Owner of Edradour sees sharp rise in profits as margin grows

THE firm which owns the Edradour Scotch whisky distillery in Pitlochry has reported a 10.5 per cent increase in turnover, driven by export sales to markets including Japan and Taiwan,

Signatory Vintage Scotch Whisky Company made a pre-tax profit of £6.7 million, up 30 per cent, on revenue of £11.7m.

Writing in accounts newly filed at Companies House, the directors said the “significant margin expansion” came as a results of price increases and improved product mix.

The growth of Edradour single malt whisky was 5.7 per cent in volume terms, with sales revenue up 20.7 per cent.

Providing an update on a second distillery being built at Edradour, the directors said distillation is due to begin next month, increasing capacity to 200,000 litres of alcohol per year, with space for additional washbacks which could increase this to 500,000 litres.

The directors said that there remained a general shortage of stocks against forward sales forecasts, but this should ease in 2021 when additional stocks laid down to mature in 2011 when the company moved to a six day week will help alleviate this.

Post year-end the company acquired £4.9m in stock, drawing down £4m of bank funding to support the purchases.

The company employed an average of 21 people. The transition to digital tax services will “change beyond recognition” the accountancy profession, according to the managing partner of one of Scotland’s oldest firms.

Phil Morrice ends 2017 having overseen the 150th anniversary of Glasgow-based Alexander Sloan, a business which has retained its independence in as sector of constant consolidation.

And Mr Morrice said that consolidation would likely continue, while he warned that firms which did not modernise faced going out of business.

“It’s because we move with the times that we survive,” he said. “If we were set in our ways, like lots of accountancy and legal firms are, they are the ones that end up not surviving.”

Mr Morrice said in its 150th year, the business has had a “reasonably good” performance, turning over around £2.5 million – but he added market conditions remained tough, and the firm was adapting to a changing world.

“The world of accountancy is changing beyond recognition,” he said. “Making tax digital coming in, the whole cloud-based services, and we’re moving into things like virtual financial services for clients.”

The Government’s making tax digital plan, which will see all tax returns for businesses filed online by 2020, reducing the requirement for tax return teams. This has forced accountants to diversify.

Virtual financial services is one such focus. “There are lots of SMEs who need a finance director but can’t afford one,” said Mr Morrice. “With IT nowadays you can provide that service remotely. If we were to go to medium-sized engineering company every day the cost to them would be huge, so they’d have to employ someone themselves, but they can’t afford either of those options.”

Instead, Alexander Sloan can manage the firm from its own office and visit once or twice a month. “That’s where we see the

Phil Morrice has overseen the 150th anniversary of Alexander Sloan.

future,” he said. “Pretty much all our services are going to have to change. Making tax digital is going to transform services for business, you have to be on the front foot for that.”

Of the firm’s enduring independence, he said: “There have been opportunities over the years, firms have approached us; we’ve acquired firms ourselves, and basically each time we’ve weighed it up and we’d rather keep out independence”.

He added that the firm, which last made an acquisition more than a decade ago, was looking at potential targets again.

“We have had discussions, we’re always interested in what’s out there,” he said.

The firm has 50 staff, with 40

based in Glasgow, and the remainder in an Edinburgh office which was opened ten years ago. In March, David Jeffcoat was promoted to partner at the Edinburgh office, and Mr Morrice said: “We want to push on and grow that business, we see opportunities there, it is definitely a place with a lot of potential for growth.”

Mr Morrice said that as well as staff being attracted to a firm with such a rich heritage, clients also like it.

“We’ve got clients we’ve worked with for over 100 years and it is part of their tradition. Family business who have used Alexander Sloan as their accountant is part of who they are,” he said.

Many of these long-term clients joined staff from the firm at a civic

reception held at Glasgow City Chambers to celebrate the 150 year milestone.

“It was brilliant, went extremely well,” said Mr Morrice of the event. “It is a magnificent building and everyone was just thrilled. It was great for staff, we wanted to focus that event on staff rather than just clients.”

The company’s website gives little away about the age of the company, contemporary branding deliberately portraying the business as one which operates in a digital world.

“We don’t want to fall into the trap of people thinking we’re an old-fashioned accountants,” he says. “If we were we wouldn’t be 150 years old because we’d have been swallowed up.” GVC Holdings, the online gambling giant, has agreed to pay up to £4 billion for the Ladbrokes Coral group, creating one of the largest betting firms in the world.

It is expected that Ladbrokes Coral’s Glaswegian chief executive Jim Mullen will leave the business upon completion of the deal.

The acquisition comes after lengthy talks between the parties. It will see Isle of Man-based GVC acquire the share capital of Ladbroke Coral at a cost of 32.7p per share and 0.141 shares in GVC.

Ladbrokes Coral shareholders will also receive a “contingent entitlement” of up to a further 42.8p, which is dependent on the result of a government review into the use of fixed odds betting terminals.

GVC said the deal had “compelling strength and scale” with cost savings expected to be in the region of £100 million.

The board of the enlarged group will comprise Lee Feldman as chairman, Kenneth Alexander as Chief executive, Paul Bowtell as chief financial officer and non-executive directors drawn from the current GVC board.

Mr Alexander, said: “The creation of one of the world’s largest listed sportsbetting companies, combining a portfolio of established brands, proven technology and leading market positions in multiple geographies, is a truly exciting prospect.”