TIDMSTCK
RNS Number : 4585N
Stock Spirits Group PLC
09 August 2017
Stock Spirits Group PLC
Results for the six months ended 30 June 2017
An improved financial performance driven by operational
initiatives
9 August 2017: Stock Spirits Group PLC ("Stock Spirits" or the
"Company"), a leading owner and producer of premium branded spirits
and liqueurs that are principally sold in Central and Eastern
Europe, announces its results for the six months ended 30 June
2017.
FINANCIAL HIGHLIGHTS
-- Total revenue EUR119.8 million, an increase of 3.3% (2016: EUR116.0 million)
-- Operating profit EUR16.5 million, an increase of 32% (2016: EUR12.5 million)
-- Profit after tax EUR11.7 million, an increase of 23% (2016: EUR8.4 million)
-- Basic EPS 6 EUR cents per share, an increase of 50% (2016: 4 EUR cents per share)
-- Interim dividend 2.38 EUR cents per ordinary share, an
increase of 4.8% (2016: 2.27 EUR cents)
-- EBITDA(1) EUR22.0 million, an increase of 23.4% (2016: EUR17.9 million)
OPERATIONAL HIGHLIGHTS
-- Total sales volume increase of 7.3% to 5.7 million 9 litre cases (2016: 5.4 million)
-- Poland top line and profit growth; increased market shares since December 2016
-- Over EUR2.5 million of savings recorded in the period from initiatives implemented in 2016
-- Restructuring of operations and legal teams expected to
generate incremental savings of EUR1.5 million from the start of
next year
-- Investment in high growth, high margin, category of Irish
whiskey through an equity investment - the Company's second bolt-on
deal in nine months
-- New distribution arrangements in place with Synergy in Bosnia
and Croatia, Distell in the UK, and Beam in Slovakia
Mirek Stachowicz, CEO of Stock Spirits Group, commented:
"We are pleased to have delivered good financial and operational
progress during the first half of the year. This performance is a
clear sign that the business has stabilised and that the
initiatives put in place in 2016 are beginning to deliver tangible
results including in Poland. While our core markets remain
competitive, we believe that our strategy of further developing our
existing brand portfolio whilst continuing to invest in markets and
categories with strong potential leaves us well placed to continue
delivering long-term and sustainable growth. As always, I would
like to thank all of Stock Spirits' employees for their hard work
and commitment in helping us to deliver the plans and ambitions
that we have for this business."
Management will be hosting a presentation for analysts at 9.00am
on Wednesday 9th August 2017 at:
Nomura
1 Angel Lane
London
EC4R 3AB
There will be a simultaneous web cast of the presentation via
www.stockspirits.com with a recording made available shortly
thereafter.
For further information:
Stock Spirits Group
Lesley Jackson, Chief
Financial Officer +44 (0) 1628 648 500
Powerscourt +44 (0) 207 250 1446
Rob Greening stockspirits@powerscourt-group.com
Lisa Kavanagh
A copy of this interim results announcement ("announcement") has
been posted on www.stockspirits.com. Investors can also address any
query to investorqueries@stockspirits.com.
Disclaimer
This announcement may contain statements which are not based on
current or historical fact and which are forward looking in nature.
These forward looking statements may reflect knowledge and
information available at the date of preparation of this
announcement and the Company undertakes no obligation to update
these forward looking statements. Such forward looking statements
are subject to known and unknown risks and uncertainties facing the
Group including, without limitation, those risks described in this
announcement, and other unknown future events and circumstances
which can cause results and developments to differ materially from
those anticipated. Nothing in this announcement should be construed
as a profit forecast.
This announcement contains inside information which is disclosed
in accordance with the Market Abuse Regulation.
Basis of Preparation
The financial information contained in these interim results
does not constitute statutory accounts of Stock Spirits Group PLC
within the meaning of Section 434 of the Companies Act 2006.
Statutory accounts for Stock Spirits Group PLC for the year ended
31 December 2016 were delivered to the Registrar of Companies. The
auditors have reported on the accounts, their report was:(i)
unqualified; (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report; and (iii) did not constitute a statement
under Section 498(2) or (3) of the Companies Act 2006.
Notes to editors:
About Stock Spirits Group
Stock Spirits is one of Central and Eastern Europe's leading
branded spirits and liqueurs businesses, and offers a portfolio of
products that are rooted in local and regional heritage. With core
operations in Poland, the Czech Republic, Slovakia, Italy, Croatia
and Bosnia & Herzegovina, Stock also exports to more than 40
other countries worldwide. Global sales volumes currently total
over 100 million litres per year.
Stock has state of the art production facilities in Poland and
the Czech Republic, and its core brands include products made to
long-established recipes such as Stock 84 brandy, Fernet Stock
bitters and Limonce, as well as more recent creations like Stock
Prestige and Zoladkowa de Luxe vodkas.
Stock is listed on the main market of the London Stock Exchange.
For the year ended 31 December 2016 it delivered total revenue of
EUR261.0m and operating profit of EUR40.1m.
For more information please visit www.stockspirits.com.
INTERIM MANAGEMENT REPORT
Overview
We are now over twelve months into the turnaround of the
business performance. Last year we set out a number of actions that
would deliver tangible results, and the half year results confirm
the very strong progress that has been made to date.
We have grown our volumes, our sales revenue, our market shares,
delivered hard cost savings, implemented further actions to deliver
more savings, grown our profit and margin, further improved our
cash generation and completed our second bolt on acquisition.
With a full team in place and a very strong balance sheet, we
are well positioned to continue our journey.
Our key priority has been the turnaround of our performance in
Poland. This entailed making our brands more competitive,
strengthening and upskilling our sales team, improving our sales
execution capability and growing market share. Our actions have led
to an increase in net sales revenue, EBITDA and EBITDA margin. We
have also gained volume and value market share since December
2016.
The root and branch review actions taken in Poland are now
largely implemented and we are now embedding the changes and
seeking to optimise the new ways of working.
The overall vodka market in Poland remains in positive growth,
although at a lower rate than during 2016, and the traditional
trade channel remains the largest and fastest growing channel,
accounting for over 64% of all vodka purchases(2) . We have
continued to monitor prices closely and have adjusted our price
architecture on selected products to remain competitive on-shelf.
The price differential between our core brands and their key
competitors has narrowed and this, together with our work to
improve in store execution, has led to a slight increase in our
overall volume and value share YTD.
In the Czech Republic performance has been very robust with
growth reported in market share, net sales revenue, EBITDA and
EBITDA margin.
Other markets have performed in line with expectations.
We have enhanced our NPD process which remains focused upon
strengthening our core brands. We have recently completed a
packaging upgrade of the iconic Stock 84 brandy range, which will
be rolled out to all markets during the coming months.
