Good morning!

Some things  on my plate today:



Distil (LON:DIS)

  • Share price: 1.775p (-7%)
  • No. of shares: 502 million
  • Market cap: £9 million

Final results

(Please note that I do not have a holding in Distil, having sold my holding today.)

I've been at my desk for a couple of hours already this morning, prior to writing this, trying to generate a firm view on Distil's results.

In the end, I've sold out my entire position.

Regular readers will know that I hate selling things. Especially illiquid micro-caps with a wide spread. My default position is to hold on to things for as long as possible.

Indeed, this is my very first sale of 2019. I was proud of having gone nearly six months without making a single disposal.

What's happened?

Distil is a small developer of alcohol spirits brands, and has delivered results today which are in line with the forecasts from Progressive Research. Sales are up 19% and the company has generated profits for the second consecutive year: £160k in operating profit, around the same as last year.

I can summarise the good points in today's statement:

  • Growth in sales volume of Redleg Spiced Rum accelerates to +45%. Has attracted a loyal customer base. "Very positive" reponse to the new Caramelised Pineapple flavour.
  • Again with respect to Redleg: there is "increased availability across all trade channels but especially in the growing number of independent bars, pubs and restaurants serving RedLeg Spiced Rum."
  • Group gross margins (before advertising costs) improve to 60%.
  • The cash balance improves slightly and continues to stand in excess of £1 million.

Unfortunately, there are a few reasons for concern, in my view.

Firstly, the non-Redleg brands performed very poorly. I didn't place much value on them, anyway, but even so: revenue from Blackwoods Gin has…

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