Artisanal Spirits (LSE:ART) — Full Year 2023 Results

0:01 Good afternoon, and welcome to the ARTISANAL SPIRITS COMPANY PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the q and a tab situated in the right corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it received during the meeting itself. However, the company can review all the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. Now I'd like to hand you over to Andrew Gaines, CEO. Good afternoon, sir.

0:32 Afternoon. Thank you much, and thank you much all for joining. And going for our 23 results presentation for the ARTISANAL SPIRITS COMPANY PLC. Both myself and my colleague Billy here to present and then take questions later on. So we'll start with a reminder of what SC is. We create and sell outstanding limited edition whiskeys and experiences around the world. We primarily do that through the Scottish Water Whiskey Society. What we're gonna do today is gonna take you through an exact summary, some of the headlines of the recent results, then hand over to Billy to take through more of the detail of those results for 2023, and then hand back to me to start talking a little bit more forward looking about current trading and also our our outlook.

1:21 So we'll start with some headlines on on recent trading for 2023. And I guess what was pleasing was despite challenging global conditions to still delivered revenue growth. That's 8% revenue growth for the full year. But in particular, for me, pleasing to see an acceleration in that revenue growth during the year. So 12% revenue growth in the second half after 4% in h one. And that represents good progress, though obviously not at the level that we had targeted for the year. What we have seen is expansion of our footprint in in Asia with the addition of new franchise in Korea as well as the addition of Taiwan, helping to offset most but not all of the downside from challenges in China during the year. Alongside that, we also saw delivery of a huge range of strategic initiatives.

2:07 We'll talk about those in detail later, but most notably, the sale of the whole cask worth of bottles directly to us and The US members. We also saw strong membership growth across the Scottish Malt Whiskey Society in its fortieth anniversary year to over 40,000 members, as well as adding some real proof points to the significant and growing value of our cask inventory. That's the whiskey stock that we own, which has increased substantially. We'll spend quite a lot of time today talking about that too.

2:40 In terms of headlines as we look forward, current trading has been good. In January, we acquired Single Cast Nation, The US based independent bottler, and that's had a really positive positive start to life. Prop here of the first single cast nation bottling being done at Masterton Bond, our own facility, and first sales in February and first e commerce release in mid March, which sold out almost half in the first day, which is great. And that feeds into a positive start to 2024 with 10% revenue growth, giving us confidence in our full year EBITDA guidance for 2024. And that takes us on a path from low to mid to high single digit margins over the next three years. And overall, continue to think we're well placed to deliver and that despite challenging 2023, we've actually emerged in a much stronger position, increasingly well positioned for continued global growth in a sector that continues to be significant and growing in that attractive ultra premium sub sector of the market.

3:42 And the ability to add new markets and expand our footprint as well as starting to get the benefit for the investment we have already made in the previous years, strategic initiatives as well as a a few of the other things that build the top brand like SPIRITS, WOUT, venues, and Masterton Bond. So overall, it gives us good confidence. So that's it. That's the headlines. Now we'll take you through quick recap of the business, hand over to Billy for 23 results, then talk about our model and why we have confidence in our ability to deliver long term. So first up, this is a refinement of what we've always talked about, which is at the heart of the business is our purpose of captivating a global community of whiskey adventures. And we do that, as I said at the start, by creating and selling outstanding limited edition whiskeys and experiences around the world.

4:34 Now ultimately, we have an ambition to create a really high quality, high profitable and cash generative premium global business. We're making progress against that against our five pillars, whiskey, membership, experiences, new brands and audiences, and people. You'll see our progress with us, many of those, during the course of this session. What has changed is our portfolio of brands has expanded. But it's really important to note that at the heart of the business now and in the future is the Scottish Malt Whiskey Society founded in 1983 and now with over 40,000 members, providing those amazing outstanding liquids and experiences, but really glad to be able to welcome single cask nation into the into the fold as another incremental and complementary fit with the other brands that exist alongside J. G. Thompson.

