Distil delivered results in line with our forecast expectation at EBITDA and PBT level. FY19 saw a 19% turnover increase, supported by gross margin expansion, with EBITDA and PBT marginally ahead after a 48% increase in brand investment through its advertising and promotional activities. Net cash advanced by almost £40K (+4%) over the year on the back of an operating cash inflow of £85K. Innovation continues apace, with the recent launch of RedLeg Caramelised Pineapple Spiced Rum, along with new gift packaging and miniature bottle formats for RedLeg and Blackwoods Gin. We are reflecting our more cautious outlook on short-term UK consumer spending prospects in our new forecasts, primarily for the current FY20E year.
Distil’s results were in line with our unchanged forecasts following the Q4 trading update in May. A slight shortfall in turnover was mitigated by a better than forecast gross margin expansion of 130bps. Total operating cost growth of 28% outpaced turnover and gross profit growth of 19% and 22% respectively, with EBITDA, EBIT and PBT therefore only marginally ahead of last year. Cash generation was again positive, with year-end net cash increasing by just under 4% to £1068K.
Despite a highly competitive drinks market and an increasingly difficult consumer backdrop, Distil delivered overall volume growth of 15%, led by a 45% increase for RedLeg, which gained market share in this growth segment. Gin continues to gain share from most spirits, led by the growth of coloured, flavoured and sweetened gins, with dry gins also up, driven by new brand launches. The vodka segment continues to shrink. Distil’s volumes fell in both the gin and vodka segments, although Blackwoods 2017 Vintage Dry Gin made good underlying progress when performance is adjusted for the pipeline fill last year for the launch of the new vintage and its new packaging.
With consumer confidence and spending faltering, we have adopted a more cautious stance in the shape of our forecasts, most notably for the current year. Our forecasts continue to show profit progression and cash generation each year across the period, but with the equivalent of a year’s lag to the shape of our previous forecasts.