TIDMART
RNS Number : 6861M
Artisanal Spirits Company PLC (The)
18 September 2023
18 September 2023
The Artisanal Spirits Company plc
('Artisanal Spirits', 'ASC' or 'the Group')
Interim Results for the Six Months to 30 June 2023
Continued positive progress towards our 2024 ambition
The Artisanal Spirits Company (AIM: ART), curators of the
world's favourite, single-cask and limited-edition whisky, and
owner of The Scotch Malt Whisky Society ("SMWS") which marks 40
years since its inception this year, is pleased to announce its
half year results for the six months ended 30 June 2023. The Group
has continued to deliver on its strategic plan and objectives -
progressing a disciplined investment programme and range of
operational initiatives to facilitate the Group's long term,
sustainable growth.
Performance highlights
Ongoing strategic progress maintaining consistency of delivery
-- against expectations.
Revenue of GBP10.2m representing +3% increase in H1-23,
-- with growth momentum gained in Q2-23, delivering +7% growth
following a relatively flat Q1.
SMWS membership growth of 9% vs H1-22, with double digit
-- growth in Europe, US, Japan and Franchises. China also
returned to membership growth through Q2, with membership
up +8% vs H1-22.
Europe online and UK Venues continued to achieve strong
-- outperformance with 21% and 23% growth respectively.
Adjusted EBITDA in H1-23 represents a loss of GBP1.8m against
-- a prior year EBITDA loss of GBP0.3m. Revenue growth and
profit delivery are weighted to the second half, and we
remain on track to deliver positive EBITDA in the full
year.
SMWS was again recognised in 2023 for the quality of its
-- spirits at awards from the top international competitions
including The International Spirits Challenge, Scotch Whisky
Masters, San Francisco World Spirits Competition and The
Tokyo Whisky and Spirits Competition.
Continued progress against strategic objectives
Continued successful international expansion;
-- * Post period-end launched a new Joint Venture
subsidiary in Taiwan (replacing a Franchise
agreement) in the world's 3rd biggest total
addressable whisky market.
* Successfully established the new franchise in South
Korea
* Signed new franchise agreements in Malaysia and
Singapore
Completed the final development phase of Masterton Bond:
-- e-fulfilment. The site is now completing all bottling and
despatch activities for the Group.
Re-opening of Vaults Members' room, the heart of the SMWS
-- brand home, due this month following refurbishment investment
of GBP0.5m.
In line with our strategy, realised value of our existing
-- spirit stock through private cask sales to members and
selected industry partners.
Continued to balance our cask spirit holding by also seeking
-- opportunities to acquire old and rare spirit.
Ongoing exploration of development opportunities in the
-- American Whiskey Market. Growth in American Whiskey sales
via SMWS USA ($120k in H1-23, up 50% on full year FY22)
and first shipment of JGT to the market in H1, with GBP130k
potential sales value.
Continued commitment to investment in digital transformation
-- and on track to launch a new Members' app by the end of
2023.
Further development of management, talent and expertise
-- within the business, with the promotion of Billy McCarter
to CFO, promotion of Rebecca Hamilton to Chief Marketing
& Experience Officer and the appointment of Chris Leggat
(former Chief Executive of Douglas Laing & Co) as new Business
Development Director.
Remain confident in delivering full year growth expectations
Like many other companies, we have felt the impact of the
-- changing macroeconomic conditions and cost of living pressures
during 2023, and we expect them to remain over the course
of the next 12-18 months. Our globally diversified footprint,
growing membership and pioneering model, combined with
the demographics of our loyal and engaged customers make
us better placed to continue to grow despite these wider
market conditions. We therefore remain confident that we
are on track to deliver growth in line with full year expectations,
including inaugural positive EBITDA.
We expect to see an acceleration in revenue growth during
-- H2-23 (full year consensus revenue expectation represents
c25% revenue growth vs H2-22), with positive impact of
the Taiwan & Korea launches, weaker comparatives in China
from H2-22, and further progress on cask sales.
The SMWS membership product offer is being broadened in
-- H2 with the introduction of private cask sales which allow
members to more actively participate in the whisky curation
process and which opens up a complementary revenue stream.
We also anticipate continued strong performance in UK venues
-- and the launch of the refurbished venue at the Vaults in
Leith at the end of September coupled with a Guinness World
Record attempt for the largest whisky tasting worldwide.
Alongside this, further progress on strategic objectives
-- will be made with the launch of a new SMWS App in the UK,
new membership & bottle product and first "prestige" 40-year-old
product designed to complement the existing Vaults Collection
range and further develop our prestige pricing.
GBP'm 6 months 6 months % change
N to 30 June to 30 June
ote 2023 2022
Revenue 6 10.2 9.9 3%
------ ------------ ------------ ---------
Gross profit 6.2 6.2 -
------ ------------ ------------ ---------
Gross margin 61% 63% (2ppt)
------ ------------ ------------ ---------
Adjusted EBITDA* 9 (1.8) (0.3) (500%)
------ ------------ ------------ ---------
EBITDA 9 (2.0) (0.3) (567%)
------ ------------ ------------ ---------
Loss before tax 9 (3.5) (1.1) (218%)
------ ------------ ------------ ---------
Loss after tax (3.6) (1.4) (157%)
------ ------------ ------------ ---------
Net Debt (18.8) (8.2) (128%)
------ ------------ ------------ ---------
Cask inventory 1 4 23.9 22.8 5%
------ ------------ ------------ ---------
Notional retail value
of cask inventory(+) 492 455 8%
------ ------------ ------------ ---------
* A djusted EBITDA is a non IFRS measure and is defined
as earnings before interest tax, depreciation, amortisation
and exceptional and restructure costs, details set
out in Note 9
+Notional retail value is a non IFRS measure and is
calculated as total litres of spirit in casks, converted
to bottle equivalent (based on 70cl) multiplied by
average net revenue per bottle in the period.
