REG - Distil PLC - Final Results <Origin Href="QuoteRef">DISD.L</Origin>
06/09/2014 02:01
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Distil PLC
09 June 2014
Distil plc
("Distil" or the "Group")
Final Results for the Year Ended 31 March 2014
"A year of development and investment to achieve future growth"
Distil (AIM: DIS), owner of premium drinks brands including Blavod Black
Vodka, Blackwoods Gin and Vodka and RedLeg Spiced Rum, today announces its
final results for the year ended 31 March 2014.
Key Points:
Financial
31 March 2014 31 March 2013
(£,000) (£,000)
Sales 2,405 3,785
Operating loss (367) (619) *
Administrative Expenses 714 1,011
Advertising and Promotional costs 235 177
*299k of this is non-recurring
Owned brands
· 36% increase in sales of Blackwoods Gin and 37% increase in RedLeg
Spiced Rum
· Successful launch of Blackwoods Vintage Dry Gin, Blackwoods Limited
Edition 60%ABV Gin and Blackwoods Vodka
· Diva Vodka and Jago re-designed and nearing re-launch in UK
· International network increasing with Spanish distributor appointed
Agency brands
· Cessation of distribution agreement with Babco and Bruichladdich
Distillery brands
Corporate
· Share placing in October 2013
· Name change to Distil plc
Don Goulding, Executive Chairman of Blavod, said:
"We have continued to transform the business by focussing on selling our own
brands through distributors and have successfully developed and launched new
products which have been well received in the market. Inevitably these
financial results reflect the costs of these changes. However the majority of
these costs are non-recurring in nature and having successfully raised
additional working capital (from our very supportive shareholders) earlier in
the year, we are now well placed to concentrate on growing sales further and
launching new products later this year."
Distil plc
Don Goulding Executive Chairman Tel: +44 207 352 2096
SPARK Advisory Partners Limited (NOMAD)
Neil Baldwin Mark Brady Tel +44 113 366 2266 /2268
SI Capital (Broker)
Andy ThackerNick Emerson Tel +44 1483 413500
Cadogan PR
Alex Walters Tel: +44 207 4995002
Chairman's statement
In the year to 31 March 2014 the Group has steadily transformed its business
model from one where we distributed both owned and third party agency spirits
brands within the UK, direct to customers via our own direct sales force, to
one where we now focus solely on the development of our owned brands. Sales
are now made to distributors within each market leaving the Group to focus
exclusively on brand development, distributor selection and support.
With this fundamental shift in business model has come an amount of key
investment and expense. During the year investment in the development of our
owned brands was incurred in the form of direct expense of £90k and tooling
costs and product reconfiguration amounting to £22k. Expense has also been
incurred in the form of redundancy and associated costs in relation to the
former sales force amounting to £58k.
The ownership of our owned brand portfolio was consolidated in May 2013 with
the completion of the acquisition of Blackwoods Gin and Vodka, Diva Vodka and
Jago's cream liqueur. This, combined with the funding generated by the private
placing in October 2013, has enabled the re-launch of Blackwoods Vintage Dry
Gin and Blackwoods Limited Edition 60% ABV in September 2013, followed by
Blackwoods Vodka in March 2014. All three have been well received and are now
stocked in a growing list of UK bars and retail outlets.
The development of both Diva and Jago's is now nearing completion and we
expect to announce the launches of these products later in the year.
Marketing and Distribution
During the year we ran a number of highly successful promotional events
including the RedLeg Spiced Rum pop-up "Rum Shacks" which appeared across
major cities in the UK including Edinburgh, Glasgow, Manchester, Leeds,
Newcastle, London, Bristol and Brighton during November and December.
In January we signed an exclusive distribution agreement with Madrid based
distributor The Water Company for an initial three year term to cover all
Spanish territories, these represent the single largest gin market in Europe
and the single largest rum market in the world.
