Artisanal Spirits (LSE:ART) — Preliminary Results

0:00 Good morning, and welcome to the ARTISANAL SPIRITS COMPANY PLC Preliminary Results Investor Presentation. Throughout this quarter presentation, investors will be in listen only mode. Questions are encouraged, they can be submitted at any time by the Q and A tab situated in the right hand 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 receives in the meeting itself. However, the company can review the questions submitted today and publish responses where it's appropriate to do so. Before we begin, before we'd like to submit the form the following poll. And I'd now like to hand you up to Andrew Dane, CEO. Good morning to

0:32 you, sir. Good morning, and good morning all. Thank you very much for for joining us today for this, full year results presentation. Joined by my colleague, Billy McArthur, our CFO. Good morning. So as a reminder, THE ARTISANAL SPIRITS COMPANY creates and sells outstanding limited edition whiskies and experiences around the world. We primarily do that through the Scotch Malt Whiskey Society, a forty year old business that curates an outstanding and unique range of single cask whiskeys and other spirits to fee paying membership in over 40,000 members around the world in over 30 countries. In addition, we've been developing a group. And last year, we added Single Cask Nation, a US based independent bottler that sells both direct to consumer as well as through traditional retail channels, primarily in The US as well as in a growing number of export markets.

1:24 We also have JG Thompson, brand focused on outstanding small batch blended malt rum and gin as well as a range of other cask and bottling services that we operate through our supply chain facility at Masterton Bond. And what binds them all together is an underlying focus on exceptional quality and a shared purpose of exciting and captivating a global community of whiskey adventurers.

1:52 To cover the headlines for 2024, it was our first positive EBITDA since IPO and actually represented an all time record profit for the group, having delivered just over a million pounds, sorry, just over £1,100,000 against an expectation of a million. And that's been delivered in the context of relatively flat revenue where we saw revenue and diversification, And that increased profitability combining with the transition from stock investment to stock replenishment means we were also cash generative, and that investment in stock over the last ten years means we have a substantial and outstanding asset backing. We've then been growing our membership base. Membership was up four percent led by The UK and Europe, as well as Asian markets with membership growing in the new market of Korea as well as membership up in China.

2:48 That single cast nation acquisition success last year, which we'll talk a little bit about, has been fantastic and helped that revenue diversification,

2:56 as well as strategic delivery across the rest of the across the rest of the group with things like product innovation, creators collection, etcetera, which I will talk about later on. So if we just pause to reflect back for a moment, we've made really good progress since the IPO, and it can certainly be when you look at the share price, it can be easy to forget actually the substantial progress that has been made over the last four years. Since IPO in early twenty twenty one, revenue and membership are both up by almost 60%, and the book value purchase price of our cask spirit is up by almost half. On that asset backing, Billy will tell you about the current position and what that means for the future, but it's worth noting that that's a reflection of the long term strategy of the business, which has been to invest in quality spirit and capture its appreciation as it goes up.

3:50 And we now hold almost 10 times as much liquid as we did when ASC was created to acquire the Scotch Malt Whiskey Society ten years ago, and that gives us all the stock we need for the for the foreseeable future, and it also means we've transitioned into this replenishment stage. So what does that mean for us right now? Well, as I said, since IPO, we've been on that path to profitability cash generation and pleased to have now passed that inflection point. We've now delivered a record profit for the business in what were more challenging economic conditions for consumer businesses, and that reflects the strength, depth, and diversity of our business model. We are now cash generative and have started to reduce net debt as that transition from asset growth to replacement costs significantly changes the cash trajectory for the positive.

4:42 So I'll now hand over to Billy to take you a little bit about that profitable growth. Thank you, Andrew. So I'll give a little bit more flavor around the key elements of the business, what we've delivered in the last year, essentially what we're gonna deliver in the future. So as Andrew mentioned, revenue, marginal growth, we've managed our cost basis, delivered EBITDA, also talk about cash generation and the strong asset back end that we have. So if I start with revenue, as you can see, since 2020, we've we've consistently grown the revenue of the business, noting that in '24, it was marginal. So we increased it from £23,500,000 to £23,600,000. Now if I give you a little bit of flavor behind that, what we're really pleased about, as Andrew has mentioned, is our revenue diversification.

