TIDMEISB
RNS Number : 3250Z
East Imperial PLC
14 September 2022
14 September 2022
East Imperial Plc
(the "Group" or the "Company")
Interim results for the 6 months ended 30 June 2022
Strong revenue growth and significant strategic milestones
achieved
East Imperial, the global purveyor of ultra-premium beverages,
today announces unaudited half-year results for the period ended 30
June 2022.
Summary
-- Revenues up 26.3% from GBP1.02m to GBP1.28m, reflecting the
return of key on premise markets and normalised trading patterns in
the US and Europe
-- Strong improvement in net cash of GBP1.5m (H1 2021: GBP0.2m)
due to the capital raise in January 2022. Q2 saw significant
lowering of cash requirements compared to Q1 2022
-- Margins recovering in Q2 2022 (YTD at 17.4%; June 2022 up to
22.3%) as margin improvement programme continues
-- Key US market saw sales up 132% year on year as expansion in
this priority market continues and cornerstone APAC market shows
positive signs of post-Covid recovery
-- The current operating loss represents our commitment to the
investment in the business and the growth opportunities in global
markets.
Strategic Highlights
-- US distribution agreement with Republic National Distributing
Company (RNDC) and national distribution partnership enjoying
successful roll out with East Imperial now available in 12
states
-- China distribution agreement with Wen Hua Hang Wine Spirits
Company to supply East Imperial's entire range across the Chinese
Mainland and Macau.
-- In advanced talks to appoint a bottling partner in the
fast-growing US market, offering significant cost savings as the
brand expands
-- Light Tonic introduced in Q2 satisfying ongoing demand in all
territories for lower sugar options and offering an ultra-premium
low calorie tonic water, without compromising on flavour
GBPm H1 2022 H1 2021 Change
Revenue 1,284 1,017 26.2%
------------------- ----------------- --------------
Gross Profit 224 261 (14.1%)
------------------- ----------------- --------------
Gross Margin 17% 26% (9%)
------------------- ----------------- --------------
Operating Loss (1,464) (437) (235%)
------------------- ----------------- --------------
Net cash 1,563 231 (576%)
------------------- ----------------- --------------
Anthony Burt, CEO of East Imperial, commented:
"I'm very pleased to be reporting double digit revenue growth
for the half, as well as a significantly improved net cash
position. Our revenue growth was driven by a very strong
performance in the US and Europe as these markets return to normal
trading patterns. While the impact of Covid has lasted longer in
APAC, we are starting to see signs of recovery in our business
there and we expect to see the return to growth in the second
half.
Significant expansion in the US market remains an absolute
priority for us, and we are seeing sales growth and market share
gains in US on-trade due to our laser focus on luxury. Establishing
powerful US distribution networks in our core US and China markets
are significant strategic milestones that will put East Imperial in
a strong position to expand in the future. We are in advanced talks
to appoint a US-based bottler, which will reduce the capital costs
involved in expanding in this fast-growing market and support our
margin improvement programme, which is already starting to bear
fruit.
The positive momentum has continued into the second half, which
is traditionally the stronger half for our business and this,
combined with the strength of the underlying business, underpins my
confidence that we are well positioned to deliver long term
sustainable growth to create value for our shareholders. We can't
ignore the fact that consumers more broadly are feeling the
squeeze, but our focus on luxury means that we are benefitting from
the continuing shift towards premiumisation across the beverage
industry. We are confident in our strategy of aiming to be the only
ultra-premium choice for mixers in our markets and focusing on
higher-end and luxury on-premise outlets."
......
Media Enquiries
Brunswick Group
Helen Smith +44207404 5959
Will Booth
Eastimperial@brunswickgroup.com
About East Imperial
Founded in New Zealand and Singapore in 2012, East Imperial
produces a range of ultra-premium mixers that sell throughout APAC,
US and EMEA. Guided by a clear strategy to capitalise on the
growing demand for premiumisation across the beverage industry,
East Imperial has sold over 20 million bottles in over 20 countries
since its founding, with popular products including Old World
Tonic, Grapefruit Tonic, Yuzu Tonic and Mombasa Ginger Beer. In
2022, East Imperial won 8 medals, with two awarded best in class at
the coveted Tonic & Mixers Masters Competition in London.
The company was founded on the philosophy of creating exquisite
products defined by heritage, tradition and authenticity. All
products are made from the highest quality, all-natural
ingredients, reflecting East Imperial's commitment to providing a
sustainable product and minimising environmental impacts at every
stage of the manufacturing process.
