Artisanal Spirits (LSE:ART) — Interim results for the six months ended 30 June 2021

0:01 Good afternoon, ladies and gentlemen. Welcome to the ARTISANAL SPIRITS COMPANY PLC Investor Presentation for the Interim Results for the Six Month Ended 06/30/2021. We do apologize for the slightly late running today's meeting. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the q and a tab situated on the right hand corner of your screen. Just click q and a, scroll to the bottom, type your question, and press send. Company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your investment company dashboard, and they'll be available for your review. I'd also like to remind you this presentation is being recorded. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to David Ridley, executive managing director, and Andrew Dane, finance director of the ATISNOR SPIRITS COMPANY PLC.

0:49 Good afternoon to you. Thanks very much. I'm David Ridley. And And I'm Andrew Dane. I'm the finance director. So you've gotta pick pick up our voices. Unfortunately, you won't be able to see us, but, hopefully, my Australian accent is distinctive enough against Andrew's accent. And we're we're delighted to introduce the ARTISANAL SPIRITS COMPANY and our interim results for the six months ending 06/30/2021. And it's our maiden set of results since our IPO in June of this year. THE ARTISANAL SPIRITS COMPANY is a distinctive, fast growth, premium spirits, direct to consumer online business. And THE ARTISANAL SPIRITS COMPANY is the owner of the Scotch Malt Whiskey Society, which is the leading curator and provider of premium single cask Scotch malt whiskey for sale primarily online to a discerning global membership.

1:44 And we're a unique business with high margins and high lifetime member value. There is a strong global consumer demand, especially for Scotch Whisky with strong stories of providence and creation. And the proof of the strategy working includes revenue growth, membership growth, stock growth, and international development. And the execution of the company's strategy revolves around buying significant quantities of stock to add to our vast holdings, recruiting new members, building our global platform, and we're leveraging our expertise into new ARTISANAL SPIRITS COMPANY brands, and we'll be launching a new small batch blended malt range under the new exciting brand of J. G. Thompson.

2:39 We've got a strong management team to lead the business and and that has led the business and into the future. Mark Hunt has recently joined us as chairman, had decades with the Molson Coors international brewing business. I myself had more than two decades in wines and spirits largely with the LVMH group throughout Asia. Andrew has joined us last year from ARTISANAL SPIRITS, and he's, you know, quite used to fast growth business where he oversaw six fold growth in six years. And we have Kai Ibelow in the position of SPIRIT director, and he's been with the the organization for over fifteen years and has extensive experience with us.

3:26 And supplemented to that is a really powerful blend of board members to to, you know, oversee the the business in terms of an assortment of experiences that they've all had either running whiskey businesses, order committees, marketing, and digital programs as well. So it's a really, as I say, powerful blend of of the board. So our journey since 2015, which is really when we were became independent, we were we were required out of the LVMH group at that time and went into independent investors' hands. And it's really seen the business grow rapidly since 2015 with revenues doubling, building internationally.

4:21 And this phase of the plan significantly invested in mature cask stock for our long term sales cover. June 4 saw the ARTISANAL SPIRITS COMPANY admitted to the AIM market. And thanks to many investors, 10% of our UK members included, we raised £15,000,000. We've delivered 20% growth in the first half of this year. We've had strong sales and strong membership growth in key markets such as The US and China. Our UK venues reopened in May of this year to support further growth. And we've made strong progress on the strategic objectives we said at the IPO, and we'll present later what we've done in those areas we said.

5:09 And we have a robust start to the year with a confident full year outlook. Our current business brings together a number of distinct features, our growing and engaged membership, for instance, supported by our events and digital content, strong presence in the most valuable, fast growing international whiskey markets, offering a 4,200,000,000 US dollar addressable market. The consumer knowledge and retail value capture of our direct to consumer model, which today has a day one payback. The substantial value creation within our model creating industry leading margins and sourced from a vast array of distilleries, our extensive collection of highly valued single cask whiskeys.

