Questions for Burn Stewart: The Investment Column

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The Independent Online
For whisky distiller Burn Stewart to publish its delayed results on the same day as DIY retailer Wickes revealed details of a four-month investigation into accounting irregularities was unfortunate, to say the least.

But Burn Stewart's directors rather made themselves a hostage to fortune by publicly disagreeing with their auditors over the treatment of an accounting standard, FRS5, and insisting that publication of results for the year to June, due on 2 October, was deferred for a fortnight.

In the event, pre-tax profits collapsed 74 per cent to pounds 1m and the dividend was cut from 5p to 3.4p.

The accounting item in question - believed to relate to the treatment of whisky stocks handled by a consultant for the Chinese market - was responsible for an estimated pounds 3m of the profits shortfall.

The City's reaction was swift with the shares marked down 7.5p to 74p, their lowest level since Burn Stewart joined the stock market at 140p five years ago. In that time sales have grown from pounds 38m to pounds 54m but profits have shrunk from a peak of over pounds 10m in 1992 as the whisky price war took its toll. How directors can square this record with the "remarkable progress" they claim to have made in recent years is not clear.

The report and accounts may throw more light on these issue. And until Burn Stewart provides more answers, the shares are best avoided.

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