Dissolution is the resolution at Kingfisher

IT IS widely acknowledged that Kingfisher wants to buy out the 45% of French DIY group Castorama that it does not already own. This would cost around £2.5bn and the retailer, which includes B&Q and Comet, does not have the money. Lateral thinkers in the City reckon Castorama should buy Kingfisher's stake for around £3bn and the money be returned to Kingfisher shareholders. Under a complex structure agreed at the time of the Castorama deal, the French group incorporates B&Q. A buyout would therefore leave Kingfisher as a pure electrical retailer, principally owning Comet here and Darty in France.

Buyers for both businesses could easily be found and a further few billion pounds would find their way into shareholders' pockets. But Kingfisher would be disbanded, which may not entirely please chief executive Sir Geoff Mulcahy.

Kingfisher grudgingly revealed this week that Mulcahy is on a 12-month rolling contract, apparently a significant comedown from the three-year contract we were told about last spring. But nothing is simple at this company. In fact, Mulcahy moves on to six months' notice from September. Kingfisher says this has nothing to do with the three-year deal we thought he was on. That was not a contract but a business plan, with Mulcahy asked to stay until 2004 to ensure an orderly succession.

The obfuscation surrounding Mulcahy's position is symptomatic of this group's attitude towards its stakeholders. Dissolution seems increasingly attractive.

Losing game

ALLAN Leighton is an ardent football fan and a business success story. He is so renowned for his commercial acumen that he sits on the board of seven companies, and chairs Consignia. He is such a keen supporter of Leeds United, where he is deputy chairman, that he bought a million shares in the company six months ago at 9 1/2p.

Leeds today revealed six-month losses of £13.8 million. The shares are trading at 7 1/2p so Leighton has lost £20,000. He will probably claim he bought them as a long-term investment, and perhaps he did.

But football's commercial future does not look bright because the figures behind it make no sense.

Players' wages have spiralled out of control in the Premier League so the average pay is £500,000 and packages of several million pounds are not uncommon. To justify these enormous wage bills, football companies need serious earnings from European matches and home games. The economics are fragile and rely on generous remuneration from television rights.

Most businessmen love football, and Leighton is no exception. But buying shares in the companies is a decision made with the heart, not the head.

Double standard

THE Financial Services Authority declared that it could find no evidence of Railtrack failing to disclose price-sensitive information in the run-up to Transport Secretary Stephen Byers' decision to put the company into administration.

In other words, Railtrack directors did not mislead the market. Executives have consistently said as much and have consistently asked the Government to disclose key documents relating to the administration move. These documents are yet to be made available.

As far as the FSA is concerned, its file on the matter has now had to be closed because the authority can only investigate companies. It has taken legal advice and its remit does not extend to the Crown.

That means Byers escapes scrutiny from the over-arching financial watchdog. It also means the Government is free from the constraints to which it has subjected all those involved in City and market matters. One rule for them and another for us.

Boxed in

UNILEVER put its audit out for tender recently and declared that whoever won it would not be allowed to carry out consultancy work too. That sounded sensible after the Enron debacle but it has created major problems for the big accountancy firms as top partners fight over whether to pitch for Unilever's audit or consultancy business.

Consultancy tends to be much more lucrative so the quarrel is understandable. But it risks gaining wider currency if the Government proceeds with legislation requiring the separation of audit and non-audit work. The Institute of Chartered Accountants is vehemently against the move, suggesting a large part of so-called non-audit business, such as takeover and restructuring related work, is most appropriately carried out by the auditor. It also admits that if the audit function were rigidly segregated, few accountants would pitch for the business because it would not be worth their while.

There is a broader point. The big difference between UK and US accounting is that the Americans rely on box-ticking and we rely on judgment. Increased legislation would, perversely, take us closer to the accident-prone US.

Same story

HSBC and Standard Chartered tend to be mentioned in the same breath as British banks with extensive-operations around the globe. HSBC is routinely praised for its sobriety. Standard Chartered is routinely criticised as lacklustre.

A look at the duo's profit records begs the question why. HSBC's latest annual report shows its five-year track record. In 1997 profits before tax were £5.7bn and last year £5.6bn. Standard delivered £870 million pre-tax in 1997 and last year managed £809 million.

The figures have moved up and down but both banks have produced negative profits growth over the period. Analysts say HSBC is better managed while Standard Chartered appears to throw good shareholder money after bad deals.

In the final analysis, the results tell the same story. Managing large businesses in developing countries is a high-risk business, the benefits of which are seldom apparent.