6:04 And for growth opportunities, they really exist around six areas, increasing investment on membership recruitment in the marketplace with strong tailwinds, and we have a strong payback metrics. Rolling out our latest UK ecommerce platform to other markets and investing on further digital developments. Implementing the value creation initiatives, Andrew and I will be presenting in the coming slides. We'll grow Caskstock to continue to excite members well into the future with an enormous amount of variety, bring more of our whiskey experiences to more members via online and offline activity. And we have a pipeline of new brand initiatives that will complement the Scotch Malt Whiskey Society, leverage internal capabilities, and address additional dynamic markets.

6:58 I'll hand you over to Andrew to cover off KPIs. Thanks, David. And it's fair to say it's been a great start to the year. Revenue grew strongly by 20% in the half, really driven by international growth, in particular in The U. S, but there's also been a good rebound in The UK, up 12% year on year. So that masks the fact that Q1 was down cycling over the period pre pandemic, whereas Q2 was up by over 40% year on year. From a profit perspective, reported gross profit was up by over 30% to just north of GBP 5,000,000, and that's with a gross margin of 65%, reflecting the positive news in The U. S. With the long term suspension of US tariffs that took effect earlier this year.

7:43 In The UK, we've seen momentum building as COVID restrictions ease, that membership falling in the early part of the year when the most severe restrictions were in place before showing six consecutive months of growth results of the East. And we now have over 29,000 members around the world as we head towards that 30,000 milestone. On stock, we made great progress there too, having spent over 2,000,000 since the IPO. These actions have helped grow stock to 15,000 casks with a retail value of almost $350,000,000. Importantly, we've been investing in younger spirit that drives up margins over time. And alongside this, we filled the known gaps from mature stock, meaning that we now hold all of the stock we plan to sell right through to the end of twenty twenty six, which is a great position to be in as we look forward.

8:37 Thanks, Andrew. I'd like to present our strategic frame framework. We've really put consolidated our strategy onto onto one page here and aligned that also importantly to our company culture and initiatives that we're currently rolling out to start following a number of rounds of team workshops. Importantly here, we connect purpose, proposition, ambition, and strategic pillars, which inform initiatives that we will measure our progress against. We have a broad purpose consistent with the SMWS to captivate a global community of whiskey adventures. This is wide scope to attack the vast whiskey world. Our proposition for now is concentrated on the SMWS and will broaden the future with new and complementary brands.

9:31 Our ambition is clear, double sales by the end of twenty twenty four. As you saw on the previous slide that Andrew presented, we have 100% of that stock cover to meet this and all the way through to 2026. And at the time of the flotation, we established four pillars of our growth strategy. Membership growth enabled by enhancements across our digital delivery, improved margins, and the addition of new and complementary brands, and supported by a really talented team behind it all. Within those pillars, we're focused and we have focused initiatives concentrating on high growth markets, our ecommerce and digital rollout programs, value creation across all areas of the business while building new ones for the future.

10:23 So now I'd like to dive into the business model in a bit more detail. So one special part of our model is the limited edition nature of our premium single cask product. It provides variety. We offer hundreds of single cask Scotch whiskeys every year. Help navigate that vast collection of whiskey, we have the 12 flavor profile that you can see in the middle of the page for members to choose from. And additional communication comes in the form of the front label and the foil color coding to support visually. Exclusivity, a cask typically yields 250 bottles. So only 250 people in the world could have a particular bottling or single cask bottling.

11:10 And once it's gone, it's gone forever. Originality. With a constant stream of fresh original new products, which we release during our monthly outturns. There's always a reason for the member to repeat purchase. We're specialists in the fear of missing out. Accessibility. We span premium price points from £45 per bottle to £1,500 per bottle. So there's something for every budget. And desirability. Age is a desirable factor in The US and China, especially to help define premiumness. And we have over 30% of our sales volume above 12 years old of age, well ahead of leading single malt brands.

11:57 Now I'd like to take a little bit more closer look into the business model as well. So here, we have a number of distinct features of our business model that creates substantial value. We have the vertical integration to produce a bottle of whiskey and horizontal integration of owned multiple sales channels as well as content and engagement channels. And we'll touch on the financial value shortly. Specifically, the stages of value capture featured in the top half of the model include the spirit acquisition, our active maturation to maximize flavor. It's important to note here that 60% of the whisky's flavor will come from the cask.

