Distil Regulatory News (DIS)

2 Jan 2007 07:01

Blavod Extreme Spirits PLC29 December 2006 29 December 2006 BLAVOD EXTREME SPIRITS PLC INTERIM REPORT For the six months ended 30 September 2006 Financial • Turnover increased by 61% to £3.54m (2005: £2.20m) • Case equivalent shipments increased by 35% • Gross profit of £986k (2005: £737k) increase by 34% • Gross profit margin of 28% (down from 34% in 2005) • Improved operating loss (excluding associate) of £1.49m (2005: £1.57m) Brands • Brand Portfolio offerings delivering solid performances • Brands continue to increase distribution in both the UK and US • Added new wine and spirit partnerships Joint Venture • Joint venture with Suntory International progressing well • El Diamante del Cielo Tequila is now distributed in 44 US States • Strengthened the Group's position within the drinks sector Commenting on the results, Chief Executive Officer, Jeff Hopmayer, said: "We have continued to benefit from a strong marketplace, the continued roll-outof our Tequila El Diamante del Cielo and the introduction of Cockspur Rum whichhave accelerated our growth. Turnover in the UK and the US have increasedsubstantially. However, some of this growth has been at the cost of lowermargins, specifically on Blavod Black Vodka, as we continue to support thebrand. Measures have been put in place to correct this in the second half of theyear which is traditionally the main season for wine and spirit sales." Enquires: Blavod Extreme Spirits plc 020 7930 0777Jeff Hopmayer, Chief Executive 001 615 771 9111Tony Murphy, Finance Director Brewin Dolphin Securities Ltd 0113 241 0130Mark BradyKeith Williams 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 September,2006. Turnover increased by 61% to £3.54m, led by El Diamante del Cielo, ourwine portfolio and the introduction of new agency brands. The global market for wines and spirits continues to expand in the areas wherewe operate, while industry consolidation continues. Results Total revenue of £3.54m (2005: £2.20m) represented an increase in per caserevenue of 19%. Equivalent case shipments increased in the US by 23%, whileincreasing 52% in the UK and other markets. Recorded gross profit margin in the US fell to 26% (2005: 30%) as a directresult of heavy promotions for Blavod Black Vodka. Gross profit margins forPlayers Extreme and our wine portfolio increased over last year. Gross profitmargin in the UK finished at 18% (2005: 24%), driven by margin decreases onBlavod Black Vodka. These decreases were the result of the competitiveenvironment and the promotional demands to grow consumer brand awareness. Webelieve that there continues to be potential for further margin gains on many ofour brands and we are taking steps to restore decreasing margins in our brandportfolio for the second half of the year. Total marketing costs decreased by 10%, while other administrative expensesincreased by 24%. Over the full year, marketing and other administrativeexpenses are expected to be in-line with the previous year. The Group recordedan increase in gross profits to £986k (2005: £737k). United Kingdom In the UK markets, new listings further expanded distribution. All agency brandsare contributing ahead of last year's figures, despite higher advertising andpromotion costs. This trend indicates that all brands have attainedprofitability. Initial indications for the Christmas holiday period show forwardorders significantly ahead of last year. United States In the US, distribution expanded and equivalent case shipments increased by 23%.Gross margins on Players Extreme and our wine portfolio have increased and allbrands are contributing after advertising and promotion costs. Initialindications for the second half of the year appear very promising and stronglyahead of last year. Diamante Spirits (Associate) The first brand launched by our Joint Venture with Suntory is a new luxurytequila, El Diamante del Cielo Tequila. The brand has been positively receivedin the 44 US States to which it has been currently introduced. The companyrecorded a share of loss in Associate of £198k; however, working capital for thejoint venture is contributed by our partner. The brands in the joint venturecontinue to contribute significantly to Blavod Extreme Spirits. 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, Molinari Sambuca, the wines of the Domaines de BaronRothschild and recently added Cockspur Rum and Matariki Wines. Therepresentation and distribution relationships have all made positivecontributions and they now represent 65% of our UK business. In the US, wedistribute an Italian wine portfolio, including wines from Bruno Rocca,Baroncini, L'Illuminata, Petra and Contadi Castaldi among others, which nowrepresent 31% of our US business. These partnerships have made positive contributions and continue to increase theGroup's presence amongst key distributors and accounts. Possible offer for the issued share capital in the Company Further to our announcement on 28 November 2006, the Company confirms thatdiscussions regarding this possible offer are still ongoing. A furtherannouncement will be made in due course. Outlook The Group is continuing 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. The second half of the year is the main season for wine and spiritsales and there are early positive indications that our brands are continuing todemonstrate their potential. Jeffrey S. HopmayerChief Executive UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT for the six months ended 30SEPTEMBER 2006 Year to Six months to 30 September 31 March 2006 2005 2006 Unaudited Unaudited Audited Restated Notes £ 000 £ 000 £ 000 Turnover 3,540 2,203 5,353Cost of sales (2,554) (1,466) (3,682) -------- -------- -------- Gross profit 986 