Our agreement with Waldemar Behn GmbH & Co for production and distribution of
Blavod Black Vodka in Germany continues to progress well and we have continued
to see increased sales in new and existing European markets.
Discontinued Brands
Early in the year we announced that we would cease to be distributors of the
Bruichladdich Distillery Brands as we unwound our activities with third party
agency brands and concentrated on the development of our owned brands and we
also announced in February this year that we would no longer distribute the
Babco brand, Mickey Finn.
Name change
In line with the changing focus and nature of the business which is now
predominantly a distilled spirits business, entirely focused on designing and
marketing a growing portfolio of its own brand, it was agreed to change the
name of the Group to Distil plc after the period end in April.
Placing
In October we raised £571k through a placing of 57.13 million New Ordinary
Shares, these funds are being used for working capital, brand marketing and
the activation and development of our new brands.
The loss for the year of £392k (2013: £738k of which £299k was non-recurring)
is in line with our expectations. The Group has sufficient cash reserves to
meet its needs as it steadily moves to the planned break even position.
D. Goulding
6 June 2014
Strategic report
Result for the year
The operating loss attributable to shareholders for the year amounted to £367k
(2013: loss of £619k). The current year loss relates solely to ongoing
activities. The prior year operating loss comprised £299k of non recurring
expenses related to an aborted acquisition and a trading loss of £320k which
related to ongoing activities.
Within the current year's expenses there has been significant expense incurred
in changing the business model and investing in our owned brands as detailed
in the Chairman's statement.
The directors' primary focus is to return the Group to a sustainable break
even position and ultimately to turn to profit.
Principal activities and business review
Distil plc acts as a holding company for the entities in the Distil group (the
"Group"). As detailed in the Chairman's statement the principal activity of
the Group throughout the period under review was the marketing and selling of
Blavod Black Vodka, Blackwoods Gin and Vodka and RedLeg Spiced Rum
domestically and internationally and, prior to their steady transition out of
the business, a number of third party agency brands of spirits in the UK.
The results for the 2014 financial year reflect the steady work in refocusing
the business on its key owned brands, both the active brands detailed above
and Diva and Jago's which are being rebranded ready for re-launch.
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 from owned brands fell £93k from £228k in 2013 to £136k in
2014. This result is after active
spend on re-launching Blackwoods Gin and Vodka and preparing for the
re-launch of Diva, Jago and the
launch of another new brand under development in the amount of £111k.
The benefits of this investment
will be derived in 2015 and thereafter as the brands build distribution
and consumer sales develop.
· Sales volume versus prior year
Total volume of owned brands sold was flat year on year despite the
lack of a US distributor for Blavod
Black Vodka in 2014. Arrangements with the previous US distributor came
to an end in 2013 as the
Group chose to terminate the relationship and seek a new distributor.
Volume increases following the
successful re-launch of Blackwoods Gin and Vodka and the further
increase in volumes of RedLeg
Spiced Rum compensated for this shortfall.
· Sales turnover versus previous year
For owned brands this increased by 7% year on year. Notable within this
were the 36% increase in
sales of Blackwoods Gin and 37% increase in RedLeg Spiced Rum which
outweighed the temporary
fall in sales of Blavod Black Vodka due to the lack of a US
distributor.
Agency brand sales fell by 46% year on year and, with the transfer out
of agency brands nearly
complete, these should be minimal in the year to 31 March 2015.
· Gross margin versus previous year
Owned brand gross profit as a percentage of sales fell slightly from
48% to 46%. This is due to the
move from direct sales in the UK to operating via a distributor with
the associated benefit moving from
gross margin to a reduction in overheads. Overall the margin movement
was positive given tooling cost
increases as we prepared for brand re-launches. These costs shaved 3%
from the margin thereby
demonstrating the continuing improvement in export margins as we
carefully consolidate and in some
cases establish new relationships with overseas distributors.