12:43 And once ready, we'll take a sample from the cask for our own expert tasting panel to assess the whisky. And upon passing the panel's assessment, each product has its own tasting note and unique product identity. Once we've finished the bottling, we move on to the horizontal part of the model, specifically membership and the properties that we have there. We sell membership mostly online. And once a member, you get access to three sales channels across ecommerce, our member only whiskey bar venues, and events to purchase bottles or in venues, for instance, also buying drams of whiskey. Members have many options to engage with us across the various content platforms. And I'll now hand you over to to Andrew who really take you further into the value creation model.

13:32 Thanks very much. So David's been setting out how we create value. And here on the page, I'll set out the substantial nature of that value that we're creating through multiple interactions to serve. Starting with the SPIRIT acquisition, well, it's an appreciating asset, typically going up over 10% per annum. And we're maturation experts. We're creating outstanding variety of flavors that our customers love and pay premium prices for. But really, as you look across the page, it's the control of the creation and sale of that final product through our direct to consumer route to market that allows us to capture the full retail value. That's the figure of GBP $330,000,000 made at the end of December, now up to almost GBP $350,000,000 by August.

14:20 And that means that our current stock could generate well over GBP 200,000,000 of gross profit through existing channels based on last year's actual margin and actual selling prices. That means that for every one being spent on liquid spirit stock, we generate GBP 11 of gross profit. So a single bottle has GBP 49 of gross profit, but we think there's scope to improve there. For example, bringing elements of supply chain in house and doubling our sherry cask maturation program, which provides for higher prices as well as the impact over time of buying younger and unique spirit. But really, it's that online direct to consumer route to market who were taking the spirit sometimes straight off the still all the way through to the member's door that really allows us to capture the value.

15:09 And here, I'll now talk a little bit more about that route to market. So you see, we really are primarily direct to consumer ecommerce, and those online sales have been growing at around about 30% per annum for a good number of years. And picking up on David's comment about the fear of missing out, when we launch product onto the site during the monthly outturn, typically around three quarters of it will sell out within the first hour. Now physical venues and partner bars were obviously adversely impacted by COVID, but we've seen great rebounds as that as the world has reopened now. And it's accelerated a trend that we've been driving for years with ecommerce representing a growing proportion of our sales, but online also being a growing part of how we interact with members. In virtual tastings, digital content, YouTube sessions, online events, multi award winning unfiltered magazine, which has now been fully online and interactive for almost a year.

16:05 But it's the depth and quality of that online proposition that helps us to deliver the strong KPIs you can see on the right hand side of the page. 15% UK conversion rates, high store ratings in China, significant growth in US YouTube views, it's just some examples. So it's increasingly how we engage with our members all the way around the world. And I'll now hand back to David to talk a little bit more about that global membership. Yeah. Looking at members and their value, we've got engaged growing global membership. Where the site has been established the longest in The UK, average membership is nine years and a retention rate of 85% for renewing members. And while the The UK members' numbers did soften over 2021 at quarter one this year.

16:55 There's been a strong rebound since then. It's important to note almost a thousand UK members were recruited in venues in 2019. You won't describe that there was little venue recruitment over the lockdown period. And certainly, in in coming slides, you'll see the strong results that are coming out of that consecutive monthly growth that Andrew just referred to. Internationally, we're present in over 30 countries and importantly, in China and The US. And they've driven 40% of the growth in an expanding global offering. Overall awareness of the society is growing now with over 29,000 members and heading towards a 30,000 member milestone. And these factors bring high value, especially with market like The US and China.

17:43 Members purchase membership and usually their first bottle in the first transaction. And that gives us the day one payback and also importantly a four times e one payback. We've also got strong sales uplift achieved as a member lifetime profit of over £900. So we describe our business opportunity as establishing a valuable membership experience that attracts and inspires involvement. Now I'll move on to the markets. The premium scotch and spirits market has had secular growth, which is built to scale, and we are represented in the key markets with a firm focus on them, which I'll show on the next table.

