REG - Artisanal Spirits Co - Interim Results for the Six Months to 30 June 2024
10/09/2024 07:30
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RNS Number : 5486D Artisanal Spirits Company PLC (The) 10 September 2024
10 September 2024
The Artisanal Spirits Company plc
('Artisanal Spirits', 'ASC' or 'the Group')
Interim Results for the Six Months to 30 June 2024
H1 profit improvement and on track for full year delivery
The Artisanal Spirits Company (AIM: ART), the creator of outstanding,
limited-edition whiskies and experiences around the world, and owner of The
Scotch Malt Whisky Society ("SMWS"), Single Cask Nation & J.G. Thomson, is
pleased to announce its half year results for the six months ended 30 June
2024.
H1 Performance Summary
· £1m of EBITDA improvement on prior year, which on relatively
flat revenue year on year, reflects SMWS membership growth of 4% to 40,300 (H1
2023; 38,700), recurring cost efficiencies of £0.75m and gross profit margin
improvement of £0.25m (2 ppts).
· Increasing revenue diversification to manage the industry and
economic headwinds, most notably China, is demonstrated through launches in
the important new markets of Taiwan and Korea, alongside the acquisition of
Single Cask Nation and growth in cask sales.
· An independent cask spirit valuation in June of just over
£100m following an independent assessment representing around 4x our current
Net Book Value "NBV" of cask spirit and Net Debt.
· Following significant investment in the cask inventory, we now
hold all spirit required to meet demand through to the next decade. As a
result, the cash profile of the Group is improving, and net debt has peaked,
as we transition from material net cash investments in stock to a
replenishment approach.
· Further industry recognition celebrating the quality and
uniqueness of our product offering, with awards for SMWS, JGT and SCN releases
in 2024 including Independent Bottler of the Year for SMWS and SCN at the
World of Whiskies and New York International Spirits Competition respectively.
Outlook
· H2 initiatives include further international expansion, two
completely new Scotch Malt Whisky distillery releases and the refresh of our
range to ensure it continues to reflect current consumer trends, resulting in
new releases such as the inaugural 'Creators' Collection' alongside the 2024
'Winter Series' collection.
· Trading to date in H2 has seen us consolidate the improved
profitability in H1, which alongside the expected H2 revenue delivery from
core markets at similar levels to FY23, planned US shipments and continued
cask sales, ensure we remain on track to meet FY consensus EBITDA.
£'m 6 months to 30 June 2024 6 months to 30 June 2023 % change
Note
Revenue 6 10.1 10.2 (1%)
Gross profit 6.4 6.2 3%
Gross margin 63% 61% 2ppt
EBITDA 9 (1.0) (2.0) 50%
Loss before tax 9 (3.1) (3.5) 11%
Loss after tax (3.2) (3.6) 11%
Net Debt (27.0) (18.8) (44%)
Cask inventory 14 26.5 23.9 11%
Cask inventory valuation* 102.0 - -
Notional retail value of cask inventory(+) 507.0 492.0 3%
*Cask inventory valuation based on an independent valuation completed by
sector experts.
+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 June 2024 June 2023 % change
Europe 24.4 25.0 (2%)
Asia 5.5 4.2 31%
Americas 8.5 7.5 13%
Other* 1.9 1.9 -
Total members 40.3 38.7 4%
*Other represents Australia, New Zealand and South Africa
Andrew Dane, CEO of Artisanal Spirits Company, commented:
"We have delivered a creditable performance and made good progress on our
journey towards profitability despite challenging trading conditions
prevailing in some markets. We continue to focus on attracting and retaining
higher quality members, whilst maintaining a well-controlled cost base.
"Our proven strategy of investing in whisky stock has built an impressive
inventory to satisfy our requirements well into the next decade, as well as
delivering a significant uplift in value creation, with the current cask value
of just over £100m. Correspondingly, the Group now only needs to acquire
stock on a replenishment basis, thereby significantly improving the future
cash profile of the business.
"Single Cask Nation has integrated well and is performing to expectation.
Our revenue streams and the geographies in which we operate are becoming
increasingly diverse, further limiting our exposure to any given market.
This together with the actions we're taking now are building this unique
business for the longer term to the benefit of all shareholders.
"We enter H2 with a clear strategy, a focus on delivery of the key drivers of
profitability in the year across cask sales and US shipments and remain
confident of meeting FY24 EBITDA expectations."
