Announcement PDF RNS Number : 7911C Artisanal Spirits Company PLC (The) 31 March 2025 The Artisanal Spirits Company plc ("The Artisanal Spirits Company", "ASC" or "the Group") Preliminary Results for the year ended 31stDecember 2024 Delivering profitable growth, cash generation and strong asset backing 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 ("SCN") & J.G. Thomson is pleased to announce its preliminary results for the year ended 31 December 2024 ("FY24"). The Group delivered EBITDA of £1.1m, a record performance which was slightly ahead of market expectations. In challenging economic conditions, the Group has shown strong resilience to deliver profitable growth and cash generation, which, alongside its strong asset base of cask spirit, gives us continued confidence to meet our future strategic and financial goals. Highlights · · · · Profitable growth; Full year FY24 EBITDA of £1.1m, slightly above consensus expectation of £1.0m Cash generation; £1.5m net debt reduction in H2-24 Asset backed; Over 18,000 casks in stock, independently valued in July 2024 at £102m Membership growth; SMWS membership up 4% against prior year Financial Highlights · · · · · Marginal revenue growth of +0.4% to £23.6m (2023: £23.5m), with continued revenue diversification £1.5m of sustainable, long-term savings across Commission, A&P, Payroll and Overheads EBITDA of £1.1m, up £1.6m vs prior year (2023: (£0.5m))£1.0m improvement vs prior year adjusted EBITDA* Loss before tax reduced to £3.1m (2023: (£3.6m)), profit growth offset partially by increased interest costs H2-24 reduction in net debt** of £1.5m, resulting in a year end net debt of £25.5m, (Jun-24: £27.0m, Dec 23: £22.6m) · Cask stock holding with NBV of £27.8m (2023: £25.9m), which when independently appraised during July 2024 was valued at £102m £'m Revenue Gross profit Gross margin EBITDA Loss before tax Loss after tax Net Debt** Cask inventory Cask inventory valuation*** Note 6 7 7 15 12 months 6 months to to 31 30 June December 2024 2024 23.6 10.1 15.0 6.4 64% 63% 1.1 (1.0) (3.1) (3.1) (3.3) (3.2) (25.5) (27.0) 27.8 26.5 102.0 12 months to 31 December 2023 23.5 15.0 64% (0.5) (3.6) (3.7) (22.6) 25.9 n/a * Adjusted EBITDA defined as earnings before interest tax, depreciation, amortisation and non-underlying costs ** Net debt defined as current and non-current financial liabilities less cash and cash equivalents per the Statement of Financial Position, less interest accrued on inventory financing. ***Cask inventory valuation based on an independent valuation completed by sector experts. Operational Highlights · Membership growth of 4% to 42,700 (2023; 41,000) with Europe supported by notable UK growth of 10% and the Asian region led by China (+24%) and recently added Korea franchise (+59%) Global Membership Europe Americas Asia Other Total · December 2024 27,400 8,000 5,500 1,800 42,700 December 2023 25,900 8,300 4,900 1,900 41,000 % Change 6% (4%) 12% (5%) 4% New product development success, with inaugural Creators Collection "Peat Plant Collection", released in Q424 having generated over £250k of sales. Current Trading/Post Period Highlights · · · · · The start to the year has been strong, with achievement of double-digit revenue growth in Q1-25 vs Q1-24 Revenue growth led by bottle sales in Europe, supported by further success of the new Creators Collection range, as well as early success on delivering against full year cask sales targets In January 2025, we completed the investment in the SMWS America ("SMWSA") business, resulting in ability to take a greater proportion of the value chain from full control of membership and marketing services. Year on year profitability improvement in Q1-25 has more than offset this previously announced one-off £0.5m investment in SMWS America (SMWSA) Further awards across the Group including celebration of SCN retaining their Independent Bottler of the Year Award at the prestigious 'Icons of Whisky Awards' Completion of the sale of the second (and final) Vaults residential property, generating £0.3m cash inflow in Q1-25 Andrew Dane, CEO of Artisanal Spirits Company, commented: "Our ambition remains to create a high quality, highly profitable and cash generative, premium global business and we made good progress on achieving this during FY24, despite a backdrop of uncertain economic conditions in some markets. We have delivered profitable growth, helped by our successful acquisition of US based Single Cask Nation in January 2024 and the additional investment in our SMWS USA operations completed in January 2025 also further augments the exciting opportunity for ASC to deliver profitable growth in this key market. We continue to have an outstanding asset backing, with the current cask inventory value of just over £100m representing around 4x both NBV and Net Debt. We have now made the important transition of only acquiring stock on a replenishment basis, and this continues to increase the positive future cash profile of the business which is encouraging. Overall, we exit FY24 with a good set of results behind us, with a positive start to Q1-25 meaning that we are on track to deliver further profitable growth and cash generation in FY25 and beyond." 