Half-year Report Business Wire

LONDON--(BUSINESS WIRE)--

Chapel Down Group Plc

(`CDG' or `the Company')

EPIC: CDGP

UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30th JUNE 2017

Chapel Down Group PLC is pleased to announce the Company’s Interim Results for the six month period ended 30th June 2017.

Key highlights include:

  • Year on year sales up 22% to £4.977m (H1 2016: £4.093m)*
    • Chapel Down Wine sales up 29% to £3.345m (H1 2016: £2.585m)
    • Curious Drinks Ltd Beer and Cider sales are up 8% to £1.632m (H1 2016: £1.508m)
  • Wine Gross Profit up 24% at £1.271m (H1 2016: £1.026m)
  • Beer and Cider Gross Profit up 18% at £0.558m (H1 2016: £0.473m)
  • EBITDA of £235k (H1 2016: £93k) as we continue to reinvest in our brands, infrastructure and supply
  • 50 acres of new vineyards planted on our new leased sites in Kent
  • A Gold medal at The International Wine and Spirits Challenge 2017 Awards for our Kit’s Coty Coeur de Cuvee 2013

* Total of Wine, Beer and Cider sales

Frazer Thompson, Chief Executive, said:

“We are focused on delivering strong top line growth at good margins to ensure we can continue to build strong and sustainable brands that our consumers and customers love. Interest in English wines – and Chapel Down in particular - has never been higher and is exciting the wine world as we help to grow the sparkling wine market as well as innovate and surprise with our still wines.

We are planting more vines on some truly outstanding land, while improving our winemaking and equipment and systems. We continue to develop our people and brands. We are encouraged by the prospect of a good harvest in 2017, despite early fears of significant frost damage, with very high quality fruit which will enable us to continue to improve the quality of our wines and help us meet future demand at the premium end of the market.

In the beer market, great product will always be attractive and command a premium. Maintaining the highest standards of quality have been crucial to developing the brand and I am delighted that we have achieved this. Our growth has been limited by our desire to maintain margins and ensure our positioning has not been compromised at this early stage. The new brewery is about to commence construction at Ashford and will represent a big step forward in the brand’s journey. We have also seen interest in our cider continuing to grow. This autumn will see a re-design of our range to reflect more clearly our winemakers pedigree, which we know consumers see as a relevant and exciting point of difference.

I believe we have a fantastic team of people, and we are excited about the prospects for the future and our ability to continue to hire the very best people to enable us to develop an even better business by exciting consumers and investors.”

Performance Review

The combined business continued to perform strongly in the first half of 2017, with growth in sales and gross profit of both Wine and Beer and Cider:

    Wine   Beer and Cider   Combined Businesses
    H1 2017   H1 2016  

%age
Variance

  H1 2017   H1 2016  

%age
Variance

  H1 2017   H1 2016  

%age
Variance

    £’000   £’000       £’000   £’000       £’000   £’000    
Turnover   3,345   2,585   +29%   1,632   1,508   +8%   4,977   4,093   +22%
Gross profit   1,271   1,026   +24%   558   473   +18%   1,829   1,499   +22%
Gross profit %age   38%   40%       34%   31%       37%   37%    

We have made a conscious decision to continue reinvesting any surplus cash in our people, our systems and our brands. As a consequence, the total business reported EBITDA of £235k, compared with £93k in the six months to June 2016.

Higher costs predominantly as a result of Euro exchange rates have slightly reduced wine gross margins from 40% to 38%, but remain very healthy.

Beer margins have improved but there has been limited scope for short term volume growth whilst developing the brand and managing supply. At 34% gross margin from contracted out brewing, we are satisfied with its performance.

Wine

Wine sales grew 29% in the first half, to £3.345m with wine volumes up 24%. The strong positioning of our brand has been enhanced through our sponsorship of the Oxford & Cambridge University Boat Races, a sharpening of our presentation, and continuing growth in the quality of our wines in trade. We have seen good growth across the country, as well as in our focused export markets, with very encouraging development in the United States where the brand has been well received in prestige accounts in New York following launch and our partners, ABCK Corporation have recently launched Chapel Down in Texas and New England working with Southern Wines and Spirits.

