Chapel Down Half Year Results


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Chapel Down Group Plc is pleased to announce another period of progress in our results, despite the enormous challenges posed by the Covid-19 pandemic, for the 6 months ended 30 June 2020.

Key highlights:
• Wines and spirits
o Wine revenues up 20% reflecting the growing demand for our award-winning wines despite losing approximately a third of our business in the on licensed trade and our own retail sales.
o Direct to consumer sales up 473%, offsetting reduced sales in on-trade and own retail outlets due to Covid-19
o The excellent harvests in 2018 and 2019 have enabled us to increase stocks by 33% to £10.958m (2019: £8.256m) reflecting the substantially higher levels of sparkling stock
o Further recognition of our premium quality with platinum for our Kit’s Coty Coeur de Cuvée 2014 and our Three Graces 2015 and gold for Kit’s Coty Blanc de Blancs 2014 and Kit’s Coty Chardonnay 2017 at The Decanter World Wine 2020 Awards. This, along with more trophies and Golds in the WineGB awards for both sparkling and still wines so far this year reinforces Chapel Down’s position as England’s leading producer.
o Chapel Down Wine and Spirits sales on a continuing basis up 14% to £4.771m (2019: £4.182m).
o Wines and Spirits gross profit on a continuing basis up 15% at £1.728m (2019: £1.509m
• Beer and Cider
o Beer and Cider sales, in Curious Drinks Limited, were down 38% to £1.202m (2019: £1.939m) reflecting the overwhelming importance of the on-trade
o Beer and Cider gross profit (in Curious Drinks Limited) down 59% at £0.280m (2019: £0.680m)
• Overheads excluding depreciation down £0.496m thanks to a swift programme of cost reduction, furloughing of staff and Board and senior management salary cuts
• EBITDA improved by £0.315m* on a continuing basis
• Profit before tax on continuing operations was a loss of (£1.188m) (2019: loss of (£1.139m))
• The Group has a healthy cash position of £5.832m (H1 2019: £5.192m)
* Excludes the effect of the FRS 102 Section 26 share option accounting adjustment of £35k (2019: £23k) which is a non-cash item.

Chief Executive’s Commentary:

Given the ongoing Covid-19 pandemic, I am delighted to announce a strong set of half year results. There was an almost complete collapse in the on licensed trade for two thirds of this period, from early March to the end of June.

The on trade is vital for the development of brands and premium brands in particular. With almost one third of our wine and spirits business and nearly 90% of our beer business focused on this channel of trade, it has been a remarkable achievement to have grown our wines and spirits business in total by an amazing 14% through an acceleration of our sales to supermarkets and other off premise retailers and making a step change in our direct sales on-line. We have been further encouraged by this momentum continuing into the second half.

We see online sales as a major growth area and are investing accordingly. We have the considerable benefit of the Chapel Down brand and that has reinforced our belief that now, more than ever, it is crucial that we continue to invest in building strong brands and maintaining a balanced business in the on trade, off trade, on line and direct.

Our sales through our own shop at Tenterden as well as the restaurant and shop at Ashford brewery have obviously also been severely impacted. Both have now re-opened and are trading to expectations. With the brewery, we have been grateful for the continuing support of Ashford Borough Council as we begin to slowly re-emerge from the crisis. The on trade remains extremely fragile and the first half year was especially challenging.

Brands are the only way we can deliver a sustainable long term profitable business for our customers and shareholders. We have built attractive innovative brands with premium positioning through outstanding quality products, well executed marketing, strong distribution and visibility and a team of people dedicated to serving a loyal and growing customer base, many of whom become shareholders, brand advocates and fans. In a challenging environment, we believe those assets are vital to our long term success.

Those that survive and thrive in the current crisis will not compromise on quality and value, or cease their investment in their brands. That is why we believe that despite the current crisis, Chapel Down will continue to grow. World class products, great service and great value whether on-line, in store or on the menu.

As winemakers we have longer term horizons than most. To us, the future looks really exciting. The genesis of a new wine region does not happen often and to be at the forefront of that is very exciting. With higher brand awareness than other English wines, we continue to see strong demand and excellent sell through. We have a very solid asset base of both tangible and intangible assets.

We will be looking to make substantial investments over the coming years in the supply of first class fruit, improving our winemaking efficiency and excellence, driving our commercial and on-line infrastructure, creating smarter and more effective marketing and building the strongest quality brands to be best placed for future growth and any industry consolidation.

Our assets are strong and we have great brands and a truly excellent management team and investors who are supportive of the business. I believe we will come out of the Covid-19 pandemic stronger than we were before and the whole team look forward to the future with relentless enthusiasm.

This enthusiasm is shared by all our stakeholders to whom I would like to extend our thanks.

Thanks for coming on this journey with us.

Frazer Thompson
Chief Executive 

30th September 2020