In line with our stated objectives we have continued to focus
upon expanding our reach into the premium, super premium and ultra
premium segments where we see strong growth and attractive profit
pools. Following the agreement to distribute the ultra premium
vodka brand Beluga in Poland last year, we have extended our
relationship with Synergy and commenced distribution of the Beluga
brand in both Croatia and Bosnia. In addition, we have begun
distribution of the Beam portfolio in Slovakia alongside the
Distell portfolio to extend our reach into the fast growing and
profitable whiskey category.
To further extend our position in the whiskey category, we
recently announced a EUR15m initial investment to acquire 25% of
Quintessential Brands Irish Whiskey Ltd, a company owning "The
Dubliner Irish Whiskey" and "The Dublin Liberties" Irish whiskey
brands. This represents our second bolt-on deal in nine months and
is commented on in more detail below.
During the period we have begun to crystallise hard savings from
the cost cutting initiatives started last year. Over EUR2.5m of
savings have been recorded in the first half results, arising
primarily from the closure of the Swiss office, the retender of
Group corporate services and the many actions taken to reduce cost.
Earlier this year we announced a restructuring of the Group
operations and legal teams to align them closer to the markets,
which will generate incremental savings of EUR1.5m from the start
of next year. In addition, we have restructured the commercial
activities in Italy and the UK, which will also deliver modest
savings from next year.
Today, we are announcing an interim dividend of 2.38 EUR cents
per share, representing an increase of 4.8% versus last year.
As a Board, we do not perceive any significant issues for Stock
Spirits Group with regard to the UK's exit from the EU. We will
continue to monitor the risks and report on this position but in
anticipation of an expected period of uncertainty (as negotiations
around the UK's exit from the EU unfold), the Group has extended
its finance facilities (see Financial performance section
later),ensuring that the Group will continue to benefit from its
existing facility and the associated very competitive borrowing
costs for a further two years, through to at least November
2022.
Market Performance:
Poland
Total vodka market volumes have remained in growth and in the
six months to the end of June 2017 volume growth was 1.4% versus
2.4% last year. Flavoured vodka is recording significantly higher
levels of growth and volumes grew 7.7% to the end of June (2016:
4.7%).
The value of the vodka market has also grown versus last year
and increased by 1.7% (2016: 2.9%)(3) .
The actions from the root and branch review are now largely
complete and delivering initial improvements in results. Our focus
has been on embedding the changes and we are constantly seeking to
further optimise the operations of the business.
Pricing of our brands has remained a high priority and we have
been working with our customers to achieve our on-shelf price
targets. We have also focused upon execution in trade to ensure
that our promotional offers, point of sale, sales activation, trade
marketing and sales force training and tools are developing in line
with the standards we wish to attain. We have implemented our
actions focusing upon the needs of each market segment and
channel.
We have increased our volume and value market shares since
December 2016 by 1.8% and 1.5% respectively to 26.2% and 26.9% as
at June 2017 and in the traditional trade channel, we increased our
share of this channel from 30.2% as at December 2016 to 30.9% as at
June 2017.
In line with our strategy of focusing our NPD on core brands, we
launched a limited edition "Carbon" version of the premium Stock
Prestige brand, to build awareness and trial.
A clear objective for the Polish market is to target growth
profit pools. Our growth in volume and value YTD in the total
premium vodka category(4) has outgrown the market and now stands at
a volume share 18.4% (2016: 16.1%) and value share 17.4% (2016:
15.8%). Within premium, super and ultra premium vodka segments we
have the fastest growing brand portfolio with overall value growth
of 15.1% YTD versus market growth of 4.3%. Our growth of the Beam
distribution brands has also continued at very high levels, with
value growth of 54.1% versus the whisky market growth of 14.5%. The
Beam brands have performed equally well in terms of growth across
all trade channels.
Net sales revenue has grown, on a constant currency basis by
2.8% to EUR64m. Reported EBITDA in the first half was EUR16.9m
versus EUR15.1m last year, and on a constant currency basis we grew
by over 8%, with an improved margin (on a constant currency) of
26.4% against 25.0% last year.
Czech Republic
The Czech Republic spirits market has continued to grow in both
value at 7.2% (2016: 2.3%) and volume at 5.5% (2016: 2.9%), on a
YTD basis. Stock has delivered volume and value share growth,
taking our YTD volume share to 35.3% (2016: 33.1%) and YTD value
share to 33.2%(5) (2016: 31.3%) at the end of June.
The key drivers of our YTD gains have been the combination of
strong performance from our Bozkov innovations, with Bozkov
Tradicni and Bozkov Bily generating incremental share, plus
continued strong performance from our Diageo distribution brands,
notably Captain Morgan and Johnnie Walker.
The change of strategy on the Bozkov brand, offering a wider mix
of variants which has increased choice and price range for the
consumer, has delivered tangible results with double digit growth
YTD. Market share in this important rum category is now at a YTD
value share of 57.2% from 55.7% in 2016, and YTD volume share of
56.8% versus 54.5% in 2016(6) .
In October 2016 we acquired the spirits business of Bohemia Sekt
in the Czech Republic. We are delighted with the early results of
this acquisition, which is now fully integrated and has helped to
boost our market shares in the vodka category. YTD volume share has
increased from 25.1% (end of June 2016) to 27.2%, and YTD value
share from 25.8% (end June 2016) to 28.6%(7) .
We are seeing increased competition in the Herbal Bitters
category, where we lost a marginal share of the category on a YTD
basis. We are addressing this issue and will provide an update on
this at the year end.
Net sales revenue has grown on a reported basis and, on a
constant currency basis, net sales revenue is EUR29.8m versus
EUR27.9m last year, an increase of 7.1%. Reported EBITDA has grown
versus last year. On a constant currency basis EBITDA grew by
nearly 20% to EUR9.5m, with an uplift in EBITDA margin to 32%.
Italy
The modest growth in the Italian spirits market in 2016 has
continued into 2017. Value growth of 1.2% still leads volume growth
of 0.1% in the first six months(8) . Whilst we have maintained our
value share(9) , issues remain on the Keglevich brand, notably in
flavoured vodka, where we are gaining share in a category that is
in long term decline. As reported at the year end, the category has
suffered from changing consumer habits and this remains the case.
Our growth in this category is insufficient to offset the
underlying decline and accordingly has impacted volume and
financial performance.
In recent weeks we have relaunched our iconic brand, Stock 84
brandy, with refreshed consumer offering including new packaging
across the range. We believe the refresh will help to stimulate
further growth and will build brand equity. We have achieved volume
and value share growth YTD not only in the important brandy
category but also in the limoncello category with our category
leader Limonce(10) .