Investor presentation
Andrew Dane (CEO) and Billy McCarter (CFO) will provide a live presentation
relating to the Interim Results via Investor Meet Company on 10 September 2024
at 17:00 BST. Investors can sign up to Investor Meet Company for free and add
The Artisanal Spirits Company via:
https://www.investormeetcompany.com/the-artisanal-spirits-company-plc/register-investor
(https://www.investormeetcompany.com/the-artisanal-spirits-company-plc/register-investor)
The presentation is open to all existing and potential shareholders. Questions
can be submitted prior to the event via the Investor Meet Company dashboard
until 09:00 BST on 9 September 2024, or at any time during the live
presentation.
For further enquiries:
The Artisanal Spirits Company plc via Instinctif PR
Andrew Dane, Chief Executive Officer
Billy McCarter, Chief Financial Officer
Tel: +44 (0) 20 3100 2222
Panmure Liberum Limited (Nominated Adviser and Broker)
Edward Thomas
Dru Danford
John More
Tel: +44 (0)20 7457 2020
Instinctif Partners (Financial PR)
Justine Warren
Matthew Smallwood
Joe Quinlan
Hannah Scott
About The Artisanal Spirits Company
ASC's purpose is to captivate a global community of whisky adventurers,
creating and selling outstanding, limited-edition whiskies and experiences
around the world with an ambition to create a high quality, highly profitable
and cash generative, premium global business.
Based in Edinburgh, ASC owns The Scotch Malt Whisky Society (SMWS), Single
Cask Nation (SCN) and J.G. Thomson (JGT). Owning over 18,000 casks primarily
comprising Single Malt Scotch Whisky, ASC's stock includes outstanding whisky
(and other spirits) from 150 different distilleries across 20 countries which
is sold to members both as individual bottles and whole casks.
With an established global presence in some 30 countries, SMWS operates a
direct-to-consumer model (90% of revenue) primarily through e-commerce, in
addition to four member rooms in the UK. SMWS provides members with inspiring
experiences, content and exclusive access to a vast and unique range of
outstanding, expertly curated Scotch malt and other whiskies.
In January 2024, ASC acquired SCN which sources, curates and bottles
single-cask whiskies and other spirits selling both online and via traditional
retail channels to its following of over 10,000 whisky enthusiasts in the USA.
SCN also retails to key international whisky markets around the world.
Launched in the UK in late 2021, JGT has a focus on outstanding small batch
blended malt whiskies and other spirits, available both through
direct-to-consumer online sales and through traditional retail channels. The
award-winning brand has subsequently expanded into international markets.
With proven e-commerce reach and a growing family of brands, ASC is building a
portfolio of limited-edition and small-batch whisky and other spirits brands
for a global movement of discerning consumers - delivering revenue of £23.5
million in FY23, predominantly from outside the UK, with an expanding presence
in the other key global whisky markets including USA, China, Europe, Japan,
Australia and Taiwan.
ASC has a pioneering business model, a substantial and growing addressable
market presenting a long-term global opportunity and a strong and resilient
business primed to deliver growth.
Interim Statement
Group Progress
We are pleased to have delivered a resilient performance in the period under
review. The trading conditions and consumer purchasing behaviour experienced
in FY23 have continued in FY24, an impact felt by most businesses within the
spirits industry over the last 12-18 months, reported across some of the key
leaders, with the US normalisation of the post-Covid era and China economic
conditions resulting in decline in both these markets.
Whilst ASC has not been immune to these factors, we are pleased to have
maintained relatively flat revenue, and importantly achieved profit
improvement against this backdrop, illustrating the Group's broadening revenue
streams. Diversification is evidenced through continued international
development and expansion, such as Korea and Taiwan and the strengthening of
ASC's operations in the US through the acquisition of Single Cask Nation,
collectively delivering £0.7m of aggregated revenue (2023; nil), alongside
new product offerings such as Cask Sales which delivered £1m in the period
(H1-23; £0.5m), ensuring the Group is not overly exposed to temporary
challenges in any given market.
At a membership level, there has been 4% growth year-on-year, to around 40,300
members at the end of June 2024 (H1 2023: 38,700). Whilst this is a slight
reduction from December 2023, this reflects our more recent focus on retaining
a more engaged membership base that is more sustainable for the longer term,
as evidenced in the UK where membership has decreased 7% but average revenue
per member has increased 8%. Retention within the Group remains strong at
over 70%, representing the opportunity that exists when we onboard new members
successfully.
