REG - Artisanal Spirits Co - Half Year Results
14/09/2022 07:00
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RNS Number : 3500Z Artisanal Spirits Company PLC (The) 14 September 2022
14 September 2022
The Artisanal Spirits Company plc
('Artisanal Spirits', 'ASC' or 'the Group')
Interim Results for the Six Months to 30 June 2022
Six months of further significant progress towards our ambition to double
revenue by 2024
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"), is pleased to announce its half year results for the six
months ended 30 June 2022. The Group has continued to deliver on the
strategic plan and objectives outlined at IPO - progressing its disciplined
investment programme and range of operational initiatives to facilitate the
Group's long term, sustainable growth.
Financial highlights
· Revenue increased 25% to £9.9 million (H1-21: £7.9 million) with
significant growth in UK venues, Europe and China and gross margin of 63%,
ahead of the 61% achieved in FY21
· Gross profit increased 21% to £6.2 million (H1-21: £5.1 million)
· EBITDAE loss of £0.3 million (H1-21: profit of £0.2 million)
following planned ongoing investment for growth
· Loss before tax of £1.1 million (H1-21: £0.9 million loss)
· The Group's net debt position was £8.2 million (June 2021: £1.9
million; December 2021: £5.2 million), as the Group continued to invest in
planned strategic initiatives (most notably investment in spirit and wood and
the new supply chain facility "Masterton Bond")
· Stock-in-cask at 30 June 2022 had an increased notional retail sales
value of approximately £455 million (31 December 2021: £430 million)
· The Group remains fully funded to finance its expansion plans for the
foreseeable future
£'m 6 months to 30 June 2022 6 months to 30 June 2021 % change
Note
Revenue 6 9.9 7.9 25%
Gross profit 6.2 5.1 21%
Gross margin 63% 65% (2ppt)
EBITDAE* 9 (0.3) 0.2 n.a.
Loss before tax (1.1) (0.9) 17%
Loss after tax (1.4) (1.1) 27%.
Net Debt (8.2) (1.9) n.a.
Cask inventory 14 22.8 19.6 16%
Notional retail value of cask inventory(+) 455 375 21%
Aggregate Life Time Value^ 62 28 118%
*EBITDAE is a non IFRS measure and is defined as earnings before interest tax,
depreciation, amortisation and exceptional 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
^ Aggregate Life Time Value is a non IFRS measure and is calculated as number
of members at the period end date, multiplied by the average member life time
value for the preceding 12-month period.
Operational highlights:
Global membership
'000s June 2022 June 2021 % change
UK 17.7 13.4 31%
US 5.5 4.8 15%
China 1.6 1.4 15%
Europe* 3.9 2.9 33%
Australia 1.5 1.2 28%
Japan 1.6 1.4 15%
Rest of World 3.8 3.6 7%
Total members 35.6 28.7 24%
*Europe represents direct sales markets within continental Europe, but
excludes franchise markets in Denmark and Switzerland which are shown within
Rest of World
· SMWS membership growth (a leading indicator of future revenue
growth) increased by 24% to over 35,600 (30 June 2021: 28,700). This included
robust growth in European members since the launch of the new EU route to
market towards the end of FY21
· Healthy supply chain situation and good stock availability across
markets
· £2.4 million investment in new spirit stock, taking the total
number of casks to c.15,700
· Masterton Bond facility progressing on time and on budget ahead of
operations beginning in H2-22
· On track to deliver full year performance in line with market
expectations(+)
· Confident of delivering ambition to double revenue between 2020 and
2024
+The Board of The Artisanal Spirits Company considers that current consensus
revenue expectations for the year ending 31 December 2022 are £21.6 million
(2021: £18.2 million).
Post-period highlights:
· Further progress made during July and August towards delivery of
full year financial forecasts
· Continued growth in global SMWS membership, which is now just over
36,000, including a return to growth in China during Q3 and acceleration in
growth in the US (up by c.200 since 30 June 2022)
· Value of US shipments in Q3-22 planned to exceed the £1.6 million
achieved in the entirety of H2-21
· First J.G. Thomson export sale made to La Maison du Whisky in
France.
