REG - Chapel Down Group - Results for the period ended 31 December 2024
03/04/2025 07:00
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RNS Number : 4053D Chapel Down Group PLC 03 April 2025
This announcement contains inside information for the purposes of the retained
UK version of the EU Market Abuse Regulation (EU) 596/2014 ("UK MAR").
Chapel Down Group Plc
('CDG' or 'the Company')
EPIC: CDGP
RESULTS FOR THE PERIOD ENDED 31 DECEMBER 2024
Chapel Down, England's leading and most celebrated winemaker, is pleased to
provide its audited financial results for the year ended 31 December 2024,
with net sales revenue in line with guidance and strong sales momentum in Q4.
Account 2024 2023 Change
£000's £000's
Net Sales Revenue(1) (NSR) - Full year 16,351 17,201 -5%
Net Sales Revenue - Q4 5,749 5,356 +7%
Gross profit 7,918 8,911 -11%
Gross profit % 48.4% 51.8% -3.4% pts
Adjusted EBITDA(2) 2,418 5,733 -58%
Stocks 26,558 22,581 +18%
Net debt (9,159) (1,236) +641%
Net assets 32,652 34,326 -5%
Average Selling Price (ASP) - Sparkling £13.84 £13.15 +5%
Planted vineyards (Acres / Hectares) 1,018 / 412 906 / 367 +12%
Highlights
· Net Sales Revenue (NSR)(1) was -5% to £16,351k (2023: £17,201),
in line with guidance, but only -3% excluding the exited spirits business.
o Ecommerce +22% and On-trade +16% continued their consistent growth
trajectory, showing robust growth in underlying consumer demand.
o Strong Q4 performance, with NSR +7% and NSR, excluding the now exited
spirits business +10%, which momentum has been carried into the new year.
o Overall NSR significantly impacted by one-off factors in the Off-trade,
including the previously reported reduction in stock held by retailers.
Although NSR was -19% in the Off-trade, this was not reflective of positive
Off-trade consumer sales growth(3) (Chapel Down +2%, Chapel Down sparkling
+4%).
· Chapel Down are pleased to announce a new agreement with Jackson
Family Wines (JFW) for the distribution of sparkling wines into the USA, our
largest potential export market. JFW are a multi-generational, family run,
recognised leader, in global fine wines with an extensive distribution network
and dedicated sales division in the USA. The agreement is effective from mid
Q2 2025.
· Gross margin of 48.4% (2023: 51.8%) reduced predominantly due to a
greater proportion of still wines in the sales mix, due to the exceptional
2023 harvest volume, coupled with an increase in Cost of Goods Sold (COGS) as
a result of Chapel Down selling a significant proportion of sparkling wines
which were created from lower yielding and hence more expensive harvests and
bottled during a period of higher materials inflation, which has subsequently
unwound.
· Strong cost discipline maintained, with administrative expenses
reducing by -5% to £7,037k (2023: £7,394k). Within this, Chapel Down
continued to invest in the brand and marketing spend, which grew +5% on prior
year.
· High quality 2024 harvest, which Chapel Down believes will be
comparable to the excellent 2019 vintage, though the in-year fair value
movement in biological produce(4) was -£567k (2023: £2,171k) due to more
challenging growing conditions reducing yields below our 6-year average. The
in-year fair value movement is a non-cash accounting adjustment for
'viticultural profit' during the year, which is calculated as the estimated
market value of grapes, less the vintage's growing costs. The in-year fair
value movement is correlated with growing conditions within the year, and can
thus be uncertain.
· Adjusted EBITDA(2) decreased by -58% to 2,418k (2023: £5,733k),
with the reduction driven predominantly by the reduced gross profit (-£993k
impact) and the non-cash in-year fair value adjustment on biological
produce(4) (-£2,738k impact).
· After planting 122 acres of new vines taking total planted acreage
to 1,018 (c10% of the UK's total) and also increased stock levels (£3,976k
increase) from the exceptional 2023 harvest, which will underpin future
growth, net debt increased to £9.2m (2023: £1.2m). The Company retains
significant headroom on its £20m revolving credit facility.
· Net assets stand at £32.7m (2023: £34.3m) giving a NAV per share
of 19.0p (20.0p). The Board remain confident the market value of these
tangible assets is significantly higher than the reported values.
· The quality of Chapel Down wines continues to be recognised at
national and international awards, with 2024 our most successful year yet
across the top five wine competitions. The Decanter World Wine Awards trophy
for 'Best in Show' for our traditional method Chapel Down Sparkling Rosé was
a particular highlight.
· Chapel Down remains the leading brand(5) in English wine with
continued growth in Awareness (42%), Affinity (25%) and Penetration (17%),
higher than any other English wine brand.
· Chapel Down is now the only English wine company with a stock
market listing.
Outlook
· The consumer environment remains uncertain, but Chapel Down is
currently trading well ahead of prior year and expects strong sales growth for
the year, with a return to full profitability.
