The Morning Call - Carillion calls in Pwc for major corporate restructuring as it plans for the future

Highlights of the Day

Asian Markets

Asian shares regained some poise after a tough week in which the gathering risk of a U.S. rate rise lifted Treasury yields toward nine-year highs and boosted borrowing costs across the region.

U.S. Markets

US stocks finished slightly higher, with the U.S. 500 poised to close at a record on gains in McDonald’s and drugmakers, while investors continued to hope President Donald Trump will be able to move forward on tax reform.

Today's News

Doubt has been cast over one of the longest-standing economic claims in the Brexit debate, after an investigation revealed that Britain’s real exports to outside the EU are actually far lower than official figures suggest. The government’s trade statistics show that, over the past five years, the share of UK goods being exported to the European Union was only 46% – a fact frequently referred to by those who campaigned for Brexit. However, this number is severely distorted by the flow of gold bullion in and out of London – the world’s major centre for the trade of this precious metal.

Mitie Cleaning and Environmental Services employees based at Manchester Airport voted in favour of taking strike action on Thursday as they continued their efforts to seek a better remuneration packet after a two-year pay freeze. The cleaners, who had been receiving just about the minimum wage of £7.50 per hour, were seeking an increase that would put them over the national living wage of £8.45, as well as a one-off payment for backdated earnings at a rate of £1 per hour for every hour worked since April 2016. Unite regional officer, Jimmy Carter said, “Keeping Britain’s third busiest airport clean is hard work, after a two-year pay freeze workers have had enough.”

Pension trustees at Carillion have called in the world’s largest audit firm to advise them amid a massive financial restructuring, Sky News reported on Thursday. Sky News said it understands that the trustees are working with PricewaterhouseCoopers on options to safeguard members’ interests, even as Carillion’s pension deficit soars to nearly £600m. The appointment, which is understood to have been made several weeks ago, has emerged just before Carillion is due to present its delayed half-year results at 0700 BST.

Operating profits at CVS rose by 46.2% to £17.2m in the year to the end of June. Revenue rose 24.6% to £271.8m with like-for-like sales growth for the group of +6.3%. Pre-tax profits of £14.5m were up 58.4%. Adjusted EBITDA rose by 28.2% to £42.1m and adjusted earnings per share increased by 32.1% to 42.8p. Looking ahead, non-executive chairman Richard Connell said: ‘The group’s exposure to the potential impacts of Brexit appears to be limited.

Purplebricks said strong progress has been made across the business since the start of the financial year on 1 May 2017. Trading in the UK and Australia remained on course to meet the full year guidance provided at the Final results in June: revenues of £80m for the UK and £12m for Australia. H1 revenues in the UK are likely to be more than double the same period last year and many times ahead in Australia, although they had only been trading two months in the comparable period.

The UK Civil Aviation Authority has told Ryanair Holdings it has until 5 pm London time to meet obligations to thousands of customers affected by flight cancellations, Sky News reported. The CAA has ordered Ryanair to tell passengers they are entitled to reimbursement of their expenses and to be rerouted with another carrier, as well as to commit to help passengers who have chosen an “unsuitable” option due after being mislead, according to Sky News. The CAA has threatened legal action against Ryanair following the airline’s failure to properly inform customers of their rights.

Oil prices were mixed on Friday, but both Brent and U.S. crude were set to chalk up another weekly gain as investors bet that efforts to cut a global glut are working and that the demand outlook is improving.

Gold fell on Friday, inching towards the previous session’s six-week low as the dollar strengthened, with prices set for their biggest monthly fall this year.

Companies Reporting this week

Day	Companies
Today:	CVS Group * Purplebricks Group

Early Market Movements

Market	Index	Change	% Change
UK 100	7,336.55	+13.73	+0.2%
UK 250	19,704.25	+25.79	+0.1%
GER 30	12,730.91	+26.26	+0.2%
FRA 40	5,297.96	+4.19	+0.1%
U.S. 30	22,381.20	+40.49	+0.2%
U.S. 500	2,510.06	+3.02	+0.1%
OIL (BRENT)	57.41	+0.0	+0.0%
GOLD	1,287.38	+0.08	+0.0%

UK Risers & Fallers (8:15am)

Company	Price	Change	% Change
Qinetiq	253.5	+20.1	+8.6%
ITV	172.3	+3.6	+2.1%
Glencore	334.5	+5.6	+1.7%
Equinti	276.7	-24.7	-8.2%
Hargreaves Lansdown	1462	-35	-2.3%
Micro Focus	2371	-17	-0.7%

Latest Broker Views

Company	Broker	Recommendation	Price	Target
Petrofac	Macquarie	Outperform	460.9	540
Pearson	Barclays	Equal Weight	604	625
Smith and Nephew	Goldman Sachs	Neutral	1335	1350
WPP	Barclays	Equal Weight	1367	1575

Forthcoming Economic Data

Time/Date	Previous	Forecast	Outcome
9:30am: U.K. Current Account	-16.9b	-15.8b	–
3:00pm: BOE Governor Carney Speaks	–	–	–
3:00pm: U.S. Revised UoM Consumer Sentiment	95.3	95.3	–