Chapel Down Group Plc
('CDG' or 'the
Company')
EPIC: CDGP
AUDITED RESULTS FOR THE YEAR ENDED 31
DECEMBER 2023
The Board is pleased to report record company
sales, strong profitable growth and an exceptional harvest for 2023
as it continues to develop its market-leading brand, both in the UK
and around the world.
Financial Highlights
●
|
Net Sales Revenue, gross of retro1
grew 15% to £17.9m, (2022: £15.6m) and 15% to £17.2m net of
retro1 (2022: £15.0m) as Chapel Down showed continued
sales momentum.
|
●
|
Chapel Down's brand-defining Traditional Method
Sparkling (TMS) wines continued to grow strongly with Net Sales
Revenue2 increasing 25% to £12.0m (2022: £9.6m) on
volumes up 13% to 887k bottles (2022: 789k).
|
●
|
Strong NSR growth is across all UK &
international trade channels, as well as the direct-to-consumer
business, showing the benefits of scale and breadth of
distribution.
|
●
|
Chapel Down's Average Selling Price (ASP) grew
13% during the year, evidencing the continued premiumisation of the
Chapel Down brand.
|
●
|
Chapel Down remains strongly profitable at all
levels, driven by profitable trading and the IFRS fair value
adjustment on grapes from an exceptional harvest:
o Gross profit
increased 16% to £8.9m (2022: £7.7m), with an increase in gross
profit margin to 52% (2022: 51%)
o EBITDA grew
strongly, up 87% to £5.4m (2022: 2.9m)
|
●
|
Net debt of £1.2m (2022: net cash £3.3m)
resulting from investing in a record harvest of 3,811 tonnes (2022:
2,050) which has increased wine stocks by 44% to £22.6m (2022:
£15.6m) and the planting of 118 acres (48 hectares) at Boxley Abbey
vineyard. At year end, Chapel Down had an unused Revolving Credit
Facility (RCF) of £12m.
|
●
|
Strong balance sheet with high quality net
assets of £34.3m (2022: £32.3m), including freehold land and
buildings, planted vineyards and stock. The Board remain confident
the market value of these tangible assets is significantly higher
than the reported values. Chapel Down does not assign a value to
its brand in the financial statements.
|
Operational Highlights
●
|
Successful listing on AIM on 7th December 2023,
a move which reflects the maturity of the business and the
ambitious growth plan that we are committed to delivering in the
years ahead and maintains the inheritance-tax free status of Chapel
Down's shares.
|
●
|
Continued brand leadership with prompted
awareness5 growing to 39% (2022: 32%), and
penetration5 to 14% (2022: 11%). Off trade value market
share4 was maintained at 35.4% (2022: 35.7%). Social
media following grew 13% to over 105k followers across all social
channels (2022: 93k). These awareness, penetration, market share
and social media metrics are higher than for any other English
winemaker.
|
●
|
Favourable growing conditions, combined with
the skill of our world-class viticulture and winemaking team,
resulted in an exceptional, high-quality harvest in 2023. Chapel
Down delivered a record 3,811 tonnes of grapes, 86% higher than
2022 (2,050 tonnes), and 75% higher than Chapel Down's previous
record (2018: 2,173 tonnes). This will create c3.4m bottles of
wine.
|
●
|
Future growth enabled with the planting of the
Boxley Abbey vineyard on the North Downs of Kent. This increases
total planted vineyards to 906 acres (367 hectares) (2022: 788
acres, 319 hectares), accounting for nearly 10% of UK planted
vineyards (Source: Wine GB).
|
●
|
Continued success at international wine awards,
with 28 major successes in 2023 reinforcing the exceptional quality
of our wines. Highlights include Chapel Down Kit's Coty Coeur de
Cuvée receiving gold medals in the International Wine Challenge,
Decanter World Wine Awards and Wine GB Awards, and as the 'Best
Prestige Cuvée Trophy' in the Wine GB Awards, as well as Kit's Coty
Chardonnay and Bacchus still wines both winning Gold medals in the
Wine GB Awards.
|
Outlook
●
|
Current trading is in line with management
expectations and our outlook for 2024 remains positive. We expect
to deliver double digit sales growth in the year, weighted towards
H2. We expect underlying profitability to return to normalised
levels, with an increased proportion of still wine and 'A Touch of
Sparkle' in the sales mix as a consequence of the exceptional 2023
harvest, a more typical harvest yield in 2024, and continued brand
investment.
|
●
|
As previously announced, our next phase of
growth, from 2026, incorporates plans for a new purpose-built
winery, which we expect to be operational in time for the 2026
harvest (subject to final planning approval).
|
●
|
Opportunities to secure new vineyard acreage
will continue to be explored, as well as developing an expanded
tourism offering at the Tenterden brand home, to accelerate future
growth.
