Distil Regulatory News (DIS)

22 Oct 2007 07:01

Blavod Extreme Spirits PLC22 October 2007 Blavod Extreme Spirits PLC22 October 2007 Blavod Extreme Spirits PLC Preliminary Results For the twelve months ended 31 March 2007 Trading Highlights Financial • Turnover increased 29% to £6.9m (2006: £5.4m) • Full year case shipments increased by 22.0% • Recorded a gross margin of £1.8m (2006: £1.7m) • Year-end gross margin of 26.0% (2006: 31.2%) • Operational results, excluding the associate, but with impairment of goodwill, show a loss of £6.1m (2006: £2.5m) Brands • Difficult market trend in the USA • Blavod Black Vodka continues to grow in major markets • Significant growth for UK agency brands, Mickey Finn's, Molinari and Cockspur Associate • Diamante Spirits, LLC - the Associate Company owned equally by Blavod Extreme and Suntory International which produces the El Diamante del Cielo Tequila products contributed a loss of £0.3m Commenting on the results, Chairman Colin Campbell, said: "The year was one of sharp contrasts and ultimate disappointment. Markets inthe US proved difficult and limited finance restricted brand promotion. Thesteps taken to dispose of the US operation and to concentrate in the UKcontrolled markets, where trends are positive, should be to the ultimate benefitof our shareholders." Enquiries: Blavod Extreme Spirits plcColin Campbell 33 6 8781 1 362 Brewin Dolphin 0113 241 0126 Chairman's Statement The year was one of sharp contrasts and ultimate disappointment. All the Company's markets began well, with strong sales through the first sixmonths. However autumn and winter proved to be very difficult periods in theUSA, with slower sales and declining margins. The Company did not havesufficient cash to continue to support the brands, and advertising andpromotional expenditure was cut. Management was distracted by an offer for the Company, ultimately aborted, whichalso caused uncertainty among our customers. Over the full twelve months onlythe Cielo Tequila brand showed volume growth in the US. On the other hand, the UK market prospered, largely because of the continuedgrowth of Mickey Finn, and the addition of Cockspur Rum in the second quarter;but in this market also, the state of the Company's finances forced managementto reduce promotional expenditure behind Blavod Black Vodka, restricting thebrand's potential. Although the results are close to market expectations, your Board regards thequality of earnings as unhealthy. This state of affairs led the Directors toexamine all options open to the Company, and culminated in the recommendation todispose of the US business, which was agreed at the EGM on September 24th. With the sale of the US operation it was considered prudent to review the valueof goodwill associated with the acquisition and to write it off. The beginning of the year in the UK has been encouraging. The directors believethat sales growth will continue strongly and that new finance will be requiredto provide the necessary working capital. The Company is considering a range ofoptions to address this requirement which includes an issue of new equity. Thedirectors are seeking authority from shareholders at the forthcomingExtraordinary General Meeting on 13 November 2007 to be able to issue newordinary shares comprising up to 20% of the existing issued share capital whilstdis-applying the need to offer shares pre-emptively to shareholders. At the EGM, called to approve these accounts, the Directors expect to announcethe sales results for the first six months of the year, split between the US andthe UK divisions, and we shall regularly report on the performance of thesmaller, simpler Company. Colin CampbellChairman Preliminary ResultsCONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 31 March 2007 Notes Year to 31 March 2006 2007 (restated) £000 £000 Turnover 1 5,353 6,889Cost of sales (3,682) (5,105) Administrative ExpensesGross profit 1,671 1,794Impairment of goodwill - (2,863)Marketing and other administrative expenses (4,188) (5,063) Total administrative expenses (7,976) (4,188) Operating loss (2,517) (6,132)Share of the operating loss of associate 2 (470) (323) (2,987) (6,455) Bank interest receivableGroup 48 (72)Associate 3 - 51 (72) Loss on ordinary activities before taxation (2,936) (6,527)Taxation - - Loss for the year (2,936) (6,527) Loss per share 3 (4.44p) (9.08p)Diluted loss per share (4.44p) (9.08p) STATEMENT OF RECOGNISED GAINS AND LOSSES for the year ended 31 March 2007 Year to 31 March Year to 31 March 2006 2007 (restated) £000 £000Loss for the year (2,936) (6,527)Recognition of associate 931 -Share of additional capital contribution to associate - 156Foreign exchange difference on conversion of associate - (42)Foreign exchange differences on conversion of net investments (384) 595 Total recognised losses for the year (2,389) (5,818) CONSOLIDATED BALANCE SHEET as at 31 March 2007 As at 31 March As at 31 March 2006 2007 (restated) £000 £000Fixed assetsIntangible assets 3,728 682Tangible assets 55 33Investment in associate 464 255 4,247 970 Current assetsStock 1,089 1,032Debtors 1,405 1,313Cash at bank 1,070 401 3,564 2,746 Creditors: amounts falling due within one year (1,716) (1,482) Net current assets 1,848 1,264 Total assets less current liabilities 6,095 2,234 Creditors: amounts falling due after one year (5) (1,164) Net assets 6,090 570 Capital and reservesCalled up share capital 713 732Share premium account 18,002 18,240Shares to be issued 1,052 1,093Other reserves 464 255Profit and loss account (14,141) (19,750) Shareholders' funds 6,090 570 CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 March 2007 2006 2007 (restated) Cash outflow from operating activities (2,245) (2,474) Returns on investmentsInterest received 48 -Interest paid - (72) Net cash inflow from returns on investments 48 (72) Capital expenditurePurchase of tangible fixed assets (2) (23)Proceeds from sale of tangible assets - 8Expenditure relating to the registration of (10) (20)trademarks Net cash outflow for capital expenditure (12) (35) Cash outflow before financing (2,209) (2,581) FinancingIssue of ordinary share capital 1,240 257Share issue costs (95) -Line of credit advances - 1,644Repayment of capital element of finance lease (8) (9)rental Net cash inflow from financing 1,137 1,912 (Decrease) of cash in the period (1,072) (669) NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2007 1. Basis of preparation The financial information in this statement is prepared under the historicalcost convention and in accordance with applicable accounting standards. It doesnot constitute statutory accounts as defined in Section 240 of the Companies Act1985. 2. Share of the operating loss of Associate This relates to the Group's share of the losses of Diamante Spirits, LLC,accounted for in accordance with FRS 9 'Associates and Joint Ventures' and is a'non-cash' item. 3. Loss per share The calculations of earnings per share for the year, both basic and diluted, arebased on a loss of £6,527,000 (2006: £2,936,000 restated) and 71,891,182 (2006:66,074,562) shares in issue. 4. Published accounts Copies of the published accounts of the Company have today been sent to allshareholders and will be available from the offices of Brewin Dolphin, 34 Lisbon Street, Leeds, LS14LX and can be located on www.blavodextreme.com/aim_report1.html This information is provided by RNS The company news service from the London Stock Exchange