Earlier in the year we reported that we had restructured the
commercial team, with the benefits being crystallised from next
year. The cost of the restructuring has been borne within other
operating expenses.
Net sales revenue reflects a decline of EUR0.9m, driven by the
issues reported on Keglevich. Excluding the restructuring cost,
EBITDA was EUR2.6m, with an underlying margin of 20.6% versus 21.5%
last year.
In line with Group policy we continue to review the carrying
value of the intangible assets in respect of Italy. Given the
ongoing market issues on flavoured vodka, we have considered the
possible risk of diminuation in carrying value of the related
intangible assets. At this point in time, our expectations are such
that we do not see an indicator that there is an impairment of the
carrying value however further market deterioration could change
this assumption and result in an impairment. Any impact would not
affect cash but would cause an adjustment to expected EPS. The
position is being closely monitored and will be reported upon at
the year end.
Other Markets
Our other markets include Slovakia, Bosnia & Herzegovina and
Croatia together with our export operations and Baltic
distillery.
In Slovakia performance was in line with our expectations. The
performance of our business in Croatia has been impacted by the
well publicised difficulties being experienced by the Agrokor
Group, a major Croatian retail and food group. The impact recorded
in the first half results is EUR0.2m. We continue to trade with the
Agrokor companies in Croatia and are monitoring the situation very
carefully. As reported earlier in the year we have changed our
route to market in the UK and moved the distribution of our brands
to Distell. This has necessitated incurring restructuring costs of
EUR0.1m to implement the change.
In May we experienced an equipment failure at our Baltic
distillery, which caused the facility to cease production of
alcohol for a short period of time. Alcohol was sourced from third
party suppliers whilst the facility was out of action, and
therefore production at our sites in Poland and Czech Republic was
not impacted. A charge of EUR0.4m is included in the interim
results. We don't expect any additional costs from this event.
Net sales revenue declined by EUR0.7m with reported net sales
revenue of EUR13.3m to the end of June 2017. EBITDA for the period
was EUR0.7m, versus EUR1.5m in 2016. Excluding the charges noted
above, the EBITDA for the six months to the end of June was EUR1.4m
and an underlying EBITDA margin of 10.6%.
Investment in Irish Whiskey
On 17 July 2017 the Group announced an initial EUR15m equity
investment for 25% of the Irish whiskey company, Quintessential
Brands Irish Whiskey Ltd, creating a joint business with
Quintessential Brands. A further deferred investment of up to
EUR3.3m may be made over a period of five years, based on the
performance of the brands. This investment provides the Group with
access to two very exciting Irish Whiskey brands, The Dubliner
Irish Whiskey; a range of standard through to premium Irish
whiskies and The Dublin Liberties; a super premium to ultra premium
Irish whiskey range. Both brands allow Stock to capitalise on the
fast growing and highly profitable Irish whiskey category. Whiskey
is the second largest category globally behind vodka and Irish
whiskey has been the fastest growing segment since 2007(11) . In
Poland and the Czech Republic Irish whiskey is the fastest growing
category amongst all spirits categories.
The brands are already sold in over 30 markets around the world
with sales now exceeding 32,000 9 litre cases. The Dubliner Irish
Whiskey was the fastest growing Irish Whiskey brand globally(12) .
Currently whiskey is sourced from a third party, and our investment
will help to accelerate A&P investment behind the brands,
complete the build of a new distillery in the Liberties area of
Dublin with a brand experience and visitor centre, and to source
additional mature liquid for the development of the brands.
We expect the investment to be earnings accretive in year four;
the distillery will take one year to complete and as maturation of
Irish whiskey takes a minimum of three years, the benefits will
flow in year four from own produced liquid and accelerated
investment behind the brands in the early years.
The Group remains committed to the existing distribution
contracts it is party to in our respective markets.
The acquisition has been financed from existing facilities and,
after taking this into account, net debt leverage remains lower
than the end of December 2016.
Financial Performance
The actions that have been implemented across the Group during
the last twelve months, are now being reflected in the H1 2017
financial performance.
The impact of price reductions implemented in Poland in 2016 has
led to an overall reduction in net selling price per case. The
pricing adjustments have kept our Polish brands competively priced
and helped the Group deliver a 7.3% growth in sales volumes.
Overall Group net sales revenue has shown a 3.3% (+EUR3.8m) growth.
Of this growth EUR1.8m relates to the impact of positive FX.
Cost of goods per case remains largely flat and reflects the
impact of volume growth and brand mix. Gross margin has reduced to
just under 50% reflecting the impact of pricing adjustments in
Poland.
This impact has been more than offset by a reduction in selling
expenses, largely attributable to the timing of activity and
reduction in the number of new product launches, and hard savings
being crystallised in other operating expenses.
Last year, the Group announced the closure of the Swiss office
and a range of initiatives that had been actioned to deliver a
reduction in the cost base. Savings in excess of EUR2.5m (on a
constant currency basis) have been delivered in H1 2017 versus H1
2016. Further action has been taken in H1 2017, as announced
earlier in the year, covering the restructuring of Group legal,
Group operations, commercial restructuring in Italy and change of
route to market in the UK. We expect these initiatives to deliver a
further EUR1.5m of savings from the start of 2018.
Operating profit is EUR16.5m versus EUR12.5m last year, which is
an improvement of 31.9%, and EBITDA was EUR22.0m versus EUR17.9m in
2016.
In line with expectations, the Group has not recorded any
exceptional costs in H1. All costs of restructuring and one off
type expenses have been charged to other operating expenses. Such
expenses were EUR1.0m in 2016 and EUR2.0m in 2017.
Underlying finance costs before foreign exchange movements were
EUR0.8m (2016: EUR1.3m). In 2016 a foreign currency gain of EUR1.5m
was recognised (the gain was driven by exchange movements on inter
company loans which were fully settled in 2016).
The current finance facility was put in place in November 2015
with an expiration date of November 2020. The Group has now agreed
an extension of the current facility for a further two years, now
expiring in November 2022. A number of conditions have been
relaxed, allowing the Group greater flexibility whilst retaining
the existing margins. The overall facility remains unchanged.
Combined with the Group's strong track record on cash generation,
this extension affords the Group a strong financial platform to
develop the business.
Capital spend in the first half of last year included the
completion of investment in flexible packaging capability in
Poland. Accordingly capital spend is lower this year. We have no
plans for major production investment in 2017 and therefore expect
capital spend for the full year to be lower than prior years.
