Testing times see highs and lows for big-hitters
Skyscanner a winner in 2016 while Aggreko, RBS and Wood Group suffer
THE past year has not been kind to all businesses, with uncertainty over how the UK will manage its exit from the European Union causing disruption across all sectors.
For Gareth Williams, co-founder and chief executive of Edinburgh-based travel search engine Skyscanner, however, 2016 turned out to be a very good year.
Having started the year by raising £128 million from a group of investors including fund management house Baillie Gifford and Japanese internet company Yahoo Japan, Skyscanner ended the year being taken over by Chinese travel management company Ctrip in a deal valued at £1.4 billion.
Mr Williams, who said when the deal was announced that it represented an “exceptional return for our fund and our investors”, is thought to have received around £200m from the sale.
Construction and infrastructure business Robertson Group had a solid 2016 too, with the 50-year-old business seeing turnover rise by 57 per cent to £453m and pre-tax profits shoot up by 81 per cent to £21.4m.
Chairman Bill Robertson said that while margins in the group’s construction business had been hit by the ongoing trend to subcontract out the labour on projects, all 19 group companies posted a profit in 2015/16. The business is on course to double turnover to around £900m in the next five years, he said.
It has also been a year of expansion for Edinburgh brewing business Innis & Gunn, which in addition to expanding its Beer Kitchen pub network into a number of new locations smashed its target when it launched a crowdfunding campaign.
Having opened its first Beer Kitchen in Edinburgh last summer, the brewing company launched branches in Dundee and St Andrews this year and unveiled plans for further sites in Glasgow and Canadian city of Toronto next year.
The expansion is being funded bythecashraisedviathecrowdfunding campaign, which originally aimed to fetch £1m but closed in November at almost £2.4m. The money will also be used to expand the firm’s Inveralmond Brewery in Perth.
The past 12 months have been less kind to temporary power specialist Aggreko, which in November saw almost £100m wiped off its stock market value after it was hit by the continuing downturn in US oil and gas activity.
The Glasgow-based company said the ongoing weakness of the oil and gas sector in North America weighed heavily on revenue in its rental solutions business in the third quarter.
Earlier in the year, Aggreko had highlighted the impact of depressed oil prices when its firsthalf profits dropped by more than £30m to £71m in the six months to June 30.
In November, chief executive Chris Weston said its rentals solutions arm had seen a 50 per cent fall in revenue earned from the US upstream oil and gas market during the third quarter.
Aberdeen’s Wood Group was similarly affected by the ongoing downturn in the oil and gas sector, with the group laying off more than 2,000 people across the UK in the past two years. Its first-half turnover fell by 17 per cent to £2.6bn while pre-tax profits were down by 39 per cent to £96m.
There was some good news for the business, which in October won a contract to provide support services to a group of oil and gas heavyweights including ExxonMobil on the Hibernia platform off Newfoundland.
However, earlier this month the group’s chief financial officer David Kemp said: “We believe the North Sea is going to continue to be a difficult market next year and, whilst we feel we’re in a ‘bottoming-out’ phase, we’re not seeing a pick-up in activity as yet.”
Royal Bank of Scotland, which has faced challenges for the best part of the last decade, had another tough year in 2016.
While a series of high-profile court cases continued to hit the headlines, the bank also faced ongoing uncertainty over the outcome of a US Department of Justice (DoJ) investigation into the way it sold mortgage-backed securities in the early 2000s. The bank’s shares tumbled by six per cent in September on the day it was announced that Deutsche Bank was being fined $14bn at the end of a similar investigation.
In October the bank signalled that it is seeking to distance itself from the tarnished RBS moniker by rebranding its branches across Scotland back to Royal Bank of Scotland, but further woes were to come when it was the only bank to initially fail the Bank of England’s stress test in November.
Although the bank agreed a revised capital plan with the Prudential Conduct Authority, it could be forced into further restructuring if it cannot sell off its Williams & Glyn arm or if the DoJ fine turns out to be bigger than anticipated.
More woes came when the bank, led by chief executive Ross McEwan, admitted it is setting aside £400m to compensate former customers of its now-defunct Global Restructuring Group.