LEAMINGTON SPA: Wolseley, the £4.4bn plumbing and heating merchant's announcement to exit the UK and set up its headquarters in Switzerland for tax purposes sent a shockwave through the industry.
Although chief executive Ian Meakins said the company had "no political axe to grind", the announcement was nevertheless a blow to the coalition Government's future plans.
"We have to do right by our shareholders," said Mr Meakins, who joined Wolseley from Travelex last year. The move will save the national merchant £23m a year.
Mr Meakins said that Wolseley would continue to pay UK tax on its British operations. "The Government has inherited the tax situation on controlled foreign operations. We engaged positively with Her Majesty's Revenue & Customs and with the new Government, but could get no solution. They must be as disappointed as we are. If things change for the better, we could come back."
The Government has pledged to simplify the tax system and shake up the controlled foreign corporation tax (CFC). The Treasury admitted that there would not be any permanent changes until 2012 at the earliest.
Wolseley has lost a fifth of its size in three years, but is in better shape as a result. Of the 42 businesses across the group and the 19 'performance builders', only 10 remain. Brandon Hire was sold, other businesses have either been integrated or are being wound down or disposed of. And, although not actively being considered, under scrutiny are France's Brosette and the UK's Build Center with £ £400m of sales.
Across the Wolseley group, operational profits before exceptional items turned around from a £148m loss to a £135m profit. However, a clutch of 'exceptionals' that included a £138m write-off of a computer system, meant a £328m pre-tax loss against £766m last year. There will be no dividends until this year's interims.
The company was, however, reported to be encouraged by its Q4 revenue growth of 4% and a rise of 5% in the UK and the US.