David Ridley, Managing Director of Artisanal Spirits Company, commented:
"We are pleased with the Group's strong first half performance which has once
again delivered significant membership growth, whilst simultaneously
continuing to build our business in terms of appreciating whisky stocks and
infrastructure to support our future growth ambition for the medium to longer
term. We continue to benefit from structural tailwinds as premiumisation,
digitalisation, experience and convenience combine to accelerate the appeal of
our proposition to our expanding global membership base.
"Our opportunity remains compelling, exciting and highly relevant for today's
marketplace. Furthermore, and as evidenced by the continued growth by many
of the global spirits majors, whisky continues to demonstrate its strong and
enduring credentials. ASC's unique portfolio of curated, limited edition
whisky benefits from natural price elasticity which, in turn, provides strong
gross margin appreciation and a natural inflation hedge. Financially strong
with current stock value over 2x consensus December 2022 net debt, we remain
on track to deliver a doubling of revenue from 2020 to 2024."
Sellside analyst presentation
David Ridley, Managing Director, and Andrew Dane, Finance Director, 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
(mailto:artisanalspirits@instinctif.com)
Investor presentation
In addition, management will host a live online investor presentation and
Q&A at 16.00 hours BST today.
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:
www.equitydevelopment.co.uk/news-and-events/artisanal-results-presentation-14september2022
(https://protect-eu.mimecast.com/s/7IA_CW6RwC6OyXVhxBpIs?domain=equitydevelopment.co.uk)
A recording of the presentation will also be made available via the Group's
website following the webinar.
For further information, please contact:
The Artisanal Spirits Company plc via Instinctif Partners
David Ridley, Managing Director
Andrew Dane, Finance Director
Singer Capital Markets 020 7496 3000
(Nominated Adviser & Sole Broker)
Sandy Fraser
Rachel Hayes
George Tzimas
Asha Chotai
Instinctif Partners (Financial PR) 020 7457 2020
Justine Warren
Matthew Smallwood
Sarah Hourahane
Notes to Editors:
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 and currently has a growing worldwide membership of just
over 36,000 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, 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 small-batch spirits brands for a global movement of discerning
consumers - delivering c.£20 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 2022 was another period of substantial progress from both a
strategic and commercial perspective and we continue to believe that our
pioneering model, long-term global growth opportunity and robust business is
primed to deliver. Core to the Group's success has been our ability to deliver
the very highest quality experiences to our members on a consistent basis with
a range of exclusive and unique, single malt Scotch Whisky. The Artisanal
Spirits Company ("ASC") has proven strategies for growth around the world.
This is further underpinned 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.
We continue to deliver on our strategic framework and have achieved another
period of sales growth in excess of 20% - a record which has been achieved
every year since ASC commenced operations in 2015, with the exception of the
Covid impacted 2020. The strategy, financial metrics and KPIs outlined at
the time of IPO have been met consistently. The six months to 30 June 2022 are
no exception with revenue up 25% to £9.9 million, albeit against a
Covid-impacted period in the previous year (H1 2021: £7.9 million). Whilst
our industry-leading gross margins reduced slightly vs H1-21, at 63%, they
remain ahead of full year FY21 and in line with consensus estimates for FY22.
At this stage of the Group's development, and in line with the plan set out at
the time of the IPO, we have intentionally taken the decision to reinvest
current profits into 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. As the business
continues to be developed, we continue to invest in cask stocks (up 16% at
£22.8 million as at 30 June 2022) and the Group incurred an EBITDAE loss of
£0.3 million and a loss before tax of £1.1 million. However, the Board's
expectation, unchanged since IPO, is that our growth trajectory will deliver
meaningful profits in the medium term, underpinned by our direct-to-consumer
model and our policy of in-house maturation which, together, generate
industry-leading margins. Furthermore, we are confident that the investment we
are making now will see margins continue to grow over the longer term.
Minimising the timeline for delivery of sustainable profits is a key objective
for management.
