Switzerland-based company, which owns Boots the Chemist, has been among those targeted by protest groups such as UK Uncut over its tax affairs
Stefano Pessina, the Italian billionaire who co-owns Alliance Boots with private equity firm KKR, has warned the prevailing “anti-business” public mood in the UK could deter companies from investing here.
The Switzerland based company, which owns Boots the Chemist, has been among those targeted by protest groups such as UK Uncut over its tax affairs. Pessina said the government, which recently cut the corporation tax rate, was “business friendly” but added: “My only regret is the atmosphere in the UK is anti-business and this is not a good thing, because investment means jobs and that’s what we need in this country.”
The retail and drugs wholesaler group reported pre-tax profits of £660m on sales of £23bn in the year to 31 March. The profit figure was depressed by finance charges of £434m relating to its multibillion-pound debts. The company paid £26m of tax in the UK, which compared with £10m in 2011. That followed a year in which UK trading profits increased more than 5% to £750m. Its finance director George Fairweather said its tax bill would have been higher had it not received tax relief on contributions made to its pension funds. Interest payments were a “valid expense for tax purposes”, he added.
Alliance Boots has also been using spare cash to cancel its debt which was cut by £826m to £7bn during the year. No dividend was paid to shareholders.
Pessina, who is based in Monaco and is estimated to have a personal fortune of $2.6bn (£1.63bn), said they had invested close to a £1bn in the UK over the last five years and made larger payments to its pension funds than those agreed when the takeover deal was being negotiated. There were countries where it had not invested “£1 for 10 years or more” because of the unfavourable business climate, such as higher tax. “The UK government is doing everything they can to attract business but this criticism, or hitting of business, doesn’t put companies in a very favourable position,” he said.
Pessina, 70, said he had no plans to retire or even hire a chief executive to replace Andy Hornby, who unexpectedly quit the £1m-a-year post last year. “We don’t need a CEO,” he said, adding that the leadership team was so in sync that even his “leadership is not indispensable anymore”. Pessina, who transformed his family’s ailing Naples drug wholesaler into the pharmacy giant Alliance UniChem, which merged with Boots in 2006, also indicated his preferred “exit” would be via another merger rather than a fresh stock exchange listing: “I believe a merger would be better than an IPO,” he said, explaining that partnerships delivered business synergies.
The squeeze on consumer spending coupled with a cut in the amount paid out by the government for dispensing generic medicines made life difficult for Boots the Chemist with like-for-like sales down 1.1% for the year. While demand for its No7 make-up and “miracle” face creams held up, the mild winter hit sales of cold and flu remedies with retail health sales down 2.4% at £891m. “Sales were impacted by strong competition and lower volumes of cough and cold related non-prescription medicines following a significantly lower incidence of such ailments this winter,” said Fairweather.