EXPOSE: £250m raised but Cult Wines Limited is corked

Cult Wines about which I have been warning about since last April has now belatedly filed its overdue accounts for the year ended 31 December 2024 at Companies House.  They show a company in deep financial trouble despite claiming to have raised £250 milion from investors . It’s corked and the FCA, who I have alerted again last week, should be all over this.

At the year end Cult had net liabilities of £21.6 million up from £17.1 million and net current liabilities of £17.3 million marginally up from £17.1 million.  The profit and loss account saw dramatic declines in revenue down from £58.8 million to £33.5 million.  It did manage to reduce its administrative expenses which reduced post tax losses but only from £5.9 million to £4.8 million.  The net liabilities include £4.8 million of intangible assets relating to development costs.  There is no note explaining why the intangibles haven’t been fully impaired in light of cumulative retained losses of £21.9 million. 

I note that the prior year comparatives have been restated to include a previously omitted wine purchase of £890,629 which doesn’t exactly provide confidence in the quality of the financial controls at the business.

During the year it was lent £4.25 million by way of a loan which is classified as an amount falling due after more than one year (the actual loan term is not disclosed).  The loan is secured by way of a charge over the assets of the company.

It is a company reliant on creditors to continue to trade and fund past losses.  Note 17 indicates that Trade creditors include £7.9 million of customers money earmarked to pay for the procurement of wine and the payment of wine.  I suspect that money isn’t protected via a separate trust account but is commingled with Cult’s own cash balances which were only £573,000.  No wonder some customers have complained about delays in receiving their cash back from the group. 

I note that the highest paid director trousered £276,668 and total directors’ emoluments in the year were £426,711 up from the prior year total of £91,464.  Even worse for a company in such financial distress, note 22 on related parties reveals that the Directors owed the company £614,093 in interest free loans.   This is at same time as the new loan it has taken out cost the company Sonia plus 4%.

The auditor Azets Audit Services include a material uncertainty paragraph over going concern and warn that if the assumptions in the business forecasts are not met then there may be a shortfall. No shit sherlock.   The Directors are in denial and say they are optimistic about returning to being cashflow positive in 2026 and believe the Group is well positioned to continue operating as a going concern.

On Trustpilot there are complaints and 1 star reviews highlighting lengthy delays in being paid cash to departing customers.  As Cult loses more customers that will reduce incoming cashflows, and trigger cash outflows and eventually it will run out of cash to pay leaving customers and creditors and end up in administration.

I note that the lender of £4.25 million Coterie is part of a larger UK group with significant wine interest including Lay & Wheeler so perhaps the loan was a way of potentially taking control of Cult in due course when it goes into administration with Coterie have a senior charge over its assets and leave other creditors with nothing.

Cult is a company to avoid and if you are an existing customer, sell your wine and get your cash out whilst you can.