June Update: Essential News

BAA unhappy
Airports operator BAA lodged an appeal with the Competition Appeal Tribunal against the Competition Commission’s recommendations to break it up. It believes the commission is biased because of links between one of its members and an organisation that is interested in the airports it must sell, and has not considered the difficulty in selling them in the current market conditions.

Poor M&S
Marks & Spencer reported pre-tax profit down 40% to £706m in the year to 28 March 2009, compared with £1.0bn in 2008. Like-for-like sales shrank 6% overall ­ 7% in general merchandise and 5% in food ­ and reported operating profit down to £769m from last year’s £1.1bn. The final dividend was cut 33% to 15p per share from 22.5p.

Shell shareholders’ pay revolt
The remuneration report of Royal Dutch Shell was voted down by 59.4% of shareholders in May as the group recommended upping remuneration to board members, despite missing performance targets. Sir Peter Job, chairman of the remuneration committee, said the group took the vote "very seriously" and added that it would “reflect carefully on it".

Virgin Media CFO exit
Virgin Media CFO Jerry Elliott leaves the business on 31 May for “family health reasons” after just five months in the job. Capital markets and treasury functions will be covered by treasurer Rick Martin while a successor is found and controller Robert Gale will become principal financial officer. Additional senior members of the finance function will manage commercial finance activities.

First pensions longevity swap
FTSE-100 support services group Babcock is the first UK company to transact a longevity swap to hedge risk in its two defined benefit pension schemes. “While a longevity swap may increase liabilities, it can often be transacted with a nil cash payment on day one,” says Gordon Fletcher, a consultant at pensions consult ant Mercer.

ABI man is new FRC chief
Stephen Haddrill will succeed Paul Boyle as chief executive of the Financial Reporting Council, moving from his post as director general of the Association of British Insurers in mid-November. Haddrill said: “The financial crisis has raised important questions about the future of accounting and governance.”

TECHNICAL UPDATE
TAX
The new regime of personal responsibility for tax systems places an onerous burden on ‘senior accounting officers’. Liability will be determined according to a standard of ‘careless failure’. “The accountant could be liable if there is virtually any error,” warns Jonathan Davies, a partner at City law firm Reynolds Porter Chamberlain.

Auditing
The Treasury Select Committee’s second report on the banking crisis calls for closer cooperation between auditors and the FSA and, controversially, suggests that bank auditors should not be allowed to undertake non-audit work for their clients.
http://tinyurl.com/tsc-bank1
http://tinyurl.com/tsc-bank2

Corporate killing
The first ever prosecution for corporate manslaughter was launched against Cotswold Geotechnical Holdings Ltd following the death of an employeee. There is also a charge of gross negligence manslaughter against director Peter Eaton. If convicted, the director could be jailed, while the company could face an unlimited fine and a ‘publicity order’.
www.blg.co.uk