Financial results and company news
Drinks wizard Walsh to chair caterer Compass
Paul Walsh, the mastermind behind the success of Diageo, the drinks giant, is to become chairman of Compass as the extraordinary reshuffle of the FTSE 100’s leadership gathers pace.
Walsh, 58, has been lined up to succeed Sir Roy Gardner, who stands down next year from the catering company that serves Wimbledon and the Oscars party as well as office canteens. It will be
Walsh’s first chairmanship after 13 years of running Diageo, the maker of Guinness and Johnnie
Walker, and comes as several of Britain’s top companies change chairmen.
Compass’s biggest market is America, but Richard Cousins, the chief executive, is pushing hard into emerging markets.
Directors believe Walsh, who oversaw acquisitions in Turkey, Brazil, India, Vietnam and China at Diageo, will help to speed up the international expansion. Cousins said last week that Compass’s operations in emerging markets could be bigger than those in western Europe within five years.
Compass’s share price has more than trebled under Cousins, who has led the company since 2006. The stock closed at 839Åp on Friday, valuing the group at £15.3bn.
Gardner, 67, joined the board of Compass in 2005 and became chairman a year later. A former chief executive of Centrica, the British Gas owner, Gardner is arguably best known to the public for his stint chairing Manchester United football club, where he presided over its sale to the Glazer family.
Walsh has been at Diageo since 1982 and became chief executive in 2000. Under his watch, the company’s value grew by some £30bn, helped by big acquisitions such as an $8bn (£5bn) deal to buy the Seagram drinks empire, which Diageo pulled off in partnership with Pernod-Ricard, its French rival.
He sold off its Burger King fast-food chain and food brands such as Haagen-Dazs ice cream to concentrate on beer and spirits. Compass declined to comment on Walsh’s appointment.
Headhunters say the current turnover at the top of the FTSE 100 is unprecedented, with several companies hunting for chairmen.
The Sunday Times
Punch still suffering from its debt hangover
Despite Punch Tavern’s debt woes, chairman Stephen Billingham insists the company has a solid future as a smaller group of 3,000 core pubs.
The chain has been gradually off-loading sites and currently has just over 4,000 pubs. It is investing an average of £100,000 in core pubs and claims the returns are promising.
“We think there is a long-term market for pubs in the UK but the pubs need to be invested in – it needs to be a modern offering,” says Billingham. “You can’t expect pubs to survive without any investment or modern facilities – that’s the simple answer.”
But before it can turn a corner, Punch must first tackle its debt situation, which is so complex that it has 16 different classes of debt.
Without continued cash injections from the parent company, Punch has made it clear that both of its securitisations would breach their covenants.
Analysts have also warned that Punch’s auditors are likely to raise “going concern” issues at the end of its financial year in August. KPMG last year warned that “failure to achieve a successful [debt] renegotiation could result in a part of the group ceasing to be a going concern, which in turn would result in a significant reduction in the group’s operations”.
Tensions between Punch and some of its shareholders have been simmering since the end of 2010, when there was a leak to the media that the company was planning to restructure. That tension rose to boiling point in February of this year, when Punch’s management unveiled a proposal that was viewed by some senior lenders as a “Machiavellian” strategy to skew the restructuring in favour of a powerful group of US hedge funds, which hold junior debt in Punch B and are also shareholders of the parent group.
The deal was rejected by an influential group of senior lenders, represented by an Association of British Insurers (ABI) special committee, amid claims the junior lenders were being incorrectly prioritised and would receive cash for holdings that were close to worthless.
Any restructuring needs to be agreed by three-quarters of bondholders in each of Punch A and Punch B. The senior lenders represented by the ABI together have the voting power to block any deal.
While an element of brinkmanship is expected in most restructuring negotiations, sources say the events of last week have been unprecedented. A second restructuring plan, which the company claimed was an “equitable solution”, further stoked tensions and was rejected by the ABI as “too vague”. The special committee also claims the materials that have been provided by the company have not allowed them to do the “appropriate due diligence”.
Punch hit back with accusations the ABI had made “inaccurate” public statements and aired its anger at fees being charged by the special committee’s advisers, Rothschild and Latham & Watkins.
Billingham says Punch’s board will “continue to invite the ABI to participate” in restructuring negotiations, but insists: “At some point if they don’t engage with us, we’re going to have to put out a proposition and they are going to have to decide as individual members.”