With the first half successfully behind us, the Group is well positioned for
the rest of the year. Against the wider economic backdrop, and general
concerns over cost of living, there appears to be no let-up in the global
trend of growth in spirits, particularly Scotch malt, premiumisation,
digitalisation and the desire for experiences, even in the most recent period.
It is anticipated that the full year performance will be in line with market
expectations and the Group remains firmly on track to meet its aim of doubling
revenue between 2020 and 2024.
Operational progress
Group sales in the period were very strong with revenue increasing by 25%.
This performance reflects robust growth: in Europe, reflecting the positive
impact of the launch of the new EU route to market towards the end of FY21; in
the UK, where venue sales recovered very strongly against lockdown-affected
2021 comparables; and in China, where exceptional growth in membership numbers
during 2021 and an improving trend in retention rates combined to drive sales
growth in the period.
In the US, ASC recognises revenue on a shipment basis and therefore the
Group's revenue profile is dependent upon the timing of consolidated shipments
which by their nature are uneven, thereby distorting performance trends in the
short term. The reported performance of our US business during H1-21 has been
distorted in this way by the timing of shipments to that market and we
anticipate a more balanced picture to emerge over the full year. Whilst the
headline figures show a decline in revenues in the US in the first half of
approximately 25%, in-market stock depletions in the US were broadly flat year
on year and membership grew by c.300 (5%) in H1-22. We expect US revenue to
be H2 weighted this year (vs H1 weighted in FY21), with growth in US
membership numbers accelerating in Q3 (up by c.200 since 30 June 2022) and the
value of Q3-22 shipments planned to exceed the £1.6 million achieved in the
entirety of H2-21.
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 ecommerce platform - and revenue derived from its four
member venues in London, Glasgow and Edinburgh. 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 65% of revenues generated in
international markets, 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 24% year-on-year to 35,600 (30 June 2021: 28,700,
31 December 2021: 33,300). The Group experienced strong growth in membership
numbers in the UK, Europe, the US and Australia. ASC delivered exceptionally
strong membership growth in China last year, with growth continuing into
Q1-22; however, Q2-22 was temporarily impacted by strict Covid lockdowns in
the region in April and May. While members continued to place orders during
this period, it affected our ability to fulfil deliveries, as well as
resulting in cancellations of face-to-face marketing and member recruitment
events. These factors temporarily disrupted our membership growth trajectory
in the region. Encouragingly, once restrictions were lifted, membership in
China returned to growth in Q3-22 and is now broadly back to 2021 year end
levels and ahead by 15% year-on-year.
Overall, member retention rates continued to rise year on year to over 80%
and, by implication, member churn has reduced by over 35% since IPO in June
2021 which is encouraging. Correspondingly, an increase in member retention
delivers improved lifetime value which has increased to over £1,700 for the
12 months ended 30 June 2022, representing a further demonstration of the
intrinsic value inherent within ASC's business model.
Constant stream of unique, award-winning products
The limited-edition nature and outstanding reputation for quality of ASC's
whisky has resulted in a plethora of industry accolades, winning over 270
awards in the last three years, which, in turn, drive demand and engender a
loyal, growing and high spending membership of whisky-loving aficionados. ASC
currently sells over 1,000 different products per annum with an average
revenue per bottle of around £95.
Investing to support the long-term global growth opportunity
ASC has a clear flightpath to double sales between 2020 and 2024. 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 £2.5 million in new spirit stock and wood, taking the
total number of casks to around 15,700 (31 December 2021 15,300). Importantly,
during this period a further c500 casks of new make spirit were acquired which
will continue to drive up gross margin over time. The proportion of casks
which were less than three years old at time of acquisition was 45% at 30 June
2022, up from 38% at 30 June 2021. Stock-in-cask at the period end had an
estimated retail sales value of approximately £455 million (31 December 2021;
£430 million).
The Group's financial strength and industry reputation also facilitate
tactical purchases of high value, vintage whisky stock which has the advantage
of being more immediately marketable, enabling ASC to capitalise on the high
levels of demand it is experiencing. Product stock and availability remains
strong across all markets and the supply chain robust.