18:34 The consumer trends is to premiumize, which matches well with our product offer. In the context of the quotes at the top of the page, the consumer's behavior towards authenticity plays well to our product information and provenance. And in terms of status, no more than 250 people in the world can buy a bottle of one particular release. We provide content to expand the consumers' knowledge. We believe that we're well placed to take advantage of the increasing spending power of these consumers. Premiumization is reflected in the growing market share of premium spirits. And in the price points shown on the right hand side there, where ultra premium and above price points in the boxed area are growing fastest and has created a sizable market.

19:26 We're 100% focused on that attractive, fast growth, multibillion dollar segment. Now I'd like to go and provide a further perspective on the markets. We've defined our addressable market of four criteria, scotch whiskey only, ultra premium price points and above per my last slide, domestic markets, and only markets where we have distribution in today as shown in this table. And importantly, three quarters of that opportunity is in the top eight markets listed there. That $4,200,000,000 addressable market has had a decade of tailwinds growing 200% and forecast to continue.

20:14 And in the key markets shown here on the left, ecommerce is a strongly accepted purchasing channel. So for instance, The US consumer likes the convenience of ecommerce and is prepared to spend higher amounts as with the Chinese consumer. And there, we've expanded into multiple sales platforms such as the dominant Tmall and jd.com. And The UK and Europe markets are equally important and equally fast growing as well, which you can see there. Across these markets, we have got modest market shares from which we can grow and build upon. Now I'd like to cover off the progress that we've made since the IPO on various initiatives.

21:02 And Andrew and I will give you update across each of the areas of our strategic pillars. So firstly, to grow the membership experience proposition. And we touched on earlier that, you know, with with the the lockdown of venues, you know, had softened The UK membership numbers. Likewise, we're being impacted with the Brexit changes in the earlier part of of the year. But you can see we're well ahead of that now, and we've had those six consecutive months that Andrew referred to. So importantly, where are we at? Well, year to date, we have recruited over 6,000 new members. The focus on high growth markets have delivered 25% membership growth in China and 13% in The US and the strong rebound in The UK since venues have reopened in May.

21:59 We see the membership momentum continuing in the second half, and this will be further boosted with new investment in recruitment from the IPO funds. Moving on to the enhancements on ecommerce and digital content. We have launched a dedicated EU storefront earlier this year to help facilitate transactions post Brexit. The website was successfully launched in the backdrop of last minute Brexit decisions. We've added a basket reservation timer to ensure members get the products they want, and further enhancements are being rolled out aggressively over the year. We're well down the preparation path of migrating Japan onto our ecommerce platform and further rollouts are planned in 2022 for Australia and The US. We've also launched the storefront for the J. G. Thompson brand, which I'll touch on further down.

22:57 And unfiltered, our important content magazine for members has now had a full year of digital format, which moved the frequency of content delivery from quarterly to monthly. I'll hand over to Andrew. Thanks. And as we kinda continue to dig a little deeper into the progress we've made since the IPO against those key pillars of the growth strategy, I'll now turn to the investment in SPIRITS and CASKWID. Part of that, continuing to build out our stock holding to support the ongoing growth of the business. And we've made good progress there, making a couple of significant purchases of stock covering dozens of distilleries and makes. And that's allowed us to fill known gaps in our stock holding from mature stock, and it now means we own all the stock we plan to sell right through to the end of twenty twenty six.

23:45 We've also made great progress on younger and new mix spirit, and importantly, that helps drive down the spirit cost over time and drive up margins over the same period. So the purchase cost of those new make agreements is less than GBP 2 per bottle, and that compares to GBP 6 per bottle to the liquid we are using in our sales this year. And those new rolling agreements we've entered for another 75,000 bottles worth since the IPO, it gets up to the 265,000 bottles that's on the slide there. That's the equivalent of 160% of last year's sales. Think of it another way, when we're making our sales this year, we can replace the liquid at a third of the cost or three times the liquid pound per pound.

24:34 The second area is we turn around the investment in task wood. Part of that, continuing the tasks required to support the spirit we've acquired, but importantly, it's about adding further value too. And the Sherry maturation program is the best example of that. Essentially means buying more x Sherry cask, and that's what we've been doing. Two thirds of the cask spend in the last three months for example. Because we know that gives a flavor profile our members love and that they're willing to pay further premium price for. And we've got an ambition to significantly increase the volume of Sherry influenced whiskeys aiming for around about a third of our whiskey to be sherry influenced by 2024, 2025, primarily from our additional maturation program, but also over time from full term sherry cask maturation over the whole life of the spirit.

