The Times - UK (2020-08-07)

the times | Friday August 7 2020 2GM 43

Business

The construction industry recorded its
strongest monthly rise in activity for
nearly five years as the sector con-
tinued to rebound from the lockdown.
However, the industry has a long way
to go before output returns to pre-Cov-
id levels, and construction companies
are still shedding jobs at one of the fast-
est rates since the global financial crisis.
The IHS Markit/CIPS construction
purchasing managers’ index rose to 58.1
last month from 55.3 in June, slightly
above economists’ forecasts and a
sharp rebound from April’s record low
of 8.2. A reading above 50 represents an
expansion in business activity.
Tim Moore, economics director at
IHS Markit, said: “Survey respondents
noted a boost to sales from easing lock-
down measures across the UK eco-
nomy and reduced anxiety about start-

Travelex, the travel money firm, has
struck a deal to stay in business but will
lose more than 1,300 jobs in the UK.
PWC, the administrator, said the im-
pact of a cyberattack followed by the
coronavirus crisis hit the company.
“acutely”. It said a complex restructur-
ing deal completed yesterday had
delivered £84 million of new money
through a “pre-pack administration
sale” of certain entities and assets.
The purchaser is Travelex Acquisi-
tionco Limited, a special purpose
vehicle controlled by the noteholders to
the global Travelex Group. A pre-pack

resulted in 1,309 UK employees being

made redundant.”

On New Year’s Eve, Travelex was the

target of a high-profile hack and report-

edly paid out $2.3 million in January to

the REvil ransomware gang. The attack

left its systems down for weeks, forcing

the group to resort to pen and paper.

PWC said the subsequent Covid-19

Growth shows construction on

mend but jobs continue to leak

ing new projects. However, new work

was still relatively thin on the ground.”

The index represents the pace of

growth, not the level of production. The

sector has a long way to recover after

construction output collapsed by more

than 40 per cent in March and April.

Construction accounts for about 6 per

cent of Britain’s economy.

The latest construction PMI reading

showed the fastest monthly growth in

the sector since October 2015, driven by

expansion in the residential sector.

“Construction companies took

another stride along the path to

recovery in July as a rebound in house-

building helped to deliver the strongest

overall growth across the sector for

nearly five years,” Mr Moore said.

“Civil engineering and commercial

activity are also back in expansion,

which has been mainly due to the

restart of work that had been delayed.

“Survey respondents noted a boost to

sales from easing lockdown measures

across the UK economy and reduced

anxiety about starting new projects.”

However, worries about the speed of

the recovery led to a “sustained de-

cline” in staffing numbers during the

month, the survey said. Thirty-four per

cent of firms reported a fall in employ-

ment levels, as the winding down of the

government furlough scheme nears.

Duncan Brock, group director at the

Chartered Institute of Procurement &

Supply, said: “Though builders were

slightly less optimistic about prospects

for the year ahead compared to the pre-

vious month, recovering lost ground

gives hope that the damage caused by

the pandemic may be less entrenched if

recovery continues along this path.

“However, with another sharp fall in

staffing levels, the number of redun-

dancies increasing and competition for

raw materials resulting in higher costs,

holes are already starting to appear.

“After a summer of this blistering

return to growth, building companies

should prepare for a chilly autumn as

furlough schemes come to an end and

the real strength of the UK economy is

revealed.”

Ragene Raithatha, senior associate

in the construction and infrastructure

practice at DWF Group, the London-

listed law firm, said: “The figures show

the fastest rise in construction output

since October 2015.

“In a post–pandemic world there will

still be a requirement for more homes,

urban regeneration, improved

infrastructure, improved offices, retail

space and more distribution facilities.

We all know from past downturns that

a robust construction sector will

emerge but how and when, we just do

not know.”

Robert Miller

ANTHONY GHNASSIA/GETTY IMAGES

D

iageo has started

arbitration

proceedings against

LVMH over the French

company’s refusal to pay a

€181 million dividend

(Dominic Walsh writes).

Diageo, which owns

Johnnie Walker and

Smirnoff, has a 34 per cent

stake in Moët Hennessy, the

French luxury goods

group’s spirits and wine

unit. LVMH, which is

controlled by the French

billionaire Bernard

Arnault, initially said that

Moët Hennessy should pay

a dividend of €531 million,

of which €181 million would

normally have gone to

Diageo. While LVMH itself

has pressed ahead with the

payment of dividends to its

shareholders in respect of

last year’s results, Moët

Hennessy has scrapped

them, which Diageo is now

challenging.

