Distil has delivered further strong progress in its interim results. These mirror the pattern of last year’s interims with a substantial reduction in operating losses, new major retail listings, another full TTB approval for sales into the US and a strong volume uplift across key brands. In summary, Distil is continuing the process of brand building across all channels, with a clear operational focus on the development of its key brands in its key markets.
Interim results: The first half performance has been strong, delivering top line revenue growth of 26% in the period to £0.666m, despite lapping against pipeline fill to the major retailer listing won in April 2015. This particularly impacted Q1, when sales revenues were up 5%, so top line growth has been considerably more impressive in Q2. Production volume in litres increased by 16.4%, which compounds on last year’s interim volume growth of 23%. Despite investment in headcount to support Distil’s continued growth, operating costs remain well controlled and rose at a slower rate than turnover. Consequently, the operating loss decreased by 26% to £66K, compared with £89K last year.
UK listing gains: During H1, Distil announced further listing gains within the UK. In August, Distil announced the listing of RedLeg within the leading premium grocery chain in the UK, followed in September by the announcement of the listing of both RedLeg and Blackwoods Vintage Dry Gin at another of the so-called Big Four UK grocery retail chains. RedLeg is now listed at three of the Big Four chains, which will significantly increase brand awareness.
Full TTB approval for RedLeg: Distil received finalised label approval for RedLeg from the TTB (US Alcohol and Tobacco Tax and Trade Bureau) in October. Having crossed this final hurdle, Distil is planning production and shipments into the US in Q4 of FY17.
Unchanged forecasts: We are leaving our forecasts unchanged at this stage. The increased momentum seen in Q2, together with the new listings and support activity secured for the peak Q3 trading period in FY17, should underpin top line performance in H2. Given the broadly break-even performance delivered in H2 last year, FY17 PBT forecast risk now appears weighted to the upside in our view after these interim results.