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CHAPEL DOWN GROUP PLC Interim / Quarterly Report 2020
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Interim / Quarterly Report
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National Storage Mechanism | Additional information
Half-year Report
**Chapel Down Group Plc
(‘CDG' or ‘the Company')
EPIC: CDGP**
UNAUDITED RESULTS FOR THE 6 MONTHS ENDED 30 JUNE 2020
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
- 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.
- Direct to consumer sales up 473%, offsetting reduced sales in on-trade and own retail outlets due to Covid-19
- 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
- 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.
- Chapel Down Wine and Spirits sales on a continuing basis up 14% to £4.771m (2019: £4.182m).
- Wines and Spirits gross profit on a continuing basis up 15% at £1.728m (2019: £1.509m
- Beer and Cider
- 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
- 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.
Thanks for using your shareholder benefits to get great discounts on our wines, beers and spirits and for wholeheartedly supporting our online sales in which we will continue to invest to improve and build the experience.
Thanks for your feedback, energy and support.
Thanks for your faith and belief.
Performance Review
Chapel Down Wines and Spirits sales were up 14% at £4.771m (H1 2019: £4.182m). Wine revenue growth of 20% combined with direct to consumer sales up 473% more than offset the reduced on-trade sales of both wine and spirits due to the Covid-19 pandemic and the reduction in retail sales following the closure of the retail outlet at Tenterden on 20 March in line with the Governments advice to close pubs, theatres and hospitality venues to contain the spread of the virus. The retail outlet at Tenterden partially re-opened on 28 May and the Brewery restaurant re-opened on 4 September.
Our beer and cider sales are largely focused on the on-trade which was shut from 20 March to 4 July. Our shop, restaurant and bar at the state of the art Curious Brewery in Ashford were also closed on 20 March. As a result Beer and Cider sales were down 38% at £1.202m (H1 2019: £1.939m) and margins were significantly impacted by stock returns.
Sales in the combined business on a continuing basis were marginally lower at £5.974m and gross profit was 34% vs 36% in the prior year reflecting the impact of beer stock returns and the closure of the restaurant.
| Wines and Spirits – Continued Operations | Beer and Cider | Combined Businesses | |||||||
| H1 2020 |
H1 2019 | %age Variance | H1 2020 |
H1 2019 | %age Variance | H1 2020 |
H1 2019 |
%age Variance | |
| £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | ||||
| Turnover | 4,771 | 4,182 | +14% | 1,202 | 1,939 | -38% | 5,974 | 6,121 | -2% |
| Gross profit | 1,728 | 1,509 | +15% | 280 | 680 | -59% | 2,008 | 2,189 | -8% |
| Gross profit %age | 36% | 36% | 23% | 35% | 34% | 36% |
We made a conscious decision to reduce spend across the business. This along with the furloughing of staff and salary cuts of 20-40% taken by the Board, executive and senior managers resulted in overhead expenditure down £0.496m on a continuing basis. As a consequence, the total business reported an EBITDA loss on a continuing basis of (£0.335m) compared with (£0.650)* in the 6 months to 30 June 2019.
The loss before tax on continuing operations was a loss of (£1.188m) (2019: loss of (£1.139m)) and the loss before tax including discontinued operations was (£1.272m) (2019: loss of (£1.772m)).
Stocks increased by 33% to £10.958m (H1 2019: £8.256m) reflecting substantially higher sparkling stock levels following the excellent 2018 and 2019 harvests.
The Group has a healthy cash position of £5.832m (H1 2019: £5.192m) with net debt of £6.452m (H1 2019: £1.259m).
The Group’s net tangible assets were £30.088m (H1 2019: £33.505m) and represent 99.7% of total equity (H1 2019: 99.6%). Net tangible assets per share were £0.21 per share (2018 H1: £0.23 per share).
Outlook
Today’s environment is tough. We know we need to be fit to survive and thrive.
Predicting the future in today’s environment is impossible. However, our best defence is excellence in our products, strength in our brand and quality of our people. We continue to ensure we invest in all three.
The quality of the grapes for our wine has never been better, and we see another high quality and high volume harvest. Our brand has never been stronger and we continue to invest with our partners to build awareness as Englands leading winemaker. Our people continue to give their best despite difficult trading conditions and we see that in our performance. On behalf of all shareholders, I’d like to thank them for their continued support.
