TIDMDIS
RNS Number : 4967A
Distil PLC
08 June 2016
Distil plc
("Distil" or the "Group")
Final Results for the Year Ended 31 March 2016
"Strong growth in brand volumes and revenues across key
markets"
Distil (AIM: DIS), owner of premium drinks brands including
Blackwoods Gin and Vodka, RedLeg Spiced Rum, Blavod Black Vodka,
Diva Vodka and Jago's Vanilla Cream Liqueur, announces its final
results for the year ended 31 March 2016.
Operational review
-- RedLeg Spiced Rum listed in 2 major UK supermarket chains
-- Commenced shipments of Blavod Black Vodka to the USA, where
we had been absent for several years
-- International and domestic sales volumes growing strongly
Financial review
-- Turnover, supported by increased marketing investment, increases to GBP1,169k from GBP666k
-- Gross profit increased 68% from GBP406k to GBP681k
-- Margins reduced from 61% to 58% for the same period, year-on-year
-- Other administrative expenses reduced by 17%
-- Operating loss reduced by 66% from GBP286k to GBP97k
-- Cash reserves of GBP982k at 31 March 2016
Don Goulding, Executive Chairman of Distil, said:
"We are pleased to report strong growth year-on-year on the back
of increased investment in our brands. The overall business has
been transformed and simplified over the past three years and we
are benefiting from focus on each of our brands. The recent TTB
approval of RedLeg Spiced Rum will further enhance our presence in
the important USA market and, with planned further marketing
investment across all our brands, we look forward to building on
the significant progress made to date."
Distil PLC
------------------------ ----------------------
Don Goulding Executive Tel: +44 207 352 2096
Chairman
------------------------ ----------------------
SPARK Advisory Partners
Limited (NOMAD)
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Neil Baldwin Tel +44 203 368 3550
Mark Brady
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SI Capital (Broker)
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Andy Thacker Tel +44 1483 413500
Nick Emerson
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Executive Chairman's statement
Results
Distil brands enjoyed strong growth with year-on-year revenues
climbing 75% supported by an increase in marketing investment ahead
of growth at 89%.
Overall losses for the period were reduced from GBP289k to
GBP98k representing a 66% reduction over prior year.
Gross profit increased for each of our key brands with the
fastest growth coming through RedLeg Spiced Rum which is performing
consistently well in all markets domestically and internationally,
in both the On-trade (bar, pubs and restaurants) and the retail
trade.
The reopening of the US market for Blavod Black Vodka more than
offset a decline in Eastern Europe duty free sales, although Q4
showed encouraging signs of year-on-year growth.
Placing
In March we announced that we had raised GBP626,260 (gross)
following a placing of 62.626 million new shares at 1p, a premium
to the prevailing share price. Cash raised from the placing has
been used to strengthen the balance sheet and provide funds for
further investment in brand marketing.
Domestic sales
Sales revenue in the UK grew by 121% following new listings with
major customers during the year and continued growth through
existing stockists of our brands. RedLeg Spiced Rum enjoyed a 350%
increase in volumes as our brand reached new consumers. The premium
gin market is showing signs of maturing but continues to grow and
our Blackwoods Limited Edition is outperforming the market with a
62% increase in volume and revenue.
International
In Q1 we commenced shipments of Blavod Black Vodka to the USA
where we had been absent for several years. Initial results have
been very positive. Our distributor has successfully opened new
stockists and secured strong promotional activity around the peak
selling period.
Sales of Blavod Black Vodka in Eastern Europe showed early signs
of recovery in Q4 although we are lapping weak numbers and not yet
achieving the previous sales volumes, however it is encouraging to
see some growth of this brand following a number of years of
contraction.
Blackwoods Gin sales continued to grow in continental Europe
despite a flood of new gin brands in all markets. In the USA we
further increased our presence following initial shipments of our
Small Batch Gin in March 2015 and in April 2015 we received TTB
approval for our Limited Edition 60% Gin.
RedLeg Spiced Rum's rate of growth is accelerating in
Australasia as the brand's profile improves following an increase
in our marketing efforts in the territory.
