REG - Artisanal Spirits Co - Preliminary Results
27/03/2024 07:00
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RNS Number : 4142I Artisanal Spirits Company PLC (The) 27 March 2024
27 March 2024
The Artisanal Spirits Company plc
("The Artisanal Spirits Company", "ASC" or "the Group")
Preliminary results for the year to 31 December 2023
Strong H2-23 Revenue and EBITDA(1) delivery signals positive momentum for FY24
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, Single Cask Nation & J.G. Thomson is pleased
to announce its preliminary results for the year ended 31 December 2023
("FY23").
The Group has delivered another year of revenue growth and diversification.
FY23 results marginally exceed the update given in early December 2023, with
8% revenue growth at £23.5 million and adjusted EBITDA(2) of £0.1 million.
The delivery of revenue growth and adjusted EBITDA(2) profit, despite the
headwinds prominent in 2023 and the macro-economic conditions in China, serves
to support the Board's confidence in the ability of the business to deliver
more substantial EBITDA(1) in 2024 and thereafter, in line with consensus
forecasts*.
Headlines
· Continued improvement across key metrics, most notably Revenue,
Gross Profit and Membership, though not at the level we had targeted for the
year
· The successful Scotch Malt Whisky 40(th) anniversary celebrations
- including the surpassing of 40,000 members in year (over 41,000 at year-end)
· Acquisition post year-end (4(th) January 2024) of Single Cask
Nation ("SCN") in the USA
· Investment in and completion of key strategic initiatives
detailed in the Operational Highlights section, including the launch of our
new Cask Sales member offering
· Substantial growth in market value of cask inventory - this
inherent value of our spirit stock evidenced through cask sales delivered in
FY23 at 4.5x NBV and new debt facility valuation in year of 4.8x NBV
Financial Headlines
· Revenue increased 8% to £23.5 million (2022: £21.8 million),
slightly ahead of expectation. Increasingly diversified revenue streams came
to the fore with significant growth in cask sales, contributing £2.7 million
of revenue in FY23, offsetting a challenging period of trading in China
· Gross margin improved to 63.8% (2022: 63.6%) and gross profit
delivery increased by 9% to £15.0 million (2022: £13.8 million)
· EBITDA(1) loss of £0.5 million (2022; £0.2 million), which
excluding non-recurring costs, resulted in an adjusted EBITDA(2) profit of
£0.1 million (2022; £0.4 million) with strong H2 contribution of £1.9
million (2022; £0.7 million)
· Loss before tax of £3.6 million (2022; £2.1 million),
predominantly due to an increase of £1.1 million of interest cost and
depreciation of the now fully operational new supply chain facility, Masterton
Bond.
· Further investment in spirit and wood stock, resulting in 100%
demand cover through to FY28 and 75% through to FY35
· Cask stock holding of £25.3 million (2022; £23.3 million) with
a notional retail value of approx £500 million
· A new debt facility of £15 million with specialist lender
Ferovinum and total debt facility headroom, including RBS RCF, at 31 Dec 2023,
of £14.0 million
· FY23 strategic and operational progress supports a path from low
to high single digit EBITDA(1) margin by 2026
Operational Headlines
· SMWS membership growth of 10% in FY23 to over 41,000 members
(2022: 37,400), supported by growth in USA and mainland Europe, +17% and +29%
respectively as well as the new Asian markets
· The launch of our new member cask sale programme with the launch
initiative being the '50(th) Anniversary Cask Club'. This complementary and
incremental member initiative further broadens the offer to members
· Further expansion of the Group's Asia presence with the launch of
a new subsidiary in Taiwan and new franchise operations in South Korea,
Malaysia and Singapore
· Membership loyalty and engagement remains strong, with retention
remaining close to the all-time high level at 74% combining with annual
contribution per member of around £300 (2022; £326) to deliver a lifetime
value per member of £1,173 (2022; £1,387) - up 25% since IPO
· Launch of the new SMWS app in the UK during December 2023
facilitating ease of ordering
· Further product innovation: "Membership and a Bottle" and "Drop
and Dram" subscription option in Q4-23 to drive additional member recruitment
· Refurbishment of the members rooms at our spiritual home, The
Vaults, in Leith in September 2023
Global Membership
December 2023 December 2022 % Change
Europe 25,900 24,500 6%
Americas 8,300 7,100 16%
Asia 4,900 3,800 29%
Other 1,900 2,000 (1%)
Total 41,000 37,400 10%
Current trading/post period highlights
· Trading in the early part of 2024 has been positive, with revenue
performing in line with expectation representing 10% growth on prior year with
delivery from Taiwan and Single Cask Nation supported by growth in franchises
and cask sales
· As a result, expected FY profit delivery remains in line with
consensus market expectations, which would represent a significant improvement
in profitability and a positive step on the path to high single digit
EBITDA(1) margin by FY26
· Acquisition of Single Cask Nation (SCN) on 4 January 2024,
complementing SMWS' existing US business. SCN enhances ASC's ambition to
further grow its presence in the USA and further leverage the sizable and
growing American whiskey market. Entirely self-funded from existing bank
facilities, it is anticipated SCN will be PBT positive in FY24
· Celebration of SCN being awarded Independent Bottler of the Year
Award at the prestigious 'Icons of Whisky Awards'
in Louisville, Kentucky in February 2024 - further emphasising the quality
and appeal of SCN's exquisitely curated whiskies
* The Board of The Artisanal Spirits Company considers that current
consensus market expectations for the year ending 31 December 2024 are
revenue of £25.0m and EBITDA(1) of £1.0m.
(1)EBITDA, a non-IFRS metric, is Earnings before interest, tax, depreciation
and amortisation (see note 7)
(2)Adjusted EBITDA, a non-IFRS metric, is calculated as EBITDA(1) excluding
exceptional and non-recurring costs (see note 7)
Andrew Dane, CEO of The Artisanal Spirits Company, commented:
Despite the globally challenging economic environment in 2023, the Group
emerged stronger, more resilient and increasingly well positioned for
continued growth.
I was particularly pleased to see the strong revenue and EBITDA(1) delivery in
H2-23 which provides momentum for growing profitability in 2024. This has
continued with a positive start to 2024, with revenue performing in line with
expectation in the first two months.
The core of the Group remains the SMWS, which celebrated its 40th anniversary
in 2023, with a unique and exciting range of celebrations and product
developments. In January 2024, we were also thrilled to welcome Single Cask
Nation (SCN) to the Group, alongside SMWS and JGT. This acquisition is a
strong strategic development and is both complementary and incremental to SMWS
in the significant and growing US whisky market. We remain confident in this
US market opportunity, with the very strong finish to 2023 for in-market
depletions for SMWSA, continuing with double digit growth in early 2024.
