TIDMDIS
RNS Number : 7165B
Distil PLC
14 June 2021
Distil plc
("Distil" or the "Group")
Final Results for year ended 31 March 2021
"Rising to the challenge"
Distil plc (AIM: DIS), owner of premium drinks brands RedLeg
Spiced Rum, Blackwoods Gin and Vodka, Blavod Black Vodka, Trøve
Botanical Spirit, Jago's Cream Liqueur and Diva Vodka, announces
its final results for the year ended 31 March 2021.
Operational review
-- Multi award winning new-to-world brand TRØVE Botanical Vodka
launched into the UK market in three varieties; Valencia Orange
& Lime, Raspberry, Lemongrass & Mint and Green Apple &
Ginger.
-- RedLeg Banana Rum and RedLeg Tropical Rum successfully launched into the UK market
-- Ready-to-drink ("RTD") RedLeg Pineapple Rum with Franklin
& Sons Ginger Ale launched and listed in major UK retailers
-- Increase in Marketing headcount and brand investment
-- Increase in Product Development headcount, resources and investment
-- Geographic footprint continues to grow. New markets opened in
Austria, Hungary, Slovakia and Africa
Financial review
-- Turnover increased 48% to GBP3,616k (2020: GBP2,441k)
-- Gross profit increased 39% to GBP2,010k (2020: GBP1,446k)
-- Margins decreased to 55.6% (2020: 59.2%)
-- Advertising and promotion spend increased 61% to GBP1,071k (2020:GBP665k)
-- Other administrative expenses increased 9% to GBP651k (2020: GBP597k)
-- Operating profit increased 38% to GBP254k (2020: GBP184k)
-- Net cash inflow of GBP204k (2020: GBP210k outflow) resulting
in year-end cash reserves of GBP1,062k (2020: GBP858k)
-- Net assets of GBP3.81m (2020: GBP3.43m) at 31 March 2021
Don Goulding, Executive Chairman of Distil, said:
"I am pleased to report significant growth and development of
our business in the year ended 31 March 2021.
Our small but talented and impressive team were able to respond
rapidly to the unique Covid pandemic related challenges we faced
throughout the year. Despite prolonged closure of the important
hospitality and travel retail sectors, plus supply disruptions,
export shipping complications and remote working, they delivered an
excellent set of results.
We also delivered against our promise of further new products
and whilst these have been initially launched mainly in the UK with
international markets to follow, we increased our export sales of
existing brands by 81% year on year. "
Distil PLC
Don Goulding, Executive Chairman Tel: +44 20 3283 4006
Shaun Claydon, Finance Director
----------------------
SPARK Advisory Partners Limited
(NOMAD)
----------------------
Neil Baldwin Tel: +44 20 3368 3550
Mark Brady
----------------------
Turner Pope Investments (TPI)
Ltd (Broker)
----------------------
Andy Thacker/James Pope Tel: +44 20 3657 0050
----------------------
This announcement contains inside information as stipulated
under the UK version of the Market Abuse Regulation No 596/2014
which is part of English Law by virtue of the European (Withdrawal)
Act 2018, as amended. On publication of this announcement via a
regulatory information service this information is considered to be
in the public domain.
About Distil
Distil Plc is quoted on the AIM market of the London Stock
Exchange. It owns drinks brands in a number of sectors of the
alcoholic drinks market. These include premium spiced rum, vodka,
gin, vodka vanilla cream liqueur and are called RedLeg Spiced Rum.
Blackwoods Vintage Gin, Blackwoods Vodka, Blavod Original Black
Vodka, Trøve Botanical Spirit, Diva Vodka and Jago's Vanilla Cream
Liqueur.
Chairman's Statement
I am pleased to report another year of increased profit, revenue
growth and continued investment in our brands for the year ended 31
March 2021.