The Group's priorities remain driving quality, long term membership growth
through international development and initiatives such as 'Membership and a
Bottle', product range review, our members cask sales programme and continued
SCN growth, as well as continued efficient cost management.
As we continue to focus our attention on these areas and reflect on last
12-month profit delivery of £1m of adjusted EBITDA, we remain confident in
achieving FY24 profit in line with market consensus requirements.
International Trading
Americas
The US remains the world's largest market for Scotch Malt Whisky, with over
$1.5 billion of 2023 sales at Ultra-Premium price points and above (bottle
prices over $45) and is one of the three core markets, alongside China and
India, identified by IWSR as the drivers of $30bn growth in Total Beverage
Alcohol by 2028.
The acquisition of SCN completed in January 2024 and since then we have seen
positive initial period of trading with its inaugural releases across both
e-commerce and retail in the USA delivering £0.1m of EBITDA in H1. Both
complementary and incremental to ASC's existing business, SCN is also
strategically well aligned with the Group's stated ambition to further grow
our presence in the USA and leverage the sizable and growing American Whiskey
market.
SMWS America has seen membership growth of 17% to well over 7,000 and a
depletions performance that is flat year on year, a resilient performance in a
wider market that has witnessed volume decline over the same period. Retention
remaining strong at the 70% level also gives confidence in continued growth in
the market.
In line with our American growth strategy, we continue to develop our approach
to SMWS operations in the US to give us greater direct operational control and
the optimal cost structure with our partners in the market.
Asia
In Asia, the most recent international market additions of Taiwan and the
franchise in Korea, delivered growth to partially offset a 30% decline in
China. Taiwan membership up 40% vs Dec 23 and Korea achieving 56% membership
growth over the same period, enabling the franchise markets to achieve their
best ever 12-month delivery of £1.3m of revenue. We also continue to develop
plans for further expansion in the region.
Europe
In Europe, performance at a revenue level was relatively flat, with the EU
market achieving 14% membership growth and, in the UK, an improvement in the
average revenue per member, up 8% on the twelve-month period to Jun 2023,
helping mitigate a 7% decline in membership as we drive a more engaged
membership base. Revenue performance in the UK venues was down slightly (5%)
on the prior year but remained ahead of pre-Covid levels (up 11% since H1-19),
with over 22,000 visit to the Vaults since completion of the refurbishment
last year.
Balance Sheet Strategy Evolution and Whisky Stock Valuation
Since IPO, we have invested significantly in our cask spirit stock, notably
continuing to optimise our whisky cask purchasing by evolving to a greater
acquisition of new make spirit - ensuring we purchase at lower price points
and proactively manage the maturation journey of our whiskies.
As a result, we have curated an exceptional collection of over 18,000 casks of
whisky, from approximately 150 leading distilleries and representing over 200
different makes. As such, ASC now having sufficient stocks in place to meet
forecast demand into the next decade. Correspondingly, the cash profile of the
Group will adjust going forward as a result as the Group transitions from
material net cash investments in stock to a replenishment approach.
Alongside this, we recently carried out an independent valuation of the cask
spirit stock holding, completed by sector experts Dr Alan Rutherford and Des
McCagherty, who have valued the current holding at around 4x the NBV, at just
over £100m, which also represents around 4x the current Net Debt level of
around £27m.
The Group will continue to invest in the sustainable growth of the business
and regard the current Net Debt level as appropriate within the wider Group
capital structure, supported by the significant cask spirit valuation.
Celebrating Continued Industry Recognition
The Group has been recognised for the quality of its spirits through awards
from the top competitions around the world in 2024.
The outstanding reputation for the quality of ASC's whisky continues to
attract a growing number of industry accolades, with notable success for SMWS
which was named Independent Bottler of the Year in the World of Whiskies
awards and the newly acquired Single Cask Nation (SCN) winning the Independent
Bottler of the Year award in the San Francisco World Spirits Competition.
Other awards include a number of gold and silver awards achieved by SMWS, SCN
and JGT across a number of worldwide competitions including Scotch Whisky
Masters, San Francisco World Spirits Competition, and International Wine and
Spirits Competition, awards achieved since 2018 standing at over 300.
Current Outlook and Trading
Trading in the early weeks of H2 have been positive, with consolidation in
EBITDA improvement against the prior year, which is encouraging within the
context of the last quarter of the year. The core business delivery
expectation in the remaining quarter is based on current trends and market
dynamics, with timing of US shipments and cask sales key to overall delivery
in line with consensus expectations.