This sits alongside the range of other strategic initiatives which were
delivered in 2023. These, together with the revenue growth and impressive
membership expansion give us confidence to support further profitable growth
in 2024 and beyond.
I would like to extend my thanks and recognition to all the fantastic
employees within ASC for the hard work and commitment displayed during the
year - their resilience, innovation and delivery of outstanding experiences
for our members continuing to reach new heights.
(1)EBITDA, a non-IFRS metric, is Earnings before interest, tax, depreciation
and amortisation (see note 7)
(2)Adjusted EBITDA, a non-IFRS metric, is calculated as EBITDA(1) excluding
exceptional and non-recurring costs (see note 7)
Sellside analyst presentation
Andrew Dane, Chief Executive Officer, and Billy McCarter, Chief Financial
Officer, will host an in-person presentation for sellside equity analysts
today/Wednesday, 27 March at 09.00 hours GMT. Analysts wishing to join
should register their interest by contacting: artisanalspirits@instinctif.com
(mailto:artisanalspirits@instinctif.com)
A recording of the presentation will also be made available via the Group's
website later today.
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 Adviser and Broker) Tel: +44 (0) 20 3100 2222
Edward Thomas
Dru Danford
John More
Instinctif Partners (Financial PR) Tel: +44 (0)20 7457 2020
Justine Warren
Matthew Smallwood
Joe Quinlan
Notes to Editors:
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 17,000 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.
Established in 1983, SMWS currently has a growing worldwide membership of over
41,000 paying members. 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 international markets including the UK, Germany,
Sweden, Japan, Israel and Canada.
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.
Chair's Statement
Despite the globally challenging environment in 2023, the Group has weathered
the storm and emerged stronger, more resilient and increasingly well
positioned for continued growth.
The global whisky market continued to deliver compound growth in 2023, despite
the global macro-economic and geo-political situation. Against this
background, while the Group grew revenue by 8%, we were disappointed not to
have delivered the growth in profitability we wanted and generated a loss
before tax of £3.6 million (£2.1 million), reflecting increased interest
costs, depreciation of our new supply chain facility and below expectation
results in some markets such as China. This resulted in the Group resetting
its growth and revenue targets for 2024 and beyond, with the delivery of the
long-term plan set out at IPO being delayed by a year. Despite this temporary
rephasing of growth, the Group is becoming increasingly diversified - both in
terms of its geographic footprint and expanding offering, leaving it less
exposed to any one market - and has the clear foundations in place to deliver
ongoing and growing profitability.
In 2023 the SMWS celebrated its 40th anniversary, and the Group implemented a
number of strategic actions which pave the way for the Society's continued
future growth. Membership of SMWS has grown, with year-end membership at over
41,000, representing a 10% increase year-on-year. The four member venues in
the UK have continued to deliver excellent results, bringing unique and
memorable experiences to our members, with The Vaults in Leith, the spiritual
home of the SMWS, benefitting from a fabulous renovation as part of the
Society's 40th anniversary milestone celebrations.
Alongside membership, the heartbeat of our proposition is our focus on unique,
high-quality whiskies that we purchase, curate and release in limited
editions. In 2023 we further added to our world-beating stock of whisky,
deploying the Group's funds well to ensure that we have forward stock cover
well into the next decade, with 100% to FY28.
To support this membership growth in 2023, we launched the newly re-packaged
Membership & Bottle and the Drop & Dram subscription service across
the UK, both designed to increase our membership offers and drive recruitment.
To further improve our membership experience we successfully launched the SMWS
app in late 2023 enabling members to order from their mobile devices with good
feedback received from members supported by encouraging download levels and
average engagement time.
The end of 2023 also saw SMWS embark upon offering cask sales to members.
Under the 50th Anniversary Cask Club, SMWS members can purchase the contents
of a cask of new-make spirit and experience its maturation journey over the
next decade to the Society's 50th Anniversary - an innovative option for the
Society's whisky afficionados.
In January 2024 we acquired an additional brand, Single Cask Nation (SCN), the
award-winning independent bottler based in the USA. SCN will further
strengthen our position in the US market with an orientation towards American
whiskies to complement the existing SMWS business in the USA.
In addition, the Group continued to expand its global footprint into new
growth markets through SMWS. It further consolidated its go to market approach
in Taiwan, the world's third largest ultra-premium whisky market*, targeting a
discerning customer base in that market by migrating from a franchise to a
majority
owned joint venture, while retaining the franchise partners as part of this
growing business.
ASC is conservatively financed and has ample funds to continue to invest in
and grow the Group for the foreseeable future.
Investors
As we build on strategic delivery and deliver future growth, profit and cash
conversion, I would like to thank investors for their continued support since
we completed the IPO in June 2021. The business has come a long way in that
time, a credit to your belief in what we are doing.
There is frustration with the current share price, impacted by the AIM small
cap performance since 2021; however we continue to have a clear strategy we
will deliver against as we do everything we can to drive a more representative
valuation of our great business.
Governance
Over the last year the Board continued to pursue exemplary standards of
corporate governance and drove the ASC values across the business,
particularly the uncompromising approach to keeping the interests of our loyal
SMWS members firmly at the forefront of everything we do.
People
In early 2023, the former Managing Director David Ridley and the Board agreed
that he would step down following six years with the Group, during which time
the business delivered sustained revenue growth in 2021 and 2022, including
the successful IPO on the AIM market of the London Stock Exchange under his
stewardship.
Andrew Dane (previously the Finance Director) was appointed as our new CEO in
January 2023 and Billy McCarter, formerly Group Financial Controller, was
appointed as Chief Financial Officer in May 2023 after a successful assessment
and selection process, and I would like to take this opportunity on behalf of
the Board to congratulate both of them on their appointments and their
excellent leadership throughout 2023.
I would like to thank the Board and the ASC team for their hard work,
commitment and resilience during 2023.
Looking to the future
We have a clear strategy focussed on delivering sustainable, profitable
growth. This remains primarily driven by continuing to develop, engage with
and grow our membership base, enhancing the breadth and depth of our whisky
stocks, further domestic and international expansion, continued enhancement of
our
e-commerce platform, increasing margins and delivering shareholder value.
Our increasingly globally diversified footprint means that the Group is not
over exposed to any one geography or market, further derisking the overall
business. Expanding our product offering with the acquisition of SCN allows
the Group to further expand sales in the valuable US market, complementing the
existing SMWS America proposition.
2024 will not be without its own set of challenges, but we are navigating
these well and planning accordingly. We welcomed the Chancellor's duty freeze
in the recent Spring statement and remain optimistic that economic conditions
will improve in the medium term, underpinning our confidence that our business
will benefit from its unique and global credentials, serving our dedicated
customer base in all major markets. We will continue to focus on delivering
compelling whisky experiences for all of our members throughout 2024 and
beyond.