We have retained our focus upon working capital management and,
as stated last year, we changed our production planning processes
which resulted in a reduction in inventory at the year end. This
benefit has been sustained and inventory at the end of June 2017
reflects a reduction of EUR4.9m versus June 2016. The changes in
Group operations, whilst delivering cost savings, have also allowed
the Group to negotiate changes to payment conditions with a number
of suppliers to bring them in line with local market terms. This
has improved underlying cash generation. Free cash flow was
EUR36.5m and closing net debt was EUR40m, a reduction of EUR18.0m
versus end of June last year, and EUR19.7m lower than the year end.
Group leverage ratio at the end of June 2017 was 0.72, which is
both lower than the same period last year and the year end.
Foreign exchange movements impacted net sales revenue by EUR1.8m
and EUR1.4m at EBITDA. There has been an impact of EUR6.3m movement
in balance sheet reserves due to the impact of foreign exchange
differences on the translation from the functional currencies of
the Group's foreign subsidiaries into Euros.
Given the strengthening of the Polish Zloty versus the Euro in
recent months, the Group has reviewed its expected foreign currency
cash flows for the balance of the year and has entered into
contracts to hedge EUR10m of Euro based payments.
Basic earnings per share are reported as 6 EUR cents for H1
versus 4 EUR cents for 2016, a growth of 50%.
The Board of Directors have agreed an interim dividend payment
of 2.38 EUR cents per share. The dividend will be paid on 22
September 2017, with record date 1 September 2017 (shareholders on
the register at close of business on 31 August 2017). The Euro :
Sterling exchange rate will be fixed on the record date.
Outlook
The Group has reviewed the full year outlook and is comfortable
with the external consensus as published by Bloomberg, on a
constant currency basis. The half year financial performance is
enhanced (EUR1.4m benefit to reported EBITDA) by positive impacts
of foreign currency translation. We have no control over these
impacts and if they were to continue, the full year results could
be further enhanced by the translation effect. In addition, we
reconfirm our guidance on expected EBITDA margin in Poland for the
full year as between 26% and 27%.
Going concern
After making enquiries, the Directors have a reasonable
expectation that the Company and its subsidiaries have adequate
resources to continue in operational existence for at least the
next twelve months. For this reason, they continue to adopt the
going concern basis in preparing the consolidated financial
information of the Group.
Principal Risks and uncertainties
The Board considers the key risks for the Group remain as:
-- Economic & Political risk - The Group's results are
affected by overall economic conditions in its key geographic
markets and the level of consumer confidence and spending in those
markets. The Group's operations are primarily in Central and
Eastern Europe markets where there is a risk of economic and
regulatory uncertainty. Political, economic and legal systems and
conditions in emerging economies are generally less
predictable.
-- Taxes - Increases in taxes, particularly increases to excise
duty rates and VAT, could adversely affect the demand for the
Group's products. Changes in tax laws and related interpretations
and increased enforcement actions and penalties may alter the
environment in which the Group does business.
-- Strategic transactions - Key objectives of the Group are: (i)
the development of new products and variants; and (ii) expansion in
the Central and Eastern European region and certain other European
countries, through the acquisition of additional businesses.
Unsuccessful launches or failure by the Group to fulfil its
expansion plans or integrate completed acquisitions could have a
material adverse effect on the Group's growth potential and
performance.
-- Marketplace & Competition - The Group operates in a
highly competitive environment and faces competitive pressures from
both local and international spirits producers, which may result in
pressure on prices and loss of market share.
Further detail on the principal risks and uncertainties
affecting the business activities of the Group are set out on pages
48 to 52 in the Stock Spirits Group Annual Report 2016, a copy of
which is available on the Company's website at
www.stockspirits.com. In the view of the Board there is no material
change in these risks in respect of the remaining six months of the
year.
Responsibility statement of the Directors in respect of the
half-yearly financial report
We confirm to the best of our knowledge:
The condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by
the EU
The interim management report includes a fair review of the
information required by:
a) DTR 4.2 7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
b) DTR 4.2 8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
Board of Directors
The Board of Directors as at 9th August 2017 is as follows:
David Maloney (Chairman), Mirek Stachowicz (Chief Executive
Officer), Lesley Jackson (Chief Financial Officer), John Nicolson
(Senior Independent Non-Executive Director), Mike Butterworth
(Independent Non-Executive Director), Tomasz Blawat (Independent
Non-Executive Director), Diego Bevilacqua (Independent
Non-Executive Director) and Randy Pankevicz (Non-Independent Non-
Executive Director).
For and on behalf of the Board of Directors:
Mirek Stachowicz David Maloney
Chief Executive Officer Chairman
9th August 2017
Independent Review Report to Stock Spirits Group PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2017 which comprises the Interim Condensed
Consolidated Income Statement, Interim Condensed Consolidated
Statement of Comprehensive Income, Interim Condensed Consolidated
Statement of Financial Position, Interim Condensed Consolidated
Statement of Changes in Equity, Interim Condensed Consolidated
Statement of Cash Flows, and the related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2017 is not prepared, in all material respects, in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU and
the Disclosure Guidance and Transparency Rules ("the DTR") of the
UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards as adopted by the EU. The directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
Simon Haydn-Jones (Senior Statutory Auditor)
For and on behalf of KPMG LLP
Chartered Accountants
Reading
9 August 2017
Interim condensed consolidated income statement
For the six months ended 30 June 2017
Six months Six months
ended ended
30 June 30 June
2017 2016
Unaudited Unaudited
Notes EUR000 EUR000
Revenue 5 119,811 115,989
Cost of goods sold (60,130) (54,077)
Gross profit 59,681 61,912
Selling expenses (28,031) (30,829)
Other operating expenses (15,199) (18,610)
Operating profit 16,451 12,473
Finance income 7 447 1,601
Finance costs 7 (1,247) (1,349)
Profit before tax 15,651 12,725
Income tax expense 8 (3,957) (4,346)
Profit for the period 11,694 8,379
----------- -----------
Attributable to:
Equity holders of the Parent 11,694 8,379
----------- -----------
Earnings per share, (cents),
attributable to equity
holders of the Parent
Basic and diluted 9 0.06 0.04
----------- -----------
Interim condensed consolidated statement of comprehensive
income