We also closely monitor both the level of and the value derived from
our advertising and promotional
costs and other administrative expenses. Advertising and promotional
costs on owned brands
increased by £106k from £97k to £203k. Of this amount £90k related to
investment in brand redesign
and liquid development in preparation for re-launches.
Other administrative expenses reduced by £283k from £1,011k to £728k.
Within this figure the Group
incurred £58k of redundancy and associated costs related to the
redundancies announced in May 2013.
Future developments
The Group has historically carried a large proportion of its overheads as
fixed costs. The effect of reducing overheads during the year to 31 March 2014
will enable the Group to sustain this annual cost reduction in the amount of
approximately £325k over the overhead level of the previous year.
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 monitor fixed overheads against budget on a
monthly basis and cost 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 part of 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.
By order of the Board
Sarah Bertolotti
6 June 2014
Directors' report
Review of business and financial performance
Information on the financial position and development of the Group is set out
in the Chairman's statement and the strategic report.
Results
The Group reports an operating loss attributable to shareholders for the year
of £367k (2013: loss of £619k). The current year loss relates solely to
ongoing activities. The prior year loss comprised £299k of non recurring
expenses related to an aborted acquisition and a trading loss of £320k which
related to ongoing activities.
Subsequent events
In October 2013, the Group served notice on its invoice discounting facility.
This notice period came to an end on 28 April 2014 at which point the facility
ceased.
Financial risk management
Details of the Group's financial risk management objectives and policies and
its exposure to risks associated with the use of financial instruments are
disclosed in note 18 to the financial statements.
Directors
The directors of the company who served during the year and/or up to the date
of this report are as follows:
S. Bertolotti
D. Goulding (Executive Chairman)
M. Quinn (Non-executive)
Qualifying third party indemnity provision
The Group maintains qualifying third party indemnity provision for the benefit
of the directors.
Statement of disclosure to auditor
The directors confirm that:
· so far as each director is aware, there is no relevant audit
information of which the company's auditor is unaware; and
· the directors have taken all steps that they ought to have taken as
directors in order to make themselves aware of any relevant audit information
and to establish that the auditor is aware of that information.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Group's website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
Auditor
Chantrey Vellacott DFK LLP has expressed its willingness to continue in
office. In accordance with section 489(4) of the Companies Act 2006, a
resolution to re-appoint Chantrey Vellacott DFK LLP as auditor will be
proposed at the Annual General Meeting to be held on 3 July 2014.
Going concern
The Group incurred a consolidated loss of £392k during the year under review.
The Group also held cash reserves in the amount of £344k at the year-end
following the private placing in October 2013.
The Group has prepared detailed three year forward forecasts for the business
in its new format. These forecasts have been prepared on a prudent basis
without reliance on major new customers and markets, although these are
anticipated. These forecasts demonstrate the Group's steady move forwards
towards its planned break even position following its change in business
model. The forecasts demonstrate that the current cash reserves are sufficient
to meet the Group's needs for the foreseeable future.
For these reasons, the Group continues to adopt the going concern basis in
preparing the report and accounts.