· Looking ahead, our ambition remains to deliver sustained profitable
growth over the medium-term, winning the equivalent of 1% of the 300 million
bottle global Champagne market by 2035, while further cementing Chapel Down's
position as the leader in the English wine category.
James Pennefather, CEO commented:
"I am delighted to join Chapel Down at a pivotal time in the development of
the English wine market. As the global reputation of England as a wine-making
region grows, especially in the sparkling wine category, we have a rare
opportunity to establish Chapel Down as a celebrated wine brand of
international acclaim.
With our experienced team, portfolio of exceptional wines and a clear
strategic focus, we are well positioned to grow both domestically and
internationally."
Chairman's review
Whilst 2024 was a tougher year for Chapel Down following the outstanding
performance seen in the previous year, the business performed creditably,
making continued strategic and operational progress. The prospects for Chapel
Down as the leading English winemaker remain exciting.
In 2021, Chapel Down returned to its roots as a pure-play winemaker, exiting
brewing and later spirits to focus exclusively on the production and sale of
the award-winning wines, for which we are famous. Chapel Down now has a clear
strategic focus.
Chapel Down is England's leading winemaker, and our home market offers some
important advantages both for production and as a market for our wines. Our
terroir shares many of the characteristics which have made Champagne so
successful as a wine region. An abundance of south-facing, chalk and clay
slopes and a cool maritime climate provide optimal conditions for creating
traditional method sparkling wines. And whilst international demand for
English sparkling wine is in the ascendancy as its reputation grows, the UK is
in itself a large, mature consumer market for all styles of sparkling wine,
ensuring Chapel Down's home market will be a key driver of growth for decades
to come. Our scale gives us an advantage over other UK-based winemakers,
allowing us the largest distribution footprint in the industry, as well as
economies of scale in production, distribution and other overheads.
As part of our refocus on wine, we significantly transformed our operations to
lay the foundations for future growth, including organisational structures and
culture, as well as our core business systems, processes and data. These
actions were difficult, and at times painful, but we benefited greatly from
their successful delivery. After these actions were completed, we naturally
started looking forward to the next phase of the Company's growth. As such, in
addition to our move onto AIM in December 2023, we began a strategic review in
June 2024 to assess all options to most effectively deliver on our long-term
plans.
The strategic review confirmed that Chapel Down was an attractive investment
proposition, and we had extensive conversations with interested parties on an
array of structures. Ultimately though, we did not find a partner with the
right fit on both strategic direction and valuation, leading the Board to
conclude that the best way to create superior long-term shareholder value was
for Chapel Down to remain a stand-alone, AIM listed, company.
The strategic review did not come without cost, and nearly £1m of this year's
exceptionals directly or indirectly relate to this, costs which of course will
not be repeated. I would like to take this opportunity to confirm that no
payments were made to directors directly or indirectly as a consequence of the
strategic review and, additionally, to note that the whole Board, who
conducted the review, are also significant shareholders in the Company and
thus aligned with other shareholders in their desire to create long-term
shareholder value.
Looking forward, we recognise the need to remain vigilant on debt levels,
which are more elevated than planned, as a result of investments made in the
exceptional vineyards at Boxley Abbey and Buckwell, which will underpin our
medium-term growth, without raising additional equity investment.
Our performance in 2024 is covered elsewhere in this announcement and so I do
not intend to repeat that here. However, I will note that whilst 2024
represented a more challenging operational environment than in previous years,
that meant we broke our track record of revenue growth and bottom-line
profitability, the Board is confident that the one-off factors that
contributed to this are unrelated to the underlying growth in consumer demand
for Chapel Down wines, which continues.
In closing I would first like to reiterate my thanks to the outgoing CEO,
Andrew Carter, and CFO, Rob Smith, who have both made a significant
contribution to the repositioning and refocusing of the Chapel Down brand.
They leave the Company well-positioned to deliver on its future plans. We were
pleased to confirm the appointment of James Pennefather as CEO, who started on
February 1(st) and also Louan Mouton as CFO, who will join the Board in April.
Both have significant and relevant expertise in the drinks sector and will be
an integral part of driving the Chapel Down brand forward. In addition, I am
pleased to announce that Jamie Brooke has become our Senior Independent
Director.
Finally, I would like to thank all shareholders for their continued support
and our customers for their enthusiasm and commitment. The hard-working Chapel
Down team remain dedicated to the continued growth of the Company, and we
remain enthused by the opportunity to accelerate our leadership in the
fast-growing English wine category.
CEO strategic update
As England continues to build its reputation as one of the world's most
exciting new wine regions, Chapel Down's strategy is to win share of global
consumer celebration occasions by creating exceptional traditional method
sparkling wines and by building a brand that represents "approachable luxury".
As the leading winemaker in UK, Chapel Down has a unique opportunity to shape
the market and capture the leading share of emerging consumer adoption
worldwide.