5:30 So if I come on to revenue in a bit more detail. So that point one marginal increase is essentially additional delivery within our Europe region offset with decline in our Asia region. So if I focus on some of the key positives within our Europe region, our trade cast sales continue to grow significantly in line with expectation and in line with our strategy. Our other key colleagues here would be ecommerce and venues events essentially flat year on year alongside the likes of Americas and our rest of world or other if we call it. So in in a tough tough marketplace, there are some industry headwinds at the minute. We are managing to keep our revenue flat in some areas but importantly grow due to some of the strategic implementations over the last couple of years. So I've mentioned trade cast sales, single cast nation as Andrew mentioned delivered fantastically last year delivering a £700,000 revenue and our new markets that we started during FY '23 of Taiwan and Korea delivering full year. So that's excellent. So that's the growth.

6:34 In terms of the offset giving us a marginal revenue increase overall, that represents China. So China, within Asia, in '23 we saw a decline, in '24 we saw a decline as well of around 30%. Now there are some significant headwinds in China and we're doing what we can to manage those, But like many businesses and many spirits in this spirits companies within the industry, this is a challenge. So what we're really pleased about is a growing diversification to manage that and going forward, we we expect that rebound if I use such a word to be relatively slow. So our expectation on China is prudent. It's and therefore, we think the declines aren't what they were. They're not gonna be 30%.

7:19 So as that bottom as that starts to bottom out and we look at our continued strategic objectives, which Andrew will talk about a bit around US and Europe, we are well placed to deliver further revenue growth.

7:32 If I then move on to our cost base, ultimately, the cost base has helped us deliver the the impressive EBITDA or the record EBITDA of the group that we've delivered this year. On marginal revenue, the 1,100,000 deliveries effort delivered through cost base efficiencies. So on the left hand side, you can see our cost base as a percent of revenue is back down towards pre IPO levels. As a reminder, when we at the IPO, we invested strongly in mainly people and systems to really help drive the growth of the business. As Andrew shown, we have we have grown the business. As we've become more efficient, more mature, we've been able to utilize the investment in those systems and investment in those people to drive efficiencies within the business.

8:19 So this year delivering around £1,500,000 of cost base efficiency across commission, advertising promotion or marketing as we call it, payroll and other overheads which we're really pleased about. So as we summarize what we've achieved, we've achieved that record profit for the group of £1,100,000. The chart on the right, the purple line showing our EBITDA and for prior year prior year showing our adjusted EBITDA. You can see that £1,500,000 improvement from £500,000 loss to £1,100,000 profit this year, which we're really pleased about. And what's positive is that we're well placed to deliver revenue growth going forward on a cost base that is sustainable at the level it's currently at so that more of the revenue growth that we deliver will deliver to the bottom line.

9:10 And following up from that cash, Andrew's talked about cash generation. We will continue to be cash generative and what we're really pleased about is an f 24 for example on the screen you can see the cash, the operational cash flow improvement. So EBITDA clearly plays a role in delivering a £3,000,000 improvement in operational cash flow. But what's also clear there is that middle bar of 1,700,000, that's our net working capital. So we've been able to deliver operational cash flow improvement through our US debtor timing, because we're significant US debtor, our trade creditor timing, which is also supported by the cost reduction that we've seen, and also managing our inventory from a dry and finished goods and final bottle stock point of view. That's been really strong as we look to ensure we carry an optimal level of inventory and that will continue going forward.

