UK mineral water producer Highland Spring has blamed last year's G8 summit in Scotland for a slump in profits during 2005.

The company, based only a few miles from the Scottish town of Gleneagles where the summit was held last July, said it had to temporarily close its distribution centre due to security measures surrounding the event.

The closure contributed to pre-tax profits plunging 23.6% to GBP3.2m (US$6m) last year. Highland Spring, which produces the best-selling sparkling water brand in the UK, also cited a rise in raw material costs and increased marketing expenses for the fall in profits. Revenues, however, rose 6% to GBP51.6m.

A spokesperson for Highland Spring told just-drinks today (6 November): "The company took the decision to reduce any potential operational risks to the business by holding stock in another part of the country in the event that distribution was constrained in some way.

"This indeed proved to be the case on more than one occasion during G8 and Highland Spring were satisfied that they had taken the appropriate and essential actions in advance."

She declined to comment on whether the company had asked the UK government for compensation for the disruption caused by the G8 summit.

However, a spokesperson for the Scottish Executive told The Scotsman newspaper that the UK government had made it clear Highland Spring would not receive compensation over the disruption.

"The company has written to the Foreign and Commonwealth Office and the Scottish Executive and their concerns have been fully addressed," the spokesperson said.