Artisanal Spirits Company: Preliminary Results

29th March 2022 | Artisanal Spirits Company

Growth comfortably ahead of market expectations and decisive early delivery against strategic objectives

The Artisanal Spirits Company (AIM: ART), the owner of The Scotch Malt Whisky Society (“SMWS”), the leading curator and provider of premium single cask Scotch malt whisky and other spirits for sale primarily online to a discerning global membership, is pleased to announce its preliminary results for the 12 months ended 31 December 2021 (“FY 2021”).

Financial highlights

  • Revenue increased 21% to £18.2m (2020: £15.0m), comfortably ahead of market expectations
  • Gross profit increased 27% to £11.2m (2020: £8.8m), resulting from the revenue growth, as well as gross margin improvement to 61.5% (2020: 58.6%) which is largely attributable to the long-term suspension of US tariffs
  • EBITDAE loss of £0.6m (2020: profit of £0.6m) with planned ongoing investment for growth offsetting the increase in gross profit (EBITDAE defined as earnings before interest tax, depreciation, amortisation and exceptional costs, details set out in Note 7)
  • Loss after tax of £3.4m (2020: £1.6m), including the impact of £0.9m of exceptional IPO costs
  • The Group’s net debt position improved to £5.2m (2020: £13.7m), as a portion of the proceeds of the IPO fundraise were used to temporarily reduce Group borrowings (to minimise interest costs)

Operational highlights

  • 18% overall membership growth (a leading indicator of future revenue growth)
    • 15% global membership growth in the second half of the year (over 33,000 members at year end up from 28,700 at 30 June 2021)
    • UK membership grew by 20%, with growth in other markets averaging 15% over the year as a whole. Exceptionally strong growth in China offset by lower levels of growth in Europe (reflecting Brexit related challenges in H1)
  • Lifetime member value (“LTV”) of £1,445 (2020: £932). A consistently high LTV, coupled with growing global membership, demonstrates the Group’s ability to deliver sustainable and profitable growth
  • Continued recovery in UK venue & events sales following phased reopening in Q2 2021
    • Robust performance through to year end despite the emergence of the Omicron variant during Q4, demonstrating the advantages of ASC’s multi-channel business model
    • UK venue sales in the second half surpassed those in the entirety of FY 2020
  • Successful admission to AIM in June 2021, raising gross proceeds of £26m. Decisive early progress made against strategic growth objectives outlined at IPO:
    • Significant investment in matured and new make spirit stock and cask wood
    • 10-year lease signed on a new supply chain facility
    • Launch of new brand J.G. Thomson
    • Increased equity interests in joint venture entities in China and Japan
  • Strengthened the Group’s leadership team through key strategic hires
  • Established a warehouse in mainland Europe, enabling the Group to mitigate Brexit-related logistical challenges and reduce shipping and delivery times to EU members
  • Record number of top awards (for both SMWS and J.G. Thomson) from several of the most prestigious competitions in the global whisky calendar

Post-period highlights

  • Strong start to the new financial year with revenues ahead by over 30% year-on-year, in line with management expectations, cycling over low Q1-21 sales in UK Venues & Europe
  • Global membership of 34,200 at the end of February (up 3% from the position at year end). This was in line with management expectations
  • Landmark 150th distillery bottling, sourced from southwest Ireland
  • 13 prestigious gold and silver awards across both SMWS (8 awards) and J.G. Thomson (5 awards) ranges at IWSC 2022
  • Site manager recruited and first materials delivered for new supply chain facility, known as Masterton Bond
  • With positive momentum in business, the Group remains well placed to deliver another year of significant growth

David Ridley, Executive Managing Director of the Company, said:

“Following what was an exceptional year for the Artisanal Spirits Company against a challenging backdrop, I am pleased to be able to present such a positive first set of results as a listed business, with strong growth in both sales and member numbers.

In the months since IPO to year end, we made excellent early progress in delivering against our strategic objectives; investing in, enhancing and optimising our operations to create a platform capable of delivering high, sustainable and ultimately profitable growth, always keeping the interests of our loyal SMWS members firmly at the centre of everything we do. This work behind the scenes will benefit the Group and SMWS members for many years to come, and on behalf of the Board I would like to thank all our colleagues for their efforts during the year to make it happen.

Moving into 2022, we have made an encouraging start to the new financial year, again from both a sales and member growth perspective. The outlook is positive, notwithstanding the inherent unpredictability of the pandemic and its effects, giving us confidence in our ability to continue our track record of delivering significant year-on-year growth, while remaining on course to deliver our ambition of doubling sales between 2020 and 2024.

Global macrotrends such as premiumisation continue unabated, and as we move away from the worst of Covid-19, we are ideally equipped to operate in a more hybrid world, straddling both on-line and in-person. While we have made an encouraging start to life as a listed company, we recognise there is no room for complacency. We will continue to meet challenges head on while vigorously pursuing our goal of growing and developing the Group. This is being delivered by taking our proposition to a growing global community of whisky enthusiasts, offering the very highest quality crafted spirits & experiences and creating significant value for members and shareholders alike.”

News in full

David Ridley and Andrew Dane, MD & FD respectively, outline not only the key highlights from the results,  but also the progress made since the IPO, an update on trading since the year end, along with an outlook for the group