A troubled German electrical goods chain, which Kingfisher gave away to its former owners two years ago, has come back to haunt the DIY retailing giant.
Kingfisher admitted yesterday that it was being forced to take a £16.6m exceptional charge to write off a loan to the purchasers of the loss-making retail chain ProMarkt.
Seven years ago, Michael and Matthias Wegert shared £111m when they sold ProMarkt to Kingfisher.
Under Kingfisher’s five-year ownership, losses at the electrical chain totalled more than £85m.
Two years ago, before demerging its electricals business Kesa, Kingfisher paid the Wegert brothers £35m to take ProMarkt off its hands.
Yesterday, Kingfisher admitted that the remainder of its “working capital loan” had failed to be repaid by the Wegerts in January, as expected.
Kingfisher’s finance director Duncan Tatton-Brown said that although the loan had been extended, the company had decided it was prudent to write it off.
Kingfisher also said its pre-tax profits rose 17.5pc to almost £671m on sales, up 8.7pc to £7.7billion for the year ending January 29. A final dividend of 6.8p is payable on June 3, making a total of 10.65p, an increase of 10.4pc.
Last month Kingfisher disappointed the City with a surprise fall in underlying sales at its core B&Q DIY chain, the first tumble in quarterly sales in almost three years.
Yesterday chief executive Gerry Murphy said colder weather meant that B&Q and Castorama, its French DIY business, had suffered a weaker start to the new financial year.
Mr Murphy, who is hoping the current milder weather will boost sales of plants, garden furniture and sheds, said: “My sense is that UK retail is tougher this year than last but I think we’re in good shape to deal with a tightening environment.”
Additional contributions totalling £250m will be made to its pension scheme over the next three years. The fund has a £200m deficit. “We can afford to sort this uncertainty,” said Mr Murphy.
Kingfisher shares rose 5 to 295½p.
from The Telegraph