Distil Regulatory News (DIS)

28 Nov 2005 07:02

Blavod Extreme Spirits PLC28 November 2005 28 November 2005 BLAVOD EXTREME SPIRITS PLC INTERIM REPORT For the six months ended 30 September 2005 Financial • Turnover increased by 140% to £2.2m (2004: 0.92m) • Full year case equivalent shipments increased by 149% • Gross profit of £0.74m (2004: £0.17m) • Gross profit margin of 33.5% up from 18.2% in 2004 • Operating loss reduced to £1.56m (2004: £2.69m) • Cash position and facilities in place to support the Group's growth objectives Brands • Blavod and Players Extreme range delivering strong performances • Distribution channels improving through multiple agreements • Added 2 new wine and spirit partnerships Joint Venture • Joint venture agreed with Suntory International • Full scale launch of first product, El Diamante del Cielo Tequila, expected early 2006 • Significantly strengthened the Group's position within the Global drinks sector Commenting on the results, Chief Executive Officer, Jeff Hopmayer, said: "We have continued to benefit from the successful growth of our core brandsBlavod Black Vodka and the Players Extreme range. Sales in the UK and the UShave increased substantially. In addition, we signed a Joint Venture agreementwith Suntory in August 2005 which has significant strategic importance for theGroup. We expect the Joint Venture to contribute strongly to the Group'sprofitability in the longer term." Enquires: Blavod Extreme Spirits plc 020 7930 0777Jeff Hopmayer, Chief Executive (after 28 November - 001 615 771 9111)Fred Read, Finance Director Brewin Dolphin Securities Ltd 011 3241 0130Mark BradyKeith Williams Cardew Group 020 7930 0777Tim RobertsonCatherine Maitland CHIEF EXECUTIVE'S STATEMENT Blavod Extreme Spirits plc ("the Group") has continued to make good progress inits strategic and marketing objectives for the six months ended 30 September2005. Sales of Blavod Black Vodka and the Players Extreme range drove theincrease in Group sales to £2.2m, supported by revenues generated from ourdistribution partnerships. The Group has also made significant strategicprogress through its joint venture with Suntory International Corporation andthe creation of the joint venture's first product, El Diamante del CieloTequila. The global market for wines and spirits continues to expand in the markets inwhich we operate, while industry consolidation continues. Recent changescreated by that consolidation could result in additional opportunities for theGroup, as several spirit suppliers reorganise their portfolios and distributionplatforms. Results Revenue for the period increased 140% to £2.2m (2004: 0.92m), with revenue percase increasing by 9.3%. Total equivalent case shipments increased by 149%, inthe US by 344% and in the UK and other markets by 56%. Equivalent case shipmentsof Blavod Black Vodka and Players Extreme increased by 63% and 114%respectively. These comparisons, are however, affected by the temporary declinein sales in 2004 during the repackaging of Players Extreme. Despite increases in fuel and manufacturing costs, gross profit margins improvedto 33.6% in the US and 28.1% in the UK and other markets. We believe that therecontinues to be potential for further margin gains. Total marketing and administrative expenses decreased by 19.4%. The Grouprecorded an increase in gross profits to £0.74m (2004: £0.17m) and a reducedoperating loss of £1.56m (2004: £2.69m). Blavod Black Vodka In the UK, new listings expanded the brand's distribution where equivalent caseshipments increased by 20%. In the US, the brand increased its penetration andequivalent case shipments increased by 60%. International sales advanced by87%. Initial indications for the UK Christmas holiday period show forwardorders significantly ahead of last year. Players Extreme Range In the US, Players Extreme is making progress with key distributors, retailersand clubs resulting in higher depletion rates (depletion rates indicate casesmoving from distributor warehouses to the consumer). This indicates anincreased consumer awareness of and demand for our brands. The recent launch ofPlayers Extreme Caramel Vodka has been particularly well received; caramel isalready the brand's second most popular flavored vodka, representing 20% ofPlayers Extreme flavored volume. Players Extreme represents 31% of the totalGroup's equivalent case sales while still only available in the US. Joint Venture In August we announced a joint venture agreement with Suntory InternationalCorporation, a US subsidiary of Suntory Limited, Asia's leading producer of wineand spirits and one of the largest beverage alcohol companies in the world. Thenew joint venture company, Diamante Spirits LLC, is a 50:50 partnership and willexploit the respective strengths of the two shareholders. Diamante will focuson developing new spirit brands, the ownership of which will remain within thejoint venture company. The first brand is a new luxury tequila, El Diamante delCielo Tequila. The product is being piloted in Miami and Chicago and will berolled out US wide in the fourth quarter of our financial year. Partnerships The Group continues to form partnerships with other drinks companies todistribute their brands in the UK and US. In the UK the Group distributesMickey Finn, Fernet Branca and the wines of the Domaines de Baron Rothschild.The representation and distribution relationships have all made positivecontributions, with a particularly strong performance by Mickey Finn, which sawcase sales increase by 37%. In June we announced an exciting representation inthe UK with Molinari Sambuca. In the US we distribute an Italian wineportfolio, including wines from Bruno Rocca, Baroncini, L'Illuminata, Petra andContadi Castaldi among others. These partnerships have made useful contributions and increased the Group'spresence amongst key distributors. Financing The Group