TIDMDIS
RNS Number : 3119H
Distil PLC
07 June 2017
Distil plc
("Distil" or the "Group")
Final Results for the Year Ended 31 March 2017
"Strong growth in brand volumes and revenues delivers maiden
profit"
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 2017.
Operational review
-- Sales volumes and revenues growing strongly across all trade channels
-- Major distribution gains across both the On-Trade (pubs and
bars) and Off-Trade (retail) including independents, wholesale and
nationwide chains.
-- Launch of our proprietary packaging for RedLeg spiced rum.
-- Increased investment in social media reach.
Financial review
-- Turnover, supported by increased marketing investment,
increases 40% to GBP1,642k from GBP1,169k
-- Gross profit increased 40% from GBP681k to GBP950k
-- Margins maintained at 58% for the same period, year-on-year
-- Other administrative expenses increased 11%
-- Operating profit of GBP10k compared to prior year loss of GBP97k
-- Cash reserves of GBP910k at 31 March 2017
Don Goulding, Executive Chairman of Distil, said:
"We are pleased to report a profit on our owned brands for the
first time. This represents a major milestone in the long-term
development of our business and a platform on which to grow and
expand. Our performance reflects the energy and focused efforts of
our small but dedicated team. This together with further increases
in marketing investment and promotional activity, helped drive
broader reach to a greater number of consumers in a fast-moving
market
We anticipate sustained growth of premium spirits and will
therefore build on our proven marketing strategies to advance our
brands. In addition, we are also exploring new products to build on
the success of our existing brands"
Distil PLC
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Don Goulding, Executive Tel: +44 207 352 2096
Chairman
Shaun Claydon, Finance
Director
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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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Chairman's Statement
Results
I am pleased to report a year of significant progress and strong
growth for Distil.
This growth is driven by our key brands which continued to
outperform the market and their respective spirit categories.
As previously reported, we delivered growth in each quarter with
full year sales revenue ahead 40%, gross profits increased by 40%,
contribution margins were maintained at 34% and adjusted EBITDA
(EBITDA adjusted for share-based expense) improved from GBP(65)k to
GBP46k as we achieved a maiden profit of GBP10k (2016 :
GBP(97)k).
We achieved a small profit over the year on our owned brands,
for the first time - a major milestone in the long-term development
of our business and a platform on which to grow and expand.
Our performance reflects the energy and focused efforts of our
small but dedicated team. This, together with further increases in
marketing investment and promotional activity, helped drive broader
reach to a greater number of consumers in a fast-moving market.
UK
The overall spirits market grew ahead of beer and wine in both
the on-trade and off-trade, with premium branded spirits providing
the majority of that growth.
Our domestic sales revenue grew by 70% with further advances
being made across all trade channels and regions on the back of
major gains in the number of national brand stockists.
RedLeg Spiced Rum advanced by GBP324k or 63% in revenue as we
broadened brand availability and marketing support leading to
greater brand awareness, product trial and repeat purchases. I am
particularly pleased with the positive consumer response to our new
packaging. We continued to win awards for both our rum and our
packaging.
Blackwoods Gin gained GBP189k or 41% on the back of increased
marketing investment and strong consumer interest in premium gin
and gin cocktails. Despite a growing number of gin brands entering
the market, Blackwoods performed well.
International
Prior to the UK voting to leave the EU in June last year we
moved to GBP invoicing for all exports. This helped offset
subsequent currency movement following the referendum and our sales
grew across Europe.
Blavod volume sales whilst showing an overall year-on-year
decline in Eastern Europe returned to growth in the final quarter
as Duty Free sales improved and we enjoyed repeat purchases in the
USA.
Our ambition for RedLeg in the US has increased following its
success in other key markets. We are therefore reviewing our
distribution arrangements to ensure we have the appropriate reach
and in-market support prior to launching the brand in that
territory. More news will follow once negotiations have
concluded.
Outlook
Consumer trends are moving at a more rapid pace providing great
opportunities for those who stay close to the consumer and are then
able to provide an agile response.
We anticipate sustained growth of premium spirits and will
therefore build on our proven marketing strategies to advance our
brands. In addition, we are also exploring new products to build on
the success of our existing brands.
D Goulding
6 June 2017
Strategic report
Results for the year
The operating profit attributable to shareholders for the year
amounted to GBP10k (2016: loss of GBP97k). The current year profit
and prior year losses relate solely to continuing activities.
Sales volumes and revenues from our brands have shown strong
growth during the year as we continue to focus on brand building
through increased distribution, marketing and promotion. This
growth has been primarily driven by strong performances from our
RedLeg Spiced Rum and Blackwoods Vintage Gin brands. Further
success in securing listings for these brands in major UK retail
multiples and pub chains during the year has resulted in our
achieving significant progress in the UK market.
The Group continues to minimize overheads where possible, whilst
ensuring sufficient investment to support the growth in sales of
its brands. During the year the Group increased headcount which
partly contributed to an 11% increase in other administrative costs
over the prior year.
The directors' primary focus has been that of returning the
Group to a sustainable break even position and ultimately to turn a
profit. Having achieved this goal in the current year the directors
will seek to build on this success by further expanding sales of
its key brands in domestic and international markets.
Principal activities and business review
Distil Plc (the "Company") 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 2017 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 GBP165k from GBP401k in 2016 to GBP566k
in 2017. This increase was achieved through a significant increase
in overall volumes and revenues which more than offset a 37%
increase in advertising and marketing costs during the year.
