Final Results
Blavod Wines and Spirits plc
14 June 2010
Preliminary Results for the year ended 31 March 2010
Financial Highlights
Blavod Wines and Spirits plc (the "Company"), the owner of the Blavod
Black Vodka brand, and wines and spirits distributor, announces its
unaudited preliminary results for the year ended 31 March 2010.
Financial highlights
·        Revenue up 40% to £ 8.316m (2009: £5.955m)
·        Gross profit up 10% hurt by unfavourable mix of brands and sterling
weakness.
·        Costs of Brand Support and overheads significantly increased to
support growth.
·        Loss of £15k (2009 profit £130k as restated)
Commenting on the results, Richard Ambler, Managing Director, said:
"Despite an encouraging 40% increase in sales value the change in mix towards
lower priced brands reduced margins during a difficult trading year and led to a
disappointing result. This year, price
increases already partially implemented, regained distribution and the selective
reduction in overheads will restore the company to profit. The launch of
Blackwood's Gin in Spain and in the US, and the repackaging of Blavod and good
progress in the US, are particularly encouraging developments."
For further information, please contact:
Blavod Wines and Spirits plc                              Tel: 0207 352 2096
Richard Ambler
Brewin Dolphin Corporate Advisory & Broking            Tel: 0845 213 4726
Neil Baldwin
Chairman's Statement
Trading
After a strong start, the Group had a disappointing year, making a small loss of
£15k (2009: profit £130k as restated) as expected in our trading statement of 1
February 2010. Spirit sales continued to grow strongly, from £4.9m to £6.8m net
of excise taxes.
However, profits were hurt by a number of factors of which the most important
were the following:
* gross margins were penalised by the poor performance of Blavod Black Vodka,
our highest margin brand, which was delisted in two major UK grocery chains
for most of the year, in favour of a competitive product which is no longer
labelled as vodka; income from wine dropped sharply as a result of the
weaker pound sterling, generally difficult market conditions and a less
attractive vintage;
* there were continued difficulties in Russia and Duty Free at the beginning
of the year;
* overheads and brand spending increased substantially behind volume growth;
* interest charges rose sharply as we borrowed more to finance greatly
increased volumes, at lower margins.
Among the positive features of the year, the most important was the addition of
Bruichladdich Scotch Malt Whiskies to the portfolio in September, making a
strong contribution. Blavod had a good year in the US gaining volume and
listings in a number of new states. Blackwood's was launched into Spain in the
middle of the year, one of the world's largest premium gin markets. Vitally, the
Company's very prudent credit policy, although it caused us to forfeit some
sales, saved us from the First Quench collapse and other failures. The Company
has taken steps to correct the causes of the poor result last year:
* Blavod Black Vodka will be back in UK grocery distribution by the middle of
the year in an attractive new presentation;
* Blackwood's export distribution continues to grow and the brand will be
launched in the US in July;
* some price increases have been successfully implemented and others are being
negotiated, improving our margins;
* overheads have been cut back almost to the levels of 2008/9, largely by the
restructuring of the sales force.
As a result of these corrective measures we are confident of a significantly
improved performance in the year ahead and in the long term prospects of our
brands. In order to improve investors' understanding of our business we have
made a number of changes to our financial statements this year, and adjusted our
previous year accordingly. Specifically:
* we have added more information in our income statement, showing separately
advertising and promotional costs, administrative expenses, depreciation and
amortisation and finance charges as well as adding EBITDA and operating
profit lines;
* we have reallocated to cost of sales funds received from suppliers as price
support, whereas in the past these have been included as a credit within
administrative expenses;
* also in the course of the year we identified a misstatement in our 2008/9
financial statements whereby our profit for that year was overstated and one
of our creditor balances understated in the amount of £55,000. This has been
corrected in the restated figures. Neither the original error nor its
correction had any effect on cash.