Strong Foundations for Profitable Growth
Chapel Down is well placed to benefit from over 30 years of expertise and
investment.
Chapel Down has exceptional vineyard assets spanning over 1,000 acres -
equivalent to approximately 10% of the UK's total vineyards or 1.5 million
individual vines, with 70% of this acreage concentrated across four
outstanding vineyards in the Kent Downs. Each of these vineyards has been
meticulously selected by our seasoned viticulture team for its topography and
micro-climate to maximise grape ripening and avoid frost pockets. Of these,
our most recent vineyard investment, Buckwell, is not due to come into full
production until 2027, providing wines which will enable the Company to
deliver topline volume growth from existing vineyard assets into the early
2030s.
Chapel Down's winemaking philosophy is to produce exceptional wines with a
backbone of crisp and fresh flavours. Under the leadership of our Head
Winemaker, Josh Donaghay-Spire, our winemaking team has historically adopted a
blend of traditional methods and modern innovation, facilitated by operating
in a New World region with fewer restrictions than established regions such as
Champagne. We have garnered international acclaim for our wines, including the
prestigious Decanter World Wine Awards 'Best in Show' trophy in 2024 for our
traditional method Chapel Down sparkling Rosé. This accolade underscores our
relentless pursuit of quality and excellence.
Chapel Down offers a range of award-winning wines, with RRPs ranging from £15
to £125, which allows for consumer trial at all points across the pricing
ladder. We have good stocks of sparkling wines still on lees/under maturation
in our warehouses, valued at £26.6m on our balance sheet but with an expected
realisable market value significantly in excess of this. These stocks enable
us to be confident in our growth forecasts into the 2030s by protecting
against any future downside risk from a poor harvest, as well as supporting
our long-term premiumisation strategy.
The Company's expertise and investment in brand-building has resulted in
impressive metrics in brand awareness, affinity and penetration. The brand
targets the global market for consumer celebration occasions, a market
currently served by categories such as Champagne. Over the past two decades,
Chapel Down has developed an appealing and differentiated brand proposition
around more approachable luxury. In support of this, we have established
in-house capabilities in customer relationship marketing, social media,
ecommerce, sponsorships and in the design and delivery of memorable brand
experiences.
Chapel Down has established an expansive distribution network which underpins
our go-to-market strategy. Our Off-trade channel, where we have the widest
distribution of any UK wine brand, is complemented by a growing On-trade
presence, where we have successfully grown to 2,462 listings (+25%), of which
over 1,800 are by the glass listings (+73%). The Company's Direct-to-Consumer
(DTC) channel is also strengthening and is serviced through our ecommerce
platform and the highly popular Tenterden brand home, which attracts more than
50,000 visitors annually.
These foundations, established over three decades by Chapel Down, will not
only continue to support our success in the UK and fuel our global expansion
but also represent strong barriers to entry into the category.
Summary & Medium-Term Outlook
Chapel Down creates value by helping consumers celebrate the happiest moments
in their lives. Our exceptional sparkling wines have a backbone of crisp and
fresh flavours, which make them invigorating and uplifting, enhancing
celebration occasions.
Our ambition is to win the equivalent of 1% of the 300 million bottle global
Champagne market by 2035.
To achieve this, we have built a high value asset base of exceptional
vineyards and maturing stocks, coupled with expertise at all levels of our
vertically integrated model including viticulture, winemaking, brand-building,
route to consumer alongside a strong management team. As we build stocks from
our recently planted Kent's North Downs vineyards, we expect to be in a
position to sell 3m bottles of Chapel Down sparkling wine each year by 2035.
To date, we have proved the success of our business model in the UK market by
not only achieving market leadership position in English sparkling wine across
all the key metrics(5) - including brand awareness, penetration, distribution
levels and market share - but also achieving 3.6% equivalent share of total
Champagne sales(3) in the key Off-trade channel in 2024 at an average price
index of 90 to Champagne.
There remains significant headroom for growth. The next phase of growth for
Chapel Down will be delivered in the UK by increasing brand metrics and
distribution levels to those of leading Champagne brands and by expanding into
selected international markets. Our ambition is to deliver sustained,
profitable, growth over the medium-term while further cementing Chapel Down's
position as the global leader in the fast-growing English wine category.
As referenced elsewhere, strong performance momentum from Q4 2024 has
continued into 2025.
I look forward to sharing our continued progress and success with our
shareholders as our dedicated and highly skilled team at Chapel Down helps
consumers celebrate the happiest moments of their lives.
