Interim Results

Blavod Black Vodka PLC 08 December 2003 NOT FOR RELEASE IN THE UNITED STATES BLAVOD BLACK VODKA PLC INTERIM REPORT For the six months ended 30 September 2003 CHAIRMAN'S STATEMENT A pleasing improvement in operating result over the comparable half year indicates the continuing steady progress being made by the Company. Growing sales of Blavod Black Vodka in several important markets such as the UK which rose by 24% in case volumes and duty free by 18% contributed to this outcome. Ongoing control of overhead costs and increased gross profit margins (up from 34% to 36.5%), together with a larger contribution from several of the brands which we market and distribute in the UK, are welcome indications of movement towards overall profitability in the year ahead. The reduction in turnover was partly a consequence of a key UK customer moving to trading under bond where previously this figure included duty and also due to delay in a number of pre-Christmas orders which will be made up in the second half of the year. The second period of the year should, as usual, be stronger since it includes volumes for the important Christmas trade. Interest in Blavod in the former Iron Curtain countries has been surprisingly positive and we are hopeful that this may become a valuable territory. Early evidence has been encouraging, with the brand out-performing all expectation in several specific areas and stores. In the United States, where the recent loss of our importer caused a problem, we have finally begun to make some progress in a prospectively important market where sales over the recent Halloween period sharply exceeded our forecast, partly as a result of positive press coverage of the brand. The Board is confident that, in the next six month period, we will come close to achieving positive cash flow. This will be a significant milestone for the company and the brand. Blavod has also today announced that it is in advanced negotiations to acquire all of the business, assets and liabilities of Extreme Beverage Company, LLC, an innovative, dynamic US spirits company, for an all share consideration in conjunction with a proposed Placing and Open Offer to raise approximately £8 million (before expenses). Although these negotiations are still to be finalized and there can be no assurance that this transaction will proceed, the Company hopes that it will be able to announce the final terms later this month. The proposed acquisition will be classified as a 'reverse takeover' under the AIM Rules by virtue of its size and, accordingly, the existing Blavod shares were suspended from trading on AIM on 17 September 2003 and will remain suspended pending finalization of the transaction. Allan Shiach 8 December 2003 UNAUDITED PROFIT AND LOSS ACCOUNT for the six months ended 30 SEPTEMBER 2003 Notes Six months to 30 September Year to 31 March 2003 2002 2003 Unaudited Unaudited Audited £ 000 £ 000 £ 000 Turnover 557 634 1,509 Cost of sales (354) (419) (944) -------- -------- -------- Gross profit 203 215 565 Marketing and administrative expenses (465) (579) (1,032) Exceptional item - stock claim provision - (149) (149) -------- -------- -------- Operating loss (262) (513) (616) Bank interest receivable 15 21 35 -------- -------- -------- Loss on ordinary activities before taxation (247) (492) (581) Taxation - - - -------- -------- -------- Loss for the financial period 2 (247) (492) (581) ======== ======== ======== Loss per share (1.67p) (3.33p) (3.93p) Diluted loss per share (1.67p) (3.33p) (3.93p) There were no gains or losses in any period other than those included in the above profit and loss account. UNAUDITED CONSOLIDATED BALANCE SHEET as at 30 SEPTEMBER 2003 30 September 31 March 2003 2002 2003 Unaudited Unaudited Audited £ 000 £ 000 £ 000 Fixed assets Intangible assets 1,124 1,273 1,196 Tangible assets 14 25 20 -------- -------- -------- 1,138 1,298 1,216 -------- -------- -------- Current assets Stock 75 145 73 Debtors 269 279 249 Cash at bank 776 1,094 1,022 -------- -------- -------- 1,120 1,518 1,344 Creditors: amounts falling due within one year 274 (496) (329) -------- -------- -------- Net current assets 846 1,022 1,015 -------- -------- -------- -------- -------- -------- Net assets 1,984 2,320 2,231 ======== ======== ======== Capital and reserves Called up share capital 148 148 148 Share premium account 5,967 5,967 5,967 Profit and loss account (4,131) (3,795) (3,884) -------- -------- -------- Shareholders' funds 1,984 2,320 2,231 ======== ======== ======== UNAUDITED CONSOLIDATED CASH FLOW STATEMENT for the period ended 30 SEPTEMBER 2003 Six months to 30 September Year to 31 March 2002 2001 2002 Unaudited Unaudited Audited £ 000 £ 000 £ 000 Cash outflow from operating activities (257) (157) (241) -------- -------- -------- Returns on investments Interest received 15 21 35 -------- -------- -------- Net cash inflow from returns on investments 15 21 35 -------- -------- -------- Capital expenditure Expenditure relating to the registration of trademarks (4) (6) (8) -------- -------- -------- Net cash outflow for capital expenditure (4) (6) (8) -------- -------- -------- (Decrease) in cash in the period (246) (142) (214) ======== ======== ======== ======== ======== ======== NOTES TO THE FINANCIAL STATEMENTS for the six months ended 30 SEPTEMBER 2003 1. Basis of preparation The financial information in this interim statement is prepared under the historical cost convention and in accordance with applicable accounting standards. It does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The financial information for the full preceding year is based on the statutory accounts for the year to 31 March 2003. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. The interim financial information has been prepared on the basis of the accounting policies set out in the Group's statutory accounts for the year ended 31 March 2003. 2. Loss per share The calculations of loss per share are based on a loss £247,000 (2002: £492,000), a basic weighted average of 14,776,306 shares in issue (2002: 14,776,306 shares) and a diluted weighted average of 14,776,306 shares in issue (2002:14,776,306 shares). The calculations of earnings per share for the full year to 31 March 2003 are based on a loss of £581,000, a basic weighted average of 14,776,306 shares in issue and a diluted weighted average of 14,776,306 shares. INDEPENDENT REVIEW REPORT TO BLAVOD BLACK VODKA PLC Introduction We have been instructed by the company to review the financial information for the six months ended 30 September 2003 which comprises the consolidated profit and loss account, the consolidated balance sheet, the consolidated cash flow statement and related notes 1 and 12. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. AIM requires that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 September 2003. Nexia Audit Limited Chartered Accountants 8 December 2003 This announcement does not constitute an offer to sell any securities in the United States. The issue of the ordinary shares in connection with the Acquisition and the offer and sale of Ordinary Shares in the Placing and Open Offer have not been, and will not be, registered under the US Securities Act of 1933, as amended, and such ordinary shares may not be offered, sold or delivered to, nor may the Open Offer be accepted by, any US Person (as such term is defined under Regulation S under the Securities Act). This information is provided by RNS The company news service from the London Stock Exchange

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