We anticipate further revenue growth in 2024, albeit slightly reduced from the
c20% growth rates experienced in 2021 and 2022, as we focus on driving margin
and delivering sustainable profitability. As we do this, we are committed to
doing so responsibly, working within The Scotch Whisky Association's
Sustainability Strategy, which strives to achieve best practice. At ASC, 2024
will continue to focus on making our supply chain and packaging efficient and
sustainable, as well as various efforts to reduce our carbon footprint while
also reducing costs.
The Group has come through 2023 bigger and better than ever, with an expanding
portfolio of quality brands and the core SMWS business in as strong a position
as it has ever been. I thank you all for your continued support of the ASC
business and look forward to delivering for you and our members in 2024 and
beyond.
* IWSR Database - 2022 data
Chief Executive's Review
Through 2023, we continued to grow both revenue and membership, as well as
making good progress on our strategic initiatives. These positive steps
reinforce the Group's confidence in its model and its ability to continue to
grow profitably.
We did suffer headwinds during the year, most notably the macro-economic
conditions in China, with consumer spending behaviour significantly knocked;
however, we have delivered further diversification in our revenue delivery to
achieve year on year improvement that has helped us reduce the impact at an
EBITDA(1) level, further boosted by our 50th Anniversary Cask Sale launched in
Q4.
Particular strategic highlights from the year included the launch of the new
subsidiary in Taiwan, the world's third largest market for Ultra-Premium
Scotch whisky;* the refurbishment of The Vaults member room in Leith (heart of
the SMWS brand, with investment of £0.5 million); the creation of innovative
new revenue streams (including cask sales, the Membership & Bottle
product, and a monthly subscription service); digital developments including a
new US website and launch of a new UK mobile app, as well as further
developments in Asia with the successful launch of a new franchise in South
Korea and appointment of new franchise partners in Malaysia and Singapore.
I would like to extend my thanks and recognition to all the fantastic
employees within ASC for the hard work and commitment displayed during the
year - their resilience, innovation and delivery of outstanding experiences
for our members continuing to reach new heights.
In year, we have made changes to the Executive and Senior Management Team to
support the appointment of myself as CEO and Billy McCarter as CFO, welcoming
Anne Phillips as the new Marketing Director as well as key external hires to
the wider Management team.
I believe the current team within ASC will significantly aid us in achieving
our future ambition.
Continued growth momentum
During 2023 we delivered £23.5 million of revenue and adjusted EBITDA(2) of
£0.1 million and a strong H2 delivery of £1.9 million of adjusted EBITDA(2).
We had previously set out an ambitious target of doubling ASC's revenue
between 2020 and 2024, and while we have already grown by 56% since 2020,
challenging trading conditions in some markets during 2023 resulted in a
temporary reset of our ambitions, delaying our growth targets by 12 months,
i.e. now doubling revenue by 2025. Despite this we have continued to work hard
to deliver an expanded platform to drive through growth in revenue, sales and
ultimately profit in 2024 and beyond. The Group is well financed for the
future and remains set on a transitional path to high single digit EBITDA(1)
margin by FY26.
Building a high quality, highly profitable and cash generative, premium global
business
ASC is the creator of outstanding, one-of-a-kind whisky and experiences around
the world and our ambition remains to create a high quality, highly profitable
and cash generative, premium global business.
The core of the Group remains the Scotch Malt Whisky Society. SMWS operates a
pioneering model with a loyal and growing membership who can exclusively
purchase unique, award winning, limited-edition whiskies. Developing
additional markets for SMWS and for our growing stable of other retail facing
brands diversifies our proposition,and allows us to still deliver growth over
the year despite economic uncertainty and fluctuating markets in various parts
of the world.
Underlying structural dynamics growing the addressable market
Regardless of the geo-political turmoil around the world, Scotch whisky
remains a highly desirable category on the international stage. We operate
primarily in the global Ultra-Premium segment which has seen substantial
growth over the last decade and continues to do so. Trends such as
premiumisation and experiential demand further add to the appeal of the
category - with consumers seeking authenticity, status and exclusivity. The
drive for increasing convenience and continued global digitalisation combine
to play to ASC's strengths as a limited-edition producer with our primarily
D2C model.
The overall addressable market opportunity remains significant, with the
global Scotch whisky market for Ultra-Premium price points, valued by IWSR
data for 2022, at $8.1 billion, having grown by 52% since 2020. Of this, $6.3
billion is in markets where we already have a well-established presence and,
within these markets, ASC has a market share of only 0.3% representing a
significant and growing opportunity.
Globally diversified SMWS celebrates 40th year with continued growth
This year saw us grow global membership of SMWS once again, up 10% to 41,000
at the year end. 2023 experienced particularly strong membership growth in
Europe (+29%) the USA (+17%) and new Asia markets, while the slower sales
performance in China was also reflected in flat membership during the year.
The Society has maintained its high levels of loyalty from our existing
members, delivering recurring revenues with retention rates close to last
year's historically high level at 74%.
2023 was a very special 40th anniversary year for the Society, with a number
of events marking this milestone held around the world, including the global
Guinness world record for the largest online tasting, which saw members from
almost 20 different countries take part in a simultaneous whisky tasting
hosted online from the spiritual home of the Society, The Vaults in Edinburgh.
SMWS revenue continued to grow underpinned by the growth in global membership,
while spend per member reduced slightly from the record levels seen in 2022.
2023 also saw the launch of the new Membership & Bottle and Drop &
Dram subscription offerings, designed to engage and entice new members, as
well as the SMWS app supporting the existing members' experience and making
purchase of our award-winning whisky more accessible.
November 2023 also saw the Society offer its members the chance to buy the
full contents of a cask for the first time, with the launch of the 50th
Anniversary Cask Club. This initiative enables members to secure the contents
of a cask of new-make spirit and experience its maturation towards a 50th
anniversary bottling in 2033. While the initial pace of sales was slower than
forecast, dozens of members joined the programme in the first few weeks
following launch. Sales are continuing in early 2024 and we are focussed on
delivering the full value of this programme during the year.
We further enhanced our globally diversified range of markets by completing
the transfer of the Taiwanese chapter of SMWS into a majority-owned joint
venture launching in 2023 and selling out 500 memberships within a day. The
new franchise in South Korea achieved 300 new members on initial launch in
April with a further 150 added in October.
Acquisition of Single Cask Nation (SCN)
In the second half of 2023 we laid the groundwork to acquire SCN, the
award-winning independent bottler based in the USA. The acquisition of the SCN
business, including its two founders Jason Johnstone-Yellin and Joshua Hatton
joining the wider group, completed in early 2024.
SCN is an independent bottling brand which sources, curates and bottles rare
single-cask and limited-edition whiskies, with an orientation to American
Whiskies, and other spirits for sale both online and through specialty on-and
off-premise accounts in the USA and other key international markets.