For the six months ended 30 June 2017
Six months Six months
ended ended
30 June 30 June
2017 2016
Unaudited Unaudited
EUR000 EUR000
Profit for the period 11,694 8,379
Other comprehensive income/ (expense)
Other comprehensive income/ (expense)
to be reclassified to profit or
loss in subsequent periods:
Exchange differences arising on
translation of foreign operations 6,260 (8,095)
Income tax effect - -
----------- -----------
17,954 284
Other comprehensive expense not
to be reclassified to profit or
loss in subsequent periods
Re-measurement losses on employee
severance indemnity - (2)
Income tax effect - 1
Total comprehensive income for
the period, net of tax 17,954 283
=========== ===========
Interim condensed consolidated statement of financial
position
As at 30 June 2017
30 June 31 December
2017 2016
Unaudited Audited
Notes EUR000 EUR000
Non-current assets
Intangible assets - goodwill 60,854 60,840
Intangible assets - other 10 309,472 302,753
Property, plant and equipment 11 52,810 55,705
Deferred tax assets 11,632 13,255
Other assets 4,666 4,533
439,434 437,086
---------- --------------
Current assets
Inventories 25,181 21,658
Trade and other receivables 105,330 131,396
Other assets - 1,500
Current tax assets 737 411
Cash and cash equivalents 12 49,933 74,956
181,181 229,921
---------- --------------
Total assets 620,615 667,007
========== ==============
Non-current liabilities
Financial liabilities 13 89,590 134,168
Other financial liabilities 71 113
Deferred tax liabilities 47,050 45,933
Provisions 931 946
Trade and other payables 215 49
137,857 181,209
---------- --------------
Current liabilities
Trade and other payables 60,415 53,352
Financial liabilities 13 1 33
Other financial liabilities 125 174
Income tax payable 7,419 8,926
Indirect tax payable 57,695 74,200
Provisions 475 534
126,130 137,219
---------- --------------
Total liabilities 263,987 318,428
---------- --------------
Net assets 356,628 348,579
========== ==============
30 June 31 December
2017 2016
Unaudited Audited
Notes EUR000 EUR000
Capital and reserves
Issued capital 15 23,625 23,625
Share premium 183,541 183,541
Merger reserve 99,033 99,033
Consolidation reserve 5,130 5,130
Own share reserve (356) (356)
Other reserve 10,322 9,335
Foreign currency translation
reserve 15 13,779 7,519
Retained earnings 21,554 20,752
Total equity 356,628 348,579
Total equity and liabilities 620,615 667,007
========== ==============
Interim condensed consolidated statement of changes in
equity
For the six months ended 30 June 2017
Foreign
Own currency
Issued Share Merger Consolidation share Other translation Retained Total
capital premium reserve reserve reserve reserve reserve earnings equity
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
Balance at 1
January
2016 23,625 183,541 99,033 5,130 (635) 9,254 15,284 29,630 364,862
Profit for the
period - - - - - - - 8,379 8,379
Other
comprehensive
income - - - - - - (8,095) (1) (8,096)
-------- -------- --------- -------------- -------- -------- ------------ --------- ---------
Total
comprehensive
(expense) /income - - - - - - (8,095) 8,378 283
-------- -------- --------- -------------- -------- -------- ------------ --------- ---------
Share based
payment
compensation - - - - - 281 - - 281
Dividends - - - - - - - (9,215) (9,215)
Own shares
utilised
for incentive
schemes - - - - 2 - - - 2
Balance at 30 June
2016 (unaudited) 23,625 183,541 99,033 5,130 (633) 9,535 7,189 28,793 356,213
-------- -------- --------- -------------- -------- -------- ------------ --------- ---------
Profit for the
period - - - - - - - 20,058 20,058
Other
comprehensive
income/(expense) - - - - - - 330 (2) 328
-------- -------- --------- -------------- -------- -------- ------------ --------- ---------
Total
comprehensive
income - - - - - - 330 20,056 20,386
-------- -------- --------- -------------- -------- -------- ------------ --------- ---------
Share based
payment
compensation - - - - - (200) - - (200)
Dividends - - - - - - - (28,141) (28,141)
Own shares
utilised
for incentive
schemes - - - - 277 - - 44 321
-------- -------- --------- -------------- -------- -------- ------------ --------- ---------
Balance at 31
December
2016 (audited) 23,625 183,541 99,033 5,130 (365) 9,335 7,519 20,752 348,579
-------- -------- --------- -------------- -------- -------- ------------ --------- ---------
Profit for the
period - - - - - - - 11,694 11,694
Other
comprehensive
income - - - - - - 6,260 - 6,260
-------- -------- --------- -------------- -------- -------- ------------ --------- ---------
Total
comprehensive
income - - - - - - 6,260 11,694 17,954
-------- -------- --------- -------------- -------- -------- ------------ --------- ---------
Share based
payment
compensation - - - - - 987 - - 987
Dividends - - - - - - - (10,892) (10,892)
Balance at 30 June
2017 (unaudited) 23,625 183,541 99,033 5,130 (356) 10,322 13,779 21,554 356,628
-------- -------- --------- -------------- -------- -------- ------------ --------- ---------
Interim condensed consolidated statement of cash flows
For the six months ended 30 June 2017
Six months Six months
ended ended
30 June 30 June
2017 2016
Unaudited Unaudited
Notes EUR000 EUR000
Operating activities
Profit for the period 11,694 8,379
Adjustments to reconcile
profit for the period to
net cash flows:
Income tax expense recognised
in income statement 8 3,957 4,346
Interest expense and bank
commissions 7 1,239 1,349
Loss/ (gain) on disposal
of tangible and intangible
assets 4 (9)
Other financial income 7 (447) (127)
Depreciation of property,
plant and equipment 11 4,940 4,578
Amortisation of intangible
assets 10 653 819
Net foreign exchange (loss)/
gain 7 8 (1,474)
Share based compensation 987 281
Movement in provisions 179 (143)
----------- -----------
23,214 17,999
Working capital adjustments
Decrease in trade receivables
and other assets 27,431 31,041
Increase in inventories (3,524) (2,351)
Decrease in trade payables
and other liabilities (9.276) (26,756)
14,631 1,934
Cash flows generated by
operations 37,845 19,933
Income tax paid (3,567) (2,456)
Net cash flows from operating
activities 34,278 17,477
----------- -----------
Investing activities
Interest received 7 195 127
Payments to acquire intangible
assets 10 (493) (398)
Purchase of property, plant
and equipment 11 (813) (3,691)
Proceeds from sale of property,
plant and equipment - 27
Net cash flow from investing
activities (1,111) (3,935)
----------- -----------
Financing activities
Repayment of borrowings (44,603) -
New borrowings raised - 4,197
Interest paid (1,245) (1,337)
Dividends paid to equity
holders of the parent (10,892) (9,215)
Net cash flow from financing
activities (56,740) (6,355)
----------- -----------
Net (decrease)/ increase
in cash and cash equivalents (23,573) 7,187
Cash and cash equivalents
at the start of the period 74,956 75,806
Effect of exchange rates
on cash and cash equivalents (1,450) (5,428)
Cash and cash equivalents
at the end of the financial
period 12 49,933 77,565
=========== ===========
Notes to the interim condensed consolidated financial
statements
for the six months ended 30 June 2017
1. Corporate information
The interim condensed consolidated financial statements of Stock
Spirits Group PLC (the Company) and its subsidiaries (the Group)
for the six months ended 30 June 2017 were authorised for issue in
accordance with a resolution of the directors on 9 August 2017.
