Losses widen at SMWS but future is bright

The London-listed owner of the Scotch Malt Whisky Society (SMWS) widened its losses in 2023 – but hailed “another year of revenue growth and diversification” and said the results “marginally” exceed the update given at the tail end of the year.

The Aim-quoted Artisanal Spiritscompany(asc)hasposted a pre-tax loss of £3.6 million, up from £2.1m in 2022, which it saidwaspredominantlyduetoa £1.1mhitfrominterestcostsand depreciationfromthenowfully operational £2.5m Masterton Bond production facility in Uddingston that was launched in March 2023.

However, the group notched up

8 per cent revenue growth to reach £23.5m, which it said was slightly ahead of expectation, and “increasingly diversified revenue streams cametotheforewithsignificant growth in cask sales, contributing £2.7m… offsetting a challengingperiodoftradinginchina”. Adjusted earnings before interest, taxes, depreciation, and amortisation came in at £100,000, down from £400,000 in the previous year.

Other milestones include membership growth of 10 per cent in the year to more than 41,000 members (the group flagged breaking the 40,000 threshold in December), supported by growth in USA, Europeandnewasianmarkets.

Finance chief Billy Mccarter toldthescotsmanthatthefirm achievedgrowthagainsta“challenging” economic backdrop, with highlights including revenue gaining momentum in the second half, when it was up 12 percentyearonyear,anda“high and growing” margin. Gross margin stepped up slightly to 63.8 per cent, which Mccarter noted is up 5 percentage points sincethefirm’s£78mstockmarket debut in 2021. He also pointed out the group’s “substantial” increase in cask value in the year, with such assets selling for an average of 4.5 times the book value.

In terms of post-2023 milestones, ASC highlighted its acquisition of American bottling firm Single Cask Nation (SCN) at the start of this year, reinforcing its “increasingly globally diversified footprint”, and expected to top up 2024 profits. Mccarter stressedthatscnis“a really nice, complementary,incremental fit, working with people who are fundamentally trying to deliver something that matches with our purpose”, and as for whether more similardealsareonthecardsfor ASC, he stated that the current priorityisdeliveringvaluefrom the SCN transaction,.

In terms of the Edinburghbased firm’s planned relocation, in the second quarter of this year, to a new HQ in the centre of the city, he said this will have a marginal sub£100,000 impact on the group, “which is a well worthwhile investment”.

Looking ahead, ASC said its profit delivery for 2024 “remains in line with consensus market expectations, and Mccarter added: “We’re not reliant on significant growth to be able to deliver our forecasts, giving us the chance to go and setdownagoodsetofresultsfor this year.”