2024 Performance review
Key metrics
Account 2024 2023 Change
£000's £000's
Net Sales Revenue net of retro(1) (NSR) - Full year 16,351 17,201 -5%
NSR - Q4 5,749 5,356 +7%
Gross profit 7,918 8,911 -11%
Gross profit % 48.4% 51.8% -3.4% pts
Operating profit before in-year fair value movement and exceptionals 882 1,517 -42%
In-year fair value movement on biological produce(4) (567) 2,171
(Loss) / profit after tax (1,309) 1,527
Adjusted EBITDA(2) 2,418 5,733 -58%
Stocks 26,558 22,581 +18%
Net debt (9,159) (1,236) +641%
Net assets 32,652 34,326 -5%
Net assets per share 19.0p 20.0p -5%
Average Selling Price (ASP) - Sparkling £13.84 £13.15 +5%
Planted vineyards (Acres / Hectares) 1,018 / 412 906 / 367 +12%
Financial review - Highlights
NSR was -5% to £16,351k (2023: £17,201), but only -3% excluding the exited
spirits business. Chapel Down additionally showed strong momentum in Q4 with
NSR +7% to £5,749k, (2023: £5,356k), or +10% ex-spirits.
NSR was materially impacted by one-off events, predominantly a reduction in
the stock held by Off-trade retailers (estimated impact, in excess of £1m),
and an exit from our spirits business (impact £0.4m). In addition, when
comparing NSR to prior year, Chapel Down performance was impacted by the
Coronation of King Charles III being in the comparative (estimated impact
£0.3m) and a lack of in-year grape sales, due to the smaller harvest in 2024
(£0.2m).
Gross margin of 48.4% (2023: 51.8%) was reduced predominantly due to a greater
proportion of still wines in the sales mix, due to the exceptional 2023
harvest volume, coupled with an increase in cost of goods sold (COGS) as a
result of Chapel Down selling a significant proportion of sparkling wines
which were created from lower yielding and hence more expensive harvests and
bottled during a period of higher materials inflation, which has subsequently
unwound.
Financial review - Sales by channel
Channel NSR 2024 2023 Change
£000's £000's
Off-trade 6,790 8,428 -19%
On-trade 2,460 2,122 +16%
International 684 760 -10%
Ecommerce 3,755 3,070 +22%
Retail, Tours & Events 2,241 2,250 -
Other sales and income 421 571 -26%
Total 16,351 17,201 -5%
Of which Direct to Consumer (DTC) 6,343 5,684 +12%
The Off-trade remains Chapel Down's largest channel, with strong sales to
consumers and H2 momentum being offset by previously reported one-off impacts:
i. Reduction in stock held by retailers in H1, due to higher than
expected opening stocks from a weaker rate of sale (ROS) at Christmas 2023 as
well as a move by retailers to lower average stock holdings than in prior
years (estimated impact, in excess of £1m).
ii. Strong comparative due to the Coronation of King Charles III
(estimated impact £300k).
iii. Exit from spirits (impact £400k, across all channels).
Off-trade NSR -19% to £6.8m (2023: £8.4m), however, consumer sales of Chapel
Down through the Off-trade(3) continued their growth in 2024 (+4% sparkling,
+2% overall) with particular momentum in the Christmas period (+38% sparkling,
+29% overall).
Chapel Down maintained market leadership(3) in the Off-trade in 2024 with its
34% market share (2023: 34%), rising to 37% in Q4. Additionally, in the
Off-trade, Chapel Down continued to show strong consumer pricing(3) against
Champagne, with a relative price index of 90 for our traditional method
sparkling wine (2023: 87).
On-trade revenue grew at +16% to £2.5m (2023: £2.1m) as Chapel Down
continued to enjoy a strong ROS and secure key distribution wins (outlets +25%
to 2,462), as well as extended partnerships.
'By the glass' listings increased strongly (+73%) and now account for
significantly more than half of all listings. These drive consumer sampling
and a materially higher rate of sale. Full benefits from this listing's
growth, alongside new wins, will be seen in 2025.
International NSR was -10% due to reduced export sales, particularly from the
US, and a key Global Travel Retail (GTR) order, expected in 2024, partially
deferred to 2025.
Chapel Down has a strong GTR business, now located in 35 key UK travel hubs
(2023: 13) where travellers look for products with a 'sense of place'. This
growth in listings will deliver a full year of benefits in 2025.
Chapel Down is currently reviewing a range of options to further optimise
distribution in export markets and are pleased to announce a new agreement
with Jackson Family Wines (JFW) for the distribution of sparkling wines into
the USA, our largest potential export market. JFW are a multi-generational,
family run, recognised leader, in global fine wines with an extensive
distribution network and dedicated sales division in the USA. The agreement is
effective from mid Q2 2025. We are delighted to be working with Jackson Family
Wines.
Export remains a key growth opportunity for the Company.
Chapel Down showed continued strong growth in consumer demand through Direct
to Consumer (DTC) channels. Ecommerce NSR grew +22% to £3,755k (2023:
£3,070k), driven by the acquisition of 14k new customers in 2024, which
helped to increase the number of Ecommerce orders by 28% to 41k (2023: 32k).
NSR in Retail, Tours and Events was flat at £2,241k (2023: £2,250k) with a
good 5% growth in tour revenues offset by a -3% reduction in Retail and
Events, particularly influenced by a reduction in the number of 'Pub in the
Park' events from 12 to 4.
