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Tesco Crisis: Accounting Probe Launched

Written By Unknown on Selasa, 23 Desember 2014 | 14.47

By Mark Kleinman, City Editor

The accounting watchdog is to scrutinise the former finance director of Tesco during a probe into the financial statements of Britain's biggest retailer.

Sky News understands that Laurie McIlwee, who left Tesco in April and had no role in the half-year results which triggered its accounting crisis in September, will face questions as part of the Financial Reporting Council's (FRC) investigation.

The FRC confirmed on Monday that it had commenced an inquiry into the "preparation, approval and audit" of Tesco's financial results following the disclosure that its profits had been overstated by £263m.

Members of Tesco's audit team at PricewaterhouseCoopers (PwC) will also be central to the FRC inquiry, which will examine statements dating back to the year ended 25 February 2012, and their impact on "the matters reported in the company's interim results for the 26 weeks ended 23 August 2014".

It is unclear whether Mark Armour, a Tesco director and member of its audit committee who also sits on the FRC board, will form part of the investigation.

The accounting body's inquiry will run alongside that of the Serious Fraud Office (SFO), which said in November that it had launched a criminal probe into the affair.

Mr McIlwee resigned in April and left Tesco's head office almost immediately after being asked not to return by the then chief executive, Philip Clarke.

Sources said that Mr McIlwee had not personally signed off Tesco's 2013-14 accounts.

Tesco's outgoing chairman, Sir Richard Broadbent, was forced to clarify remarks made in September that Mr McIlwee had not been at Tesco for "days and weeks", eventually admitting that he had not been called upon since April.

After his departure, Mr Clarke formed a separate finance committee to oversee the preparation of future financial statements.

According to insiders, members of that committee included Carl Rogberg, the former UK finance director, Mr Clarke himself, and Mike Iddon, who is now chief financial officer at New Look.

The £263m profits overstatement, announced by Mr Clarke's successor, Dave Lewis, triggered the suspension of at least eight executives, including Mr Rogberg, at least four of whom have since left the company.

One, Matt Simister, has been reinstated, while the fate of three others remains unclear.

The overstatement was a result of the way Tesco managers booked income from commercial suppliers, prompting Mr Lewis to announce an overhaul of those relationships.

The FRC has the power to impose unlimited fines and bans on individual members and member firms following formal disciplinary procedures.

Although widely expected, the formal confirmation of its investigation is a further distraction for Mr Lewis, who is attempting to improve Tesco's domestic performance in the wake of another devastating profit warning.

It issued its fourth profits warning in a year earlier this month, saying that full-year earnings would not exceed £1.4bn - well short of City forecasts of around £1.94bn.

Mr Lewis will update the City on Christmas trading and his broader plans to reinvigorate Tesco on January 8.

Tesco and the FRC declined to comment further, while Mr McIlwee could not be reached for comment.

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Ex-B&Q Chief In Frame For Top Whitehall Role

By Mark Kleinman, City Editor

The former boss of B&Q's parent company is being lined up to take a key role in Whitehall as ministers prepare for a swingeing new round of public spending cuts.

Sky News has learnt that Sir Ian Cheshire, who stepped down as chief executive of Kingfisher earlier this month, is among a small number of candidates to succeed the former BP boss Lord Browne as the Government's lead non-executive director.

The appointment of Sir Ian has yet to be finalised, although he is understood to be the preferred choice of a number of key Whitehall decision-makers and could be announced as soon as next month.

The role has assumed growing significance since being established in 2010 as part of an attempt by the Conservative-led Coalition to improve governance across Government departments.

Upon his appointment as the lead non-executive director at the Department for Work and Pensions in January 2011, Sir Ian said:

"The opportunity to support the Department in delivering its ambitious programme of reform is one I welcome.

"I believe that Government and business should be working together and sharing experience and expertise and I am pleased to be playing my part in this approach."

The appointment of Sir Ian as Lord Browne's successor is understood to be subject to cross-party approval given the proximity of next May's General Election.

Labour sources said they were not opposed to the continuing involvement of business leaders as non-executive directors of Government departments.

A Whitehall insider said that other candidates for the lead non-executive role may also be in contention.

Among those recruited by ministers in 2010 were Rona Fairhead, now chair of the BBC Trust; Sam Laidlaw, the outgoing chief executive of Centrica; and Sir Andrew Witty, chief executive of GlaxoSmithKline.

The appointment of business leaders to the boards of Government departments has received a mixed reaction, with Lord Browne himself acknowledging in an interview with the Financial Times that the initiative had had a "mixed report card".

Sir Ian, who has had a successful career in the retail sector, will remain as a director of Kingfisher until next month, and he has been linked with the chairmanship of Tesco.

He was also approached earlier this year about becoming chief executive of the Civil Service, but turned down the role, which was eventually filled by John Manzoni, a former BP executive.

Lord Browne said last month: "Francis Maude has demonstrated determined commitment to Civil Service Reform and, under his leadership Whitehall has been transformed for the better.

"There is much more to do, but it is now time for a new perspective on that process."

