The Times - UK (2020-06-29)

32 1GM Monday June 29 2020 | the times

Business

1

Internet shoppers could be hit

by a compulsory delivery

charge as part of a drive to cut

congestion and toxic emissions.

The government is considering

measures to reduce the impact of

the ecommerce boom. A report

recommended a “mandatory

charge” similar to that imposed for

plastic bags. Page 1

2

The slump in passenger

numbers caused by

coronavirus is likely to hasten

the end of the double-decker

Boeing 747 and Airbus A380,

analysts say. The jets may never

return to service as airlines

struggle to fill the aircraft, making

them uneconomical. Page 10

3

The recovery of London’s

stock market from the

coronavirus sell-off is the

weakest among its peers, with

New York, Frankfurt and Tokyo

surging ahead, figures show. One

analyst described London as “the

most unloved equity market”

because of its sluggish

performance compared with other

leading financial centres. Page 31

4

Nigel Wilson, chief executive

of Legal & General, has

warned that “history will

judge us unkindly” unless the

government embarks on a

multibillion-pound investment

programme to revitalise the

economy. Page 31

5

Two brothers who founded

the sportswear brand Castore

hope to create a challenger to

Nike and Adidas. Castore will

clock up £75 million in sales this

year, having secured a £25 million

kit deal with Rangers FC, a three-

year contract with the West Indies

cricket team and a deal with

McLaren.

6

Almost three-quarters of

manufacturers are

considering cutting jobs this

year as they battle for survival.

The prospect of huge job losses

came as Make UK, the industry

lobby group, said the sector would

take at least two years to recover

from the pandemic. Page 34

7

A third of adults are planning

a trip to the pub when they

reopen in a much-needed

boost for landlords, new research

predicts. Takings in English pubs

are set to reach £210 million over

the July 4 weekend, about 72 per

cent higher than the average

weekend turnover, according to

the Centre for Economics and

Business Research. Page 34

8

Azzurri, the casual dining

chain behind the Ask Italian

and Zizzi chains, looks likely

to be sold after attracting bids

from five private equity and

investment firms. Page 36

9

Whitehall officials have been

warned that any reduction to

the access British vessels

enjoy to the waters where most of

the country’s fish and chip shop

portions come from would be an

“enormous failure”. Page 37

10

Large corporations that

have received help from

the government to see

them through the pandemic

should be forced to pay their

suppliers within a month, a

leading business campaign group

has argued. Page 39

Need to know

EY accused of failing to act on Wirecard worries

EY had concerns about Wirecard’s

accounting practices as early as 2016

but continued to sign off the scandal-

hit company’s results, according to

reports.

Internal emails are said to show the

auditor questioning the German com-

pany’s financial arrangements four

years ago, yet EY continued to sign off

its accounts for a further three years,

according to The Wall Street Journal.

The correspondence shows EY’s con-

cerns over trustee accounts in Singapore

that were said to hold a large chunk of

Wirecard’s cash. EY said this month that

it was unable to verify €1.9 billion of the

German company’s funds that was said

to be held in the trustee accounts.

The payments processing and card

issuing company said on Monday there

was a “prevailing likelihood” that the

money did not exist and EY now says

there appears to have been a “large-

scale international fraud at Wirecard”.

Wirecard has plunged from a market

value of €13 billion last week to filing for

insolvency on Thursday. Markus

Braun, its former chief executive, was

arrested and released on bail last week.

German prosecutors have launched a

criminal investigation into the com-

pany. On Friday the scandal spread to

the UK as the Financial Conduct

Authority froze Wirecard’s British sub-

sidiary, Wirecard Card Solutions, caus-

ing chaos for the fintech industry and

locking hundreds of thousands of

people out of pre-paid card accounts.

On Saturday Wirecard indicated

that it planned to continue operations

and would take measures so that its UK

business would be able to resume.

For many years EY had enjoyed a bet-

ter reputation than many of its rivals but

its competence is under intense scru-

tiny, with its work on NMC Health and

Thomas Cook already being investigat-

ed by the accountancy watchdog.

More than 1,000 shareholders of

Wirecard have joined a legal action

which is pursuing EY for £910 million

over its audit work. The complaint, to

be filed in Germany, focuses on EY’s

alleged failing to check the trustee ac-

counts, The Sunday Times reported.

