Scottish aviation company names Giles Wilson as new CEO

Aviation services business John Menzies – one of Scotland’s oldest and largest companies – has announced the appointment of Giles Wilson as chief executive with immediate effect.

He was named chief financial officer of the group in June 2016 and was made interim chief executive on 12 March this year on the departure of Forsyth Black.

Wilson joined the group in 2011, and has held senior roles including finance director of Menzies Aviation and senior vice president of African, Middle East and Indian Operations.

Menzies, which dates back to 1833 when it opened a bookshop on Edinburgh’s Princes Street, selling The Scotsman, said Wilson “brings great financial acumen and a deep knowledge of the aviation services market to this role”.

Chairman Dermot Smurfit said: “Giles provides excellent continuity whilst bringing great energy and enthusiasm to the role. He has strong relationships with our shareholding base, a sound understanding of our business, and is already tackling the challenges and opportunities that lie ahead.

“The board are confident that Giles will provide strong leadership as we continue our drive to sustainably grow our business in the aviation services market.”

Wilson said his appointment comes at a “very exciting” time for Menzies. “We have a strong team in place and I look forward to working with them as we drive further efficiencies from the business, pursue sustainable organic growth, deliver excellent service to our customers and increase shareholder value.”

Black had been ratified as chief executive in September, returning Menzies to what it described at the time as a “more standard executive structure”.

Britain’s 2nd biggest steel maker enters insolvency

British Steel, the country’s second largest steel producer has entered into compulsory liquidation, said British government’s Insolvency Service in a press release on Wednesday.

It said that the High Court ordered British Steel into compulsory liquidation the same day, and the Official Receiver was appointed as liquidator.

“The immediate priority following my appointment as liquidator of British Steel is to continue safe operation of the site,” said the Official Receiver in a statement.

EY has been appointed as special manager by the Official Receiver.

“The company in liquidation is continuing to trade and supply its customers while I consider options for the business,” the Official Receiver said, “Staff have been paid and will continue to be employed.”

The company had reportedly been seeking emergency funds of 30 million pounds (about 38 million U.S. dollars) from the government, blaming “Brexit-related issues” for its difficulties.

The company’s collapse would put its 5,000 employees directly and 20,000 more in the supply chain at risk, local media reported.

Business Secretary Greg Clark called it a “deeply worrying time” for employees and local communities in a statement on British Steel Wednesday.

However, he noted, “The government can only act within the law, which requires any financial support to a steel company to be on a commercial basis. I have been advised that it would be unlawful to provide a guarantee or loan on the terms of any proposals that the company or any other party has made.”

“In the days and weeks ahead, I will be working with the Official Receiver and a British Steel support group of management, trade unions, companies in the supply chain and local communities, to pursue remorselessly every possible step to secure the future of the valuable operations in sites at Scunthorpe, Skinningrove and on Teesside,” he added.

The government admitted that it has already provided the company with a 120 million pounds (152 million dollars) bridging facility to enable it to meet its emissions trading compliance costs.

In 2016, Private equity group Greybull Capital purchased the company from Tata Steel for a nominal 1 pound (1.27 dollars) during the depths of the steel crisis.

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Purplebricks CEO departs, as firm scales back global expansion

Purplebricks founder and chief executive Michael Bruce has left the online estate agent as the firm announced it will exit Australia and place its US operations under review.

Mr Bruce will step down from Purplebricks with immediate effect, just months after shares in the firm tumbled when it cut annual revenue guidance and announced the departure of the bosses of its UK and US units.

Replacing him will be Vic Darvey, previously the company’s chief operating officer.

Chairman Paul Pindar thanked Mr Bruce for his contribution to the creation and development of Purplebricks, but added that the firm had got things drastically wrong over the past year.

“We are very conscious that the group’s performance has been disappointing over the last 12 months and we sincerely apologise to shareholders for that.

“With hindsight, our rate of geographic expansion was too rapid and as a result the quality of execution has suffered.

“We have also made sub-optimal decisions in allocating capital. We will learn from these errors and will not make them again.”

Purplebricks bemoaned “increasingly challenging” conditions in Australia and confessed to “execution errors”, adding that returns from the nation are “not sufficient to justify continued investment”.

It will now commence an “orderly run down” with immediate effect, pending closure.

In the US, Purplebricks has put its operations under review.

The firm said: “Whilst good progress has been made in launching our brand across the US, the board has materially cut investment in marketing and other overheads to reduce expenditure to sustainable levels and begun a strategic review.”

In February, Purplebricks warned over headwinds in the Australian housing market when it admitted that it does not expect to meet revenue forecasts for the year.

In the US, the company cautioned that there has been a “slower-than-expected response” to its marketing initiative and it also does not expect US revenue to meet expectations.