COVID-19
The COVID-19 pandemic created a unique, and hopefully one-off,
set of circumstances which resulted in a challenging 12 months. As
our financial year began in tandem with the first national UK
lockdown, we reprioritised our investments and, by working closely
with our partners at all levels of the business, were able to focus
on meeting the rapidly changing needs of consumer and customer.
The safety and wellbeing of our staff remained paramount
throughout, and my thanks go to the whole team for their
adaptability, tenacity and hard work. They each did an outstanding
job in managing the various issues faced and the added complication
of working remotely. Many learnings will be taken from the past
year; these challenges forced us to scrutinise our ways of working,
and resulted in positive simplification and improvement of many
processes which will remain in place as we move forward.
Performance
I am pleased to report that we achieved a strong set of results
and closed the year having grown our combined business above that
of spirits market growth with revenues increasing by 48% year on
year. Within this result our sales mix by spirit category shifted
significantly; rum sales increased 50%, gin advanced 50% both
enjoying breadth of distribution while vodka decreased by 45% due
to distribution weight in Duty free.
Naturally, results by brand, by market, and by trade channel
varied significantly. Whilst our overall sales were hit in the
hospitality and travel retail sectors, these declines were offset
by increases across grocery and online retail.
To support our goal of creating stakeholder value through
premium spirit brand building in the UK and internationally, we
increased our marketing investment by 61%, mainly in support of
additional brand activation, but also in the area of new product
development (NPD). This year has seen the continued move into new
formats with the successful launch of RedLeg Pineapple and Ginger
Ale ready-to-serve cans in partnership with Franklin & Sons
(Global Brands), together with the launch of two new flavours -
RedLeg Banana Rum and RedLeg Tropical Rum - to capitalise on the
growing trend for flavoured spirits.
In addition, this year has seen the launch of TRØVE, a lower ABV
botanical spirit crafted in partnership with Master Distiller, Sion
Edwards. Three flavours were developed for launch, all sugar free,
gluten free, lower calorie, and vegan while delivering the same
complexity of flavour and rich mouthfeel as full-strength spirits
to suit emerging consumer trends towards more balanced lifestyles.
The brand has already been awarded medals in the prestigious Low
& No Masters 2021, organised by The Spirits Business.
New product launches were heavily weighted in Q4, so the
revenues are not material in these results, however we are
confident that they will add significant value to the business in
the coming years.
Expanding our geographical footprint remains a strategic
priority and a key business driver, with new markets opened in
Europe and Africa. As a result, combined export sales rose 85%
year-on-year.
Our cost of goods increased, particularly in the first half of
the year, reflecting COVID-19 inefficiencies driven by plant
closures, social distancing, supply disruption, and movement of
goods to more accessible locations to ensure we were able to fulfil
demand. This reduced our gross profit margin in the short to
mid-term from 59% to 56%.
Distil remains committed to reducing the environmental impact of
our business and as such, this year saw us seek out new partners to
support us in the move to cost effective eco-friendly packaging,
including FSC certified labels, glue-free corks, and recyclable
capsules.
All other costs in our business remain tightly controlled and
this improved EBITDA by 55% year-on-year, with cash generation
remaining strong resulting in a 24% increase in year-end cash
reserves to GBP1.1 million.
Board Changes
In January, we welcomed Roland Grain on to the board as a
Non-executive Director. He replaced Mark Quinn who had served as
Non-executive Director since 2010. I am grateful to Mark for his
excellent contribution to the board and thank him for his support
throughout.
Roland is a successful entrepreneur based in Vienna, who founded
his IT & HR business in 1995. Over the last 10 years he has
built a spirits investment portfolio including Manly Spirits,
(Australia), East London Liquor Company, Potstill Spirits Trading -
Austria's leading Whisky Importer and Distil Plc.
At the same time, we promoted Kate O'Connell, Marketing and
Operations Director, to the board. Kate has been with the company
for 10 years and played an integral role in helping to establish
new ways of working and launching new products.