Stock Spirits Group PLC is domiciled in England. The Company's
registered office is at Solar House, Mercury Park, Wooburn Green,
Buckinghamshire, HP10 0HH, United Kingdom.
The Company, together with its subsidiaries, is involved in the
production and distribution of branded spirits in Central and
Eastern Europe.
2. Basis of preparation
The interim condensed consolidated financial statements for the
six months ended 30 June 2017 have been prepared on a going concern
basis in accordance with IAS 34 Interim Financial Reporting as
adopted by the European Union.
The annual financial statements of the group are prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the EU. As required by the Disclosure and
Transparency Rules of the Financial Conduct Authority, the
condensed set of financial statements has been prepared applying
the accounting policies and presentation that were applied in the
preparation of the company's published consolidated financial
statements for the year ended 31 December 2016.
The financial information contained in this interim statement,
which is unaudited, does not constitute statutory accounts as
defined by the Companies Act 2006. The interim condensed
consolidated financial statements do not include all the
information and disclosures required in the annual financial
statements, and should be read in conjunction with the Group's
annual financial statements as at 31 December 2016. The annual
financial statements of the Group were prepared in accordance with
IFRS as adopted by the European Union and can be found on the
Group's website at www.stockspirits.com.
The financial information for the six months ended 30 June 2017
and the comparative financial information for the six months ended
30 June 2016 has not been audited, but has been reviewed. The
comparative figures for the financial year ended 31 December 2016
are not the company's statutory accounts for that financial year.
Those accounts have been reported on by the company's auditor and
delivered to the registrar of companies. The report was (i)
unqualified (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006.
Having made appropriate enquiries, the Directors have a
reasonable expectation that the Group has adequate resources to
continue in existence for the foreseeable future. Accordingly it is
appropriate to adopt the going concern basis in preparing the
interim condensed consolidated financial statements.
The consolidated financial information is presented in Euros
('EUR'). The closing foreign exchange rates used to prepare these
financial statements are as follows:
Six months Six months Year ended
ended 30 ended 30 31 December
June 2017 June 2016 2016
PLN 4.23 4.40 4.39
CZK 26.19 27.11 26.97
GBP 0.88 0.83 0.85
CHF 1.09 1.08 1.07
3. Significant accounting policies
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statement are consistent
with those followed in the preparation of the Group's annual
consolidated financial statements for the year ended 31 December
2016, except for the adoption of new standards and interpretations
and revision of the existing standards as of 1 January 2017 noted
below.
New/revised standards and interpretations adopted in 2017
The following amendments to existing standards and
interpretations were effective in the period to 30 June 2017, but
were either not applicable to or did not have a material impact on
the Group:
Amendments to IAS 7: Amendments as a result
of the Disclosure initiative
Amendments to IAS 12: Amendments regarding
the recognition of deferred tax assets for
unrealised assets
Amendments to IFRS 12: Amendments resulting
from Annual Improvements 2014 -2016 Cycle
(clarifying assets)
The entity is in the process of performing
a detailed assessment of the application
of the new standards, IFRS 15 and 16. The
company expects to disclose additional quantitative
information before the standards are applied.
4. Use of estimates and judgements
The preparation of the interim financial information requires
management to make judgments, estimates and assumptions that effect
the application of policies and reported amounts of certain assets,
liabilities, revenues and expenses. These are discussed on page 122
of the Group's 2016 annual financial statements. Estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognized in the period in which the
estimate is revised, if the revision affects only that period, or
in the period of revision and future periods if the revision
affects both the current and future periods.
5. Segmental analysis
In identifying its operating segments, management follows the
Group's geographic split, representing the main products traded by
the Group. The Group is considered to have five reportable
operating segments: Poland, Czech Republic, Italy, Other
Operational and Corporate. The Other Operational segment consists
of the results of operations of the Slovakian, International and
Baltic Distillery entities. The Corporate segment consists of
expenses and central costs incurred by non-trading Group
entities.
Each of these operating segments is managed separately as each
of these geographic areas require different marketing approaches.
All inter-segment transfers are carried out at arm's length prices.
The measure of revenue reported to the chief operating
decision-maker to assess performance is based on external revenue
for each operating segment and excludes intra-Group revenues. The
measure of EBITDA reported to the chief operating decision-maker to
assess performance is based on operating profit and excludes
intra-Group profits, depreciation and amortisation.
The Group has presented a reconciliation from profit before tax
per the consolidated income statement to EBITDA below:
For the six months ended 30 June 2017 For the six months ended 30 June 2016
EUR000 EUR000
Profit before tax 15,651 12,725
Net finance cost/ (income) 800 (252)
-------------------------------------- --------------------------------------
Operating profit 16,451 12,473
Depreciation and amortisation (note
10,11) 5,593 5,397
-------------------------------------- --------------------------------------
EBITDA 22,044 17,870
-------------------------------------- --------------------------------------
EBITDA margin 18.4% 15.4%
-------------------------------------- --------------------------------------
Total assets and liabilities are not disclosed as this
information is not provided by segment to the chief operating
decision-maker on a regular basis.
Poland Czech Italy Other Operational Corporate Total
Republic
30 June 2017 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
External revenue 63,985 29,831 12,714 13,281 - 119,811
------- ---------- ------- ------------------ ---------- --------
EBITDA 16,863 9,545 2,339 742 (7,445) 22,044
------- ---------- ------- ------------------ ---------- --------
Memo note: EUR000
Head Office costs (3,620)
PLC related costs including NEDs, internal audit and external communications (544)
Group external audit (151)
PSP and share-based payments (411)
Local market support costs including operations and IT (803)
Group NPD projects (17)
Insurance (307)
--------
Sub total (5,853)
Restructuring costs (1,059)
Other including consolidation adjustments and FX (533)
--------
Total Corporate costs (7,445)
--------
Poland Czech Italy Other Operational Corporate Total
Republic
30 June 2016 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
External revenue 60,743 27,575 13,645 14,026 - 115,989
--------- ---------- -------- ------------------ ---------- ---------
EBITDA 15,088 7,771 2,934 1,525 (9,448) 17,870
--------- ---------- -------- ------------------ ---------- ---------
Memo note: EUR000
Head Office costs (4,489)
PLC related costs including NEDs, internal audit and external communications (1,014)
Group external audit (149)
PSP and share-based payments (567)
Local market support costs including operations and IT (2,155)
Group NPD projects (327)
Insurance (362)
--------
Sub total (9,063)
Senior team recruitment, incremental 2016 AGM & other one-off costs (1,039)
Other including consolidation adjustments and FX 654
--------
Total Corporate costs (9,448)
--------
Seasonality
Sales of spirits beverages are somewhat seasonal, with the
fourth calendar quarters accounting for the highest sales volumes.