31 March 2025 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 at 09.00 hours GMT. Analysts wishing to join should register their interest by contacting:artisanalspirts@instinctif.com. A recording of the presentation will also be made available via the Group's website later today. Investor Meet Company presentation Andrew Dane, Chief Executive Officer, and Billy McCarter, Chief Financial Officer, will host a virtual presentation on Thursday 3 April at 09.00 hours GMT. For further enquiries: The Artisanal Spirits Company plc https://artisanal-spirits.com/link/6rklZP Andrew Dane, Chief Executive Officer Billy McCarter, Chief Financial Officer Panmure Liberum Limited (Nominated Adviser and Broker) Tel: +44 (0) 20 3100 2222 Dru Danford Edward Thomas John More Instinctif Partners (Financial PR) Tel: +44 (0)20 7457 2020 Justine Warren Hannah Scott About The Artisanal Spirits Company ASC's purpose is to captivate a global community of whisky adventurers, by 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 awardwinning 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 £23.6 million in FY24, 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 substantial asset backing and is delivering profitable growth and cash generation. Chairs Statement I am pleased to present this year's Chair's report, following a year where the global whisky market faced headwinds, but the Group was able to deliver membership growth, revenue stability and EBITDA growth. The Board continue to focus on four broad areas - governance, strategy, performance and culture - ensuring that the business is well led and well run. Despite ongoing business progress, frustratingly the market valuation of ASC materially lags both its performance trajectory and its asset value. This remains a key focus for the Board and Executive team as we seek to drive total shareholder returns. Through a review of our capital allocation strategy alongside active conversations with a number of our shareholders, profit growth and cash generation remains the absolute focus. We will strengthen our balance sheet ensuring capital is deployed against building business momentum including cask purchases, deleveraging, retaining optionality for strategic M&A (with Single Cask Nation a good example of this) and then longer term consideration of a dividend policy or share buy backs. Strategic priorities focus delivers first positive EBITDA delivery since IPO This year marks a significant milestone for our Company as we delivered our first positive EBITDA since our IPO. This achievement is a testament to our focus on our strategic priorities and operational efficiencies. Our guidance indicates an improving revenue and EBITDA trajectory and strengthening balance sheet, reflecting our commitment to sustainable growth and profitability. Growing SMWS Membership and Aspirations for Further Growth SMWS membership continues to grow, reflecting the value and appeal of our offerings. We have ambitious aspirations to further increase our membership numbers, which we believe is the gateway to future growth. Our strategies are designed to attract, retain and engage members, driving long-term value. We are also proud to report that member retention rates for SMWS have held up strongly. This stability is a key indicator of member satisfaction and loyalty, which are critical to our ongoing success. We remain committed to enhancing the member experience and delivering exceptional value both through the on-line and in person offering. SMWS venues continue to perform solidly, contributing to our overall success. We have focused on optimizing our venue operations to ensure they deliver exceptional experiences for our members and guests and will continue to enhance our flagship "storefronts" for the Group's products. Positive developments in the USA We have taken major steps to unlock the potential of the US market as we take more active control over operations allowing us to expand more rapidly and more efficiently in the USA. This complements the 2024 acquisition of the Single Cask Nation business, which has overdelivered on expectations, and continues to win awards and delight the "members of the nation" with outstanding whiskies. As we head into 2025, while there is no specific new tariff currently being proposed on our products, the threat of tariffs remains a possibility and the group is taking steps to minimise any potential impact through management of our US stockholding, the optimal route to market, and our ability to utilise a greater percentage of US whiskey, should this be required at any stage. China and Asia: a more manageable risk While China and the Far East remain important markets for the Group, our exposure to the Chinese market has reduced, limiting the risk to the Group of further downside while being positioned to capitalise on any recovery. Our international expansion efforts continue with Vietnam being our next target market. We are confident that our proven strategies and strong brand will resonate with consumers in Vietnam, opening new avenues for growth and success. This will build on previous expansions into Taiwan, South Korea and across South-East Asia, where demand for ultra-premium whisky remains strong. Evolving the SMWS Portfolio We are excited about the evolution of the SMWS range to provide our members with exclusive opportunities to explore and enjoy a wider range of products, further enhancing their experience and delivering outstanding whisky at multiple price points. Innovation remains at the heart of our product portfolio strategy. We are accelerating our efforts to introduce new and exciting products that meet the evolving needs and preferences of our members. The introduction of the Creators Collection is a fine example of this, with the first release generating over £250,000 of sales in the first few weeks after launch. Additionally