Scotch Malt Whisky Society owner the Artisanal Spirits Company widens full-year losses but toasts optimistic outlook

The Aim-quoted Artisanal Spirits Company (ASC) has posted a pre-tax loss of £3.6 million, up from £2.1m in 2022, which it said was predominantly due to a £1.1m hit from interest costs and depreciation from the now fully 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 came to the fore with significant growth in cask sales, contributing £2.7m… offsetting a challenging period of trading in China”. Adjusted earnings before interest, taxes, depreciation, and amortisation (ebidtda) came in at £100,000, down from £400,000 in the previous year.

Other milestones flagged 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 and mainland Europe, as well as new Asian markets.

Finance chief Billy McCarter told The Scotsman that the firm achieved growth against a “challenging” economic backdrop, with highlights including revenue gaining momentum in the second half, when it was up 12 per cent year on year, and a “high and growing” margin. Gross margin stepped up slightly to 63.8 per cent, which McCarter noted is up 5 percentage points since the firm’s £78m stock market 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 stressed that SCN is “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 similar deals are on the cards for ASC, he stated that the current priority is delivering value from the SCN transaction,.

In terms of the Edinburgh-based company’s planned relocated 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 without really impacting on the business performance”.

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 set down a good set of results for this year.”

Analysts Wayne Brown and Anubhav Malhotra of Liberum said they saw “no surprises” in the results, and forecast that ASC in 2024 will up ebitda to £1m, but lowered their pre-tax profit forecast to a £2.9m loss. However, they also stated: “Any positive momentum in any of the group’s markets could drive material upside.”