Sir Jeremy Heywood, the Cabinet Secretary, said the Civil Service had "made real progress in addressing long-standing weaknesses in commercial, digital and project-management skills and strengthening departmental governance, management information and talent management".

The Cabinet Office declined to comment on the appointment of Lord Brown's replacement, saying that an announcement would be made in due course.

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Thorntons Warns On Profit Amid Warehouse Woes

Thorntons says problems with its new warehouse and weaker supermarket orders will result in its annual profits being down on last year.

The chocolate specialist's statement to the stock exchange this morning spoke of a number of "challenges" which had "adversely affected its sales performance in the run up to Christmas.

The festive season is the key trading period for all retailers in the UK and Thorntons said that while its retail division - its own shops - were showing like-for-like sales growth its commercial channel was likely to deliver a fall in sales in the second quarter.

The company said it had "experienced a significant reduction in previously indicated orders from the major grocers who also took in stock later than anticipated."

The trading update also pointed to problems with its new warehouse, admitting they had resulted in disruption to customers.

"In particular in our UK commercial channel we experienced lost and late sales with consequent missed promotional slots and re-orders.

Our warehousing and distribution is now working normally," the statement added.

The company has, in recent years, shifted its focus from own-stores towards placing products in supermarkets and other retail outlets.

Its store closure programme was aimed at halving its presence to around 180 shops, with its commercial business now making up to half its revenue.

The company, which has shed almost 500 jobs over the past four years, still employs almost 4,000 people and made a pre-tax profit of £5.97m in its last financial year.

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ITE Exhibits Move From Sanctions-Hit Russia

Written By Unknown on Senin, 22 Desember 2014 | 14.47

By Mark Kleinman, City Editor

A London-listed exhibitions firm will this week announce a £20m takeover that will reduce its reliance on Russia amid the country's currency crisis and the ongoing impact of international sanctions.

Sky News has learnt that ITE Group, which has a market value of more than £350m, is to acquire Breakbulk, a leading provider of shipping and logistics intelligence.

The deal, which is understood to include an additional performance-related payment based on future revenues, is expected to be announced on Monday.

Investors in ITE are expected to view the takeover as a welcome diversification from the company's dependence upon Russia and emerging markets for the majority of its revenues.

Roughly 60% of ITE's sales are generated in Russia, which has seen a plunge in the value of the rouble in recent weeks as evidence of the weakness of the country's economy has mounted.

ITE's chief executive recently acknowledged "currency headwinds and difficult trading conditions in Russia and Ukraine", but managed to beat analysts' profit forecasts despite a decline in sales.

The Russian economy's travails are the main factor behind a near-52% fall in ITE's share price during the last 12 months, prior to which it was in the FTSE-250 index.

Breakbulk runs annual exhibitions - held in Shanghai, the Belgian port of Antwerp and, in alternating years, New Orleans and Houston - for senior executives in logistics roles in sectors such as energy and infrastructure.

Reflecting rapid growth in demand, Breakbulk has also added exhibitions in Brazil, South Africa and Turkey.

The business is part of Axio-Data, which has been owned by Electra Partners, a private equity firm, since last year.

It had previously been under the umbrella of UBM, the much larger media and events group listed on the London Stock Exchange.

Announcing annual results earlier this month, Russell Taylor, ITE chief executive, said it remained "sensitive to the economic climate in Russia but has increasingly good growth prospects in its other markets".

An ITE spokesman declined to comment.

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Push To Get More Women Into The Cockpit

By Charlotte Lomas, Sky News Reporter

More than four decades after the first British female pilot took to the skies in a commercial airliner, there are still few women choosing flying as a career. But why are there so few female pilots?

Of the 3,500 pilots employed by British Airways, just 200 are women and this is more than any other UK airline.

Globally, 4,000 of the 130,000 airline pilots are female and fewer still are captains - worldwide there are around 450.

Helen Macnamara has been a British Airways pilot for 14 years after enrolling on a sponsorship scheme once she left university.

"I like to see the world and different places and I enjoy the magic of flying itself," she said.

"Once you have the passion for it, then that's it really".

Helen, 38, believes the reason so few women go into flying may stem from a lack of opportunities in the past.

She said: "I think historically there were less women involved in aviation and that has been changing throughout my career.

"I think it's important females see this as an option and that there are role models in our industry."

One such role model is TV presenter and now fully trained pilot, Carol Vorderman.

She is planning to embark on a solo round-the-world flying trip and is supporting a recruitment drive by British Airways to get more women in the cockpit.

Carol said: "I always wanted to be a pilot since I was very young.

"It was the reason I read Engineering at Cambridge, and ideally would have joined the RAF or a commercial airline after graduating, but sadly this was not an option then.

"I think the reason so few women enter the profession can be traced back to schools, home and the media. Girls need to be encouraged more to pursue sciences, maths and technology at school and realise different paths are open to them."

Although many women work in the aviation industry as a whole - piloting is still very much a male-dominated profession.

Jim McAuslan, the general secretary of BALPA, the British Airline Pilots Association, is hoping this will change.