Operational highlights:
Global membership
'000s J une 2023 J une 2022 % change
--------------- ------------ ----------
UK 18.2 17.7 3%
--------------- ------------ ----------
US 6.3 5.5 15%
--------------- ------------ ----------
China 1.7 1.6 8%
--------------- ------------ ----------
Europe* 4.8 3.9 22%
--------------- ------------ ----------
Australia 1.5 1.5 -
--------------- ------------ ----------
Japan 1.9 1.6 20%
--------------- ------------ ----------
Rest of World 4.3 3.8 13%
--------------- ------------ ----------
Total members 38.7 35.6 9%
--------------- ------------ ----------
*Europe represents direct sales markets within continental
Europe, but excludes franchise markets in Denmark and
Switzerland which are shown within Rest of World
Notes
1. The Board of The Artisanal Spirits Company considers that
current consensus market expectations for the year ending 31
December 2023 are revenue of GBP25.2m (2022: GBP21.8m) and EBITDA
of GBP1.07m (2022: Adjusted EBITDA GBP0.4m)
Post-period highlights:
Continued growth in membership, now above 39,000.
--
Successful launch of newly established SMWS Taiwan subsidiary.
-- 500 members enrolled on the first day of trading. We now
plan to drive sales and engagement through the SMWS website,
in-person events and digital marketing, as well as social
media activity, building on launch activity for media,
whisky clubs, brand ambassadors and retailers.
Reopening of refurbished Vaults venue to reinforce members'
-- proposition and positive growth of venue revenue.
Andrew Dane, CEO of Artisanal Spirits Company, commented:
"We are pleased to have achieved year on year revenue growth,
particularly within the context of challenging macroeconomic
headwinds in some of our key markets and cost of living pressures,
with an increase of +7% in Q2 (following a relatively flat Q1) and
are proud to have also continued to deliver strong member growth,
+9% up on prior year, which is a leading indicator of future
revenue growth.
"We have also made continued progress against our strategic
objectives with Masterton Bond now fully operational, the
successful launches of the South Korea franchise and Taiwan
subsidiary and further strengthening of the Exec Team and talent
within the business.
"As we look ahead to trading in the balance of the year, despite
the ongoing macroeconomic backdrop, we remain focused on delivering
EBITDA at the consensus level, with the continued premiumisation
trend, our expanding, loyal and engaged membership base and
diversified global business model supporting our growth
ambitions.
"We also look forward to further delivery of our strategic
objectives for the year including continuance of the private cask
programme and launch of the new App all on track for this
year."
Sellside analyst presentation
Andrew Dane, CEO, and Billy McCarter, CFO, will host a physical,
in person presentation for sellside equity analysts, followed by
Q&A, at 09.00 hours BST today. Analysts wishing to join should
register their interest by
contacting: artisanalspirits@instinctif.com
Investor presentation
In addition, management will host a live online investor
presentation and Q&A at 11.30 hours BST on Wednesday 20th
September. The Group is committed to ensuring that there are
appropriate communication channels for all elements of its
shareholder base so that its strategy, business model and
performance are clearly understood.
The presentation is open to all existing and potential
shareholders. To register to attend, please use the link below:
https://www.equitydevelopment.co.uk/news-and-events/artisanal-results-presentation-20sept2023
A recording of the presentation will also be made available via
the Group's website following the webinar.
For further enquiries:
The Artisanal Spirits Company plc via Instinctif PR
Andrew Dane, Chief Executive Officer
Billy McCarter, Chief Financial Officer
Liberum Capital Limited (Nominated Tel: +44 (0) 20 3100 2222
Adviser and Broker)
Dru Danford
Edward Thomas
Miquela Bezuidenhoudt
Instinctif Partners (Financial PR) Tel: +44 (0)20 7457 2020
Justine Warren
Matthew Smallwood
Joe Quinlan
About The Artisanal Spirits Company
The Artisanal Spirits Company (ASC) are curators of the world's
favourite, single-cask and limited-edition whisky.
Based in Edinburgh, ASC owns The Scotch Malt Whisky Society
(SMWS) which was established in 1983 - marking its 40(th)
anniversary this year - and currently has a growing worldwide
membership of over 39,000 paying members.
SMWS provides members with inspiring experiences, content and
exclusive access to a vast and unique range of outstanding single
cask Scotch malt whiskies and other craft spirits, with current
stocks sourced from over 100 distilleries in 20 countries and
expertly curated with diligence and care.
Since producing the Society's very first cask, we have created
around 10,000 different whisky releases, producing a constant flow
of unique and exciting one-of-a-kind whiskies.
With proven e-commerce reach and new brands like J.G. Thomson,
ASC is building a portfolio of limited-edition and small-batch
spirits brands for a global movement of discerning consumers -
delivering c.GBP22 million in annual revenues with over 80% of
revenue generated online and over 65% from outside the UK, with a
growing presence in the key global whisky markets including UK,
China, USA and Europe.
ASC has a pioneering business model, a substantial and growing
addressable market presenting a long-term global growth opportunity
and a strong and resilient business primed to deliver growth.
Interim Statement
Introduction
The first half of 2023 was another period of progress against
our stated strategy with improved sales and membership growth. We
continue to believe that our pioneering model, long-term global
growth opportunity and robust business is well positioned to
deliver. Underpinning the Group's success remains our ability to
consistently deliver the very highest quality experiences to our
members with a range of exclusive and unique single malt Scotch
Whisky. The Artisanal Spirits Company ("ASC") has proven strategies
for growth around the world, further augmented by the combination
of the Group's online digital platform and exclusive membership
club venues/in person experiences which enable the maximisation of
our opportunity in both online and offline markets.
Our business fundamentals remain strong, and we achieved year on
year membership growth of +9% and member retention of 74%,
demonstrating the continued appeal of our membership proposition
and demand for our curated range of premium single malt whiskies.
Despite a relatively flat Q1, momentum was gained in Q2 achieving
+7% against Q2-2022, culminating in overall revenue increasing +3%
to GBP10.2 million in the six months to 30 June 2023, building on a
significantly strong H1-22 which delivered +25% year-on-year (2022:
GBP9.9 million). Our industry-leading gross margins were broadly
maintained vs H1-22, at 61%, (2022: 63%).