Positioned for increased premiumisation and ecommerce growth
Further underpinning the model is the fact that 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. 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 - which are each limited editions 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 grew through the Covid-19 pandemic and continues to
be buoyant as reflected in our strong growth and that achieved by industry
majors. To put the Group's opportunity in context, the premium and super
premium whisky sector is estimated to be worth $5.8 billion, of which ASC has
a small but growing share. The Ultra-Premium market has grown over 200% (c10%
CAGR) over the last decade and achieved 26% growth in 2021.
Building a growing portfolio of complementary small-batch spirits brands
The Group's first development brand, J. G. Thomson, delivers spirits which are
a little out of the ordinary, such as small batch blended malt whiskies, grain
whiskies, rum and gin. This ecommerce proposition provides the Group with
direct-to-consumer access, complementing SMWS' core membership model. Its
growing portfolio of spirits is also available via third party retailers and
initial exports to France have commenced with internationally renowned
partners such as Masters of Malt and La Maison du Whisky. Following its launch
in 2021, this new, fledgling venture is now starting to build traction and
some encouraging sales momentum.
As previously reported, the Group is advancing its plans to expand its
addressable market in the US and making good progress in that regard. The
domestic market for American Whiskey is estimated to be worth approximately
$1.4 billion, opening up an entirely new but highly complementary market for
ASC since less than $100k of SMWS US sales derive from the US Whiskey
category. On a related point, it was pleasing to see American Single Malt
Whiskey being proposed as a distinct category by the Alcohol and Tobacco Tax
and Trade Bureau ("TTB") in the US at the end of July 2022, adding further
credence to this exciting segment. ASC continues to progress detailed
market planning and assessment of its American Whiskey proposition, now
expected to launch in H1 2023. We look forward to updating the market with
further details in due course.
A financially strong business:
The Group's balance sheet remains strong. ASC owns all of the whisky stock
required to satisfy forecast demand through to the end of FY28, with c75%
coverage to 2033. Asset-based loan facilities are a long-established funding
mechanism across the sector because of the highly tradeable and appreciating
nature of the spirits stocks which provide the underlying security for such
facilities and in which there is an active secondary market. Accordingly, debt
represents a highly efficient and sustainable part of the Group's long term
capital structure. Net debt of £8.2 million is in line with our
expectations and is underpinned by the inventory value of the Group's current
whisky stocks in cask. Based on consensus December 2022 net debt forecasts of
around £13 million, the current indicative bulk market value of stock (over
£30 million) would remain over 2x net debt, a level that the Directors
perceive to be a prudent minimum stock cover ratio at this stage in the
Group's development. The Group is fully funded to finance our expansion plans
for the foreseeable future.
High and growing margin
As set out above, the core business model allows us to capture substantial
value throughout the chain delivering an average of over £60 gross profit per
bottle, while the evolving market mix and various initiatives outlined below
will continue to improve this further in time.
Good progress continues to be made in fitting out the Group's new
multi-purpose supply chain facility at Masterton Bond. This facility is
progressing to schedule and on budget, ahead of becoming operational later
this year. It is anticipated that this facility will further improve
operating margins by c.2%, with the initial benefits expected to be gained
early in FY23.
Our ex-sherry cask programme is on track to deliver around 35% of whisky with
a sherry cask influence by FY24 (vs c15% in FY18), typically achieving c10%
price uplift per bottle (reflecting the strong member demand for whisky with
this profile) and giving >200% payback on first use of the cask.
Furthermore, ex-sherry casks characteristically benefit from a c.20 year
useful lifetime cycle.
Robust business, primed to deliver
Whilst the macro-economic climate cannot be ignored, and along with many other
businesses the Group is facing 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.
Experienced Board and management leading a passionate and engaged team
We have an experienced Board and management team, with a proven track record
of delivery. We were proud to receive an overall Employee Engagement Index
score of 81 from our staff survey during H1. While improving this aspect of
the business is an ongoing process, this score is significantly higher than
reported UK and global averages, demonstrating the commitment of our
colleagues to making The Artisanal Spirits Company and its brands successful
and further enhancing the Group's reputation as a great place to work.
