A SURGE in profits at Glasgow-based whisky producer Whyte & Mackay (W&M) is likely to help drinks giant Diageo sell the business towards the top end of the expected price range.
Scotland’s biggest whisky firm is looking to offload most of W&M’s businesses as part of negotiations to acquire a controlling stake in Indian billionaire Vijay Mallya’s United Spirits.
Former Del Monte owner Vivian Imerman is considering buying back W&M in a deal likely to exceed £600 million.
W&M’s financial report and accounts show that pre-tax profits rose 27 per cent to almost £33.6m in the year to end-March 2013 from £26.3m last time. Turnover increased from £227.2m to £263.4m.
The profit was struck after exceptional charges of £1.9m relating to “onerous” lease provisions, property costs and some business restructuring. W&M, whose other brands include Isle of Jura, Glayva and Claymore, said the lease provisions related to properties in Glasgow and Edinburgh that are vacant or sub-let at a discount.
Mallya stepped down as chairman last summer along with chief executive John Beard. The company said the lease provisions took account of “current market conditions” and expected future vacant periods.
Underlying operating profits, before exceptional items, climbed to £35.8m from £28.6m. There is no dividend, with profits being added to W&M’s reserves.
The highest paid director, likely to be Beard, saw an increase in salary from £516,000 to £535,000.
The group’s net pension deficit rose to £9.3m from £6.4m in the previous year, following the final-salary pension scheme being closed in April 2012.
Diageo’s attempt to gain majority control at USL has been stalled following a ruling of a court in India last Friday. Diageo is appealing the decision.
Analysts believe the court intervention will not stop the £1.28 billion deal from going through. Should it do so, it would raise Diageo’s stake from 19 per cent to 53.4 per cent in a key growth market.