Amortisation of trademarks
As envisaged in last year's report we have reviewed the policy of amortisation
of the Group's owned brands. We have concluded that straight line amortisation
bears no relevance to brand value and have decided to adopt the more useful
method of annual review of value for impairment purposes. On the basis that
brands are considered to have an indefinite useful life, this year's review
showed a value well in excess of the value on the balance sheet and therefore
there is no cause for impairment.
Board developments
Mr Willie Phillips will retire at the AGM, after acting as part time finance
director since 2003. We thank him for his services, particularly during the very
difficult times when the Company was being managed from the US. Mr Phillips will
be succeeded as part time finance director by Mrs Sarah Bertolotti, who has been
working with Mr Phillips for much of the last year. We propose Mrs Bertolotti
for election to the board of Directors at the AGM. Mrs Bertolotti is a chartered
accountant and worked for Arthur Andersen for six years before moving to finance
management positions with Hilton Hotels and with Regus. She has already made a
significant contribution to Blavod. We intend to further strengthen the board,
and to prepare for the future, by proposing two new non executive directors for
election at the AGM:
Mr Don Goulding was for many years a senior executive at Diageo, holding a
number of commercial positions internationally, lastly as Managing Director of
Diageo in the UK. He has deep knowledge of the UK market and Blavod's customers;
Mr Mark Quinn is an experienced businessman who until recently was Managing
Director of Soho Estates, which owns the largest estate of licensed premises in
Central London. He will bring deep understanding of the economics and operations
of the restaurants, bars and clubs in the Capital, important customers for our
brands.
C. Campbell
Chairman
Unaudited consolidated income statement for the year ended 31 March 2010
2009
      2010  restated
     Note £'000  £'000
Revenue      8,316  5,955
Cost of sales     (6,745)  (4,531)
--------- ----------
Gross profit     1,571  1,424
Advertising and promotional
costs      (268)  (104)
Non recurring costs      (21)  -
Other administrative expenses     (1,204)  (1,084)
--------- ----------
Total administrative expenses      (1,493)  (1,188)
--------- ----------
EBITDA Â Â Â Â Â 78 Â 236
Depreciation and amortisation      (6)  (53)
Operating profit    72  183
Finance income     20  3
Finance expense     (107)  (56)
(Loss) / profit before tax from continuing
operations  (15)  130
Income tax      -   -
+------------------+
(Loss)/ profit for the year | (15) Â 130|
+------------------+
(Loss)/ earnings per share:
Basic (pence per share) Â Â 2 (0.02) Â 0.15
Diluted (pence per share) Â Â 2 (0.02) Â 0.15
Unaudited consolidated statement of comprehensive income
2009
      2010  restated
      £'000  £'000
(Loss)/ profit for the year     (15)  130
Other comprehensive income     -  -
--------- -----------
Total comprehensive income for the year  (15)  130
Unaudited consolidated balance sheet as at 31 March 2010
    2010  2009 restated
    £'000  £'000
Assets
Non-current assets
Property, plant and equipment  24  12
Intangible assets   1,311  1,259
--------- --------------
    1,335  1,271
--------- --------------
Current assets
Inventories   612  452
Trade and other receivables  1,827  1,724
Cash and cash equivalents  118  52
--------- --------------
Total current assets   2,557  2,228
--------- --------------
Total assets   3,892  3,499
Liabilities
Non current liabilities
Borrowings   (337)  -
Derivative   (60)  -
--------- --------------
   (397)  -
Current Liabilities
Trade and other payables  (974)  (1,139)
Finance facility liability  (905)  (745)
--------- --------------
Total current liabilities    (1,879)  (1,884)
--------- --------------
Total liabilities   (2,276)  (1,884)
--------- --------------
Net assets   1,616  1,615
EQUITY
Equity attributable to equity holders of the
parent
Share capital   878  878
Share premium account  -  -
Shares to be issued   717  701
Retained earnings  21  36
--------- --------------
Total equity   1,616  1,615
Unaudited consolidated statement of changes in equity
Share Share Shares
Capital Premium to be Retained Total
     £000 £000 issued Earnings Equity