5:28 So since it's at the heart of the business, just a quick recap of what the Scotch malt whiskey society is. It is a truly global business with two thirds of its sales outside The UK, so primarily directly to consumers, both online as well as in member rooms. The small balances into a network of outstanding part of ours around the world. It's premium, limited edition, typically single cask with maybe only 200 or two fifty bottles with extensive whiskey coverage and that growing global membership is highly engaged. So what do we do? We're not a distiller. We buy from wide range of distilleries, Scotch malt whiskeys, other international malt whiskeys, well as rye, bourbons, and some other spirits that we know members love.

6:16 We mature those casks and then we move over 17,000 casks ourselves. We bottle them in our own supply chain facility and we bottle those under our own brand, Scotch McWhiskey Society, and sell those bottles exclusively to members. But it's about more than just standard liquid in a bottle, it's the experiences that go with them, events, tastings, as well as our four member rooms in the in The UK, two here in Edinburgh, one in Glasgow, and one down in London.

6:47 And then finally, before I hand over to Billy, I thought it was worth just pausing and reflecting on the last three years and the progress that's been made against what we said we would do at the time of the IPO back in late May twenty twenty one. We set up the target of doubling revenue to CHF 30,000,000 by this year. By last year, we'd already grown 56%. We wanted to grow our membership base in major markets, but we've grown by 57% primarily driven by international expansion. We have enhanced our e commerce with new U. S. Website and new U. K. App as well as our route to market capabilities with new joint venture in Taiwan in August, franchises, most recently in Korea in April, but over the last two years in South Africa and Mexico as well.

7:34 We've driven up margins, which are up by five percentage points since pre IPO, as well as growing that cask inventory of outstanding and unique liquids to now over 17,000 casks with almost £05,000,000,000 of future retail value. We've used the venues and the bars to to make life in not just growth in those ventures, but more profitable venues as well as adding to the premium spirits brands with the creation of J. G. Thompson in late twenty twenty one and then acquisition of Single Cast Nation in early twenty twenty four. So I'll now hand over to Billy to take us through some of the detail around the 2023 results. Thank you, Andrew. So on on the slide at the minute, you'll see really some key indicators that tell us how our business is performing.

8:25 And we've got the financials on the left hand side. We've got members behavior and membership in the middle and and what we call the kind of inherent value within our business. So go through each one. But if we start in the middle, the SMWS, SCOTT SMART Whiskey Society, is at the heart of ARTISANAL SPIRITS COMPANY. And at the heart of Scotts Malt Whiskey are the loyal and engaged members that sit within that business. So we're particularly pleased that we've seen 10% increase in members year on year to just over 41,000 in our fortieth year. And our retention level is still a really high benchmark level, 74%. It's above PIPO. It's slightly down on prior years, but that's still 74% of our members will remain with us, which is still a really good benchmark score. With with regards to lifetime value, that has seen a slight dip year on year. That's predominantly driven by the market in China, which we'll come on to a bit more in a minute.

9:19 That's still 25 of IQ levels. And what that middle section is telling us that members are engaging, they're joining, they're they're staying with us, and they're still they still appreciate the product and the experience that we provide, so that's fantastic. Then what comes with that is is our financials on the left hand side. So, again, we've grown revenue by 8%. Certainly, not the 20% we've seen previously, but this is in a in a year where there has been some challenges set within China. But 8% growth goes to show, which I'll comment on is diversification of the revenue of this business, which is which is really positive, and we were looking at opportunities in the future. And with that revenue growth comes 9% gross profit growth alongside that contribution growth. So that's really positive.

10:07 And in the right hand side, I won't go too much into it. There's slides by the wrong, but essentially, as a reminder, within our books, there is a net book value of cash stock that we hold around £25,000,000 There are then two other points of two external points we can measure that against. We will always hold those cast stock, but through our sorry, an epic value at the at the cost we paid for it. And against those, we have through our revolving credit facility, a bank valuation carried out annually, which gives us a better value of what what that is because we are working with an appreciating SPIRITS asset. And then in the last year, we're just going to a bit more detail. We've sold cast members, and we've agreed a new facility with, which gives us what we believe is a more truer market valuation.