The Group has continued to invest in additional future whisky
stocks, infrastructure, systems and people to support ASC's future
growth, laying the foundations for delivery of significantly
enhanced shareholder value over time. In addition, and in line with
our strategy, we continue to enhance the value of our cask stock,
capitalising on the opportunity to further balance our cask spirit
holding, acquiring additional old and rare spirits to add to our
existing portfolio and recognise value from certain other
appreciating assets within our existing stock.
The Group incurred an adjusted EBITDA loss of GBP1.8 million
(2022: GBP0.3 million loss (adjusted and unadjusted EBITDA)) and a
loss before tax of GBP3.5 million (2022: GBP1.1 million loss).
However, the Board remains confident we remain on track to deliver
inaugural positive EBITDA, our strategic objectives delivery and
revenue diversification allowing us to manage the impact of the
evident macroeconomic headwinds suffered. We remain confident that
the investment we are making now will see margins continue to grow
over the longer term and deliver sustainable profits.
The Group is well positioned for the remainder of the year.
Whilst the wider challenging economic backdrop and general cost of
living concerns stubbornly remain, the global trend of growth in
spirits - particularly Scotch malt whisky, premiumisation,
digitalisation and consumer desire for experiences, underpins our
continued confidence in the future growth prospects for ASC. It is
anticipated that the full year performance will be in line with
market expectations and the Group remains on track to meet its aim
of doubling revenue between 2020 and 2024.
Operational progress and continued delivery of strategic
objectives
Group revenue in the period increased 3% overall, further
building on an exceptionally strong period of growth of 25% in the
prior year. Trading improved following a broadly flat Q1 and
although May and June were tougher months in the UK and China,
momentum increased with the result that the Group delivered +7%
growth in Q2-2023 versus Q2-2022. This performance evidenced strong
growth in Europe in the six-month period, with membership up 22%
and revenue up 21% versus 2022, as we continue to consolidate our
position in this key strategic growth area. There were encouraging
signs of recovery in China which delivered Q2-2023 revenue growth
of 50% on Q1-2023 and membership increased 6% year on year. The US,
Japan and Franchises also delivered double-digit membership growth
of 15%, 20% and 15% respectively.
UK Venues continued to achieve strong outperformance with 23%
revenue growth during H1-2023 against the same period in the prior
year - marking this division's strongest six-month performance on
record - as we see increase in member usage and spend per head.
Investment of GBP0.5 million in refurbishment of the Group's member
rooms at the Vaults in Edinburgh is due to complete at the end of
Q3 and we look forward to welcoming back our members for our busy
Christmas period.
A pioneering model relevant for today's consumer
ASC is a creator and curator of outstanding single cask and
limited-edition whisky, and, through its pioneering business model,
it combines a vertically integrated business; through its prowess
and expertise in acquiring and maturing limited edition whiskies,
with a horizontally integrated model; through its digital
e-commerce platform and four member venues in London, Glasgow,
Edinburgh and Leith. The Group has a robust and well-financed
business model which is arguably unique in combining the
attractions of direct-to-consumer attributes through membership of
The Scotch Malt Whisky Society ("SMWS"), with the benefits that
e-commerce brings, together with its physical member venues which
provide a rich source for recruitment and an additional level of
exclusivity for members.
SMWS benefits from a unique market position with its global
membership model which comprises an invested, loyal, growing and
high spending community, which is both scalable and geographically
diverse, with characteristically affluent members. An established
global brand with over 60% of revenues generated in international
markets across c.30 countries, SMWS continues to grow its presence
and standing in the world's key whisky markets such as the UK,
continental Europe, China and the US.
Loyal, valuable and growing global membership
Membership trends are a leading indicator of future revenue
growth, courtesy of SMWS' high member retention rates which, in
turn, deliver a stream of recurring annual revenue in the key
markets in which the Group operates. In addition, the breadth of
SMWS' international membership base diversifies the Group's risk,
and its affordable entry level membership fee delivers immediate
payback on average member acquisition cost.
Overall, membership grew by 9% in H1-2023 to 38,700 (30 June
2022: 35,600, 31 December 2022: 37,400). The Group experienced
strong growth in membership numbers in Europe, the US and Japan.
Following a slow start in China in Q1, due to significant levels of
Covid following the easing of lockdown and the macro-economic
challenges, encouragingly, Q2-23 saw improving momentum and both
revenue and membership have now returned to growth.
Lifetime member value reduced slightly to GBP1,261 - albeit this
remains up 35% since IPO, further demonstrating the intrinsic value
inherent within ASC's business model.
Continued international expansion
The period under review saw ASC continue to expand its
geographic footprint in additional key markets. The Group entered
into a new franchise operation in South Korea, achieving 300 new
members on initial launch in April 2023. We also signed new
franchise agreements in Malaysia and Singapore, where we expanded
our relationship with La Maison du Whisky.
Post the period end, a new Joint Venture subsidiary was
successfully launched in Taiwan in July 2023, a key strategic
objective for 2023. Taiwan is the third largest market for
Ultra-Premium Scotch Whisky globally based on value, with an
estimated total addressable market of $593 million (source: IWSR
2022) and our previous presence in this market had been limited to
a franchise agreement. The newly established SMWS Taiwan subsidiary
provides direct sales access to the Taiwanese market and marks the
next milestone in the Group's strategic expansion in Asia where
SMWS already has similar subsidiary operations in China and Japan
as well as franchise partners in a range of markets, including
those referenced above. ASC has 70% ownership of the new entity
which is led by an experienced management team of Murphy Chang,
former Brand Heritage Manager for Moët Hennessy Taiwan, as Country
Director who will oversee operations, supported by Eric Huang, the
former franchise partner and one of the foremost whisky experts in
Asia. Whilst still early days, this operation has got off to an
encouraging start with 500 members enrolling on launch day. We look
forward to building on this success over the coming months as we
continue to expand our representation within this important market
and in Asia more generally.