Outlook
The beverage alcohol market remains highly attractive globally,
and we remain confident in our relatively small but talented team
who are able to respond rapidly to changing environments and growth
opportunities.
As we commence the new financial year, many UK restrictions
relating to social distancing and entertainment are scheduled to be
lifted. We are therefore hopeful that the hospitality and
entertainment sector will resume full activity over the course of
the summer and autumn months. This is particularly important for
consumer confidence, brand building and new product
development.
At this stage, with many export markets being under varying
degrees of lockdown and timelines for the resumption of
international travel uncertain, we believe it is too early to
forecast with accuracy or certainty for the coming year. Market
guidance will be released as soon as we are suitably confident in
the stability of consumer free-movement and trade channels
remaining open.
In the meantime, while maintaining tight control of costs and
cash, we will continue to invest in our brands, NPD and new
packaging to meet consumer needs longer term while keeping
attention on supporting changing trade needs in the short to
mid-term.
Don Goulding
Executive Chairman
Date: 11 June 2021
Strategic Report
Results for the year
The profit before tax attributable to shareholders for the year
amounted to GBP243k (2020: GBP182k). Adjusted EBITDA* was GBP303k
(2020: GBP195k).
Against the difficult backdrop of the COVID-19 pandemic and
ongoing disruption to supply chains caused by the UK's withdrawal
from the EU we delivered another year of successful growth. Overall
sales volumes and revenues increased significantly during the
period, supported by a 61% increase in marketing and promotional
spend ahead of sales in line with our strategic plans. Despite a
reduction in gross margin to 56% as a result of COVID-19 related
production charges and the ramp up in marketing spend we were able
to increase brand contribution from GBP781k to GBP939k. We
anticipate a gradual recovery in gross margins as pandemic
restrictions are eased and production capacity constraints are
lifted albeit the timing of this remains uncertain.
The strong growth in overall sales and volumes was driven by
another year of strong performance from Redleg Spiced Rum, revenue
sales of which grew 50% and were enhanced by the successful launch
of further flavour variants during the period. Blackwoods Vintage
Gin also delivered significant sales revenue growth of 50%
year-on-year. Sales of Blavod Vodka were impacted by the COVID-19
related closures across the Travel Retail (Duty free) sector
resulting in a decline of 65% in sales revenue.
The Group continues to minimise overheads where possible, whilst
ensuring sufficient investment to support the growth in sales of
its existing brands and development of new brands. Other
administrative expenses (including lease amortisation costs)
increased by 9% over prior year, largely due to investment in staff
recruitment to support business growth. The Group also seeks to
carefully manage its cash resources and posted a net operating cash
inflow of GBP254k (2020: GBP99k outflow) during the year.
The Group's position at the financial year end remained robust
showing net assets of GBP3.81m (2020: GBP3.43m). This included cash
reserves of GBP1.06m (2020: GBP0.86m) and intangible assets of
GBP1.60m (2020: GBP1.58m) comprising expenditure on trademarks
related to our brands. Inventories increased to GBP553k (2020:
GBP349k) in line with the increase in monthly sales volumes.
*EBITDA is adjusted for share based payment expenses as well as
one-off IFRS 16 amortisation and finance expenses in 2020. There
are no IFRS 16 related amortisation or finance expenses in
2021.
Principal activities and business review
Distil Plc (the "Company") acts as a holding company for the
entities in the Distil Plc group (the "Group"). The principal
activity of the Group throughout the period under review was the
marketing and selling of RedLeg Spiced Rum, Blackwoods Vintage Gin,
Blackwoods Vodka, Blavod Original Black Vodka, Trøve Botanical
Spirit and Diva Vodka.
The results for the 2021 financial year reflect the continued
focus on investing in the Group's key brands to drive top line
growth in both domestic and international markets whilst ensuring
overhead costs remain appropriate for the size of the Group.