|
●
|
Planting will begin at our newest vineyard at
Buckwell, on the North Downs of Kent, in spring 2024. This will be
117 acres (47 hectares) of Chardonnay and Pinot Noir, and will
increase our planted vineyards to 1,023 acres (414
hectares).
|
●
|
To capitalise on our medium-term growth
opportunity, we are in advanced discussions to extend and increase
our existing RCF to be drawn when required as part of the overall
mix of funding for our investment plans.
|
Andrew Carter, Chief Executive Officer of
Chapel Down, commented: "2023 was
a landmark year for English wine and Chapel Down. It is great to
see the strategic and operational progress that we have delivered,
and the continuing sales momentum that we have. In line with our
2023 targets, the business achieved double digit net sales revenue
growth, driven by the exceptional performance of our traditional
method sparkling wine and growth across all of our UK and
international trade channels and our direct-to-consumer
business.
"Chapel Down
continues to grow profitably - a core strength which, along with
our strong balance sheet, makes us resilient and underpins our
ambitious future growth plans.
"Chapel Down
is the market leader in an industry which is enjoying rapid and
sustained growth. We have the leading brand, the deepest
distribution which we continue to expand at pace, and we continue
to win international acclaim for the quality of our wines. Our
continued outstanding performance, and the fantastic,
record-breaking 2023 harvest, means our passionate and highly
skilled team carries significant momentum into the new financial
year."
Note
1:
Chapel Down listed on AIM on 7th
December 2023. Consequently, the company has adopted IFRS as its
accounting standard. All numbers shown, including comparatives
(except where specified in note 2) are prepared under
IFRS.
Note
2:
The IFRS standard requires netting
Retrospective discount support (Retro), which is promotional price
support given to customers by Chapel Down, from Net Sales Revenue
("NSR net of Retro").
Previously, Net Sales Revenue was reported
before netting Retro ("NSR gross of retro"). All channel and
category revenue splits in the Financial Highlights and CEO
Strategic Review are shown in this transition year as NSR gross of
retro, to enable like for like comparison.
Note
3:
Adjusted EBITDA relates to profit from
operations before interest, tax, depreciation, amortisation, share
based payment expense and exceptional costs.
Note
4:
Source, Nielsen
Note
5:
Source, BrandVue
Chairman's Statement
2023 saw the continuation of the exceptional
growth of the English wine industry. We continue to see the ongoing
creation of a new global wine region, with a number of high quality
vineyards, award-winning wines and an increase in wine-related
tourism.
The English wine region's growth is enabled by
the excellence of the terroir, with an abundance of south facing,
chalk and clay slopes and a cool maritime climate that give rise to
perfect conditions for traditional method sparkling wine
production. Wine GB estimates that there were 10,695 acres (4,328
hectares) of vineyards planted at the end of 2023, and this is
growing rapidly, up 180% over the past decade. The mid-point of
Wine GB's industry forecast is to have 18,780 acres (7,600
hectares) of vineyards planted by 2032 and wine production
increasing from 12.2m bottles in 2022 to 24.7m in 2032.
This quality underpins the increased growth in
demand for English traditional method sparkling wine, with sales
growth of 16% in the UK off-trade seen in 2023, whilst comparable
UK off-trade Champagne sales4 value declined by 9% in
the year.
This quality and buoyant demand also continues
to attract international interest. For example, Jackson Family
Wines purchased land to create a new vineyard in 2023, and we
expect the release of the first of Taittinger's English sparkling
wines during 2024.
Within this exciting new global wine region,
Chapel Down is the largest winemaker by both production and sales,
as well as having the leading brand. We have 906 acres (367
hectares) of vineyards planted, predominantly on south facing chalk
soils in the North Downs of Kent, which equates to 8.5% of all UK
planted vineyards. Chapel Down will plant its newest vineyard at
Buckwell in spring 2024. This will be 117 acres (47 hectares) of
Chardonnay and Pinot Noir, and will increase our planted vineyards
to 1,023 acres (414 hectares). Chapel Down's yields continue to
increase, with a 5-year average of 3.3 tonnes per acre,
significantly higher than the English average. The quality of our
wines also continues to increase, evidenced by the outstanding
number of awards won in 2023.
Chapel Down not only has the largest revenue in
the industry but is already profitable at all levels. Chapel Down's
scale allows the broadest distribution, and it helps manage unit
costs that, in turn, drives further sustainable
profitability.
Underpinning the business are an outstanding
collection of assets, which are both long term in nature and very
difficult to replicate. These include wine stocks of £22.6m, which
have increased 44% in the year due to the exceptional harvest
(2022: £15.6m). These significantly increased wine stocks give
resilience against any potential future smaller harvest. We,
additionally, have a very strong balance sheet and a £12m RCF,
which was unused at year end.
Furthermore, we have a world-class team in
place, led by our CEO Andrew Carter, who will continue to deliver
Chapel Down's continued outstanding leadership and performance. At
the heart of our culture is a commitment to "deliver together" our
ambitious plans and I am proud to note that from 2024, Chapel Down
will be paying the real living wage as a minimum to all our
employees.