**Frazer Thompson
Chief Executive Officer**
*Excludes the effect of the FRS 102 Section 26 share option accounting adjustment of £35k (H1 2019: £23k) which is a non-cash item. Refer to note 1 “Basis of preparation/accounting policies” for further information.
Contact
| Chapel Down Group plc Frazer Thompson Richard Woodhouse |
Chief Executive Finance Director |
01580 763 033 | |||||||||
| finnCap Ltd Christopher Raggett/Simon Hicks Tim Redfern |
Corporate Finance ECM |
020 7220 0500 |
The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30TH JUNE 2020
| Unaudited Continuing Operations 01.01.20 to 30.06.20 | Unaudited Discontinued Operations 01.01.20 to 30.06.20 | Unaudited Total 2020 £ |
Unaudited Continuing Operations 01.01.19 to 30.06.19 | Unaudited Discontinued Operations 01.01.19 to 30.06.19 | Unaudited Total 2019 £ |
Audited Continuing Operations 01.01.19 to 31.12.19 | Audited Discontinued Operations 01.01.19 to 31.12.19 | Audited Total 2019 £ |
|
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | |
| Turnover | 5,973,791 | 26,767 | 6,000,558 | 6,121,004 | 622,592 | 6,743,596 | 14,800,569 | 1,311,368 | 16,111,937 |
| Cost of sales | (3,965,988) | (5,412) | (3,971,400) | ( 3,932,404) | ( 158,421) | ( 4,090,825) | (9,449,449) | (303,288) | (9,752,737) |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | |
| Gross profit | 2,007,803 | 21,355 | 2,029,158 | 2,188,601 | 464,170 | 2,652,771 | 5,351,120 | 1,008,080 | 6,359,200 |
| Administrative expenses | ( 2,987,070) | (105,122) | ( 3,092,192) | ( 3,230,498) | ( 1,097,158) | ( 4,327,656) | (7,205,832) | (1,952,361) | (9,158,193) |
| Share based payment charge | (34,548) | - | (34,548) | ( 23,247) | - | ( 23,247) | (42,532) | 0 | (42,532) |
| Exceptional administrative expenses | - | - | - | - | - | - | - | (1,247,237) | (1,247,237) |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | |
| Operating (loss)/profit | (1,013,815) | (83,767) | (1,097,582) | ( 1,065,144) | ( 632,988) | ( 1,698,132) | (1,897,244) | (2,191,518) | (4,088,762) |
| Interest receivable and similar income | 2,767 | - | 2,767 | 19,151 | - | 19,151 | 22,581 | - | 22,581 |
| Interest payable and expenses | (177,015) | - | (177,015) | ( 92,551) | - | ( 92,551) | (218,910) | - | (218,910) |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | |
| (Loss)/profit before tax | (1,188,063) | (83,767) | (1,271,830) | ( 1,138,544) | ( 632,988) | ( 1,771,532) | (2,093,573) | (2,191,518) | (4,285,091) |
| Tax on (loss)/profit | - | - | - | - | - | - | 157,906 | - | 157,906 |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | |
| (Loss)/profit for the financial year | (1,188,063) | (83,767) | (1,271,830) | ( 1,138,544) | ( 632,988) | ( 1,771,532) | (1,935,667) | (2,191,518) | (4,127,185) |
| \========= | \========= | \========= | \========= | \========= | \========= | \========= | \========= | \========= | |
| Loss for the year attributable to: | |||||||||
| Non-controlling interests | (666,937) | - | (666,937) | ( 564,779) | - | ( 564,779) | (1,477,053) | - | (1,477,053) |
| Owners of the parent company | (521,126) | (83,767) | (604,893) | ( 573,765) | ( 632,988) | ( 1,206,753) | (458,614) | (2,191,518) | (2,650,132) |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | |
| (1,188,063) | (83,767) | (1,271,830) | ( 1,138,544) | ( 632,988) | ( 1,771,532) | (1,935,667) | (2,191,518) | (4,127,185) | |
| Adjusted performance measures | |||||||||
| Adjusted EBIDTA | |||||||||
| Operating (loss)/profit | (1,013,815) | (83,767) | (1,097,582) | ( 1,065,144) | ( 632,988) | ( 1,698,132) | ( 1,897,244) | (2,191,518) | (4,088,762) |
| Share based payment | 34,548 | - | 34,548 | 23,247 | - | 23,247 | 42,532 | - | 42,532 |
| Depreciation and amortisation | 644,489 | - | 644,489 | 392,293 | 250,886 | 643,179 | 993,138 | 569,808 | 1,562,946 |
| Exceptional costs | - | - | - | - | - | - | - | 1,247,237 | 1,247,237 |
| -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | -------------- | |
| EBITDA excluding share based payment | (334,778) | (83,766) | (418,545) | ( 649,604) | ( 382,102) | ( 1,031,706) | (861,574) | (374,473) | (1,236,047) |
| \========= | \========= | \========= | \========= | \========= | \========= | \========= | \========= | \========= | |
| (Loss)/Profit per share – diluted (pence) | (0.40) | (0.840) | (1.85) |
There was no other comprehensive income for 2020 (2019 - £Nil).