Building on a stronger H1, the second half will see the first releases
resulting from our range review. This process to ensure our product range
continues to reflect current consumer trends is now complete, and in H2-24 we
will see the first releases, including the launch of the inaugural 'Creators
Collection'. It will also see two new distillery .1 releases, sure to capture
member interest, as well as the new 'Winter Series' collection.
It will also see the follow up release to the members cask programme, first
launched in H2-23, the next iteration, containing new cask offerings in the
spirit of the previous release, exciting distillery liquids with bourbon and
sherry cask offerings.
Key strategic areas of delivery in the second half include the installation of
a new state-of-the-art ePos system within our members' rooms, which is
progressing to plan and budget. The new system will deliver an improved
member experience within the Venues and allow SMWS to further understand and
connect with the many members who visit our venues in Edinburgh, Glasgow and
London.
The Board remains confident in the future opportunity for ASC and delivery of
market consensus expectation - well placed to deliver significant future value
for shareholders.
Financial Review
The Group has achieved year-on-year EBITDA improvement of £1m against
relatively flat revenue delivery, resulting in an improvement in Loss Before
Tax (LBT) to £3.1m (2023; £3.5m) - cost base savings supported by margin mix
at an EBITDA level, offset to a degree by increased interest costs of £1.1m
(2023; £0.6m) at an LBT level.
Despite the backdrop of market and economic headwinds, ASC has taken action to
continue to increase the diversification of Group revenue, as we manage the
Group's exposure to any given market or territory. Where we have seen China
decline around 30% year on year, following a similar decline in FY24, reducing
to around 12% of Group revenue, our ability to deliver revenue around the same
level as prior year, has been achieved through Single Cask Nation (SCN),
Taiwan first full H1 delivery and Cask Sales, in total, delivering 3x the
level achieved in PY, at £1.8m revenue in 2024 (2023; £0.6m).
A focus on cost management and efficiencies has significantly contributed to
the EBITDA improvement of £1m, with 2ppt of gross margin improvement, £0.2m
gross profit equivalent, supporting £0.7m of cost savings;
Selling & Distribution Expenses Administrative Expenses
2024-H1 2023-H1 2024-H1 2023-H1
£'000 £'000 £'000 £'000
Commission 633 746
Advertising & Promotion (A&P) 1,230 1,643
Depreciation 916 835
FX Loss 30 167
Overheads 1,852 2,221
Payroll 3,637 3,552
Total 2,810 3,390 5,489 5,774
A&P, Overheads and Commission savings of £0.9m have been marginally
offset by costs relating to payroll, reflecting the inflationary pay increase
in year of £0.2m, and FX loss of £0.1m, predominantly relating to USD. For
every +/-1c movement in USD, the EBITDA impact is +/- £15k.
Within A&P, spending is around 75% of prior year levels, a saving of
£0.4m year on year, as we look to further enhance the return on investment in
the area, evident through ability to achieve similar revenue to FY23 at a
reduced A&P investment rate.
Recurring cost-efficiency savings within Overheads are driven by cost
management in relation to professional fees, travel costs and wider overhead
costs, supported by the less intense investment requirement compared to the
prior year, where strategic delivery and spend was made in tech roadmap
(delivering a new app in 2023), new product development spend (new 'Membership
and a Bottle' product) and costs relating to the set-up of Taiwan and
acquisition of Single Cask Nation within the American Whisky development
opportunity.
From a cash flow perspective, the increased net debt of the business is
predominantly driven by the £1.0m EBITDA loss for the period alongside
increased interest cost of £0.8m, net stock and wood investment, £0.3m and
£0.4m respectively, timing of US shipments on debtor holding of £1m and the
initial £0.2m acquisition of SCN in January of this year.
From an investment perspective, net spend in stocks (cask spirit) and wood
will continue reduce to as we slow down the intensity of investment in this
area as a result of having stocks to meet demand for the foreseeable future,
pivoting to investment on a replenishment basis.
The Group Balance Sheet remains strong, with net assets of £15.2m, a cask
spirit stock with a book value of £26.5m and Net Debt of £27m - an
independent valuation of that stock now around 4x NBV and Net Debt levels.