10:00 As we look ahead and I've talked about profit generation, that will deliver cash generation. So further EBITDA growth will ensure that from a cash perspective, become a bit more cash self sufficient alongside lower investment and SPIRIT and WOULD purely as we have enough SPIRIT and WOULD to last us long into the next decade. So we're in a good place to make sure that we are marginally reducing that net debt from a directional perspective. And just talk about asset backing. We did an asset valuation, an independent asset valuation, should add, in July 2024. And one of the key purposes for us as business for doing that was we have directionally given a view as to what our assets are inherent asset valuation is. So over the past couple of years, we've we've done cask sales. Over the last two years, the return on the cask sales that we've achieved are around 4.9 times net book value. We've always directionally given that view to our shareholders and our investors and anyone interested.

11:00 We've also done a we also entered the game with Ferevinum where we saw similar levels of return. But ultimately, we wanted to get a more a more specific and true understanding of what the assets value there. Ultimately, as Andrew mentioned, we have grown a lot and we think the current share price our views, it does undervalue us a little bit. And as you can see, our market cap is around 23,000,000 or it was at the time of release. Our net debt is around 25,000,000. Our enterprise value is around 50,000,000. That asset valuation is double our enterprise value and four times our market cap and net debt. Now to be clear, the business model is to utilize all those nearly 19,000 casts to deliver the retail value and the gross profit that comes with that, which Andrew will talk to in a minute. But during that we also have the ability to unlock some of the inherent value within those casks. So we will continue to do trade cask sales and we will do some private cask sales. But it's really important for us as a business and others to recognize that there is that strong inherent asset backing behind us.

12:05 So as I close out before handing back over to Andrew, I wanted to give a bit of a view on what our capital allocation strategy is and ultimately it's a balanced approach. So as we delivered cash profit and cash generation this year and we will continue to do in future use going forward, there there are two sides two sides to this, operational use or strategic use. And the first thing I'd mention is Andrew and I both mentioned, we're becoming a bit more cash self sufficient and we will look to make marginal reductions in net debt. Alongside that, from an operational perspective, the key considerations for us are growing the membership and therefore investing in marketing to help drive that. CAST SPIRITS, so as I said, we are we do have enough CAST SPIRIT to last us long into the next decade. But where opportunities arise, we will consider those because as you can see, our ability to make significant returns on tasks is strong and therefore we will always seek opportunities to really exist.

13:02 From a CapEx perspective, the CapEx over the next couple of years is less than has been in previous years. Remember, we've made significant investment in the vaults over the last couple of years the new ecosystem last year which has gone extremely well. But again, always ready to seek opportunities there. And from a strategic perspective alongside the debt reduction is consideration of shareholder returns. At this minute, The dividend policy is no different currently. And as we we reach that growth, want to deliver more cash. And also from an M and A perspective, we're really pleased with the delivery of single cash nation. We don't think it could have gone much better. So it's if these opportunities arise, something similar to single cash nation, we always want to be well placed to utilize those opportunities.

13:48 So that just gives you an idea of how we how we evaluate, how we use our cash as part of our capital allocation strategy. Thanks, Bill. And back to Andrew. Thank you. So that's a really good summary of the success of last year, the profitable growth delivered, the cash generation, and the asset backing. If we now look at where does the future opportunity come from, you heard that in 2024, the profit improvement came from cost savings. Our view is we have now rightsized the cost base and that the future profitable growth comes from top line growth and getting back to double digit top line growth.

14:24 So we've set the process made today, but the future is about getting the business growing again. And we'll talk later on about current trading, but pleased to say q one twenty five is in double digit growth again. So that's where the growth comes from. And I thought it may be helpful to just walk through how we think about a framework for delivering that growth. And first up is our strategic framework, which remains unchanged and focuses on our five key strategic pillars, whiskey, membership, experiences, new brands and audiences, and our people. From a whiskey perspective, that's about returning the focus to creating and selling our own outstanding whiskey. Membership, delivering a step change in that membership to expand our global community of whiskey adventures.

15:09 From an experiential perspective, going big in size and impact to deliver those world's best whiskey experiences. From a new brands and audiences perspective, investing in new premium private cask experience, continue to expand our global brand reach with new markets like Vietnam coming on, etcetera, as well as keeping an open mind to m and a opportunities. From a people perspective, a focus on enabling our people to be their best, recruiting, retaining, and training the best people. And then what we also add is this regional perspective. And since last year, we've been transitioning to these kind of macro geographic regions with strong leadership across each of the key areas supported by the central team. As we look at where the growth is gonna come from, rather than talk through every part of the business, I'm gonna pick two or three key strategic focus areas and try to bring them to life a little bit.