Notes:
- Represents the consolidated unaudited results for Chapel Down Group Company, English Wines Plc and Curious Drinks Limited for the period 01 January 2020 to 30 June 2020, excluding the Gin Works restaurant and bar for the period 01 January 2020 to 30 June 2020 which is reported separately under discontinued operations
- Represents the discontinued operations being the Gin Works Restaurant & Bar for the period 01 January 2020 to 30 June 2020
- Represents the consolidated unaudited results for Chapel Down Group Company, English Wines Plc and Curious Drinks Limited for the period 01 January 2020 to 30 June 2020
- Represents the consolidated unaudited results for Chapel Down Group Company, English Wines Plc and Curious Drinks Limited for the period 01 January 2019 to 30 June 2019, excluding the Gin Works restaurant and bar for the period 01 January 2019 to 30 June 2019 which is reported separately under discontinued operations
- Represents the discontinued operations being the Gin Works Restaurant & Bar for the period 01 January 2019 to 30 June 2019
- Represents the consolidated unaudited results for Chapel Down Group Company, English Wines Plc and Curious Drinks Limited for the period 01 January 2019 to 30 June 2019
- Represents the consolidated audited results for Chapel Down Group Company, English Wines Plc and Curious Drinks Limited for the period 01 January 2019 to 31 December 2019, excluding the Gin Works restaurant and bar for the period 01 January 2019 to 31 December 2019 which is reported separately under discontinued operations
- Represents the discontinued operations being the Gin Works Restaurant & Bar for the period 01 January 2019 to 31 December 2019
- Represents the consolidated audited results for Chapel Down Group Company, English Wines Plc and Curious Drinks Limited for the period 01 January 2019 to 31 December 2019
CONSOLIDATED BALANCE SHEET FOR THE 6 MONTHS ENDED 30TH JUNE 2020
| Unaudited As At 30.06.2020 £ |
Unaudited As At 30.06.2019 £ |
Audited As At 31.12.2019 £ |
|
| Fixed assets | |||
| Intangible assets | 99,879 | 119,408 | 108,712 |
| Tangible assets | 27,510,095 | 27,367,075 | 27,578,539 |
| -------------- | -------------- | -------------- | |
| 27,609,974 | 27,486,483 | 27,687,251 | |
| Current assets | |||
| Stocks | 10,957,758 | 8,256,441 | 10,719,361 |
| Debtors due within one year | 2,838,368 | 4,029,397 | 3,368,387 |
| Cash at bank and in hand | 5,832,489 | 5,191,940 | 2,473,457 |
| -------------- | -------------- | -------------- | |
| 19,628,615 | 17,477,778 | 16,561,205 | |
| Creditors: amounts falling due within one year | (4,668,534) | (11,102,485) | (12,755,963) |
| -------------- | -------------- | -------------- | |
| Net current assets | 14,960,081 | 6,375,293 | 3,805,242 |
| -------------- | -------------- | -------------- | |
| Total assets less current liabilities | 42,570,055 | 33,861,776 | 31,492,493 |
| Creditors: amounts falling due after more than one year | (12,283,175) | (12,638) | (17,934) |
| Provisions for liabilities | |||
| Deferred tax | (98,804) | (224,778) | (111,527) |
| -------------- | -------------- | -------------- | |
| Net assets | 30,188,076 | 33,624,360 | 31,363,032 |
| \========= | \========= | \========= | |
| Capital and reserves | |||
| Called up share capital | 7,225,712 | 7,205,379 | 7,211,129 |
| Share premium account | 26,153,471 | 26,036,438 | 26,105,728 |
| Capital redemption reserve | 400 | - | 400 |
| Revaluation reserve | 1,048,074 | 1,086,706 | 1,067,390 |
| Non-controlling Interests | (2,398,914) | (819,703) | (1,731,977) |
| Profit and loss account | (1,840,667) | 115,540 | (1,289,638) |
| -------------- | -------------- | -------------- | |
| 30,188,076 | 33,624,360 | 31,363,032 | |
| \========= | \========= | \========= | |
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30TH JUNE 2020
| Unaudited As At 30.06.2020 £ |
Unaudited As At 30.06.2019 £ |