is pleased to announce that it is entering into a £5,000,000 facilityto support the Groups growth objectives. Outlook The Group is on course to establish its brands in its major target markets. Inthe second half of the year the Group expects to continue the momentum of thefirst half, while maintaining the current cost base. The second half of theyear is the main season for wine and spirit sales and there are early positiveindications that our brands are beginning to demonstrate their potential. Jeffrey S. HopmayerChief Executive UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT for the six months ended 30SEPTEMBER 2005 Year to Notes Six months to 30 September 31 March 2005 2004 2005 Unaudited Unaudited Audited £ 000 £ 000 £ 000Turnover 2,203 917 3,116Cost of sales (1,466) (750) (2,218) -------- -------- -------- Gross profit 737 167 898 Marketing and administrativeexpenses (2,303) (2,858) (4,998) Operating loss (1,566) (2,691) (4,100) Share of operating loss inassociate (78) - - -------- -------- -------- (1,644) (2,691) (4,100) Bank interest receivableGroup 39 114 182Associate 1 - - -------- -------- -------- 40 114 182 Loss on ordinary activitiesbefore taxation (1,604) (2,577) (3,918) Taxation - - - -------- -------- -------- Loss for the financial period (1,604) (2,577) (3,918) ======== ======== ======== Loss per share 2 (2.45p) (3.94p) (5.99p)Diluted loss per share 2 (2.45p) (3.94p) (5.99p) UNAUDITED CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for thesix months ended 30 SEPTEMBER 2005 Loss for the financial period (1,604) (2,577) (3,918)Investment in associated undertaking recognisedin other reserves 1 635 - -Foreign exchange differences on conversion ofnet investments 246 - (122) -------- -------- -------- Total recognised losses for the period (723) (2,577) (4,040) ======== ======== ======== UNAUDITED CONSOLIDATED BALANCE SHEET as at 30 SEPTEMBER 2005 30 September 31 March 2005 2004 2005 Unaudited Unaudited Audited £ 000 £ 000 £ 000 Fixed assetsIntangible assets 3,847 4,055 3,946Tangible assets 66 96 82Investment in associate 558 - - -------- -------- -------- 4,471 4,151 4,028 -------- -------- --------Current assetsStock 1,052 770 866Debtors 1,375 1,598 1,113Cash at bank 880 4,105 2,142 -------- -------- -------- 3,307 6,473 4,121 Creditors: amounts falling due withinone year (1,177) (1,847) (824) -------- -------- -------- Net current assets 2,130 4,626 3,297 -------- -------- -------- Total assets less current liabilities 6,601 8,777 7,325 Creditors: amounts falling due after oneyear (10) - (11) -------- -------- -------- Net assets 6,591 8,777 7,314 ======== ======== ======== Capital and reservesCalled up share capital 654 654 654Share premium account 16,916 16,916 16,916Other reserves 558 - -Profit and loss account (11,537) (8,793) (10,256) -------- -------- -------- Shareholders' funds 6,591 8,777 7,314 ======== ======== ======== UNAUDITED CONSOLIDATED CASH FLOW STATEMENT for the period ended 30 SEPTEMBER2005 Year to Six months to 30 September 31 March 2005 2004 2005 Unaudited Unaudited Audited £ 000 £ 000 £ 000 Cash outflow from operating activities (1,289) (3,187) (5,209) Returns on investmentsInterest received 40 114 182 -------- -------- --------Net cash inflow from returns oninvestments 40 114 182 Capital expenditure (9) (74) (77)Purchase of tangible fixed assetsExpenditure relating to theregistration of trademarks (3) (7) (11) -------- -------- --------Net cash outflow for capitalexpenditure (12) (81) (88) AcquisitionExpenses related to acquisition - (34) (34) -------- -------- --------Net cash outflow relating toacquisitions - (34) (34) -------- -------- --------Cash outflow before financing (1,261) (3,188) (5,149) -------- -------- --------Financing (1) - (2) Repayment of capital element of financelease rental -------- -------- -------- Net cash inflow from financing (1) - (2) -------- -------- --------Decrease in cash in the period (1,262) (3,188) (5,151) ======== ======== ======== NOTES TO THE FINANCIAL STATEMENTS for the six months ended 30 SEPTEMBER 2005 1. Basis of preparation The financial information in this interim statement is prepared under thehistorical cost convention and in accordance with applicable accountingstandards. It does not constitute statutory accounts as defined in Section 240of the Companies Act 1985. The financial information for the full preceding yearis based on the statutory accounts for the year to 31 March 2005. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered tothe Registrar of Companies. The interim financial information has been prepared on the basis of theaccounting policies set out in the Group's statutory accounts for the year ended31 March 2005. In the period, Blavod Extreme Spirits PLC acquired a 50% holding in anassociated undertaking, Diamante Spirits LLC, at zero cost. The associate isincluded in the consolidated accounts on an equity accounting basis, in that theGroup's share of the net assets of the associate are included within investmentin associate and the Group share of the profits or losses are included withinthe profit and loss account. Suntory International Corporation, which owns theother 50% of the associate, invested £1,270,000 in Diamante Spirits, LLC on itsformation, and the Group's share of this amount is included within otherreserves. A transfer equivalent to the Group's share of the loss for the yearhas been made between other reserves and the profit and loss account withinshareholders' funds. 2. Loss per share The calculations of earnings per share for the six months, both basic anddiluted, are based on a loss of £1,604,000 (2004: £2,577,000) and 65,443,633(2004: 65,443,633) shares in issue. The calculations of earnings per share forthe full year to 31 March 2005 are based on a loss of £3,918,000, and 65,443,633shares in issue. 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