Conviviality Plc, the UK's leading independent wholesaler and distributor of alcohol and impulse serving consumers through its franchised retail outlets and through hospitality and food service, has posted results for the 26 weeks to 29 October 2017 (H1 FY17: 26 weeks to 30 October 2016).
Robust results with an increase in revenue and adjusted EBITDA with profits reflecting the phasing of cost synergies into the second half of the year.
Revenue was up 9.2% to £836.3m (H1 FY17: £765.9m), and gross margin fell by 0.3% to 12.5% (H1 FY17: 12.8%) due to increased sales to large national account customers in H1 FY18.
Adjusted EBITDA grew by 1.7% to £23.3m (H1 FY17: £22.9m), and adjusted profit after tax was down 1.6% to £12.3m (H1 FY17: £12.5m). Profit after tax fell by 10.3% to £5.2m (H1 FY17: £5.8m).
Strong gains in market share during the period saw 1,408 new on-trade customers. Over 2,400 customers, including 84 national accounts, increased their purchases year-on-year
Above market growth was achieved, 6.5% above market in on trade distribution and 1.9% above market in off trade distribution.
For on-trade, Conviviality's sales growth of 6.9% (H1 FY18 v H1 FY17), compared to estimated growth in the on-trade distribution market of 0.4% for the same period. For off-trade, sales rose by 5.7% (H1 FY18 v H1 FY17) compared to estimated market growth of 3.8% .
Significant increases were seen in both national and regional customers buying from both Matthew Clark and Bibendum: 36 national accounts (18 in H1 FY17), and 189 regional accounts (115 in H1 FY17).
A new digital platform was successfully launched for on trade customers: 50.3% of Matthew Clark sales are now through our integrated e-commerce platform, and total number of users up 33% to 5,490.
The group completed the integration of Matthew Clark and Bibendum Wine onto the same Enterprise Resource Planning (ERP) platform - a significant milestone in our ongoing integration plan.
During the period, Capex's investment of £10.5m upgraded the group's IT systems thereby facilitating organisational alignment and synergies and to improve the store estate.
Conviviality Direct saw a 6.9% increase in sales compared to the corresponding prior period, and a 1.2% uplift in outlets supplied, and a 5.7% rise in revenue per outlet.
Long term contracts were secured with the group's largest customers - Stonegate Pub Company (5 year) and JD Wetherspoon. A 10-year agreement was signed with Wadworth to supply wines to 200 managed and 139 independent free trade outlets.
Conviviality Retail achieved a 10% increase in sales compared to the corresponding prior period. Like-for-like retail sales rose by 2.3% excluding tobacco. The division saw 22 new stores opened in the period, and a 53% increase in average sales per store opened in the first half. Franchisee gross margin increased by 0.8% points
Conviviality Trading saw a 9.6% increase in sales compared to the corresponding prior period, and a 27% rise in Events sales was acheived.
Key agency brands are performing well, with Larios, Estrella Galicia, Marie Brizard and Gancia Prosecco delivering strong sales growth. Two further exclusive agencies have been secured: Piccini and Barramundi.
The firm saw a 8.4% increase in group sales during November and December (9 weeks) compared with the same period last year
Conviviality Retail sales (including Central Convenience stores) increased by 12.3%, and Conviviality Direct sales rose by 7.7%, while Conviviality Trading grew by 3.2%.
There was a 0.6% increase in retail like-for-like sales for the 6 weeks ended 31 December 2017.
Conviviality Retail successfully acquired the Central Convenience business from WS Retail Limited (in administration) on 15 December 2017, adding 127 convenience stores located in the South and South West into the group, bringing total store numbers as at 2 January 2018 to 831.
CEO Diana Hunter said, 'Our customers and franchisees have continued to recognise the strength of the Conviviality proposition and the opportunities a single supplier and distribution solution affords them. This has been evidenced by our above market growth in both the on trade and the off trade during the period.
'We have made deliberate choices to successfully grow market share and enhance the quality of future earnings by agreeing long term contracts with our larger customers and securing new national account customers.
'These gains in market share coupled with our continued strong sales demonstrates our competitive advantage, the broad customer base we have developed and the robust nature of Conviviality as the UK's leading drinks wholesaler, distributor and solution provider to our Customers.'