25:23 And alongside that spend, we've also made good progress with orders with hundreds of other casts on the water and orders about to be placed for a few 100 more that will land by October. So good progress being made here. And that then brings us nicely on to the part of the valuation creation pillar that relates to improvement in margin from supply chain. And in this context, it's worth noting that at present, the company currently outsources four key elements of its operations in Scotland. Cask storage, primarily those that are maturing as well as those that are ready to be bottled. Bottling, process of producing the finished goods bottles from the cask. Finished goods storage, I. E, final bottles ready for the market, and distribution, the process of picking, packing and dispatching.

26:09 And as we explained at the time of the IPO, our intention is to insource some elements of this supply chain. And I'm pleased to say we've agreed head of terms for a great facility in the Central Belt Of Scotland, which will allow us to do exactly that. It's expected that lease will be signed imminently in the coming weeks with design and planning work already underway. Construction work commenced probably around the turn of the year and operations to commence next year. All of those, including the circa GBP 2,000,000 expected fit out costs, all in line with time scales and costs at the time of the IPO. And hopefully, Dan, that answers your question about CapEx of the supply chain facility. Thanks, Andrew. Moving on to new and complementary brands.

26:55 J. T. Thompson was established in the eighteenth century, and for most of its two century history, operated its wine and spirits business from the vaults in Leith where Andrew and I are presently sitting. The Scotch Malt Whiskey Society purchased the vaults in the early nineteen eighties and has continued to use the vault as its members room. Among the likes of Shivers Brothers and Johnny Walker, the Usher family were famous blenders of whiskey and were business partners with J. G. Thompson in the nineteenth century. So we've resurrected the J. G. Thompson brand, and we'll focus on small batch blended malt whiskey. The emergence of the blend trend provides a significant and emerging segment for consumers looking beyond mainstream brands.

27:45 The brand will have a range of Scotch whiskeys along with gin and rum in keeping with the navel and seafaring backdrop of leaf. The ARTISANAL SPIRITS COMPANY will use its ecommerce experience to sell online and use specialist retailers and high end whiskey bars to provide further distribution. The products have already received high praise announced this month by the SPIRITS BUSINESS Luxury Awards with a top trophy, four gold medals, and a silver medal. And if I move on now to to the fifth strategic pillar for us in terms of our cultural framework, our values.

28:31 These are what we stand for, and it's how we hold ourselves to account and how we depend on each other. And this is how we live and breathe, and we're responsible for this. And it fits with the SMWS brand values, most of which were created almost forty years ago with the ethos of Pip Hills and his friends that created the business. And our behaviors there on the right hand side, well, this is this is who who we're about. These behaviors, we look in each and every one of our team members. This is what we strive for every day and keeps us ahead of the game. When we take great pride in the excellent work that we help create, and we take the greatest pride in creating a place that people love to work in. So I'll hand you back over to Andrew for financial updates.

29:22 Thanks. So here's a little bit more detail and flavor, but the key messages are set out before. Revenue growing by 20%, representing a really strong performance for the period with good international sales growth, particularly in The US, as well as that rebound in The UK venues and events towards the tail end of the period. And as I mentioned earlier, overall UK sales up 12%, but that masked the decline in Q1 followed by almost 40% growth in Q2. And when we talk about The U. S, it's worth noting that not only did we get good revenue growth, but also profit performance was boosted by the suspension of U. S. Tariffs on the imports of think of bald Scotch whiskey in March of this year. It's been fantastic to see how that suspension of those tasks has really flowed through into the results and be able to show an actual gross profit almost 65%.

30:16 Then looking at adjusted EBITDA, that too has grown to more modestly with an ongoing investment in sort of growth, largely offsetting the increase in gross profit. And that comes across investments in in people, in systems, and the platform for growth. And I can see your questions about the breakdown between optional reinvestment and fixed costs. And very much what we're doing at the moment is investing additional costs now to support the business we want to be over the coming years. And that doesn't mean investing in cost in advance of achieving the revenue, and that's what we're seeing coming through here. Next page again is a bit of a wall of numbers on balance sheet and cash flow, but it's worth setting out the headlines. ASC is a strong asset backed business with a well capitalized balance sheet where funding is being used to support investment and growth of the business.

