Media Enquiries

Brunswick Group    

Helen Smith      +44207404 5959

Will Booth       

Eastimperial@brunswickgroup.com

About East Imperial

Founded in New Zealand and Singapore in 2012, East Imperial produces a range of ultra-premium mixers that sell throughout APAC, US and EMEA. Guided by a clear strategy to capitalise on the growing demand for premiumisation across the beverage industry, East Imperial has sold over 20 million bottles in over 20 countries since its founding, with popular products including Old World Tonic, Grapefruit Tonic, Yuzu Tonic and Mombasa Ginger Beer. In 2022, East Imperial won 8 medals, with two awarded best in class at the coveted Tonic & Mixers Masters Competition in London.

The company was founded on the philosophy of creating exquisite products defined by heritage, tradition and authenticity. All products are made from the highest quality, all-natural ingredients, reflecting East Imperial's commitment to providing a sustainable product and minimising environmental impacts at every stage of the manufacturing process.

For more information about East Imperial and its ultra-premium mixers, visit eastimperial.co.uk.

Strategic Update

East Imperial Plc revenues grew strongly in the first half of 2022 up 26.3% from £1.02m to £1.28m. This growth reflects the return of key on premise markets in the US and Europe as well as continued off-premise growth in New Zealand as grocery ranging was extended. H2 is traditionally the stronger half for the business typically in the vicinity of 80% greater.

Revenues in the APAC region was below last year due to New Zealand maintaining heavy Covid restrictions during the summer high season. However, New Zealand is now seeing on-premise return to pre covid levels bolstered by significant off-premise growth. Momentum has begun to build in Singapore as it opened fully through H1. The Asia Pacific region is the cornerstone of the East Imperial brand story and we are now seeing the region return with expectations of a strong H2.  Our new distribution partnerships in Singapore and Hong Kong are building strongly. The addition of our new China distribution partner will begin to see volume uplifts in Q4 and beyond.

US sales are 132% up on last year as we implemented phase one of the Republic National Distribution Company (RNDC) national distribution rollout through twelve states. This has placed the business in a strong position to leverage for a strong finish in H2. With the work carried out in the US in H1, we are confident that we have a strong base for growth in 2023 and 2024.

The first six months of 2022 has seen the challenging environment in the previous year continue. The team has done an incredible job operating in such a challenging environment to successfully manage the pressures on margins.

Financial Review

The Group's performance in H1 2022 was pleasing as we saw significant growth with revenues up by 26.3% to £1.28m demonstrating continued post-Covid recovery. Revenue improvement has been driven by the key US market experiencing significant growth as the US returned to more normalised trading patterns and the new national distribution partnership rolled out.

The 2022 H1 gross margin of 17.5% reflects a fall compared to 25.6% in 2021. This fall reflects the industry-wide challenges of the supply chain through this period. Much of the margin challenges were evident in Q1 and by June 2022 margins have returned to 22.3%. We will continue to see this improve through H2 as volume grows. Much of the Q1 margin issues were due to lower volumes and the impact the semi-variable margins costs such as warehousing have on our business. There are a number of large fixed costs which require a build of volumes to normalise these costs and the improvement seen in June demonstrates this beginning to happen. We expect this margin improvement to continue and to grow as we move operations closer to markets.

We are focused on the significant opportunity ahead for the Group and growth opportunities in global markets. We have invested in the brand, our people and our ability to execute on growth. This led to underlying operating expenses increasing by 238% to £1.68m (2021: £0.45m). It is worth noting that the costs of the listed structure drove significant cost increase of £0.33m with directors +£0.13m and professional services and regulatory fees +£0.2m.

People costs increased by £0.32m while sales and marketing-related expenses increased by £0.16m, both reflecting the investment in growth of the business. The increase in people costs reflects our commitment to invest in the building of our team in 2022, with a particular focus on the building of capability and growth capacity in the US. We do remain a lean operating organisation and do not anticipate growing head count significantly from where we are today. Marketing and sales costs reflect the extra support costs invested as we roll out in the US market.

The Group generated an operating loss before exceptional costs of £1.46 m in H1 (2021: £0.5m). This was in line with expectations reflecting the ongoing investment in growth.

Outlook

Looking into later in the year and into 2023 the pressures on margins will be addressed as volume grows and as we move to bottle products closer to key market. With the strategic importance of the US, we will be bottling in the US to service this market. This will allow us to control costs more effectively and become more proactive to the demands of this market. We remain focused on margin improvement opportunities in the medium term while also focusing on driving significant top-line growth.

Cash Position 

As at 30 June 2022, the Group had cash balances of £1.56m and net current assets of £2.8m.  The company raised £3.4m as part of a private placement of new share issuance in January 2022, this is being used to cover working capital, and to finance ongoing growth initiatives. Cash burn showed significant improvement in Q2 with a reduction in the cash balance of £0.47m.

Going Concern

The condensed consolidated interim financial statements have been prepared on a going concern basis. The Directors have carefully assessed the Group's ability to continue trading and have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for at least twelve months from the date of approval of these condensed consolidated interim financial statements and for the foreseeable future.

The Directors have assessed the strategic plan and forecasts prepared for the next three years. An assessment of cash flows for the next three financial years has indicated an expected level of cash generation would be sufficient to allow the Group to fully satisfy its working capital requirements and cover all principal areas of expenditure.

Having assessed the principal risks and the other matters discussed over a three-year period to June 2025, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing its condensed consolidated interim financial statements.

Principal Risks and Uncertainties

The principal risks and uncertainties currently faced by the Group are reviewed regularly by the Board. The principal risks faced by the Group are set out below and the Board considers the risk levels to have remained the same since December 2021.

•       The Group is exposed to the impact of the ongoing outbreak of COVID-19 and the risks relating to measures imposed by national governments to control the outbreak. In the past, this has seen the closing of on-premise locations across multiple key territories. The Group continues to actively monitor the situation in all jurisdictions they operate in and remain agile in adapting to changing market and operational conditions.

•       Regulatory changes in each market could have an adverse impact on the Group. The Group monitors legislative and regulatory changes and alters its business practices where and when appropriate.

•       An unforeseen loss of key personnel. The Group has a continuity program in place to ensure that Directors are able to minimise the disruption caused by the potential loss of key personnel. The Company also has in place a Short-Term Incentive Plan (STIP) for all employees and an Options scheme for senior team members for the purposes of both reward and retention.

Forward-Looking Statements

Certain statements in this interim report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to be correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. It undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

Statement of Directors' Responsibilities

The Directors confirm that the condensed consolidated interim financial statements for the six-month period ended 30 June 2022 have been prepared in accordance with the Disclosure and Transparency Rules (DTR) of the Financial Conduct Authority and with International Accounting Standard 34, 'Interim financial reporting', as endorsed for use in the United Kingdom and gives a true and fair view of the Group's assets, liabilities, financial position and profit and loss.

In addition, the interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

•       An indication of important events that have occurred during the period and their impact on the condensed interim financial statements, and a description of the principal risks and uncertainties for the remaining period of the financial year; and

•       Material related party transactions in the period and any material changes in the related party transactions described in the last annual report.

The Directors of East imperial Plc are listed in the East imperia Plc Annual Report for the year ended 31 December 2021. A list of current directors is maintained on the East Imperial Plc website.

The interim management report was approved by the Board of Directors and the above responsibility statement was signed on its behalf by Anthony Burt.

EAST IMPERIAL PLC

 INTERIM REPORT

FOR THE SIX MONTHS ENDED 30 JUNE 2022