Distil : 7 June 2017 - Final Results for the Year Ended 31 March 2017

Final Results for the Year Ended 31 March 2017

Distil (AIM: DIS), owner of premium drinks brands including Blackwoods Gin and Vodka, RedLeg Spiced Rum, Blavod Black Vodka, Diva Vodka and Jago's Vanilla Cream Liqueur, announces its final results for the year ended 31 March 2017.

• Sales volumes and revenues growing strongly across all trade channels

• Major distribution gains across both the On-Trade (pubs and bars) and Off Trade (retail) including independents, wholesale and nationwide chains.

• Launch of our proprietary packaging for RedLeg spiced rum.

• Increased investment in social media reach.

  Financial review

• Turnover, supported by increased marketing investment, increases 40% to

  £1,642k from £1,169k

• Gross profit increased 40% from £681k to £950k

• Margins maintained at 58% for the same period, year-on-year

• Other administrative expenses increased 11%

• Operating profit of £10k compared to prior year loss of £97k

• Cash reserves of £910k at 31 March 2017

Don Goulding, Executive Chairman of Distil, said:

"We are pleased to report a profit on our owned brands for the first time. This represents a major milestone in the long-term development of our business and a platform on which to grow and expand. Our performance reflects the energy and focused efforts of our small but dedicated team. This together with further increases in marketing investment and promotional activity, helped drive broader reach to a greater number of consumers in a fast - moving market

We anticipate sustained growth of premium spirits and will therefore build on our proven marketing strategies to advance our brands. In addition, we are also exploring new products to build on the success of our existing brands"

I am pleased to report a year of significant progress and strong growth for Distil.

This growth is driven by our key brands which continued to outperform the market and their respective spirit categories.

As previously reported, we delivered growth in each quarter with full year sales revenue ahead 40%, gross profits increased by 40%, contribution margins were maintained at 34% and adjusted EBITDA (EBITDA adjusted for share-based expense) improved from £(65)k to

£46k as we achieved a maiden profit of £10k (2016 : £(97)k).

We achieved a small profit over the year on our owned brands, for the first time - a major milestone in the long-term development of our business and a platform on which to grow and expand.

Our performance reflects the energy and focused efforts of our small but dedicated team. This, together with further increases in marketing investment and promotional activity, helped drive broader reach to a greater number of consumers in a fast-moving market.

The overall spirits market grew ahead of beer and wine in both the on-trade and off-trade, with premium branded spirits providing the majority of that growth.

Our domestic sales revenue grew by 70% with further advances being made across all trade channels and regions on the back of major gains in the number of national brand stockists.

RedLeg Spiced Rum advanced by £324k or 63% in revenue as we broadened brand availability and marketing support leading to greater brand awareness, product trial and repeat purchases. I am particularly pleased with the positive consumer response to our new packaging. We continued to win awards for both our rum and our packaging.

Blackwoods Gin gained £189k or 41% on the back of increased marketing investment and strong consumer interest in premium gin and gin cocktails. Despite a growing number of gin brands entering the market, Blackwoods performed well.

Prior to the UK voting to leave the EU in June last year we moved to GBP invoicing for all exports. This helped offset subsequent currency movement following the referendum and our sales grew across Europe.

Blavod volume sales whilst showing an overall year-on-year decline in Eastern Europe returned to growth in the final quarter as Duty Free sales improved and we enjoyed repeat purchases in the USA.

Our ambition for RedLeg in the US has increased following its success in other key markets. We are therefore reviewing our distribution arrangements to ensure we have the appropriate reach and in-market support prior to launching the brand in that territory. More news will follow once negotiations have concluded.

Consumer trends are moving at a more rapid pace providing great opportunities for those who stay close to the consumer and are then able to provide an agile response.

We anticipate sustained growth of premium spirits and will therefore build on our proven marketing strategies to advance our brands. In addition, we are also exploring new products to build on the success of our existing brands.

D Goulding 6 June 2017

The operating profit attributable to shareholders for the year amounted to £10k (2016: loss of

£97k). The current year profit and prior year losses relate solely to continuing activities.

Sales volumes and revenues from our brands have shown strong growth during the year as we continue to focus on brand building through increased distribution, marketing and promotion. This growth has been primarily driven by strong performances from our RedLeg Spiced Rum and Blackwoods Vintage Gin brands. Further success in securing listings for these brands in major UK retail multiples and pub chains during the year has resulted in our achieving significant progress in the UK market.

The Group continues to minimize overheads where possible, whilst ensuring sufficient investment to support the growth in sales of its brands. During the year the Group increased headcount which partly contributed to an 11% increase in other administrative costs over the prior year.

The directors' primary focus has been that of returning the Group to a sustainable break even position and ultimately to turn a profit. Having achieved this goal in the current year the directors will seek to build on this success by further expanding sales of its key brands in domestic and international markets.

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 Blavod Black Vodka, Blackwoods Gin and Vodka, Diva Vodka, Jago's Vanilla Cream Liqueur and RedLeg Spiced Rum domestically and internationally.

The results for the 2017 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.

The Group monitors progress with particular reference to the following key performance indicators:

Total volumes increased 31% year-on-year largely driven by a significant increase in volume sales of RedLeg Spiced Rum and Blackwoods Gin which showed year-on-year growth of 62% and 46% respectively. Blackwoods Vodka increased by 66% compared to the prior year whilst volume sales of Blavod Black Vodka showed an overall year-on-year decline in Eastern Europe although encouragingly, volume sales in that region returned to growth in the final quarter of the year.

Total sales increased 40% year-on-year. Notable within this was a 63% increase in sales of RedLeg Spiced Rum, driven by a significant increase in UK sales volumes. Sales of Blackwoods Gin and Blackwoods Vodka increased 41% and 82% respectively during the period, whilst sales of Blavod Black Vodka decreased by 55%.

Gross margin as a percentage of sales was in line with prior year at 58%.

We also closely monitor both the level of and value derived from our advertising and promotional costs and other administrative costs. Advertising and promotional costs increased in absolute terms by £104k from £280k to £384k as the Group continued to inve st in the marketing of its brand portfolio to drive top line sales growth. As a percentage of sales, advertising and promotional spend amounted to 23% (2016: 24%) during the year.

Other administrative costs increased by £50k from £470k to £520k partly due to an increase in headcount during the year.

Following an encouraging start to the financial year the Group will seek to continue to expand sales of its existing brands both in the UK and internationally whilst ensuring its cost base remains appropriate for the Group's size of business.