ASC now has an SMWS presence in the world's six largest markets
and our enlarged global footprint provides us with coverage of over
80% of the $8.1 billion Ultra-Premium Scotch Whisky Market (2022
IWSR) as we continue to grow our global reach.
International industry recognition
The limited-edition nature and outstanding reputation for the
quality of ASC's whisky continues to attract a growing number of
industry accolades, now totalling over 300 awards since 2018. This
third-party endorsement from prestigious awards globally, which are
judged by many of the most respected professionals in our industry,
further authenticate our credentials in producing outstandingly
high-quality single malt Scotch malt whiskies, thereby driving
demand and engendering a loyal, growing and high spending
membership of whisky-loving aficionados globally. ASC currently
sells over 1,000 different products per annum with an average
revenue per bottle of around GBP97.
Once again, H1 saw SMWS recognised for the quality of its
spirits at awards from the top competitions around the world,
including a record success in the International Spirits Challenge,
as well as achieving its best-ever result in the Scotch Whisky
Masters 2023. In addition, SMWS was recognised in the US at the
2023 San Francisco World Spirits Competition, as well as the 2023
The Tokyo Whisky & Spirits Competition (TWSC) in Japan. These
awards are testament to the outstanding quality of our single malt
Scotch whiskies which are appreciated around the world for their
unique flavours.
Investing to support long-term global growth
ASC remains on track to double sales between 2020 and 2024 and
with it sustainable profit delivery. It has made significant
investment for future growth with spirit and stocks acquired to
satisfy demand through to the end of FY28 and beyond, providing a
significant inflation hedge for the Group from a supply
perspective, with further potential upside from stock appreciation
over time. During the period under review, ASC invested GBP1.2
million in new spirit stock and wood, taking the total number of
casks to around 16,700 (31 December 2022: 16,500). During this
period the holding of New Make Spirit (NMS) casks rose to over 50%
of our total cask holding, over time feeding through to deliver
increases in gross margin.
As normal course of business, we continue to enhance the value
of our cask stock by taking advantage of the opportunities to grow
and realise value of this substantial and appreciated asset base in
line with our strategy. The flexibility of our model is such that
we proactively look to rebalance the Group's cask spirit holdings
from time to time (including cask swaps and sales) either by
acquiring additional old and rare spirits to add to our existing
portfolio or realising value from certain other appreciating assets
within our existing stock. An additional potential new revenue
stream currently under consideration includes the development of
member cask sales as part of the ongoing strategic development of
our membership offer to deliver additional value from our
appreciating asset base.
Embracing premiumisation and ecommerce growth
ASC is positioned at the forefront of key current structural
consumer trends such as premiumisation and experiential demand, as
consumers increasingly move away from mainstream brands to seek out
higher quality, crafted products which demonstrate premium
authenticity. These trends are particularly evident in the context
of artisanal whisky and other spirits. Today's consumer both values
- and demands - experience above all else, along with diversity of
choice, convenience of access, purchase and delivery, as well as
value for money.
ASC's relevance for today's consumer is further illustrated by
the way in which its ethos creates a sense of community, enabling
its members to socialise and connect in a variety of physical,
digital and virtual spaces through technology, data and its
membership venues. The Group is committed to continued investment
in digital transformation to further enhance member experience and
is on track to launch a new Members' app by the end of 2023.
In addition, SMWS is also a premier vehicle for investing in
outstanding cask whisky and accessing often rare and exclusive
whiskies. Through the provision of premium single cask whisky and
other spirits - each a limited edition by nature - ASC is able to
capitalise on the rarity value of its portfolio, creating the
desire for consumers to purchase each release before stocks run
out.
Significant and growing addressable market opportunity
Scotch Whisky remains a highly desirable global category. The
premium whisky sector in which we operate continues to grow and
prove its resilience in spite of the ongoing challenging economic
backdrop. Today, the Ultra-Premium and above whisky sector is
estimated to be worth $8.1 billion, of which ASC has a small but
growing share, achieving 12% CAGR since 2012 and grown by 52% by
2020.
Robust business characteristics
Whilst the macro-economic climate continues to be challenging,
and along with many other businesses the Group continues to face
certain inflationary pressures, the whisky category has
historically been highly robust, and stocks have typically
appreciated significantly through challenging periods protecting
gross margins and representing a natural inflation hedge.
Furthermore, our substantial stock holding not only provides
protection against supply side inflation but also potentially
delivers incremental value given the high degree of price
elasticity open to us as an 'ultra-premium' supplier and the
appreciating nature of our curated, finite spirits portfolio.
Further strengthening of Board and management team
The Group benefits from an experienced Board and management
team, with a proven track record of delivery. H1 saw further
strengthening of the Executive management team, talent and
expertise within the business with the promotion of Billy McCarter
to CFO and to the Board.
In addition, Chris Leggat (former Chief Executive of Douglas
Laing & Co) was appointed as the new Business Development
Director and Rebecca Hamilton as Chief Marketing & Experience
Officer (CXO).
Outlook and current trading
ASC continues to deliver against its stated strategy. The Group
enters H2 well positioned, and management remains confident in
continuing to progress the Group's strategic ambition of doubling
revenue between 2020 and 2024. We continue to face a challenging
economic landscape, noted by many within the spirits industry, but
remain on track to deliver positive EBITDA in 2023 and utilise our
loyal and growing membership base globally (now at over 39,000
members), diversified revenue portfolio and strategic delivery to
manage many of the challenges we currently face, and expected to
remain over the next 12-18 months.
Trading in the early weeks of H2 has been positive, with the
momentum evidenced in Q2 continuing into Q3, with performance
supported by growth in membership and robust demand for our
exclusive, curated and unique products and membership venues.
Europe and UK Venues are expected to continue to outperform the
prior year and momentum looks set to continue in China on strong Q2
membership growth of +8%.
Finalisation of the Vaults Member's Room refurbishment in
September following an investment of GBP0.5 million is on schedule
to plan and budget as we invest in the heart of the SMWS brand
home.