16:05 And first up, I'll talk about whiskey through the lens of innovation and product development. And many of you may well have seen an announcement a few months a few weeks ago about the success of new product development, product innovation in the business. And at the tail end of 2024, we launched the first outcome from our significant range review that we talked about last year and the first series from from that coming out that's new called the Creators Collection, and that's been received to great success. It supports our existing signature, white label core range, and the Heresy ranges, and it showcases the real liquid art of the whiskey making. And following the first, the Peak Plants collection that was released in November 2024, in early twenty five, we followed up with the homecoming collection, celebrating spiritual home of SMWS at the Vaults in Leith through the visual art illustration combining with some of the oldest and rarest whiskeys and most delicious with beautifully designed label by a local artist.

17:06 In 2025, we release more new and exciting creators collection upcoming spring awakenings, as well as really doubling down on the the heresy range of outstanding small batches with great personality, great liquid, great stories behind them.

17:27 So then choose one of the regions, and I think The US, we talk often about it being a key strategic focus for us. And I thought it was worth just explaining why I see that. So first of all, The US is the world's biggest ultra premium scotch malt whiskey market. The total addressable market, over 1,500,000,000. Alcohol and spirits sales in the market have returned to their pre pandemic trend levels, their pre pandemic growth trajectories. The graphs that's what the graphs are showing. On the left hand side, you can see US alcohol sales all the way over the last ten years. And quite often at the moment, people are looking at the last two, three, four years and commenting on an industry in decline rather than looking at the last ten years and seeing a long term growth trajectory interspersed with a COVID super cycle. And some of you may be able to relate to that period of COVID when alcohol consumption was higher.

18:23 The right hand graph also is telling the same story but in a different way. On the right hand side, the dark orange bars represent actual US SPIRITS seals. The yellow bar represents the 2019 forecast for long term SPIRITS growth. And if you look closely, you'll see that 2024 was right on the money. So The US is a huge huge market with the right structural direction, but also my view is that our own footprint in The US is underrepresented. It's smaller proportionally than our presence in other markets. Hence, why we made the the decision to invest in The US at the start of this year, spending £500,000 to transition the business to bring full control of the marketing and operations in the country and really give the team the impetus, the the unleash their capabilities as well as giving them a bit of spending power to go after that market opportunity.

19:25 And the challenge to that team has been how do you double the size of our presence in that market over the next few years? And the team are well up for the challenge. We've made good early progress on some of their target initiatives, everything from a flat rate shipping costs to expanding the reach of our experiential offerings there as well as upcoming direct targeted marketing campaigns, which we hadn't done in the market before. So those are a few examples of the things we've been doing, and those sit alongside, as I said, the acquisition of Single Cast Nation, which gives us another route into the substantial US market where they operate both direct to consumer as well as through classic retail channels.

20:11 So that's an example as well of some of where we are seeking to grow. The third one that I probably will highlight, there's not a slide for this, but I would highlight, is delivering that step change in membership. And we've been working hard to identify new opportunities in how we present the society, how we recruit, and you'll see a number of test and learn things being deployed over the coming year where that's everything from how we present ourselves online. A good example of that is a change in The US where we have been more whiskey led rather than community led in our membership in our marketing to prospects. And what that means in practice is when you land on The US site, you're able to engage directly with the whiskeys.