Other sales and income reduced -26% to £421k (2023: £571k) since Chapel Down
did not make any grape sales to third parties this year, due to a reduced
harvest volume (2023: £162k).
Financial review - Sales by category
Category NSR 2024 2023 Change
£000's £000's
Sparkling 10,582 11,444 -8%
A Touch of Sparkle 1,347 1,399 -4%
Still 3,113 2,545 +22%
Spirits 161 553 -71%
Tours & Other 1,148 1,260 -9%
Total 16,351 17,201 -5%
Sparkling wine remains our strategic focus and was 70% of wine sales in 2024
(2023: 74%). Sparkling wine NSR was £10.6m (2023: £11.4m), an -8% reduction
primarily due to one-off challenges in the Off-trade, as referenced above.
This NSR reduction in the Off-trade was not reflected in consumer sales, which
continued to grow. In the Off-trade, Chapel Down sparkling wines (+4%)
outgrew(3) English sparkling wine as a category (+2%) and Champagne (-2%),
showing continued strong consumer demand.
Still wine NSR grew 22% to £3.1m (2023: £2.5m), also due to strong customer
demand, increased distribution and the planned RRP reduction in 2024.
A Touch of Sparkle (ATOS) NSR showed a slight decline to £1.3m (2023:
£1.4m). ATOS Classic was relaunched, under a new label consistent with ATOS
Rosé, in Q4 2024.
Chapel Down fully exited the spirits category in the year, reflected in
reduced sales of £0.2m (2023: £0.6m).
Financial review - Other P&L items
Chapel Down maintained strong cost discipline, with administrative expenses
reducing -5% to £7,037k (2023: £7,394k). Within this, Chapel Down continued
to invest in the brand and marketing spend, which grew +5% on prior year.
The in-year fair value movement in biological produce(4) was -£567k (2023:
£2,171k) due to more challenging growing conditions in H2, which reduced
yields below the 6-year average. The in-year fair value movement is a non-cash
accounting adjustment for 'viticultural profit' during the year, which is
calculated as the estimated market value of grapes, less the vintage's growing
costs. The in-year fair value movement is correlated with growing conditions
within the year, and can thus be uncertain. In H1 the Company recorded an
in-year fair value gain on biological produce of £773k and hence in H2 it
posted a loss of £1,340k to leave the net loss for the year at £567k.
Exceptionals of £1,216k (2023: £1,235k) largely from the direct and indirect
costs of the strategic review performed in the year. In addition, the Company
completed the implementation of a single, cloud-based, scalable and integrated
technology and data platform covering Sales, Customer Relationship Management
and Finance.
Adjusted EBITDA(2) has decreased by -58% to 2,418k (2023: £5,733k). This
reduction of £3,315k is driven predominantly by the reduced gross profit
(-£993k impact) and in-year fair value adjustment on biological produce
(-£2,738k impact).
Sparkling average selling price (ASP) grew 5% showing continued brand
investment and strength alongside consumer demand, but was offset by planned
RRP reductions in still (-9%) and ATOS (-4%) as a result of the exceptional
2023 harvest, leaving a blended ASP of -4%.
Chapel Down can reconfirm that it does not intend to pay a dividend in the
foreseeable future.
Financial review - Balance sheet
Stocks growth of +18% to £26,558k (2023: £22,581k) as a result of the
exceptional 2023 harvest. As noted elsewhere, these stocks will underpin
future Company sales growth.
Net working capital ex stocks remained negative at £1,040k (2023: £2,178)
due to net advantaged payment terms.
The additional planting of 122 acres of new vines, bringing the Company's
total acreage to 1,018 (c10% of the UK's total), as well as increased stock
levels (£3,976k increase) from the exceptional 2023 harvest, has resulted in
net debt increasing to £9.2m (2023: £1.2m). The Company retains significant
headroom on its £20m revolving credit facility.
During 2024, Chapel Down signed a long-term extension to its Revolving Credit
Facility, which reduces interest rates payable, whilst increasing the
facility's size to £20m, with an 'accordion' facility extension to £30m,
should this be required. At year end, the Group's covenants were in the
process of being reconfigured by PNC to remove the non-cash fair value
adjustment on biological produce from the calculation, which had been
inappropriately included in the initial covenant. As such, the balance has
been categorised as a current liability at the balance sheet date, but from
17(th) January 2025, when the updated covenants were agreed, this balance has
been reclassified as a long-term liability, consistent with prior years.
Net assets stood at £32.7m (2023: £34.3m) giving a NAV per share of 19.0p
(20.0p). 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 review
Planting at the new Buckwell vineyard is now complete, and the vines are
growing in line with expectations. Buckwell provides an additional 92 acres
(37 hectares) of Chardonnay and 27 acres (11 hectares) of Pinot Noir,
extending Chapel Down's planted vineyards to 1,018 acres (412 hectares), c10%
of all UK planted vineyards. There are no current plans for further vineyard
plantings.