For more information about East Imperial and its ultra-premium
mixers, visit eastimperial.co.uk.
Strategic Update
GBP000 H1 2022 H1 2021 Change
Revenue
--------------- --------------- -------------------
APAC 664 742 (10.5%)
--------------- --------------- -------------------
USA 422 182 132%
--------------- --------------- -------------------
Other 198 93 113%
--------------- --------------- -------------------
East Imperial Plc revenues grew strongly in the first half of
2022 up 26.3% from GBP1.02m to GBP1.28m. This growth reflects the
return of key on premise markets in the US and Europe as well as
continued off-premise growth in New Zealand as grocery ranging was
extended. H2 is traditionally the stronger half for the business
typically in the vicinity of 80% greater.
Revenues in the APAC region was below last year due to New
Zealand maintaining heavy Covid restrictions during the summer high
season. However, New Zealand is now seeing on-premise return to pre
covid levels bolstered by significant off-premise growth. Momentum
has begun to build in Singapore as it opened fully through H1. The
Asia Pacific region is the cornerstone of the East Imperial brand
story and we are now seeing the region return with expectations of
a strong H2. Our new distribution partnerships in Singapore and
Hong Kong are building strongly. The addition of our new China
distribution partner will begin to see volume uplifts in Q4 and
beyond.
US sales are 132% up on last year as we implemented phase one of
the Republic National Distribution Company (RNDC) national
distribution rollout through twelve states. This has placed the
business in a strong position to leverage for a strong finish in
H2. With the work carried out in the US in H1, we are confident
that we have a strong base for growth in 2023 and 2024.
The first six months of 2022 has seen the challenging
environment in the previous year continue. The team has done an
incredible job operating in such a challenging environment to
successfully manage the pressures on margins.
Financial Review
Unaudited (GBP000) H1 2022 H1 2021 Movement
Revenue 1,284 1,017 26.2%
------------- ------------- --------------
Gross Profit 224 261 (14.1%)
------------- ------------- --------------
Adjusted EBITDA (1,485) (447) (233%)
------------- ------------- --------------
Operating loss (1,464) (437) (235%)
------------- ------------- --------------
Cash 1,563 231 576%
------------- ------------- --------------
The Group's performance in H1 2022 was pleasing as we saw
significant growth with revenues up by 26.3% to GBP1.28m
demonstrating continued post-Covid recovery. Revenue improvement
has been driven by the key US market experiencing significant
growth as the US returned to more normalised trading patterns and
the new national distribution partnership rolled out.
The 2022 H1 gross margin of 17.5% reflects a fall compared to
25.6% in 2021. This fall reflects the industry-wide challenges of
the supply chain through this period. Much of the margin challenges
were evident in Q1 and by June 2022 margins have returned to 22.3%.
We will continue to see this improve through H2 as volume grows.
Much of the Q1 margin issues were due to lower volumes and the
impact the semi-variable margins costs such as warehousing have on
our business. There are a number of large fixed costs which require
a build of volumes to normalise these costs and the improvement
seen in June demonstrates this beginning to happen. We expect this
margin improvement to continue and to grow as we move operations
closer to markets.
We are focused on the significant opportunity ahead for the
Group and growth opportunities in global markets. We have invested
in the brand, our people and our ability to execute on growth. This
led to underlying operating expenses increasing by 238% to GBP1.68m
(2021: GBP0.45m). It is worth noting that the costs of the listed
structure drove significant cost increase of GBP0.33m with
directors +GBP0.13m and professional services and regulatory fees
+GBP0.2m.
People costs increased by GBP0.32m while sales and
marketing-related expenses increased by GBP0.16m, both reflecting
the investment in growth of the business. The increase in people
costs reflects our commitment to invest in the building of our team
in 2022, with a particular focus on the building of capability and
growth capacity in the US. We do remain a lean operating
organisation and do not anticipate growing head count significantly
from where we are today. Marketing and sales costs reflect the
extra support costs invested as we roll out in the US market.
The Group generated an operating loss before exceptional costs
of GBP1.46 m in H1 (2021: GBP0.5m). This was in line with
expectations reflecting the ongoing investment in growth.
Outlook
Looking into later in the year and into 2023 the pressures on
margins will be addressed as volume grows and as we move to bottle
products closer to key market. With the strategic importance of the
US, we will be bottling in the US to service this market. This will
allow us to control costs more effectively and become more
proactive to the demands of this market. We remain focused on
margin improvement opportunities in the medium term while also
focusing on driving significant top-line growth.
