TIDMDIS
RNS Number : 9344Q
Distil PLC
24 October 2019
Distil plc
("Distil" or the "Group")
Interim Results for the six months ended 30(th) September
2019
Distil (AIM: DIS), owner of premium drinks brands RedLeg Spiced
Rum, Blackwoods Gin and Vodka, Blavod Black Vodka, Jago's Cream
Liqueur and Diva Vodka, today announces its unaudited interim
results for the six months ended 30th September 2019.
Operational review:
-- RedLeg Caramelised Pineapple Spiced Rum successfully launched into the On-trade
-- Ready-to-drink ("RTD") RedLeg Spiced Rum and RedLeg
Caramelised Pineapple Spiced Rum listed in major UK national
retailers
-- Mardi Gras trademark secured in Europe and USA
-- Implementation of improvements to the structure and capability of New Product Development
-- UK blending and bottling relocated to a single site and raw materials stock build
-- New markets opened in Czech Republic and Russia
Financial Review - versus same period last year:
-- Revenue decreased by 29% to GBP824k (2018: GBP1.164m)
-- Gross profit decreased by 30% to GBP499k (2018: GBP710k)
-- Volume (litres) decreased by 28%
-- Investment in brand marketing and promotion decreased by 30% to GBP219k (2018: GBP312k)
-- Other administration costs decreased by 15% to GBP248k (2018: GBP293k)
-- Operating profit of GBP1k (2018: profit GBP101k)
-- Cash reserves of GBP836k (2018: GBP957k)
Don Goulding Executive Chairman, commenting on these results
said:
"We experienced trading challenges in our core markets,
particularly the UK unflavoured gin market where we had fewer
promotions and retail distribution declined by approximately one
hundred outlets, during the six months to 30 September 2019. By
contrast the spiced rum market continued to enjoy good year-on-year
growth during the period.
Whilst we expect further growth in the spiced rum market we
anticipate further softening of the unflavoured gin category into
the foreseeable future. Despite these headwinds we remain confident
in our strategy of investment in marketing support to our brands,
coupled with new product innovation, to deliver growth over the
medium term
We look forward to the retail availability and promotional
support of RedLeg Caramelised Pineapple Spiced Rum in five hundred
outlets and RedLeg ready-to-drink in three hundred stores in
Q3.
To reduce and offset the risk of interruption to product supply
we have increased our stock of raw materials given the uncertainty
of materials and supplies movement in the EU post Brexit."
Executive Chairman's Statement
Results versus same period last year
Overall year-on-year sales revenue and volumes were down during
the period. Sales revenue decreased 29% and volumes decreased 30%,
against the backdrop of strong year-on-year comparatives and a
slow-down in the UK gin market. Despite these falls we successfully
maintained gross margins at 61% and, through continued tight
control over overheads, were able to report a breakeven result
during the first half.
RedLeg Spiced Rum shipments to distributors were flat
year-on-year. However, depletions (sales from our customers to
consumers) continue to show double digit growth in line with
overall spiced rum market volumes, despite lapping strong sales in
2018 and a growing number of new entrants to the spiced rum
category.
Gin sales have been disappointing. The gin market, according to
latest market data, shows a slow-down during the summer of
traditional, unflavoured gin, with overall category volume sales
down in the twelve weeks to mid-August 2019. On-trade distribution
for Blackwoods 2017 Vintage Dry Gin increased over the period
although not enough to offset a range reduction in major retail.
The shortfall in gin volumes represent the revenue difference
versus prior year.
Sales of Blavod Black Vodka were in line with our expectations,
with sales volume performance tracking ahead of the overall vodka
market.
Operations
A key area of focus has been to reduce trade inventory overhang
from the fourth quarter of the prior financial year and in turn to
build our raw materials stock in preparation for likely changes
within Europe and possible impact on movement of goods.
We also relocated our UK blending and bottling operations into a
single site during the period, enabling further opportunity for
operational efficiencies as we grow our business.