Growing conditions for 2024 started well, with no frost damage during early
spring, and fine, warm weather during flowering, however the 2024 vintage
faced more difficult weather conditions in September and October. Although our
vineyards were not impacted as heavily as other regions in England, late
season weather led to some pressure from mildew and consequently reduced
yields, given our strict focus on quality. Total harvest was 1,852 tonnes,
which is 2.5 tonnes per acre. This is below last year's exceptional harvest of
3,811 tonnes, which was 5.1 tonnes per acre, as well as being below the 6-year
average yield of 3.2 tonnes per acre.
Vintage quality and grape flavours are excellent, reminiscent of the 2019
harvest, which delivered great quality traditional method sparkling wine.
Chapel Down has created c1.7m bottles from the 2024 vintage, the majority of
which is traditional method sparkling wine. This is 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 Kent Downs.
The Company is pleased to note that the impact from adverse late season
weather was minimised by our vineyards being geographically spread across
Kent, our network of 46 weather stations feeding back live data to allow us to
take rapid mitigating actions, coupled with the outstanding expertise of our
vineyard and grower teams.
Head winemaker, Josh Donaghay-Spire, commented;
"The weather in 2024 was cooler and more humid than in recent years. However,
the dedication and hard work of the vineyard team meant that the reduced crop
was of high quality, particularly from our Kent Downs vineyard sites. Levels
of natural alcohol and acidity mirrored those found in 2019, a year which gave
some excellent sparkling wines including the current releases of Kit's Coty
Blanc de Blancs and Grand Reserve.
We're delighted with the quality of the still wines we've already bottled as
they have captured the fresh fruit characters of the vintage well. The
sparkling base wines have an elegance and delicacy which will mature in our
cellars gracefully over the coming years."
The quality of Chapel Down wines continued to be recognised at national and
international awards, with 2024 being the most successful year yet across the
top five wine competitions. In the Decanter World Wine Awards, Chapel Down won
'Best in Show' for our traditional method Chapel Down Sparkling Rosé. This
accolade underscores our relentless pursuit of quality and excellence.
Chapel Down was the Wine GB Award's 'Supreme Champion', the highest accolade
awarded, and also won 'Best English Sparkling Wine' with Kit's Coty Coeur de
Cuvée 2016, as well as winning 'Top Still Wine' and 'Best Chardonnay'
trophies with Kit's Coty Chardonnay 2021. Overall, Chapel Down achieved its
best performance overall in wine awards this year, winning a total of 41
awards across the top five wine competitions.
Continued investment in brand, including key sponsorship activations, has
maintained Chapel Down's position as the power brand in English wine. Chapel
Down has market leading(5) 'Consumer awareness' of 42% (2023: 39%), 'Affinity'
of 25% (2023: 22%), 'Penetration' of 17% (2023: 14%) and 'High quality'
perception of 23% (2023: 20%). Each of these metrics remains higher than any
other English wine brand.
The Company's social media following also continues to grow rapidly, +20% to
126k followers (2023 105k).
Chapel Down remains the 'Official Sparkling Wine' of the England & Wales
Cricket Board and The Oxford & Cambridge Boat Race. Chapel Down has a new
extended sponsorship partnership with Ascot Racecourse which included the
launch of a limited-edition Chapel Down Royal Ascot Edition sparkling wine and
creating 'Yeats Bar by Chapel Down', our own sparkling wine bar at Royal
Ascot. Chapel Down, additionally, continued its strong partnership with Tom
Kerridge's 'Pub in the Park' festivals.
Chapel Down continues to invest in sustainable operations, including electric
forklift trucks, recycling spray application and under vine weeding technology
to reduce its inputs. Progress has also been made on further reducing the
weight and environmental impact of packaging.
Significant technology investments were completed in 2024, giving Chapel Down
a single, cloud-based, scalable and integrated technology and data platform
covering Sales, Customer Relationship Management and Finance. In line with
relevant accounting practice concerning cloud-based technology, this is
accounted for as an exceptional item of £246k (2023: £456k).
As previously announced, the Company is pursuing planning permission for a new
purpose-built winery in Kent. This planning permission is subject to ongoing
judicial review, the next step of which is expected to be completed by late
summer 2025, when we will provide an update. We do not have any certainty on
the final completion date of the planning process or its outcome. In the
meantime, the Company has been reviewing alternative options to increase
winemaking production capacity in the medium term.
Outlook
The consumer environment remains uncertain, but Chapel Down is currently
trading well ahead of prior year and expects strong sales growth for the year,
with a return to full profitability.
Looking ahead, our ambition remains to deliver sustained profitable growth
over the medium-term, winning the equivalent of 1% of the 300 million bottle
global Champagne market by 2035, while further cementing Chapel Down's
position as the leader in the English wine category.
Note 1:
· Net sales revenue (NSR) is stated net of both duty and retro, in
accordance with IFRS.
