Chapel Down Half Year Results 2021

Chapel Down Half Year Results | 2021

by Chapel Down 28 September 2021

Download a copy of the Half Year Results 2021

Chapel Down is pleased to announce significant progress in the results for the 6 months ended 30 June 2021.

Key highlights:

• Total Group
o The Company is now entirely focused on growth in the exciting English wine industry having exited the Beer and Cider business in April 2021.
o After the period end in September 2021, Andrew Carter, previously MD of Chase Distillery and CCO of Treasury Wine Estates, joined as our new CEO.
o Group revenues increased by 35% to £8.109m (H1 2020: £6.001m).
o Adjusted EBITDA for the Group was a profit of £0.618m (H1 2020: loss of (£0.419m))*.
o Net debt at 30 June 2021 was £0.854m (31.12.20: £7.411m) prior to the fundraise of £6.876m which closed after the period end on 16 July 2021.
o The Company secured a new £15m asset based lending facility in June 2021 which will enable us to continue to invest in growth and meet the strong demand for our high quality wines.

• Wines and Spirits
o Wine sales volumes were up 66%, reflecting the growing demand for our award-winning wines and the strength of our brand.
o Direct to consumer volumes continued to grow and were up a further 36% and we experienced further growth of 86% in our off-trade business in Waitrose, Marks & Spencer, J Sainsbury, Majestic, Tesco and other well-known retailers.
o There was further recognition of the premium quality of our wines with a Platinum medal for our Rose Brut NV and Gold for Kit’s Coty Blanc de Blancs 2015 and Kit’s Coty Bacchus 2019 at The Decanter World Wine 2021 Awards. This, along with more trophies and Golds in the WineGB awards for both sparkling and still wines reinforces Chapel Down’s position as England’s leading wine producer.
o Chapel Down Wine and Spirits revenues were up on a continuing basis by 64% to £7.822m (H1 2020: £4.780m).
o Wines and Spirits gross profit on a continuing basis were up 76% at £3.055m (H1 2020: £1.736m).
o Adjusted EBITDA for Chapel Down Wines and Spirits was up 232% at £0.801m (H1 2020: £0.241m)*.

• Beer and Cider
o The sale of our Beer and Cider business on 23 April 2021 resulted in an improvement in the Company’s net debt position by £7.202m on completion.
o The sale resulted in a £0.806m exceptional non-cash cost relating to the share for share exchange.
o The Beer and Cider business – with some 90% of its sales in the hospitality sector – was badly affected by the COVID-19 lockdowns.
o Beer and Cider sales, in Curious Drinks Limited, were down 76% to £0.287m (H1 2020: £1.194m) reflecting the impact of the closure of the on-trade for much of the year.
o Beer and Cider gross profit (in Curious Drinks Limited) down 78% at £0.061m (H1 2020: £0.272m).
o With the closure of hospitality, the off-trade was dominated by heavy discounting and intense competition for shelf space.
o Adjusted EBITDA for Beer and Cider was a loss of (£0.183m) (H1 2020: loss of (£0.576m)).

* Excludes the effect of the exceptional costs and the FRS 102 Section 26 share option accounting adjustment of £27k (H1 2020: £35k) which is a non-cash item.

Chairman’s Commentary
I am pleased to announce significant progress in the development of Chapel Down as a premium wine producer with greater focus. This has manifested itself in rapid sales growth and profitability. There has already been a positive swing of over £1m in terms of EBITDA, which in H1 2021 was £0.618m (H1 2020 loss of (£0.419m)).

The drivers of this excellent turnaround have been a growing demand for our award winning wines and the opening up of new distribution routes to the consumer. The foundations remain our superb quality wines and spirits, our industry leading brand recognition and of course, our great team.

I’ve always said that “people make strategy happen” and this has certainly been the case at Chapel Down. Frazer and his team have steered the company through the pandemic, built a significant e-commerce proposition and completed the difficult process of exiting Beer production which we completed in April 2021. They have also completed a successful round of fundraising and financing. This has allowed full focus on what we believe will continue to make Chapel Down even more well-known and regarded and enable it to grow more profitably - namely our range of extraordinary wines which continue to delight consumers and connoisseurs alike. The Platinum medals for our Rose Brut NV and Kits Coty Blanc de Blancs for example, help continue to win new friends and customers.

It’s important to recognize the importance of great people to drive performance. I’d like to extend the Board’s thanks and appreciation to Frazer Thompson who retires in November and to wish his successor Andrew Carter my best wishes as they work to ensure a seamless transition as he takes over as CEO. Frazer has built a tremendous platform for growth at Chapel Down during his 20 year tenure. Chapel Down is the UK’s biggest English wine business with the most recognised and valued brand. It takes time and patience to build high quality wine capability and great flair to build a distinctive brand. Frazer has helped build something remarkable and a business of which all stakeholders can be proud.

Andrew joins at a great time. We have focused the business and have the desire and capability to rapidly build scale and to extend our lead further. Andrew already has a great track record in Wine and Spirits and is excited to plot a course to further accelerate profitable growth that can change the way people think about English Wine forever and make Chapel Down truly famous.

I wish Frazer a happy retirement and Andrew the best of luck in his new role at this exciting time for Chapel Down.

Finally, I would like to thank all of our thousands of enthusiastic and committed shareholders, without whom this progress would not have been possible.

Martin Glenn

28th September 2021