In the USA we faced continued delays in approval for RedLeg
Spiced Rum from the TTB and secured the services of specialists to
assist us in opening this important market for the future. We were
pleased to announce in May 2016 that RedLeg Spiced Rum had received
TTB approval, further enhancing our presence and future sales
opportunities in the USA.
Outlook
We remain entirely focused on the development of our brands in
key markets. The successful placing in March will enable us to
invest in further resource to help open up new international
territories. It will also enable us to further increase our
marketing support directly to consumers and with our in-market
distributors.
We look forward to further growing revenues and expanding the
reach of our brands over the coming year.
D Goulding
7 June 2016
Strategic report
Results for the year
The operating loss attributable to shareholders for the year
amounted to GBP97k (2015: loss of GBP286k). The current year and
prior year losses relate solely to ongoing activities.
Sales volumes and revenues from our brands have risen
significantly during the year as we continue to focus on brand
building through increased distribution, marketing and promotion.
In particular we have made significant progress in the UK market
where we have been successful in securing listings for RedLeg
Spiced Rum in major UK retail multiples. We also continued to
increase our presence in the US market with initial shipments of
Blackwoods Small Batch Gin and Blavod Black Vodka during the year
and in Australasia where we experienced significant volume growth
for RedLeg Spiced Rum.
The Group's objective of minimizing overhead costs yielded a
further year-on-year reduction in other administrative
expenses.
The directors' primary focus remains that of returning the Group
to a sustainable break even position and ultimately to turn a
profit.
Principal activities and business review
Distil Plc acts as a holding company for the entities in the
Distil Plc group (the "Group"). The principal activity of the Group
throughout the period under review was the marketing and selling of
Blavod Black Vodka, Blackwoods Gin and Vodka, Diva Vodka, Jago's
Vanilla Cream Liqueur and RedLeg Spiced Rum domestically and
internationally.
The results for the 2016 financial year reflect the continued
focus on investing in the Group's key brands to drive top line
growth in both domestic and international markets whilst ensuring
overhead costs remain appropriate for the size of the Group.
Key performance indicators
The Group monitors progress with particular reference to the
following key performance indicators:
-- Contribution - defined as gross margin less advertising and promotional costs
Contribution increased GBP143k from GBP258k in 2015 to GBP401k
in 2016. This increase was achieved through a significant increase
in overall volumes and revenues which more than offset a reduction
in gross margin and an 89% increase in advertising and marketing
costs during the year.
-- Sales volume versus prior year
Total volumes increased 35% year on year largely driven by a
significant increase in volume sales of RedLeg Spiced Rum which
secured a listing in a second major UK multiple retailer during the
period. Volume sales of Blavod Black Vodka showed another overall
year-on-year decline in Eastern Europe although encouragingly,
sales in that region showed growth in the final quarter of the
year. In addition, Blackwoods Gin continued to grow in continental
Europe. Total volume sales of Blackwoods Gin increased 3% led by a
62% increase in UK volumes of Blackwoods Limited Edition.
Blackwoods Vodka decreased 15% compared to the prior year which
benefited from initial retail stocking orders. During the year we
increased our presence in both the US market with initial shipments
of Small Batch Gin and Blavod Black Vodka and in Australasia where
we experienced accelerating volume growth for RedLeg Spiced
Rum.
-- Sales turnover versus previous year
Total sales increased 75% year-on-year. Notable within this was
a 350% increase in sales of RedLeg Spiced Rum, driven by a
significant increase in UK sales volumes. Sales of Blackwoods Gin
and Blavod Black Vodka also increased 6% and 100% respectively
during the period, whilst sales of Blackwoods Vodka decreased by
18%.
-- Gross margin versus previous year
Gross margin as a percentage of sales decreased from 61% to 58%.
The prior year margin benefitted from a one off credit to cost of
sales and overall underlying margins have held up well against the
backdrop of pricing pressures in the market.
We also closely monitor both the level of and value derived from
our advertising and promotional costs and other administrative
costs. Advertising and promotional costs increased in absolute
terms by GBP132k from GBP148k to GBP280k as the Group continued to
invest in the marketing of its brand portfolio to drive top line
sales growth. As a percentage of sales, advertising and promotional
spend amounted to 24% (2015: 22%) during the year.