We have acquired a USA business that is both complementary and incremental to
our existing USA business. SMWS will continue to focus on delivering
outstanding Scotch Malt Whisky, while SCN will develop a greater focus on
American whiskey. This will not only give consumers something which they seek,
namely interesting, unique, curated, exquisitely selected and matured whisky,
but also allows us to incubate and trial new product propositions in a very
low cost/low risk way with the scope to expand in due course, whilst
accelerating our US operations.
The acquisition of SCN builds on ASC's already globally diversified footprint
and secures a greater presence in the world's largest premium whisky market.
JGT groundwork continues
We continued to grow our suite of superior quality spirit and complementary
brands with further development of JGT with first shipments into the USA and
first sales into Asia.
Masterton Bond now fully operational
Our production and supply chain facility at Masterton Bond, near Glasgow, is
now fully operational, taking care of every stage of the supply chain process
from cask storage, bottling, labelling and pick, pack and dispatch. Over
200,000 bottles have now been produced at the site since it opened in 2022.
The first bottling of SCN has now completed and we will continue to service
SMWS, SCN and JGT and potentially other brands from this state-of-the- art
facility.
As the facility continues to meet the growing volume demand of the Group, in
future years we look to drive improvement in margin.
Demonstrating inherent value
ASC generates value through two key components of its unique business model;
firstly, acquiring a unique collection of Scotch malt whisky and other
spirits, and capturing the value as these casks mature; secondly, using this
liquid to create outstanding, limited-edition whisky and experiences around
the world.
The long-term substantial value comes from this second element, with stock in
cask at the year-end having an estimated retail value in bottle of
approximately £481 million (31 December 2022: £493 million), a slight
reduction as the average selling price has declined slightly due to lower
Vaults Collection and Chinese market sales in 2023, however still a
significant value that represents the opportunity for around £300 million of
future gross profit based on the current margin structure of the business.
While we continue on our path to realising this full value over time, the
first part of the accretion capture has already delivered significant value.
The Group now holds over 17,000 casks (up from 16,500 at the end of 2022)
covering a vast range of styles, distilleries, makes, ages, and cask wood
types. Though these casks are still carried in our accounts at the net book
value of £25.3 million (31 December 2022: £23.3 million), the real current
market value has increased substantially since acquisition.
This has been evidenced by both the value of casks sold during the period,
which sold for an average of 4.5x the book value, but also the third-party
valuation undertaken by Ferovinum; they valued the relevant inventory at 4.8x
the net book value as part of the new £15 million facility announced in
November 2023.
The path to profitability
During the course of 2023, we have continued to build on the significant
investments across our business made in 2021 and 2022, have a clear strategy
to drive profitable growth and anticipate growing EBITDA(1) and profit before
interest and tax (PBIT) through 2024. Furthermore, the Group remains set on a
transitional path to high single digit EBITDA(1) margin by FY26.
2024 will be a year of continued profitable expansion and development,
focussing on maximising the benefits of the investments and developments
already made in 2023, with concentration on the "brilliant basics" of the
business that we expect to see deliver revenue and PBIT growth in line with
forecasts.
Current trading and outlook
Whilst still early in the year, we are on track to meet our revised
expectations for the full year. We remain positive about our ability to meet
our strategic goals in the short, medium and long term, achieving revenue,
EBITDA(1) and PBIT growth as we benefit from our investments and the momentum
from a profitable FY23 H2 together with increased revenue diversification
through cask sales and our new SCN acquisition.
Confidence is supported by stronger performance in the USA, with encouraging
levels of in-market depletions revenue growth for Q4-23 (+29%) and continued
double digit growth in early 2024 supporting our FY24 shipment revenue
forecasts. In China, double digit growth in the early months of 2024 again
supports our full year forecast on broadly flat revenue in the market for
2024.
We will continue to adhere to a disciplined investment programme, ensuring we
balance conversion of profit delivery to cash with investment in spirit and
wood to achieve the optimal levels required to meet our future growth
ambitions. We have invested ahead in our supply chain facility and technology
roadmap and now have the foundation in place for profitable cash conversion.
We will continue to seek partnerships in major markets for ultra-premium
whisky where we are not already presented.
Early in FY24-Q2, we plan to relocate to a new Edinburgh HQ Head Office. These
premises in central Edinburgh facilitate our future growth ambitions and show
a commitment to our People, one of our five strategic pillars - investing in
facilities more reflective of modern working practices and further building
our Employee Value Proposition (EVP), as morale, collaboration and an
increased sense of pride drive further productivity within the business.
We remain focussed on developing and progressing our business through the
continued growth of membership globally, building a sustainable platform for
the future and driving ASC towards profitability which should be achieved in
the near term. We will continue to benefit from the structural tailwinds of
digitalisation, premiumisation and convenience which underpin our unique
business model and the continued global growth of the Ultra- Premium whisky
segment.
* IWSR Database - 2022 data
(1)EBITDA, a non-IFRS metric, is Earnings before interest, tax, depreciation
and amortisation (see note 7)
(2)Adjusted EBITDA, a non-IFRS metric, is calculated as EBITDA(1) excluding
exceptional and non-recurring costs (see note 7)
Chief Financial Officer's Review
FY23 has been a year of challenge within the wider spirits Industry, most
notably the economic climate in China, cost of living pressures and the US
post-Covid market rebalancing.
We are disappointed to have not delivered the growth in profitability we
wanted, generating a loss of £3.6 million (2022; £2.1 million), impacted by
increased interest costs, depreciation of our new Supply Chain facility and
below expectation results in some markets such as China.
This FY24 objective is supported by FY23-H2 momentum where we delivered strong
results, recognising 12% revenue growth against H2-22, resulting in H2-23
adjusted EBITDA(2) profit delivery of £1.9 million. Full year growth in gross
margin of 0.2ppt and completion of the key investments we set out to achieve
by the end of FY23, setting us up well to achieve our EBITDA(1) and PBIT
ambition, more importantly, sustained and growing profit and cash delivery in
the near to medium term.
In FY23, we delivered revenue growth of +8%, achieving £23.5 million, and an
EBITDA(1) loss of £0.5 million which, after accounting for non-recurring
areas of spend (Executive and Senior Management Team restructure costs,
pre-acquisition costs of Taiwan, Single Cask Nation (SCN) and final Masterton
move costs), resulted in an adjusted EBITDA(2) of £0.1 million. The loss
before tax was £3.6 million, impacted by lower profitability than expected,
predominantly driven by market conditions in China.
At a Group level, I am enthused by our continued ability to strengthen the
diversification of our business with regards to revenue and profit delivery -
more than offsetting challenges in any one market.