Key performance indicators
The Group monitors progress with particular reference to the
following key performance indicators:
-- Contribution - defined as gross margin less advertising and promotional costs
Contribution increased GBP158k from GBP781k in 2020 to GBP939k
in 2021. This increase was achieved through a 48% increase in
overall sales revenues which more than offset a reduction in gross
margin to 56% and a 61% increase in advertising and marketing costs
during the year
-- Sales turnover versus previous year
Total sales increased 48% year-on-year to GBP3.62m. RedLeg
Spiced Rum and Blackwoods Gin were the key performance driver with
both brands posting a 50% increase in revenue, ahead of the wider
spirts market. Blackwoods Vodka and Blavod Original Black Vodka
experienced declines of 60% and 66% respectively, albeit off
relatively small bases.
-- Gross margin versus previous year
Gross margin as a percentage of sales fell to 56% compared to
59% in the prior year due to an increase in production costs caused
by the COVID-19 pandemic.
We also closely monitor both the level of, and value derived
from our advertising and promotional costs and other administrative
costs. As a percentage of sales, advertising and promotional spend
amounted to 30% (2020: 27%) during the year, reflecting our
continued commitment to investing in existing and new brand
development.
Other administrative costs increased 9% to GBP651k (2020:
GBP597k) as we increased headcount whilst continuing to carefully
manage our cost base.
Principal risks and uncertainties
As a relatively small but growing business our senior management
is naturally involved day to day in all key decisions and the
management of risk. Where possible, structured processes and
strategies are in place to monitor and mitigate as appropriate.
This involves a formal review at Board level.
The directors are of the opinion that a thorough risk management
process has been adopted which involves a formal review of the
principal risks identified below. Where possible, processes are in
place to monitor and mitigate such risks.
-- Economic downturn
The success of the business is reliant on consumer spending. An
economic downturn, resulting in reduction of consumer spending
power, will have a direct impact on the income achieved by the
Group. In response to this risk, senior management aim to keep
abreast of economic conditions. In cases of severe economic
downturn, marketing and pricing strategies will be modified to
reflect the new market conditions.
-- High proportion of fixed overheads and variable revenues
A large proportion of the Group's overheads are fixed. There is
the risk that any significant changes in revenue may lead to the
inability to cover such costs. Senior management closely monitor
fixed overheads against budget on a monthly basis and cost saving
exercises are implemented wherever possible when there is an
anticipated decline in revenues.
-- Competition
The market in which the Group operates is highly competitive. As
a result, there is constant downward pressure on margins and the
additional risk of being unable to meet customer expectations.
Policies of constant price monitoring and ongoing market research
are in place to mitigate such risks.
-- Failure to ensure brands evolve in relation to changes in consumer taste
The Group's products are subject to shifts in fashions and
trends and the Group is therefore exposed to the risk that it will
be unable to evolve its brands to meet such changes in taste. The
Group carries out regular consumer research on an ongoing basis in
an attempt to carefully monitor developments in consumer taste.
-- Portfolio management
A key driver of the Group's success lies in the mix and
performance of the brands which form the Group's portfolio. The
Group constantly and carefully monitors the performance of each
brand within the portfolio to ensure that its individual
performance is optimised together with the overall balance of
performance of all brands marketed and sold by the Group.
-- COVID-19 pandemic
The Group continues to comply with international governmental
advice and requirements across its operations to prioritise safety,
with all employees able to continue working effectively from home
with minimal disruption to the company's day-to-day operations.
Whilst the ongoing pandemic continues to present challenges in
forecasting accurate market trends over the next six months, our
brands remain relatively well positioned and we will continue to
work closely with our trade partners and customers to ensure we
maintain stock cover and flexibility through this uncertain period.
In addition we will continue to prepare exciting new marketing
programmes, line extensions and new to world brands to take
advantage of the fresh opportunities that will naturally arise as
consumer habits and trade structures continue to shift.
Future developments
We remain focused on four key growth drivers to maintain
profitable brand growth and create value. These are listed
below:
Brand activation and marketing at the point of sale:
-- Precise timing and frequency of promotional activity including occasions & gifting.
