End of the road
The collapse of outsourcer Carillion (CLLN) dominated the headlines since news broke that it would be entering liquidation on 15 January. Surging debt, mispricing of contracts and operational difficulties on some of its large contracts meant the support services group could no longer continue, sending its 13 UK pension schemes – with a combined deficit of £587m – under the auspice of lifeboat The Pension Protection Fund. Questions have been raised as to why the government kept awarding contracts to Carillion despite mounting signals that it was in financial straits. Government minister David Lidington confirmed the Official Receiver would be investigating the conduct of current and past directors, which could include changes made to the remuneration scheme that apparently made it more difficult to take back bonuses. (see Carillion: tip of the iceberg).
BP under cosh
Costs climb
BP (BP.) can’t get away from its demons. The oil major’s court-supervised claims facility for the Macondo disaster may be “winding down”, but the final economic loss claims have been higher than anticipated. In a trading update BP said it would book a $1.7bn (£1.2bn) provision in fourth-quarter results, meaning Deepwater Horizon-linked cash payments are likely to be 50 per cent higher at $3bn in 2018. The shares fell 2 per cent on the day of the announcement.
Betting against Oz
Potential sale
The havoc the UK government’s review into fixed-odds betting terminals could play on gambling groups’ profitability has been well publicised. But William Hill (WMH) is under the regulatory cosh elsewhere, too. The bookie is considering selling off some of its Australian business, since management reckons profitability will come under increasing pressure due to the credit betting ban and the possible point of consumption tax. However, there was some good news for shareholders – group adjusted operating profit is expected to be 11 per cent ahead of last year, at £290m, beating analyst expectations.
Empty words?
Plastic reduction pledge
Two weeks on from the Chinese government’s announcement that it would ban the import of certain plastic waste, prime minister Theresa May outlined her own plans for reducing throwaway plastics. Ms May’s measures include funding for plastics innovation, extending the 5p carrier bag charge to all retailers in England and potential taxes and charges on single-use items such as takeaway containers.
Inflationfall-back
BoE signals top
Has UK inflation peaked? Pointing to the latest data out from the Office for National Statistics (ONS), the Bank of England (BoE) reckons so. Consumer price inflation reduced to 3 per cent in December, from 3.1 per cent the previous month – the first month-on-month decline since June. The ONS said that while air fares had risen, the impact had been smaller than at the same time in 2016. A drop in the price of toys and games also contributed to the decline, the BoE said. Pre-Christmas discounting by retailers may have also played its part.
Riskylending rises
Margins also squeezed
Given the rising cost of living and growing competition among lenders to accelerate their loan books, it’s unsurprising that unsecured personal lending continues to surge in the UK. Around half of UK households have some unsecured consumer debt, according to the Institute of Fiscal Studies. Those with above-average incomes owe about 60 per cent of this debt, which presents less of an issue since they have the financial assets to pay them off. However, around a quarter of the very lowest income households have high debt repayments or are in arrears, the study found.
Premier less than stellar
But international benefits
Could food manufacturer Premier Foods’ (PFD) fortunes be about to change? Food inflation, weak sterling and changes to supermarket promotional activity have plagued the group during the past two years. However, the company revealed that it was in exploratory talks around a potential sale of its Batchelors’ soup brand, causing a bump in the share price on the day of the news. Rumours have abounded that Japanese noodle-maker Nissin Food, its largest shareholder, may be the buyer. What’s more, it reported a 4 per cent increase in sales during the third quarter, bringing year-to-date sales to a 2.6 per cent increase.
UK house price growth may have slowed since mid-2016, but for now there does not seem to be any signs of a major correction. November prices grew by an average 5.1 per cent year on year, although this was down from 5.4 per cent during the year to October.
The average house price stood at £226,000, according to the Office for National Statistics (ONS). However, some regions are performing better than others. The trend for London growth to outstrip the rest of the UK continued to reverse (see chart), with the capital’s house prices growing at the joint weakest rate of 2.3 per cent.
