Regulatory Announcement

Company Blavod Extreme Sp. TIDM BES Headline Final Results Released    14:38 06-Jun-08 Number 1867W14



Blavod Extreme Spirits PLC

6 June 2008

Blavod Extreme Spirits PLC 

Blavod Extreme Spirits plc (the "Company"), the owner of the Blavod Black Vodka brand, and wine and spirits distributor, announces its preliminary results for the year ended 31 March 2008.

Financial highlights

• Revenue up 26% to £4.09 million (2007: £3.05 million)

• Profitable at operating company level with £92k operating profit (2007 : loss (£172k)) 

• Reported pre-tax loss from continuing operations reduced to £155k (2007: £649k);

• Reported pre-tax profit for the year of £1.08 million (2007: loss £3.50 million) after profit on disposal of discontinued operations

• Company has net cash resources at £0.5 million at the year end (2007: £0.4 million)

Business highlights

• All brands in the business showing increased turnover year on year.

• Successful acquisition of the licence for Blackwood's Gin and Vodka in May 

• Disposal of loss-making US business complete

• Proposal to change the Company's name 

Commenting on the results, Richard Ambler, Chief Executive, said: 

"A year of solid progress both for the Blavod vodka brand and all of our agency brands has resulted in our first operating profit, and the very recent acquisition of two new brands and the encouraging start to the new financial year give us confidence in more progress in the year ahead. "

For further information, please contact:

Blavod Extreme Spirits plc                                                Tel: 0207 352 2096

Richard Ambler

Brewin Dolphin Investment Banking                                Tel: 0113 241 0126

Neil Baldwin

Preliminary Results

For the twelve months ended 31 March 2008

Chairman's Statement

Having sold the loss-making Blavod Extreme Spirits USA Inc's brands, assets and liabilities in September 2007, the Group has made solid progress.

Each brand in our portfolio contributed to the 26% growth in turnover: Blavod responded to a modest investment in promotional spending, and gained strongly in export sales; Mickey Finns benefited from strong demand and increased range and distribution; and Cockspur prospered over the first full year of representation by the Group. Consequently, the UK operating company made a profit, for the first time, of £91,000, compared to a loss of £172,000 in the previous year. Head Office costs remained at previous high levels resulting in an operating loss in the UK of £166,000.

In the circular proposing to shareholders the disposal of the US business, the directors wrote that this disposal would enable the Company to widen the portfolio of brands. This May we have been able to take advantage of such an opportunity, and to acquire the licences for Blackwood's Gin and Blackwood's Vodka, under terms recently announced, and which should lead to full ownership of the brands in due course. We are enthusiastic about this development: these brands should contribute in a meaningful way to Group turnover in the current year and significantly more thereafter, generating good margins.

The Group has been able to finance its growth and the acquisition of the new brands through the consideration received for the sale of the US business and the issue of new shares in December 2007. We will be in a position to finance further growth by using an invoice discounting facility recently put in place.

In 2008/9, sales have increased satisfactorily in the first two months, in spite of the rise in excise duty in the UK. Export volume of Blavod remains buoyant, and there is nascent demand for Blackwood's Gin. An experienced and stable management team is in place, spending behind the brands will be increased and overhead costs contained, and we expect a positive result for the full year.

Some changes are needed to reflect the structure and future prospects of the Company.

• The Company Balance Sheet has a deficit of £20m on the profit and loss account, and an almost equivalent balance in the Share Premium Account. This, in its current form, precludes the payment of any dividend even in the most optimistic foreseeable future. Now that the Company is approaching profitability we will shortly seek shareholder approval to apply to the court for restructuring to reduce substantially the negative balance on the profit and loss account.  
  
• Certain directors and staff hold share options issue several years ago in a different context, at an exercise price of 24.5 pence. In the current situation these options no longer represent a meaningful incentive. We propose to ask shareholders to agree to cancel these options and to issue new options to current directors and employees, at an appropriate price. The detailed proposal is set out in the AGM notice.
  
• The Company's name, eponymous with one of its major brands, no longer represents the diversity of the portfolio, in particular the importance of the wine and spirit agency brands. Nor does the inclusion of the word "Extreme" represent more than a reminder of previous hopes and disappointments. We propose to shareholders, subject to their approval to change the Company's name to one that is more appropriate. Shareholders should be reassured that any costs connected with this change will be minimal, no agency being appointed to advise on the name, logo or other design elements.

Following a year of major change the Group can look forward to growth of its brands and a profitable year. 

Colin Campbell

Director

Consolidated income statement

Earnings per share: 

From continuing operations:

From total profit/(loss):

Consolidated balance sheet

  Consolidated statement of recognised income and expense

Consolidated cash flow statement

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

 1    Basis of preparation

The financial information in this statement is for the twelve months ended 31 March 2008 and is prepared in accordance with applicable accounting standards. It does not constitute statutory accounts as defined in the Section 240 of the Companies Act 1985. 

2    Earnings per share

The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year.  

The diluted earnings/(loss) per share is identical to the basic earnings/(loss) per share as the exercise of warrants and options would be anti-dilutive as the market value of shares is less than the exercise price of the warrants and options granted. 

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.

Continuing operations

Discontinued operations

Total operations

3    Explanation of transition to IFRS

These are the Group's first financial statements prepared under IFRS.  

An explanation of how the transition from UK GAAP to IFRS has affected the Group's reported financial position, financial performance and cash flows is set out below.

IFRS 1 permits companies adopting IFRS for the first time to take certain exemptions from the full requirements of IFRS in the transition period. These financial statements have been prepared on the basis of taking the following exemptions:

Business combinations prior to 1 April 2006, the Group's date of transition to IFRS, have not been restated to comply with IFRS 3 "Business Combinations". Accordingly the classification of the combination (acquisition, reverse acquisition or merger) remains unchanged from that used under UK GAAP. Assets and liabilities are recognised at date of transition if they would be recognised under IFRS, and are measured using their UK GAAP carrying amount immediately post-acquisition as deemed cost under IFRS, unless IFRS requires fair value measurement. Deferred tax is adjusted for the impact of any consequential adjustments after taking advantage of the transitional provisions.  

Cumulative translation differences on foreign operations are deemed to be nil at 1 April 2006. Gains recognised in the consolidated income statement on the subsequent disposal of foreign operations have excluded translation differences arising prior to the transition date; and

The entity has elected not to apply IAS 21 "The Effects of Changes in Foreign Exchange Rates" retrospectively to goodwill and fair value adjustments arising on business combinations before the Group's date of transition to IFRS. Such goodwill and fair value adjustments are not treated as foreign currency assets and so are not retranslated at each reporting date.

Reconciliation of equity at 1 April 2006