737 1,671 Marketing andadministrative expenses (2,484) (2,315) (4,188) -------- -------- -------- Operating loss (1,498) (1,578) (2,517)Share of operating lossin associate (198) (78) (470) -------- -------- -------- (1,696) (1,656) (2,987) Bank interest receivableGroup 13 39 48Associate 0 1 3 -------- -------- -------- 13 40 51 Loss on ordinaryactivities beforetaxation (1,683) (1,616) (2,936) Taxation 0 0 0 -------- -------- --------Loss for the financialperiod (1,683) (1,616) (2,936) ======== ======== ======== Loss per share 2 (2.36p) (2.47p) (4.11p)Diluted loss per share 2 (2.36p) (2.47p) (4.11p) UNAUDITED CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for thesix months ended 30 SEPTEMBER 2006 Year to Six months to 30 September 31 March 2006 2005 2006 Unaudited Unaudited Audited Restated Notes £ 000 £ 000 £ 000 Loss for the financialperiod (1,683) (1,616) (2,936)Investment inassociated undertakingrecognised in otherreserves 1 0 635 931 Foreign exchangedifferences onconversion of netinvestments (59) 246 (384) -------- -------- --------Total recognised lossesfor the period (1,742) (735) (2,389)Prior year adjustments 1 (1,052) 0 0 -------- -------- --------Total recognised lossessince the last auditedfinancial statements (2,794) (735) (2,389) ======== ======== ======== UNAUDITED CONSOLIDATED BALANCE SHEET as at 30 SEPTEMBER 2006 31 March 2006 2006 Unaudited 2005 Unaudited Audited Restated Notes £ 000 £ 000 £ 000 Fixed assetsIntangibleassets 3,779 3,847 3,728Tangible assets 35 66 55Investment inassociate 266 558 464 -------- -------- -------- 4,080 4,471 4,247 -------- -------- --------Current assetsStock 1,309 1,052 1,089Debtors 1,972 1,375 1,405Cash at bank 372 880 1,070 -------- -------- -------- 3,653 3,307 3,564Creditors:amountsfalling duewithin oneyear (3,361) (1,177) (1,716) -------- -------- --------Net currentassets 292 2,130 1,848 -------- -------- -------- Total assetsless currentliabilities 4,372 6,601 6,095 Creditors:amountsfalling dueafter one year 0 (10) (5) -------- -------- --------Net assets 4,372 6,591 6,090 ======== ======== ========Capital and reservesCalled upshare capital 714 654 714Share premiumaccount 18,001 16,916 18,001Other reserves 3 266 558 464Shares to beissued 3 1,077 1,044 1,052Profit andloss account 3 (15,686) (12,581) (14,141) -------- -------- --------Shareholders'funds 4,372 6,591 6,090 ======== ======== ======== UNAUDITED CONSOLIDATED CASH FLOW STATEMENT for the period ended 30 SEPTEMBER2006 Year to Six months to 30 September 31 March 2006 2005 2006 Unaudited Unaudited Audited £ 000 £ 000 £ 000 Cash outflow from operatingactivities (1,738) (1,289) (2,251) Returns on investmentsInterest received 13 40 48 -------- -------- --------Net cash inflow from returns oninvestments 13 40 48Capital expenditurePurchase of tangible fixedassets (3) (9) (2)Expenditure relating to theregistration of trademarks 0 (3) (10) -------- -------- --------Net cash outflow for capitalexpenditure (3) (12) (12) -------- -------- --------Cash outflow before financing (1,728) (1,261) (2,215)FinancingDraw-down on credit facility 1,030 0 0Issue of ordinary share capital 0 0 1,240Share issue costs 0 0 (95)Repayment of capital element offinance lease rental 0 (1) (2) -------- -------- --------Net cash inflow/(outflow) fromfinancing 1,030 (1) 1,143 -------- -------- --------Decrease in cash in the period (698) (1,262) (1,072) ======== ======== ======== NOTES TO THE FINANCIAL STATEMENTS for the six months ended 30 SEPTEMBER 2006 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 2006, restated toadopt Financial Reporting Standard 20: Share-based payments. The statutoryaccounts for the year to 31 March 2006, upon which the auditors issued anunqualified opinion, have been delivered to the Registrar of Companies. As aresult of adoption of Financial Reporting Standard 20, profit for the year to 31March 2006 is reduced by £20,000 from that stated in the statutory accounts forthe year to 31 March 2006 and unaudited profit for the period to 30 September2005 is reduced by £12,000 from that stated in the interim report for the sixmonths ended 30 September 2005. Whilst net assets are unaffected, the profit and loss reserve 31 March 2006 isreduced by £1,052,000 (September 2005 unaudited: £1,044,000) and the shares tobe issued reserve is increased by an equivalent amount. Other than adoption of FRS 20, the interim financial information has beenprepared on the basis of the accounting policies set out in the Group'sstatutory accounts for the year ended 31 March 2006. In the prior 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, has invested £1,754,483 in Diamante Spirits, LLCsince its formation, and the Group's share of this amount is included withinother reserves. A transfer equivalent to the Group's share of the loss for theperiod has been made between other reserves and the profit and loss accountwithin shareholders' funds. 2. Loss per share The calculations of earnings per share for the six months, both basic anddiluted, are based on a loss of £1,683,000 (2005: £1,616,000) and 71,379,700(2005: 65,443,633) shares in issue. The calculations of earnings per share forthe full year to 31 March 2006 are based on a loss of £2,936,000, and 71,379,700shares in issue. 3. Movement in reserves Other Shares to be Profit and Reserves Issued Loss At 31 March2006 aspreviouslystated 464 0 (13,089)Prior periodadjustment 0 1,052 (1,052) -------- -------- --------At 31 March2006 adjusted 464 1,052 (14,141)Loss for theperiod 0 0 (1,683)Share of lossin associate (198) 0 198Foreign 0 0 (59)Share options 0 25 0 -------- -------- --------At 30September 2006 266 1,077 (15,685) ======== ======== ======== This information is provided by RNS The company news service from the London Stock Exchange