Profits up 50% at Highland: Accounting change boosts results at Famous Grouse distiller

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The Independent Online
A CHANGE in accounting policy boosted pre-tax profits almost 50 per cent at Highland Distilleries for the six months to 28 February.

Highland, which makes the Famous Grouse, made pounds 21.2m on turnover up pounds 1.5m at pounds 98.3m.

The company said pounds 5.1m of the pounds 6.5m profits rise came from taking into the accounts its share of profits from Robertson & Baxter, in which Highland has a 35.4 per cent stake.

Taking just the dividend income, as Highland has done in the past, would have added only pounds 700,000 to pre-tax profits. The balance sheet is also boosted by pounds 44.2m as a result of the change, increasing net assets to pounds 208.7m.

Robertson & Baxter produces Cutty Sark whisky, but also has an interest in the Famous Grouse.

Brian Ivory, Highland's managing director, said the company was reacting to changes in accounting practice. The change involves treating Robertson as an associate company rather than a participating interest.

David Thompson, analyst at Kleinwort Benson, said Highland had been under pressure from the City to equity account for the Robertson & Baxter stake in this way.

John Goodwin, chairman, said the underlying improvement in profits was pounds 1.4m. Operating profits rose 13 per cent to pounds 13.3m.

Mr Goodwin said the Famous Grouse continued to power the group's growth and more than offset a 21 per cent drop in sales of new malt whisky fillings.

He added that overall whisky volumes in the UK had fallen 8 per cent in 1992, but that Famous Grouse had maintained its market share, despite premium pricing. Exports of the brand rose 11 per cent in volume and 21 per cent in value.

He said Highland's distribution tie-up with the Remy Cointreau group was pushing sales ahead in Continental Europe.

He welcomed the Chancellor's preferential treatment of whisky in the Budget, but pointed out that it still attracted 1.8 times the duty paid on wine.

'We're at the first of 15 rounds and we intend keeping the campaign going,' he said.

Highland's earnings per share rose from 7.7p to 8.4p and the interim dividend is lifted to 1.6p (1.45p). The shares rose 3p to 285p.

(Photograph omitted)