Balance at 31 March 2008 and 1 April 1,466
2008Â Â Â Â Â Â Â Â Â Â Â Â Â 878 18,489 682 (18,583)
Transfer between reserves  (18,489) - 18,489 -
Share-based payment charge  - 19  19
Profit for the financial year as stated  - - 130 130
-----------------------------------------
Balance at 31 March 2009 and 1 April 1,615
2009Â Â Â Â Â Â Â Â Â Â Â Â Â 878 - 701 36
-----------------------------------------
Share-based payment charge  - 16  16
(Loss) for the year  - - (15) (15)
-----------------------------------------
Balance at 31 March 1,616
2010Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 878 - 717 21
Unaudited consolidated cash flow statement for the year ended 31 March 2010
2009
     2010  restated
     £'000  £'000
Cash flows from operating activities
Operating profit   72  183
Adjustments for
:
Depreciation    6  3
Amortisation    -  53
Share-based payment   16  19
Net foreign exchange (gain) / loss  -  (11)
------- ---------
     94  247
Movements in working capital
(Increase) in inventories  (160)  (232)
 (Increase) in trade receivables  (103)  (667)
 (Decrease) / increase in trade payables  (65)  121
Cash (used by) operations   (328)  (778)
------- ---------
Finance expense    (90)  (56)
------- ---------
Net cash (used in) operating activities  (324)  (587)
Cash flows from investing activities
Interest received    -  3
Purchase of property, Â plant and
equipment    (18)  (14)
Expenditure relating to the acquisition of licences and
trade marks (152) Â (597)
------- ---------
Net cash (used by) investing activities  (170)  (608)
Cash flows from financing activities
Net cash received from finance facility  160  745
Proceeds from convertible loan note  400  -
Net cash received from financing activities  560  745
------- ---------
Net increase/(decrease) in cash and cash equivalents 66 Â (450)
Cash and cash equivalents at beginning of year 52 Â 502
------- ---------
Cash and cash equivalents at end of year  118  52
1Â Â Â Â Â Â Â Basis of preparation
The consolidated financial statements are for the twelve months ended 31 March
2010. They have been prepared in accordance with the requirements of
International Financial Reporting Standards (IFRS) as adopted by the European
Union (EU) and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS. The financial statements have been prepared
under the historical cost convention.
The financial information set out above does not constitute the Company's
statutory accounts within the meaning of section 435 of the Companies Act
2006. The 2010 figures are based on unaudited accounts for the year ended 31
March 2010.
The 2009 comparatives are derived from the statutory accounts for 2009 which
have been delivered to the Registrar of Companies and received an unqualified
audit report and did not contain a statement under the Companies Act 1985,
s237(2) or (3). These have been restated by way of a prior year adjustment to
correct a misstatement in the amount of £55,000. Neither the original error nor
its correction had any effect on cash. The effect of this adjustment is to
reduce the prior year profit, as previously stated, with a corresponding
increase in trade creditors.
2Â Â Â Â Â Earnings per share
The calculation of the basic (loss)/ 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 (loss) / earnings per share is identical to the basic
earnings/(loss) per share as the exercise of convertible loan instruments,
warrants and options would be anti-dilutive as the market value of shares is
less than the exercise price of the convertible loan instruments, warrants and
options granted.
Reconciliations of the earnings and weighted average number of shares used in
the calculations are set out below.
    2010  2009
 restated
(Loss)/profit attributable to ordinary shareholders (15) Â 130
(£'000)
Weighted average number of shares (used for basic
e r i gs per share)
 87,758,508  87,758,508
------------ -----------
Basic and diluted earnings/(loss) per share (pence) (0.02) Â 0.15
3. Annual report
Copies of the published accounts of the Company will be sent to all shareholders
on or around 15 June 2010 and will be available from that the Company's
registered office and will be located on:
http://www.blavodwinesandspirits.com/investors/accounts.htm
ENDS
[HUG#1423550]
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