the times | Wednesday January 26 2022 41
Business
The chairman-designate of the
accounting watchdog has told the Big
Four firms that “the outcome could be
much worse for them” if they do not
play their part in improving the audit
industry.
The warning from Jan du Plessis, the
government’s preferred candidate to
lead the Financial Reporting Council,
came as he was questioned by MPs on
the business select committee.
The FRC has been criticised in recent
years for failing to take a hard enough
line against audit firms after a string of
high-profile corporate collapses,
including Carillion, the building con-
tractor, and Patisserie Valerie, the chain
of cake shops. The accountancy indus-
try is dominated by PwC, KPMG, EY
and Deloitte.
In what was effectively the final stage
of his interview process, Du Plessis, the
former chairman of BT, said that he
would help to “jack up” the audit
profession in Britain if he got the job.
River and Mercantile shareholders are
being offered 0.07392 new AssetCo
shares for each one in River and Mer-
cantile.
Gilbert was the founder of Aberdeen
Asset Management, which was merged
with Standard Life in 2017 to become
the recently renamed abrdn.
Gilbert, 66, left in 2020 and ploughed
£3.1 million of his own money into Asset-
Co, a defunct listed fire engine leasing
business. Since then it has bought:
Saracen Fund Managers, an Edinburgh
investment boutique, for £2.75 million:
Rize ETF, a thematic investment funds
house, for £16.5 million: and a 30 per cent
stake in Parmenion, a wealth manage-
ment platform, for up to £27.8 million.
Excluding the solutions division, River
and Mercantile manages £4.2 billion of
assets.
River and Mercantile shares rose 4p,
or 1.4 per cent, to 300p, while AssetCo
was unchanged at £15.50.T
he latest
rearranging of
the deckchairs at
Unilever has
been in the
works since November,
apparently, with insiders
saying that impending
Chinese lunar new year
closures have had more
impact on its timing than
than the arrival of Nelson
Peltz on the share register
(Ashley Armstrong
writes).
The shift from three to
five business groups is the
latest attempt to revive
growth by Alan Jope, the
consumer goods
conglomerate’s chief
executive, although it’sinteresting to consider
which “business group”
might have been
offloaded to fund his
mega-deal ambitions had
his pursuit of
GlaxoSmithKline’s
consumer healthcare
division been successful.
What will this reshuffle
do? Not that much, other
than give product divisionbosses control of their
global operations. Thus if
sales of Magnums slump
in a wet summer in
Europe, the newly created
“president, ice cream”
can shift more products to
sunnier spots in Asia or
North America.
Previously, country
bosses controlled the
profit and loss of product
divisions.
In recent years Unilever
has had at least three
reorganisations. In 2018
Paul Polman, Jope’s
predecessor, created three
business groups: beauty
and personal care; food
and refreshment; and
homecare. Before that,
there was his “Connected
for Growth” strategy that
clustered management
into geographies.
It is hard to be agile
when a company employs
150,000 people in 190
countries. Despite recent
disposals of its slow-
growth, highly cash-
generative tea and
spreads businesses,
Unilever has a
complicated product
portfolio that faces tough
competition from leaner
rivals and nimble upstarts
that are winning over
younger customers.
The market has been
unimpressed so far with
Unilever’s proposals,
though this
reorganisation will make
it easier for Unilever to
dispose of lower-growth
brands.
When Peltz, the activist
investor, lobbied for a seat
on Procter & Gamble’s
board, he proposed a
reorganisation to promote
accountability and faster
decision-making to
ensure a productivity plan
“actually delivered”. It
won’t be long before we
learn what he makes of
Jope’s latest efforts.Behind the story
Creating product heads at
Unilever, such as president,
ice cream, is intended to
allow for quicker changes to
sales plans in response to
changes in demandHundreds of
managers set to
go in overhaul
at Royal Mail
Louisa Clarence-Smith
Chief Business CorrespondentBig Four warned over audits shake-up
Tom Howard Du Plessis, 68, was born in South Africa
but holds British citizenship and is a
chartered accountant by training. He
quit as chairman of BT last year amid
reports of a falling out with Philip
Jansen, the telecoms group’s chief
executive, which the company denied.
He has chaired Rio Tinto, the mining
group, British American Tobacco, the
maker of Lucky Strike cigarettes, and
SABMiller, the brewer.