The Artisanal Spirits Company plc
Consolidated Statement of Comprehensive Income
For the period ended 30 June 2024
6 months to 6 months to Year Ended
30 June 2024 (Unaudited)
30 June 2023 (Unaudited)
31 December 2023 (Audited)
£'000 Notes
Continuing operations
Revenue 6 10,095 10,225 23,500
Cost of sales (3,720) (4,013) (8,499)
Gross Profit 6,375 6,212 15,001
Selling & Distribution expenses (2,810) (3,390) (6,238)
Administrative expenses (5,489) (5,774) (10,901)
Finance costs (1,146) (629) (1,516)
Other income 8 3 77 79
Loss on ordinary activities before taxation 9 (3,067) (3,504) (3,575)
Taxation (18) (8) (158)
Loss for the period (3,085) (3,512) (3,733)
Other comprehensive income:
Item that will not be reclassified to profit or loss
Movements in cash flow hedge reserve - - (8)
Movements in translation reserve (111) (127) (64)
(111) (127) (72)
Total comprehensive loss for the period (3,196) (3,639) (3,805)
Loss for the period attributable to;
- Owners of parent company (3,139) (3,593) (3,848)
- Non-controlling interest 54 81 115
(3,085) (3,512) (3,733)
Total comprehensive loss for the period attributable to;
- Owners of parent company (3,250) (3,720) (3,920)
- Non-controlling interest 54 81 115
(3,196) (3,639) (3,805)
Basic EPS (pence) 12 (4.6) (5.3) (5.5)
Diluted EPS (pence) 12 (4.6) (5.3) (5.5)
The Artisanal Spirits Company plc
Consolidated Statement of Financial Position
As at 30 June 2024
As at As at
30 June 2024 (Unaudited)
31 December 2023 (Audited)
£'000 Notes
Non-current assets
Investment property 420 420
Property, plant and equipment 13 11,256 10,426
Intangible assets 2,505 2,389
14,181 13,235
Current assets
Inventories 14 31,028 30,564
Trade and other receivables 5,489 4,787
Cash and cash equivalents 1,880 1,235
38,397 36,586
Total assets 52,578 49,821
Current liabilities
Trade and other payables 3,532 3,216
Current tax liabilities 442 702
Financial liabilities 15 245 272
Lease liability 15 394 384
4,613 4,574
Net current assets 33,784 32,012
Non-current liabilities
Financial liabilities 15 28,600 23,809
Lease liability 15 3,221 2,575
Other payables 331 -
Provisions 662 589
32,814 26,973
Total liabilities 37,427 31,547
Net Assets 15,151 18,274
Equity
Called up share capital 176 176
Share premium account 15,255 15,255
Translation reserve (251) (140)
Retained earnings (278) 2,789
Cash flow hedge reserve - -
Equity attributable to parent company 14,903 18,080
Non-controlling interest 249 195
Net assets 15,151 18,275
The Artisanal Spirits Company plc
Consolidated Statement of Cash Flows
For the period ended 30 June 2024
6 months to 6 months to Year Ended
30 June 2024 (Unaudited)
30 June 2023 (Unaudited)
31 December 2023 (Audited)
£'000 Notes
Loss for the period after tax (3,085) (3,512) (3,733)
Adjustments for:
Taxation charged 18 8 158
Finance costs 1,057 579 1,415
Interest receivable - (2) (4)
Movement in provisions 73 4 9
Share based payments 72 100 (48)
Investment in property fair value movement - - (15)
Lease interest 89 50 101
Depreciation of tangible assets 856 760 1,568
Amortisation of intangible assets 168 124 282
Movement in working capital:
(Increase)/decrease in stocks (292) (1,477) (2,261)
(Increase)/decrease in debtors (1,009) (64) (1,073)
Increase/(decrease) in creditors (77) 756 (700)
Cash absorbed by operations (2,130) (2,674) (4,301)
Income taxes paid (278) (86) 139
Interest paid (726) (579) (1,379)
Net cash outflow from operating activities (3,134) (3,339) (5,541)
Cash flow from investing activities
(Disposal)/purchase of intangible assets 11 (14) (422)
Purchase of property, plant and equipment (526) (610) (1,657)
Sale of property, plant and equipment - 23
Acquisition of trade and assets (160) - -
Interest receivable - 2 4
Net cash used in investing activities (675) (621) (2,052)
Cash flows from financing activities
Share issue - 252 260
Transaction with non-controlling interest - - 65
Asset backed lending received 3,457 - 2,592
Inventory secured RCF facility 1,500 3,221 5,000
Loans received - - 1,450
Repayment of loan (140) - (2,336)
Repayment of leases (252) (230) (461)
Net cash from financing activities 4,565 3,243 6,570
Net (decrease)/increase in cash and cash equivalents 756 (718) (1,023)
Cash and cash equivalents at beginning of period 1,235 2,331 2,331
Reserve movements (111) (108) (73)
Cash and cash equivalents at end of period 1,880 1,506 1,235
The Artisanal Spirits Company plc
Consolidated Statement of Changes in Equity
For the period ended 30 June 2024
£'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 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 (3,848) (3,848) 115 (3,733)
Share-based compensation (48) (48) (48)
Transaction with non-controlling interest 65 65
Dividend payable (213) (213)
Other comprehensive loss (8) (64) (72) - (72)
Balance at 31 December 2023 176 15,255 2,789 - (140) 18,080 195 18,275
Loss for the period (3,139) (3,139) 54 (3,085)
Share-based compensation 72 72 72
Other comprehensive gain (111) (111) (111)
Balance at 30 June 2024 176 15,255 (278) - (251) 14,903 249 15,151
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 subsidiaries
(together the "Group") for the six months ended 30 June 2024 and the
comparative figures for the six months ended 30 June 2023 which are
unaudited. This financial information does not constitute statutory accounts
as defined in Section 435 of the Companies Act 2006. The external auditor's
report on the Group's annual report and accounts for the year to 31 December
2023 was unqualified and did not include an emphasis of matter statement under
s.498 of the Companies Act 2006.
