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Fri 21st Apr 2017 - Update: Restaurant Group, Costa, Hotel Chocolat, Chapel Down
Restaurant Group chief financial officer steps down: The Restaurant Group has announced that Barry Nightingale, chief financial officer, will step down from the board and leave the company with immediate effect. He had been with the company for less than year. The board has commenced a search for a new Chief Financial Officer and will update the market in due course. Debbie Hewitt, chairman, said: “On behalf of the board, I would like to thank Barry for the valuable contribution that he has made over the past year, as we began the company’s turnaround process, which continues to progress well. We wish him all the best for the future.” The Company will next provide a trading update on 26 May 2017, the date of the company’s 2017 AGM. Cenkos leisure analyst Simon French stated: “No reason for his departure is given but we note his appointment pre-dated that of chief executive Andy McCue who has been building his own top team. Therefore we do not view his departure as concerning but we expect the share price will react adversely given he has only been in post since June 2016 and there has been significant instability at the top of the group since Andrew Page’s departure in August 2014. There is no update on current trading which we interpret to mean remains in line with market expectations although the group will update alongside its AGM on 26 May. The chairman does however state that the turnaround process continues to progress well. The stock trades on a 2017E adj EV/Ebitdar of 7.8x and a P/E of 15.6x and yields 4.8%. We would take advantage of any weakens as an attractive buying opportunity as we see signs of some of the industry pressures abating.”

Labour MP apologises to Costa Coffee after claiming it was dodging tax: Labour MP Dawn Butler has apologised to Costa Coffee after accusing it of not paying full tax in the UK when she appeared yesterday on Radio Four’s Eddie Mair programme. Live on air, she then added that she could not say the company was doing so “definitively”. Dawn Butler made the accusation in an interview backing Jeremy Corbyn‘s pledge to take on the establishment’s “rigged system set up by wealth extractors” as he launched his general election campaign. Butler told the BBC: “It is clear that those people, very high earners and tax corporations and businesses such as Costa Coffee etc who don’t pay their full taxes in this country will have to pay their taxes in this country.” But she immediately rowed back when questioned if that was right by BBC presenter Eddie Mair. She said: “I’ve said Costa Coffee from memory but let me not say that definitively.” In fact, the 2015/16 accounts for Costa’s parent firm Whitbread report it paid £116.1m of tax on £546.3m profits – an effective rate of 21.3%. Butler later tweeted: “I officially apologise to @CostaCoffee unlike one of their competitors they do pay all their taxes.” A Costa spokeswoman declined to comment but pointed to the company’s publicly-available accounts. Butler’s interview was dubbed a “car crash” by Tory critics on Twitter.

Greg Hodder joins Hotel Chocolat board: Hotel Chocolat Group, the premium British chocolatier and omni-channel retailer, has announced the appointment of Greg Hodder as non-executive director with effect from 1 May 2017. The company stated: “Greg brings with him a wealth of experience from the retail sector, having previously been chief executive of Charles Tyrwhitt. Prior to joining Charles Tyrwhitt, he was chief executive of Direct Wines. Greg is currently a Non-executive Director of Majestic Wine.” Greg Hodder said: “I have always been a great fan of Hotel Chocolat and I can see that the business has some fantastic opportunities for continued profitable growth. I am delighted to be joining the board.” Angus Thirlwell, co-founder and chief executive, added: “Having someone with Greg’s experience and track record is a great fit for us at this stage of our growth.”