In terms of future developments, H2 will see further development
of our cask sales, building on the selective re-balancing of cask
spirit holdings initiatives undertaken in H1, as well as
development of private member cask sales as a new revenue driver as
part of the ongoing strategic development of our membership offer
to deliver additional value from our appreciating asset base. Our
new proprietary member app remains on course to go live later this
year bringing increased functionality and ease of engagement to our
loyal and growing members.
The Board remains confident in the future opportunity for ASC
and that market expectations for the year ended 31 December 2023
including inaugural positive EBITDA. Looking forward, the Group
looks increasingly well positioned to deliver significant future
value for shareholders.
Financial Review
The Group has delivered year-on-year sales growth of 3%,
trailing an H1-22 that was +25% vs prior year. Delivery of GBP10.2
million in the six months to June 2023 represents another period of
revenue growth.
Our H1-23 performance signifies strongly the diversified global
portfolio of our business. Despite a decline in China performance
given the particular economic conditions in that market, we have
successfully grown year on year. Some stand out performances
include;
1) The best six-month performance on record within our UK
Venues, achieving GBP2.0 million in H1-23, an increase of 16%
against H1-22;
2) Further growth in Europe, delivering 23% revenue growth,
driven by 22% increase in membership, against the prior year
3) Cask sales in the first half equating to GBP0.5 million,
H1-22 delivering GBP0.1m. This remains a strategic opportunity for
the business as we look at the potential of a cask sale offering to
members as a premium service and the opportunity to ensure we
continually balance our cask spirit holding portfolio, any sales
replaced with spirit that creates a better re-balance.
Within China, we have seen momentum as we exit H1 and sales in
Q2 were up more than 50% on Q1, however we recognise we won't
achieve the level of growth in year as was expected at the start of
the year as a result of the economic headwinds.
At a Gross Profit level, we are maintaining a strong return on
the costs of our product, delivering 61% in H1-23. This was
slightly lower than the prior year 63% as a result of Group level
margin mix from reduced sales in China, lower average selling
price, predominantly through re-pricing of some our premium Vaults
Collections and FX impacts relating to the Asia and US markets. The
expectation remains we will deliver in line with consensus margin
expectation, H2 trading margins and mix closing the current
gap.
The adjusted EBITDA loss of GBP1.8 million, and Loss before Tax
of GBP3.5m in the first half, down from a loss of GBP0.3 million
loss (adjusted and unadjusted EBITDA) and GBP1.1m respectively in
the same period of 2022, is a result of the continued investment in
systems and people, the second half delivering the greater
proportion of revenue and therefore EBITDA as our busiest trading
periods. EBITDA has been adjusted for two key items in 2023;
Masterton Bond costs, as we moved to our own self-sufficient supply
chain facility; GBP0.1m, which are exceptional by nature, and
restructuring costs that took place following the change of CEO,
GBP0.1m, non-recurring costs which have also been adjusted to
ensure we show representative underlying EBITDA (there were no
adjustment items in H1-22 EBITDA).
The Group's balance sheet retains a strong net asset value of
GBP18.7m, supported by continued investment in an appreciating cask
spirit asset held at cost value but with an external bank valuation
of +50% on holding value, and a retail value of almost
GBP0.5bn.
Within Cash, we continue to invest in cask wood and spirit
stock, per our strategy, GBP1.2m in the period, as well as the
final elements of investment in our Masterton Bond Supply Chain
facility, initial investment in the Vaults refurbishment and
restructuring costs within the business as a result of the change
in CEO.
The Artisanal Spirits Company
plc
Consolidated Statement of Comprehensive
Income
For the period ended 30 June 2023
6 months 6 months
to to Year Ended
30 June 30 June 31 December
2023 (Unaudited) 2022 (Unaudited) 2022 (Audited)
GBP'000 Notes
Continuing
operations
Revenue 6 10,226 9,933 21,781
Cost of sales (4,014) (3,719) (7,936)
------------------ ------------------ ----------------
Gross Profit 6,212 6,214 13,845
------------------ ------------------ ----------------
Selling &
Distribution
expenses (3,390) (1,819) (5,503)
Administrative
expenses (5,774) (5,316) (9,875)
Finance costs (629) (195) (576)
Other income 8 77 12 37
------------------ ------------------ ----------------
Loss on ordinary activities before
taxation 9 (3,504) (1,104) (2,072)
------------------ ------------------ ----------------
Taxation (8) (279) 359
------------------ ------------------ ----------------
Loss for the period (3,512) (1,383) (1,713)
------------------ ------------------ ----------------
Other comprehensive
income:
Item that will not be reclassified
to profit or loss
Movements in cash flow hedge reserve 0 31 31
Movements in translation reserve (127) 0 (59)
------------------ ------------------ ----------------
(127) 31 (28)
------------------ ------------------ ----------------
Total comprehensive loss for the
period (3,639) (1,353) (1,741)
------------------ ------------------ ----------------
Loss for the period attributable
to;
- Owners of parent
company (3,593) (1,562) (2,010)
- Non-controlling
interest 81 179 297
------------------ ------------------ ----------------
(3,512) (1,383) (1,713)
------------------ ------------------ ----------------
Total comprehensive loss for the period attributable
to;
- Owners of parent
company (3,720) (1,532) (2,038)
- Non-controlling
interest 81 179 297
------------------ ------------------ ----------------
(3,639) (1,353) (1,741)
------------------ ------------------ ----------------
Basic EPS (pence) 12 (5.3) (2.2) (2.9)
Diluted EPS (pence) 12 (5.3) (2.2) (2.9)
The Artisanal Spirits Company
plc
Consolidated Statement of Financial Position
As at 30 June 2023
As at As at
30 June 2023 31 December
(Unaudited) 2022 (Audited)