While Punch will continue to push for a deal in the next two weeks, tensions are expected to flare further this week amid calls from some bondholders for directors of the public company to step down from its board to concentrate on overseeing the securitisations.
Lenders will also hold meetings this week to consider a counter-proposal to Punch’s restructuring plans. With Punch likely to rebuff the calls, there is one certainty: it’ll be a long while yet before Punch clears its hangover.
The Sunday Telegraph
Jamie Oliver cooks up a £1m payday
Jamie Oliver has enjoyed a bumper £500,000 dividend from the company that handles his recipe books, TV deals and advertising promotions.
The payout was revealed in his latest accounts, which show that for the year to December 31, 2012, his company made a profit of £9.8m on a £35.3m turnover, up from a £3m profit last year.
The rise was attributed to the ‘excellent’ sales of his 15-Minute Meals book, as well as record sales of the 30-Minute Meal book, and the rise in income from his TV production company Fresh One.
Company directors said that they expected the following year to show another “solid performance”.
As well as the £500,000 payout for Oliver, the chef will have pocketed £472,500 as the highest-paid director, adding to his estimated £150m fortune.
The company also donated £100,000 to charity.
Meanwhile, figures for his Jamie’s Italian restaurant business show an increase in turnover to £92.6m with profits steady at £7.8m.
The chain now has 34 restaurants in the UK and Ireland, and is opening more worldwide.
The Mail on Sunday
Birley’s newest club set to outshine Annabel’s
Nightclub entrepreneur Robin Birley’s latest members’ club, 5 Hertford Street, is replacing Richard Caring’s Annabel’s in the business elite’s affections – and early profits are “encouraging”.
One year since the Mayfair club opened its discreet doors in June 2012, Dashwood can reveal the business earned membership fees of £641,690 for the year to August 31 2012, which covered the first two months of trading.
Pre-tax profits were £312,524, as members’ £1,500 annual subscriptions started rolling in after a “significant” outlay on refurbishment, on turnover of £4.9m.
Birley, the majority founding shareholder, alongside the billionaire property tycoons Simon and David Reuben and fund manager Ben Goldsmith, has “agreed to offer continued [financial] support for at least the next 12 months”.
Nevertheless, the club’s directors are “determined to improve profitability”.
They have committed to a further £2.4m of improvements – helped by a £4m loan – “to help maintain the highest standards in the club’s appearance”.
Whatever it takes to keep the likes of Google boss Eric Schmidt and property mogul Nick Candy coming back for more.
Although, with a reported 1,000 people on 5 Hertford Street’s waiting list, the financial risk of members not renewing is “limited”, say directors.
The Sunday Telegraph
Vianet shares lose fizz as it fights to preserve a fair pint
Pub owners – like pernickety drinkers – are keen to check the exact quantities of beer being served in their hostelries. Some tenant landlords, however, find it irksome.
So, with consultation on a statutory code for fair treatment of tenants closing this week, it is not surprising that shares in a beer monitoring company have looked a little flat.
Vianet changed its name from Brulines last year, to reflect moves into vending and fuel monitoring, but it still depends on pub equipment for 90% of its pre-tax profit. It argues that monitoring beer pumps protects the drinker and the Treasury, and says it will fight any proposal to limit the practice.
Pre-tax profit for the year to March 31 fell from £2.3m the year before to £1.8m, but Vianet maintained its dividend. Its shares fell 14.5% this week, closing at 76.50p on Friday.
The Weekend FT
Famous Grouse maker to expand US operations
Edrington, the Scottish company that owns whisky brands The Famous Grouse and The Macallan, is to invest in further export growth in the US after doubling sales there over the past four years.
The group, which employs 2,300 staff, including 800 in Scotland, will announce on Monday that it is investing £10m in setting up three new companies in the US,
The US accounts for 20% of Edrington’s revenues, which totalled £556m in the year to March 2012. For the past 28 years, the group has distributed its brands in the US through French group Remy Cointreau.
It will terminate this deal from next March, forming Edrington USA and opening offices in Chicago, Los Angeles, Dallas and Miami, as well as expanding its existing New York site.
Demand for premium malt whisky is growing by 16% a year in the US, with the market adding 1m new spirits drinkers each year.
Chief executive Ian Curle said: “Two years ago, we generated 60% of our brand contribution in Europe, including the UK. This year, that will be 40%. The rest is coming from the Americas, Asia and the emerging world.”