Our wines continue to win international accolades, which has helped to ensure that, along with our strong sponsorships and outstanding PR, demand for our wines continues to outstrip our ability to supply and enables us to move pricing forwards whilst maintaining strong relationships with our blue chip retail partners. With high demand and excellent sell through (volumes up 24%) we are confident of an excellent long term future if we can increase our fruit supply. This year’s harvest looks to be of very good quality, but volumes have been affected by an early frost and we are having to limit supply of some of our wines to new customers to ensure we can continue to support our core customers who are experiencing growing demand. Growth in the second half has been managed down therefore, but will nevertheless mean that 2017 will see record sales and gross profits.

Investment by our shareholders has enabled us to secure an exciting future. We are very pleased with the development of our new vineyard sites and we continue to invest in creating further high quality supply. We have planted a further 50 acres this Spring taking the total planted on our long term leased land to 172 acres since 2015. We now have 533 acres of vineyard planted from which to source our fruit. We continue to invest in further capacity and equipment to enhance efficiency and quality in the winery, improving our systems and processes as well as building our brand and team. We completed the development of the new Wine Sanctuary at Tenterden to enable us to give an even better visitor experience. Our visitor numbers and spend in the shop are up (around 20%) and the restaurant has also benefitted.

Beer and Cider

Our growth has been focused on premium accounts and we are delighted by the continuing progress in top end restaurants, bars, hotels and premium off-trade where the brand has good sustainable rates of sale. We are successfully attracting aspirant consumers wanting interesting, original and accessible brands. We have National distribution through Majestic and Waitrose in the off trade and a network of wholesalers including Matthew Clark that enables us to get Curious beers in draught or bottles to the whole of Great Britain. We are supplying M&B, EI Group, Food and Fuel and a number of up and coming small groups looking for something truly original. Beer and cider sales rose 8% to £1.632m in the first half and we have successfully migrated production. We have also recently completed an overhaul of the brand identity to ensure that our proposition is better communicated and have held off off-trade development until those two elements were in place.

Recent research confirms that we have a unique and distinctive consumer proposition – a winemaker’s beer – which is increasingly rare in a beer market excited by novelty and choice. Our real point of difference and taste appeal to a broad church of consumers give us a huge opportunity. We are satisfied with the strong margins and we will be driving growth as we add capacity to build the brand. The construction of the new brewery has been frustrating but we are now about to commence construction and will be brewing on site in 2018. This will help us further improve margins.

Outlook

We are optimistic about the medium and long term growth of the business. English wines have real momentum. In the short term, a successful 2017 harvest will provide the quality of fruit from which we can grow wine revenue and margin.

Whilst we don’t seek explosive growth in Curious sales whilst our brewing is contracted out, we do expect an increased rate of growth in 2018 as a result of the brand overhaul and anticipated new listings. With the new brewery due to be finished in 2018 we will be adding new energy and talent to help to take us to the next level.

Our tangible assets are strong and supportive of the business: land – and high quality vined land in particular – continues to appreciate and we have stock, steel equipment and freehold land and buildings associated with the winery and a freehold site for the brewery. And of course, our brand assets are more valuable than ever.

We enjoy the custom and support of our many passionate and engaged shareholders who continue to spread the word with energy and enthusiasm.

Thank you for your faith, your continued encouragement and your enthusiastic support. It makes a difference!

Contact

Chapel Down Group plc

Frazer Thompson

Richard Woodhouse

             

Chief Executive

Finance Director

             

01580 763 033

           
finnCap Limited

Geoff Nash/Simon Hicks

Stephen Norcross

Corporate Finance

Corporate Broking

020 7220 0500

PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 30th JUNE 2017
   

Unaudited
Continuing
Operations
01.01.17 to
30.06.17

 

Unaudited

Total

 

Unaudited
Continuing
Operations
01.01.16 to
30.06.16

 

Unaudited
Discontinued
Operations
01.01.16 to
03.04.16

 

Unaudited

Total

 

Audited
Continuing
Operations
01.01.16 to
31.12.16

 

