Investment bank slams Boots’ accounting methods

In a recent report, hotly contested by the retail giant, CSFB analysts said the company’s pre-exceptional pre-tax profit ‘has to be adjusted’ in order for investors to get a clearer picture of underlying growth.

They highlighted Boots’ accounting for exceptional items, the incorporation of off-balance sheet derivatives, and the benefit of its lower pension costs under SSAP 24.

The report said: ‘We believe that many investors are aware of Boots’ recurrent use of exception items, but are generally unaware of the other issues, which on our estimates will collectively contribute £65m to Boots’ reported pre-exceptional pre-tax in March 2002.’

Boots’ share price dropped following the release of the report, reflecting sensitivity over accounting issues in the wake of Enron.

In a statement, Boots responded that its reporting was ‘transparent’ and the information in its annual report ‘complies with accounting standards’. CSFB’s claim that £65m had been ‘added’ to reported pre-exceptional profits, Boots said, was not the case.

Boots shares were last trading at 673p.

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