Final Results
Blavod Extreme Spirits PLC
05 August 2004
Blavod Extreme Spirits
2003/04 Preliminary Results
Blavod Extreme Spirits plc reports its preliminary results for its financial
year ended 31 March 2004.
Financial and Strategic Highlights
• Turnover up by 20.9% to £1.82m
• Equivalent gross profit up 14.5% to £647,000 (excluding the
exceptional write-off of old stock)
• Case volume increased by 30.9%
• Strong cash position
• Significantly enhanced marketing already under way
• Rationalisation of businesses following the merger now complete and a
firm base for future growth established
Commenting on the results, CEO Jeff Hopmayer said:
'I am extremely encouraged by these results and look forward to seeing the
benefits of our merger in the latter part of the year. New partnerships with
both wineries and retailers, to which our recent announcement referred, and our
enhanced marketing approach, clearly demonstrate the exciting potential of our
niche brands on both sides of the Atlantic.'
Enquiries:
Blavod
Jeff Hopmayer CEO 0207 404 5959
Brunswick
Laura Cummings 0207 404 5959
Unaudited preliminary results for the year ended 31 March 2004
Chairman's statement
With turnover up by 21% and gross profit by 14.5% at the trading level,
excluding the exceptional write-off of old stock, there is evidence of a year of
satisfactory advance. It should be noted that the period under review includes
only 72 days of combined figures following upon the acquisition of the business
of Extreme Beverage Company LLC by Blavod Black Vodka plc and which was duly
completed on January 20, 2004 and yielded some £10m gross for working capital.
The transaction has brought new institutional shareholders to the Company and
new directors to the Board, giving us greater financial, commercial and
marketing experience.
The company continued to see satisfactory progress in key markets for Blavod,
particularly in the UK, Russia and European Duty Free. Our other UK brands also
grew, notably Domaine Baron Rothschild Wines and the Babco range of products.
Earlier in the year we announced agreement in principle to manage the
distribution of Marie Brizard alcoholic liqueurs in the UK and expect this to
add value to our growing portfolio of quality products in the domestic market.
The merged businesses have already seen benefits in a number of ways. The
purchase of the business of Extreme Beverage gives our newly-named company both
ownership of the Players Extreme vodka range in the USA - primarily in the
promising infused or flavoured vodka market - as well as real distribution
access for Blavod Black Vodka to key US wholesalers. A sustained TV and cinema
marketing campaign for Blavod Black Vodka, based on a cutting-edge commercial
directed by a world-renowned film maker, is also planned for later this year,
beginning in the North of England and the UK sales team has been expanded to
cope with the greater opportunities which the advertising will facilitate.
Much management effort has been expended in setting up a US sales organization
for the company's brands. This has already seen the opening of markets in 40 of
the US states and extensive marketing in trade and consumer publications to
support sales of the nine flavours of vodka, rum and gin which were owned by
Extreme. The management continues to concentrate on improving margins at the
production end of the business and the Players Extreme range will now be bottled
exclusively in the UK for overseas exportation.
Rationalization of the two businesses and an effective merging of the
operations, IT, human resources, production and marketing have been successfully
accomplished. As a part of this rationalization process, the following changes
have been made to the Board since this time last year:
Our Chief Executive is Jeff Hopmayer, the founder of the Extreme Beverage
company. Our Finance Director is Fred Read. David Falk and Robert Levin have
joined the Board as non-executive directors. William Phillips becomes Director
of Finance (International) and Richard Ambler is Chief Executive (International)
with a wide ranging responsibility for sales and marketing. David Wheatley left
the Board during the year and we thank him for his years of service. Andrew
Napier also stepped down but remains with the company as Sales Director of
Blavod Drinks (UK), the domestic operating arm of the business where he leads a
successful young team. With Lawrence Banks and myself as non-executive
directors, the Board now consists of four UK-based directors and four US-based
directors.