Other administrative costs decreased by GBP93k from GBP563k to
GBP470k reflecting the continued focus on ensuring overhead levels
remain appropriate for the size of the Group.
Future developments
Following an encouraging start to the financial year the Group
will seek to continue to expand sales of its existing brands both
in the UK and internationally whilst ensuring its cost base remains
appropriate for the Group's size of business.
Principal risks and uncertainties
The management of the business and the nature of the Group's
strategy are subject to a number of risks. The directors have set
out below the principal risks facing the business.
The directors are of the opinion that a thorough risk management
process has been adopted which involves the formal review of all
the risks identified below. Where possible, processes are in place
to monitor and mitigate such risks.
Economic downturn
The success of the business is reliant on consumer spending. An
economic downturn, resulting in reduction of consumer spending
power, will have a direct impact on the income achieved by the
Group. In response to this risk, senior management aim to keep
abreast of economic conditions. In cases of severe economic
downturn, marketing and pricing strategies will be modified to
reflect the new market conditions.
High proportion of fixed overheads and variable revenues
A large proportion of the Group's overheads are fixed. There is
the risk that any significant changes in revenue may lead to the
inability to cover such costs. Senior management closely monitors
fixed overheads against budget on a monthly basis and costs saving
exercises are implemented wherever possible when there is an
anticipated decline in revenues.
Competition
The market in which the Group operates is highly competitive. As
a result there is constant downward pressure on margins and the
additional risk of being unable to meet customer expectations.
Policies of constant price monitoring and ongoing market research
are in place to mitigate such risks.
Failure to ensure brands evolve in relation to changes in
consumer taste
The Group's products are subject to shifts in fashions and
trends and the Group is therefore exposed to the risk that it will
be unable to evolve its brands to meet such changes in taste. The
Group carries out regular consumer research on an ongoing basis in
an attempt to carefully monitor developments in consumer taste.
Portfolio management
A key driver of the Group's success lies in the mix and
performance of the brands which form the Group's portfolio. The
Group constantly and carefully monitors the performance of each
brand within the portfolio to ensure that's its individual
performance is optimised together with the overall balance of
performance of all brands marketed and sold by the Group.
Approved by the Board and signed on its behalf
S Claydon
Director
7 June 2016
Consolidated statement of comprehensive income
for the year ended 31 March 2016
2016 2015
GBP'000 GBP'000
--------------------------------- -------- --------
Revenue 1,169 666
Cost of sales (488) (260)
--------------------------------- -------- --------
Gross profit 681 406
Administrative expenses:
Advertising and promotional
costs (280) (148)
Other administrative expenses (470) (563)
Share-based payment expense (29) -
Depreciation (3) (4)
Other operating income 4 23
--------------------------------- -------- --------
Total administrative expenses (778) (692)
--------------------------------- -------- --------
Operating loss (97) (286)
Finance expense (1) (3)
--------------------------------- -------- --------
Loss before tax from continuing
operations (98) (289)
Taxation - -
-------------------------------- -------- --------
Loss for the year and total
comprehensive expense (98) (289)
--------------------------------- -------- --------
Loss per share
Basic and diluted (pence
per share) (0.02) (0.08)
--------------------------------- -------- --------
Consolidated statement of financial position
as at 31 March 2016
2016 2015
GBP'000 GBP'000
------------------------------ -------- --------
Assets
Non-current assets
Property, plant and equipment 3 6
Intangible assets 1,525 1,510
------------------------------- -------- --------
Total non-current assets 1,528 1,516
------------------------------- -------- --------
Current assets
Inventories 204 230
Trade and other receivables 274 211
Cash and cash equivalents 982 511
------------------------------- -------- --------
Total current assets 1,460 952
------------------------------- -------- --------
Total assets 2,988 2,468
------------------------------- -------- --------
Liabilities
Current liabilities
Trade and other payables (225) (238)
Total current liabilities (225) (238)
------------------------------- -------- --------
Total liabilities (225) (238)
------------------------------- -------- --------
Net assets 2,763 2,230
------------------------------- -------- --------
Equity
Equity attributable to
equity holders of the
parent company
Share capital 1,290 1,227
Share premium 2,880 2,341
Share-based payment reserve 29 -
