Interim Results

Blavod Extreme Spirits PLC 28 November 2005 28 November 2005 BLAVOD EXTREME SPIRITS PLC INTERIM REPORT For the six months ended 30 September 2005 Financial • Turnover increased by 140% to £2.2m (2004: 0.92m) • Full year case equivalent shipments increased by 149% • Gross profit of £0.74m (2004: £0.17m) • Gross profit margin of 33.5% up from 18.2% in 2004 • Operating loss reduced to £1.56m (2004: £2.69m) • Cash position and facilities in place to support the Group's growth objectives Brands • Blavod and Players Extreme range delivering strong performances • Distribution channels improving through multiple agreements • Added 2 new wine and spirit partnerships Joint Venture • Joint venture agreed with Suntory International • Full scale launch of first product, El Diamante del Cielo Tequila, expected early 2006 • Significantly strengthened the Group's position within the Global drinks sector Commenting on the results, Chief Executive Officer, Jeff Hopmayer, said: 'We have continued to benefit from the successful growth of our core brands Blavod Black Vodka and the Players Extreme range. Sales in the UK and the US have increased substantially. In addition, we signed a Joint Venture agreement with Suntory in August 2005 which has significant strategic importance for the Group. We expect the Joint Venture to contribute strongly to the Group's profitability in the longer term.' Enquires: Blavod Extreme Spirits plc 020 7930 0777 Jeff Hopmayer, Chief Executive (after 28 November - 001 615 771 9111) Fred Read, Finance Director Brewin Dolphin Securities Ltd 011 3241 0130 Mark Brady Keith Williams Cardew Group 020 7930 0777 Tim Robertson Catherine Maitland CHIEF EXECUTIVE'S STATEMENT Blavod Extreme Spirits plc ('the Group') has continued to make good progress in its strategic and marketing objectives for the six months ended 30 September 2005. Sales of Blavod Black Vodka and the Players Extreme range drove the increase in Group sales to £2.2m, supported by revenues generated from our distribution partnerships. The Group has also made significant strategic progress through its joint venture with Suntory International Corporation and the creation of the joint venture's first product, El Diamante del Cielo Tequila. The global market for wines and spirits continues to expand in the markets in which we operate, while industry consolidation continues. Recent changes created by that consolidation could result in additional opportunities for the Group, as several spirit suppliers reorganise their portfolios and distribution platforms. Results Revenue for the period increased 140% to £2.2m (2004: 0.92m), with revenue per case increasing by 9.3%. Total equivalent case shipments increased by 149%, in the US by 344% and in the UK and other markets by 56%. Equivalent case shipments of Blavod Black Vodka and Players Extreme increased by 63% and 114% respectively. These comparisons, are however, affected by the temporary decline in sales in 2004 during the repackaging of Players Extreme. Despite increases in fuel and manufacturing costs, gross profit margins improved to 33.6% in the US and 28.1% in the UK and other markets. We believe that there continues to be potential for further margin gains. Total marketing and administrative expenses decreased by 19.4%. The Group recorded an increase in gross profits to £0.74m (2004: £0.17m) and a reduced operating loss of £1.56m (2004: £2.69m). Blavod Black Vodka In the UK, new listings expanded the brand's distribution where equivalent case shipments increased by 20%. In the US, the brand increased its penetration and equivalent case shipments increased by 60%. International sales advanced by 87%. Initial indications for the UK Christmas holiday period show forward orders significantly ahead of last year. Players Extreme Range In the US, Players Extreme is making progress with key distributors, retailers and clubs resulting in higher depletion rates (depletion rates indicate cases moving from distributor warehouses to the consumer). This indicates an increased consumer awareness of and demand for our brands. The recent launch of Players Extreme Caramel Vodka has been particularly well received; caramel is already the brand's second most popular flavored vodka, representing 20% of Players Extreme flavored volume. Players Extreme represents 31% of the total Group's equivalent case sales while still only available in the US. Joint Venture In August we announced a joint venture agreement with Suntory International Corporation, a US subsidiary of Suntory Limited, Asia's leading producer of wine and spirits and one of the largest beverage alcohol companies in the world. The new joint venture company, Diamante Spirits LLC, is a 50:50 partnership and will exploit the respective strengths of the two shareholders. Diamante will focus on developing new spirit brands, the ownership of which will remain within the joint venture company. The first brand is a new luxury tequila, El Diamante del Cielo Tequila. The product is being piloted in Miami and Chicago and will be rolled out US wide in the fourth quarter of our financial year. Partnerships The Group continues to form partnerships with other drinks companies to distribute their brands in the UK and US. In the UK the Group distributes Mickey Finn, Fernet Branca and the wines of the Domaines de Baron Rothschild. The representation and distribution relationships have all made positive contributions, with a particularly strong performance by Mickey Finn, which saw case sales increase by 37%. In June we announced an exciting representation in the UK with Molinari Sambuca. In the US we distribute an Italian wine portfolio, including wines from Bruno Rocca, Baroncini, L'Illuminata, Petra and Contadi Castaldi among others. These partnerships have made useful contributions and increased the Group's presence amongst key distributors. Financing