Final Results

Blavod Extreme Spirits PLC 22 October 2007 Blavod Extreme Spirits PLC 22 October 2007 Blavod Extreme Spirits PLC Preliminary Results For the twelve months ended 31 March 2007 Trading Highlights Financial • Turnover increased 29% to £6.9m (2006: £5.4m) • Full year case shipments increased by 22.0% • Recorded a gross margin of £1.8m (2006: £1.7m) • Year-end gross margin of 26.0% (2006: 31.2%) • Operational results, excluding the associate, but with impairment of goodwill, show a loss of £6.1m (2006: £2.5m) Brands • Difficult market trend in the USA • Blavod Black Vodka continues to grow in major markets • Significant growth for UK agency brands, Mickey Finn's, Molinari and Cockspur Associate • Diamante Spirits, LLC - the Associate Company owned equally by Blavod Extreme and Suntory International which produces the El Diamante del Cielo Tequila products contributed a loss of £0.3m Commenting on the results, Chairman Colin Campbell, said: 'The year was one of sharp contrasts and ultimate disappointment. Markets in the US proved difficult and limited finance restricted brand promotion. The steps taken to dispose of the US operation and to concentrate in the UK controlled markets, where trends are positive, should be to the ultimate benefit of our shareholders.' Enquiries: Blavod Extreme Spirits plc Colin Campbell 33 6 8781 1 362 Brewin Dolphin 0113 241 0126 Chairman's Statement The year was one of sharp contrasts and ultimate disappointment. All the Company's markets began well, with strong sales through the first six months. However autumn and winter proved to be very difficult periods in the USA, with slower sales and declining margins. The Company did not have sufficient cash to continue to support the brands, and advertising and promotional expenditure was cut. Management was distracted by an offer for the Company, ultimately aborted, which also caused uncertainty among our customers. Over the full twelve months only the Cielo Tequila brand showed volume growth in the US. On the other hand, the UK market prospered, largely because of the continued growth of Mickey Finn, and the addition of Cockspur Rum in the second quarter; but in this market also, the state of the Company's finances forced management to reduce promotional expenditure behind Blavod Black Vodka, restricting the brand's potential. Although the results are close to market expectations, your Board regards the quality of earnings as unhealthy. This state of affairs led the Directors to examine all options open to the Company, and culminated in the recommendation to dispose of the US business, which was agreed at the EGM on September 24th. With the sale of the US operation it was considered prudent to review the value of goodwill associated with the acquisition and to write it off. The beginning of the year in the UK has been encouraging. The directors believe that sales growth will continue strongly and that new finance will be required to provide the necessary working capital. The Company is considering a range of options to address this requirement which includes an issue of new equity. The directors are seeking authority from shareholders at the forthcoming Extraordinary General Meeting on 13 November 2007 to be able to issue new ordinary shares comprising up to 20% of the existing issued share capital whilst dis-applying the need to offer shares pre-emptively to shareholders. At the EGM, called to approve these accounts, the Directors expect to announce the sales results for the first six months of the year, split between the US and the UK divisions, and we shall regularly report on the performance of the smaller, simpler Company. Colin Campbell Chairman Preliminary Results CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 31 March 2007 Notes Year to 31 March 2006 2007 (restated) £000 £000 Turnover 1 5,353 6,889 Cost of sales (3,682) (5,105) Administrative Expenses Gross profit 1,671 1,794 Impairment of goodwill - (2,863) Marketing and other administrative expenses (4,188) (5,063) Total administrative expenses (7,976) (4,188) Operating loss (2,517) (6,132) Share of the operating loss of associate 2 (470) (323) (2,987) (6,455) Bank interest receivable Group 48 (72) Associate 3 - 51 (72) Loss on ordinary activities before taxation (2,936) (6,527) Taxation - - Loss for the year (2,936) (6,527) Loss per share 3 (4.44p) (9.08p) Diluted loss per share (4.44p) (9.08p) STATEMENT OF RECOGNISED GAINS AND LOSSES for the year ended 31 March 2007 Year to 31 March Year to 31 March 2006 2007 (restated) £000 £000 Loss for the year (2,936) (6,527) Recognition of associate 931 - Share of additional capital contribution to associate - 156 Foreign exchange difference on conversion of associate - (42) Foreign exchange differences on conversion of net investments (384) 595 Total recognised losses for the year (2,389) (5,818) CONSOLIDATED BALANCE SHEET as at 31 March 2007 As at 31 March As at 31 March 2006 2007 (restated) £000 £000 Fixed assets Intangible assets 3,728 682 Tangible assets 55 33 Investment in associate 464 255 4,247 970 Current assets Stock 1,089 1,032 Debtors 1,405 1,313 Cash at bank 1,070 401 3,564 2,746 Creditors: amounts falling due within one year (1,716) (1,482) Net current assets 1,848 1,264 Total assets less current liabilities 6,095 2,234 Creditors: amounts falling due after one year (5) (1,164) Net assets 6,090 570 Capital and reserves Called up share capital 713 732 Share premium account 18,002 18,240 Shares to be issued 1,052 1,093 Other reserves 464 255 Profit and loss account (14,141) (19,750) Shareholders' funds 6,090 570 CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 March 2007 2006 2007 (restated) Cash outflow from operating activities (2,245) (2,474) Returns on investments Interest received 48 - Interest paid - (72) Net cash inflow from returns on investments 48 (72) Capital expenditure Purchase of tangible fixed assets (2) (23) Proceeds from sale of tangible assets - 8 Expenditure relating to the registration of (10) (20) trademarks Net cash outflow for capital expenditure (12) (35) Cash outflow before financing (2,209) (2,581) Financing Issue of ordinary share capital 1,240 257 Share issue costs (95) - Line of credit advances - 1,644 Repayment of capital element of finance lease (8) (9) rental Net cash inflow from financing 1,137 1,912 (Decrease) of cash in the period (1,072) (669) NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2007 1. Basis of preparation The financial information in this statement is prepared under the historical cost convention and in accordance with applicable accounting standards. It does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. 2. Share of the operating loss of Associate This relates to the Group's share of the losses of Diamante Spirits, LLC, accounted for in accordance with FRS 9 'Associates and Joint Ventures' and is a 'non-cash' item. 3. Loss per share The calculations of earnings per share for the year, both basic and diluted, are based on a loss of £6,527,000 (2006: £2,936,000 restated) and 71,891,182 (2006: 66,074,562) shares in issue. 4. Published accounts Copies of the published accounts of the Company have today been sent to all shareholders and will be available from the offices of Brewin Dolphin, 34 Lisbon Street, Leeds, LS1 4LX and can be located on www.blavodextreme.com/aim_report1.html This information is provided by RNS The company news service from the London Stock Exchange

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