It is still early days in the new fiscal year and much is yet to be achieved.
The full benefits of the merger are not expected to show until the latter half
of this calendar year and in the meantime write-downs of old stock, as the
brands develop stronger and more marketable identities, as well as other
exceptional costs associated with the merger are reflected in the figures and
are the principal reason for the overall loss. In taking a fresh look at our
brands and as a result of consumer research, an early decision was taken to
provide a new look for the Players Extreme range which is intended to widen our
consumer base, improve margin, position the product for more international
acceptability and, in smaller part, respond to packaging changes by competing
brands. This will create a firm base for future sales growth.
We are expecting a significant increase in Blavod sales to the US over the next
12 months. A good beginning has been made, evidenced by the recent announcement
that Costco Wholesale Club of Northern California, the largest retailer of wine
and spirits in the US, is to stock Blavod Black Vodka. Blavod is also targeting
special marketing opportunities in the US during the later part of this year, as
is Players Extreme with its range of high-profile activities to support the
newly designed packaging for the flavoured vodka range. This range is being both
augmented and rationalized by the addition of new flavours in response to
consumer demand and extensive market research and the gin and rum based products
are being dropped in anticipation of other brands being brought into the
portfolio.
Further developments include the recent signing of US distribution agreements
for two distinguished Italian wine brands, Bruno Rocca and Baroncini. More
announcements in connection with the strong margin and large-volume wine sales
in the US will be made shortly. The strategy in this regard is to augment the
brand portfolio and improve revenues while continuing to keep focus on our
principal wholly-owned brands. With sales of imported wine in the USA continuing
to grow (by 4.9% this past year) the opportunity was taken to provide our sales
teams with products which create additional sales and marketing opportunities
across the range of our brands and especially for Blavod Black Vodka and Players
Extreme. The wine distribution agreements are long term and have no capital cost
aside from stock purchase. They will, thus, contribute to general revenue growth
while helping to move Blavod Extreme Spirits towards its goal of creating a
substantial position in the global beverage business.
Our employees have been especially diligent and hard working during the year
under review and, on behalf of shareholders, I wish to thank them for all their
efforts, their loyalty and skill.
PROFIT AND LOSS ACCOUNT for the year ended 31 MARCH 2004
2004 2004 2003
£000 £000 £000
Turnover
Continuing operations 1,366 1,509
-acquisitions 459 -
-------- --------
1,825 1,509
Cost of sales (1,178) (944)
Exceptional cost of sales - stock re-packaging
provision (869) -
-------- --------
Total cost of sales (2,047) (944)
-------- --------
Gross (loss)/profit (222) 565
Marketing and administrative expenses (2,164) (1,032)
Exceptional item - stock claim provision - (149)
-------- --------
Total marketing and administrative expenses (2,164) (1,181)
--------
Operating loss
Continuing operations (819) (616)
- acquisitions (1,567) -
-------- --------
(2,386) (616)
-------- --------
Bank interest receivable 54 35
-------- --------
Loss on ordinary activities before taxation (2,332) (581)
Taxation - -
-------- --------
Retained loss for the financial year (2,332) (581)
======== ========
Loss per share (8.50p) (5.16p)
Diluted loss per share (8.50p) (5.16p)
All of the company's activities are classed as continuing. There were no gains
or losses in either year other than those included in the above profit and loss
account.