The Group is pleased to announce that it is entering into a £5,000,000 facility to support the Groups growth objectives. Outlook The Group is on course to establish its brands in its major target markets. In the second half of the year the Group expects to continue the momentum of the first half, while maintaining the current cost base. The second half of the year is the main season for wine and spirit sales and there are early positive indications that our brands are beginning to demonstrate their potential. Jeffrey S. Hopmayer Chief Executive UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT for the six months ended 30 SEPTEMBER 2005 Year to Notes Six months to 30 September 31 March 2005 2004 2005 Unaudited Unaudited Audited £ 000 £ 000 £ 000 Turnover 2,203 917 3,116 Cost of sales (1,466) (750) (2,218) -------- -------- -------- Gross profit 737 167 898 Marketing and administrative expenses (2,303) (2,858) (4,998) Operating loss (1,566) (2,691) (4,100) Share of operating loss in associate (78) - - -------- -------- -------- (1,644) (2,691) (4,100) Bank interest receivable Group 39 114 182 Associate 1 - - -------- -------- -------- 40 114 182 Loss on ordinary activities before taxation (1,604) (2,577) (3,918) Taxation - - - -------- -------- -------- Loss for the financial period (1,604) (2,577) (3,918) ======== ======== ======== Loss per share 2 (2.45p) (3.94p) (5.99p) Diluted loss per share 2 (2.45p) (3.94p) (5.99p) UNAUDITED CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the six months ended 30 SEPTEMBER 2005 Loss for the financial period (1,604) (2,577) (3,918) Investment in associated undertaking recognised in other reserves 1 635 - - Foreign exchange differences on conversion of net investments 246 - (122) -------- -------- -------- Total recognised losses for the period (723) (2,577) (4,040) ======== ======== ======== UNAUDITED CONSOLIDATED BALANCE SHEET as at 30 SEPTEMBER 2005 30 September 31 March 2005 2004 2005 Unaudited Unaudited Audited £ 000 £ 000 £ 000 Fixed assets Intangible assets 3,847 4,055 3,946 Tangible assets 66 96 82 Investment in associate 558 - - -------- -------- -------- 4,471 4,151 4,028 -------- -------- -------- Current assets Stock 1,052 770 866 Debtors 1,375 1,598 1,113 Cash at bank 880 4,105 2,142 -------- -------- -------- 3,307 6,473 4,121 Creditors: amounts falling due within one year (1,177) (1,847) (824) -------- -------- -------- Net current assets 2,130 4,626 3,297 -------- -------- -------- Total assets less current liabilities 6,601 8,777 7,325 Creditors: amounts falling due after one year (10) - (11) -------- -------- -------- Net assets 6,591 8,777 7,314 ======== ======== ======== Capital and reserves Called up share capital 654 654 654 Share premium account 16,916 16,916 16,916 Other reserves 558 - - Profit and loss account (11,537) (8,793) (10,256) -------- -------- -------- Shareholders' funds 6,591 8,777 7,314 ======== ======== ======== UNAUDITED CONSOLIDATED CASH FLOW STATEMENT for the period ended 30 SEPTEMBER 2005 Year to Six months to 30 September 31 March 2005 2004 2005 Unaudited Unaudited Audited £ 000 £ 000 £ 000 Cash outflow from operating activities (1,289) (3,187) (5,209) Returns on investments Interest received 40 114 182 -------- -------- -------- Net cash inflow from returns on investments 40 114 182 Capital expenditure (9) (74) (77) Purchase of tangible fixed assets Expenditure relating to the registration of trademarks (3) (7) (11) -------- -------- -------- Net cash outflow for capital expenditure (12) (81) (88) Acquisition Expenses related to acquisition - (34) (34) -------- -------- -------- Net cash outflow relating to acquisitions - (34) (34) -------- -------- -------- Cash outflow before financing (1,261) (3,188) (5,149) -------- -------- -------- Financing (1) - (2) Repayment of capital element of finance lease rental -------- -------- -------- Net cash inflow from financing (1) - (2) -------- -------- -------- Decrease in cash in the period (1,262) (3,188) (5,151) ======== ======== ======== NOTES TO THE FINANCIAL STATEMENTS for the six months ended 30 SEPTEMBER 2005 1. Basis of preparation The financial information in this interim 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. The financial information for the full preceding year is based on the statutory accounts for the year to 31 March 2005. Those accounts , upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. The interim financial information has been prepared on the basis of the accounting policies set out in the Group's statutory accounts for the year ended 31 March 2005. In the period, Blavod Extreme Spirits PLC acquired a 50% holding in an associated undertaking, Diamante Spirits LLC, at zero cost. The associate is included in the consolidated accounts on an equity accounting basis, in that the Group's share of the net assets of the associate are included within investment in associate and the Group share of the profits or losses are included within the profit and loss account. Suntory International Corporation, which owns the other 50% of the associate, invested £1,270,000 in Diamante Spirits, LLC on its formation, and the Group's share of this amount is included within other reserves. A transfer equivalent to the Group's share of the loss for the year has been made between other reserves and the profit and loss account within shareholders' funds. 2. Loss per share The calculations of earnings per share for the six months, both basic and diluted, are based on a loss of £1,604,000 (2004: £2,577,000) and 65,443,633 (2004: 65,443,633) shares in issue. The calculations of earnings per share for the full year to 31 March 2005 are based on a loss of £3,918,000, and 65,443,633 shares in issue. This information is provided by RNS The company news service from the London Stock Exchange

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