The Sunday Telegraph
Corker of a year for Lanson
Lanson is celebrating 25 years as the official champagne of the Wimbledon tennis championships and is hoping for an exceptional year with up to 20,000 bottles expected to be drunk in the next fortnight.
Paul Beavis, managing director of Lanson UK said: “If the sun shines we are quite definitely looking at a bumper year.”
The company is introducing a strawberry champagne cocktail, to be called Lanson Fraise, at the event and a range of cooling jackets styled as tennis shirts.
“We are thrilled to be celebrating 25 years with Wimbledon and it is a very exciting time for us,” said Beavis.
Although the champagne market has been under pressure since the financial crash, Lanson has outperformed.
“Sales have been down in volumes, but the value of our sales has been rising,” Beavis said.
Lanson enjoyed strong sales in 2012 in the UK – which is France’s biggest single export market for champagne – thanks to Wimbledon and to the Queen’s Jubilee
The Mail on Sunday
BSkyB takes swipe at BT with web offer
[In what is perhaps a sign of things to come in the business market] a war of words erupted yesterday as BskyB hit back at BT by offering free unlimited broadband for domestic customers signing up to its Sky Sports channels.
Sky will also cut the price of its “totally unlimited broadband packages in half for any new customer, regardless of whether they take out a TV subscription.
BT surprised the industry last month by revealing that its new sports TV channels would be available to broadband customers free of charge.
Experts said it was the start of what would prove a year-long scrap between the two giants.
Sky’s retaliation comes just weeks before BT Sport is due to go live.
The Daily Telegraph
Economy and politics
Vince Cable’s pub code is ‘putting thousands of jobs at risk’
The boss of David Cameron’s favourite brewer yesterday accused the Government of creating “an increasingly anti-business environment” and warned that it was putting thousands of pubs at risk of closure.
Jonathan Paveley, chairman of Oxfordshire’s Hook Norton Brewery, said that proposals to regulate the way the big tenanted pub companies, such as Enterprise Inns and Punch Taverns, treat their tenants would have “dramatic unintended consequences”.
Mr Paveley, who is also executive chairman of Admiral Taverns, one of the pubcos targeted by the legislation, said: “The issues being scrutinised are complex and government understanding of the consequences of its plans appears lacking.”
The proposals, on which the consultation ended yesterday, were announced in January by Vince Cable after he decided that, despite warnings to “change their behaviour”, the pubcos were still “exploiting and squeezing their publicans by unfair practices and a focus on short-term profits”.
The Business Secretary, who claimed a self-regulated code instigated by the British Beer & Pub Association “isn’t working”, outlined a statutory code designed to give a fairer deal on rent and prevent abuses of the beer tie, under which publicans are forced to buy particular beers from the pubcos at sometimes inflated prices.
To oversee the code, which would apply only to companies with more than 500 tenanted pubs, Dr Cable is proposing the appointment of an independent adjudicator with the power to impose sanctions and financial penalties.
Greg Mulholland, the MP for Leeds North West and chair of the All Party Parliamentary Save the Pub Group, has welcomed the proposals as a long-needed solution to the “endemic overcharging of pubco lessees that has prevented the majority of them from making a decent living”.
But Mr Paveley said that the statutory code posed “a grave threat to a very British institution”, adding: “Vince Cable is considering legislation that will see thousands of pubs close, threaten small breweries across the country, reduce choice for beer drinkers and create yet another quango.
He admitted that the pubcos were “not perfect” but insisted that it was only a “vocal minority” of disgruntled tenants who wanted to abolish the beer tie. For the most part, he argued, the tenanted business model meant that “both owner and operator have a common vested interest in the performance of the pub — and seeing it succeed”.
The chairman of the 164-year-old Hook Norton, which still delivers its beer to local pubs by horse-drawn dray, also called into question the Campaign for Real Ale’s support for the Cable code. “The pubcos play an essential distribution channel for Britain’s small brewers,” he said.
In its submission to the consultation, the British Beer & Pub Association cites a study claiming that if all licensees exercised the mandatory free-of-tie option envisaged by Dr Cable, it could lead to 2,300 pub closures with the loss of 18,400 jobs, half among 18 to 24-year-olds.
A spokesman for the Business Department said that although the Government would normally expect to give a response to the consultation after three months, the huge reaction in this case — it received more than 5,500 responses — meant that it could take longer to reach a conclusion.
The Times
Ministers call time on council demand for CCTV in pubs
Ministers last night unveiled a clampdown on the blanket use of surveillance cameras in pubs.