SMWS will continue to develop private cask sales as a strategic priority giving existing and new members the opportunity to acquire full casks of our outstandingly curated whiskey. Improving Balance Sheet Our balance sheet is improving as we see a reduction in net debt in the second half, cash generative in FY24-H2, reflecting our disciplined financial management and capital allocation strategy. This improvement provides us with the financial flexibility to pursue growth opportunities and navigate potential challenges. The balance sheet is underpinned by the exceptional stocks of whisky and spirits held by the Group, with over 18,000 casks in ownership with a current replacement valuation of over £100 million. Our asset value remains robust and is well ahead of our market capitalisation. This strength underscores the inherent value of our business and provides a solid foundation for future growth and value creation. People and Culture People are central to everything we do and the results of our 2024 culture survey demonstrated that we have an engaged team who are passionate about delivering world class experiences for our members around the world. We continue to invest in people development ensuring that we have a work environment that represents the premium experiences that we seek to deliver. In conclusion, we have made significant progress this year, achieving key milestones and positioning ourselves for continued success. I am confident that our strategic initiatives and dedicated team will drive our company forward, delivering value for our members and shareholders. Thank you for your continued support. CEO Statement Creators of outstanding, limited-edition whisky and experiences At the Artisanal Spirits Company, we aim to captivate a global community of whisky adventurers, and we do that by creating and selling an unrivalled selection of outstanding, limited-edition whisky and experiences. Our ambition is to create a high quality, highly profitable and cash generative, premium global business and I am delighted to report that we have delivered our strongest EBITDA performance to date and have transitioned into a cash generative business from the latter part of FY24, as we make progress against that ambition. This progress would not have been possible without the amazing team at ASC, and I would like to thank them for the quality and commitment of their efforts throughout the year. Significant progress made since IPO Whilst the journey to date has not been without its challenges, I thought it would be helpful to reflect on the substantial progress that has been made since our IPO in H1-21. Both revenue and SMWS membership have each grown by 57% since 2020 (with membership at 31 December 2024 now over 42,000), supported by significant revenue diversification, product quality and innovation, international expansion, new brands and investment in marketing. The Scotch Malt Whisky Society remains at the heart of the business; however we were delighted to welcome Single Cask Nation into the Group in January 2024, with a very positive inaugural year since acquisition. The overall mix of the business has continued to evolve, with China gradually increasing to almost a quarter of the business in 2022, before reducing to only 10% in FY24, reflecting the economic headwinds in the market. In response to this, we have been able to show strong agility, and revenue diversification, and excluding China, the rest of the business delivered a 15% CAGR between 2020 and 2024. I am pleased with our ability to move with pace on these long term strategic opportunities for the group, with launches in new markets like Korea and significant growth in Taiwan, the successful acquisition of Single Cask Nation, as well as product development such as our 50th Anniversary Cask Programme and more generally our development of our cask sales offering helping to reduce dependency on individual markets, products or brands. From a strategic investment perspective, we have successfully deployed the £15m of new equity raised on IPO. This, together with debt, has been primarily used to fund the £14m investment in spirit between 2021 and 2024, and a further £3m on cask wood during the same period. Following this 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 we believe that net debt has peaked, as we transition from material net cash investments in stock to a replenishment approach. The new equity at IPO also helped us to complete our £2.5m investment in our Masterton Bond supply chain facility where we have now produced over 335,000 bottles and have over 2,300 casks in storage, helping to reduce our third party costs and dependency. We have also been able to invest in our international markets, in particular south-east Asia, and more recently in the USA, as well as to improve our IT and e-commerce systems across the business and undertake the substantial refurbishment of the SMWS brand home at the Vaults in Leith in 2023. This investment in the Vaults helped to deliver the joint fastest growth of any venue in FY24 (+£0.1m = 8%). Overall, the member rooms remain a critical part of our member proposition, with around 100,000 visitors to our venues across 2024, helping to recruit around 1,000 new members and support almost £4m of revenue in the year. We have continued to invest in these member rooms during the year, with the successful roll out of a new electronic point of sale ("EPOS") till system across the venues in Q4-24 which is already driving benefits to members and our business. As