Outlook and current trading
ASC continues to deliver against its stated strategy. The Group enters H2
well positioned, and management remains confident in its ability to realise
the Group's strategic ambition of doubling revenue between 2020 and 2024.
ASC has more than sufficient stock to achieve its plans through to FY28 and
beyond. The Group's Masterton Bond facility is progressing to plan and on
budget to come on stream in H2 and the Group is advancing preparations for the
launch of its American Whiskey proposition, whilst continuing to expand its
membership base globally in key whisky markets.
Trading in the early weeks of H2 has been positive, with continued growth in
membership and robust demand for our exclusive, curated and unique products
and membership venues. The Board remains confident that market expectations
for the year ended 31 December 2022 will be met.
Financial Review
The Group delivered strong revenue growth, with sales up by 25% compared to
the first half versus the prior year. This represented a continuation of the
Group's track record of consistent growth with total sales in the six-month
period growing to £9.9 million (H1-21: £7.9 million).
The three largest drivers of sales growth during the period were:
1) The UK, where sales grew by £1.0 million, primarily reflecting the
full reopening of member rooms which were closed for much of H1-21;
2) China, where sales grew by around £0.9 million, supported by the
significant growth in members delivered during FY21; and
3) Europe, where sales grew by around £0.4 million, reflecting the
positive engagement from European members since the launch of the new EU route
to market towards the end of FY21.
The impact of these was offset to an extent by a £0.6 million decline in the
value of US shipments during the period. In market sales were broadly flat
during the period, and this decline reflects the timing of shipments (noting
that of the total £4.1 million of shipments in FY21, £2.5 million were
delivered in H1-21 and £1.6 million were delivered in H2-21).
Reported gross profit increased 21% to £6.1 million (H1-21: £5.1
million). This was clearly driven by the revenue growth as set out above,
partially offset by a small decrease in gross margin vs the comparative
period. Note that while gross margin reduced slightly vs H1-21 (in part
reflecting timings of high margin US shipments noted above), it remained ahead
of full year FY21 and in line with consensus estimates for FY22.
EBITDAE swung to a loss of £0.3 million in H1-22 (£0.2 million profit in
H1-21), reflecting increased investment in marketing spend and administrative
expenses, as well as the removal of other income (CJRS and Government Grants
in H1-21) offsetting much of the gross profit increase. As set out previously,
this planned investment reflects ongoing development across the Group,
particularly in people and systems, to help support the ongoing and future
growth of the business. Also included in this cost are £0.1m of non-cash
share option charges, around £0.1 million of expenditure associated with the
initial set up of the Masterton Bond facility (in anticipation of commencing
operations before the end of FY22) and similar spend on progression of our
American Whiskey venture. The non-recurring pre-launch costs attributable to
the American Whiskey venture will increase further in the second half in
advance of expected market readiness in the first half of next year.
Overall, this (together with £0.2 million of depreciation for the Masterton
Bond site) resulted in a loss for the period of £1.4 million (H1-21: loss
of £1.1 million). We remain in a growth and reinvestment phase while
retaining a focus on gross margin improvement, with the goal of returning to
positive EBITDAE in the near term and delivering bottom line profitability in
the medium term.
Total reported cash absorbed by operations during H1 2021 was £2.0
million (H1 2020: £2.4 million). However, this outflow primarily reflected
the material investment in new spirit stock of £2.4 million during H1-22
(H1-21: £0.7 million), which is a long-term investment in nature, but is
disclosed within "movement in working capital". Excluding this investment (as
well as exceptional costs of £0.5 million relating to the IPO incurred during
H1-21), the operational cash inflow in H1-22 was £0.4
million (H1-21: outflow of £1.2 million).
During the period, the net increase in cash and cash equivalents was just
over £2.2 million to £4.2 million. While total financial liabilities
increased from £7.2 million to £12.8 million, these liabilities primarily
related to the inventory-secured RCF facility (£11.85 million at 30 June
2022). The inventory secured credit facility, is a 3-year £18.5 million
facility committed until January 2024 and bears interest at a rate of 2.5% per
annum over SONIA.
