For larger contracts, those worth more than £300,000, Boots has a list of three preferred contractors, which work with the group on an open-book basis. This relationship is something between a negotiated contract and partnering arrangement.
It is one year into this procurement process and is constantly reviewing its needs. As part of this review, the company uses key performance indicators to assess contractor performance. These KPIs include, for example, snagging problems and health and safety issues.
For smaller contracts, below £300,000, it will use one regional contractor for each of its store regions. These firms work on an agreed rate basis.
Current and future projects
The sale of Boots' 400 Halfords stores is expected to lead to a fall in the group's capital programme. In the interim report to September 2002, the purchase of fixed assets from the cash flow statement fell to £69.9m compared with £81.1m in the same period in 2001 and £172.1m in the year to March 2002.
The company recently embarked on a programme of improvement for almost all its 1400 stores. This is expected to be completed over the period to 2005/06. By September 2002, 120 London stores had been refurbished with a further 45 refits completed in October 2002. By the end of this financial year, March 2003, it is planned that some 300 stores will have benefited from this improvement programme. The company has estimated that, over four years, it will invest about £240m on store improvements.
Boots continues to open new stores in edge-of-town locations, for example seven were opened in 2001/02. It could open seven to 15 new stores in 2002/03 in edge-of-town or high street locations. These will require an investment of £3-5m. This level of new store openings is expected to continue into 2003/04. However, with new sites becoming more difficult to obtain, Boots is looking at other options. One avenue has been to open Boots outlets in Sainsbury superstores; six of these implants were opened in 2001/02.
In July 2002, Boots sold its Halfords division to CVC Capital Partners for £427m and the group's operating divisions now comprise Boots the Chemist, Wellbeing Services, Boots Healthcare International and Boots Retail International. The bulk of its £5.3bn sales come from Boots the Chemist. Boots is undertaking a major review of its Wellbeing Services operation.
The group has announced a £700m share buy-back programme, of which £300m had been completed by September 2002. This buy-back equates to more than 10% of the total number of shares issued. The net proceeds from the Halfords sale will be used in this share buy-back programme.
On 19 November 2002, the company announced that it was going to change its name from The Boots Company plc to Boots Group plc.
Project manager Ian Whitehead Contact details
Property engineering and
facilities management D94,
Nottingham NG90 1HQ
phone: 0115-950 6111
fax: 0115-949 2896
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