These enduring sources of competitive
advantage, and our complete focus on being England's leading and
most celebrated winemaker, give us great confidence about the
future. I remain hugely excited about the prospects for continued
exceptional growth in the English wine industry but particularly
for the market leader, Chapel Down.
Finally, I would like to thank all of our
customers, our teams, growers, as well as our committed, loyal and
enthusiastic shareholders, without whom these ongoing successes
would not have been possible.
CEO
Strategic Review
Chapel Down's vision is to be the leading and
most celebrated English winemaker and I am proud of the team
performance in 2023. As we continue to build our position as
England's largest winemaker, we are at the forefront of the
continued growth and development of the world's newest global wine
region.
Chapel Down is the leading brand in English
sparkling wine with higher awareness and penetration5,
and a larger social media following, than any other brand. We are
positioned as a fresh, innovative challenger in the traditional
method sparkling wine market, with our excellent, award-winning
wines at the heart of the brand. We continue to premiumise the
brand, as is reflected in our refreshed design, range architecture,
continued strong ASP growth (+13%), and our brand leading position
in sponsorship and events.
Our brand-defining traditional method sparkling
wines are our focus. They are what we are famous for. Still wines
and A Touch of Sparkle continue to play an important role in our
portfolio, providing us with additional access points into the
brand and operational integration, but we have now exited the
spirits category, as flagged at H1. We are always looking at
innovative new wine products and expect to be able to make exciting
announcements in 2024 and beyond.
The scale and breadth of our distribution is
unmatched and growing rapidly. We have an incredible home market,
where English sparkling wine as a category grew 16% last year.
However, domestic English sparkling wine sales are still only 3% of
total sparkling wines and one tenth the size of UK Champagne
sales4. This means there is still a significant amount
of growth potential in the UK market, and we see increasing
opportunities in export markets which are currently under-served by
English sparkling wine.
Our direct-to-consumer (DTC) channel was 32% of
our business this year (2022: 33%). We aim to maintain this share
as the company grows since DTC helps rapid, continued brand build,
as well as exciting consumer opportunities for the future,
including the fast-growing wine tourism sector.
2023
Performance Review
Key
metrics
P&L
account
|
2023
£000s
|
2022
£000s
|
% Change
|
Net sales revenue(2) - gross of
retro
|
17,921
|
15,635
|
+15%
|
Retro(2)
|
(720)
|
(636)
|
+13%
|
Net sales revenue(2) - net of
retro
|
17,201
|
14,999
|
+15%
|
Gross profit
|
8,911
|
7,709
|
+16%
|
Gross profit %
|
52%
|
51%
|
|
Fair value movement in biological
produce
|
2,171
|
(156)
|
|
Operating profit before exceptional
costs
|
3,688
|
1,464
|
+152%
|
Exceptional costs
|
(1,235)
|
(110)
|
|
Operating profit
|
2,453
|
1,354
|
+81%
|
Profit before tax
|
2,307
|
1,236
|
+87%
|
Adjusted EBITDA(3)
|
5,437
|
2,905
|
+87%
|
Balance sheet
account
|
|
|
|
Stocks
|
22,581
|
15,645
|
+44%
|
Net assets
|
34,326
|
32,255
|
+6%
|
Net cash / (debt) excluding lease
liabilities
|
(1,236)
|
3,262
|
|
Key
metrics
|
|
|
|
Average selling price
|
£11.58
|
£10.29
|
+13%
|
Planted vineyards (acres / hectares)
|
906 / 367
|
788 / 319
|
+15%
|
EPS (basic / diluted)
|
0.95 /
0.94
|
0.49 /
0.49
|
+94% / +92%
|
Financial
Review
Traditional
method sparkling wine remains our strategic focus and
largest category. NSR grew 25% to £12.0m (2022: £9.6m), driven by a
mix of an increased ASP of 10% and a 12% volume increase to 887k
bottles (2022: £789k). This ASP and volume growth was further
augmented by some additional favourable product and channel mix
movements.
Rosé traditional
method sparkling wine was an outstanding growth story in the year
with 47% volume growth to 262k bottles (2022: 178k). We believe
there is a strong, ongoing consumer appetite for rosé traditional
method sparkling wines.
A Touch of
Sparkle grew NSR 7% to £1.5m (2022: £1.4m),
driven by an 8% increase in ASP alongside a 1% decline in volumes
to 179k bottles (2022: 180k). 'Black Friday' was particularly
successful for A Touch of Sparkle sales, bringing new consumers
into the English wine category.
Still
wine NSR reduced 7% in the year to £2.6m (2022:
£2.8m) with a 9% ASP increase being offset by a 14% volume decrease
to 375k bottles (2022: 435k). Still wine is a competitive market,
and in addition, there was an unwelcome increase in duty rates
during the year which increased the consumer price, impacting
volumes.