This statement does not include all the information required for the annual
financial statements and should be read in conjunction with the Group's Annual
Report and Accounts for the 12 months ended 31 December 2023. The Annual
Report is available on the Group's website (www.artisanal-spirits.com/
(http://www.artisanal-spirits.com/) ).
2. Accounting policies
This condensed consolidated interim financial information has been prepared in
accordance with IAS34 'Interim Financial Reporting', the International
Accounting Standard as adopted in the United Kingdom. The accounting policies
applied in preparing the condensed consolidated interim financial information
consistent with those applied in the most recent Annual Report and Accounts
for the year ended 31 December 2023.
In this condensed consolidated financial information, the Group has applied
amendments to IFRS issued by the International Accounting Standards Board
("IASB") and endorsed by the UK Endorsement Board ("UKEB") that are
mandatorily effective for accounting periods that begin on or after 1 January
2024. The new effective amendments are:
• Amendments to IAS 1 - Classification of Liabilities as Current or
Non-current & Non-current Liabilities with Covenants;
• Amendment to IFRS 16 - Lease Liability in a Sale and Leaseback; and
• Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangements:
Disclosures.
None of the amendments issued by the IASB and endorsed by the UKEB have had a
material impact on the Group.
The following new standards and amendments to existing standards have been
issued by the IASB at the reporting date:
• Amendment to IAS 21 - Lack of exchangeability (UKEB endorsed,
effective 1 January 2025);
• IFRS 18 - Presentation and Disclosure in Financial Statements (not yet
endorsed by UKEB, effective 1 January 2027); and
• IFRS 19 - Subsidiaries without Public Accountability: Disclosures (not
yet endorsed by UKEB, effective 1 January 2027).
3. Going concern
The financial information has been prepared on the basis that the Group will
continue as a going concern. In assessing the appropriateness of adopting the
going concern basis in the preparation of the condensed interim financial
information, the Board has considered relevant information, including annual
budget sensitivities, forecast future cash flows until September 2025,
availability of financing and the impact of subsequent events in making their
assessment.
The directors have considered in detail the impact of reasonably plausible
downside scenarios and 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 Group's Annual Report and Accounts for the 12 months
ended 31 December 2023.
5. Dividends
No dividend was declared or paid during the period (prior period £nil).
6. Operating segments
6 months to 30 June 2024 (Unaudited) Europe Asia Americas Other Group
£'000 £'000 £'000 £'000 £'000
Revenue 5,455 2,149 2,021 470 10,095
Cost of Sales (2,437) (610) (473) (200) (3,720)
Gross Profit 3,018 1,539 1,548 270 6,375
Selling & distribution costs (2,810)
Administrative costs (5,489)
Finance costs (1,146)
Other income 3
Loss before tax (3,067)
Taxation (18)
Net loss (3,085)
6 months to 30 June 2023 (Unaudited) Europe Asia Americas Other Group
£'000 £'000 £'000 £'000 £'000
Revenue 5,460 2,348 1,950 467 10,225
Cost of Sales (2,730) (671) (424) (188) (4,013)
Gross Profit 2,730 1,677 1,526 280 6,212
Selling & distribution costs (3,990)
Administrative costs (5,774)
Finance costs (629)
Other income 77
Loss before tax (3,504)
Taxation (8)
Net loss (3,512)
Year ended 31 December 2023 (Audited) Europe Asia Americas Other Group
£'000 £'000 £'000 £'000 £'000
Revenue 12,570 5,223 4,722 985 23,500
Cost of Sales (5,783) (1,415) (896) (405) (8,499)
Gross Profit 6,787 3,808 3,826 580 15,001
Selling & distribution costs (6,238)
Administrative costs (10,901)
Finance costs (1,516)
Other income 79
Loss before tax (3,575)
Taxation (158)
Net loss (3,733)
The Board, the Chief Operating Decision Marker, does not receive a segmental
breakdown of assets and liabilities, depreciation or capital expenditure.