To compound matters, last month analysts downgraded the online estate agent and said it would have to raise fresh cash.

Berenberg warned in a research note that the group should either give up on its international expansion plans or raise more funding as it slashed its rating from buy to sell.

It cited a slowdown in Purplebricks’ core UK market, as well as tough conditions in Australia and the US.

Purplebricks confirmed that it expects revenue to be within the £130 million to £140 million range it guided for in February and cash balances will be no lower than £62 million.

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Business Minister commends Scottish Industrial Strategy efforts

Speaking to over 50 business leaders at the Scottish Council for Development and Industry (SCDI) Annual Forum today (Friday 26 April), Lord Henley showcased how, through collaboration between UK and Scottish government, Scottish businesses and regions were “rising to the occasion” to meet some of the UK’s biggest challenges.

In particular he highlighted the importance of collaboration between the SCDI and government in supporting Scottish enterprise in recent years – with £87 million of UK government funding awarded to 163 Scottish organisations through the Industrial Strategy Challenge Fund since its launch in April 2017.

The government has also invested over £1.35 billion pounds across Scotland, as part of the City and Growth Deals, aimed at providing more power and flexibility to cities in terms of employment and skills, business support and housing.

Business Minister Lord Henley said:

From addressing the needs of an ageing society, to capitalising on the benefits of artificial intelligence, it’s brilliant to see first-hand how businesses in Scotland are thriving while tackling the UK’s grand challenges.

Through collaboration between business and the UK and Scottish governments, we can ensure that we continue to back Scottish businesses, boosting productivity and creating high quality, well paid jobs.

As part of his visit, Lord Henley met with life sciences company RoslinCT to see how £887,000 of government funding, awarded in October 2018, is being used to help develop stem cell therapies for clinical use.

He also met with scientists and academia from SynthSys, Edinburgh’s virtual centre for Synthetic Biology, to tour its flagship Genome Foundry, which is using robotics and automation to assemble DNA for medical applications.

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We wish you a Merry Christmas and a Happy New Year

We would like to thank you for working with Advisory Excellence throughout 2018 and hope you and your colleagues have a wonderful festive break.

Our offices will be closed from 1pm on Friday 21st December and will re-open on Monday 7th January 2019.

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We look forward to working with you in 2019!

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KPMG partners receive bumper payouts despite Carillion fallout

KPMG, the auditing firm that gave Carillion a clean bill of health, has reported a leap in profits that will result in the average pay of its 635 partners soaring from £519,000 to more than £600,000 each.

Only months after KPMG was accused by MPs of being part of a “cosy club” and “complicit” in the run-up to the collapse of the construction and government outsourcing company, the accountancy group reported an 8% rise in revenue to £2.3bn in the 12 months to 30 September. Profits surged 18% to £365m.

Bumper profits helped to boost the pay packets of KPMG’s most senior executives, with the average payout per partner rising to £601,000. The chairman, Bill Michael, who was appointed last year, received £2.1m.

KPMG was one of the firms singled out in a damning report on the demise of Carillion, which collapsed under a mountain of debt in January.

“In its failure to question Carillion’s financial judgments and information, KPMG was complicit in the company’s questionable accounting practices, complacently signing off its directors’ increasingly fantastical figures over its 19-year tenure as Carillion’s auditor,” MPs on the work and pensions and the business select committees concluded in May.

KPMG was also fined £3m in August by the Financial Reporting Council (FRC) after the firm admitted to misconduct in its audits of the fashion chain Ted Baker in 2013 and 2014. That penalty followed a £4.5m fine by the FRC in June, for its audit of Quindell in 2013.

The boost to profits comes at a difficult time for the big four accountancy firms – KPMG, EY, Deloitte and PwC – which have attracted criticism from politicians and regulators over the quality of their audit work and face calls to be broken up.

They were all criticised for failing to spot problems at Carillion sooner and for prioritising profits over proper scrutiny of companies during their audits.

MPs accused the firms of “feasting” on the carcass of Carillion after banking £72m for work in the years leading up to the construction firm’s collapse.

Professional firms such as KPMG have also been criticised for conflicts of interest, given the wide array of work done for big clients such as Carillion. It has been claimed that firms are less willing to challenge auditing clients in the hope of winning lucrative contracts for consultancy and advisory work.

However, KPMG stressed in its latest results that it was the first UK firm to “voluntarily stop providing ‘non-audit’ services to the FTSE 350 companies it audits”. It has also recommended that the ban is rolled out across all audit firms in the UK.

Michael said: “I have been clear that our wider profession faces challenges. In order to safeguard against any perceptions of conflict of interest, we have drawn a clear line between our advisory and audit work for UK-listed businesses.”