Spirits were an insignificant part of our
business and NSR reduced by 7% to £0.6m (2022: £0.6m). Chapel Down
reconfirms its planned exit from Spirits in Q1 2024.
NSR gross of
retro(2)
|
2023
£000s
|
2022
£000s
|
% Change
|
% Wine sales
|
Traditional method sparkling
|
11,999
|
9,607
|
+25%
|
74%
|
A Touch of Sparkle
|
1,471
|
1,379
|
+7%
|
9%
|
Still
|
2,638
|
2,840
|
(7%)
|
16%
|
Spirits
|
553
|
592
|
(7%)
|
|
Tours
|
689
|
675
|
+2%
|
Other sales
|
571
|
542
|
+5%
|
Total NSR
gross of retro(2)
|
17,921
|
15,635
|
+15%
|
The off-trade remains our largest
distribution channel, accounting for 54% of wine sales in the year
(2022: 57%). Off-trade NSR grew 9% to £9.0m (2022: £8.2m).
Traditional method sparkling wines NSR grew 21% to £7.2m (2022:
£5.9m), driven by premiumisation of pricing up 9%, as well as
growth of distribution for 'premium' traditional method sparkling
wine to 3,462 retail listings (2022: 2,991 retail listings). Chapel
Down's off-trade value growth for traditional method sparkling wine
of 21% continues to outpace the overall English sparkling wine
category which grew 16% in the year4 to £33m (2022:
£29m). Off-trade value market share4, was maintained at
35.4% (2022: 35.7%).
Strong momentum continued in the on-trade, with NSR growth of 26% to
£2.2m (2022: £1.7m) driven by growing depth of visibility and
availability in premium hospitality outlets. The on-trade saw
continued excellent traditional method sparkling wine performance
+39% to £1.3m (2022: £1.0m). ASP in the on-trade grew at 9%, again
led by traditional method sparkling wine at 14%, reflecting the
continued success of our premiumisation strategy. Total outlet
distribution also grew strongly to 2,100 outlets (2022: 1,300).
Chapel Down is now stocked in 76 of the UK's 200 most iconic
venues, including The Ritz, The Lanesborough, and Nobu
Hotels.
Continued consumer trial and an enhanced rate of
sale is driven through more than 1,000 'by the glass' placements in
the UK on-trade in the year, up 101% (2022: 536).
Whilst export only reflects 5% of wine sales
(2022: 4%), it is the fastest growing distribution channel, with
NSR up 67% to £0.9m (2022: £0.5m). Export was boosted by a very
strong performance across the newly launched travel retail
business. Distribution during the year grew to 36 stores in 14 UK
travel hubs, including Heathrow, Gatwick, Luton, Stansted and
London City airports, and our rate of sale was particularly strong.
Chapel Down continues to maintain a highly selective export market
focus, to balance current financial performance with future growth
prospects. During the year, Chapel Down has continued to seed and
develop the brand in 14 international markets with the key focus
markets being USA, Scandinavia and UAE.
2023 was also a strong year for e-commerce, with NSR increasing 18% to
£3.1m (2022: £2.6m). We had over 1m visits to our website (2022:
926k) and a 20% increase in order numbers. This was driven by
12,000 new customers, as well as an improved returning customer
rate of 62% (2022: 60%). Our 'Black Friday' activity supporting A
Touch of Sparkle was particularly successful, creating 2,700 new
customers in a week.
In 2023, we welcomed 60,000 visitors to our
brand home in Tenterden, and our tour numbers were flat at 26,000.
Our overall retail and
tours NSR increased 10% to £2.3m (2022: £2.0m). For the
second year running, we were thrilled to have been awarded the
TripAdvisor 'Travellers' Choice Award' for 2023, placing us in the
top 10% of attractions worldwide. The award is in recognition of
our consistent high-scoring TripAdvisor reviews where we have
received an average of 4.5/5 stars.
Total direct-to-consumer NSR was £5.7m, a growth
of 11% (2022: £5.1m). DTC is 32% of our business this year (2022:
33%), and we aim to maintain this share as the company grows. DTC
allows us to build brand affinity more strongly, as well as
enabling exciting consumer opportunities for the future, including
the fast-growing wine tourism sector.
NSR gross of
retro(2)
|
2023
£000s
|
2022
£000s
|
% Change
|
Off trade
|
8,968
|
8,192
|
+9%
|
On trade
|
2,176
|
1,730
|
+26%
|
Export
|
885
|
530
|
+67%
|
e-Commerce
|
3,070
|
2,599
|
+18%
|
Retail & Events
|
1,561
|
1,368
|
+14%
|
Tours
|
689
|
675
|
+2%
|
Other sales
|
541
|
524
|
+3%
|
Other income
|
30
|
17
|
+78%
|
Total NSR
gross of retro(2)
|
17,921
|
15,635
|
+15%
|
Total DTC
|
5,684
|
5,106
|
+11%
|
Chapel Down remains strongly profitable at all
levels. We are a well-established business, with the scale to
create profitable revenues, which underpins a strong balance sheet
and provides a sustainable platform for future growth.