10:56 So on the agency, 4.8 times. I won't go into that too much right now. We've got further on that to come in a minute. But, ultimately, cost in our books worth more is an appreciates good asset. I'll come back to that. Thank you, Andrew. So I think the key point to note here is the continued diversification of our global revenue. And some of the key pullouts here would be we've seen venues grow almost double digit, 9%. Again, they've continued to recover post COVID. And I think the key importance for us is last year and I would lean to this year, we have been in a high inflationary environment, cost of living challenges. We've got people who want to attend our venues and want to experience what the S and WS can provide. So that's fantastic. So we continue to see the key importance of our venues, and we expect that to deliver this year as well.

11:45 One of the key growth areas you've seen in our trade cask sales, we have done this to a much lower degree in prior years. However, it was always a strategic objective of the business to utilize trade cask sales. It's something that exists within the whiskey industry now. It's an opportunity for us, for example, to balance our whiskey portfolio if we perhaps got stocks of whiskey without the aged distillery, maturation type. We can we can sell those to them, rebalance and purchase against that and make sure we have the right optimal balance of stock going forward. In terms of other key points here, it'd be remiss of me not to mention Asia decline of 14%, and that is driven by the macroeconomic challenges within China.

12:33 But again, the positive and near is where we've seen 30% decline in China driven by those macroeconomic conditions. We've offset that. We've got the new franchise in Korea. We've got the new joint venture in Taiwan, and we've had

12:45 significant growth in Japan. So there's still lots of positivity within that, and that diversified revenue portfolio will help us achieve our future ambitions. From a P and L perspective, we did deliver adjusted EBITDA of £100,000 which perhaps is not as high as expectation, again, shows our ability to turn a profit in challenging times across that diversified revenue. And if you look at the blue highlights column to the right hand side, the important bit to call out is really the momentum coming from half two. So in half two, we delivered £1,900,000 of adjusted EBITDA to deliver that overall point one. Now within that, there are elements of timing. You can see that particular strong revenue delivery.

13:30 Some of that is timing, but what the key importance of the second half, as you will see, in marketing and payroll and other overheads, a key cost base within the business, all of the all of those areas have reduced against the half one, and they are exiting half two at that level. This is a future run rate. So this gives us confidence that coming from a half two delivery of 1,900,000 kind of EBITDA, a diversified revenue, a controlled cost base where significant investment has already been made, we can deliver what we want to deliver in terms of consensus delivery with regards to EBITDA going forward. From a balance sheet and cash flow perspective, we have still continued to have a very strong balance sheet. We've got GBP 18,300,000 of net assets supported by cash goods of around GBP 25,000,000 as mentioned.

14:18 If we go on then to talk about cash flow, again, the key things for us in half two, it was a challenging half one and half two, we delivered significantly. Not only have we delivered operating cash flow and a positive operating cash flow in the second half, but what we will see is that net cash investment has been and SPIRIT has peaked. So as a business, as we start to deliver profit and cash generation, that cash SPIRIT spend is peaked. We'll start to deliver more and more operating cash flow that can allow us to drive cash and further invest in the business and drive further growth.

14:54 Okay. So I mentioned a couple of minutes ago about I mentioned two seconds ago about the the strong balance sheet that we have underpinned by our cash stock. What's key to pull it out is the inherent value within our balance sheet. So I mentioned we have cash stock of £25,000,000 within our balance sheet. What I'd like to call out is a sing a specific example over the last twelve months. So we entered a new facility agreement with VERIBENUM. The facility agreement with VERIBENUM allows us to unlock some liquidity locked within that balance sheet. And the benefit of this facility with VERIBENUM is they look at the casks and SPIRIT within a balance sheet and give us a true market valuation for what they held up. So what's important to note in this example is for the tranche of casks that we delivered in in h two in 2023, we selected a portion of CAS that had a net book value of around £800,000.