GBP'000 Notes
Non-current assets
Investment property 405 405
Property, plant and equipment 13 10,212 10,362
Intangible assets 2,139 2,249
-------------- ----------------
12,756 13,016
-------------- ----------------
Current assets
Inventories 14 29,780 28,303
Trade and other receivables 3,773 3,714
Cash and cash equivalents 1,506 2,331
-------------- ----------------
35,059 34,348
-------------- ----------------
Total assets 47,815 47,364
-------------- ----------------
Current liabilities
Trade and other payables 4,459 3,703
Current tax liabilities 327 405
Financial liabilities 15 281 357
Lease liability 15 360 360
Forward currency contracts - -
-------------- ----------------
5,427 4,825
-------------- ----------------
Net current assets 29,632 29,523
-------------- ----------------
Non-current liabilities
Financial liabilities 15 20,282 16,984
Lease liability 15 2,780 2,959
Deferred tax liabilities - -
Provisions 584 580
-------------- ----------------
23,646 20,523
-------------- ----------------
Total liabilities 29,073 25,348
-------------- ----------------
Net Assets 18,742 22,016
-------------- ----------------
Equity
Called up share capital 176 174
Share premium account 15,255 14,997
Translation reserve (196) (76)
Retained earnings 3,192 6,685
Cash flow hedge reserve 8 8
Equity attributable to parent
company 18,435 21,788
-------------- ----------------
Non-controlling interest 307 228
-------------- ----------------
Net assets 18,742 22,016
-------------- ----------------
The Artisanal Spirits Company plc
Consolidated Statement of Cash Flows
For the period ended 30
June 2023
Year
Ended
31 December
6 months to 6 months to 2022
30 June 2023 (Unaudited) 30 June 2022 (Unaudited) (Audited)
GBP'000 Notes
Loss for the period after
tax (3,512) (1,383) (1,713)
Adjustments for:
Taxation charged 8 279 (359)
Finance costs 579 195 494
Interest receivable (2) - (4)
Movement in provisions 4 - 10
Share based payments 100 94 190
Investment in property
fair value movement - - (14)
Lease interest 50 - 82
Depreciation of tangible
assets 760 505 1,000
Amortisation of intangible
assets 124 133 259
Movement in working
capital:
(Increase)/decrease in
stocks (1,477) (3,005) (4,496)
(Increase)/decrease in
debtors (64) (627) (746)
Increase/(decrease) in
creditors 756 1,794 240
------------------------- ------------------------- -------------
Cash absorbed by
operations (2,674) (2,015) (5,057)
------------------------- ------------------------- -------------
Income taxes paid (86) (131)) (75)
Interest paid (579) (195) (494)
------------------------- ------------------------- -------------
Net cash outflow from
operating activities (3,339) (2,341) (5,626)
------------------------- ------------------------- -------------
Cash flow from investing
activities
Purchase of intangible
assets (14) (31) (88)
Purchase of property, plant
and equipment (610) (1,010) (2,911)
Purchase of JV China share - - (359)
Interest receivable 2 - 4
Net cash used in investing
activities (621) (1,041) (3,354)
------------------------- ------------------------- -------------
Cash flows from financing
activities
Asset backed lending drawn
down
Dividends paid (373)
Loan received
Repayment of loan (78) (148)
Share issue 252 59 59
Repayment of lease (230) (92) (354)
Inventory secured RCF
facility 3,221 5,650 10,300
Net cash from financing
activities 3,243 5,539 9,484
------------------------- ------------------------- -------------
Net (decrease)/increase in
cash and cash equivalents (718) 2,157 504
------------------------- ------------------------- -------------
Cash and cash equivalents at
beginning of period 2,331 2,012 2012
Reserve movements 120 31 -
Non controlling interest
movement (228) (185)
Cash and cash equivalents at
end of period 1,506 4,200 2,331
------------------------- ------------------------- -------------
The Artisanal
Spirits Company plc
Consolidated Statement of
Changes in Equity
For the period
ended 30 June 2022
Called Share Retained Cash Translation Total Non-controlling Total
up premium earnings flow reserve controlling interest equity
share account hedge interest
GBP'000 capital reserve
Balance at 31
December 2021 174 14,938 8,505 (23) (17) 23,577 304 23,881
Issue of share
capital 0 59 59 59
Share issue direct
costs
Loss for the
period (2,010) (2,010) 297 (1,713)
Adjustment to
non-controlling
interest
Share-based
compensation 190 190 190
Dividend paid (373) (373)
Investment in
subsidiary
Other
comprehensive
gain 31 (59) (28) (28)
-------- -------- --------- -------- ------------ ------------ ---------------- ---------
Balance at 31
December 2022 174 14,997 6,685 8 (76) 21,788 228 22,016
Issue of share
capital 2 258 260 260
Loss for the
period (3,593) (3,593) 79 (3,514)
Share-based
compensation 100 100 100
Other
comprehensive
gain (120) (120) (120)
-------- -------- --------- -------- ------------ ------------ ---------------- ---------
Balance at 30 June
2023 176 15,255 3,192 8 (196) 18,435 309 18,742
Notes to the unaudited interim financial information
1. Basis of preparation
The condensed interim financial information presents the
consolidated financial results of The Artisanal Spirits Company plc
and its wholly owned subsidiaries (together the "Group") for the
six months ended 30 June 2023 and the comparative figures for the
six months ended 30 June 2022 which are unaudited. This financial
information does not constitute statutory accounts as defined in
Section 435 of the Companies Act 2006.
The condensed consolidated interim financial information, which
is neither audited nor reviewed, has been prepared in accordance
with the measurement and recognition criteria of adopted
International Financial Reporting Standards ("IFRS"). This
statement does not include all the information required for the
annual financial statements and should be read in conjunction with
the Group's the Company's Annual Report and Accounts for the 12
months ended 31 December 2022.
There are no new IFRS which apply to the condensed consolidated
interim financial information.
2. Accounting policies
The accounting policies applied in preparing the condensed
consolidated interim financial information are the same as those
applied in the preparation of the Group's HFI included within the
Company's Admission Document.
