonds were recognised as a liability. Each year the cost value of the chocolates was recognised as an interest expense.

Hotel Chocolat said the ongoing growth of the business has increased operating cash generation to the extent that the continuation of growth and sustainability projects can be funded using its available working capital.

Angus Thirlwell, co-founder and CEO of Hotel Chocolat, said: “Thanks to the support of our amazing Chocolate Bond-holders, we were able to invest in ethical cocoa, British manufacturing, create hundreds of jobs and then repay them in full, as planned.”

Morning update

Sales at English Wine producer Gusbourne rose a further 56% last year, although pre-tax losses expanded marginally as the group invested in growth.

Revenue for the year to 31 March 2018 amounted to £998k, up from £640k last year.

Gusbourne said that whilst these sales continue to reflect “limited stock availability at this time”, they do represent a consecutive like for like growth since 2013.

The group saw strong growth in exports, selling into 16 countries and now representing 25% of sales compared to 14% last year.

Administrative expenses rose to £1.76m from £1.39m in the previous year, reflecting continuing investment in the development and growth of the business and the Gusbourne brand.

EBITDA for the year was a loss of £690k compared to an £802k loss last year. Its operating loss grew to £1.17m from £1.16m and pre-tax losses grew to £1.64m from £1.53m.

Gusbourne said these “planned losses” continue to be in line with expectations and the long-term development strategy of the group.

Its 2017 harvest took place during September and October and favourable growing conditions resulted in our earliest ever start date. It stated: “The quality of the grapes was excellent, with optimum levels of natural sugar and acidity, both of which met our own exacting quality standards.”

Good yields from the 2017 harvest have allowed it to significantly increase wine stocks for future sales.

However, the growing season in 2018 has started slightly later than last year, due to a cold start to the year, though warm spring weather has led to strong even growth and high potential fruitfulness.

Chairman Andrew Weeber commented: “2017 has been another successful year of growth as we work towards our long-term goals based on the production and sale of our premium sparkling wines. I am delighted with our export performance which represented 25% of our revenues in 2017.”

On 31 May 2018 the group announced its intention to raise new equity to support further growth. In order to meet immediate working capital requirements, the Company entered into an agreement with primary funder Lord Ashcroft to receive an unsecured loan of £1m which will be repaid as part of the equity raise.

Also this morning, German pharma giant Bayer has announced it plans to complete its $63bn acquisition of Monsanto on June, 7 after receiving clearance from regulatory authorities.

Bayer announced its intention to acquire Monsanto in May 2016 and signed an agreement with the US company for $128 per share in September 2016. Currently that corresponds to a total cost of approximately $63bn taking into account Monsanto’s debt.

As part of the deal, Bayer has agreed to the divestiture of businesses which generated €2.2bn in sales in 2017 for an aggregate base purchase price of €7.6bn. Including Monsanto and taking the divestitures into account, the health and agriculture businesses would have been roughly equal in size in 2017, with total pro forma sales of around €45bn.

Bayer will become the sole shareholder of Monsanto on June 7. Bayer will remain the company name. Monsanto will no longer be a company name. The acquired products will retain their brand names and become part of the Bayer portfolio.

Bayer chairman Werner Baumann commented: “The acquisition of Monsanto is a strategic milestone in strengthening our portfolio of leading businesses in health and nutrition. We will double the size of our agriculture business and create a leading innovation engine in agriculture, positioning us to better serve our customers and unlock the long-term growth potential in the sector.”

Elsewhere, on the markets this morning the FTSE has opened the week up 0.6% at 7,750.9pts as the market shrugged off worries over a mounting international trade war.

Early risers include PayPoint (PAY), up 4% to 1,050p, PureCircle (PURE), up 1.6% to 371p, Majestic Wine (WINE), up 1.5% to 437.5p and Tate & Lyle (TATE), up 1.1% to 685.2p.

Fallers so far include Pets at Home (PETS), down 1.1% to 127.1p, Cranswick (CWK) down 0.4% to 3,366p and Finsbury Food Group (FIF), down 0.4% to 125p.

The week in the City

The City looks set for another quiet week for the grocery sector.

Of most interest is a third quarter trading update from WH Smith (SMWH) on Wednesday. Forecourt operator Applegreen (APGN) hosts its AGM on the same day.

Away from the UK, French drinks group Remy Cointreau will issues its full year results on Thursday morning.

In economic news, BRC-KPMG Retail Sales figures for May will be issued tomorrow, while the monthly Grocer Price Index will be published on Friday.

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