20:57 You don't have to sign up to the membership before you see the whiskeys. People can add bottles to their basket. When they come to checkout, they ask them, are you already a member? Yes. Log in. No. Don't worry. We've automatically added the membership to your basket. We saw a 2.7 times increase in the number of bottles being bought on day one when we made that change, and that's being replicated in other markets now. Another example is partnerships where we are looking to build on successes, for example, a partnership with Amex in Australia, where they took the the their records of Amex cardholders in Australia who had spent money at the Scottish Water Whiskey Society there, took that, created a kind of persona, and applied that to the much larger Amex membership base, and then allowed us to give a targeted SMS offering to that cohort. And we'll be doing something similar in the in The UK later this year. So just bringing to life some examples of partnerships and approaches which we hope will drive a substantial step change in membership.

22:00 The other thing that we know is, and we'll come to questions later on, but a lot of questions that we receive are around share price. How do we drive the share price? And as Billy and I both acknowledged, a frustration at the disconnect between our business, which is growing, delivering profits, being cash generative and a share price which doesn't match. My view very firmly is that the thing that management can do best to drive the share price is deliver the results of the business, continue to deliver profitable growth, continue to deliver cash generation, continue to demonstrate that significant asset backing. However, there are other things we can do, and one of those is we're driving the level of retail shareholder engagement. So you already have seen this year the level of communications that's going on, press releases, r and s reach announcements, LinkedIn posts, these type of investor meet company presentation, MELO presentation, retail engagement, all stepping up. Press calls, we did 10 press calls on on Monday to go through the results and try to get the word out. But alongside that, you may well have seen this morning's announcement that we're actually relaunching an enhanced shareholder benefit program.

23:11 And the existing program is existing since IPO. It's been very successful. To date, we've had well over a thousand SMWS members have taken the chance to own part of the business, which is brilliant. And that program is being enhanced. So what we're doing is we're offering some incremental benefits to the existing members. So, for example, making the discount on the JJ Thompson site permanent as well as offering the chance for discounts on flights of whiskeys in the venues. But we're also gonna be introducing a new kind of plus benefits, enhanced benefits tier for those who hold at least 5,000 shares. The benefits of that new tier include complementary membership of Scottish Whiskey Society, a slightly larger discount on the JJ Thomson site, as well as savings on vaults collections, whiskey flights, etcetera.

24:01 And in addition, anyone who is a member of that new benefit tier on the 06/30/2025, I. Holds at least 5,000 shares at that date, will also receive a complimentary bottle of an exclusive and delicious commemorative 21 year old Scotch whisky. And that's all part of our plan as we continue to develop the quality of our shareholder engagement, and, you know, sits alongside last week's announcement that we'd relaunched our website. So that's part of the things that management can do on top of the day to day primary focus of deliver the results. So as we look ahead, the future opportunity is substantial, and it's about top line growth, getting back to double digit revenue growth, driving over 50% EBITDA growth as the more efficient business cost base that we have now delivered ensures a greater proportion of that new gross profit flows to the bottom line.

25:02 Then cash generation with the growth in EBITDA, the growth in profits, combining with the reduction in SPIRIT and WOULD spend, delivering cash self sufficiency and, hence, reduction in net debt and positive free cash flow. All of that with asset backing, strong cash for the asset bake that not only supports the core business model and strong returns related to that, but allows us to continue to recognize significant value through other strategic priorities. Then driving growth through market opportunity and membership growth that I touched on, through innovation that you saw through Creators Collection, Heresy, etcetera, noting we'd release a thousand new whiskies a year, so innovation is at the heart of what we do. And then market expansion with the upcoming release and opening of the Vietnam franchise, which I look forward to going out and and being there for the launch of that in the in the coming, coming months.

25:57 And finally, before we move on to questions, just give an update on current trading and outlook. And here, it's really been a good start to 2025, delivering double digit revenue growth in q one. And importantly, that's been driven by bottle sales in Europe supported by the success of that product innovation, Creators Collection, etcetera, as well as early delivery against our full year forecast of cast sales target. And that has again been profitable growth. Year on year profitability increased by more than half a million, meaning that even after paying the one off cost of that transition in The US, profits are still up in q one. And that US investment has allowed us to unleash the potential of the team, resulting in our ability to take greater proportion of the value chain and deliver a long term optimized cost base as well as making us better placed to go after the the opportunity that exists there.