The volume of sales may be affected by both weather conditions and
public holidays.
6. Free cash flow
The Group defines free cash flow as net cash generated from
operating activities (excluding income tax paid), plus net cash
used in or generated from investing activities (excluding interest
received, net cash paid for acquisitions and net proceeds from the
sale of subsidiaries).
Free cash flow is a supplemental measure of the Group's
performance and liquidity that is not required to be presented in
accordance with IFRS.
For the six months ended 30 June 2017 For the six months ended
30 June 2016
EUR000 EUR000
Net cash generated from operating activities 34,278 17,477
Income tax paid 3,567 2,456
Net cash pre investing and financing activities 37,845 19,933
Net cash generated from investing activities (1,111) (3,935)
Interest received (195) (127)
-------------------------------------- ---------------------------
Cash flow pre financing activities 36,539 15,871
Free cash flow 36,539 15,871
Free cash flow as a percentage of EBITDA 165.8% 88.8%
-------------------------------------- ---------------------------
7. Finance costs and income
For the For the six
six months months ended
ended 30 30 June 2016
June 2017
EUR000 EUR000
Finance income:
Foreign currency exchange gain - 1,474
Interest income 447 127
Total finance income 447 1,601
============ ==============
Finance costs:
Interest payable on bank overdrafts and loans 703 900
Bank commissions, guarantees and other payables 337 261
Other interest expense 199 188
Foreign currency exchange loss 8 -
Total finance costs 1,247 1,349
============ ==============
Net finance costs / (income) 800 (252)
============ ==============
8. Income taxes
The Group calculates the period income tax expense using the tax
rate that would be applicable to the expected total annual
earnings. The major components of income tax expense in the interim
condensed consolidated income statement are:
For the For the six
six months months ended
ended 30 30 June 2016
June 2017
EUR000 EUR000
Current income tax
Current income tax charge 1,901 3,381
Tax (credit)/charge relating to prior periods (197) (20)
Deferred income tax
Relating to the origination and reversal
of temporary differences 2,253 985
Total tax expense 3,957 4,346
============ ==============
Tax inspections
Group wide tax provisions total EUR7,110,000. The most
significant relates to tax risks in respect of our Italian
subsidiary, Stock S.r.l. The Italian tax authorities have open
enquiries covering the years 2006 - 2010. No cash prepayments have
been made in respect of the open enquiries in 2017.
The Group's Czech subsidiary, Stock Plzen Bozkov s.r.o. received
a tax assessment relating to 2011 from the Czech tax authorities in
February 2016. Management will be vigorously defending the
Company's position, and have therefore not made a provision against
this assessment, which totals EUR1,125,000.
In July 2016 the Group's Polish subsidiary, Stock Polska Sp.
z.o.o. received notification from the Polish tax authorities of the
commencement of a standard enquiry covering its 2013 corporate tax
return. To date no tax assessment has been received in respect of
this open enquiry.
9. Earnings per share
Basic earnings per share amounts are calculated by dividing the
profit for the period attributable to ordinary equity holders of
the parent by the weighted average number of ordinary shares
outstanding during the period.
Diluted earnings per share amounts are calculated by dividing
the profit attributable to ordinary equity holders of the parent by
the weighted average number of ordinary shares outstanding during
the period plus the weighted average number of ordinary shares that
would be issued on conversion of all the dilutive potential
ordinary shares into ordinary shares.
Details of the earnings per share are set out below:
For the six months ended 30 June 2017 For the six months ended 30 June 2016
Basic earnings per share
Profit attributable to the equity
shareholders of the Company
(EUR'000) 11,694 8,379
Weighted average number of ordinary
shares in issue for basic earnings
per share ('000) 199,937 199,786
-------------------------------------- --------------------------------------
Basic earnings per share (EUR) 0.06 0.04
-------------------------------------- --------------------------------------
Diluted earnings per share
Diluted profit attributable to the
equity shareholders of the Company
(EUR'000) 11,694 8,379
Weighted average number of diluted
ordinary shares adjusted for the
effect of dilution ('000) 202,217 199,786
-------------------------------------- --------------------------------------
Diluted earnings per share (EUR) 0.06 0.04
-------------------------------------- --------------------------------------
Reconciliation of basic to diluted ordinary shares
Weighted average number of Ordinary shares ('000) 200,000 200,000
Effect of purchase of own shares ('000) (63) (214)
--------- ---------
Basic weighted average number of Ordinary shares ('000) 199,937 199,786
Effect of PSP options ('000) 1,280 -
Effect of Special Equity Scheme options ('000) 1,000 -
Diluted weighted average number of Ordinary shares ('000) 202,217 199,786
--------- ---------
There have been no other transactions involving ordinary shares
between the reporting date and the date of authorisation of these
financial statements.