Moët Hennessy, which

owns brands such as Moët

& Chandon, Krug and

Veuve Clicquot, is believed

to have cancelled the

payout over concerns about

the pandemic. Diageo said

that the non-payment of

last year’s dividend

“constitutes a breach by

LVMH of the partners’

agreement”. The revelation

in Diageo’s full-year results

came after it maintained its

own final dividend but

admitted that the pandemic

had thrown up “significant

challenges”. In the year to

the end of June Diageo

reported an 8.7 per cent

decline in reported net sales

to £11.8 billion, with

operating profit suffering a

47.1 per cent drop to

£2.1 billion.

LVMH could not be

reached for comment.

Diageo fights

its corner on

Moët dividend

Travelex strikes rescue deal but 1,300 UK staff will go

Robert Miller administration sale is when a company
arranges a deal to sell its assets to a
buyer before appointing administrators
to facilitate the sale.
The company was founded in 1976 by
Lloyd Dorfman with one store in
London and grew into a network of
more than 1,000 outlets.
Toby Banfield, joint administrator at
PWC, said: “The completion of this
transaction has safeguarded 1,802 jobs
in the UK and a further 3,635 globally,
and ensured the continuation of a
globally recognised brand.
“Unfortunately, as the majority of the
UK retail business is no longer able to
continue trading, it has regrettably

outbreak created “considerable uncer-

tainty” on future financial performance

and the spread of the virus resulted in a

sharp decline in air passenger numbers,

affecting global travel.

The Travelex Group trades in over 80

currencies and operates in more than

50 countries, both online and through a

network of more than 1,000 stores

including big airports, with more than

1,000 ATMs around the world, PWC

said.

The group also provides travel cur-

rency services for partners including

banks, supermarkets and travel agen-

cies, extending its reach to more than

60 countries.

£84m

Money put into Travelex by sale of

assets to its lenders

Source: PWC

‘Tsunami of

appeals’ over

business rates

James Hurley Enterprise Editor

A “tsunami” of Covid-related appeals

over business rates threatens to over-

whelm the government agency that

handles them.

Experts said a huge rise in companies

registering challenges to their bills

would cause a 17-year backlog if appeals

are dealt with at their current rate.

Figures from the Valuation Office

Agency (VOA), which handles rates

appeals, show that 144,910 shops, pubs,

restaurants, offices, factories and other

businesses lodged a “check” on their

property tax valuation in the first three

months of this financial year, the first

stage in launching a formal appeal.

The number registered was seven

times the total for the same period last

year, when 18,340 were raised. There

was a total of 158,910 in the past three

years. Experts expected a rise, but were

surprised by the scale of the jump.

Jerry Schurder, head of business

rates at Gerald Eve, a firm of property

advisers, said: “This tsunami of appeals

will overwhelm the VOA — and it is

ratepayers, desperate for rates cuts, that

will pay the price. To wait many years

for their case to be considered will be

the death knell for many.”

Altus Group, another property advis-

ers, estimates that the Treasury has

written off bills to the tune of £10.22 bil-

lion in an emergency holiday for retail,

leisure and hospitality properties.

Alex Probyn, UK president of Altus

Group, said that sectors that had not

benefited from the rates holiday must

be given urgent assistance, including

offices, factories and warehouses.

Mr Schurder said the situation could

become even worse from next April

when businesses that enjoy a rates holi-

day at present may also launch appeals.

Lower business rates income could

cause a crisis in local authority budgets.

Jobless claims

in US show fall

Robert Miller

The number of Americans filing for

jobless benefits fell last week to the

lowest level since coronavirus hit the

country in March, official figures show.

Initial unemployment claims

dropped by a seasonally adjusted

249,000 to 1.2 million for the week

ending August 1, according to the Labor

Department. The figure was below the

consensus forecast of 1.4 million com-

piled by Bloomberg.

The weekly number is the lowest

level of jobless claims registered during

the Covid-19 pandemic. It also marked

a fall from the previous week after two

consecutive weeks of increases.

“The tone of the jobless claims data is

the best it has been in three weeks,”

Thomas Simons, money market econo-

mist at Jefferies, said. “The outright

level of claims has made a new post-

pandemic low, and the decline is the

biggest since the week of June 6.”

More than 55 million unemployment

claims have been filed since March, far

exceeding the 37 million during the

2008-09 financial crisis.

Continuing claims, which represent

the aggregate total of people receiving

unemployment benefits, came in at

16.1 million for the week ending July 25,

a decline from the previous period’s

revised number.

This week’s jobless claims numbers

come ahead of the July non-farm

payroll report today.

The pianists Lang Lang & Gina Alice Redlinger celebrate their wedding in front of a Moet champagne pyramid in Paris last year