26:56 And then as I said at the start, the bit that binds all of the business together is dedication to quality. We've continued to win awards across the group, you know, primarily across Scottish Malt Whiskey Society. We've awarded something like 300 awards over the last five years as well as single cast nation who again have quality at the heart of what they do, who picked up the icons of whiskey award for independent bottle of the year for the second year running. All those things then combining to mean that we are profitable growth, cash generation, and asset backing. So that, therefore, ends the formal part of the presentation. I'm now looking forward to, going through some of the questions and a chance to engage, engage more fully with you all. Andrew, Billy, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions, and you can do so just by using the q and a tab that's situated on the top right hand corner of your screen. But just while the company take a few moments for you, the questions that have been submitted today, I'd like to run you the recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard.

28:01 As you can see, we have received a number of questions throughout today's presentation. What I'll do is I'll just hand back over to you now to read out the questions where appropriate to do so, and I'll pick up from you at the end. Yeah. No problem at all. So I'll start with the questions that are pre submitted, and there are two questions that are around the share price. One of them says, can you explain the weakness in the share price and outline what the board intends to do to improve it? The other saying the share price seems unreasonably low given the value of the board doing enough to raise awareness. So I'll cover those both together. Certainly, of course, we are disappointed that despite the growth that the business has delivered, that the share price hasn't matched. There are structural challenges, you know, there have been AIM fund outflows over the last couple of years. You understand that the with the company does not set the share price. And certainly, our number one focus on what can drive the share price is delivering the business results, and we're really pleased to have done that. Delivering profitable growth, delivering cash generation, slightly outperforming consensus estimates for this year and with an objective of continuing to do so, as well as other things that are in our control, like the retail investor outreach program that we're we're undertaking.

29:08 The next question is around US UK tariffs, and this is from last week, so it talks about 25% tariff. Many of you may well have seen the the introduction of 10% blanket tariff on all UK products. So a couple of things to note. The first is that we have roughly nine months worth of stock in market, so it gives us time and flexibility. We have also been working over the last six months or so on tariff mitigation plans that we believe can offset the majority of the impact of tariffs on our business. Those are being developed as we speak. The US entity has already been registered. It's going through license kind of application processes, etcetera. So that will allow us to offset the vast majority of the tariff impact on our business, and it's really by moving to a model which is already used by every other SPIRITS business and unwinding the idiosyncrasies of of our current model.

30:02 Yeah. So I've just seen another question coming just now again about tariffs. Can you tell us what revenues earned from exports to the to USA? Last year, was about $5,000,000 of total retail sales, including both membership fees and bottle sales. Just help put that into perspective. Though the tariff applies to The U the the price at which it is imported at, so the tariff would not apply to that full value. K. Thanks. Question here that says, if you were forced to choose between share buybacks and dividends, what would you choose? As Billy has said, we don't have dividends as part of our current capital allocation strategy. Share buybacks are certainly something that we have seen as widespread or growing in a market, particularly where you see a structural disconnect between the value of the business, in our case, 100,000,000 of assets and 50,000,000 enterprise value, or the fact that at the time of IPO, we were valued at four times revenue, that's now closer to one, I can understand why share buybacks in those scenarios would be of interest. As Billy said, we've committed to to not increasing net debt, to reducing net debt. So if there were opportunities to generate surplus cash, it's certainly something that the board has discussed and would consider, though at the moment, we're not we're still not proposing that today.

31:25 The next question is around, I think, thanks for enhancing shareholder benefits today. I own my shares in several nominee accounts. How do I ensure that you know the full extent of my shareholding? We have got a a platform in the background that's able to look through the nominee accounts. So if you hold through Harkis, Lansdowne or AG Bill, where it can look through those accounts. If you're in any doubt, there is actually a a form on our website that allows you to confirm your holding and that will flag to us. If it if it doesn't match our own records, that will flag to us, and we can go and make sure that we're amalgamating accounts across different things if required. If you have any issues, just drop us a message. Use the website. Use the platform that's there. Okay. Next question again is about tariffs. Can you talk about the past experience with tariffs and the outlook there? Does having single cast nation change this in any way for you? So, let's first of all talk about the impact of the previous tariffs, which were 25% on all Scotch whisky imports imposed under the previous Trump period in 2019, I think, came in from from memory.