Cash Position
As at 30 June 2022, the Group had cash balances of GBP1.56m and
net current assets of GBP2.8m. The company raised GBP3.4m as part
of a private placement of new share issuance in January 2022, this
is being used to cover working capital, and to finance ongoing
growth initiatives. Cash burn showed significant improvement in Q2
with a reduction in the cash balance of GBP0.47m.
Going Concern
The condensed consolidated interim financial statements have
been prepared on a going concern basis. The Directors have
carefully assessed the Group's ability to continue trading and have
a reasonable expectation that the Group and Company have adequate
resources to continue in operational existence for at least twelve
months from the date of approval of these condensed consolidated
interim financial statements and for the foreseeable future.
The Directors have assessed the strategic plan and forecasts
prepared for the next three years. An assessment of cash flows for
the next three financial years has indicated an expected level of
cash generation would be sufficient to allow the Group to fully
satisfy its working capital requirements and cover all principal
areas of expenditure.
Having assessed the principal risks and the other matters
discussed over a three-year period to June 2025, the Directors
consider it appropriate to adopt the going concern basis of
accounting in preparing its condensed consolidated interim
financial statements.
Principal Risks and Uncertainties
The principal risks and uncertainties currently faced by the
Group are reviewed regularly by the Board. The principal risks
faced by the Group are set out below and the Board considers the
risk levels to have remained the same since December 2021.
-- The Group is exposed to the impact of the ongoing outbreak of
COVID-19 and the risks relating to measures imposed by national
governments to control the outbreak. In the past, this has seen the
closing of on-premise locations across multiple key territories.
The Group continues to actively monitor the situation in all
jurisdictions they operate in and remain agile in adapting to
changing market and operational conditions.
-- Regulatory changes in each market could have an adverse
impact on the Group. The Group monitors legislative and regulatory
changes and alters its business practices where and when
appropriate.
-- An unforeseen loss of key personnel. The Group has a
continuity program in place to ensure that Directors are able to
minimise the disruption caused by the potential loss of key
personnel. The Company also has in place a Short-Term Incentive
Plan (STIP) for all employees and an Options scheme for senior team
members for the purposes of both reward and retention.
Forward-Looking Statements
Certain statements in this interim report are forward-looking.
Although the Group believes that the expectations reflected in
these forward-looking statements are reasonable, it can give no
assurance that these expectations will prove to be correct. Because
these statements involve risks and uncertainties, actual results
may differ materially from those expressed or implied by these
forward-looking statements. It undertakes no obligation to update
any forward-looking statements whether as a result of new
information, future events or otherwise.
Statement of Directors' Responsibilities
The Directors confirm that the condensed consolidated interim
financial statements for the six-month period ended 30 June 2022
have been prepared in accordance with the Disclosure and
Transparency Rules (DTR) of the Financial Conduct Authority and
with International Accounting Standard 34, 'Interim financial
reporting', as endorsed for use in the United Kingdom and gives a
true and fair view of the Group's assets, liabilities, financial
position and profit and loss.
In addition, the interim management report herein includes a
fair review of the information required by DTR 4.2.7 and DTR 4.2.8,
namely:
-- An indication of important events that have occurred during
the period and their impact on the condensed interim financial
statements, and a description of the principal risks and
uncertainties for the remaining period of the financial year;
and
-- Material related party transactions in the period and any
material changes in the related party transactions described in the
last annual report.
The Directors of East imperial Plc are listed in the East
imperia Plc Annual Report for the year ended 31 December 2021. A
list of current directors is maintained on the East Imperial Plc
website.
The interim management report was approved by the Board of
Directors and the above responsibility statement was signed on its
behalf by Anthony Burt.