-- Bringing promotions to life and aligned with changing consumer needs.
-- Marketing and promotional activity tailored to local market needs.
Innovation in liquid & packaging development:
-- Pack sizes & formats, new brands, liquids and flavours.
Route to consumer:
-- Build long term relationships with capable local distributors in each key market.
-- Open new territories for each key brand, targeting premium growth markets.
-- Develop new trade channels through format and product.
Access to new production and design:
-- Across all aspects of distilling, bottling, packaging.
S Claydon
Director
11 June 2021
Consolidated statement of comprehensive income
For the year ended 31 March 2021
2021 2020
GBP'000 GBP'000
--------------------------------------------- -------- --------
Revenue 3,616 2,441
Cost of sales (1,606) (995)
---------------------------------------------- -------- --------
Gross profit 2,010 1,446
Administrative expenses:
Advertising and promotional costs (1,071) (665)
Other administrative expenses (651) (597)
Share based payment expense (34) -
Total administrative expenses (1,756) (1,262)
---------------------------------------------- -------- --------
Profit from operations 254 184
Finance expense (11) (2)
Profit before tax 243 182
Taxation 100 76
---------------------------------------------- -------- --------
Profit for the year and total comprehensive
income 343 258
---------------------------------------------- -------- --------
Earnings per share
Basic and diluted (pence per share) 0.07 0.05
---------------------------------------------- -------- --------
Consolidated statement of financial position
As at 31 March 2021
2021 2020
GBP'000 GBP'000
------------------------------- -------- --------
Assets
Non-current assets
Property, plant and equipment 167 153
Intangible assets 1,598 1,577
Deferred tax asset 176 76
-------------------------------- -------- --------
Total non-current assets 1,941 1,806
-------------------------------- -------- --------
Current assets
Inventories 553 349
Trade and other receivables 609 543
Cash and cash equivalents 1,062 858
-------------------------------- -------- --------
Total current assets 2,224 1,750
-------------------------------- -------- --------
Total assets 4,165 3,556
-------------------------------- -------- --------
Liabilities
Current liabilities
Trade and other payables 358 126
-------------------------------- -------- --------
Total current liabilities 358 126
-------------------------------- -------- --------
Total liabilities 358 126
-------------------------------- -------- --------
Net assets 3,807 3,430
-------------------------------- -------- --------
Equity
Share capital 1,292 1,292
Share premium 2,908 2,908
Share-based payment reserve 117 83
Accumulated losses (510) (853)
-------------------------------- -------- --------
Total equity 3,807 3,430
-------------------------------- -------- --------
Consolidated statement of changes in equity
For the year ended 31 March 2021
Share-based
Share Share payment Accumulated Total
capital premium reserve losses equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- -------- ----------- ----------- -------
Balance at 1 April 2019 1,292 2,908 83 (1,109) 3,174
Right-of-use asset opening
balance - - - (2) (2)
Profit for the year
and total comprehensive
income - - - 258 258
--------------------------- -------- -------- ----------- ----------- -------
Balance at 31 March
2020 and
1 April 2020 1,292 2,908 83 (853) 3,430
--------------------------- -------- -------- ----------- ----------- -------
Profit for the year
and total comprehensive
income - - - 343 343
Share option charges - - 34 - 34
--------------------------- -------- -------- ----------- ----------- -------
Balance at 31 March
2021 1,292 2,908 117 (510) 3,807
--------------------------- -------- -------- ----------- ----------- -------
Consolidated statement of cash flows
For the year ended 31 March 2021
2021 2020
GBP'000 GBP'000
------------------------------------------------- -------- --------
Cash flows from operating activities
Profit before taxation 243 182
Adjustments for non-cash/non-operating items:
Finance expense 11 2
Depreciation 15 13
Amortisation of right of use assets - 49
Share-based payment expense 34 -
303 246
Movements in working capital
Increase in inventories (204) (37)
Increase in trade and other receivables (66) (336)
Increase in trade and other payables 221 28
Net cash generated from/(used in) operating
activities 254 (99)
-------------------------------------------------- -------- --------