10. Intangible assets - other
Customer
Relationships Software
Brands and Trademark Total
EUR000 EUR000 EUR000 EUR000
At 1 January 2017,
cost, net of accumulated
amortisation 298,660 1,042 3,051 302,753
Additions 204 - 289 493
Transfers - - 456 456
Amortisation expense - (59) (594) (653)
Foreign currency
adjustment 6,415 - 8 6,423
At 30 June 2017,
cost, net of accumulated
amortisation 305,279 983 3,210 309,472
========== =============== =========== ==========
Customer
Relationships Software
Brands and Trademark Total
EUR000 EUR000 EUR000 EUR000
At 1 January 2016,
cost, net of accumulated
amortisation 294,261 1,160 3,475 298,896
Additions 4,522 - 1,115 5,637
Transfers 224 - (83) 141
Disposals - - (3) (3)
Amortisation expense - (118) (1,367) (1,485)
Foreign currency
adjustment (347) - (86) (433)
At 31 December 2016,
cost, net of accumulated
amortisation 298,660 1,042 3,051 302,753
========== =============== =========== ==========
11. Property, plant and equipment
The movement in property, plant and equipment for the six-month
period ended 30 June 2017 was as follows:
Land Assets
and Technical Other under
buildings equipment equipment construction Total
EUR000 EUR000 EUR000 EUR000 EUR000
At 1 January
2017, cost, net
of accumulated
depreciation 23,640 25,197 5,031 1,837 55,705
Additions 4 341 120 348 813
Transfers 26 989 282 (1,753) (456)
Disposals - (1) (7) - (8)
Depreciation
expense (541) (2,828) (1,571) - (4,940)
Foreign currency
adjustment 734 748 159 55 1,696
At 30 June 2017,
cost, net of
accumulated depreciation 23,863 24,446 4,014 487 52,810
=========== =========== =========== ============== =========
Land Assets
and Technical Other under
buildings equipment equipment construction Total
EUR000 EUR000 EUR000 EUR000 EUR000
At 1 January
2016, cost,
net of accumulated
depreciation 23,629 25,359 7,318 3,297 59,603
Additions 414 320 895 5,544 7,173
Transfers 800 5,402 535 (6,878) (141)
Disposals 11 (86) (102) - (177)
Depreciation
expense (1,021) (5,307) (3,411) - (9,739)
Foreign currency
adjustment (193) (491) (204) (126) (1,014)
At 31 December
2016, cost,
net of accumulated
depreciation 23,640 25,197 5,031 1,837 55,705
=========== =========== =========== ============== =========
12. Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash
equivalents include cash on hand and in banks, net of outstanding
bank overdrafts. Cash and cash equivalents at the end of the
financial period/year as shown in the cash flow statement can be
reconciled to the related items in statement of financial position
as follows:
30 June 31 December 2016
2017
EUR000 EUR000
Cash and bank balances 49,933 74,956
-------- -----------------
Cash and cash equivalents are denominated in the following
currencies:
30 June 31 December 2016
2017
EUR000 EUR000
Polish Zloty 16,250 16,578
Czech Koruna 11,890 21,918
Sterling 8,396 21,469
Euro 7,809 8,960
Other currencies 5,588 5,851
Total 49,933 74,956
======== =================
13. Financial liabilities
Current Non-current
30 June 30 June Current Non-current
2017 2017 31 December 2016 31 December 2016
EUR000 EUR000 EUR000 EUR000
Unsecured - at amortised cost
HSBC loan - 89,716 - 134,319
Cost of arranging bank loan (53) (126) (52) (151)
Interest payable 54 - 85 -
1 89,590 33 134,168
-------- ----------- ----------------- -----------------
14. Financial assets and liabilities
Set out below is a comparison by category of carrying amounts
which approximates fair values of all of the Group's financial
instruments that are carried in the financial statements.
As at 30 June 2017
Loans Amortised Total
and book
receivables cost value
EUR000 EUR000 EUR000
Financial assets:
Cash 49,933 - 49,933
Trade and other receivables 101,432 - 101,432
Customs deposits 4,666 - 4,666
Financial liabilities:
Interest-bearing loans
and borrowings:
(i) Finance lease obligations - (196) (196)
(ii) Floating rate borrowings
- banks - (89,537) (89,537)
Trade and other payables - (58,420) (58,420)
As at 31 December 2016
Loans Amortised Total
and book
receivables cost value
EUR000 EUR000 EUR000
Financial assets:
Cash 74,956 - 74,956
Trade and other receivables 128,393 - 128,393
Customs deposits 6,033 - 6,033
Financial liabilities:
Interest-bearing loans and
borrowings:
(i) Finance lease obligations - (287) (287)
(ii) Floating rate borrowings
- banks - (134,116) (134,116)
Trade and other payables - (51,259) (51,259)
15. Authorised and issued share capital and reserves
Share Capital
30 June 31 December
2017 2016
Number of ordinary shares
Ordinary shares of GBP0.10
each, issued and fully paid 200,000,000 200,000,000
------------ ------------
Ordinary shares (EUR000) 23,625 23,625
------------ ------------
Foreign currency translation reserve
30 June 31 December
2017 2016
EUR000 EUR000
Foreign currency translation
reserve 13,779 7,519
-------- ------------
Exchange differences relating to the translation from the
functional currencies of the Group's foreign subsidiaries into
Euros are accounted for by entries made directly to the foreign
currency translation reserve.
16. Dividend
An interim dividend of 2.38 Euro cents per ordinary share has
been recommended by the Board in respect of the half year ended 30
June 2017 and will be paid on 22 September 2017. The total dividend
payable has not been recognised as a liability at 30 June 2017.
17. Related party transactions
In considering each possible related party relationship,
attention is directed to the substance of the relationship, not
merely the legal form.
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation. There were
no other related party transactions during the six month period
ended 30 June 2017 (30 June 2016: EURnil), as defined by
International Accounting Standard No 24 'Related Party
Disclosures', except for key management compensation. The related
party transactions for the year ended 31 December 2016 as defined
by International Accounting Standard No 24 'Related Party
Disclosures' are disclosed in note 31 of the Stock Spirits Group
PLC Annual Report for the year ended 31 December 2016.
18. Commitments for capital expenditure
Commitments for the acquisition of property, plant and equipment
as of 30 June 2017 are EUR35,000 (30 June 2016: EUR120,000).
19. Events after the balance sheet date
Subsequent to the period end, the following events have occurred
-
-- On 17 July 2017, Stock Spirits entered into agreements with
Quintessential Brands Group for the acquisition of a 25% equity
interest in Quintessential Brands Ireland Whiskey Limited for a
cash consideration of up to EUR18.3m. Consideration comprised of an
initial cash payment of EUR15m for 25% of the equity interest, and
a deferred cash consideration of up to EUR3.3m which is payable
over a five year period, subject to performance conditions; and
-- On 21 July 2017, Stock Spirits Group extended its revolving
credit facilities with its banking club by a further 2 years to
November 2022. The key facility terms remain unchanged.
(1) We have referenced EBITDA, a non-GAAP measure in the
financial highlights section. For details of the reconciliation of
EBITDA to GAAP financial numbers please refer to notes 5 and 6 in
the Unaudited Interim Condensed Consolidated Financial
Statements
(2) Nielsen, total vodka off trade; total Poland as at June
2017
(3) All data references, Nielsen total vodka total off trade,
total Poland YTD June 2017
(4) Total premium is the sum of premium, top premium and ultra
premium categories as per Nielsen data
(5) Nielsen total off trade, total Czech market June 2017
(6) Nielsen total off trade, rum category, total Czech market
June 2017
(7) Nielsen total off trade, vodka category, total Czech market
June 2017
(8) IRI total on and off trade, total Italian market June
2017
(9) IRI total off trade, total Italian market June 2017
(10) IRI total off trade, total the Italian market June 2017
(11&12) IWSR 2017
Constant currency growth rates are based on prior year balances
restated based on 2017 foreign exchange rates. The prior year
constant currency amount is restated by retranslating prior year
monthly results from foreign operations at their respective 2017
monthly foreign exchange rates. The Board has chosen to disclose
these comparative growth rates as the impact of currency in the
period has been material to disclosed revenue growth rates. The
difference between the reported and constant currency amounts and
growth rates is the impact of foreign exchange
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DVLFBDVFZBBF
(END) Dow Jones Newswires
August 09, 2017 02:00 ET (06:00 GMT)
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