TIDMDIS
RNS Number : 7144C
Distil PLC
13 October 2022
Distil plc
("Distil", the "Company" or the "Group")
Interim Results for the six months ended 30 September 2022
Distil plc (AIM:DIS), owner of premium drinks brands RedLeg
Spiced Rum, Blackwoods Gin and Vodka, TRØVE Botanical Vodka and
Blavod Black Vodka, announces its unaudited interim results for the
six months ended 30 September 2022.
Operational highlights:
-- Major move from UK Distributor to a new business model
-- Relationship with major UK retail customers taken under direct control
-- Significant reduction in UK market stock cover associated
with removal of distributor
-- Commercial Director appointed to manage major retail and
exports to deliver ambitious growth plans
-- Appointment of leading distributor to service the UK hospitality sector
-- RedLeg TV advertisement developed and tested in two key regions
-- Major listing for RedLeg Tropical with leading pub group
-- New export market opened in Scandinavia
-- Blackwoods Gin & Vodka Distillery and visitor centre at
the Ardgowan site on track to open Spring 2023
Financial highlights:
-- Turnover decreased by 68% to GBP0.46 million (2021: GBP1.44 million)
-- Gross profit decreased by 74% to GBP210k (2021: GBP794k)
-- Volumes (litres) decreased by 72%
-- Investment in brand marketing and promotion decreased by 6%
to GBP376k (2021: GBP398k)
-- Administrative costs increased by 29% to GBP436k (*2021: GBP338k)
-- Adjusted** Operating loss of GBP602k (2021: GBP58k profit)
-- Loss before tax of GBP555k (2021: GBP45k loss)
-- Cash reserves*** at period end of GBP0.95 million (2021:
GBP4.22 million (GBP1.02 million excluding funds raised for, and
applied to, Ardgowan investment))
* Administrative costs for the prior period adjusted to remove
one-off transaction costs associated with the Ardgowan
investment.
** Operating loss for the prior period adjusted for one-off
transaction costs associated with the Ardgowan investment and for
both periods for share-based payment expense.
*** Prior period cash reserves include proceeds from the
fundraising completed in August 2021 amounting to GBP3.20 million
(before expenses), of which GBP3 million was invested in Ardgowan
by way of a convertible loan.
Don Goulding, Executive Chairman, commenting on these results
said:
"The first six months of this financial year have seen major
changes to our business model and the creation of a stronger
platform for accelerated future growth.
The key change year-on-year is our decision to take direct
control of relationships with our major UK retail customers, and to
move away from our previous distributor, Hi-Spirits, managing our
entire UK trade. From mid-September we transitioned to a hybrid
model, which sees direct sales to our largest retail customers
supported by a new, highly effective distributor, Marussia
Beverages Group, covering hospitality, wholesale and other sectors
where we are currently underdeveloped and have an opportunity for
new growth.
To support this significant development, we appointed a
Commercial Director to navigate the restructure and create new
relationships with our major customers, broaden our on-trade
distribution, and advance our international export network. The
strengthening of our commercial operation will also support our
drive for new product development.
While the remodel has seen a one-off hit to the half year
figures as we transition, we are confident that this move will put
Distil in a stronger position from which to accelerate future
growth"
Executive Chairman's Statement
We are grateful to our UK distributor for helping us build our
distribution platform especially in the off trade but, after
several years with our chosen partner, we decided it was the right
time to create a hybrid distribution platform which would
facilitate the next phase of accelerated brand development and
growth. We subsequently took direct control of relationships with
our largest retail stockists in late September. This was made
possible by the appointment of our Commercial Director who joined
us in June and played an important role in selection of, and
transition to, the right partner to broaden our list of stockists
in the on-trade, online and premium retail. We subsequently began
our distribution partnership with Marussia Beverages Group in
September, and early signs are most encouraging.
This new business model has led to an associated reduction of
stock in trade with little or no 'pipeline' replenishment into the
UK distributor for almost four months as we worked through a
contractual notice period and existing warehouse inventories were
depleted. This has caused a sizeably negative hit to sales out from
Distil, however there has been no real effect on actual consumer
sales.
H1 also saw the launch of the first TV advertising campaign for
RedLeg Spiced Rum in collaboration with ITV Adventures. The
campaign, valued at over GBP500,000, ran on linear channels in two
targeted regions and nationally across ITV Video-On-Demand
services. Focused around bringing the RedLeg crab logo to life, the
creative was named Ad of the Week in a leading trade publication
and has already begun to deliver positive results for the brand.