Gross profit increased 16% to £8.9m (2022:
£7.7m). The biggest component of this was an increase in ASP by
13%, as well as a small shift in sales mix towards e-commerce and
export.
Administrative costs grew 21% to £7.4m (2022:
£6.1m) reflecting a continued strong investment in our sales and
operations teams, as well as the increase in customer and consumer
marketing which continues to grow the strength of the
brand.
Operating profit before exceptionals grew
strongly, up 152% to £3.7m (2022: £1.5m), boosted by the grapes
Fair Value (FV) adjustment on the exceptional 2023 harvest of £2.2m
(2022: -£0.2m). The FV adjustment is part of the IFRS accounting
standard and reflects the "viticulture profit" for the year. The FV
adjustment is calculated as the estimated market value of grape
production less the vintage's growing costs. The grape juice then
enters wine stocks at this assessed FV and is thus reflected in
future cost of goods sold. Further details of the FV adjustment can
be found in note 16.
Exceptional costs of £1.2m reflect both the
listing costs associated with AIM, and the successful
implementation of a new cloud-based ERP system alongside the
initial phase of a new cloud-based CRM as part of the creation of a
single, cloud-based technology and data platform. IFRS accounting
policy requires cloud-based technology builds to be
expensed.
Operating profit grew strongly, up 81% to £2.5m
(2022: £1.4m) as did Profit before Tax (PBT), up 87% to £2.3m
(2022: £1.2m). EBITDA also grew 87% to £5.4m (2022: £2.9m). PBT and
EBITDA growth are driven by profitable trading but also the fair
value adjustment on grapes from an exceptional harvest.
Operational
Review
Favourable growing conditions at key periods
throughout 2023, combined with the skill of our world-class
viticulture and winemaking teams, enabled the delivery of a harvest
of exceptional grape quality and yield. Across our 750 fully
productive acres (304 hectares) under vine, we harvested a record
3,811 tonnes of grapes. This tonnage is 86% higher than 2022 (2,050
tonnes), and 75% higher than Chapel Down's previous record posted
in 2018 (2,173 tonnes).
The majority of grapes (c.80%) harvested were of
varieties primarily used for traditional method sparkling wine, in
line with the Company's strategy to focus on its higher margin
award-winning sparkling wines, which benefit from the cool maritime
climate and chalk soils of the North Downs of Kent. The 2023
vintage of traditional method sparkling wines will predominantly be
sold from 2026.
In spring 2023, we completed the planting of
our exceptional Boxley Abbey vineyard on the North Downs of Kent.
This includes 42 acres (17 hectares) of Chardonnay and 76 acres (31
hectares) of Pinot Noir for the production of traditional method
sparkling wine and brings our owned and leased holding on this
escarpment of Kent Downs chalk to a total of over 595 acres (241
hectares) of planted vineyard. In total, we now have 906 acres (367
hectares) of planted vineyards.
In the first half of 2023 we launched our new
brand identity, which gives Chapel Down a more premium, modern and
distinctive look. We invested in more premium materials and
finishes to ensure that our packaging lives up to the quality of
our wines. The new identity has been rolled out across all of our
packaging, communications, website, events, sponsorships and brand
home. Our new brand identity has been received well by our
consumers, customers, shareholders and employees.
The Chapel Down brand continues to grow
strongly. We have a market share4 in the UK off-trade of
35.4%, a prompted brand awareness of 39% and a 12-month penetration
rate5 of 14%. These market share, brand awareness and
penetration scores are higher than for any other English winemaker.
This growing brand strength comes from significant investments made
during the year. Our sponsorship and events programme were a great
success. We were the 'Official Sparkling Wine' of The Boat Race,
with the winning men's and women's crews presented with bottles of
Chapel Down sparkling wine, which was televised live on BBC One. As
'Official Sparkling Wine' of the England Cricket Board, the 'Player
of the Match' for both the men's and women's teams in last year's
Ashes series received a bottle of Chapel Down sparkling wine, which
was televised on Sky Sports with a peak audience of 2m.
During the year, we also became the 'Official
English Sparkling Wine' of Tom Kerridge's Pub in The Park, the
biggest food and music festival tour in the UK, at which our
branded airstream sold a range of our sparkling wines at 10
locations across the south of England. A new 3-year agreement was
also signed with Ascot racecourse, which will come fully into
effect in 2024, and marks the first time in the 300-year history of
the prestigious British racecourse that an English wine brand has
become an Official Supplier.
Our social media following grew 13% during the
year to over 105k followers across all social media channels (2022:
93k), making us the most followed English wine brand. In addition,
our consumer database grew 8% to 96k (2022: 89k).
