Boots had a good year, but the headlines tomorrow will be dominated by its tax affairs

There are two phrases Stefano Pessina seems to utter in every sentence: “healthcare” and “double-digit growth”. The Alliance Boots co-owner and executive chairman used both a lot this morning as he delivered full year results which achieved the latter goal, even if the 14.2% growth in trading profit was driven by the less well-known pharmaceutical wholesaling business rather than the better known high street retail business.

Retail sales were up only 1.7%, with a VAT inclusive increase in like-for-likes of 1.2%. Trading profit rose 5.5%. It wasn’t a bad retail performance but there were no fireworks. Yet the business is making decent progress, developing its multichannel offer well and building partnerships with other retailers like Waitrose and Mothercare to give it authority in categories where it isn’t traditionally strong.

The business faces two strong headwinds in the shape of the supermarkets steadily encroaching onto its territory, and governments both here and overseas needing to cut spending on medicines. It’s a well run outfit though with good answers to deal with these questions, but is likely to be a solid rather than spectacular performer in the years to come.

I went down to the press conference today and as is often the case with these things, in Alliance Boots’ attempt to be transparent and open, it was a bit dull. Until the subject of tax came up, that is. First finance director George Fairweather then Pessina got grilled about how much tax Alliance Boots pays in the UK. Fairweather gave a figure of £240m but refused to confirm how much - or little - of that was corporation tax.

Pessina seemed unruffled by the whole business. I asked him if he cared that he was being bracketed with companies like Arcadia by tax protestors, and he brushed it off, saying “I couldn’t care less. Because I know they are wrong.” He stressed that neither he nor KKR had been paid a dividend and would not be until the company was sold, and that the profits are being reinvested into the business and the pension scheme.

My view on tax is this. If I had a choice of paying x tax, or y tax, and y was 10% less than x, I’d pay y. If the system allows entrepreneurs to be ‘tax-efficient’, why wouldn’t they take advantage of it? It’s down to policy-makers to make sure people pay the right amount of tax by making sure the system works,