Audited As At 31.12.2019 £ |
|
| Cash flows from operating activities | |||
| (Loss)/profit for the financial year | (1,271,830) | (1,771,532) | (4,127,185) |
| Adjustments for: | |||
| Amortisation of intangible assets | 8,833 | 6,972 | 17,668 |
| Depreciation of tangible fixed assets | 635,656 | 636,207 | 1,545,278 |
| Fixed asset impairment | - | - | 1,347,564 |
| Loss on disposal of tangible assets | - | 526 | 2,011 |
| Share based payments | 34,548 | 23,247 | 42,532 |
| Interest payable | 177,015 | 92,551 | 218,910 |
| Interest receivable | (2,767) | (19,151) | (22,581) |
| Taxation charge | - | - | (157,906) |
| (Increase) in stocks | (238,397) | (576,739) | (3,039,659) |
| Decrease/(Increase) in debtors | 530,019 | (418,639) | 242,371 |
| (Decrease)/Increase in creditors | (318,086) | 714,841 | 1,153,084 |
| Corporation tax (paid) | - | - | (85,214) |
| -------------- | -------------- | -------------- | |
| Net cash generated from operating activities | (445,009) | (1,311,717) | (2,863,127) |
| -------------- | -------------- | -------------- | |
| Cash flows from investing activities | |||
| Purchase of intangible assets | - | - | - |
| Purchase of tangible fixed assets | (567,212) | (9,488,268) | (11,981,602) |
| Sale of tangible fixed assets | - | - | 23,750 |
| Interest received | 2,767 | 19,151 | 22,581 |
| -------------- | -------------- | -------------- | |
| Net cash from investing activities | (564,445) | (9,469,117) | (11,935,271) |
| -------------- | -------------- | -------------- | |
| Cash flows from financing activities | |||
| Issue of shares | 62,326 | 355,415 | 430,855 |
| New secured bank loans | 4,483,175 | 2,880,000 | 4,230,000 |
| Repayment of bank loans | - | - | - |
| Interest paid | (177,015) | (92,551 | (218,910) |
| -------------- | -------------- | -------------- | |
| Net cash used in financing activities | 4,368,486 | 3,142,864 | 4,441,945 |
| -------------- | -------------- | -------------- | |
| Net (decrease)/increase in cash and cash equivalents | 3,359,032 | (7,637,970) | (10,356,453) |
| Cash and cash equivalents at beginning of year | 2,473,457 | 12,829,910 | 12,829,910 |
| -------------- | -------------- | -------------- | |
| Cash and cash equivalents at the end of year | 5,832,489 | 5,191,940 | 2,473,457 |
| \========= | \========= | \========= | |
| Cash and cash equivalents at the end of year comprise: | |||
| Cash at bank and in hand | 5,832,489 | 5,191,940 | 2,473,457 |
| -------------- | -------------- | -------------- | |
| 5,832,489 | 5,191,940 | 2,473,457 | |
| \========= | \========= | \========= | |
1. BASIS OF PREPARATION/ACCOUNTING POLICIES
The Company’s report for the six months ended 30 June 2020 was authorised for issue by the directors on 30 September 2020. The financial information 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 2019, 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 £34,548 (2019: £23,247) resulting in a Group pre-tax loss of £1,271,830 (2019: pre-tax loss of £1,771,532).
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 2019, 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 2020 and 30 June 2019 have been drawn up using accounting policies and presentation adopted in the Company’s full financial statements for the year ending 31 December 2019 being FRS102.
2. BALANCE SHEET REVIEW
The net asset value of the Company as at 30th June 2020 was £30,188,077, which includes:
- Fixed assets of £27,609,974 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 the Boxley vineyards which is capitalised at cost.
- £10,957,758 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 ended 30 June 2020 is based on the loss for the period of £604,893 and the weighted average number of shares in issue during the period of 144,206,960.
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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20200929006138/en/
Chapel Down Group plc