Finally, one particular highlight - in
celebration of English Wine Week - was when we took Chapel Down to
the Champagne region of France under the guise of 'Chapelle en Bas
to run a blind taste test versus a leading champagne brand. 60% of
participants preferred the taste of Chapel Down, which continues to
generate significant media exposure in the UK and
France.
Sustainability
Chapel Down is committed to delivering its
long-term growth ambitions and aspires to sustainability leadership
in the English wine sector. We will develop best-in-class
environmental frameworks and sustainability measures, focusing on
the development of relevant, meaningful and measurable
sustainability plans that benefit the business and the environment
in which it operates.
Significant work was undertaken in 2023 to
understand the total company carbon footprint and identify
opportunities for reductions and improvements. Changes have already
been implemented to decrease emissions and increase efficiency,
alongside vineyard plantings & ecosystem management to maximise
sequestration. Our plans and timelines to establish a net zero
position will be further developed and communicated through
2024.
We are committed to working in harmony with
nature and continue to maximise opportunities to increase
biodiversity and create habitats for wildlife on our estates. With
the growth of our business, we continue to manage our waste,
energy, water and supply chain responsibly, for example, all of our
energy is sourced from renewable sources, including the use of
waste grape skins.
Moving through 2024, Chapel Down will continue
to measure and manage key elements of sustainability and in H2 we
will publish our sustainability strategy and targets in context of
the company's future growth plans.
Outlook
Current trading is in line with management
expectations and our outlook for 2024 remains positive. We expect
to deliver double digit sales growth in the year, weighted towards
H2. We expect underlying profitability to return to normalised
levels, with an increased proportion of still wine and 'A Touch of
Sparkle' in the sales mix as a consequence of the exceptional 2023
harvest, a more typical harvest yield in 2024, and continued brand
investment.
As previously announced, the Company's next
phase of growth incorporates plans for a new purpose-built winery,
which the Company expects to be operational in time for the 2026
harvest (subject to final planning approval being granted at a
judicial review in May 2024).
The Company will continue to explore
opportunities to secure new acreage and develop an expanded tourism
offering at the Tenterden brand home to accelerate future growth.
Chapel Down will plant its latest vineyard at Buckwell in spring
2024. This will be 117 acres (47 hectares) of Chardonnay and Pinot
Noir, and will increase our planted vineyards to 1,023 acres (414
hectares).
To capitalise on our medium-term growth
opportunity, the Company is in advanced discussions to extend and
increase its existing RCF, to be drawn when required as part of the
overall mix of funding for its investment plans.
Chapel Down has a great team and is well
positioned in an exciting growth market. The creation of a new
global wine region is rare, and we are excited to be leading the
way. I remain hugely confident and excited about the future of
English wine and Chapel Down.
I would like to conclude by thanking our
customers, our teams, our growers and shareholders for their
ongoing support. We are looking forward to continuing this journey
together in 2024, with huge anticipation and excitement.
Andrew Carter, CEO
Note
1:
Chapel Down listed on AIM on 7th
December 2023. Consequently, the company has adopted IFRS as its
accounting standard. All numbers shown, including comparatives,
except where specified in note 2, are prepared under
IFRS.
Note
2:
The IFRS standard requires netting Retrospective
discount support (Retro), which is promotional price support given
to customers by Chapel Down, from Sales Revenue ("NSR net of
Retro").
Previously, Net Sales Revenue was reported
before netting Retro ("NSR gross of retro"). All channel and
category revenue splits in the Financial Highlights and CEO
strategic review are shown in this transition year as NSR gross of
retro, to enable like for like comparison.
Note
3:
Adjusted EBITDA relates to profit from
operations before interest, tax, depreciation, amortisation, share
based payment expense and exceptional costs.