Diversified Global Revenue
Europe
As the home of SMWS, the European region remains our largest global market,
with around 60% of total Group membership comprising UK Online, UK Venues,
Europe and our two franchise markets, Denmark & Switzerland. The region
delivered 29% revenue growth year-on-year, within markets like Germany and
France as well as another year of continued growth within our UK venues,
achieving 9% revenue improvement on FY22.
This omni-channel approach in the UK, with four outstanding member rooms
complementing the online presence at www.smws.com, (http://www.smws.com/)
remains a key recruitment tool for the Group, with over 1,200 new members
joining via venues in 2023.
The biggest driver of Europe growth was the delivery of £2.7 million in cask
sales to members and where appropriate to the trade, up from £0.5 million in
2022. This is further testament to our ability to deliver new revenue streams
and increase diversification.
Asia
Our key Asian markets of China, Japan and Hong Kong were joined in year by the
launch of a new subsidiary in Taiwan and a new franchise operation in South
Korea. The launch of Taiwan and South Korea in H2-23, resulting in 1,000 new
members, ensured the region closed the year with over 4,850 members,
signifying an almost 30% growth year-on-year.
As stated, the Chinese economy faced significant challenges in 2023, resulting
in a 30% revenue decline to £3.5 million in year (2022; £5.0 million), a
return to pre-2021 levels.
We expect the recovery in China will be at a steady pace over the next 2 to 3
years. Our outlook for FY24 as a Group starts from the current base and a
prudent growth trajectory over the next few years, seeking to take opportunity
in China as it recovers, over the medium term.
Japan closed a successful 2023 with 20% revenue growth, achieving £1 million
of sales in 2023, and a closing membership of almost 2,000 members, +5%
year-on-year.
Our other Asian markets operate on a franchise basis, with new partners taking
on Malaysia and Singapore during the year.
Americas
The North American market is led by the United States, supported by franchises
in Canada and Mexico - with the US business representing over 90% of the
region based on revenue delivery. From a shipment viewpoint, the market
achieved flat performance year-on-year, heavily impacted in the first half by
volume declines in the USA as a result of de-stocking as consumer behaviour
and on-trade consumption fell back to pre-Covid levels.
Q4 in the market from a depletions perspective was strong, achieving three
consecutive months of growth and a December out-turn that achieved the second
highest month of depletion sales on record. With full year depletions up 5%,
and membership growth of +17%, the encouraging end to 2023 gives us strong
momentum heading into FY24.
Other (Australia, New Zealand and South Africa)
The other markets within SMWS, representing 4% and 5% of the Group business
based on revenue and membership respectively, consist of our wholly-owned
subsidiary in Australia and franchise operations in New Zealand and South
Africa.
Performance was 20% down on prior year from a revenue perspective, driven by
economic conditions and high inflation in Australia where consumer spending
has been cautious. Membership growth achieved was 5% year on year, again
driven by the Australian market, providing a good base for 2024.
Cost base investment setting us up for greater Gross Profit delivery to the
bottom line
Further investment in systems was made in 2023, in line with our technology
roadmap. As we enter 2024, the major investments of 2023 and earlier years
have materially concluded, meaning future revenue growth will ensure gross
profit flow-through to PBIT level.
The main elements of our cost base (advertising & promotion (A&P),
payroll and wider business overhead costs), have seen increases year-on-year
as a result of our strategic investment plans. Importantly however, our H2
EBITDA(1) delivery was supported by a cost base 16% lower than H1, a result of
investment predominantly made in H1. This gives substance and focus for a
well-controlled cost base in 2024 and beyond.
Selling & Distribution Expenses Administrative Expenses
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Commission 1,524 1,461
Advertising & Promotion (A&P) 3,081 2,743
Depreciation 1,455 1,259
FX Loss 178 40
Overheads 4,191 3,849
Payroll 6,712 6,026
Total 6,238 5,503 10,903 9,875
Within A&P, we have spent £3.1 million (2022; £2.7 million), the
increase of £0.4 million driven by marketing for our new product offerings.
Investment in 2024 will remain around the same level as 2023 as we seek
continued improvement on the return on our investment and less cost-intensive
marketing of product innovations.
From a payroll perspective, the £0.7 million increased spend in 2023 at £6.7
million (2022; £6.0 million) is driven by two key elements - the
high-inflationary impact of pay increases in 2023, at an incremental cost of
£0.3 million in year, as we remain committed to being a Real Living Wage
employer and utilising CPI as the main independent determinant of pay review
increases, and the organisational restructure costs of £0.4 million following
changes to our Executive and Management team in the year.
Within wider business overhead costs, investment of £0.3 million in our
technology roadmap and initial set-up costs of £0.1 million for new ventures
in the year relating to the Taiwan subsidiary and Single Cask Nation (SCN)
have resulted in a spend in 2023 of £4.3 million (2022; £3.9 million).
At a depreciation level, the increased depreciation of £0.2 million relates
to our new Supply Chain Facility.
During the year we chose not to hedge against our USD exposure, choosing to
self-hedge alongside our planned Single Cask Nation investment, resulting in
£0.2 million FX loss in year. This will be further reviewed in 2024.
Share Incentive Schemes and EPS
We have followed up the award of share options in 2022 with further options
within the scheme. In 2023, 670,000 new share options were issued, consisting
of time vesting options for central office and venue staff. Senior Management
options are all performance related, based on revenue, EBITDA(1) and share
price.
Our Earnings per Share at the end of 2023 is (5.5p) as a result of the
loss-making position, with positive bottom-line return expected by 2026.
Balance sheet strength, supported by cash liquidity through asset backed
funding, allows for continued cask investment
Our balance sheet strength remains strong, with net assets of £18.3 million
supported by further gross investment in spirit and wood of around £4.7
million (2022: £3.0 million).
At a cash level, net cash from financing activities increased by £6.6
million, more than planned due to the greater loss after tax position; £3.7
million (2022; £1.7 million), interest costs of £1.5 million (2022; £0.5
million), as UK interest rates have climbed to their highest rate in over 15
years, and inventory holding - predominantly further net spirit investment
of £2.3 million (2022; 4.5 million), allowing us to fully meet forecast
demand for the next 5 years and 75% long into the next decade.
We have also made strong investment in key strategic areas in the business
over FY23, with £2.1 million (2022; £3.3 million) consisting of final
elements of Masterton Bond, fully operational midway through FY23, supported
by refurbishment of The Vaults in Edinburgh, our technology roadmap including
the launch of our new member app and continued investment in cask wood.
During the year, we entered into a new £15 million facility arrangement with
Ferovinum to allow draw down of more debt, which recognises the strength of
the cask spirit on our balance sheet and allows us to recognise relevant stock
at a truer market valuation to that of the more cautious valuation approach
used by banks in a classic asset based facility.
These investments facilitate a strong foundation for the future, delivering a
number of strategic priorities in 2023 that will deliver returns in 2024
onwards. The major system investment planned for 2024 is our ePos improvement
programme, estimated at around £0.3 million.