32:37 At that stage, we did not implement any tariff mitigation impacts, and the impact, I think, was close to a million dollars for us at 25% because it was being charged on the full retail price. So first of all, the tariff this time is a lower number, and our tariff mitigation plan should offset the vast majority of that. So that we certainly don't expect it to be anything like the same overall impact. The other point about single cask nation, I would say in general, we believe that there is an opportunity in the American whiskey market, and single cask nation does represent as a domestic proposition a better op a better vehicle through which we can go after that. It will continue to sell Scotch as well, but that American whiskey waiting within that business will grow over time, and that does, again, help to mitigate some of the impact of tariffs or their exposure to us.

33:34 K. So that's two more questions about tariffs, which I I think have now been addressed. So the next question, I'm vaguely aware of several competitor of whiskey membership businesses. The industry has been difficult in the past couple of years. Is there any change in the competitive landscape in terms of number or strength of competitions? To my knowledge, there is no one who does everything that we do. If you were to lay out our whole business on a page, of course, there are people who do elements of what we do and do those very well. There are independent bottlers, some of whom have direct to consumer, most operate through traditional retail. There are whiskey clubs, but nobody has that combination of the whiskey membership, the international footprint, the direct to consumer, the vast stock holding, etcetera.

34:27 I would say that there has been a period of kind of flux across the industry. You've seen challenges to some distilleries and that's international distilleries like Waterford or MacMira closing. You've seen even large players like Brent Foreman reducing production at Glenvaso, etcetera. That also presents opportunities. And as Billy alluded to, we keep our eyes open and where there are exceptional opportunities to acquire inventory as a result of those conditions, we will we will look at those closely and reconsider extra opportunities there. So the next question is your continued promotion of a dated asset backing number of greater than a 100,000,000 is flawed. The market simply does not accept this. When is your next valuation being done?

35:18 I would say I don't quite agree with that. So the valuation was done in the second half of last year. So I don't think that, necessarily the challenges are being out of date. As Billy said, that valuation pointed to four times book value. Over the last two years, we've delivered five times and that continues through into sales in the early part of twenty twenty five. I think the challenge there is the people who understand the whiskey industry look at the business differently to those who have come in through the traditional small cap AIM fund investment space. So an example of that is that those people who look at this as long term whiskey business with significant asset backing, the 100,000,000 is a helpful validation point of something they already understood.

36:04 The challenge in the context of some investors or potential investors is when you're screening for business, you look at debt. And if you look at that debt through the lens of current profitability, that debt number looks significant. However, from our perspective, you look at the debt as we've got a 25% mortgage on our on our house, our view of that is different. So I'm not sure that constantly refreshing the values we will probably do it again in future, but I'm not sure that constantly refreshing that will necessarily help convince those people for whom the first valuation didn't didn't land the message. I think instead, that combination of having the third party valuation and actually realizing some of the value from the asset to prove the point, by the end of this year, we'll sold something like £10,000,000 worth of cast to demonstrate the value of that and use those funds to reinvest in the parts of the business that we think deliver long term growth, like The US, like the step change in membership, like the launch of the new premium private cask experience. So it would it's redirecting that capital to the areas that are growing the business the most long term.

37:16 K. I think that was all the questions that were submitted in advance or that have gone through just now. Hopefully, that helps bring it to life. But overall, I would say feel really positive. The business has been delivering good results, been delivering profitable growth, cash generation, asset backing, and has had a good start to 2025. We look ahead to a good year. Yeah. And thank you much all again for joining us today. I look forward to engaging with you again shortly. Perfect. Andrew, Billy, thank you very much for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected to provide your feedback in order the management team can better understand your views and expectations. 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 morning to you all.

38:03 Thank you very much.