They took action after concerns that a rising number of councils have been making the installation of CCTV a legal condition of granting licences to pubs.
Under the new regime, local authorities will be subject to a stricter code of practice designed to strike a better balance between privacy and security.
The change comes after the Information Commissioner’s Office, the UK’s privacy watchdog, said that it was becoming seriously concerned by the profusion of CCTV even in trouble-free pubs.
Surveillance camera systems are widely used in England and Wales, but community pubs minister Brandon Lewis said things had gone too far.
He said the principle of surveillance by consent is at the heart of the new legislation, so the public can be confident that cameras are not there to spy on them but to protect them.
He has laid a new code of practice before Parliament for approval, as part of the Protection of Freedoms Act 2012.
Mr Lewis said: “CCTV has a role to play in stopping and deterring crime in anti-social behaviour hotspots.
“But well-run pubs that don’t have a public order problem shouldn’t be tarred with the same brush.
“The public deserves to have a pint in peace without being snooped on.
“The use of surveillance cameras should be used only if it is necessary and where it has public support.”
Last night Nick Pickles, director of privacy campaign group Big Brother Watch, said: “People should be able to enjoy a quiet pint without being constantly recorded on camera.
“This announcement brings some long overdue common sense to a situation where councils were driving up the cost of a pint by demanding pubs spend thousands of pounds on CCTV where there are no problems to deal with.
“Our privacy is too important to be undermined by a tick-box on a licensing form.
“‘I’m sure landlords across the country will join me in raising a glass to Brandon Lewis for defending people’s local pubs from needless surveillance cameras.”
The Daily Mail
Shoppers are spending more, mainly on treats
Fresh evidence of a recovery in consumer confidence emerged this weekend as figures from Barclaycard, prepared exclusively for The Mail on Sunday, showed spending rose by more than four per cent in May.
Spending was up by 4.1% against the same month last year, well ahead of May consumer price inflation, which is expected at 2.6% when official data comes out next week.
But the picture is mixed, with some sectors, especially internet sales, showing sharp rises while some traditional retailers are still suffering from falling spending.
In a rollercoaster month for garden centres, warmer weather pushed up sales by 70% in the first week of May against the same period last year, but they fell away to give a rise of 6.4% for the whole month. DIY sales increased 5.1%.
However, the biggest rises in spending were in cinemas and theatres, up 21%, restaurants, 17% and flights 14% as consumers treated themselves.
Spending on petrol fell 2.8% while spending on public transport increased by more than 6%.
“May has been another strong month for consumer spending and in line with the improving outlook revealed in our April data, which was subsequently endorsed by a range of other economic indicators,” said Valerie Soranno Keating, chief executive of Barclaycard.
“Sentiment is clearly still fragile, but the better performance we’re seeing across a wide range of sectors suggests that the green shoots of a sustainable recovery may finally be taking hold.”
The Mail on Sunday
Pay packets to take a hit as inflation is expected to rise again
Inflation is expected to increase this week, dealing a blow to hopes that a moderation cost of living rises would help to support an economic recovery.
Figures for the Consumer Prices Index in May will be released on Tuesday, with City analysts expecting them to show an uptick in the annual inflation rate to 2.6%.
In April, the inflation rate registered a sharp fall from 2.8% to 2.4%, thanks to lower fuel cost increases than a year earlier. But economists expect unflattering price comparison effects with last year to push up the inflation rate over the remainder of 2013. “We judge that it is likely inflation will surpass the 3% level next month, which would entail the new Bank of England Governor, Mark Carney, needing to write an open letter to the Chancellor in August,” said Philip Shaw, chief economist at Investec.
The Bank of England’s inflation projections show the rate peaking at over 3% later this year and then only falling gradually to the official 2% target in 2015.
Inflation has outstripped pay rises since the 2008 crisis, meaning that real pay has been falling. Figures show that total pay rose by 1.3% in April on the previous year, an improvement on the previous month, but still a real-terms pay cut.
A Monetary Policy Committee member, Ian McCafferty, has admitted that it is “easy” to see why people might think the Bank has become tolerant of higher inflation given the persistent overshoots of the official 2% target.
However, data releases in recent weeks have convinced many analysts that the picture is brightening.
The Independent on Sunday
Food and drink
Lidl launches kangaroo steaks
It certainly beats throwing another prawn on the barbie.
Diners with a taste for the exotic can now hop down to Lidl and stock up on kangaroo steaks.
