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Tue 16th Oct 2018 - Update: Patisserie Holdings' auditor boss quits, climate change could double price of pint, Merlin and Vianet trading
Grant Thornton boss quits days after company slammed for missing £40m Patisserie Holdings black hole: The chief executive of Grant Thornton has quit – just days after the accountancy group was slammed for missing a £40m black hole at Patisserie Holdings. Sacha Romanovitch’s resignation was unexpected and comes almost two weeks after she vowed to stay on. Romanovitch has reportedly been at the centre of a power struggle in the partnership. Grant Thornton itself has been repeatedly criticised as the audit industry faces accusations of sloppy practice and conflicts of interest. The company is in the firing line over the near-collapse of Patisserie Holdings, whose finance director Chris Marsh has been arrested on suspicion of fraud following the discovery of a £40m funding shortfall. Grant Thornton,which has audited Patisserie Holdings since 2006 and pocketed up to £600,000 in fees in the past four years alone, could face legal action for failing to spot the problems. Grant Thornton said Romanovitch has decided not to seek a second four-year term as chief executive after consultation with its board. It means she will not run for re-election in a vote by Grant Thornton’s 200 partners, and instead will stay on only until a successor is found by the end of the year. In an interview earlier this month when asked if she would seek re-election, Romanovitch had said: “Fundamentally, do I think I’m the right person to lead this firm now? Yes. Do I think there’s unfinished business, in terms of delivering what I set out to achieve? Absolutely.” Announcing her resignation yesterday (Monday, 15 October), she said: “Following discussions with Grant Thornton’s board, we have agreed that the time is right for a new chief executive to take the firm forward.” Chairman Ed Warner said: “The board has agreed that a new chief executive is the logical next step to create long-term sustainable profits for the firm.”
 
Price of a pint ‘could double’ as result of climate change: The price of a pint could double as a result of climate change, a new study has warned. Scientists have said severe weather such as drought or hurricanes, or rising sea levels, could hit the global supply of barley. The UK-funded research, involving the University of East Anglia, is the first to assess the vulnerability of the global beer supply against a range of future climate change scenarios. Research had previously focused on its impact on staple crops such as wheat, maize, soya bean and rice. The new study, also involving experts in the US, China and Mexico, suggested “luxury” goods may be hit harder than staple foods as manufacturers are forced to prioritise. As such, coffee and wine are also at risk. The study, in the Nature Plants journal, said the effect on beer would differ between countries, depending on how much barley was prioritised for livestock feed. Only 17% is currently used for brewing. During the most severe climate events, global beer supplies could fall by 16% , or 29 billion litres – equivalent to the US’s annual beer consumption. In the UK, consumption could fall between 0.37 billion and 1.33 billion litres, and “the price could as much as double”.
 
Merlin Entertainments reports like-for-likes up 1.4%: Merlin Entertainments has reported like-for-like sales increased 1.4% for the 40 weeks ended 6 October 2018. Total revenue has grown 4.7% in the year to date, driven primarily by new business development. Resort Theme Parks organic revenue has increased 9.0% with “particularly strong” like-for-like trading of 8.3% due to successful product investment and favourable weather. Legoland Parks organic revenue rose 6.4% driven by the full year contribution of Legoland Japan and the continued accommodation roll-out, offset by flat like for like growth. Midway Attractions organic revenue was flat, reflecting the expected 0.7% decline in like-for-like revenue, with the new openings schedule phased towards the end of the year. Accommodation revenue grew by 27.7%. The company launched two new brands – Peppa Pig World of Play in Shanghai, and The Bear Grylls Adventure in Birmingham, UK. Chief executive Nick Varney said: “Group trading has been in line with expectations, with variances by operating group reflecting the diversified nature of the portfolio. We have opened a record 644 rooms, and six new Midway attractions, which has resulted in organic revenue growth of 4.7%. Continued strong guest demand for our themed accommodation offering and the ongoing trend towards short breaks has driven 27.7% growth in accommodation revenue. The impact of terror attacks that adversely affected performance from early 2017 has started to abate and we have seen early signs of recovery in the London tourism market over the summer. We are excited by the recent launch of our two new Midway brands – The Bear Grylls Adventure in Birmingham, UK, and Peppa Pig World of Play in Shanghai. It is too early to comment on their commercial success, which as for all new brands could take time to build, but the attractions look fantastic and we are pleased with early guest feedback. The cost environment remains challenging, with tighter labour markets in many parts of the world adding to the pressures resulting from legislative changes such as the National Living Wage in the UK. Our productivity agenda remains a key area of focus, and it is testament to our teams that, despite these cost pressures, we have continued to deliver excellent levels of guest satisfaction overall. The underlying fundamentals of our markets are strong and we remain excited by the global opportunities that Merlin enjoys. There remains a number of important trading weeks over the Halloween and Christmas periods. Reflecting the trends experienced to date, Merlin anticipates reporting 2018 results in line with market expectations.”
 
Vianet – trading ‘ahead of last year’: Vianet Group, the international provider of actionable data and business insight through devices connected to its Internet of Things platform, has reported trading for the six months ending 30 September 2018 is “ahead of last year”. The company stated: “Trading for the first half of the current financial year is ahead of the same period last year with the growth in operating profit being in line with market expectations. The board intends to maintain the interim dividend of 1.7 pence per share. The Smart Machines division has delivered a strong year-on-year increase in the number of connected devices deployed. We have made particularly good progress with the integration of Vendman and early-stage success in transforming circa 200,000 Vendman mobile connections to higher value Smart Machines connections is validating our strategic approach and opening up attractive cross selling opportunities. Helped by investment in Pubco data analytics capability and its increased automation of transactional processes, the Smart Zones division first-half contribution was satisfactory. This performance was achieved despite delays due to pubco corporate activity and our managed compliance service being held back by the UK beer supply chain being adversely impacted by the Europe-wide shortage of CO2 gas over the summer months.” Chairman James Dickson said: “The team continues to make good commercial progress, particularly with our telemetry and payment solutions for the coffee vending market, where momentum is being boosted by good progress integrating the Vendman acquisition. Vianet’s medium to long term prospects are exciting as we are increasingly demonstrating that our strategy of leveraging the power of our cutting edge technology to bring game changing business insight to our customers is the right one.” Vianet will release its results for the six months ending 30 September 2018 on Tuesday, 4 December.
 
Diageo launches €2bn of fixed rate Euro denominated bonds: Diageo has launched and priced €2bn of fixed rate Euro denominated bonds under its European Debt Issuance Programme. The issuer of the bonds will be Diageo Finance, with payment of principal and interest fully guaranteed by Diageo. The issue consists of €900m bonds due October 2021 with a coupon of 0.250%; €600m bonds due April 2025 with a coupon of 1.000%; and €500m bonds due October 2027 with a coupon of 1.500%. Proceeds from the issuance will be used for general corporate purposes. Citigroup Global Markets, Deutsche Bank, HSBC Bank, Morgan Stanley and NatWest are joint bookrunning managers.

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