31:09 I'll also pull out a few of headlines from the first half of the year, most notably the £12,000,000 improvement in net debt, reflecting the receipt of the IPO proceeds less those that we've already managed to spend. And as noted at the time that put in the admission document, while we're awaiting deployment of the remaining proceeds of the IPO, the funds have initially been applied towards reducing our debt just from an efficiency of interest cost management. But we can and are just drawing those funds back down as and when we require to support the investment strategy. In green, you can see on the right hand side, total operating cash flow was a little down on last year, but a key point of note there being the increase in debtors and that relates to the growth in The U. S. Debtor balance, simply reflecting the timing of those shipments into The U. S. In the latter part of the period.

32:01 And overall, it leaves us in a really strong position with everything we need as a platform for the ongoing delivery of our investment strategy. Thanks, Andrew. So we've made good progress to date and since the IPO. I mentioned earlier our strategic pillars support our growth strategy being membership growth, enabled by enhancements across our digital delivery, improved margins, and the addition of newer complementary brands supported by a talented team behind it all. So here's what we said at IPO on the left and on the right what we've done and achieved so far. So the membership international markets have grown well, especially China and The US, and The UK and EU are moving into renewed growth following venues reopening and new route to markets being established post Brexit.

32:54 Our e commerce development rollout continues. A new EU website to handle new trading relationship with Europe in the coming months, the launch of the Japanese storefront as well as JG Thompson as well. As Andrew touched on, the purchase of newly made spirits continues filling the inventories with significant volumes of high quality spirits for future maturation. Now we have a further 1,000 casks in the last three months alone, reaching now 15,000 casks, and that's important coverage of a 100% of our doubling ambition to 2024. And venues and physical events are returning strength, contributing to the membership proposition, and we're also well down the path of looking at plans to look at existing venues and new venues with use of proceeds of funds. And we're launching that already award winning range of whiskeys and spirits under the JG Thompson brand.

34:00 So we have a strong outlook ahead, and these are really based on a combination of factors. A significant and fast growing ultra premium scotch whiskey segment in a focused number of markets. The full omnichannel offering is being reestablished across the markets, especially with The UK with venues in which h two momentum is building, consumer premiumization, and consumers' affinity to limited edition and story products that excite them. We've got that stock coverage to meet those 2024 ambitions, doubling sales and beyond. And some of the use of funds from the flotation will drive accelerated membership growth and recruitment.

34:47 So and these areas will ultimately, you know, combined, confidently support our growth and value creation ambitions, making the ARTISANAL SPIRITS COMPANY a distinctive, fast growth, premium spirits, direct to consumer online business driving future growth well into the future. Alright. Thank you for your attention, and I'll open the floor for for some questions. David, Andrew, thank you very much. A fascinating presentation. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the right hand corner of the screen. While the team take a few moments to review those investor questions submitted already, I'd like to remind you that recording of the presentation, along with a copy of the slides published q and a can be accessed via investor dashboard on the investor me company platform.

35:36 I'd also like to remind you that your feedback is important to the company and immediately after the presentation has ended, you will be redirected for the opportunity to provide your feedback order that the company can better understand your views and expectations. David Andrew, we received a a pre submitted question that we had come through from investor. If I may, I'll just read it out. If possibly you could give your response, that'll be great. It reads as follows. Given the very different Chinese member behavior, both revenue and churn, can you please discuss how a potential decline in Chinese membership activity may affect your average LTV and CAC metrics? Yeah. So first and foremost, you know, China membership is growing, retention is improving, and the spend profile is remaining consistent, and the long long term value is is growing.

36:24 So the China LTV represents fantastic position and as noted, it is improving. However, even if they were to change, the position softened somewhat, for instance, this would be coming off a very high base. So it would still represent a very, very good return for us. The other markets will demonstrate strong lifetime values as well and payback metrics in their own right with that day one payback commented earlier, reflecting The UK position, which is, you know, got one of the the highest CPAs there. So we we we think that, you know, the the the China represents, you know, a fantastic opportunity.