3. Going concern
The financial information has been prepared on the basis that
the Group will continue as a going concern. The directors have
considered relevant information, including annual budget
sensitivities, forecast future cash flows up until December 2024,
availability of financing and the impact of subsequent events in
making their assessment.
The directors have considered in detail both the impact
COVID-19, Brexit and the wider inflationary environment have had on
the Group's business to date and based on their forecasts and
sensitivity analysis including the potential impact of further
lockdown scenarios, are satisfied there is sufficient headroom in
their cashflow forecasts to continue to operate as a going
concern.
Based on this assessment and taking into account the Group's and
the Company's current position, the directors have a reasonable
expectation that the Group and the Company will be able to continue
in operation and meet its liabilities as they fall due over the
12-month period from the date of this announcement.
4. Principal risks and uncertainties
The principal risks and uncertainties affecting the Group are
unchanged from those set out in the Company's Annual Report and
Accounts for the 12 months ended 31 December 2022.
5. Dividends
No dividend was declared or paid during the period (prior period
GBPnil).
6. Revenue
An analysis of the Group
revenue is as follows:
6 months 6 months Year Ended
to to
30 June 30 June 31 December
2023 (Unaudited) 2022 (Unaudited) 2022
GBP'000 (Audited)
Revenue from the sale
of Whisky 7,679 7,713 16,976
Membership Income 822 740 1,479
Revenue from the sale
of other spirits 56 74 149
Member rooms 1,091 910 2,025
Events & tastings 455 352 827
Other 123 144 325
------------------- ------------------- --------------
10,226 9,933 21,781
------------------- ------------------- --------------
An analysis of the Group revenue by geographical
areas is as follows:
6 months 6 months Year Ended
to to
30 June 30 June 31 December
2023 (Unaudited) 2022 (Unaudited) 2022
GBP'000 (Audited)
UK 3,990 3,252 7,703
US 1,833 1,867 4,353
China 1,756 2,346 5,002
Europe 1,109 915 2,014
Rest of World 682 670 907
Australia 383 439 1,001
Japan 473 444 800
------------------- ------------------- --------------
10,226 9,933 21,781
------------------- ------------------- --------------
'Revenue from the Sale of Whisky' includes the revenue from sale
of cask whisky spirit, GBP502k (H1-22; GBP53k, 2022 GBP348k).
7. KPIs
LTM Period Average Retention Revenue/ Contribution(1) Expected LTV(3)
End / Years(2)
Revenue Members Members % Member Member (Avg
Members)
GBP'000 ('000s) ('000s)
UK 7,156 18.2 17.8 76% 402 217 4.2 910
---------- ---------- ---------- ---------- --------- ---------------- ---------- -----------
United
States 4,370 6.3 5.9 68% 736 386 3.1 1,211
---------- ---------- ---------- ---------- --------- ---------------- ---------- -----------
China 4,455 1.7 1.6 40% 2,739 1,931 1.7 3,210
---------- ---------- ---------- ---------- --------- ---------------- ---------- -----------
Europe(4) 2,388 4.8 4.3 73% 553 236 3.7 873
---------- ---------- ---------- ---------- --------- ---------------- ---------- -----------
Australia 945 1.5 1.6 75% 599 318 4.0 1,275
---------- ---------- ---------- ---------- --------- ---------------- ---------- -----------
Japan 829 1.9 1.8 85% 464 358 6.7 2,393
---------- ---------- ---------- ---------- --------- ---------------- ---------- -----------
Rest of
World 1,135 4.4 4.0 81% 1,034 620 7.9 2,047
---------- ---------- ---------- ---------- --------- ---------------- ---------- -----------
Total 21,278 38.8 37.1 74% 574 330 3.8 1,261
---------- ---------- ---------- ---------- --------- ---------------- ---------- -----------
Change(5) 0% 4% 5% -4% -4% -3% -11% -13%
---------- ---------- ---------- ---------- --------- ---------------- ---------- -----------
1) Contribution is a non-IFRS measure, and is defined by
management as Gross Profit less Commission
2) Expected Years is a non-IFRS measure, and is defined by
Management as one divided by one minus retention 1/(1-r%)
3) Lifetime Value (LTV) is a non-IFRS measure, and is defined as
Annual Contribution per member, multiplied by expected years
4) Europe represents direct sales markets within continental
Europe, but excludes franchise markets in Denmark & Switzerland
which are shown within Rest of World
5) Change is shown versus the twelve-month period ended 30 December 2022
8. Other Operating Income
6 months 6 months Year Ended
to to
30 June 30 June 31 December
2023 (Unaudited) 2022 (Unaudited) 2022
GBP'000 (Audited)
Other Income 74 10 37
------------------- ------------------- --------------
74 10 37
------------------- ------------------- --------------
Other income in the period relates to a refund from the Chinese
government to SMWS China in relation to previously overpaid
expenses.
9. Loss on ordinary activities before taxation
6 months 6 months Year Ended
to to
30 June 30 June 31 December
2023 (Unaudited) 2022 (Unaudited) 2022
GBP'000 (Audited)
Presented as;
Adjusted EBITDA* (1,811) (313) 394
Depreciation of tangible
assets (760) (462) (1,000)
Amortisation of intangible
assets (124) (133) (259)
Finance costs (629) (195) (576)
Exceptional and restructure
costs (180) - (631)
------------------- ------------------- --------------
Loss on ordinary activities
before taxation (3,504) (1,104) (2,072)
------------------- ------------------- --------------
Loss on ordinary activities
before taxation (3,504) (1,104) (2,071)
Add back; Depreciation
of tangible assets 760 462 1,000
Add back; Amortisation
of intangible assets 124 133 259
Add back; Finance costs 629 195 576
EBITDA (1,991) (313) (236)
------------------- ------------------- --------------
Exceptional and restructure
costs 180 0 631
------------------- ------------------- --------------
Adjusted EBITDA* (1,811) (313) 395
------------------- ------------------- --------------
* Adjusted EBITDA is defined as earnings before interest,
tax, depreciation, amortisation and exceptional and
restructure costs
10. Exceptional and Restructure costs
6 months 6 months Year Ended
to to
30 June 30 June 31 December
2023 (Unaudited) 2022 (Unaudited) 2022
GBP'000 (Audited)
Legal and professional
fees - - 1
Non underlying American
Whiskey pre operational
costs - - 288
Non underlying Masterton
pre-operational costs 91 342
Non recurring organisational 89 - -
restructuring costs
------------------- ------------------- --------------
180 - 631
------------------- ------------------- --------------
Costs in the period relate to GBP91k (2022; nil) relating to
final movement of Supply operations to our new Masterton Bond
Supply Chain facility and GBP89k (2022; nil) and restructure costs
relating to the change of CEO.