EAST IMPERIAL PLC
INTERIM REPORT
FOR THE SIX MONTHSED 30 JUNE 2022
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2022
(Unaudited) (Unaudited)
6 months to 6 months to
30 June 30 June
2022 2021
Note GBP000 GBP000
Revenue 4 1,284 1,017
Cost of Sales (1,060) (756)
Gross Profit 224 261
------------------------ -------------------------
Administrative
Expenses (1,682) (690)
Other Operating
Income 15 -
Adjusted EBITDA (1,485) (445)
------------------------ -------------------------
Depreciation (9) (8)
Depreciation - Right
of
use asset (7) -
Amortisation (5) -
Operating Loss (1,464) (437)
------------------------ -------------------------
Finance Income - -
Finance Costs (16) (70)
------------------------ -------------------------
Loss Before Tax (1,481) (507)
------------------------ -------------------------
Income Tax - -
------------------------ -------------------------
Loss for the period (1,481) (507)
------------------------ -------------------------
Other Comprehensive
Income
Foreign exchange
differences
on consolidation 168 3
Total Comprehensive
Loss
for the period (1,313) (504)
------------------------ -------------------------
Condensed Consolidated Statement of Financial Position
For the six months ended 30 June 2022
(Unaudited) (Audited)
30 June 31 December
2022 2021
Assets GBP000 GBP000
Non - Current Assets
Intangible assets 2,332 2,228
Property, Plant and
Equipment 77 45
Right of Use Assets 771 62
Total Non-Current
Assets 3,180 2,335
---------------------------- ---------------------------
Current Assets
Cash and Cash Equivalents 1,563 266
Trade and Other Receivables 647 566
Inventories 1,890 1,849
Total Current Assets 4,100 2,681
---------------------------- ---------------------------
Total Assets 7,280 5,016
---------------------------- ---------------------------
Current Liabilities
Trade and Other Payables 1,153 1,535
Lease Liability 110 37
Total Current Liabilities 1,263 1,572
---------------------------- ---------------------------
Net Current Assets 2,837 1,109
---------------------------- ---------------------------
Non-Current Liabilities
Lease Liability 644 24
Total Non-Current
Liabilities 644 24
---------------------------- ---------------------------
Net Assets 5,374 3,420
---------------------------- ---------------------------
Equity attributable
to owners of the parent
Share Capital 3,381 3,057
Share premium 6,975 4,033
Share option reserve 248 248
Reverse acquisition
reserve 5,040 5,040
Foreign exchange reserve 216 48
Retained Losses (10,486) (9,006)
Total Equity 5,374 3,420
---------------------------- ---------------------------
Condensed Consolidated Statement
of Changes in Equity
For the six months ended 30 June
2022
Share Foreign Reverse
Share Share Option Exchange Acquisition Retained Total
Capital Premium Reserve Reserve Reserve Losses Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1
January
2021
(Audited) 222 1,098 - (91) 3,837 (3,637) 1,429
------------- ------------- ------------- -------------- ----------------- -------------- -------------
Loss for the
period - - - - - (507) (507)
------------- ------------- ------------- -------------- ----------------- -------------- -------------
Forex
retranslation
reserve - - - 3 - - 3
-------------------- ------------- ------------- ------------- -------------- ----------------- -------------- -------------
Total
Comprehensive
Income - - - 3 - (507) (504)
-------------------- ------------- ------------- ------------- -------------- ----------------- -------------- -------------
Balance at 30
June
2021
(unaudited) 222 1,098 - (88) 3,837 (4,144) 925
-------------------- ------------- ------------- ------------- -------------- ----------------- -------------- -------------
Balance at 31
December
2021
(audited) 3,057 4,033 248 48 5,040 (9,006) 3,420
------------- ------------- ------------- -------------- ----------------- -------------- -------------
Loss for the
period - - - - - (1,481) (1,312)
------------- ------------- ------------- -------------- ----------------- -------------- -------------
Forex - - - 168 - - -
retranslation
reserve
-------------------- ------------- ------------- ------------- -------------- ----------------- -------------- -------------
Total
Comprehensive
Income - - - 168 - (1,481) (1,312)
------------- ------------- ------------- -------------- ----------------- -------------- -------------
Issue of
shares 324 3,078 - - - - 3,402
------------- ------------- ------------- -------------- ----------------- -------------- -------------
Share issue
costs - (136) - - - - (136)
------------- ------------- ------------- -------------- ----------------- -------------- -------------
Exercise of - - - - - - -
options
-------------------- ------------- ------------- ------------- -------------- ----------------- -------------- -------------
Balance at 30
June
2022
(unaudited) 3,381 6,975 248 216 5,040 (10,487) 5,374
-------------------- ------------- ------------- ------------- -------------- ----------------- -------------- -------------
Condensed Consolidated Statement of Cashflows
For the six months ended 30 June 2022
(unaudited) (unaudited)
6 months
to 6 months to
30 June
2022 30 June 2021
GBP000 GBP000
Cashflows from operating activities
Loss for the period (1,481) (507)
Adjusted for:
Foreign Exchange differences on
retranslation 167 3
Depreciation, amortisation and
impairments 21 8
----------------------------- ---------------------------------------
188 11
Increase) in trade and other
receivables (77) (178)
(Decrease)/Increase in trade and
other
payables (252) 511
(Increase)/Decrease in net working
capital (74) 154
----------------------------- ---------------------------------------
(403) 487
Net cash flows from operating
activities (1,696) (9)
Cashflows from investing activities
Acquisition of property, plant and
equipment (149) (17)
----------------------------- ---------------------------------------
Net cash flows from investing
activities (149) (17)
Cashflows from financing activities
Lease Payments - -
Increase in Bank Overdrafts - 12
Proceeds from issue of ordinary
shares,
net of allowable issue costs 3,266 -
----------------------------- ---------------------------------------
Net cashflows from financing
activities 3,266 12
Net increase/(decrease) in cash and
cash
equivalents 1,421 (14)
Cash and cash equivalents at
beginning
of period 142 245
----------------------------- ---------------------------------------
Cash and cash equivalents at end of
period 1,563 231
----------------------------- ---------------------------------------
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2022
Basis of preparation and accounting policies
These condensed consolidated interim financial statements have
been prepared in accordance with International Accounting Standard
34 'Interim Financial Reporting'. They do not constitute statutory
accounts as defined in s434 of the Companies Act 2006.