Retained earnings (1,436) (1,338)
------------------------------- -------- --------
Total equity 2,763 2,230
------------------------------- -------- --------
Consolidated statement of changes in equity
for the year ended 31 March 2016
Share-based
Share Share payment Retained Total
capital premium reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------- ---------------- ----------- --------- ---------------
Balance at 1 April 2014 1,153 1,853 - (1,049) 1,957
------------------------- -------- ---------------- ----------- --------- ---------------
Issue of ordinary shares 74 488 - - 562
Transactions with owners 74 488 - - 562
Loss for the year and
total comprehensive
expense - - - (289) (289)
------------------------- -------- ---------------- ----------- --------- ---------------
Balance at 31 March
2015 and 1 April 2015 1,227 2,341 - (1,338) 2,230
------------------------- -------- ---------------- ----------- --------- ---------------
Issue of ordinary shares 63 539 - - 602
------------------------- -------- ---------------- ----------- --------- ---------------
Transactions with owners 63 539 - - 602
Loss for the year and
total comprehensive
expense - - - (98) (98)
Share based payment
expense - - 29 - 29
------------------------- -------- ---------------- ----------- --------- ---------------
Balance at 31 March
2016 1,290 2,880 29 (1,436) 2,763
------------------------- -------- ---------------- ----------- --------- ---------------
Consolidated statement of cash flows
for the year ended 31 March 2016
2016 2015
GBP'000 GBP'000
------------------------------------ -------- --------
Cash flows from operating
activities
Loss before taxation
Adjustments for: (98) (289)
Finance expense 1 3
Depreciation 3 4
Share-based payment expense 29 -
------------------------------------ -------- --------
(65) (282)
Movements in working capital
Decrease/(increase) in inventories 26 (166)
(Increase)/decrease in trade
and other receivables (63) 150
Decrease in trade payables (13) (76)
------------------------------------ -------- --------
Cash used in operations (50) (92)
Finance expense (1) (3)
------------------------------------ -------- --------
Net cash used in operating
activities (116) (377)
------------------------------------ -------- --------
Cash flows from investing
activities
Purchase of property, plant
and equipment - (1)
Expenditure relating licenses
and trademarks (15) (17)
------------------------------------ -------- --------
Net cash used in investing
activities (15) (18)
------------------------------------ -------- --------
Cash flows from financing
activities
Proceeds from issue of shares
net of issue costs 602 562
Net cash generated by financing
activities 602 562
------------------------------------ -------- --------
Net increase in cash and
cash equivalents 471 167
Cash and cash equivalents
at beginning of year 511 344
------------------------------------ -------- --------
Cash and cash equivalents
at end of year 982 511
------------------------------------ -------- --------
1 Basis of preparation and summary of significant accounting
policies
The consolidated financial statements are for the year ended 31
March 2016. They have been prepared in accordance with the
requirements of International Financial Reporting Standards (IFRS)
as adopted by the European Union (EU) and with those parts of the
Companies Act 2006 applicable to companies reporting under
IFRS.
The consolidated financial statements have been prepared under
the historical cost convention.
These consolidated financial statements are presented in Pounds
Sterling (GBP), which is also the functional currency of the parent
company. Unless otherwise stated, all amounts are given in round
GBP'000s.
Distil Plc is the Group's ultimate parent company. The Company
is a public limited company incorporated and domiciled in the
United Kingdom. The address of Distil Plc's registered office is
201 Temple Chambers, 3-7 Temple Avenue, EC4Y 0DT and its principal
place of business is First floor, 10-11 Moor Street, London W1D
5NF.
These results are audited; however, the financial information
does not constitute statutory accounts as defined under section 434
of the Companies Act 2006. The consolidated balance sheet at 31
March 2016 and the consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated
statement of cash flows for the year then ended have been extracted
from the Group's 2016 statutory consolidated financial statements
upon which the auditor's opinion is unqualified.
The financial information for the year ended 31 March 2015 has
been derived from the Group's statutory consolidated financial
statements for that year, as filed with the Registrar of Companies.
Those consolidated financial statements contained an unqualified
audit report.
Copies of the Annual Report will be sent to shareholders shortly
and will available on the Company's website www.distil.uk.com and
from the Company's registered office.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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