The Artisanal Spirits Company plc
Consolidated Statement of Comprehensive Income
For the period ended 30 June 2022
6 months to 6 months to Year Ended
30 June 2022 (Unaudited)
30 June 2021 (Unaudited)
31 December 2021 (Audited)
£'000 Notes
Continuing operations
Revenue 6 9,933 7,946 18,237
Cost of sales (3,719) (2,816) (7,026)
Gross Profit 6,214 5,130 11,211
Selling & Distribution expenses (1,819) (1,534) (4,046)
Administrative expenses (5,316) (4,451) (9,694)
Finance costs (195) (237) (348)
Other income 8 12 151 160
Loss on ordinary activities before taxation 9 (1,104) (941) (2,717)
Taxation (279) (147) (631)
Loss for the period (1,383) (1,088) (3,348)
Other comprehensive income:
Item that will not be reclassified to profit or loss
Movements in cash flow hedge reserve 31 (56) (113)
Tax relating to other comprehensive profit/(loss) 0 11 23
31 (45) (90)
Total comprehensive loss for the period (1,353) (1,133) (3,438)
Loss for the period attributable to;
- Owners of parent company (1,562) (1,198) (3,653)
- Non-controlling interest 179 110 305
(1,383) (1,088) (3,348)
Total comprehensive loss for the period attributable to;
- Owners of parent company (1,532) (1,243) (3,743)
- Non-controlling interest 179 110 305
(1,353) (1,133) (3,438)
Basic EPS (pence) 12 (2.2) (1.8) (5.9)
Diluted EPS (pence) 12 (2.2) (1.8) (5.9)
The Artisanal Spirits Company plc
Consolidated Statement of Financial Position
As at 30 June 2022
As at As at
30 June 2022 (Unaudited)
31 December 2021 (Audited)
£'000 Notes
Non-current assets
Investment property 391 391
Property, plant and equipment 13 8,883 8,377
Intangible assets 2,316 2,420
11,591 11,188
Current assets
Inventories 14 26,725 23,719
Trade and other receivables 3,594 2,968
Cash and cash equivalents 4,200 2,012
34,518 28,699
Total assets 46,109 39,887
Current liabilities
Trade and other payables 5,784 3,949
Current tax liabilities 238 277
Financial liabilities 15 360 392
Lease liability 15 360 259
Forward currency contracts - 31
6,741 4,908
Net current assets 27,778 23,791
Non-current liabilities
Financial liabilities 15 12,402 6,796
Lease liability 15 3,139 3,332
Deferred tax liabilities 571 563
Provisions 407 407
16,519 11,098
Total liabilities 23,260 16,006
Net Assets 22,849 23,881
Equity
Called up share capital 174 174
Share premium account 14,997 14,938
Translation reserve (22) (17)
Retained earnings 7,037 8,505
Cash flow hedge reserve 180 (23)
Equity attributable to parent company 22,366 23,577
Non-controlling interest 483 304
Net assets 22,849 23,881
The Artisanal Spirits Company plc
Consolidated Statement of Cash Flows
For the period ended 30 June 2022
6 months to 6 months to Year Ended
30 June 2022 (Unaudited)
30 June 2021 (Unaudited)
31 December 2021 (Audited)
£'000 Notes
Loss for the period after tax (1,383) (1,088) (3,348)
Adjustments for:
Taxation charged 279 147 631
Finance costs 195 237 348
Interest receivable - - (5)
Movement in provisions - (33) 3
Share based payments 94 111 216
Depreciation of tangible assets 505 327 671
Amortisation of intangible assets 133 128 271
Movement in working capital:
(Increase)/decrease in stocks (3,005) (1,317) (2,068)
(Increase)/decrease in debtors (627) (1,532) (929)
Increase/(decrease) in creditors 1,794 647 252
Cash absorbed by operations (2,015) (2,373) (3,958)
Income taxes paid (131) (135) (360)
Interest paid (195) (233) (347)
Net cash outflow from operating activities (2,341) (2,741) (4,665)
Cash flow from investing activities
Purchase of intangible assets (31) (87) (92)
Purchase of property, plant and equipment (1,010) (199) (1,101)
Purchase of investment property - 2 -
Interest receivable - - 5
Net cash used in investing activities (1,041) (283) (1,188)
Cash flows from financing activities
Asset backed lending drawn down - (10,724) (14,823)
Dividends paid - - (385)
Loan received - 93 93
Repayment of loan (78) (71) (145)
Share issue 59 14,878 14,878
Repayment of lease (92) (69) (139)
Inventory secured RCF facility 5,650 - 6,200
Net cash from financing activities 5,539 4,107 5,679
Net increase in cash and cash equivalents 2,157 1,083 (174)