Note
4:
Source, Nielsen
Note
5:
Source, BrandVue
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER
2023
|
|
|
2023
|
|
2022
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
Gross sales
revenue
|
|
|
20,135,454
|
|
17,745,572
|
Duty
|
|
|
(2,214,575)
|
|
(2,110,323)
|
|
|
|
|
|
|
Net sales
revenue - gross of retros
|
|
|
17,920,879
|
|
15,635,249
|
|
|
|
|
|
|
Retros
|
|
|
(719,833)
|
|
(636,147)
|
|
|
|
|
|
|
Net sales
revenue - net of retros
|
|
|
17,201,046
|
|
14,999,102
|
|
|
|
|
|
|
Cost of
sales
|
|
|
(8,289,842)
|
|
(7,290,304)
|
|
|
|
|
|
|
Gross
profit
|
|
|
8,911,204
|
|
7,708,798
|
|
|
|
|
|
|
Administrative expenses
|
|
|
(7,394,154)
|
|
(6,088,595)
|
|
|
|
|
|
|
Operating profit before exceptional
costs and fair value movement in biological produce
|
1,517,050
|
|
1,620,203
|
|
|
|
|
|
|
Fair value
gain/(loss) on measurement of biological produce
|
2,171,386
|
|
(156,373)
|
|
|
|
|
|
|
Operating
profit before exceptional costs
|
|
|
3,688,436
|
|
1,463,830
|
|
|
|
|
|
|
Exceptional
costs
|
|
|
(1,235,478)
|
|
(109,517)
|
|
|
|
|
|
|
Operating
profit
|
|
|
2,452,958
|
|
1,354,313
|
|
|
|
|
|
|
Share of
after tax losses in associates
|
|
|
-
|
|
(15,207)
|
Finance
income
|
|
|
47,222
|
|
16,147
|
Finance
costs
|
|
|
(193,057)
|
|
(119,567)
|
|
|
|
|
|
|
Profit
before tax
|
|
|
2,307,123
|
|
1,235,686
|
|
|
|
|
|
|
Tax
charge
|
|
|
(779,773)
|
|
(451,312)
|
|
|
|
|
|
|
Profit for
the year
|
|
|
1,527,350
|
|
784,374
|
|
|
|
|
|
|
Other
comprehensive income for the year
|
|
|
|
|
|
|
|
|
|
|
|
Tax
credit
|
|
|
324,626
|
|
-
|
|
|
|
|
|
|
Total
comprehensive income for the year
|
|
|
1,851,976
|
|
784,374
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income attributable to the equity holders of the
company
|
|
|
1,851,976
|
|
784,374
|
|
|
|
|
|
|
Basic
profit - pence per share
|
|
|
0.95
|
|
0.49
|
|
|
|
|
|
|
Diluted
profit - pence per share
|
|
|
0.94
|
|
0.49
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 31 DECEMBER 2023
|
2023
|
|
2022
|
|
£
|
|
£
|
Non-current
assets
|
|
|
|
Intangible
assets
|
41,803
|
|
79,318
|
Property,
plant and equipment
|
23,898,358
|
|
22,240,670
|
|
23,940,161
|
|
22,319,988
|
Current
assets
|
|
|
|
Biological
produce
|
-
|
|
-
|
Inventories
|
22,581,264
|
|
15,645,107
|
Trade and
other receivables
|
3,593,348
|
|
2,695,075
|
Cash and
cash equivalents
|
1,004,305
|
|
5,800,771
|
|
27,178,917
|
|
24,140,953
|
Total
assets
|
51,119,078
|
|
46,460,941
|
|
|
|
|
Equity and
liabilities
|
|
|
|
Equity
|
|
|
|
Called up
share capital
|
8,566,939
|
|
7,964,506
|
Share
premium
|
31,541,143
|
|
32,143,576
|
Capital
redemption reserve
|
400
|
|
400
|
Revaluation
reserve
|
936,703
|
|
970,457
|
Retained
earnings
|
(6,719,248)
|
|
(8,824,022)
|
Total
equity
|
34,325,937
|
|
32,254,917
|
|
|
|
|
Non-current
liabilities
|
|
|
|
Borrowings
|
-
|
|
2,071,159
|
Trade and
other payables
|
22,630
|
|
17,969
|
Lease
liabilities
|
7,457,140
|
|
6,582,798
|
Deferred
tax liabilities
|
893,397
|
|
438,249
|
|
8,373,167
|
|
9,110,175
|
|
|
|
|
Current
liabilities
|
|
|
|
Borrowings
|
2,240,748
|
|
467,385
|
Trade and
other payables
|
5,748,571
|
|
4,287,569
|
Lease
liabilities
|
430,655
|
|
340,895
|
Total
current liabilities
|
8,419,974
|
|
5,095,849
|
Total
liabilities
|
16,793,141
|
|
14,206,024
|
Total
equity and liabilities
|
51,119,078
|
|
46,460,941
|
|
|
|
|
CONSOLIDATED STATEMENT OF CASH
FLOWS
FOR THE YEAR ENDED 31 DECEMBER
2023
|
|
|
2023
|
|
2022
|
|
|
|
£
|
|
£
|
Cash flows
from operating activities
|
|
|
|
|
|
Profit before tax
|
|
|
2,307,123
|
|
1,235,686
|
|
|
|
|
|
|
Adjustments to reconcile profit before
tax to
|
|
|
|
|
|
net cash flows:
|
|
|
|
|
|
Amortisation of intangible assets
|
|
|
37,516
|
|
37,516
|
Depreciation of property, plant and
equipment
|
|
|
306,163
|
|
211,728
|
Profit on disposal of property, plant and
equipment
|
|
|
(13,738)
|
|
-
|
Finance cost included within cost of
sales
|
|
|
1,139
|
|
2,029
|
Finance income
|
|
|
(47,222)
|
|
(16,147)
|
Finance cost
|
|
|
193,057
|
|
119,567
|
Fair value movement in biological
produce
|
|
|
(2,171,386)
|
|
156,373
|
Equity-settled share-based payments
|
|
|
219,044
|
|
57,790
|
Increase in trade and other
receivables
|
|
|
(898,275)
|
|
(1,437,715)
|
Increase in inventories
|
|
|
(3,310,142)
|
|
(1,422,697)
|
Increase in trade and other payables