Note 2:
· In addition to the statutory measures, the Group also measures its
performance by reference to Adjusted EBITDA. Adjusted EBITDA is an Alternative
Performance Measure (APM), as defined within the European Securities and
Markets Authority Guidelines on APMs. Adjusted EBITDA relates to profit from
operations before interest, tax, depreciation, amortisation, share based
payment expense and exceptional costs.
· During the year, management performed a detailed review of the
Group's Adjusted EBITDA metric. During this review process, management noted
that whilst it was adding back the full amount of annual depreciation within
the calculation of Adjusted EBITDA, the same treatment was not being applied
to lease interest costs that are absorbed into the value of inventory and
bearer plants. To ensure the Group's Adjusted EBITDA metric remains as
consistent as possible for users of the accounts, the Group has opted to
revise its Adjusted EBITDA calculation such that the full annual interest
charge is excluded from the metric going forwards. This will ensure consistent
treatment of both depreciation and interest charges in the adjusted EBITDA
calculation. As a result of this change, the prior year Adjusted EBITDA
comparative has been restated to align to the revised basis.
· A full reconciliation of Adjusted EBITDA to Operating Profit will
be shown in the notes to the accounts in the annual report.
Note 3:
· Consumer sales in Off-trade for 52 weeks to 28th December: Chapel
Down +2%, Chapel Down sparkling +4%. Chapel Down market share 34%, unchanged
on PY.
· Q4 consumer sales in Off-trade for 12 weeks to 28th December:
Chapel Down +25%, Chapel Down sparkling +32%.
· Chapel Down sales in 4 weeks to 28th December: Chapel Down +29%,
Chapel Down sparkling +38%.
· UK Off-trade Champagne sales in 750ml bottle format: 12.1m bottles,
RSV £322m. Chapel Down UK Off-trade traditional method sparkling sales in
750ml bottle format: 465k bottles, RSV £11.1m.
· Source: Nielsen
Note 4:
· The in-year fair value movement is a non-cash accounting adjustment
for 'viticultural profit' during the year, which is calculated as the
estimated market value of grapes harvested, less the vintage's growing costs.
The in-year fair value movement is correlated with growing conditions within
the year and can thus be uncertain. The other side of the accounting entry is
stock, which is realised through the P&L as COGS when wines from each
vintage are sold. In 2024, the in-year fair value P&L movement was a loss
(debit), which is reflected in a reduction (a credit) to balance sheet stock
valuation, which will result in lower COGS in future years. The opposite would
occur in years when the Company records an in-year fair value gain.
· In H1 the Company recorded an in-year fair value gain on biological
produce of £773k and hence in H2 it posted a loss of £1,340k to leave the
net loss for the year at £567k.
Note 5:
· Source: Savanta, BrandVue, Sparkling wine drinkers, MAT end
December 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2024
2024 2023
£ £
Gross sales revenue 19,844,856 20,135,454
Duty (2,572,153) (2,214,575)
Net sales revenue - gross of retros 17,272,703 17,920,879
Retros (921,426) (719,833)
Net sales revenue - net of retros 16,351,277 17,201,046
Cost of sales (8,432,876) (8,289,842)
Gross profit 7,918,401 8,911,204
Administrative expenses (7,036,706) (7,394,154)
Operating profit before exceptional costs and fair value
movement in biological produce 881,695 1,517,050
Fair value (loss)/gain on measurement of biological produce (566,982) 2,171,386
Operating profit before exceptional costs 314,713 3,688,436
Exceptional costs (1,216,341) (1,235,478)
Operating (loss)/profit (901,628) 2,452,958
Finance income 11,742 47,222
Finance costs (510,513) (193,057)
(Loss)/profit before tax (1,400,399) 2,307,123
Tax charge 91,738 (779,773)
(Loss)/profit and total comprehensive
(loss)/income for the year (restated)* (1,308,661) 1,527,350
Total comprehensive (loss)/income attributable to
the equity holders of the company (restated)* (1,308,661) 1,527,350
Basic (loss)/profit - pence per share (0.76) 0.95
Diluted (loss)/profit - pence per share (0.76) 0.94
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2024
2024 2023
£ £
Non-current assets
Intangible assets 18,303 41,803
Property, plant and equipment 26,803,183 23,898,358
26,821,486 23,940,161
Current assets
Biological produce - -
Inventories 26,557,669 22,581,264
Trade and other receivables 4,004,523 3,593,348
Cash and cash equivalents 981,963 1,004,305
31,544,155 27,178,917
Total assets 58,365,641 51,119,078
Equity and liabilities
Equity
Called up share capital 8,576,216 8,566,939
Share premium 31,654,317 31,541,143
Capital redemption reserve 400 400
Revaluation reserve 902,948 936,703
Retained earnings (8,482,286) (6,719,248)
Total equity 32,651,595 34,325,937
Non-current liabilities
Borrowings - -
Trade and other payables - 22,630
Lease liabilities 9,225,616 7,457,140
Deferred tax liabilities 1,092,013 893,397
10,317,629 8,373,167
Current liabilities
Borrowings 9,975,683 2,240,748
Trade and other payables 5,044,284 5,748,571
Lease liabilities 376,450 430,655
