Company snapshot: Old Bushmills Distillery Co. Ltd.
Bushmills profits goes down smoothly
Old Bushmills Distillery, based in Bushmills village, is a wholly-owned subsidiary of the Diageo Group. The business is engaged in distilling, maturation, blending and distribution of spirits.
Old Bushmills sells the largest proportion of its production through supplying to meet the demands of other subsidiaries in the Diageo group. The company's annual report - 2010-11 - attributes an increase in turnover to the increased demands of the Diageo subsidiaries.
In 2010-11 there has been an increase in production alongside a further increase in capital expenditure, although the rate of capital spending was lower than the previous two years.
Capital spending peaked at £8.7m in 2008-9 but remained high by historic standards. Part of the capital expenditure was attributed to expanded cask warehousing, a vatting upgrade and an improved effluent disposal system.
Although the internal accounting within Diageo may produce particular variations for the Old Bushmills subsidiary, the attributed operating and pre-tax profits for 2010-11 reflect a very substantial improvement - operating profits were exceptionally high at 37% of turnover, in comparison to 12% in the previous year.
The accounting arrangements within the Diageo group have meant that in the most recent three-year period the post-tax profits have benefited from a corporation tax credit. This taxation effect then has the consequence that the balance sheet value of shareholders' funds increased sharply on 30 June 2011 to just over £80m.
As would be expected with a whiskey producer, the value of maturing stocks held by the company is large. Stocks at the year-end were valued at over £68m, double the level only five years ago.
The directors' report offers an extensive commentary on the way in which the company tries to offer 'an energising work environment, personal growth and recognition and attractive rewards for the performance contribution its people make to the company.'