we look ahead, the level of capital investment has reduced, meaning that since June 2024, we have now transitioned into a cash generative phase for the business. Profitable Growth For 2024, we delivered a £1.6m year on year improvement in reported EBITDA (FY23: £0.5m loss) and a £1m improvement in Adjusted EBITDA (FY23: £0.1m), in the context of revenue being broadly flat at £23.6m (FY23: £23.5m). This creditable performance has been achieved despite ongoing challenging trading conditions in certain markets and further demonstrates the strength and flexibility of the ASC business model. Growing profitability has been delivered through successful expansion into new markets and new brands with the acquisition of Single Cask Nation in the USA, quality product innovation, the evolution of our cask programme, all with a continued focus on efficient cost management, each of which is set out in more detail below. New markets We have continued to deliver growth in new markets, most notably the first full year of trading for the Taiwan subsidiary and franchise in South Korea. We are also pleased to be about to launch a new franchise in Vietnam, aligning with our strategy to expand internationally and further diversify the Group, by commencing operations in one of the world's top 20 markets for Ultra-Premium Scotch Whisky. Early in 2025, we have also taken greater operational control of the SMWS America business as part of our stated ambition to further grow its presence in the USA and take a greater advantage share of the sizeable American market, confident that the £0.5m investment will enable us to deliver more substantial membership and profit growth. Single Cask Nation Named Independent Bottler of the Year at the Whisky Magazine's Icons of Whisky America awards for both 2024 and 2025, Single Cask Nation is regarded as the USA's premier bottler of rare and exceptional single cask whiskies. "Bottled by whisky geeks for whisky geeks the world over", the Single Cask Nation represents a passionate community of whisky lovers that spans the globe. I am delighted with the performance of the business since acquisition, with the business and the team integrating well into the wider Group, and year one profitability exceeding our targets. Product innovation The SMWS has always been a haven of innovation with a prowess for creating and selling outstanding, limitededition whiskies and experiences around the world. The Society recently launched its new "Creators Collection" with its inaugural release of the series, The Peat Plants Collection, at the end of November 2024. This was followed by the recently launched Homecoming Collection. Complementing SMWS' existing Signature and Heresy ranges, the Creators Collection is a new series from the Society that showcases the liquid art of whisky making and the visual art of illustration, curating some of its oldest and rarest whiskies and collaborating to design beautiful labels to create the ultimate in whisky flights. The first two releases of the Creators Collection have been met with encouraging demand by members of the Society, eager for each release, with strong trading results. The initial "Peat Plants Collection" generated over £250k of sales, with the second "Homecoming Collection" proving equally popular. Through the Signature range, the SMWS is constantly innovating, showcasing exceptional single cask, single malt whiskies, bottled at cask strength to preserve their unique character and flavour. Following a number of new Japanese whisky distillery releases, we recently released our first casks from two exciting new Scotch whisky distilleries (numbers 161 & 163) to great acclaim, with more to come. This sits alongside the ever-popular Heresy range of small-batch whisky from the SMWS, which allows the Society to explore new flavours by combining whiskies from different casks and distilleries, an innovative approach providing members with a unique tasting experience that challenges conventional whisky norms. Similarly, our acquisition of Single Cask Nation in FY24, has not only delivered better than expected initial trading results, but also allows us to incubate and trial new product propositions in a low cost/low risk way with the scope to expand in due course, whilst accelerating our US operations. Likewise, our ability to innovate also extends to our recently launched full bottling service for third party customers at our Masterton Bond Supply Chain Facility. Our experience in sourcing and supply of dry goods, spirit preparation, bottling, packing and customer service, particularly with regards to smaller volume runs, makes us well placed to take care of bottling and distribution requirements across the industry. Cask programme In addition to trade cask sales to trusted industry partners, we have also evolved our cask programme for SMWS members. Complementing the range, we also offer our members access to exclusive casks, recognising the different requirements each market has and the ability for us to offer unique offerings to the members in those markets. Our 50th Anniversary Cask Club also gives our members the opportunity to purchase an entire SMWS cask, handpicked from Society favourite distilleries and flavour profiles. These casks will be bottled in 2033, the SMWS 50th anniversary, and decorated with a unique 50th Anniversary Club label design, personalised with the member's name, message and signature. Cost Management We have continued to focus on ensuring that we have the appropriate cost base to support the business' growth trajectory. During FY24, this meant we have been able to deliver substantial, recurring cost savings, with reductions in overheads, payroll, advertising and promotion and selling costs. As we look ahead, with the progress made to date to deliver an optimised cost base, we are now in the position to translate future revenue growth more directly into bottom line improvements in profitability as we deliver continued profitable growth. Cash Generative Net Debt peaked at £27m in June 2024 (underpinned by whisky assets valued at c.