|
|
|
1,465,663
|
|
455,688
|
Tax received
|
|
|
-
|
|
51,195
|
Net cash flows
used in operating activities
|
|
(1,911,058)
|
|
(548,987)
|
|
|
|
|
|
|
Cash flows
from investing activities
|
|
|
|
|
|
Purchase of property, plant and
equipment
|
|
|
(1,816,517)
|
|
(2,121,743)
|
Proceeds from sale of property, plant and
equipment
|
9,671
|
|
-
|
Interest received
|
|
|
47,222
|
|
16,147
|
Net cash flows
used in investing activities
|
|
|
(1,759,624)
|
|
(2,105,596)
|
|
|
|
|
|
|
Cash flows
from financing activities
|
|
|
|
|
|
Proceeds from issue of shares
|
|
|
-
|
|
220,019
|
Repayment of borrowings
|
|
|
(300,000)
|
|
(300,000)
|
Lease payments
|
|
|
(645,284)
|
|
(566,611)
|
Interest paid
|
|
|
(180,500)
|
|
(113,184)
|
Net cash flows
generated from financing activities
|
|
|
(1,125,784)
|
|
(759,776)
|
Net decrease
in cash
|
|
|
(4,796,466)
|
|
(3,414,359)
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of
year
|
|
|
5,800,771
|
|
9,215,130
|
Cash at the
end of year
|
|
|
1,004,305
|
|
5,800,771
|
|
|
|
|
|
|
1. BASIS OF
PREPARATION/ACCOUNTING POLICIES
The Company's report for the year ended 31
December 2023 was authorised for issue by the directors on
15th April 2023. 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
2023, which was prepared in accordance with the Company's reporting
standards (International Financial Reporting Standards as adopted
by the UK, IFRS) that were in effect at that time.
The Company is required to value net assets in
accordance with the Company's reporting standard (IFRS). The assets
(wine stock, land, vineyard) are held at cost which the Directors
believe is considerably less than the net realisable
value.
The statutory accounts for the year ended 31
December 2023 have been reported on by the Company's auditors,
received an unqualified audit report and will be issued to
shareholders in June 2024.
2. BALANCE
SHEET REVIEW
The net asset value of the Company as at 31
December 2023 was £34,325,937 which includes:
•
Fixed assets held
at net book value of £23,898,358, including vineyard development
expenditure which is capitalised at cost.
•
£22,581,264 of
stock, which is valued at cost being the lower of cost or net
realisable value.
3. PROFIT PER
SHARE
The calculation of the profit per share for the
year ended 31 December 2023 is based on the profit for the period
of £1,527,350 and the weighted average number of shares in issue
during the period of 160,260,960 exclusive of the effect of
dilutive share options, and 161,665,581 inclusive of dilutive
options.
4.
DISTRIBUTION OF THE FULL YEAR 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.
This announcement contains inside information
for the purposes of the retained UK version of the EU Market Abuse
Regulation (EU) 596/2014 ("UK MAR").
Contacts
Chapel Down Group
plc
Andrew Carter
Rob Smith
|
Chief Executive Officer
Chief Financial Officer
|
01580 763 033
|
|
|
|
Singer Capital
Markets
Shaun Dobson
Tom Salvesen
Asha Chotai
James Todd
|
Nominated Adviser and Broker
|
020 7496 3000
|
|
|
|
H/Advisors
Maitland
Sam Cartwright
Jonathan Cook
|
|
020 73795151
|
About Chapel Down:
Chapel Down (AIM: CDGP) is England's leading and
largest winemaker and the power brand of English wine, the world's
newest international wine region. From its home in Kent in the
heart of the Garden of England, Chapel Down produces a range of
sparking and still wines which consistently win prestigious
international awards for their quality. Chapel Down has over 1,000
acres of vineyards, of which 750 acres are fully
productive.
Chapel Down's status as the most recognised
English wine brand is supported by its partnerships with flagship
sporting and cultural events including Ascot, The Boat Race and Pub
in the Park, and Chapel Down is the 'Official Sparkling Wine' of
the England and Wales Cricket Board.
Chapel Down is listed on the London Stock
Exchange's AIM and has over 8,000 retail investors who enjoy
discounts on Chapel Down's wines, tours and tastings at the brand's
home at Tenterden in Kent, which each year attracts c60,000
visitors.
Chapel Down is strongly committed to growing its
business in balance with the environment and sustainability is a
strong, ongoing focus. The company is a founding member of
Sustainable Wines of Great Britain and practices sustainable
viticulture.