11. Taxation
The results include a tax charge against the profits of the
Group's Chinese subsidiary at the rate of 25% in both 2022 and
2023. There have been no corporation taxes due against other Group
companies due to carried forward trading losses.
12. Earnings Per Share (EPS)
6 months 6 months Year Ended
to to
30 June 30 June 31 December
2023 (Unaudited) 2022 (Unaudited) 2022
(Audited)
Earnings used in calculation
(GBP'000) (3,720) (1,532) (2,038)
Number of shares 69,807,454 69,638,840 69,708,374
Basic EPS (p) (5.3p) (2.2p) (2.9p)
Fully diluted number
of shares 74,995,461 74,673,842 74,746,138
Diluted EPS (p) (5.3p) (2.2p) (2.9p)
13. Property, Plant & Equipment
Land Land Leasehold Fixtures, Casks Right Total
and and improvements fittings GBP'000 of use GBP'000
buildings buildings GBP'000 and asset
freehold leasehold equipment 'GBP000
GBP'000 GBP'000 GBP'000
-------------------------- ----------- ----------- -------------- ----------- --------- --------- ---------
Cost or valuation
As at 1 January
2022 678 1,441 498 1,968 2,745 4,343 11,673
Additions - - 5 2,202 704 162 3,073
As at 31 December
2022 678 1,441 503 4,170 3,449 4,505 14,746
Additions - - - 287 322 - 609
-------------------------- ----------- ----------- -------------- ----------- --------- --------- ---------
As at 30 June 2023 678 1,441 503 2,651 3,070 4,343 12,686
-------------------------- ----------- ----------- -------------- ----------- --------- --------- ---------
Accumulated Depreciation
As at 1 January
2022 168 1,027 251 844 345 661 3,296
Charge for the year 13 70 55 328 148 474 1,088
As at 31 December
2022 181 1,097 306 1,172 493 1,135 4,384
Charge for the 6
months 18 24 27 407 73 210 759
As at 30 June 2023 199 1,121 333 1,579 566 1,345 5,142
-------------------------- ----------- ----------- -------------- ----------- --------- --------- ---------
Net book value
-------------------------- ----------- ----------- -------------- ----------- --------- --------- ---------
As at 31 December
2022 497 344 197 2,998 2,956 3,370 10,362
-------------------------- ----------- ----------- -------------- ----------- --------- --------- ---------
As at 30 June 2023 479 320 170 2,878 3,205 3,160 10,212
-------------------------- ----------- ----------- -------------- ----------- --------- --------- ---------
Investment in the period is driven by progression in the build
and fit-out of our new Supply Chain facility, Masterton Bond, and
continued investment in Cask Wood GBP322k; (2021; GBP199k).
14. Inventories
GBP'000 As at 30 As at 30 As at 31 December
June 2023 June 2022 2022
(Unaudited) (Unaudited) (Audited)
Cask whisky & other
spirits 23,926 22,804 23,034
------------- ------------- ------------------
Other inventory 5,844 3,921 5,269
------------- ------------- ------------------
Total inventory 29,780 26,725 28,303
------------- ------------- ------------------
The above balance contains no provision for aged stock (Jun-22:
GBP83k) as we have recognised write off costs direct to the income
statement in 2023, GBP100k relating to aged stock encountered as a
result of our move from third party supply chain support to sole
inhouse operations at our new Masterton bond supply chain
facility.
The movement in inventory is primarily driven by continued
investment in our cask stock inventory as we invest to meet future
demand, with net cask investment representing GBP0.9m in the
six-month period (H1-22: GBP2.4m).
15. Financial Liabilities
6 months Year Ended
to
30 June 31 December
2022 2022
(Unaudited)
GBP'000 (Audited)
Inventory secured revolving
credit facility 19,400 16,500
Bank loans 569 784
Other loans 45 57
-------------- --------------
Financial liabilities 20,014 17,341
Lease liability 3,139 3,319
-------------- --------------
23,153 20,660
-------------- --------------
The revolving credit facility (RCF) is secured by a bond and
floating charge over eligible inventory within the Group. The
availability of funds under the facility agreement is linked to a
calculation of eligible inventory, which is predominantly the
casked goods component of inventory assets.
In December 2022, the revolving credit facility was increased,
as part of the accordion element within the original contract, by
GBP3m, the total facility availability now GBP21.5m. The loan is
interest bearing and interest is due at a rate of 2.25% over the
Bank of England base rate.
The bank loan is secured by standard securities over the Ground
Floor Premises of the Leith property and a legal charge over the
Greville Street property. The loan is interest bearing and interest
is due at a rate of 2.25% over the Bank of England base rate.
16. Financial Instruments - accounting classifications and fair value
Financial assets
Trade and other receivables and cash and cash equivalents are
classified as financial assets at amortised cost.
Derivative assets are classified as financial assets measured at
fair value (level 2 - i.e. those that do not have regular market
pricing) through other comprehensive income.
Financial liabilities
Trade and other payables (excluding deferred income) are
classified as financial liabilities are measured at amortised
cost.
The fair value of both financial assets and financial
liabilities have been assessed and there is deemed to be no
material difference between fair value and carrying value.
Derivative liabilities are classified as financial liabilities
measured at fair value (level 2) through other comprehensive
income.
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END
IR BDLLFXKLFBBK
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