£100m). The Group has now started to reduce net debt as it transitions into a phase of generating positive operating cash flows, with a £1.5m reduction in net debt during H2-24. Looking ahead, the cash profile is expected to continue to improve. ASC has transitioned from material net cash investments in stock to a replenishment approach, with spirit and wood spend expected to further significantly reduce in FY25 vs FY24, which alongside positive operating cash flows from improved profitability, results in a net debt reduction trajectory for the Group. Strong Asset-Backing Our proven strategy of investing in whisky stock has built an impressive inventory to satisfy our requirements and deliver outstanding liquid to our members well into the next decade, as well as delivering a significant uplift in value creation. We are driven by the quality of the liquid, and it's not just our members who love our whiskies, with the Group picking up a staggering 54 awards commending our spirit this year, taking the Group's total to 347 international awards since 2018. This reflects the significant investment from our team in creating a unique and outstanding cask holding. During H2-24, an independent cask spirit valuation was undertaken which assessed the value of our cask inventory at just over £100m, representing around 4x both our current Net Book Value (NBV) of cask spirit and our Net Debt. This valuation has also been demonstrated by the c£4m of trade and private cask sales in the year which delivered an average of 4.9x NBV. Current Trading The opportunity for growth in the USA remains a key focus for the Group. Correspondingly, in January 2025 we made a £0.5m investment in The Scotch Malt Whisky Society in America ("SMWSA") which provided a transition to full operational control with effect from 1 January 2025. This one-off cost resulted in a (non-recurring) reduction to reported EBITDA in FY25. We are excited by this change, whereby the in-country marketing and operations team have become ASC employees since the start of 2025, providing ASC with direct operational control as well as an optimised cost structure in the market. We are confident that this change will provide the Group with an enhanced platform from which to deliver more substantial membership and profit growth in the world's largest Ultra-Premium Whisky market. We are pleased to have started FY25 strongly, delivering double digit growth in Q1-25 vs Q1-24. This has helped to support a year-on-year profitability improvement in Q1-25 which has more than offset this £0.5m investment in the US. As we continue to improve the quality of our shareholder engagement, we are pleased to have launched a new ASC website www.artisanal-spirits.com and look forward to the imminent relaunch of our Spirited Shareholder benefit programme. Overall, we therefore exit FY24 with a good set of results behind us, with a positive start to Q1-25 meaning that we are on track for a strong set of results and to deliver further profitable growth and cash generation in FY25 and beyond. CFO Statement Full year EBITDA delivery and H2-24 cash generation sets us up strongly for sustainable profit and cash generation I am pleased to share the financial results of ASC Group for FY24 and the achievement of EBITDA of £1.1 million. While the spirits market remained tough, we further strengthened the H1-24 EBITDA improvement of £1 million to deliver a full year EBITDA improvement of £1.6 million (£1.0 million at an adjusted EBITDA level). The loss before tax of £3.1 million, an improvement on the prior year (FY23; £3.6 million loss), represents the EBITDA delivery of the Group, offset by increased interest costs. Global Revenue Diversification Revenue of the Group was up marginally on prior year, +£0.1 million, evidencing continued diversification and resilience of our revenue base, notably our ability to offset a 34% revenue decline in China where significant economic headwinds continued to exist. The ability to offset such challenge over the last 18-24 months, where China has moved from 25% to 10% of our global revenue is testament to the strategic moves we have made in Taiwan, Korea, Single Cask Nation (SCN) and cask sales (within Europe). Europe As the home of SMWS, the European region comprises UK online, UK Venues, Europe and our two franchise markets, Denmark & Switzerland. Membership grew 6% in the period in the region, to just over 27,000 - making up 64% of the Group total - which along with contributing 58% of Group revenue, makes it our largest global market. Most of the growth in membership came through the UK with an online presence alongside four outstanding member rooms. Revenue growth in the period of 7.6% was primarily delivered by the continued and planned success of the cask sales programme, with £4.0 million delivered within the Europe region. FY24 cask sales were primarily made to trusted trade partners, but as we enter 2025, we aim to further build on the strategic growth of private cask sales acros