The Group's revenue can be analysed by product category as follows:
£'000 6 months to 6 months to Year Ended
30 June 2024
30 June 2023
31 December 2023
(Audited)
(Unaudited) (Unaudited)
Revenue from the sale of Whisky 7,744 7,679 18,161
Membership Income 762 822 1,724
Revenue from the sale of other spirits 33 56 143
Member rooms (Food & Drink) 1,046 1,091 2,244
Events & tastings 467 455 886
Other 43 123 342
10,095 10,225 23,500
7. KPIs
The KPIs relating to SMWS membership are monitored by the Board and by
Management over a rolling twelve-month period are as follows:
To 30 June 2024 (unaudited)
LTM Period End Average Annual Revenue/ Annual Contribution(1)/ Retention Expected Years(2) LTV(3)
Members
Members
Member
Member
%
(Members)
Revenue
('000s)
('000s)
£'000
Europe 9,757 24.4 25.0 390 185 72% 3.6 656
Asia 5,011 5.5 5.0 1,002 721 64% 2.8 1,994
Americas 4,699 8.5 8.1 582 342 64% 2.7 937
Other 980 1.9 1.9 504 281 69% 3.2 894
Total (4) 20,447 40.3 40.0 511 288 71% 3.4 989
Change(5) -4% 4% 8% -11% -13% -4% -10% -22%
1) Contribution is a non-IFRS measure, and is defined by
management as Gross Profit less Commission paid on sales (primarily in
relation to the USA)
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) Total revenue provided excludes trade cask sales, JG Thomson
trade sales, and Single Cask Nation sales, all of which are unrelated to the
membership proposition, totalling £2,922k (12 months to 30 June 2023: £572k)
5) Change is shown versus the twelve-month period ended 30 June
2023
8. Other Operating Income
£'000 6 months to 6 months to Year Ended
30 June 2024 (Unaudited)
30 June 2023 (Unaudited)
31 December 2023
(Audited)
Other Income 3 77 79
3 77 79
9. Loss on ordinary activities before taxation
£'000 6 months to 6 months to Year Ended
30 June 2024 (Unaudited)
30 June 2023 (Unaudited)
31 December 2023
(Audited)
Loss on ordinary activities before taxation (3,067) (3,504) (3,575)
Add back; Depreciation of tangible assets 772 760 1,173
Add back; Depreciation of production equipment within cost of sales 31 - 106
Add back; Amortisation of intangible assets 144 124 282
Add back; Finance Costs - loans 1,056 629 1,415
Add back; Finance Costs - leases 89 101
EBITDA (975) (1,991) (498)
Non-underlying costs - 180 647
Adjusted EBITDA* (975) (1,811) 149
* Adjusted EBITDA is defined as earnings before interest, tax, depreciation,
amortisation and non-underlying costs
10. Non-underlying costs
£'000 6 months to 6 months to Year Ended
30 June 2024 (Unaudited)
30 June 2023 (Unaudited)
31 December 2023
(Audited)
Non underlying acquisition and transaction costs - - 138
Non underlying Masterton pre-operational costs - 91 91
Non underlying organisational restructuring costs - 89 418
- 180 647
For the year ended 31 December 2023, non-underlying costs comprise executive
and senior management team restructuring costs, pre-acquisition costs in
relation to the Group's new operations in Taiwan and the Group's acquisition
of Single Cask Nation subsequent to the year end, and costs relating to
finalisation of the Masterton Bond start-up which became operational in 2022.