-- Sales volume versus prior year
Total volumes increased 31% year-on-year largely driven by a
significant increase in volume sales of RedLeg Spiced Rum and
Blackwoods Gin which showed year-on-year growth of 62% and 46%
respectively. Blackwoods Vodka increased by 66% compared to the
prior year whilst volume sales of Blavod Black Vodka showed an
overall year-on-year decline in Eastern Europe although
encouragingly, volume sales in that region returned to growth in
the final quarter of the year.
-- Sales turnover versus previous year
Total sales increased 40% year-on-year. Notable within this was
a 63% increase in sales of RedLeg Spiced Rum, driven by a
significant increase in UK sales volumes. Sales of Blackwoods Gin
and Blackwoods Vodka increased 41% and 82% respectively during the
period, whilst sales of Blavod Black Vodka decreased by 55%.
-- Gross margin versus previous year
Gross margin as a percentage of sales was in line with prior
year at 58%.
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 GBP104k from GBP280k to GBP384k 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 23% (2016: 24%) during the year.
Other administrative costs increased by GBP50k from GBP470k to
GBP520k partly due to an increase in headcount during the year.
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
6 June 2017
Consolidated statement of comprehensive income
for the year ended 31 March 2017
2017 2016
GBP'000 GBP'000
--------------------------------- -------- --------
Revenue 1,642 1,169
Cost of sales (692) (488)
--------------------------------- -------- --------
Gross profit 950 681
Administrative expenses:
Advertising and promotional
costs (384) (280)
Other administrative expenses (520) (470)
Share-based payment expense (32) (29)
Depreciation (4) (3)
Other operating income - 4
--------------------------------- -------- --------
Total administrative expenses (940) (778)
--------------------------------- -------- --------
Operating profit / (loss) 10 (97)
Finance expense - (1)
--------------------------------- -------- --------
Profit / (loss) before taxation 10 (98)
Taxation - -
-------------------------------- -------- --------
Profit / (loss) for the
year and total comprehensive
income / (expense) 10 (98)
--------------------------------- -------- --------
Earnings / (loss) per share
Basic and diluted (pence
per share) 0.00 (0.02)
--------------------------------- -------- --------
Consolidated statement of financial position
as at 31 March 2017
2017 2016
GBP'000 GBP'000
---------------------------- -------- --------
Assets
Non-current assets
Property, plant and
equipment 64 3
Intangible assets 1,535 1,525
----------------------------- -------- --------
Total non-current assets 1,599 1,528
----------------------------- -------- --------
Current assets
Inventories 199 204
Trade and other receivables 329 274
Cash and cash equivalents 910 982
----------------------------- -------- --------
Total current assets 1,438 1,460
----------------------------- -------- --------
Total assets 3,037 2,988
----------------------------- -------- --------
Liabilities
Current liabilities
Trade and other payables (227) (225)
Total current liabilities (227) (225)
----------------------------- -------- --------
Total liabilities (227) (225)
----------------------------- -------- --------
Net assets 2,810 2,763
----------------------------- -------- --------
Equity
Equity attributable
to equity holders of
the parent company
Share capital 1,291 1,290
Share premium 2,884 2,880
Share-based payment
reserve 61 29
Retained earnings (1,426) (1,436)
----------------------------- -------- --------
Total equity 2,810 2,763
----------------------------- -------- --------
Consolidated statement of changes in equity
for the year ended 31 March 2017
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 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 and 1
April 2016 1,290 2,880 29 (1,436) 2,763
-------------------------------------------- -------- ---------------- ----------- --------- ---------------
Share options exercised 1 4 - - 5
-------------------------------------------- -------- ---------------- ----------- --------- ---------------
Transactions with owners 1 4 - - 5
-------------------------------------------- -------- ---------------- ----------- --------- ---------------
Profit for the year and total comprehensive
income - - - 10 10
Share based payment expense - - 32 - 32
-------------------------------------------- -------- ---------------- ----------- --------- ---------------
Balance at 31 March 2017 1,291 2,884 61 (1,426) 2,810
-------------------------------------------- -------- ---------------- ----------- --------- ---------------
Consolidated statement of cash flows
for the year ended 31 March 2017
2017 2016
GBP'000 GBP'000
--------------------------------- -------- --------
Cash flows from operating
activities
Profit / (loss) before
taxation
Adjustments for: 10 (98)
Finance expense - 1
Depreciation 4 3
Share-based payment expense 32 29
--------------------------------- -------- --------
46 (65)
Movements in working capital
Decrease in inventories 5 26
Increase in trade and other
receivables (55) (63)
Increase/(decrease) in trade
payables 2 (13)
--------------------------------- -------- --------
Cash used in operations (48) (50)
Finance expense - (1)
--------------------------------- -------- --------
Net cash used in operating
activities (2) (116)
--------------------------------- -------- --------
Cash flows from investing
activities
Purchase of property, plant
and equipment (65) -
Expenditure relating to
licenses and trademarks (10) (15)
--------------------------------- -------- --------
Net cash used in investing
activities (75) (15)
--------------------------------- -------- --------
Cash flows from financing
activities
Proceeds from share options
exercised / issue of shares
net of issue costs 5 602
Net cash generated by financing
activities 5 602
--------------------------------- -------- --------
Net (decrease) / increase
in cash and cash equivalents (72) 471
Cash and cash equivalents
at beginning of year 982 511
--------------------------------- -------- --------
Cash and cash equivalents
at end of year 910 982
--------------------------------- -------- --------
.
1 Basis of preparation and summary of significant accounting
policies
The consolidated financial statements are for the year ended 31
March 2017. 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 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 2017 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 2017 statutory consolidated financial statements
upon which the auditor's opinion is unqualified.
The financial information for the year ended 31 March 2016 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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