15:52 So that was a value that sits within the 25,000,000 in our balance sheet. From a bank perspective, with our revolving credit facility, they do an annual valuation. The annual valuation is relatively simplistic. It's it's it's still agnostic. It takes a this is a year. This is a rough value for the LPA. They value those casts at 1,300,000. So they're 50% premium to net book value. Through this new facility with Verivenom, they're able to take those casts and through many data points, most importantly, external data points. They valued those casts that we had in the books £800,000 at £3,800,000. So that was almost five times the level of net book value. Now what that allows us to do is draw down and invest in our business appropriately. It gives us the optionality and flexibility, and it allows us to draw down a much better rate than we previously have been.

16:45 And it's important to note that facility is at the same benchmark levels of cost as the RBS facility as well. So to to kinda summarize where we are, we have a we have a net book value of £25,000,000, mentioned a couple of times now. Ultimately, to the right hand side of this slide, we want to sell that whiskey within bottles as part of our business model. And within that, there's our own sucker based on the stocks we have currently and £500,000,000 of revenue, which will deliver somewhere in the region of £300,000,000 of gross profit. But what's also important to understand that you can't see from looking at our balance sheet necessarily, but you can for pulling out that information. Through cash sales we've made to members of around $0.3400000 pound last year, that's four and a half times the net book value that we hold at cost. That's through the range with the fair minimum, the one I've just mentioned, that's 4.8 times.

17:41 So the key summary in here is we want to we believe in our business model. We believe in our ability to engage our members. But underneath all that, it's underpinned by an inherent value that really just grew the the valuation of this business far beyond what is currently held up. And as as as a closing remark for me, again, loyal, valuable, growing global membership, we've got over 41,000 members, annual contribution of over £300 per member, and a lifetime value of almost £200. This is not a directional metric for us. What we want is loyal, growing global membership. So we'd love that membership number to be 50,000, 60,000, and what they're spending based on that. But what I'm sure it does is it allows us to make sure that we're giving the members what they want, we've got that retention at the right level and this is something we'll keep an eye on going forward.

18:39 Thanks, Frederic. So as Billy alluded to at the end, it's that loyal, valuable, growing membership combining with the unique outstanding award winning products in a high margin direct consumer that delivers long term value for the business. So that's a bit around the kind of financial delivery, but I thought it was also worth just pulling out some examples of the strategic delivery during the year and there's been a lot. And I won't talk through all of these, but here you can get a sort of insight into the kinds of things that were delivered during the year to Masterton Bond being fully operational, cast sales, trial of our prestige products, subscription services, new app in The UK, those subsidiaries, the acquisition and all of that, and a lot of people development within the business too.

19:29 So lots has been delivered and paid for last year. And then this year we get the opportunity to take advantage of those, to make the most of the new membership in a bottle product, the subscription service, the app that was launched at the very tail end of last year, etcetera. But if we pick a couple of them and really bring them to life, first of all is really pleased to have completed the refurbishment of the spiritual home of the society at the Vault. Actually, directly above our head here just now. Then SAWS has had a presence here for just over forty years and it's great to now see it back as the kind of international standard in whiskey bar that it is. It's a fantastic venue for those of you who haven't had a chance to to visit it since the refurb, but welcome you here with open arms. It's really fantastic and very well received by members and the way the way the public and industry since it reopened around September time last year.

20:23 The other one is Masterton Bond, which is now fully operational, having produced over 200,000 bottles to date. Cask is about 85% food, which is pretty much at its operational capacity. All of our UK e commerce fulfillment as well as our international shipment fulfillments are being completed there. And as I mentioned earlier, our first single cast nation bottling is also now being done on-site. So that site is now fully operational and has been since late May, early June last year. So the benefits of that starting to to come through last year, which is great to see. And finally on that single Cast Nation acquisition, buying the trade in assets of the business, which is already cash generative expected to be bottom line profitable, not just EBITDA profitable from year one.