Total current liabilities 15,396,417 8,419,974
Total liabilities 25,714,046 16,793,141
Total equity and liabilities 58,365,641 51,119,078
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2024
2024 2023
£ £
Cash flows from operating activities
(Loss)/profit before tax (1,400,399) 2,307,123
Adjustments to reconcile profit before tax to
net cash flows:
Amortisation of intangible assets 23,500 37,516
Depreciation of property, plant and equipment 352,923 306,163
Profit on disposal of property, plant and equipment 76,846 (13,738)
Finance cost included within cost of sales 179 1,139
Finance income (11,742) (47,222)
Finance cost 510,513 193,057
Fair value movement in biological produce 566,982 (2,171,386)
Bonus issue of shares 122,451 -
Equity-settled share-based payments (197,778) 219,044
Increase in trade and other receivables (411,175) (898,275)
Increase in inventories (2,699,596) (3,310,142)
Increase in trade and other payables (726,922) 1,465,663
Tax received - -
Net cash flows used in operating activities (3,794,218) (1,911,058)
Cash flows from investing activities
Purchase of property, plant and equipment (2,473,344) (1,816,517)
Proceeds from sale of property, plant and equipment - 9,671
Interest received 11,742 47,222
Net cash flows used in investing activities (2,461,602) (1,759,624)
Cash flows from financing activities
Proceeds from borrowings 9,527,763 -
Repayment of borrowings (2,228,891) (300,000)
Lease payments (1,004,125) (645,284)
Interest paid (61,269) (180,500)
Net cash flows generated
from financing activities 6,233,478 (1,125,784)
Net decrease in cash (22,342) (4,796,466)
Cash and cash equivalents at beginning of year 1,004,305 5,800,771
Cash at the end of year 981,963 1,004,305
1. BASIS OF PREPARATION/ACCOUNTING POLICIES
The Company's report for the year ended 31 December 2024 was authorised for
issue by the directors on 2(nd) April 2025. 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 2024, 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 2024 have been reported
on by the Company's auditors, received an unqualified audit report and will be
issued to shareholders in June 2025.
2. BALANCE SHEET REVIEW
The net asset value of the Company as at 31 December 2024 was £32,651,601
which includes:
• Fixed assets held at net book value of £26,803,183,
including vineyard development expenditure which is capitalised at cost.
• £26,557,669 of stock, which is valued at cost being
the lower of cost or net realisable value.
3. LOSS PER SHARE
The calculation of the loss per share for the year ended 31 December 2024 is
based on the loss for the period of £1,308,661 and the weighted average
number of shares in issue during the period of 171,447,011 exclusive of the
effect of dilutive share options, and 173,181,416 inclusive of dilutive
options.
4. Reconciliation of operating (loss)/profit to adjusted EBITDA
2024 2023
(restated)
£ £
Operating (loss)/profit (901,628) 2,452,957
Add back:
Depreciation and amortisation 1,764,611 1,529,814
Finance costs (restated) 536,039 295,585
Share based payment expense (197,778) 219,044
Exceptional costs 1,216,341 1,235,478
Adjusted EBITDA (restated) 2,417,585 5,732,878
During the year, management performed a detailed review of the Group's
Adjusted EBITDA metric. During this review process, management noted that
whilst it was adding back the full amount of annual depreciation within the
calculation of Adjusted EBITDA, the same treatment was not being applied to
lease interest costs that are absorbed into the value of inventory and bearer
plants. To ensure the Group's Adjusted EBITDA metric remains as consistent as
possible for users of the accounts, the Group has opted to revise its Adjusted
EBITDA calculation such that the full annual interest charge is excluded from
the metric going forwards. This will ensure consistent treatment of both
depreciation and interest charges in the adjusted EBITDA calculation. As a
result of this change, the prior year Adjusted EBITDA comparative has been
restated to align to the revised basis.
5. 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 (http://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 Chief Executive Officer
James Pennefather Chief Financial Officer 01580 763 033
Rob Smith
Nominated Adviser and Broker
Singer Capital Markets
Shaun Dobson 020 7496 3000
Tom Salvesen
Alex Bond
James Todd
H/Advisors Maitland
Sam Cartwright 020 7379 5151
Jonathan Cook
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 sparkling and still wines which consistently win
prestigious international awards for their quality. Chapel Down has over 1,000
acres of vineyards, c10% of the UK's total, of which 739 acres are currently
fully productive, with the remaining plantings becoming fully productive by
2027.
Chapel Down's status as the most recognised English wine brand is supported by
its partnerships with flagship sporting and cultural events including Royal
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 10,000
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
c50,000 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.
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