The above investments, together with a greater than expected loss before tax
and additional interest costs of around £1.0 million has resulted in a net
draw-down of debt of £7.9 million.
Improved optionality and flexibility for Group investment through our
complementary cask spirit, asset backed, Ferovinum financing facility
Complementing our £21.5 million existing revolving credit facility with The
Royal Bank of Scotland (RBS),
of which £1.5 million headroom remains at the end of FY23, the Group agreed a
new financing facility of
£15 million with Ferovinum, giving the Group further financial flexibility to
develop its business via recognition of the significant appreciating cask
spirit asset base.
The Ferovinum platform allows the Group to convert our maturing stock into a
financial asset at a truer market valuation compared to the net book value
held in the balance sheet, and the only other externally guided amount
provided by the Bank (RBS). As part of the initial agreement, Ferovinum
extended to ASC £2.6 million in cash, through a cask spirit parcel valuation
of £3.8 million at 70% loan to value ratio, for a maximum period of two years
with the same headline interest margin as ASC's existing RBS banking facility.
To highlight the significant value increment achieved via Ferovinum, the Net
Book Value of the casks within the initial £3.8 million transaction held on
the Balance Sheet was £0.8 million, the RBS valuation was £1.3 million and
Ferovinum's valuation, using market generated intelligence was £3.8 million,
representing a 380% and 191% incremental valuation on the net book value and
bank value respectively.
(1)EBITDA, a non-IFRS metric, is Earnings before interest, tax, depreciation
and amortisation (see note 7)
(2)Adjusted EBITDA, a non-IFRS metric, is calculated as EBITDA(1) excluding
exceptional and non-recurring costs (see note 7)
Consolidated Statement of Comprehensive Income for the year ended 31 December
2023
2023 2022
Notes £'000 £'000
Revenue 6 23,500 21,781
Cost of sales (8,499) (7,936)
Gross profit 15,001 13,845
Selling and distribution expenses (6,238) (5,503)
Administrative expenses (10,901) (9,875)
Finance costs 6 (1,516) (576)
Other income 9 79 37
Loss on ordinary activities before taxation 7 (3,575) (2,072)
Taxation 11 (158) 359
Loss for the year (3,733) (1,713)
Other comprehensive income:
Items that may be reclassified to profit or loss:
Movements in cash flow hedge reserve (8) 31
Movements in translation reserve (64) - (59) -
Tax relating to other comprehensive loss
(72) (28)
Total comprehensive loss for the year (3,805) (1,741)
Loss for the year attributable to:
- Owners of parent company (3,848) (2,010)
- Non-controlling interest 115 297
(3,733) (1,713)
Total comprehensive loss for the year attributable to:
- Owners of parent company (3,920) (2,038)
- Non-controlling interest 115 297
(3,805) (1,741)
Basic EPS (pence) 12 (5.5p) (2.9p)
Diluted EPS (pence) 12 (5.5p) (2.9p)
Consolidated Statement of Financial Position as at 31 December 2023
2023 2022
Notes £'000 £'000
Non-current assets
Investment property 420 405
Property, plant and equipment 13 10,426 10,362
Intangible assets 2,389 2,249
13,235 13,016
Current assets
Inventories 14 30,564 28,303
Trade and other receivables 4,787 3,714
Cash and cash equivalents 1,235 2,331
36,586 34,348
Total assets 49,821 47,364
Current liabilities
Trade and other payables 3,216 3,703
Current tax liabilities 702 405
Financial liabilities 15 272 357
Lease liability 384 360
4,574 4,825
Net current assets 32,012 29,523
Non-current liabilities
Financial liabilities 15 23,809 16,984
Lease liability 2,575 2,959
Deferred tax liabilities - -
Provisions 589 580
Total non-current liabilities 26,973 20,523
Total liabilities 31,547 25,348
Net assets 18,274 22,016
Equity
Called up share capital 176 174
Share premium account 15,255 14,997
Translation reserve (140) (76)
Retained earnings 2,789 6,685
Cash flow hedge reserve - 8
Equity attributable to owners of the parent 18,080 21,788
Non-controlling interest 195 228
Net assets 18,275 22,016
Consolidated Statement of Changes In Equity For the year ended 31 December
2023
Share premium account Cash flow hedge reserve Total controlling interest Non- controlling interest
£'000 Called up share capital Retained earnings Translation reserve Other reserves Total equity
Balance at 31 December 2021 174 14,938 8,505 (23) (17) - 23,577 304 23,881
Issue of share capital - 59 - - - - 59 - 59
(Loss)/profit for the period - - (2,010) - - - (2,010) 297 (1,713)
Share-based compensation - - 190 - - - 190 - 190
Dividend paid - - - - - - - (373) (373)
Other comprehensive gain/(loss) - - - 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)/profit for the period - - (3,848) - - - (3,848) 115 (3,733)
Share-based compensation - - (48) - - - (48) - (48)
Transactions with non-controlling
interest - - - - - - - 65 65
Dividend payable - - - - - - - (213) (213)
Other comprehensive gain/(loss) - - - (8) (64) - (72) - (72)
Balance at 31 December 2023 176 15,255 2,789 - (140) - 18,080 195 18,275
Consolidated Statement of Cash Flows For the year ended 31 December 2023
2023 2022
Notes £'000 £'000
Loss for the year after tax (3,733) (1,713)
Adjustments for: Taxation charged 158 (359)
Finance costs 1,415 494
Interest receivable (4) (4)
Movements in provisions 9 10
Share-based payments (48) 190
Investment property fair value movement (15) (14)
Lease interest 101 82
Depreciation of tangible assets 13 1,568 1,000
Amortisation of intangible assets 282 259
Movements in working capital: (2,261) (4,496)
Increase in inventory
Increase in trade and other receivables (1,073) (746)
(Decrease)/increase in trade and other creditors (700) 240
Cash absorbed by operations (4,301) (5,057)
Income taxes received/(paid) 139 (75)
Interest paid (1,379) (494)
Net cash outflow used in operating activities (5,541) (5,626)
Cash flow from investing activities
Purchase of intangible assets (422) (88)
Purchase of property, plant and equipment 13 (1,657) (2,911)
Sale of property, plant and equipment 13 23
-
Acquisition of subsidiary - (359)
Interest receivable 4 4 4
Net cash used in investing activities (2,052) (3,354)
Cash flows from financing activities
Share issue 260 59
Transactions with non-controlling interest 65 -
Asset backed lending received 2,592 -
Inventory secured RCF facility 5,000 10,300
Dividends paid - (373)
Loan received 1,450 -
Repayment of loan (2,336) (148)
Repayment of leases (461) (354)
Net cash from financing activities 6,570 9,484
Net (decrease)/increase in cash and cash equivalents (1,023) 504
Cash and cash equivalents at beginning of year 2,331 2,012
Foreign currency translation (73) -
Non-controlling interest movement - (185)
Cash and cash equivalents at end of year 1,235 2,331
Relating to:
Bank balances and short term deposits 1,235 2,331
Notes to the Financial Statements
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 twelve months ended 31 December 2023 and the
comparative figures for the twelve months ended 31 December 2022.