37:11 That's absolutely fantastic. Thank you very much indeed. And if I may, if I just could ask you just to click on the q and a tab on the right hand corner of this screen. And then if I can piggyback forward, I can piggyback on Nick's question Of course, please. Please. Recruitment of of new members. I guess, if I go back to the the the platform rollout that we've done in China. So we we launched with WeChat as as our first ecommerce platform back in late twenty seventeen. We subsequently rolled out about two years ago Tmall, and more recently, we've rolled out jd.com. And these platforms have hundreds of millions of consumers on on us. It provides us with digital marketing platforms to promote the SMWS to to whiskey drinkers on on those platforms.

38:08 We have flagship store storefronts with all of those those platforms. So it's just like a store within a store, and and that we are directing traffic to those stores, recruiting the members there, and they then also purchase their bottles bottles through that. So it's a it's a fairly extensive level of reach that we have. Moreover, we've got quite a collection of what we call partner bars. So whiskey bars that we we work with that sell our products by the dram. So that's really a hub for whiskey drinkers to be exposed to the brand as well. I see a few other questions coming in, one around seasonality in the business. It's always hard to pinpoint seasonality when your business is growing as as fast as ours is. So the last quarter in the year is is often the best. But typically, we work on the basis that around about a third of sales come through in the the final quarter.

39:11 But there are markets like China, which aren't really driven by a Q4 profile so much as Chinese New Year, which is in Q1, and timings of U. S. Shipments, which aren't in alignment necessarily with final depletion. So there's an element of seasonality, but it's not a particular factor in the business. The next one was around talking about the circa $200,000,000 of gross profit, which is essentially represented under the retail value for it to sell the castle a question of what time period we could deliver that over. As David said, our clear ambition is to double sales by 2024 and that's the kind of trajectory that we're aiming for. And that having the stock and being able to capture that significant additional value by not only getting the value of the the underlying product, but by controlling the creation and sale of the finished goods right through to the member.

40:05 And owning that whole life cycle allows us to capture that full value, and that is really coming through as you can see in in the margins. And as the the business expands, our expectation is that the Scottish Water Whiskey Society margins will actually improve. So that's a it's a really good position to be in. And I'll I'll take Richard's question in terms of explain share price performance since IPO. But Richard, the the share price is not related to the performance of of of the company at the moment. I mean, you've seen the results. We've delivered above expectations in terms of the results. The the the the balance of year is is looking very strong for us move moving forward. And I I think probably I'd direct you to the arsenalspirits.com website where there is a research note published from equity development.

41:02 And I think that you can have a look through the various analysis that Chris has put together in terms of what represents fair value for the shares. That's fantastic. Thank you, David, Andrew, for covering up all those questions. And of course, any further questions do come through, you will have the ability to review those. And where appropriate to do so, we will post our questions back, and you'll be notified once they're ready for your review. Yeah. Paul Paul, whilst we've got a little bit of time, David Of course. Sent a sent a follow-up question Thank you. In terms of, I mean, obviously, the the The UK has been, you know, well established for thirty eight years here, and and having that that tenure of nine years is is obviously the the the benefit of time. You know, China China was established at the end of twenty seventeen.

41:52 So we're still, you know, relatively new in that marketplace. But I would I would see that with longevity, the average duration of the Chinese member will increase. Yeah. I I don't think we will necessarily expect it to get completely aligned. We do see differences between the markets, but Dave's absolutely right that we do expect to see that improve as the as the base becomes more established. Fantastic. Thank you so much indeed. And perhaps if I could just ask David just for a few final words before we redirect the attendees to give you some feedback, please. Well, as as I said in in in the the end that, you know, we're we're we're confident those factors will combine together to confidently support our growth and value creation ambitions and and making the ARTISANAL SPIRITS COMPANY that distinctive fast growth premium spirits direct to consumer online business growing into the future.

42:48 That's fantastic. David, Andrew, thank you indeed for updating investors today. Could I please ask investors not to close the session as you'll be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete and be greatly valued by the company. On behalf of the management team of ARTISANAL SPIRITS COMPANY PLC, we'd like to thank you very much for attending today's session. That concludes today's presentation. Thank you, and good afternoon.