Cash flows from investing activities
Purchase of property, plant and equipment (29) (37)
Expenditure relating to licences and trademarks (21) (21)
-------------------------------------------------- -------- --------
Net cash used in investing activities (50) (58)
-------------------------------------------------- -------- --------
Cash flows from financing activities
Interest on lease liabilities - (2)
Repayments of lease liabilities - (51)
-------------------------------------------------- -------- --------
Net cash used in financing activities - (53)
-------------------------------------------------- -------- --------
Net increase/(decrease) in cash and cash
equivalents 204 (210)
Cash and cash equivalents at beginning of
year 858 1,068
Cash and cash equivalents at end of year 1,062 858
-------------------------------------------------- -------- --------
1. Basis of preparation
The consolidated and company financial statements are for the
year ended 31 March 2021. They have been prepared in accordance
with International Accounting Standards in conformity with the
requirements of the UK Companies Act 2006. The financial statements
have been prepared on a consistent basis to the year ended 31 March
2020 and there have been no changes to accounting standards
implemented.
The financial statements have been prepared under the historical
cost convention.
Distil Plc is the Group's ultimate parent company. The Company
is a public limited company incorporated and domiciled in England
and Wales. The address of Distil Plc's registered office is 201
Temple Chambers, 3-7 Temple Avenue, EC4Y 0DT and its principal
place of business is Suite 113, 3 More London Riverside, London,
SE1 2RE.
These results are audited; however, the financial information
does not constitute statutory accounts as defined under section 434
of the Companies Act 2006. The consolidated balance sheet at 31
March 2021 and the consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated
statement of cash flows for the year then ended have been extracted
from the Group's 2021 statutory consolidated financial statements
upon which the auditor's opinion is unqualified. The statutory
consolidated financial statements for the year ended 31 March 2021
were approved by the Board on 11 June 2021 and will be delivered to
the Registrar of Companies in due course.
The financial information for the year ended 31 March 2020 has
been derived from the Group's statutory consolidated financial
statements for that year, as filed with the Registrar of Companies.
Those consolidated financial statements contained an unqualified
audit report.
Copies of the Annual Report will shortly be available on the
Company's website www.distil.uk.com and from the Company's
registered office.
2. Earnings per share
The calculation of the basic earnings per share is based on the
results attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the year.
The diluted earnings per share is the same as the basic earnings
per share as the exercise of warrants and options would be
immaterial.
The earnings and weighted average number of shares used in the
calculations are set out below.
2021 2020
---------------------------------------------- ------------ ------------
Profit attributable to ordinary shareholders
(GBP'000) 343 258
Weighted average of number of shares 501,982,913 501,982,913
---------------------------------------------- ------------ ------------
Basic and diluted per share (pence) 0.07 0.05
---------------------------------------------- ------------ ------------
3. Segment reporting
2021 2020
GBP'000 GBP'000
--------- -------- --------
Revenue
UK 3,221 2,227
Export 395 214
--------- -------- --------
3,616 2,441
--------- -------- --------
Gross profit
UK 1,810 1,310
Export 200 136
-------------- ------ ------
2,010 1,446
-------------- ------ ------
The directors have decided that providing a geographical split
by two locations, UK and Export, offers an enhanced indicator of
business activity. Only revenue and gross profit can be easily
identifiable when splitting between UK and export markets. All
trade is undertaken and assets are held in one geographic location,
being the UK.
During the year ended 31 March 2021, 78% of the Group's revenue
was derived from one wholesale distributor (2020: 77%). All of this
related to UK revenue. There were no other customers who accounted
for more than 10% of revenue.
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June 14, 2021 02:00 ET (06:00 GMT)
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