'Big Four' to become more?
The collapse of Carillion may have intensified the spotlight on the accounting practices of the UK’s outsourcers, but government recommendations – made following an inquiry into the group’s demise – could result in greater scrutiny being applied to all company accounts. Turning attention to the audit function, the two select committees argued for the ‘Big Four’ accounting groups – Deloitte, EY, KPMG and PwC – to be referred to the Competition and Markets Authority for a potential break-up, calling them a “cosy club incapable of providing the degree of independent challenge needed”. All four undertook work for Carillion – Deloitte and KPMG acted as internal and external auditors, respectively, EY provided turnaround advice and PwC advised the company, its pension schemes and the government.
Change at top
Colao steps down
Just a week after Vodafone (VOD) announced it had finally managed to agree terms for the acquisition of Liberty Global’s European assets, its chief executive Vittorio Colao announced plans to end his decade-long tenure. Mr Colao will be succeeded by chief financial officer Nick Read from October, who in turn will be replaced by his deputy Margherita Della Valle. During his stint at the top, Mr Colao has overseen the group’s shift from a consumer-focused 2G/3G mobile operator to overseeing a more diverse portfolio, including Europe’s largest mobile and fixed next-generation network.
Pound in the pocket
Wages rising
Real wages rose for the first time in more than a year during the first quarter, as inflation was tempered. Average weekly earnings in the UK were up 2.9 per cent on the same period last year, outpacing a 2.7 per cent increase in consumer price inflation, according to the Office for National Statistics. That’s the first annual increase since February 2017, when inflation began to overtake wage growth. That said, after including bonuses, real wage growth was flat on the prior year. The ONS data also showed the unemployment rate declined to 4.2 per cent, the lowest since records began in 1975.
Eastern delights?
Stocks revealed
Passive investors have gained a clearer idea of the types of Chinese companies they may soon be gaining exposure to. MSCI unveiled the list of 234 Chinese mainland-listed stocks to be added to its emerging markets index, which is used as a benchmark for around $1.6 trillion (£1.19 trillion) of assets globally. Among the largest companies set to be included are Bank of China, power generation provider Shanghai Electric and menswear retailer Heilan Home. The stocks will be added in two phases, at the end of May and August, but will carry a weighting of just 0.78 per cent in the emerging markets index.
Gilbert going overboard
Taking leave
Accused with ‘overboarding’ (corporatese for sitting on the boards of too many companies), Standard Life Aberdeen (SLA) co-chief executive Martin Gilbert has taken a leave of absence as a non-executive director of commodities giant Glencore (GLEN). The reason? Mr Gilbert’s “current commitment as deputy chairman of Sky (SKY) in respect of its protracted competitive bid situation”. He will rejoin the miner’s board in October. Mr Gilbert went against the Financial Reporting Council’s corporate governance guidelines when he joined Glencore last year, taking on a second non-executive role at a FTSE 100 company.
Risers and Fallers
| IWG | 32.62 |
| ZPG | 28.23 |
| SPORTECH | 25.12 |
| WOOD GROUP (JOHN) | 18.26 |
| ENQUEST | 17.03 |
| SUPERDRY | -25.61 |
| LUCECO | -19.95 |
| GREGGS | -19.49 |
| CARPETRIGHT | -18.75 |
| ARROW GLOBAL GROUP | -13.44 |
Week to 15 May 2018
East Coast derailment
Government take franchise
In what will likely fuel further arguments for widespread rail renationalisation, heavy losses have forced the government to bring the East Coast rail line back under state control for the third time in just over a decade. The service – which has been run as a joint venture between Stagecoach (SGC) and Virgin since 2015 – will be renamed London and North Eastern Railway. Transport secretary Chris Grayling said the aim was to create a new public-private partnership in 2020, with “one single team" operating the railway. The franchise had been set to run until 2023, but signs of trouble emerged in November when Mr Grayling announced it would end three years early.
Added kudos
HSBC turns to blockchain
Has blockchain just been granted added commercial credibility? HSBC (HSBA) said it had completed the first trade finance deal using a single blockchain platform this week. The banking group processed a letter of credit for US food and agricultural group Cargill, when a shipment of soybeans was transported from Argentina to Malaysia via its Geneva and Switzerland subsidiaries. HSBC used the Corda blockchain platform, developed by technology consortium R3, while Dutch bank ING – which has also adopted the technology – acted as counterparty on the deal.