The Group's consolidated financial statements have been prepared on a going
concern basis under the historical cost convention; in accordance
with UK adopted International Accounting Standards.
This statement does not include all the information required for the annual
financial statements and should be read in conjunction with the Annual Report
& Accounts.
The financial information set out above does not constitute the company's
statutory accounts for 2023 or 2022. The statutory accounts for 2022 have been
delivered to the Register of Companies, and those for 2023 will be delivered
in due course. The independent auditor has reported on these accounts, their
reports were (i) unqualified, (ii) did not draw attention to any matter by way
of emphasis without qualifying their report and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act 2006.
This announcement was approved on behalf of the Board on 27 March 2024.
2) Accounting Policies:
The accounting policies applied in preparing the condensed consolidated
financial information are the same as those applied in the preparation of the
Annual Report and Accounts for the year ended 31 December 2023, and those
applied in the preparation of the Group's Historical Financial Information
included within the Company's Admission Document.
3) Going concern:
The Directors are, at the time of approving the financial statements,
satisfied that the Group and Company have adequate resources to continue in
operational existence for a period of at least 12 months. Thus, they continue
to adopt the going concern basis of accounting in preparing the financial
statements.
The Group meets its day-to-day working capital requirements from a revolving
credit facility of £21.5m together with cash balances. The Group has further
access to a £15.0m inventory financing facility which can be drawn upon if
required. The revolving credit facility was renewed in December 2022 and is
not due for renewal until December 2025 whilst the inventory financing
facility has an evergreen term.
The revolving credit facility has quarterly leverage and covenants relating to
minimum stock holding level as a percent of the facility drawn down, the
'springing test', which requires 135% of eligible inventory holding against
the RCF balance, reviewed monthly. Secondary covenants of EBITDA(1) (Earnings
before Interest, Tax, Depreciation and Amortisation) and Net Assets (excluding
Intangibles) exist if the springing test is not met.
The Group remained compliant with its banking covenants throughout the year to
31 December 2023.
In the context of the above, the directors have prepared cash flow forecasts
for the period to 31 April 2025 which indicate that, taking account of
reasonably plausible downside scenarios, the Group will have sufficient funds
to meet its liabilities as they fall due for that period.
The Directors have assessed the potential future impacts of geopolitical risk
and have modelled scenarios as follows:
1. A base cash flow forecast. The 2024 figures in this forecast are based
on the Group's 2024 budget, which is compiled using board approved forecasts
and reflecting current performance, expected revenue growth and membership
retention. The 2025 figures in the base cash flow forecast are taken from the
Group's 3-5 year long range planning. This base case assumes a more prudent
growth trajectory than in previous years, with organic market growth rate at
single digit, supported by full year delivery of strategic initiatives
secured. Cost inflation has been considered and additional costs have been
included to account for increased wage inflation.
2. A severe, but plausible downside scenario. The directors have also
prepared a sensitised forecast which considers the impact of certain severe
but plausible downside events, when compared to the base case. This severe but
plausible downside scenario assumes an escalation of geopolitical tensions in
Asia with a resultant shut down of Asian operations impacting revenue in
excess of £5m per annum, together with an associated reduction in global
sales to a level similar to that experienced during the recent Covid-19
pandemic. Under this scenario, one-off costs to implement the required
cost-base reductions are assumed in the impacted markets.
In this scenario, capital expenditure has been reduced whereas investment in
spirit and wood continues on a replenishment basis. Throughout the severe but
plausible downside scenario the Group would remain within its facility limits
and in compliance with the relevant covenants, with further cash mitigation
opportunities available through capital expenditure, spirit and wood
investment.
The Directors are mindful of the potential impacts to macro-economic
conditions and further risk of disruption to supply chains that the conflict
in Ukraine presents, but after assessing the risks do not believe there to be
a material risk to going concern. Based on the above, the directors are
confident that the Group and Company will have sufficient funds to continue to
meet their liabilities as they fall due for at least 12 months from the date
of approval of the financial statements, and therefore the directors believe
it remains appropriate to
prepare the financial statements on a going concern basis.
(1)EBITDA, a non-IFRS metric, is Earnings before interest, tax, depreciation
and amortization (see note 7)
(2)Adjusted EBITDA, a non-IFRS metric, is calculated as EBITDA(1) excluding
exceptional and non-recurring costs (see note 7)
4) Principal risks and uncertainties
The principal risks and uncertainties affecting the Group are separately
disclosed in the Annual Report & Accounts.
5) Dividends
No dividend was declared or paid during the period (prior period £nil).
6) Operating Segments
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker; Revenue and Gross
Profit by geography and by type.
Europe Asia Americas Others Group
2023 £'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)
Europe Asia Americas Others Group
2022 £'000 £'000 £'000 £'000 £'000
Revenue 9,804 6,099 4,670 1,208 21,781
Cost of Sales (5,076) (1,664) (997) (617) (8,354)
Gross Profit 4,728 4,435 3,673 591 13,427
Selling & distribution costs (5,503)
Administrative costs (9,875)
Finance Costs (576)
Other income 37
Loss before tax (2,072)
Taxation 359
Net Loss (1,713)
Within Europe, the UK represents the largest market, split UK Online and UK
Venues, delivering £3.5 million (2022: £3.3 million) and £4.0 million
(2022: £3.7 million), respectively.
In the America's region, the largest market being the US, shipment sales of
£4.4 million was flat on prior year (2022: £4.4 million), with in-market
depletions +5%, and Q4 alone +29%, year on year.
China represents the largest market in Asia, revenue in the year of £3.5
million (2022: £5.0 million) representing a 30% decline on the prior year,
impacted by the economic headwinds within the market.
Other is predominantly represented by Australia, with revenue of £0.8 million
(2022: £1.0 million).
The Board does not receive a segmental breakdown of assets and liabilities,
depreciation or capital expenditure.
An analysis of the Group's revenue by product category is as follows.
2023 2022
£'000 £'000
Revenue from sale of whisky 18,161 16,972
Membership income 1,724 1,479
Revenue from sale of other spirits 143 149
Member rooms 2,244 2,025
Events and tastings 886 827
Other 342 329
Total revenue 23,500 21,781
Revenue from the sale of whisky in 2022 has been adjusted to include £344k of
trade sales of cask whisky, previously presented within other.