EY did not check directly with the

supposed holder of the missing money,

Singapore’s OCBC Bank, to check the

balances, instead relying on documents

from Wirecard and a third party pay-

ment processor, according to allega-

tions reported by the Financial Times.

Investors who shorted Wirecard’s

stock have claimed they have sent

EY numerous warnings about the

company’s accounting practices in

recent years.

EY declined to comment on the

emails and said it had been given false

bank statements by third parties.

James Hurley

Sportswear underdogs gear

The brothers who run

Liverpool-based Castore

are hoping to succeed

where many fail, they

tell Ashley Armstrong

The sporting world has a soft spot for

tales of plucky underdogs overcoming

their bigger rivals. Think Leicester

City’s unlikely rise to Premier League

champions or a 17-year-old Boris Beck-

er winning Wimbledon.

Now the young founders of the

sportswear brand Castore are hoping to

replicate those legendary triumphs,

with a grand ambition: to create a chal-

lenger to Nike and Adidas from their

base in Liverpool.

Tom Beahon, 30, and his brother

Phil, 27, set up Castore less than four

years ago. In that time the business has

grown rapidly. It will clock up £75 mil-

lion sales this year and has secured An-

dy Murray, the British tennis ace, as not

only an ambassador but an investor too.

The brand, which sells waterproof

hoodies for £165 and t shirts for £55, will

soon be reaching an even bigger audi-

ence through its £25 million kit deal

with Rangers FC. Castore has also

inked a three-year contract with the

West Indies cricket team, a deal with

McLaren and is in talks with a

handful of other top European

football clubs.

The company has flown

out of the blocks, but Cas-

tore will need staying

power if it is to break

into the ranks of the

global sportswear elite.

Nike made a pre-tax

profit of $2.9 billion last

year on $37.4 billion of

income. Over the

decades, plenty of up-

starts have tried to push

the dominant global brands

off their perch.

Castore does not lack high-

profile supporters who believe it

can succeed where others have come

up short. Its investors include Tom

Singh, founder of New Look, Peter

Roberts, founder of Pure Gym, and

Arnaud Massenet, who co-founded

Net-a-porter, the fashion retailer.

Its founders know all about failure,

which is perhaps the reason they chose

the aspirational slogan “Better never

stops” for their brand. Tom Beahon left

school at 16 after signing with his

beloved Tranmere Rovers’ junior side,

which he affectionately describes as

“Liverpool’s third-best team”.

“I wasn’t thinking about being an en-

trepreneur

or a business-

man, my ulti-

mate aspiration was

to be a professional footballer.” How-

ever, after a transfer to a third-tier

Spanish team he realised that he didn’t

have the talent to get to the very top.

“As much as I loved football, I realised

I was a mediocre player and that hon-

estly scared the life out of me — it didn’t

appeal to me at all. I just didn’t have the

talent and accepting that failure was a

very, very difficult thing to do,” he says.

Around the same time his brother,

Phil, was having the same realisation

about his cricket career at Cheshire and

left for a job at Deloitte. Tom spent five

years at Lloyds Bank in their leveraged

finance department after joining their

non-graduate scheme.

Tom said they spotted the opportuni-

ty for a new sportswear company after

realising there wasn’t a British brand

that competed on the global stage and

especially not in the premium market.

They started by focusing on high-quali-

ty fabrics that could improve perform-

ance, but could also be worn by people

who rarely break a sweat.

After a lengthy debating session

around the family’s kitchen table about

suitable names for the brand, they were

reminded of Castor and Pollux, the

twin brothers from Greek and Roman

mythology. They didn’t go with Pollux

because of the unfortunate rhyming

issues, Tom laughs. They added an “e”

to the end of Castor simply because

they thought it looked good.

The brothers’ early lessons in sport-

ing failure have given them the fire to

succeed in the world of business. “We

said from the start this will either result

in us being successful, or us being six

feet under — those are the only two op-

tions,” Tom says.

They are not the only sportswear

makers whose dreams of sporting glory

remained just that. Phil Knight, founder

of Nike, was a middling middle-distance

runner before starting his trainer

business that is now worth $127 billion.

Kevin Plank, Under Armour’s founder,

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€1.9bn

The amount of money EY said it

couldn’t account for in Wirecard’s audit

Castore, founded by Tom and Phil Beahon, left, have agreed deals with Andy Murray, Rangers