BALANCE SHEET as at 31 MARCH 2004
2004 2003
£000 £000
Fixed assets
Intangible assets 4,161 1,196
Tangible assets 41 20
-------- --------
4,202 1,216
Current assets
Stock 249 73
Debtors 921 249
Cash at bank and in hand 7,293 1,022
-------- --------
8,463 1,344
Creditors: Amounts falling due within one year (1,277) (329)
-------- --------
Net current assets 7,186 1,015
-------- --------
Total assets less current liabilities 11,388 2,231
-------- --------
Net assets 11,388 2,231
======== ========
Capital and reserves
Called up share capital 654 148
Share premium account 16,950 5,967
Profit and loss account (6,216) (3,884)
-------- --------
Shareholders' funds 11,388 2,231
======== ========
CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 MARCH 2004
2004 2003
£000 £000
Cash outflow from operating activities (2,287) (241)
-------- --------
Returns on investments and servicing of finance
Interest received 54 35
-------- --------
Net cash inflow from returns on investments and servicing of
finance 54 35
-------- --------
Capital expenditure
Purchase of tangible fixed assets (10) -
Expenditure relating to the registration of trademarks (16) (8)
-------- --------
Net cash outflow for capital expenditure (26) (8)
-------- --------
Acquisition
Expenses related to acquisition (546) -
Cash acquired with subsidiary 2 -
-------- --------
Net cash outflow relating to acquisitions (544) -
-------- --------
Cash outflow before financing (2,803) (214)
-------- --------
Financing
Issue of ordinary share capital 10,000 -
Cost of share issue (926) -
-------- --------
Net cash inflow from financing 9,074 -
-------- --------
Increase/(decrease) in cash in the year 6,271 (214)
======== ========
NOTES for the year ended 31 MARCH 2004
1. Turnover
Turnover relates to the company's principal activity.
2004 2003
£000 £ 000
United Kingdom 965 901
Europe - EU 18 12
USA 512 58
Duty Free 184 176
Rest of World 146 362
---------- --------
1,825 1,509
========== ========
2. Loss per share
The loss per share is based upon a loss of £2,332,000 (2003: loss of
£581,000) and the weighted average number of shares ranking for dividend
during the year of 27,443,139 (2003: 14,776,306). The fully-diluted loss
per share is based upon the loss as disclosed above and the weighted
average number of shares ranking for dividend during the year of 27,443,139
(2003: 14,776,306) adjusted for the effects of all dilutive potential
shares.
3. Acquisition
On 20 January 2004 the company acquired the business of Extreme Beverage
Company LLC, a company based in Nashville, Tennessee and involved in the
sale and marketing of spirits in the US. Details of the assets and
liabilities, acquired in the non- cash transaction, are as shown below.
Assets/ UK Restated
Liabilities GAAP assets/
acquired adjustments liabilities
£'000 £'000 £'000
Intangible fixed assets 23 (8) 15
Tangible fixed assets 63 (9) 54
-------- -------- -------
86 (17) 69
Stock 817 - 817
Debtors 418 (80) 338
Cash at bank 2 - 2
-------- -------- -------
1,237 (80) 1,157
Creditors (1,776) 130 (1,646)
-------- -------- -------
Net current liabilities (539) 50 (489)
Total assets less current liabilities (453) 33 (420)
Expenses incurred in acquisition (546)
Goodwill 3,381
-------
Satisfied by issue of shares 2,415
=======
The purchase was initially satisfied by the issue of 9,851,000 shares to
the value of £2,415,000 as stated above. Further share issues will be
required as follows:-
* should the share price reach 50p before 20 January 2007 4,104,000;
* should the share price reach 70p before 20 January 2008 4,104,000;
* should the share price reach 90p before 20 January 2009 4,104,000.
* No provision has been made in respect to the above contingent
consideration.
4. Basis of preparation
The financial information set above does not constitute the Group's
statutory accounts for the year ended 31 March 2004 but is derived from
these accounts. Statutory accounts for the year ended 31 March 2004 will be
delivered to the Registrar of Companies in England and Wales following
Group's annual general meeting.
5. Published accounts
Copies of the published accounts of the Company will be sent in due course
to all shareholders and will be available from the offices of Evolution
Beeson Gregory at 100 Wood Street, London, EC2V 7AN.
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 5 hours ago Rathbones Group
- 5 hours ago Sage Group
- 5 hours ago Rathbones Group
- 5 hours ago Sage Group
- 5 hours ago Kavango Resources