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Interim results 2014

Download the full Interim results statement (PDF 1.06MB)

Stock Spirits Group PLC, a leading Central and Eastern European branded spirits producer, announces its results for the six months ended 30 June 2014.


  • Total revenue down 10% to €137.7 million (2013: €153.1 million) reflecting the impact of the Polish duty sales re-phasing and adverse foreign exchange movements in the Czech Republic
  • Operating profit before exceptional costs down 23% to €23.2 million (2013: €30.3 million) which includes the impact of the Polish duty increase of €5m, foreign exchange movements, incremental costs of being a listed company and the presentation of new Long Term Incentive Plans for management
  • Profit after tax up to €16.8 million (2013: €10.7 million loss) reflecting a reduction in exceptional and finance costs as a result of the capital restructuring at the time of the IPO
  • EPS €0.084  per share
  • Maiden interim dividend  €0.0125 per ordinary share
  • EBITDA before exceptionals €28.6 million (2013: €34.3 million)
  • Results in line with expectations and on track to deliver full year targets    


  • Total volume 6.8 million 9 litre cases (2013: 7.8 million) reflecting impact of Polish duty increase
  • ‘Project Polar’ the roll out of 20,000 fridges in traditional off-trade stores completed in February 2014
  • The impact of the 15% excise duty increase, which resulted in the pulling forward of €5 million of operating profit into 2013, has been mitigated by effective management action
  • 14 new product launches including Sznaps and new flavours of Lubelska in Poland and a new range of flavoured vodkas in Slovakia
  • New distribution agreement signed in Croatia with Beam Suntory
  • Further international spirits awards won, reflecting the high quality nature of the Group’s products

Chris Heath, CEO of Stock Spirits Group, commented:

“The Group’s results for the first half of the year 2014 are in line with our internal targets and we are on track to meet our expectations for the full year. This solid performance has been delivered despite the challenge posed by the January 2014 excise duty increase in our largest market, Poland.

We have continued to grow our share of the key profit pools in Poland and have successfully launched a number of exciting new products in all of our core markets.

We are also pleased to have added a new distribution agreement with Beam Suntory in Croatia in line with our strategic aim of increasingly premiumising our portfolio in our core markets. Along with our existing agreements with Beam Suntory in Poland and Diageo in the Czech Republic, we are now working in partnership with global spirits leaders in three of our six core markets.

As intended at the time of the IPO last year, the Board is pleased to announce the payment of a maiden interim dividend of €0.0125 per share to shareholders. The Group is well placed to capitalise on the opportunities available in the Central and Eastern European Region and we continue to view the future with confidence.”

Management will be hosting a presentation for analysts at 10.30am on Thursday 28th August at:

1 Angel Lane

There will be a simultaneous web cast of the presentation via with a recording made available shortly thereafter.

For further information:

Stock Spirits Group:                   +44 (0) 1628 648 500

Chris Heath, Chief Executive Officer

Lesley Jackson, Chief Financial Officer

Andrew Mills, Investor Relations Director

Bell Pottinger:                            +44 (0) 20 3772 2560

Clinton Manning

A copy of this interim results announcement (“announcement”) has been posted on

This announcement contains statements which are not based on current or historical fact and which are forward looking in nature. These forward looking statements 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.

Notes to editors:

About Stock Spirits

Stock Spirits, a leading branded spirits and liqueurs business in Central and Eastern Europe, offers a modern premium branded spirits portfolio, 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 approximately 150 million litres per year.

Stock holds clear market leadership positions in spirits in both Poland and the Czech Republic, where it has invested in what is believed to be state of the art production facilities, and is one of the world’s leading vodka producers. This includes having the number one vodka brands in Poland, Italy and the Czech Republic. Core Stock Spirits brands include products made to long-established recipes such as Stock brandy, Fernet Stock bitters and Limonce, as well as more recent creations like Stock Prestige and Czysta de Luxe vodkas.

Stock Spirits was created through the integration of two long-established businesses, Eckes & Stock and Polmos Lublin, in 2008 and floated on the main market of the London Stock Exchange in October 2013.

Stock Spirits supports and is active in the promotion of responsible and moderate drinking. For further information please visit:



During the six months ended 30 June 2014, we have seen continued growth in market share in Poland, our largest market, while in the Czech Republic and Italy market share has slightly reduced.

The business has performed well against the back drop of increases in duty in Poland and Italy and the growth in private label in Czech Republic and Italy.

The business has also performed to plan in the smaller markets of Slovakia, Croatia and Bosnia & Herzegovina. Total volume was 6.8 million 9 litre cases, a reduction of 1.0 million from 2013, reflecting the impact of the Polish excise duty increase.

