It's taxing times in Poland for Stock Spirits (STCK), after a 15 per cent hike in excise duties hit liquor sales in the distiller's most important market. The "difficult trading conditions" in the Polish market weighed on revenues through 2014, although a marked reduction in finance costs as the company exchanged debt for equity in the flotation resulted in net earnings of €35.8m (£25.4m), against €8.9m in 2013.
The comparatives are slightly misleading, as many customers bought ahead of the tax rise, thereby boosting sales figures in 2013. Stock Spirits, which distributes branded liquor in central and eastern Europe, said that while its clients' inventory levels had subsequently fallen, the initial buying surge to beat the taxman was much bigger than anticipated. The inventory problems were exacerbated by industry rivals discounting heavily in the aftermath in a bid to increase market share.
In a note to the accounts, Stock's audit committee highlighted a series of "allegedly fraudulent payments" within its Polish business over the past five years that could total around €6m. But management said the findings would have no material impact on this year's accounts.
Broker JPMorgan Cazenove expects adjusted EPS of €0.18 in 2015, in line with last year's figure.
| STOCK SPIRITS (STCK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 203p | MARKET VALUE: | £406m | |
| TOUCH: | 202-203p | 12-MONTH HIGH: | 317p | LOW: 185p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 172¢* | NET DEBT: | 24% | |
| Year to 31 Dec | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2010 | 302 | 7.1 | na | nil |
| 2011 | 295 | 21.5 | na | nil |
| 2012 † | 292 | 29.0 | 0.2 | nil |
| 2013 (restated) | 341 | -8.7 | 5.0 | nil |
| 2014 | 293 | 49.0 | 18.0 | 3.75 |
| % change | -14 | - | +260 | - |
Ex-div: tba Payment: tba £1=€1.42. *Includes intangible assets of €349m or 174¢ a share. †IPO in Oct 2013, so pro-forma EPS for 2012. | ||||
