Boots – What went wrong?
Until 2004, I work for Boots. Every year the company made huge profits – £4-600 million as I remember. Therefore I was absolutely amazed via the BBC website to hear that Alliance Boots have just released their figures and that they have made “only” £13 million in the last year. What went wrong or is this the result of the £11 billion debt they’ve had to manage?
After all, I know i was good but………
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Category: Pharmacy News
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I found the answer to my question yesterday in the Times – they had to pay £623million in interest payments last year – wow!
Boots are an awful company, a virus that has infected pharmacies and consumed vas amounts of independents, I hope they go bust, Boots RIP
Interestingly though, our poll seems to indicate that they are the most popular individual company to locum for. (Although independents as a whole are more popular)
The change in reported profit is all down to the massive change in capital structure which resulted from the LBO. They may have to pay £623m in interest (which is allowable for corporation tax) but they don’t have to pay any dividends. This is the main reason for gearing up the balance sheet with debt, which is cheap at the moment and also tax efficient. It also means that the management can decide what to do with the cash without public shareholders demanding their dividend cut. With over a £1bn of cashflow, I’m sure they’ll be around for a while yet ! Also, I think previous years benefitted from some nice one offs, like the sale of the OTC business, which makes this year look extra bad !
Thanks for the explanation Valerie.