Loch Lomond hails response to Covid-19

The distiller, which makes the Loch Lomond and Glen Scotia malts and the High Commissioner blend, reported a 2.3 per cent rise in turnover to £54.1 million for the year to September 30. Loch Lomond said the growth was “modest” and reflected its transition from high-volume to premium products, while highlighting its ongoing global expansion. Its whiskies are now sold in 120 markets.

However, it noted the effect of the coronavirus crisis on business since year-end, with Loch Lomond becoming one of the first distillers to switch to producing hand sanitiser to aid NHS workers in the fightback against the disease.

The company’s distillery in Alexandria has now produced more than 40,000 bottles of hand sanitiser, which it has distributed free to frontline services and key workers.

Loch Lomond has temporarily suspended production at its Glen Scotia Distillery in Campbeltown and furloughed 25 staff at the site, though expects to start distilling again soon. It said it was confident of being able to catch up on lost production volumes after lockdown conditions are eased.

Moreover, the distiller reported that its brands in the UK have benefited from the significant rise in take home sales observed since the hospitality trade was forced to shut down in March. It added that it was similarly well-placed in international markets.

But while the company said it was trading strongly and that its balance sheet is “robust”, Mr Matthews highlighted the importance of conserving cash and flexibility in light of the “highly unusual circumstances arising from Covid-19”. He added: “As such, we have now frozen all significant new capital projects, as well as scaling back immediate marketing and commercial activity where sensible across the group.”

The new accounts are the first Loch Lomond has filed since its acquisition by a major Chinese private equity firm in June of last year. Mr Matthews increased his own minority stake after leading the deal which saw Hillhouse Capital Management acquire the majority of the shares. The deal was hailed for providing a platform to drive sales in China, and the firm noted yesterday that its Loch Lomond and Glen Scotia brands are performing strongly in the market, though Covid-19 has had an impact.

The value of the Hillouse deal was not disclosed, but it was understood to have been significantly higher than the £210 million paid when Loch Lomond previously changed hands in 2014, when Mr Matthews led a management buy-in with private equity group Exponent to acquire it from the Bulloch family.

The latest accounts show the company made a statutory pre-tax loss of £17.1m, compared with £10.1m last time. As has become customary in reporting its accounts, Loch Lomond said the loss continues to reflect the structure of the Exponent deal in 2014. That saw the cost of acquiring stock produced before February 28, 2014 recorded in the profit and loss account at its market value, rather than the production cost value.

Loch Lomond said the loss does not reflect its underlying performance. It also noted the accounts reflect one-off costs related to the Hillhouse buyout, as well as “significant non-cash shareholder loan note interest”. Loch Lomond has been loaned £75,684,796 by immediate parent company Glen Scotia Distillery Company, which is due to be repaid in June 2024.

Mr Matthews said: “Loch Lomond Group continues to go from strength to strength and the arrival of Hillhouse Capital Group in our capital structure heralds a new and very exciting chapter in the development of our business and our brands, especially in Asia and, in particular, in the very dynamic Chinese market.

“We are extremely grateful to, and immensely proud of all of our dedicated, resilient and hard-working employees across our business as well as our supply chain partners who have risen magnificently to the many challenges that Covid-19 has presented.”