Cash and cash equivalents at beginning of period 2,012 2,176 2,176
Reserve movements 31 52 10
Cash and cash equivalents at end of period 4,200 3,311 2,012
The Artisanal Spirits Company plc
Consolidated Statement of Changes in Equity
For the period ended 30 June 2022
£'000 Called up share capital Share premium account Retained earnings Cash flow hedge reserve Translation reserve Total controlling interest Non-controlling interest Total equity
Balance at 31 December 2020 135 99 12,544 67 (15) 12,830 163 12,993
Issue of share capital 39 15,579 15,618 15,618
Share issue direct costs (740) (740) (740)
Loss for the period (3,653) (3,653) 305 (3,348)
Adjustment to non-controlling interest (252) (252) 252 0
Share-based compensation 216 216 216
Dividend paid 0 (280) (280)
Investment in subsidiary (350) (350) (136) (486)
Other comprehensive gain (90) (2) (92) (92)
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
Loss for the period (1,562) (1,562) 179 (1,383)
Share-based compensation 94 94 94
Other comprehensive gain 203 (5) 198 198
Balance at 30 June 2022 174 14,997 7,037 180 (22) 22,366 483 22,849
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 2022 and
the comparative figures for the six months ended 30 June 2021 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
2021.
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 2023, 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 2021.
5. Dividends
No dividend was declared or paid during the period (prior period £nil).
6. Revenue
An analysis of the Group revenue is as follows:
£'000 6 months to 6 months to Year Ended
30 June 2022 (Unaudited)
30 June 2021 (Unaudited)
31 December 2021
(Audited)
Revenue from the sale of Whisky 7,660 6,632 14,439
Membership Income 740 610 1,591
Revenue from the sale of other spirits 74 187 395
Member rooms 910 258 1,095
Events & tastings 352 103 467
Other 197 155 250
9,933 7,946 18,237
An analysis of the Group revenue by geographical area is as follows:
£'000 6 months to 6 months to Year Ended
30 June 2022 (Unaudited)
30 June 2021 (Unaudited)
31 December 2021
(Audited)
UK 3,297 2,268 5,788
US 1,867 2,457 4,095
China 2,346 1,461 3,864
Europe 915 488 1,706
Rest of World 625 545 1,150
Australia 439 390 905
Japan 444 337 729
9,933 7,946 18,237
7. KPIs
LTM Period End Average Retention Revenue/ Contribution(1)/ Expected Years(2) LTV(3)
Members
Members
%
Member
Member
(Avg Members)
Revenue
('000s)
('000s)
£'000
UK 6,818 17.7 15.9 89% 429 200 9.0 1,810
United States 3,505 5.5 5.2 68% 675 370 3.1 1,147
China 4,748 1.6 1.6 45% 2,984 2,042 1.8 3,747
Europe(4) 2,163 3.9 3.3 80% 654 227 5.0 1,127
Australia 954 1.5 1.4 82% 692 347 5.5 1,906
Japan 836 1.6 1.5 82% 552 412 5.5 2,270
Rest of World 1,199 3,832 3,725 81% 322 199 5.3 1,048
Total 20,223 35.6 32.6 81% 621 336 5.2 1,744
Change(5) 24% 24% 15% 18% 7% 7% 65% 76%
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 June
2021
8. Other Operating Income
£'000 6 months to 6 months to Year Ended
30 June 2022 (Unaudited)
30 June 2021 (Unaudited)
31 December 2021
(Audited)
Coronavirus Job Retention Scheme - 49 50
Government Grants (UK) - 102 105
Other Income 10 - 5
10 151 160
9. Loss on ordinary activities before taxation
£'000 6 months to 6 months to Year Ended
30 June 2022 (Unaudited)
30 June 2021 (Unaudited)
31 December 2021
(Audited)
Presented as;
EBITDAE* (313) 226 (626)
Depreciation of tangible assets (462) (286) (576)
Amortisation of intangible assets (133) (128) (271)
Finance costs (195) (237) (348)
Exceptional items - (516) (897)
Loss on ordinary activities before taxation (1,104) (941) (2,717)
* EBITDAE defined as earnings before interest, tax, depreciation, amortisation
and exceptional costs
10. Exceptional Items
£'000 6 months to 6 months to Year Ended
30 June 2022 (Unaudited)
30 June 2021 (Unaudited)
31 December 2021
(Audited)
IPO related legal and professional fees - 516 897
- 516 897
11. Taxation
The results include a tax charge against the profits of the Group's Chinese
subsidiary at the rate of 25% in both 2020 and 2021. There have been no
corporation taxes due against other Group companies due to carried forward
trading losses.