Chapel Down report turnover and Ebitda growth: Chapel Down has reported year on year sales up 25% to £10.233m (2015: £8.179m) in the year to 31 December 2016. Chapel Down wine sales were up 22% to £6.791m (2015: £5.564m). Beer and Cider sales in the associate company Curious Drinks were up 32% to £3.442m (2015: £2.614m). Wine gross profit was up 30% at £2.888m (2015: £2.229m). Beer and Cider gross profit in the associate company Curious Drinks was up 39% at £1.099m (2015: £0.789m). It stated: “Continuing Ebitda (was) up 72% to £750k (2015: £435k) as we continue to reinvest in our brands, infrastructure and supply. The associate company Curious Drinks Ltd raised funds of £1.736m (equating to a 9.79% economic stake) valuing the business at £17.74m. Your company also continued to build its most important assets – its brands – through innovative and well executed marketing, high profile sponsorships and publicity and a differentiated and creative approach to all our activities. In addition to being cited as one of the London Stock Exchange’s 1000 companies to inspire Britain, we also joined the Walpole Group of luxury brands and retained our official CoolBrand status. Prior to 4 April 2016 Curious Drinks was a 100% owned subsidiary of Chapel Down Group. In April 2016, Curious Drinks raised funds of £1.736m for a 9.79% economic share and a 50.21% share of the voting rights in the business with Chapel Down Group retaining the remaining 90.21% economic interest and the remaining 49.79% share of the voting rights. The ‘post money’ valuation of the Curious Drinks business was £17.736m. The sale of the 50.21% share of voting rights means there was a “deemed disposal” resulting in a gain on disposal for Chapel Down Group of £467,000 as well as Curious Drinks being accounted for as an associate from 4th April 2016 onwards.” Chief executive Frazer Thompson said: “Chapel Down has enjoyed another excellent year of growth. In a highly competitive trading environment your company has continued to invest in the value of its brands, its vineyards and winery and its people as we build a healthy, sustainable and innovative drinks company with an exciting future both at home in the UK and in sophisticated drinks markets abroad. With sales growth of 25% across the combined businesses – sales up 22% on wine and up 32% on beer and cider in our associate company – we are investing the proceeds to build the business whilst delivering growth of 72% in continued adjusted Ebitda at £750,000 (2015: £435,000). English wines, which are now being internationally recognised for their consistent excellence, have been the bedrock of our business. Demand is continuing to rise and we are developing a very strong brand to ensure we continue to maximise the potential that is being created through the consumer and trade excitement around cool climate wines. With distribution in Marks & Spencer, Waitrose, Sainsbury’s, Tesco and Majestic, as well as hundreds of bars and restaurants serviced by our merchant partners, Chapel Down is able to capitalize on the increased excitement. We have recently seen the launch of Chapel Down in the USA to both critical and public acclaim with initial sales at twice our anticipated level. The potential for export in sophisticated wine markets is exciting. Our investment in Great British events and institutions is helping to bring our brand to a broader International consumer. The London Symphony Orchestra, The Donmar, Royal Opera House, The Boat Races and Royal Ascot are more than just great events to be at. They are perfect compliments for our brand: Exciting, English and aspirational. With the further development of our widely acclaimed Kits Coty super-premium range, we are also ensuring that the quality standards are kept high. We have also built a long term supply of world class fruit and invested further in our modern and efficient winery to ensure that the quality and value we can deliver to the market will be second to none. We directly planted a further 40 acres of new vineyards in 2016 and we now own and/or manage some 233 acres of vined land and continue to have long term contracts with our high quality group of contracted growers. We’ve added a further 55 acres of contracted vineyards to this list which enables us to source from a wider geographic area and offset some localized risks of adverse weather events. “Craft” beers are growing very fast, driven by more flavoursome beers that are the antidote to bland international brands that have become overly dominant. There is a vibrancy and excitement to the UK beer market, fuelled by spectacular success in the USA which is spreading internationally. With sales growth of 32% this year, in our associate company Curious Drinks Ltd, we are extremely well positioned to benefit from the boom. We have a unique and distinctive proposition rather than just a cool design, amusing name or extreme flavour. In order to make the most of the opportunity, the Company decided to raise further funds to allow the development of an exciting new brewery in the centre of Ashford on a highly visible freehold site adjacent to the international railway station. Once again, we have exceeded our own high expectations via crowd-funding, raising £1.736m and we will be building during 2017 and 2018 to further develop our UK and international business and the brand. With hundreds of pubs and bars stocking the beer and national availability through Majestic and Waitrose, further growth in sales and brand awarenesss will help to maximize the value of the business. Whilst we have continued to win awards and plaudits for our wines and beers, we have also developed our tourism and hospitality experience at the Tenterden site and whilst we will be extending that expertise to our new brewery, we will be developing the facilities further at Tenterden too. Our new Wine Sanctuary will be an industry leading tourism facility for the 50,000 visitors who come to Tenterden to learn more about our wines.”

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