Flavoured gin continues to show good growth in the UK. This
trend has highlighted the opportunity for Distil to ramp up its
innovation capability and speed to market of both new products and
new brands.
During the period we have reviewed our capability and identified
the key improvements needed to move ahead and to better anticipate
innovation trends. The first stage of these changes has been
implemented. Consequently, we secured the Mardi Gras trademark in
Europe and USA. Product launch will follow in 2020. Our first entry
into the growing RTD category in collaboration with Franklin &
Sons was announced in September for launch in October.
Outlook
We anticipate continued growth in the spiced rum market with
possible continued softening of the unflavoured gin category. We
have therefore increased our promotional brand support for the
second half of the year, especially through the traditionally
stronger Q3 and Christmas trading period, to grow volumes ahead of
the market.
UK stock levels have now returned to normal levels and our raw
material stock build should ensure we have sufficient product
throughout the second half regardless of any product movement
delays as a result of Brexit.
RedLeg Caramelised Pineapple Spiced Rum, launched at the start
of the financial year, successfully focused on pub distribution and
trial. I am pleased to confirm its first major national retail
listing in the UK goes live in November, supported by instore
activity
Given the prevailing headwinds in our chosen markets,
particularly the UK gin market, we anticipate full year revenue to
be below current market forecasts. However, due to ongoing
operational efficiencies and continued tight control of overheads,
we expect operating profit to remain in line.
Distil plc - Half Year Results
Consolidated comprehensive interim
income statement
----------- ----------- ------------
Six months Six months
ended 30 ended 30 Year
September September ended 31
2019 2018 March 2019
Un-audited Un-audited Audited
GBP'000 GBP'000 GBP'000
Revenue 824 1,164 2,401
Cost of sales (325) (454) (972)
----------- ----------- ------------
Gross profit 499 710 1,429
Administrative expenses:
Advertising and promotional costs (219) (312) (688)
Other administrative expenses (248) (293) (572)
Amortisation (25) - -
Depreciation (6) (4) (9)
----------- ----------- ------------
Total administrative expenses (498) (609) (1,269)
----------- ----------- ------------
Operating profit 1 101 160
Finance income - - -
Finance expense (2) - -
Profit/(loss) before tax from continuing
operations (1) 101 160
Income tax - - -
----------- ----------- ------------
(Loss)/profit for the period (1) 101 160
----------- ----------- ------------
(Loss)/profit per share:
From continuing operations
Basic (pence per share) (0.00) 0.02 0.03
Diluted (pence per share) (0.00) 0.02 0.03
Consolidated interim statement of financial As at 30 As at 30 As at 31
position September September March 2019
2019 2018
Un-audited Un-audited Audited
GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Right-of-use asset 37 - -
Property, plant and equipment 143 128 129
Intangible fixed assets 1,566 1,553 1,556
----------- ----------- ------------
Total non-current assets 1,746 1,681 1,685
Current assets
Inventories 383 221 312
Trade and other receivables 379 519 207
Cash and cash equivalents 836 957 1,068
----------- ----------- ------------
Total current assets 1,598 1,697 1,587
----------- ----------- ------------
Total assets 3,344 3,378 3,272
----------- ----------- ------------
LIABILITIES
Current liabilities
Trade and other payables (133) (263) (98)
Lease liability (38) - -
----------- ----------- ------------
Total current liabilities (171) (263) (98)
----------- ----------- ------------
Total liabilities (171) (263) (98)
----------- ----------- ------------
Net Assets 3,173 3,115 3,174
----------- ----------- ------------
EQUITY
Equity attributable to equity holders
of the parent
Share capital 1,292 1,292 1,292
Share premium 2,908 2,908 2,908
Share based payment reserve 83 83 83
Accumulated deficit (1,110) (1,168) (1,109)
----------- ----------- ------------
Total equity 3,173 3,115 3,174
----------- ----------- ------------
Consolidated interim cash flow statement
----------- ----------- -------------
Six months Six months Year ended