21:14 And a business which is really a great fit. It's also looking to captivate global community of whiskey adventures. It's a business that purchases primarily single cask whiskies. And so as our spirits delivers in The U. S. In particular as well as other international markets. And that American whiskey market is one which we think can continue to grow and expand. And it really is complementary and incremental to our existing business. Scotchgold Whiskey Society in America finished very strongly last year with circa 30% growth in depletions in market in Q4, and that's continued with around 10% growth into the start of 2024. So that's really good and it helps prove the opportunity in that market.

21:59 Really pleased for Jason Joshua and the team there to be awarded the prestigious Independent Bottle of the Year award in The U. S. At the Icons of Whiskey Awards in Kentucky earlier this year too. So that's a really good fit and as I say, off to a great start so far this year. One of the other things that we often ask to sort of bring to life a little bit more is the marketing strategy around the Scottish Warm and Whiskey Society. So I thought I'd set out two things here, one which is the basic principle of how we go about it as well as a couple of case studies to sort of bring it to life. So at its heart is the brand positioning. And then how we talk to members is about recruiting members, retaining them and engaging them. And it's across those recruit, retain and engage. That's how we approach our marketing spend and delivery.

22:49 Now what that looks like may vary by different markets. So if we take an example in The US of a member who joins through, let's say, as a gift for Father's Day, marketed either through traditional digital channels or in gift guides. Here we've got someone with the first stage of recruitment has happened as a gift, but to try to engage and retain them, it's an education piece. So the US team actually phones each individual new member through that process and has an initial call with them to explain what the society is, maybe give them an opportunity to ask questions, maybe try to see what kind of whiskeys they're interested in, try to see if there's an opportunity for them to buy the first bottle for us because we know that the sooner people get liquid to lips and try some Saxe whiskey, the more likely they are to get the proposition to stay for long time.

23:41 Another path to contrast that in The U. S. Might be someone who has joined from a corporate corporate tasting event. So some there we offer with a ticket price of those events, maybe a $150, and that will include year one membership. So in that scenario, the recruitment has happened through a channel where that new member has actually had an opportunity over the space of an hour, an hour and a half to, maybe a couple of hours to to taste some whiskeys, to hear about the society. So there, the targeting and onboarding journey around engagement retention is getting them to buy their first bottle to spend their own money for the first time to come to an event in a local partner bar or to buy their first bottle online and helping them through that process.

24:27 So the paths differ across markets and recruitment channels, but that principle of brand underpinning which recruitment, retention and engagement driving all marketing decisions and spending.

24:42 Then look ahead and think about the long term global growth opportunity it really is a significant and growing addressable market. And while the full 2023 data isn't out yet, I have seen the headlines and the headline is that the premiumization trend has continued and there is continued growth in the ultra premium Scotch Whisky market into 2023 again. But even before that continued growth, it was already over an $8,000,000,000 global market, really focused on a small number of key markets that we're already present in. So you can see from the chart, makes sense that the new markets we added were Taiwan and Korea. If you were to extend as well as changing our partner in Malaysia, if you were to extend that graph, that table down and look at the markets that were not present in the significant growing markets, you get places like Vietnam, Brazil, Nigeria, India.

25:38 Those then become the next areas to look at, but it needs to have the signs, it needs to have the maturity of the whiskey market, needs to have a regulatory financial framework that makes sense, but that becomes the next pool in which to look at as we look to expand further. And that expansion being supported by, as I say, continued premiumization. Just as a member, everything that we do across ASC is in that ultra premium above price points with most of that being driven direct to consumer through e commerce. So to wrap it up, in summary, current trading has started well. The acquisition of Single Cast Nation helping build the group and contribute profitably to the growth this year.