12. Earnings Per Share (EPS)
6 months to 6 months to Year Ended
30 June 2022 (Unaudited)
30 June 2021 (Unaudited)
31 December 2021
(Audited)
Earnings used in calculation (£'000) (1,532) (1,243) (3,743)
Number of shares 69,638,840 56,303,222 63,009,163
Basic EPS (p) (2.2p) (2.2p) (5.9p)
Fully diluted number of shares 74,673,842 61,940,980 68,272,288
Diluted EPS (p) (2.2p) (2.2p) (5.9p)
13. Property, Plant & Equipment
Land and buildings freehold Land and buildings leasehold Leasehold improvements £'000 Fixtures, fittings and equipment £'000 Casks Right of use asset Total £'000
£'000
£'000
£'000
'£000
Cost or valuation
As at 1 January 2021 678 1,405 498 1,549 2,099 2,181 8,410
Additions - 36 - 419 646 2,162 3,263
As at 31 December 2021 678 1,441 498 1,968 2,745 4,343 11,673
Additions 0 0 5 683 325 0 1,010
As at 30 June 2022 678 1,441 503 2,651 3,070 4,343 12,686
Accumulated Depreciation
As at 1 January 2021 153 957 200 614 227 474 2,625
Charge for the year 15 70 51 230 118 187 671
As at 31 December 2021 168 1,027 251 844 345 661 3,296
Charge for the 6 months 18 24 27 120 71 247 507
As at 30 June 2022 186 1,051 278 964 416 908 3,803
Net book value
As at 31 December 2021 510 414 247 1,124 2,400 3,682 8,377
As at 30 June 2022 492 390 225 1,687 2,654 3,435 8,883
Investment in the period is driven by progression in the build and fit-out of
our new Supply Chain facility, Masterton Bond, and continue to invest in our
Cask Wood £1,010; (2021; £199k).
14. Inventories
£'000 As at 30 June 2022 As at 30 June 2021 As at 31 December 2021
(Unaudited) (Unaudited) (Audited)
Cask whisky & other spirits 22,804 19,613 20,406
Other inventory 3,921 3,354 3,313
Total inventory 26,725 22,967 23,719
The above balance is net of a provision for aged stock of £83k (Jun-21:
£83k). This provision is with regards to glass and dry goods entirely,
relating to potentially obsolete designs.
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 £2.4m in the six-month period (H1-21: £0.7m).
15. Financial Liabilities
£'000 6 months to Year Ended
30 June 2022 (Unaudited)
31 December 2021
(Audited)
Inventory secured revolving credit facility 11,850 6,200
Bank loans 846 913
Other loans 65 75
Financial liabilities 12,761 7,188
Lease liability 3,499 3,591
16,260 10,779
The inventory secured credit facility, is a 3 year £18.5m facility committed
until January 2024. The facility is secured by a floating charge covering all
the property, undertaking, assets and rights owned now or in the future by the
Group. The facility is interest bearing at a rate of 2.5% per annum plus
Sterling Relevant Reference 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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