Drumchapel High SchoolEdrington Group business study

November 2011

Page

Purpose 3

Who we are 4

What we do 9

The world we work in 13

Financial highlights 15

Current issues 18

Contents

2

Purpose

The Edrington Group has been invited by the Scottish Food & Drinks Federation (‘SFDF’) to assist Drumchapel High School in its curriculum of business management. This assistance will comprise development of practical or ‘real life’ teaching lessons to complement the existing curriculum.

The key objectives of this exercise are:

• To provide insight into how a local business operates• To tie curricular learning to practical, real-life examples• To convey the opportunities which exist in the Scottish food & drink industry across

learning disciplines

This presentation provides an introduction to The Edrington Group and covers what the business is, does and how it is affected by external factors. The overview will give context to the more specific areas of study which reconcile to the topics included in the curriculum.

3

Who we are

4

Group profile

• The Edrington Group is a private, Scottish company engaged in the distillation, blending and bottling of Scotch whisky and rum.

• It is owned by the Roberston Trust, a charitable organisation established in the 1960’s by the grand daughters of William Robertson, the company founder.

• The Robertson Trust donates the profits it earns from Edrington to a variety of causes across Scotland.

• The group employees over 2,000 people worldwide including almost 500 in Drumchapel.

• Our operating principles reflect those of our founder – namely the 4i’s: Independence, integrity, involvement and innovation.

5

controlling interest

Group history

W A Robertson begins business in Glasgow

1860’s 1930-60’s

1880’s

Key elements founded:-Clyde Cooperage-Clyde Bonding-North British Distillery-Highland Distilleries

Highland acquires Grouse and Highland Park

Highland acquires Macallan

1990’s

2000’s

Edrington acquires Highland

6

Edrington acquires Brugal and Cutty Sark

Robertson Trust created

Group structure

7

Executive Board

Human Resources

Sales & Marketing

OperationsFinance & Admin

Whisky OpsSupply chain

Brands

IT

Finance Legal

Compliance

Commercial

Innovation

DistillationBottling

Logistics

Purchasing

Laboratory

Blending

Cooperage

8

Geography

Dominican Republic

Scotland

What we do

9

The whisky process

10

Barley

WashbacksMash tunGrist mill

GristMalting process

The whisky process

11

Fermentation

GristMalting processDistillation Distillation again!

BlendingMaturation - at least 3

yearsBottling

The whisky process

12

Logistics On-tradeSelling

Off trade

… we also make rum!

The world we work in

13

External factors

COMPETITION

LEGAL &REGULATORY

ENVIRONMENT

14

TECHNOLOGY

SOCIALRESPONSIBILITY

POLITICALISSUESMARKET

TRENDS

SUPPLY CHAIN

ECONOMICFACTORS

WORKFORCE

Financial highlights

15

Financial highlights – Performance

16

GBP £'m 2006 2007 2008 2009 2010

Group Turnover 263.4 278.5 291.5 419.9 468.3Share of JV Turnover 135.1 185.8 235.3 265.4 179.1

398.5 464.3 526.8 685.3 647.4

GBP £'m 2006 2007 2008 2009 2010

EBITDA 89.6 95.3 102.4 148.1 157.1EBITDA Margin 22.5% 20.5% 19.4% 21.6% 24.3%

Year Ended 31 March

Revenues

Profit Margin

Year Ended 31 March

2006 2007 2008 2009 20100

100

200

300

400

500

600

700

800

263 279 292420 468

135186

235

265 179

RevenuesGroup Turnover

Share of JV Turnover

2006 2007 2008 2009 20100

20

40

60

80

100

120

140

160

180

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

89.6 95.3 102.4148.1 157.1

22.5% 20.5% 19.4%

21.6% 24.3%

EBITDA & EBITDA Margin

• Steady growth in revenue and profitability

• Driven by performance of existing business and by new acquisitions

• Strong performance in light of current market conditions

Financial highlights – Profile

17

Balance sheet - 5 Year Trend March 31 March 31 March 31 March 31 March 31£'m 2006 2007 2008 2009 2010

*Restated

Fixed AssetsIntangible Assets 379.3 379.3 897.8 963.1 949.5Tangible Assets 125.8 130.2 160.1 184.8 188.4Investment in joint ventures 30.0 33.5 59.8 78.1 56.9Other investments 1.1 0.8 10.5 12.2 11.6

536.2 543.8 1,128.2 1,238.2 1,206.4

Current AssetsStocks 256.2 278.2 319.8 351.7 378.5Investments 0.0 0.0 13.5 0.0 12.5Debtors 43.9 42.3 79.4 92.0 105.5Cash 33.5 13.3 34.1 50.1 70.2

333.6 333.8 446.8 493.8 566.7

Total Assets 869.8 877.6 1,575.0 1,732.0 1,773.1

CreditorsBank overdraft 17.5 8.7 17.6 7.2 7.6Bank loans 0.0 0.0 14.2 0.0 360.0Other loans 2.5 2.5 2.5 2.5 1.2Trade creditors 11.5 14.1 17.4 16.0 17.9Loan notes 9.8 7.4 6.1 4.6 0.5Loan from joint venture undertaking 11.2 11.1 8.6 6.5 6.3Amount owed to joint venture undertakings9.5 20.7 10.8 17.7 8.7Accruals and other creditors 17.0 18.9 27.3 32.6 69.4Other taxes and social security costs0.6 0.7 0.7 9.4 10.6Corporation tax payable 9.8 8.2 13.7 12.1 11.2

89.4 92.3 118.9 108.6 493.4

Net current (liabilities)/ assets 244.2 241.5 327.9 385.2 73.3

Total Assets less current liabilities 780.4 785.3 1,456.1 1,623.4 1,279.7

CreditorsBank loans 215.0 195.0 568.0 662.8 283.5Less: deferred arrangement costs (0.3) 0.0 (1.1) (1.1) (0.8)Other loans 8.7 6.2 3.7 1.2 0.0Considerations payable in respect of joint-venture undertaking9.2 9.2 9.2 0.0 0.0Other creditors 0.2 0.3 0.2 0.2 0.1

Total debt due more than 1 year 232.8 210.7 580.0 663.1 282.8

Provisions for liabilities (20.7) (21.4) (53.8) (43.9) (45.2)

Net assets (excluding retirement benefit liabilities)526.9 553.2 822.3 916.4 951.7

Retirement benefit liabilities (42.4) (41.2) (20.4) (33.7) (41.8)

Net assets (including retirement benefit liabilities)484.5 512.0 801.9 882.7 909.9

• Steady growth in net asset value of business

• Growing levels of stock to meet increased demand

• Higher level of debt to fund expansion – capital expenditure and new acquisitions

Current topics

18

In the news just now…

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