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