Audited
Discontinued
Operations
01.01.16 to
03.04.16

 

Audited

Total

        1   2   3   4   5   6   7
    £   £   £   £   £   £   £   £
Turnover   3,345,360   3,345,360   2,584,706   539,356   3,124,062   6,791,014   539,356   7,330,370
Cost of sales   (2,074,056)   (2,074,056)   (1,558,917)   (369,555)   (1,928,472)   (3,903,342)   (369,555)   (4,272,897)
    ------------   ------------   ------------   ------------   ------------   -------------   -------------   -------------
Gross profit   1,271,304   1,271,304   1,025,789   169,801   1,195,590   2,887,672   169,801   3,057,473
Administrative expenses   (1,242,581)   (1,242,581)   (1,055,226)   (211,950)   (1,267,176)   (2,466,688)   (211,950)   (2,678,638)
Share based payment   (37,434)   (37,434)   (36,910)   -   (36,910)   (74,868)   -   (74,868)
    -----------   -----------   -----------   -----------   -----------   -------------   -------------   -------------
Operating loss   (8,711)   (8,711)   (66,347)   (42,149)   (108,496)   346,116   (42,149)   (303,967)
Share of loss from associate   (89,830)   (89,830)   (11,829)   -   (11,829)   (27,805)   -   (27,805)
Gain on disposal   -   -   -   466,903   466,903   -   466,903   466,903
Interest   6,576   6,576   6,607   -   6,607   22,061   -   22,061
    -----------   -----------   -----------   -----------   -----------   -------------   -------------   -------------
Profit/(loss) before tax   (91,965)   (91,965)   (71,569)   424,754   353,185   340,372   424,754   765,126
Tax   -   -   -   (6,613)   (6,613)   (111,691)   (6,613)   (118,304)
    -----------   -----------   -----------   -----------   -----------   -------------   -------------   -------------
Profit/(loss) after tax   (91,965)   (91,965)   (71,569)   418,141   346,572   228,681   418,141   646,822
    =======   =======   =======   =======   =======   =======   =======   =======
                                 
EBITDA [excl. share based payment (FRS 102 section 26 adj)]   235,411   235,411   113,730   (20,232)   93,498   749,593   (20,232)   729,361
                                 
Profit on ordinary activities before taxation [excl. share based payment (FRS 102 section 26 adj)]   (54,531)   (54,531)   (34,659)   424,754   390,095   415,240   424,754   839,994
                                 
Profit/(loss) per share – diluted (pence)       (0.08)           0.32           0.60

 

 

 

Notes:

 

1. Represents the unaudited results for Chapel Down Group Company and English Wines Plc for the period 01.01.17 to 30.06.17 and the share of loss from the Associate, Curious Drinks Limited, for the period 01.01.17 to 30.06.17

 

2. Represents the unaudited results for Chapel Down Group Company and English Wines Plc for the period 01.01.16 to 30.06.16 and the share of loss from the Associate, Curious Drinks Limited, for the period 04.04.16 to 30.06.16

 

3. Represents the Discontinued Operations being the Curious Drinks Limited unaudited results for the period from 01.01.16 to 03.04.16

 

4. Represents the total of notes 2 and 3 above

 

5. Represents the consolidated audited results for Chapel Down Group Company and English Wines Plc for the 12-month period to 30.12.16 and the share of loss from the Associate, Curious Drinks Limited, for the period 04.04.16 to 31.12.16

 

6. Represents the Discontinued Operations being the Curious Drinks Limited audited results for the period from 01.01.16 to 03.04.16

 

7. Represents the total of notes 5 and 6 above

CHAPEL DOWN GROUP PLC

CONSOLIDATED CASH FLOW FOR SIX MONTHS ENDED 30th JUNE 2017
  Unaudited   Unaudited   Audited
6 Mths 6 Mths 12 Mths
30.06.17 30.06.16 31.12.16
 
£ £ £
Net cash generated from operating activities (411,156) (441,124) (253,476)
------------- ------------- -------------
Cash flows from investing activities
Payments to acquire tangible assets (634,365) (483,363) (1,604,830)
Interest received