The Company views this initial test as the first step towards a
robust above-the-line plan to accelerate brand growth.
Our priority remains settling our brands into the new
distribution platform and restoring the momentum previously enjoyed
with accelerated future growth.
Operations
Our operations team has continued to work well by keeping
average year-on-year cost increases, per case, down to single digit
figures despite increased energy costs, general inflationary
pressures, and staff shortages throughout the supply chain, storage
and freight. This has been managed through sourcing new suppliers
and procurement consolidation.
We anticipate continued cost pressure in the short to
medium-term and will maintain our efforts to mitigate price
inflation.
Sustainability is increasingly becoming an important purchasing
consideration for both consumers and trade customers alike. Over
the past six months, our team has been working closely with
suppliers at all stages of the chain in order to reduce the
environmental impact of our brands. This includes sourcing the
latest technologies and materials for closures, and exploring new
sustainable substrates with our label suppliers. Sustainability
will continue to be a key focus across our brands moving
forward.
Ardgowan Distillery Project, Blackwoods distillery and visitor
centre
Site clearance work began earlier in the year as planned and the
building for Blackwoods Gin & Vodka distillery and visitor
experience is now taking shape, with an anticipated opening in
Spring 2023. Photos are available on the Distil website.
Good progress is also being made by the Ardgowan team on its
whisky distillery, which remains on-track for a scheduled 2024
opening.
The Ardgowan Distillery project ambition is to become the most
CO 2 efficient distillery in the Scotch Whisky industry, and
Blackwoods will play a key role on site.
The option remains for Distil to invest a further GBP2m into the
Ardgowan project and the team is working closely with Ardgowan to
move this forward.
Results versus same period last year
Total revenues fell 68% to GBP0.46 million against the prior
period, with UK sales adversely impacted by the removal of
inventory from the distributor supply chain as we transitioned away
from our UK distributor and to direct sales during Q2. The one-off
negative impact on H1 sales of this change amounted to GBP0.67
million inventories depletions and GBP0.3million reduced
promotional activity in the period leading to distributor contract
termination. The transition to direct sales was complete at the end
of September and we do not anticipate any further significant
impact on sales in the second half of the current financial year
attributable to the transition.
The Company sustained an operating loss (after adjusting for
share-based payment expense) of GBP602k (2021: GBP58k profit after
adjusting for share-based payment expense and one-off transaction
costs associated with the Ardgowan investment).
Cash reserves stood at GBP0.95 million at the end of the period
compared to GBP4.22 million at the end of the prior period, which
included proceeds of GBP3.20 million (before expenses) from the
fundraising completed in August 2021, of which GBP3 million was
invested in Ardgowan by way of a convertible loan .
Outlook
The past six months have seen one-off impacts to the business.
However, we are seeking to return to sales growth in seasonally
stronger H2 and continue that growth into the next financial year
and beyond as our new business model delivers additional stockists,
new markets, and our marketing focus delivers strong campaigns and
new products.
Rebuilding distribution across our brands is a key priority, and
we have seen encouraging early results, having recently added new
on-trade listings, including a major pub group, as well as new
export markets, both of which will come through from October
onwards.
The spirits market continues to perform well in the UK, with
value +14% vs 3 years ago (Data: WSTA). The rum category in
particular is showing good growth, reaching GBP1bn in sales and
having overtaken whisky in the UK on trade in the first half of
this year. RedLeg Spiced Rum is positioned in line with consumer
needs, and our new partnership with Marussia Beverages UK will
ensure we are well placed to benefit from market trends.
In addition to the appointment of a Commercial Director, we have
subsequently appointed a new Marketing Director and a Head of
Finance & Operations which will further strengthen our team and
broaden our capabilities.
The current political and economic uncertainties are likely to
see consumers shopping for true value in both on and off trade
outlets, especially over the peak Christmas trading period and
through Spring next year. Our brands are well positioned in this
regard, and we aim to maintain a strong promotional support
programme across all trade sectors. We anticipate full year
performance for the year ending 31 March 2023 to be in line with
current market expectations.