11. Taxation
The results include a tax charge against the profits of the Group's Chinese
subsidiary at the rate of 25% in both 2023 and 2024. 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 2024 (Unaudited)
30 June 2023 (Unaudited)
31 December 2022
(Audited)
Earnings used in calculation (£'000) (3,250) (3,720) (3,848)
Number of shares 70,559,774 69,807,454 70,214,725
Basic EPS (p) (4.4p) (5.1p) (5.5p)
Fully diluted number of shares 73,701,200 74,995,461 74,989,595
Diluted EPS (p) (4.4p) (5.1p) (5.5p)
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 2023 678 1,441 503 4,170 3,449 4,505 14,746
Additions - - - 817 840 - 1,657
Disposals - - - (25) - - (25)
As at 31 December 2023 678 1,441 503 4,962 4,289 4,505 16,378
Additions - - - 77 450 1,160 1,686
As at 30 June 2024 678 1,441 503 5,039 4,739 5,665 18,064
Accumulated Depreciation
As at 1 January 2023 181 1,097 306 1,172 493 1,135 4,384
Charge for the year 15 70 47 849 169 420 1,570
Released on disposal - - - (2) - - (2)
As at 31 December 2023 196 1,167 353 2,019 662 1,555 5,952
Charge for the 6 months 8 29 22 418 119 259 856
As at 30 June 2024 211 1,222 356 2,423 781 1,814 6,808
Net book value
As at 31 December 2023 482 274 150 2,943 3,627 2,950 10,426
As at 30 June 2024 466 219 146 2,616 3,958 3,851 11,256
Investment in the period is driven by recurring Cask Wood investment £450k
(2023; £322k) and recognition of the Right of Use asset in relation to the
Group's new Head Office at 10 George Steet, Edinburgh.
14. Inventories
£'000 As at 30 June 2024 As at 30 June 2023 As at 31 December 2023
(Unaudited) (Unaudited) (Audited)
Cask whisky & other spirits 26,482 23,926 25,343
Bottled stock 2,865 3,096 3,092
Other inventory 2,332 1,828 2,129
Total inventory 31,028 29,780 30,564
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 £1.1m in the six-month period (H1-23: £0.9m).
15. Financial Liabilities
£'000 As at 30 June 2024 (Unaudited) As at 30 June 2023 (Unaudited) As at 31 December 2023
(Audited)
Inventory secured revolving credit facility 21,500 19,400 20,000
Inventory financing 6,050 - 2,628
Bank loans 1,270 569 1,418
Other loans 25 45 35
Financial liabilities 28,845 20,014 24,081
Lease liability 3,615 3,139 2,959
32,460 23,153 27,040
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 cask goods component of inventory assets. The total facility
available is £21.5m. The loan is interest bearing and interest is due at a
rate of 2.25% over the Bank of England base rate.
The inventory financing facility allows the SMWS subsidiary to raise finance
of 60% to 80% of current market value secured against cask spirit, up to a
total facility availability of £15.0m. The facility carries interest on cash
advanced at a rate of 2.25% over the Bank of England base rate, settled on
settlement of the principal. The Company has issued a parental guarantee to
SMWS in favour of the lender.
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.
17. Business Combinations
On 3 January 2024 the Group acquired 100% of the trade and trading assets of
J&J Spirits, trading as Single Cask Nation. Single Cask Nation is a
US-based membership society that purchases single cask whiskies and other
spirits to distribute and sell direct to consumers and through retail and
distribution channels in the USA, UK, Germany, Sweden, Japan, Israel and
Canada. This interim financial information includes the impact of six months'
trading results.
Details of the acquisition are as set out below:
£'000 6 months to 30 June 2024
(Unaudited)
Purchase consideration:
Cash paid 160
Deferred consideration 307
467
Less: fair value of identifiable net assets acquired (248)
Intangible asset recognised 219
Deferred consideration is contingent upon the future revenue, profitability
and membership growth in the acquired business during the financial years 2024
and 2025. This comprises a base earn out and stretch target with the amount
payable ranging from £nil to £397k. The deferred consideration recognised of
£307k is based on current forecasts.
The fair value of net assets acquired comprise:
£'000 6 months to 30 June 2024
(Unaudited)
Cask whisky and other spirits 99
Bottled stock and other inventory 74
Customer list 75
248
During the period, the acquired business contributed £279k revenue and £129k
profit before taxation. Had the business been under the Group's control from 1
January 2024, the Group's revenue and profit before tax would remain as
reported, due to the minimal time period between 1 January and the acquisition
date. As set out in Note 10, certain non-underlying costs incurred in 2023
related to this acquisition. Of the non-underlying acquisition and transaction
costs in the year ended 31 December 2023, £58k related to the completed
acquisition.
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