Interest paid

Cash disposed of on deemed disposal of subsidiary

14,054

(7,478)

-

6,607

-

-

22,061

-

(250)

Investment in associate - (8,751) -
------------- ------------- -------------
Net cash from investing activities (627,789) (485,507) (1,583,019)
------------- ------------- -------------
Cash flows from financing activities
Drawdown of long term bank loan 489,979 - -
------------- ------------- -------------
Net cash used in financing activities 489,979 - -
------------- -------------

 

          -------------
Net (decrease)/increase in cash and cash equivalents

(548,966)

(926,631)

(1,836,495)

 
Cash and cash equivalents at the beginning of the period

1,225,528

3,062,023

3,062,023

 
------------- ------------- -------------
Cash and cash equivalents at the end of the period

676,562

2,135,392

1,225,528

======== ======== ========

CHAPEL DOWN GROUP PLC

BALANCE SHEET AS AT 30th JUNE 2017

  Unaudited       Unaudited       Audited
As at As at As at
30.06.17 30.06.16 31.12.16
 
£ £ £
Fixed assets 9,139,908 8,007,393 8,802,062
Current assets 10,081,124 9,810,843 9,654,755
Creditors due within one year (2,817,775) (2,171,431) (2,424,615)
Creditors due after one year (554,090) (294,827) (128,504)
------------ ------------ ------------
Net assets 15,849,167 15,351,978 15,903,698
------------ ------------ -------------
 
Called up share capital 5,051,510 5,051,510 5,051,510
Share premium account 8,554,912 8,554,912 8,554,912
Revaluation reserve 1,179,120 1,056,417 1,183,283
Profit and loss reserve 1,063,625 689,139 1,113,993
-------------- -------------- ----------------
Shareholders’ funds 15,849,167 15,351,978 15,903,698
========= ========= =========

1. BASIS OF PREPARATION/ACCOUNTING POLICIES

The Company’s interim report for the six months ended 30th June 2017 were authorised for issue by the directors on 28th September 2017. The interim financial information, which is unaudited, does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. Accordingly, this report is to be read in conjunction with the Annual Report for the year ended 31 December 2016, which was prepared in accordance with the Company’s reporting standard (FRS102) that was in effect at that time.

The accounting standard requires the Company to restate its profit to attribute a notional cost of non-cash share option agreements to the business. After adopting the standard, the accounts show a decrease in profit of £37,434 (H1 2016: £36,910) resulting in a Group pre-tax loss of £54,531 (H1 2016: pre-tax profit of £390,095).

The Company is required to value net assets in accordance with the Company’s reporting standard (UK GAAP). The assets (wine stock, land, vineyard) are held at cost which the Directors believe is considerably less than the realisable value.

The statutory accounts for the year ended 31 December 2016, prepared under UK GAAP, have been reported on by the Company’s auditors, received an unqualified audit report and have been filed with the registrar of companies at Companies House. The unaudited interim financial statements for the six months ended 30 June 2016 and 30 June 2017 have been drawn up using accounting policies and presentation adopted in the Company’s full financial statements for the year ending 31 December 2016 being FRS102.

2. BALANCE SHEET REVIEW

The net asset value of the Company as at 30th June 2017 was £15,849,172 which includes:

• Fixed assets of £9,139,908 includes the 2015 market value of the sites at Tenterden and Kit’s Coty as well as the vineyard development expenditure at Kit’s Coty and at Court Lodge, Boxley which is capitalised at cost.

• £4,835,379 of stock is valued at cost being the lower of cost or net realisable value.

3. PROFIT PER SHARE

The calculation of the loss per share for the six months to 30 June 2017 is based on the loss for the period of £91,965 and the weighted average number of shares in issue during the period of 112,679,120.

4. DISTRIBUTION OF THE INTERIM STATEMENT

Copies of this statement will be available for collection free of charge from the Company’s registered office at Chapel Down Winery, Small Hythe Road, Tenterden TN30 7NG. An electronic version will be available on the Company’s website, www.chapeldown.com.

--ENDS--

Chapel Down Group plc

Source: Chapel Down Group plc