He said: "Women make great pilots, unfortunately only five percent of our members and British pilots are women, and that's disappointing.

"So we're reaching out to women to find why they're not coming forward. Perhaps it's because of their choice of careers at an earlier age. Engineering is a great way to get into flying, so perhaps people should look at their careers early on.

"But our big message would be: have the dream."

Some critics argue that women face prejudice when considering a career in flying.

In 2009 a Virgin Airlines advert featuring glamorous female flight attendants flanking a male pilot received complaints it was sexist.

So too did an Air New Zealand in-flight safety video where women were dressed bikinis.

But Helen says that she has never experienced any negativity. Most passengers are simply surprised to have a female pilot, she said.

"Actually when members of the public come to our flight simulator where we train, it is usually the women who fare better than the men.

"They are softer with the manoeuvres and males can be more heavy handed."

In an industry where fewer than 5% of pilots are women it's hoped more will be landing safely on the tarmac in future.

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OPEC's Dominance Of Energy Market 'Is Over'

By Ed Conway, Economics Editor

The era of OPEC domination over the global energy market is over, the former head of the oil cartel has told Sky News.

Abdullah bin Hamad al-Attiyah, the former energy minister of Qatar, said that the group of 12 oil exporters, which dominated the production and price-setting of energy for half a century, had surrendered its power to single-handedly affect prices.

He urged the organisation to collaborate with Russia and reduce global oil production.

Asked whether the era of OPEC dominance was finished, he said: "It's over. OPEC cannot play alone. This is why when OPEC met at the last moment they cannot decide it because if they will cut there is no meaning it will be the others who will benefit and even increase their production."

His comments, in an exclusive Sky News interview, come after the oil price fell sharply, from $115 a barrel earlier this year to below $60 last week.

The collapse in prices has triggered a currency crisis in Russia and threatens to undermine prosperity in the Middle East, where stock markets have fallen sharply. Mr al-Attiyah said that his country, Qatar, was well-placed to weather the downturn, but added that others might struggle more.

He said that he suspected Russia and others were waiting for OPEC to act - but that they might be mistaken.

"We have to learn from our lessons; we have to be careful.

"Sometimes we forget the cycle and just close our eyes thinking that the oil price will never go down. But ... it happened before. And it will happen in the future."

He warned that it was conceivable that the oil price remained depressed for as long as 15 years - as it did from the oil price crash in the mid-1980s.

He said that prices needed to be lifted to $90 or $100 a barrel to keep most producers in business. He also disputed claims that OPEC had not cut its production at a recent meeting because it wanted to undermine the viability of shale oil production in the US.

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UK Election Delays Top Energy Appointment

Written By Unknown on Minggu, 21 Desember 2014 | 14.47

By Mark Kleinman, City Editor

The energy industry's leading trade association is to wait until after the General Election before appointing a new chief executive amid intense political scrutiny of the sector.

Sky News understands that Energy UK, whose members include each of the 'big six' residential gas and electricity suppliers, has decided to wait until the middle of 2015 before recruiting a permanent successor to Angela Knight, who will step down at the end of the month.

The decision by Energy UK underlines the scale of concern within the industry about the political climate at a time when tens of billions of infrastructure spending is required for modernisation programmes.

Some board members are understood to have pushed for the delay to enable the appointment of a new boss with strong connections to the party that leads the next administration.

"The timing of the election makes it impossible to pick a chief executive and be sure that they are the right person to lead the organisation," said an executive at one of the big utilities.

National Grid recently warned that the UK was at its highest risk of winter blackouts for seven years, while the major energy retailers - British Gas, EDF, EON, Npower, Scottish Power and SSE - have been at the centre of a string of mis-selling scandals and pricing rows.

Ed Miliband, the Labour leader, has pledged to freeze retail prices for 20 months if he becomes Prime Minister, while Ofgem, the industry regulator, has referred the energy suppliers to the Competition and Markets Authority (CMA) for a full investigation.

The CMA intends to publish its provisional findings and possible remedies in May or June next year, and could recommend far-reaching measures including the enforced separation of companies' power generation and supply activities.

Last month, Energy UK confirmed the appointment of Sir David Arculus, a City grandee who previously chaired Severn Trent, as its new chairman.

The trade body also said that Lawrence Slade, its chief operating officer, would become interim chief executive from January 1, although it did not say how long the role would be filled on a temporary basis.

Mr Slade is likely to be a leading candidate for the job, which is an increasingly public-facing post as energy companies acknowledge the need to explain commercial decisions to their customers.

Sir David will take over from Lord Spicer, a former Parliamentary Under-Secretary at the Department of Energy during the premiership of Margaret Thatcher.

Lord Spicer was on the board of the Association of Electricity Producers before it was absorbed into Energy UK as part of efforts by the industry to promote a more co-ordinated approach to key issues.

The new chairman said on his appointment: "This is a time of major change for the industry and for the country as old power stations are closed and cleaner greener electricity generators are built. This vital industry deserves a clear, strong voice.

"I look forward to getting to grips with the key three-fold challenge of balancing energy security with the low carbon agenda and with bills which people and industry can afford."