The management’s focus has continued to be on building sustainable profit growth and cash flow in line with the key strategic goals of the Group. These are:

  • Further develop the Group’s strong brand portfolio in current markets
  • Continue to invest in attractive markets with strong growth potential
  • Utilise purchasing and production capabilities to deliver quality products with a competitive cost advantage
  • Continue to invest in people and develop management talent
  • Pursue opportunities for acquisitions across Central and Eastern Europe

During the period, we have continued to build on our strong track record of developing innovative new products and new variants of existing products. In Poland, Sznaps, an exciting new low alcohol content spirit, is an innovative new product category that we expect to attract strong support from consumers. We are also confident that the recently launched new flavours of our “millionaire” brands Lubelska and Zoladkowa Gorzka in Poland and Keglevich in Italy will successfully enhance these ranges of market-leading vodka-based liqueurs. Testament to the quality of our product development, we are proud to have recently won further awards from The International Spirits Challenge and from the juries of the International Taste & Quality Institute.

Market Performance:


The total vodka market volume declined 3.6% which was slightly better than expected. Both regular vodka and vodka based liqueurs were in volume decline whilst value across the market in the half year increased by 2.7%. Stock Spirits value market share increased to 38.4%, compared with 38.2% in the same period last year.

In February, we completed the second phase of the branded fridges project, taking the total now installed to just over 20,000, further consolidating our leadership position in the key traditional trade distribution channel.

During the reported period, we were encouraged to see the momentum start to build in our distribution contract with Beam Suntory which gives us an exclusive right to distribute the complementary Beam Suntory portfolio of brands within Poland.

We have successfully managed the impact of the 15% increase in excise duty on strong alcohol which came into effect on the 1st January 2014, liaising closely with customers and increasing prices to adjust for the effect of the duty increase. As previously communicated, the benefit seen in 2013 from the buy-in, amounting to an estimated EBITDA increase of €5m, was reversed during the first half 2014. Despite this, reported EBITDA performance was broadly maintained at the level of the corresponding period in 2013. The effect of the drop in net sales was offset by continued growth in market share, improvement in product and customer mix and successful new product launches.

Czech Republic

Overall spirits market volume continued to grow, driven by the improving economy and growing consumer confidence.

Our portfolio has also continued to grow but at a slower rate than the market due to the loss of share to private label brands in the vodka and rum categories. In financial terms our results in the Czech Republic have been impacted by a negative translation effect of the devaluation (circa 8%) of the Czech Koruna against the Euro, and by the termination of the previously long established 3rd party brand distribution agreement, which ceased in H2 2013. The contribution from the new distribution agreement with Diageo only commenced in January 2014 and has not made a significant contribution to the first half results. Going forward the agreement is expected to contribute more meaningfully to the Czech Republic results.


The overall spirits market continued to decline slightly in volume terms during the first six months (-2.7%) but increased in value terms by 0.8%. The vodka category performed best, where we have a leading position in clear and vodka based liqueurs through the Keglevich brand.  The Limocello category was impacted by growth in private label products and as a result, our category leading Limonce brand has lost market share in the period. In addition, the Italian government posted two duty increases in Italy during H1, in a continuing difficult macro-economic environment, which have impacted volumes in H1. Against this tough trading environment, Stock Italy broadly maintained EBITDA at €3.4m compared to €3.6m in the same period last year.

Other Markets

Other Markets includes Slovakia, Bosnia & Herzegovina and Croatia along with our export operations and constitutes our smallest segment. Overall performance was in line with our expectations. The performance in Slovakia was impacted by the further rationalization of our product portfolio there following the integration of the Imperator business last year and the ending of a previous distribution agreement, which has not yet been replaced.  The portfolio rationalization resulted in lower total sales as uneconomic SKUs were eliminated and lower net profitability as we  increased advertising and promotion investment to support the expected growth of our core brands. Early results from the extra investment in advertising and promotion spend have been very encouraging and will continue to support the growth of our core brands.

We are delighted to have signed a new distribution agreement with Beam Suntory in Croatia to distribute their products from 1st September this year, further demonstrating the strength of our distribution capability in the region.

Financial Performance

The Group results are in line with our internal targets with strong trading performance which were offset by a number of factors including the increase in excise duty in Poland (which resulted in sales and EBITDA being pulled forward in Q4 of 2013 and a consequent reversal in H1 2014), the impact of the devaluation of the Czech Koruna by approximately 8% and the loss of the previous 3rd party distribution contract in Czech and Slovakia. These have resulted in a reduction in both reported sales revenue and, to a lesser extent, EBITDA.

Following the IPO in October last year, the Group is now bearing additional costs to meet the requirements of being a listed company and these have impacted the half year results. These will have a lesser year on year impact in H2 as many of these costs were in place during H2 2013.