7) Loss on ordinary activities before taxation
2023 2022
£'000 £'000
Operating loss is stated after charging:
Amortisation of intangible assets 282 259
Depreciation on tangible assets 1,173 1,000
Cost of inventories recognised as an expense 5,759 6,111
Net foreign exchange loss 79 11
Reconciliation of adjusted EBITDA:
Loss on ordinary activities before taxation (3,575) (2,072)
Add back; Depreciation of tangible assets 1,173 1,000
Add back; Depreciation of production assets within cost of sales 106 -
Add back; Amortisation of intangible assets 282 259
Add back; Finance Costs - interest on loans 1,415 494
Add back; Finance Costs - leases 101 82
EBITDA (498) (237)
Exceptional items and non-recurring costs 647 631
Adjusted EBITDA 149 394
Adjusted EBITDA and loss for the year are stated after including £nil (2022:
£0.2m) of share based payment costs.
8) KPIs
Certain KPIs relating to membership are monitored by the Board and by
Management, as follows:
Revenue Year End Members Average Members Annual Revenue/ Member £ Annual Contribution/ Member £ Retention Expected LTV
2023 £'000 % Years (Members)
£
Europe 10,231 25,921 24,987 409 187 78 4.6 866
Asia 5,223 4,865 4,249 1,229 878 63 2.7 2,355
Americas 4,722 8,281 7,511 628 366 67 3.0 1,107
Other 977 1,977 1,958 499 291 70 3.3 970
Total 21,153 41,044 38,706 547 303 74 3.9 1,173
Change vs prior year - +10% +9% -9% -7% -3% -9% -15%
Annual Revenue/ Annual Contribution/ LTV
Revenue Year End Average Retention Expected (Members)
2022 £'000 Members Members Member £ Member £ % Years £
Europe 9,408 24,494 23,304 404 173 80 5.1 885
Asia 6,056 3,770 3,668 1,651 1,180 64 2.7 3,234
Americas 4,618 7,148 6,632 696 392 68 3.1 1,235
Other 1,129 2,004 1,818 620 318 80 4.9 1,556
Total 21,209 37,416 35,422 599 326 77 4.3 1,387
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 Gross Profit per member, multiplied by expected years.
4. Total revenue excludes trade cask sales within Europe and JG
Thomson trade sales totaling £2,347k (2022: £572k) which are unrelated to
membership proposition.
9) Other operating income
2023 2022
£'000 £'000
Other income 79 37
79 37
Other income in 2023 relates to a refund of previously overpaid expenses in
SMWS China, other income in 2022 is predominantly the ageing of gift vouchers
past expiry as well as interest received on VAT refunds from HMRC.
10) Exceptional and non-recurring costs
2023 2022
£'000 £'000
Organisational restructuring costs 418 1
Acquisition and transaction-related costs 138 288
Masterton pre-operational costs 91 342
647 631
In 2023 non-recurring 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.
The 2022 non-recurring costs relate to pre-operational expenses in setting up
the Masterton Bond site to be operational by the end of 2022, and the initial
costs of the American Whiskey concept and brand assessment and development as
well as establishment of relevant legal entities. These costs are fully
expensed in the year with no revenue achievement and are therefore separately
shown to make clear the underlying profitable performance of the business.
11) Taxation
2023 2022 £'000
£'000
Current income tax
UK corporation tax
Adjustment in respect to prior periods (45) (250)
Foreign tax 203 454
Current tax charge 158 204
Deferred tax - (386)
Relating to origination and reversal of temporary timing differences
Adjustment in respect to prior periods - (52)
Effect of changes of tax rates - (125)
Deferred tax credit - 563
Tax on ordinary activities 158 (359)
12) Earnings per Shares (EPS)
2023 2022
£'000 £'000
Earnings used in calculation (3,848) (2,010)
Number of shares 70,214,725 69,708,374
Basic EPS (p) (5.5p) (2.9p)
Number of dilutable shares 74,989,595 74,746,138
Diluted EPS (p) (5.5p) (2.9p)
All dilutable potential shares relate to share options. A loss per share is
not diluted. The number of shares and number of dilutable shares shown
represent the weighted average for the period.
13) Property, plant and equipment
Land and buildings Land and buildings Fixtures, fittings and
Leasehold Right-of use
freehold leasehold improvements equipment Cask wood asset Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Cost or valuation
As at 1 January 2022 678 1441 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 - - - 817 840 - 1,657
Disposals - - - (25) - - (25)
As at 31 December 2023 678 1,441 503 4,962 4,289 4,505 16,378
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 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
Net book value
As at 31 December 2022 497 344 197 2,998 2,956 3,370 10,362
As at 31 December 2023 482 274 150 2,943 3,627 2,950 10,426
£151k (2022: £88k) of the depreciation charge for cask wood, £65k of the
depreciation charge for fixtures, fittings and equipment.
£74k of the depreciation charge for right-of-use assets have been capitalised
as costs of stock. The remaining balance has been expensed to the Statement of
Comprehensive Income.
Leases are in relation to the Group's supply chain facility at Masterton Bond
in addition to venues at Queen Street in Edinburgh and Bath Street in Glasgow.
Right of use assets included in the Consolidated Statement of Financial
Position were as follows.
Supply Chain
Venues Facility Total
At 1 January 2022(i) 1,520 2,162 3,682
Additions - 162 162
Depreciation (188) (286) (474)
At 31 December 2022(i) 1,332 2,038 3,370
Depreciation (187) (233) (420)
At 31 December 2023 1,145 1,805 2,950
(i) Right of Use Assets at 1 January 2022 and at 31 December 2022 has been
adjusted to reclassify £187k of assets from Supply Chain Facility to Venues,
with no change to the reported total balance.
Lease Liabilities included in the Consolidated Statement of Financial Position
were as follows.
Supply Chain
Venues Facility Total
At 1 January 2022 1,428 2,163 3,591
Additions 51 31 82
Depreciation (200) (154) (354)
At 31 December 2022 1,279 2,040 3,319
Interest payment 51 50 101
Repayment of lease liability (199) (262) (461)
At 31 December 2023 1,131 1,828 2,959
14) Inventories
Group
2023 2022
£'000 £'000
Cask Goods 25,343 23,034
Bottled stock 3,092 3,298
Other inventory 2,129 1,971
30,564 28,303
The cost of inventories recognised as an expense during the year was £5,759k
(2022: £6,111k). The cost of inventories recognised as an expense includes
£151k (2022: £4k) in respect of write-downs of bottled stock and other
inventory.
Inventories with a carrying amount of £795k (2022: £nil) have been pledged
as security for certain of the Group's financing facilities.
15) Financial liabilities
Group
2023 2022
£'000 £'000
Inventory Secured RCF 20,000 16,500
Inventory financing 2,628 -
Bank loans 1,418 784
Other loans 35 57
Total financial liabilities 24,081 17,341
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