The condensed consolidated financial statements should be read
in conjunction with the audited consolidated annual financial
statements for the year ended 31 December 2021, which have been
prepared in accordance with IFRS endorsed for use in the United
Kingdom.
The condensed consolidated financial information for the year
ended 31 December 2021 does not constitute the Company's statutory
accounts for that year, but is derived from those accounts.
Statutory accounts for the year ended 31 December 2021 have been
delivered to the Registrar of Companies. The auditors reported on
those accounts: their report was unqualified, did not draw
attention to any matters by way of emphasis and did not contain a
statement under s498(2) or (3) of the Companies Act 2006.
The condensed consolidated interim financial statements for the
period ended 30 June 2022 have not been audited or reviewed in
accordance with the International Standard on Review Engagements
2410 issued by the Auditing Practices Board.
The principal accounting policies adopted in the preparation of
the condensed consolidated financial statements are unchanged from
those applied to the Group's financial statements for the year
ended 31 December 2021 and are consistent with those expected to be
applied in the financial statements for the year ended 31 December
2022.
Adjusted EBITDA has been calculated consistently with the method
applied in the financial statements for the year ended 31 December
2021. Operating profit is adjusted for a number of non-cash items,
including amoritsation, depreciation, and the share-based payment
charge which recognizes the fair value of share options granted.
The intention is for Adjusted EBITDA to provide a comparable,
year-on-year indicator of underlying trading and operational
performance.
The impact of COVID-19 has also been reflected in the Directors'
assessment of the going concern basis of preparation for the group
financial statements. This has been considered by modelling the
impact on the Group's cashflow for the period to the end of
December 2023. In completing this exercise, the Directors
established there were no plausible scenarios that would result in
the Group no longer continuing as a going concern.
The Directors have therefore concluded that the Group has
adequate resources to continue in operational existence for at
least the 12 months following the publication of the interim
financial statements, that it is appropriate to continue to adopt
the going concern basis of preparation in the financial statements,
that there is not a material uncertainty in relation to going
concern and that there is no significant judgement involved in
making that assessment.
The preparation of financial statements in accordance with IFRS
requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the year to date. Although these estimates are
based on management's best knowledge of the amount, events or
actions, the actual results may ultimately differ from those
estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
audited consolidated financial statements for the year ended 31
December 2021.
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2022
1. Revenue by region
Type % Revenue by Country (unaudited) 6 (unaudited) 6
of Destination months to 30 months to 30
June 2022 June 2021
GBP000 GBP000
Beverage New
distribution 100 Zealand/Australia 537 596
----------- ------------------------ ------------------------- -------------------------
United States 422 182
------------------------ ------------------------- -------------------------
European Union 198 93
------------------------ ------------------------- -------------------------
Asia 102 146
------------------------ ------------------------- -------------------------
Pacific Islands 25 -
------------------------ ------------------------- -------------------------
2. Earnings per share
(unaudited) (unaudited) 6
months to 30 June
2021
6 months to 30
June 2022
GBP000
GBP000
Profit
Profit used to calculate basic and diluted
EPS (1,331) (504)
Number of shares
Weighted average number of shares for the
purpose of basic earnings per share 165,704,112 110,087,671
Basic earnings per share (pence) (0.0080) (0.0046)
--------------------------- ------------------------------
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END
IR SFLFIDEESEFU
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