Additionally H1 last year benefitted from a material foreign exchange translation gain principally arising from the proceeds on the disposal of the US business in 2012 which were used to partially repay the former senior unsecured debt during H1 2013.

The devaluation of the Czech Koruna in Q4 2013 has led to a reduction of €2.8m in net sales revenue and a €0.8m reduction in operating profit as a result of year-on-year exchange rate changes.

As a consequence EBITDA was €28.6m, a decline of €5.7m versus last year.

The Group has recorded a significant decrease in exceptional costs which last year were driven by costs associated with the IPO, the Group restructuring as a consequence of the IPO and a partial refinancing of the Group.

During 2013 the capital structure of the Group underwent significant change and, as a consequence, the senior unsecured debt was either repaid or converted to a single class of equity, resulting in a significant fall in finance costs in H1 2014 to €6.9m from €32.4m in the corresponding period. Finance costs are now driven by the Group’s external bank debt. Net debt at the end of June 2014 was €95.9m with a leverage of 1.29. The Group’s low leverage provides an effective funding structure for both organic and inorganic growth of the Group.

During H1 2014 the Group has renegotiated certain clauses of its external bank debt which has further relaxed a number of conditions and resulted in a reduction in the margins the Group will now pay for its external borrowing. The margin reduction will benefit the H2 earnings and results going forward and now brings the Group borrowing facilities closer to those of a public company.

The underlying results, in addition to the significant fall in finance and exceptional costs, has moved the Group to record a profit of €16.8m after tax versus a loss of €10.7m during the same period in 2013. 

Earnings per share are reported as €0.084 for the half year.

The Group remains confident on the delivery of its full year results in line with its targets.

The Group remains focused upon cash generation and has generated an adjusted free cash flow of €3.4m after adjusting for the timing impact of €40.3m of VAT recorded at the year end.

At the time of IPO the Group committed to commence the payment of a dividend following the 2014 interim results and the Board of Directors have recommended a dividend payment of €0.0125 per share.  The dividend will be paid on 26 September 2014 to shareholders on the register at close of business on 5 September 2014.  The shares will be quoted ex-dividend on 3 September 2014.

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 the foreseeable future. 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 principal risks and uncertainties affecting the business activities of the Group remain those detailed on pages 36 to 41 in the Stock Spirits Group Annual Report 2013, a copy of which is available on the Company’s website at In the view of the Board there is no material change in these risks in respect of the remaining six months of the year.

These risks include: deterioration in the economic conditions of key markets; unexpected needs for liquidity; changes in demand, customer tastes and preferences, and adverse changes to distribution channels; “black market” sales of alcoholic beverages; changes in the price or availability of supplies and raw materials; litigation directed at the alcoholic beverages industry and other litigation; increases in taxes, particularly in excise duty; exposure to liabilities under anti-bribery laws and any violation of such laws; exposure to tax liabilities resulting from tax audits; changes to regulations which limit advertising, promotions and access to products; retaining key personnel and attracting highly skilled individuals; inconsistent quality or contamination of products or similar products in the same categories as the Group’s products; economic and regulatory uncertainty; seasonal fluctuations in consumer demand; disruption to production and storage facilities or breakdown of information technology systems; maintenance of distribution agreements on favourable terms to all; protection of intellectual property rights; restrictive terms in financing arrangements, fluctuations in foreign currency.

Statement of Directors’ responsibilities

The Interim Results Announcement complies with the Disclosure and Transparency Rules (‘the DTR’) of the UK’s Financial Conduct Authority in respect of the requirement to produce a half yearly financial report. Each of the Directors of Stock Spirits Group PLC confirms that to the best of their knowledge:

This set of condensed financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union;

This Interim Management Report includes a fair review of the important events during the first half and their impact on the set of condensed financial statements, and a description of the principal risks and uncertainties for the remaining half of the year as required by DTR 4.2.7R; and

This Interim Management Report includes a fair review of the disclosure of related party transactions and changes therein that have materially affected the financial position or performance of the Group for the half year, as required by DTR 4.2.8R.

Board of Directors

The Board of Directors as at 27 August 2014 is as follows: Jack Keenan (Chairman), Chris Heath (Chief Executive Officer), Lesley Jackson (Chief Financial Officer), Andrew Cripps (Independent Non-Executive Director), David Maloney (Senior independent Non-Executive Director), John Nicolson (Independent Non-Executive Director).

For and on behalf of the Board of Directors:

Chris Heath                               Jack Keenan

Chief Executive Officer             Chairman

27 August 2014

Download the full Interim results statement (PDF 1.06MB)

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