For further information please contact:
Distil plc
Don Goulding Executive Chairman Tel: +44 203 283 4007
Shaun 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 / James Pope Tel +44 20 3657 0050
----------------------
Distil plc - Half Year Results
Consolidated comprehensive interim
income statement
----------- ----------- ----------
Six months Six months Year
ended 30 ended 30 ended
September September 31 March
2022 2021 2022
Un-audited Un-audited Audited
GBP'000 GBP'000 GBP'000
Revenue 460 1,435 2,942
Cost of sales (250) (641) (1,313)
----------- ----------- ----------
Gross profit 210 794 1,629
Administrative expenses:
Advertising and promotional costs (376) (398) (890)
Other administrative expenses (436) (410) (812)
Share based payment expense (30) (30) (59)
Total administrative expenses (842) (838) (1,761)
Operating loss (632) (44) (132)
Finance income 77 - 37
Finance expense - (1) -
Loss before tax from continuing operations (555) (45) (95)
Income tax - 65 269
----------- ----------- ----------
(Loss)/profit for the period (555) 20 174
----------- ----------- ----------
(Loss)/profit per share:
From continuing operations
Basic (pence per share) (0.08) 0.01 0.03
Diluted (pence per share) (0.08) 0.01 0.02
Consolidated interim statement of As at As at As at
financial position 30 September 30 September 31 March
2022 2021 2022
Un-audited Un-audited Audited
GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 159 167 167
Intangible fixed assets 1,613 1,602 1,606
Financial assets 3,038 3,000 3,000
Deferred tax assets 445 241 445
-------------- -------------- ----------
Total non-current assets 5,255 5,010 5,218
Current assets
Inventories 793 542 637
Trade and other receivables 586 674 687
Cash and cash equivalents 948 4,215 1,562
-------------- -------------- ----------
Total current assets 2,327 5,431 2,886
-------------- -------------- ----------
Total assets 7,582 10,441 8,104
-------------- -------------- ----------
LIABILITIES
Current liabilities
Trade and other payables 410 512 407
Financial liabilities 150 3,000 150
Total current liabilities 560 3,512 557
Total liabilities 560 3,512 557
-------------- -------------- ----------
Net assets 7,022 6,929 7,547
-------------- -------------- ----------
EQUITY
Equity attributable to equity holders
of the parent
Share capital 1,474 1,308 1,474
Share premium 6,211 5,964 6,211
Share based payment reserve 228 147 198
Accumulated losses (891) (490) (336)
-------------- -------------- ----------
Total equity 7,022 6,929 7,547
-------------- -------------- ----------
Consolidated interim cash flow statement
----------- ----------- ---------------
Six months Six months Year ended
ended 30 ended 30 31 March
September September 2022
2022 2021
Un-audited Un-audited Audited
Cashflows from operating activities GBP'000 GBP'000 GBP'000
Loss before tax (555) (45) (95)
Adjustments for non-cash/non-operating
items:
Finance income (77) - (37)
Depreciation 8 8 16
Share based payment expense 30 30 59
Expenses settled by shares - - 15
(594) (7) (42)
Movements in working capital
(Increase)/decrease in inventories (156) 11 (84)
Decrease/(increase) in trade receivables 101 (65) (78)
Increase in trade payables 3 154 54
----------- ----------- -----------
Cash (used in)/generated by operations (52) 100 (108)
Net cash (used in)/generated by operating
activities (646) 93 (150)
Cashflows from investing activities
Purchase of property plant & equipment - (8) (16)
Expenditure relating to the acquisition (7) (4) (8)
and registration of licenses and trademarks
Payment on issue of convertible loan notes - - (2,850)
----------- ----------- -----------
Net cash used in investing activities (7) (12) (2,874)
Cashflows from financing activities
Proceeds from issue of shares - 3,072 3,492
Interest received on convertible loans 38 - 32
Net cash generated by financing activities 38 3,072 3,524
Net (decrease)/increase in cash and cash
equivalents (615) 3,153 500
Cash & cash equivalents at the beginning
of the period 1,563 1,062 1,062
Cash & cash equivalents at the end of
the period 948 4,215 1,562
----------- ----------- -----------
Notes to the interim accounts:
1. Basis of preparation
This interim consolidated financial information for the six
months ended 30 September 2022 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 2022, which
have been prepared under UK-adopted International Accounting
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 2022 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 2021 are also unaudited.
3. 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 .
4. Approval of interim report
This interim report was approved by the board on 12 October
2022.
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END
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