ended 30 ended 30 31 March
September September 2019
2019 2018
Un-audited Un-audited Audited
Cashflows from operating activities GBP'000 GBP'000 GBP'000
(Loss)/profit before tax (1) 101 160
Adjustments for non-cash/non-operating
items:
Finance expense 2 - -
Amortisation 25 - -
Depreciation 6 4 9
32 105 169
Movements in working capital
(Increase) in inventories (71) (44) (135)
(Increase)/decrease in trade receivables (172) (138) 188
Increase/(decrease) in trade payables 35 42 (137)
----------- ----------- -----------
Cash (used in) operations (208) (140) (84)
Net cash (used in)/generated by operating
activities (176) (35) 85
Cashflows from investing activities
Purchase of property plant & equipment (20) (37) (43)
Expenditure relating to the acquisition
and registration of licenses and trademarks (10) (2) (5)
----------- ----------- -----------
Net cash used in investing activities (30) (39) (48)
Cashflows from financing activities
Repayment of lease liabilities (26) - -
----------- ----------- -----------
Net cash used in financing activities (26) - -
Net (decrease)/increase in cash and cash
equivalents (232) (74) 37
Cash & cash equivalents at the beginning
of the period 1,068 1,031 1,031
Cash & cash equivalents at the end of the
period 836 957 1,068
----------- ----------- -----------
Notes to the interims accounts:
1. Basis of preparation
This interim consolidated financial information for the six
months ended 30 September 2019 has been prepared in accordance with
AIM rule 18, 'Half yearly reports and accounts'. This interim
consolidated financial information is not the group's statutory
financial statements within the meaning of Section 434 of the
Companies Act 2006 (and information as required by section 435 of
the Companies Act 2006) and should be read in conjunction with the
annual financial statements for the year ended 31 March 2019, which
have been prepared under International Financial Reporting
Standards (IFRS) and have been delivered to the Register of
Companies. The auditors have reported on those accounts; their
report was unqualified, did not include references to any matters
to which drew attention by way of emphasis of matter without
qualifying their report and did not contain any statements under
Section 498 (2) or (3) of the Companies Act 2006.
The interim consolidated financial information for the six
months ended 30 September 2019 is unaudited. In the opinion of the
Directors, the interim consolidated financial information presents
fairly the financial position, and results from operations and cash
flows for the period. Comparative numbers for the six months ended
30 September 2018 are also unaudited.
IFRS 16 - Accounting Policies and Transition
The Group has initially adopted IFRS 16 Leases from 1 January
2019. IFRS 16 introduced a single, on-balance sheet accounting
model for leases. As a result, the Group, as a lessee, has
recognised right-of-use assets representing its rights to use the
underlying assets and lease liabilities representing its obligation
to make lease payments.
The Group has applied IFRS 16 using the modified retrospective
approach, under which the cumulative effect of initial application
is recognised in retained earnings at 1 April 2019. Accordingly,
the comparative information presented for the six months ended 30
September 2018 and the year ended 31 March 2019 have not been
restated - i.e. it is presented, as previously reported, under IAS
17 and related interpretations.
2. Availability
Copies of the interim report will be available from the Distil's
registered office at 201 Temple Chambers, 3-7 Temple Avenue, EC4Y
0DT and also on www.distil.uk.com.
3. Approval of interim report
This interim report was approved by the Board on 23 October
2019.
For further information please contact:
Distil plc
Don Goulding Executive Chairman Tel: +44 207 352 2096
Shan Claydon, Finance Director
----------------------
SPARK Advisory Partners Limited
(NOMAD)
----------------------
Neil Baldwin Tel +44 203 368 3550
Mark Brady
----------------------
Turner Pope Investments (TPI)
Limited (Broker)
----------------------
Andy Thacker/Zoe Alexander Tel +44 203 657 0050
----------------------
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END
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