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 
                                  ---------------------- 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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October 24, 2019 02:00 ET (06:00 GMT)

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