The budget supermarket claims roo meat, which it introduced last month, is both nutritious and inexpensive.
But animal welfare campaigners are furious and insist the trade in kangaroos is cruel.
A Lidl ‘Deluxe’ 300g pack of two steaks costs £3.99, while the equivalent weight of lean fillet beef steak costs up to £9.
The number of wild kangaroos has surged in recent years and many Australians see them as a pest because they damage crops.
As a result, mass culls are expected to slaughter almost six million this year, a huge increase on the two million killed in 2011.
Many of the shot animals will end up on supermarket shelves in Britain.
But wildlife campaigners Viva say the cull is cruel and have urged shoppers to boycott kangaroo meat and lobby Lidl to get them to stop selling it.
Its campaigns manager, Justin Kerswell, said: “Lidl are making a cheap buck by selling dead wildlife to misguided, thrill-seeking customers.
“The novelty value of so-called “exotic meats” pales when you take into account the suffering and sheer destruction this unsustainable business causes. Kangaroos are not farmed, they are wild animals that are hunted and shot at night in the vast outback away from the scrutiny of the public.”
However Lidl insisted that the meat was popular and healthy, while it rejected allegations of cruelty. A spokesman said: “The kangaroo steaks have sold phenomenally well.
“They are considered a very healthy alternative to red meats – they possess many nutritious benefits such as being low in cholesterol and fat and are high in protein, iron, zinc and conjugated linoleic acid, which has antioxidant properties and can reduce blood pressure.
“We take animal welfare very seriously and only source products that meet high standards of food safety and hygiene.
“Kangaroo meat is sold in virtually all Australian supermarkets and to thousands of restaurants and is not regarded as a novelty meat.”
The Daily Mail
Takeaways turn to top-quality cuisine
Fast food used to mean a slightly dodgy kebab, a burger shop or a bucket of crisped-to-death chicken. Now the creeping gentrification of the hot snack is going mainstream in Britain after winning us over at festivals and urban pop-ups.
On Friday nights in London it is no longer just the young clubbers on their way home who are queuing at street food outlets. Street Feast in Merchants Yard, east London, has been attracting foodie crowds of around 3,500 people of all ages to sample quality fast foods from some 20 traders vying for quality and value for money. Guerrilla Eats is a collective of food traders doing much the same thing in Manchester.
Diners looking for a burger that is a cut above the preservative-laden stereotype have been making central London burger outlets MEATliquor and Patty & Bun so popular that it’s not uncommon to see long queues outside at the weekends, while the chains Gourmet Burger Kitchen and Byron have been expanding rapidly across the UK this year. Gourmet Burger Kitchen has 59 restaurants from Brighton to Edinburgh. Byron has 32 branches and is opening soon in Liverpool and Manchester.
Financial experts are taking note and calling it the “fast casual” restaurant market, which is bucking the trend in other parts of a recession-hit economy and building annual sales growth of 5%, according to analysts NPD Group.
Unlike the average restaurant – a notoriously tricky business to get right – many of the upmarket fast food outfits finding favour this summer began as pop-ups or small traders on festival stalls, allowing the owners to get things right before expanding.
Read the full story here http://www.guardian.co.uk/lifeandstyle/2013/jun/15/fast-food-upmarket-street-feast
The Observer
And finally…
To tip or not to tip – that is the question
A New York restaurant has banned tipping to spare customers the bother, while some restaurants in other US cities have already replaced the gratuity with a fixed optional service charge. So is the discretionary tip falling out of favour in the land where it’s king?
In recent years the size of tips has increased and the list of those who expect them is growing also, in recent years joined by staff in takeaways.
Meanwhile, tip jars have proliferated to such an extent you may be confronted by one where you receive your sandwich and another one a few feet away where you pay for it.
It’s a custom that’s become second nature for most Americans, although there’s still a sharp intake of breath when they see three or four hotel staff involved in taking their luggage from the boot of the car and up to the room.
But it’s worse for visitors - whom to tip and how much can be a source of debate, confusion and often anxiety at doing the wrong thing or appearing to be ungenerous.
Tip the barman but not the shop assistant, reward the hairdresser but not if he or she owns the salon. Give the hotel luggage guy a dollar or two but not the receptionist. And don’t under-tip.
One British tourist says she and her friends were followed out of a Manhattan restaurant by an angry waiter unhappy with a 10%-15% tip.
Read the full story here http://www.bbc.co.uk/news/magazine-22846846
BBC News Magazine