If the MPs sign off on his appoint-
ment, he will chair the watchdog’s
board for the next four years. The FRC
is being given more powers and is
being transformed into the Audit,
Reporting and Governance Author-
ity as part of a government over-
haul of how the biggest companies
are scrutinised.
The regulator has been with-
out a permanent chairman
since May 2020, when
Simon Dingemans
resigned after only eight months in the
job to take up a position at Carlyle, the
American private equity firm.
Du Plessis said that the FRC was in a
“pretty poor state” of governance and
not having a chairman for almost two
years was “really not the way to run the
regulator that should be setting the
tone for the whole of British business”.
He promised to deliver a “much
stronger and better-governed FRC
pretty quickly” should he be appointed
and predicted that he could get the
watchdog in “good shape...
within two or three months”.
The job pays £125,000 for
two and a half days a week
and Du Plessis said that, if
chosen, it would “almost
certainly” be his last before
retiring. He said that he
backed shared au-
dits, which allow
smaller account-
ancy firms to team
up with larger
peers.Gilbert adds another asset
with River and Mercantile
Patrick Hosking Financial EditorMartin Gilbert has scooped his biggest
deal since leaving Standard Life Aber-
deen, paying almost £100 million for
the rump of the River and Mercantile
Group investment house.
AssetCo, the veteran City fund man-
agement chief’s acquisition vehicle, has
agreed an all-share £98.8 million take-
over of River and Mercantile, taking to
four the number of asset management
businesses it has acquired in the past
year.
Gilbert, who owns 8.7 per cent of
AssetCo and is its chairman, had a clear
run at the prize after Premier Miton
dropped out of the bidding.
River and Mercantile has already
agreed to sell its biggest division, a pen-
sions solutions business, to Schroders
for £230 million. Its shareholders will
end up with £190 million in cash plus
41.6 per cent of the enlarged business.Royal Mail plans to cut 700 managerial
jobs in a restructuring that has forced it
to lower its profit outlook for the year.
The privatised national postal opera-
tor said it hoped that the move would
ensure an “improved focus on local per-
formance” and would “devolve more
accountability and flexibility to front-
line operational managers”.
This month Ofcom, which regulates
Royal Mail, said it was “concerned”
about reported month-long delays of
post over Christmas, with some cus-
tomers not receiving cards sent in mid-
December until January. The regulator
has ordered Royal Mail to take steps to
improve its performance.
Keith Williams, 65, Royal Mail’s
chairman, said: “The past few months
have demonstrated that the challenge
for Royal Mail is to improve both
quality and efficiency.”
The Unite union described the job
cuts as “unjust” and said that it could
ballot for industrial action.
The plan to cut managerial jobs,
which is subject to consultation, would
deliver an estimated £40 million annual
cost saving and a charge of about
£70 million in the final quarter of this
financial year. In 2020 Royal Mail said
that it would lay off 2,000 staff, mostly
back-office workers and some front-
line managers.
As a result of the £70 million charge,
Royal Mail’s UK business expects
annual adjusted operating profit of
about £430 million.
The group reported its best spring
and summer profits last year, driven by
soaring demand for home parcel deliv-
ery and the success of its expansion into
the European and American courier
markets. In the three months to
December, Royal Mail delivered
439 million parcels. UK parcel volumesdeclined by 7 per cent year-on-year, but
were 33 per cent above their pre-pan-
demic level. Parcel revenue fell by
4.9 per cent on the previous year but
was up 44 per cent on the year before
the pandemic began. Covid-19 had
resulted in a structural shift, with a
permanent step up in domestic parcel
volumes, Royal Mail said.
Total revenue was down 2.4 per cent
for the three months to December after
a rise in volumes around Black Friday
proved weaker than expected. Revenue
was still 17 per cent higher than in the
period in 2019. The company said that
its overall revenue performance was
broadly in line with its expectations and
that it was “at least maintaining” its
market share.
Simon Thompson, 55, its chief execu-
tive, said: “With the rise of Omicron,
absence has been around twice pre-
Covid levels, with around 15,000 staff
off sick or isolating in early January.
Thankfully, this is now improving. We
are resolutely focused on addressing
these issues which have affected our
service in some parts of the country.”
He said that in the year to date Royal
Mail had spent more than £340 million
on overtime, additional temporary
staffing and sick pay, as well as provid-
ing targeted support for some offices.
Shares in the group rose by 5¾p, or
1.3 per cent, to 442¼p.Failing to deliver
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to lead the regulatorTOM DYMOND/REX/SHUTTERSTOCK