26:27 10% revenue growth even before that

26:31 real contribution from single cast nation giving us confidence in delivering full year profitability as well as that path from low to mid to high single digit EBITDA margin over the 2024, 2025, 2026 long range plan. So well placed to continue to deliver through that. And it's our actions in this space around making sure that the SMWH range still fit for purpose and globally, that the quality of those releases are still outstanding and amazing around the world,

27:01 driving value from the private cask sales that Billy talked about. And that's everything from our fiftieth anniversary program where casks initially cost between 4,005.5 thousand pounds. Someone gets to be part of the maturation and journey of a cask through its ten years and it'll be bottled in ten years time. And all the way through to the other end where people are buying casks that might cost tens of thousands or hundreds of thousands of mature spirits ready to go. But what's important in both of those is it's the sale of a whole cask worth of society bottles to a society member. We're not going anywhere near the whiskey cask investment schemes and this is about people who really want the whiskey and that's some good progress there.

27:50 Replacing the tilt system, the e post system across the venues, we've already added single cask nation and movie office in The UK and to reflect something that that matches the the ambition for our people. But having done that in such a way that it requires no cash outlay upfront. So founding we found an office that was already fitted out and and all the rest of it weren't there wasn't an upfront requirement to spend money on that, but also one that has the smallest possible EBITDA impact and seven or less than a 100 k of EBITDA

28:20 impact, but giving people the space that really reflects the importance of people to our success. So overall, in a good position, building on the strategic initiatives that were already delivered last year as well as this year gives us good confidence to deliver. So that brings an end to the main part of the presentation. And I'll now go over to questions and I can see that a few have already come through. So I'll maybe start to go through them. But if you do have any more questions, please feel free to keep sending the questions. I'll be happy Billy and I'll be happy to talk through those. The first one was question about why the share prices dropped over 50% in the last year and why.

29:05 And I think there's two things, maybe three things to comment here. The first two relation to the share price itself. We are in some ways subject to the vagaries of the market itself. The A market is for smaller and the liquid stocks has suffered a lot. I mean since the time of our IPO, I think the market is down by over 40% as a whole, the entire AIM whole share index. And the second is that during the course of the year, as I alluded to at the start, while we did grow last year, it wasn't quite at the level of growth that we had targeted for the year. So when we got the momentum back in the second half of the year, we weren't quite able to recover and deliver the full amount that we wanted to in the year. And that's the first time since IPO that we haven't been able to sit here and say we've delivered everything that we said we would sort of. Part of that's fed in.

29:56 But really the important thing is what do we do about that? And Billy and I's job is very clear to deliver the results, to deliver on the strategy and make sure the business is well placed to take advantage of long term growth and trust them that the share price will follow through thereafter. Second question is around trade casks sales. Who are the two and what does the customer typically do with the barrels of SPIRIT? So these are to a small number of trusted industry partners. So some of the same people that we're buying casks from, so sometimes they are surplus to their requirements, so that can include swaps back to distilleries that sold us them before. It can be into others in the industry who are using those kind to put into typically to put into bottle and be sold elsewhere.

30:48 But we're only working with a small number of people who we trust. And again, are not going out into kind of whiskey cask investment schemes. These are back into people who we are happy trading with. Next question says, the acquisition of single cask stations seems much aligned to premium focus. How do you see this enhancing your market position and help push the revenue target to double 2025 particularly in The US? So single cast nation as you see is very much aligned and what's really important is complementary and incremental. So it's, I mean, as the bottle says on it, five Whiskey Geeks, four Whiskey Geeks, it's a wonderful brand that's been built over the last ten years through a combination of Scotch whisky, American whisky and other spirits.

31:38 I think the opportunity for us is twofold. One is to help bring more support to Jason and Joshua and the team there to deliver what we're already doing. But also we've always talked about an opportunity to do more in the American whiskey market. And I think that in that space, single cask nation gives us the opportunity to create and sell some outstanding American whiskeys into that while continuing to do some of what we're already doing. The other thing to note is that when we started some of the initial work around overlaps and customer bases, single cask nations roughly 10,000 mailing list and the Scottish and Whiskey, Saudi America is roughly 7,700 and a half thousand members in The US. The overlap is less than 5%.