Statement of directors' responsibilities
The directors are responsible for preparing the directors' report and the
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law the directors have elected to prepare the
consolidated financial statements under International Financial Reporting
Standards as adopted by the European Union (IFRS) and the parent company
financial statements under United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable laws). Under
company law the directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs
and profit or loss of the company and Group for that period. In preparing
these financial statements, the directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgments and accounting estimates that are reasonable and
prudent;
· state whether applicable IFRS have been followed for the consolidated
financial statements and UK Accounting Standards have been followed for the
parent company financial statements, subject to any material departures
disclosed and explained in the financial statements;
· prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's transactions and disclose with
reasonable accuracy at any time the financial position of the Group and enable
them to ensure that the financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets of the Group and
hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
S. Bertolotti
6 June 2014
Consolidated statement of comprehensive income
for the year ended 31 March 2014
2014£'000 2013£'000
Revenue 2,405 3,785
Cost of sales (1,830) (2,908)
Gross profit 575 877
Administrative expenses:
Advertising and promotional costs (235) (177)
Other administrative expenses (714) (1,011)
Depreciation and amortisation 0 (7) (9)
Non recurring expenses - (299)
Other operating income 14 -
Total administrative expenses (942) (1,496)
Operating loss (367) (619)
Finance expense (25) (119)
Loss before tax from continuing operations (392) (738)
Taxation - -
Loss for the year and total comprehensive expense (392) (738)
Loss per share
Basic and diluted (pence per share) (0.12) (0.40)
Consolidated balance sheet
as at 31 March 2014
2014£'000 2013£'000
Assets
Non-current assets
Property, plant and equipment 9 17
Intangible assets 1,493 1,418
Total non-current assets 1,502 1,435
Current assets
Inventories 64 361
Trade and other receivables 361 628
Cash and cash equivalents 344 60
Total current assets 769 1,049
Total assets 2,271 2,484
Liabilities
Current liabilities
Trade and other payables (314) (428)
Finance facility liability - (259)
Total current liabilities (314) (687)
Total liabilities (314) (687)
Net assets 1,957 1,797
Equity
Equity attributable to equity holders of the parent company
Share capital 1,153 1,096
Share premium 1,853 1,358
Retained deficit (1,049) (657)
Total equity 1,957 1,797
Consolidated statement of changes in equity
for the year ended 31 March 2014
Share Share premium£'000 Retained Total equity£'000
capital£'000 earnings£'000
Balance at 1 April 2012 878 - 81 959
Issue of ordinary shares at a premium 218 1,358 - 1,576
Transactions with owners 218 1,358 - 1,576
Loss for the year and total comprehensive expense - - (738) (738)
Balance at 31 March 2013 and 1 April 2013 1,096 1,358 (657) 1,797
Issue of ordinary shares at a premium 57 495 - 552
Transactions with owners 57 495 - 552
Loss for the year and total comprehensive expense - - (392) (392)
Balance at 31 March 2014 1,153 1,853 (1,049) 1,957
Consolidated cash flow statement
for the year ended 31 March 2014
2014£'000 2013£'000
Cash flows from operating activitiesLoss before taxation Adjustments for: (392) (738)
Finance expense 25 119
Depreciation 7 9
Loss on disposal of property, plant and equipment 2 -
(358) (610)
Movements in working capital
Decrease/(increase) in inventories 297 (27)
Decrease in trade and other receivables 267 350
Decrease in trade payables (114) (446)
Cash generated by/(used in) operations 450 (123)
Net finance expense (25) (58)
Net cash generated by/(used in) operating activities 67 (791)
Cash flows from investing activities
Purchase of property, plant and equipment (1) (2)
Expenditure relating to the acquisition of licences and trade marks (75) (15)
Net cash used in investing activities (76) (17)
Cash flows from financing activities
Proceeds from issue of shares net of issue costs 552 1,139
Net cash repaid to finance facility (259) (348)
Net cash generated by financing activities 293 791
Net increase/(decrease) in cash and cash equivalents 284 (17)
Cash and cash equivalents at beginning of year 60 77
Cash and cash equivalents at end of year 4 344 60
1 Basis of preparation and summary of significant accounting policies
The consolidated financial statements are for the year ended 31 March 2014.
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 (£),
which is also the functional currency of the parent company. Unless otherwise
stated, all amounts are given in round £'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 and its principal place of business is 3rd
Floor, Cardinal House, 39/40 Albemarle Street, London W1S 4TE.
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 2014 and the consolidated
statement of comprehensive income, consolidated statement of changes in equity
and consolidated cash flow statement for the year then ended have been
extracted from the Group's 2014 statutory consolidated financial statements
upon which the auditor's opinion is unqualified.
The financial information for the year ended 31 March 2013 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, with an emphasis of matter paragraph on
going concern.
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 3rd Floor, Albemarle Street, London W1S 4TE.
This information is provided by RNS
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