32:27 So that says two things. One, the evidence is the fact that the propositions are adjacent but no overlap. They are distinct propositions playing into slightly different angles in the same space. But the second is given that both present in The US selling outstanding, primarily single cask limited edition whiskeys in The US market, when the overlap is less than 5% it shows just how enormous that market opportunity is. The next question is with the membership base growing other opportunities to cross sell or upsell? Of course, that's an area that as a business we're always looking to make sure that we are we're looking at opportunities.

33:17 But particularly when you're operating with a membership base, it's really important that we're only bringing things to people that we really believe in, that we really think are things that they would be interested in, that we can bring extra value to. Where we can do that ourselves, for example, the fiftieth anniversary program, we'll do that. Where it's something that we think people would really love to do but where we don't have the expertise ourselves, let's say whiskey tourism partnering with the right people to bring S and WS members opportunities they can't get elsewhere without distracting us from the core business. The next question is how much stock does single cast nation have and do you envisage increasing it like you've done for SMWS and how would this be financed?

34:04 So first thing to note is single cast nation is a much smaller overall beast the Scottish Whiskey Society as well as obviously within its portfolio of American whiskies which are lower maturation times. So overall, is there a need to increase it dramatically? There's not. And we did it did come as part of the acquisition and most of the upfront payments underpinned by assets including CASK inventory. So certainly plenty to get us going as well as acquisitions that ASC had already done envisaging this deal going through. So there's no huge requirement to invest a lot of money into SPIRIT for this year, for example, you know, the next outflow will be close to zero. So not a lot required there. The next one is you mentioned expanding into new markets in Asia. What does it take to penetrate the market and sustain the growth from a resource and cost view?

35:01 It's quite hard on TANSA because it varies quite a lot by market. So maybe I'll give a couple of examples. In Korea, if I stick my, when we launched in South Africa and Mexico, the way we actually launched franchises in those markets was we work with a partner bar. So the partner bar owner in Cape Town or the partner bar owner in Mexico City said, we'd like to operate the franchise in your country. Very low risk, somebody already knows SWS, but typically a lower take off rate. In Korea, we actually did a beauty parade of potential franchise partners and in FDA Korea, I found a fantastic partner who just got the society goal we're trying to achieve and have done a fantastic job. Know, the opening years target in the first hour and really go what it takes there. So it varies by market.

35:56 When we're looking at new markets, if we think about Asia and think about India, it's not really one market, it's a whole plethora of individual stage with individual regulations. So while the overall market is big enough, what we're looking there is, is it mature enough? Do the regulations support it? Can we actually operate? Do they support single cast spirits or small releases or high ABV products? And then do the commercials work? So there the import tariffs are pretty punitive, but potentially there is still an opportunity. So it does vary by market, but we are only for 2024 ruthless focus on delivering this year's results. So we will only be adding new markets at a time that they can contribute profitably to us. So we will start, you know, start discussions. India is a good example. We're talking to partners now about opportunities, but we would only launch them when we're confident that it can deliver value right from the start and sustainably grow from there.

36:59 Okay. And then last one, will visits to masseter bond be possible for shareholders? I'm pausing because conceptually it's not something that we are actively looking at. As you know, lots of the romance of the Scottish whisky industry reflects lots of wood and lots of open casts. Masterborn is a really effective operating facility. So steel and steel racking and bottling and so on. And it's also a fully operational facility. So from a health and safety perspective, high storage of pallets, cask racking, forklifts moving around, so it's not set up for visits by our shareholders. We have occasionally done events where people can come there once or twice and we would, you know, keep considering those as options but it's not really a destination like the visitor center at Distillery.

38:08 Anything else you'd like to add at this stage, Billy? No. Nothing more. Good questions. Think as Andrew mentioned our short term aim this year is ruthless delivery of results, and and we've had a positive start to the year, and we'll continue that momentum from the second half of last year also. K. Perfect. Andrew, Billy, thank you very much for updating investors today. Could I please ask investors not to close the session? As you know, we automatically redirected 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, but some should be greatly valued by the company. On behalf of the management team of the ARTISANAL SPIRITS COMPANY PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.

38:54 Thank you very much all. Thanks.