M&C Saatchi (SAA) has announced a boardroom exodus with all its non-executive directors and the company’s co-founder Lord Saatchi to leave the crisis-hit business. The British advertising agency was forced to admit last week that a summer accounting scandal was worse than previously thought as it also fired off its second profit warning in less than three months. In a statement after the stock market had closed on Tuesday, the company, founded in 1995 by brothers and advertising moguls Maurice and Charles Saatchi, said that Lord Dobbs, the creator of the House of Cards TV series, Sir Michael Peat, the former private secretary to the Prince of Wales and a member of the family that supplied the “P” in KPMG, and Lorna Tilbian had all resigned. Maurice Saatchi, who had retained a seat on the board, is also leaving the firm that bears his name. Jeremy Sinclair, the company’s chairman, said: “We have accepted the decision of these directors to resign. We are determined to restore the operational performance and profitability of the business.”
Lloyds Banking Group (LLOY) will reopen compensation claims for victims of the HBOS branch fraud in Reading after an independent review found the original scheme was “neither fair nor reasonable”. The decision is an embarrassing U-turn for Lloyds, which closed its £100m-plus compensation scheme in the spring and has been trying to draw a line under one of Britain’s biggest banking scandals. Sir Ross Cranston, a former high court judge who ran the independent inquiry, said the bank’s review of the fraud had “serious shortcomings”. The most serious concerned Lloyds’ “approach to assessing direct and consequential loss caused by the criminal misconduct”, he said. “This part of the customer review, both in structure and in implementation, was neither fair nor reasonable.”
The Tory donor behind Ovo Energy has been given the green light to take control of Britain’s second largest energy supplier for half a billion pounds. The UK’s competition watchdog, the Competition and Markets Authority, cleared Ovo Energy’s £500m takeover of SSE (SSE) energy supply arm, saying the tie-up would not affect competition in the energy market. The approval clears the way for Ovo to become the second largest energy supplier in the country, and propels the personal wealth of its founder, Stephen Fitzpatrick, past £600m. The former banker founded Ovo Energy in Bristol 10 years ago and still holds a 67% stake in the company, which was valued at £1bn before the SSE deal. The deal will increase Ovo’s customer base from 1.5 million to 5 million homes at a stroke.
Mothercare (MTC) sales have slid further in Britain and overseas after the retailer put its UK business into administration last month with the potential loss of 2,800 jobs. Group sales fell by 8.4% to £452.3m in the six months to 12 October, as pre-tax losses widened to £21.2m from £18.5m in the same period a year before. Mark Newton-Jones, the chief executive of the mother and baby goods retailer, said it had been through an “extraordinarily challenging period”, but Mothercare’s exit from the UK, where it had 79 stores at the time of entering administration, enabled the group to focus on expanding its international operations. He said the move would complete Mothercare’s transformation “into a capital-light business, which is expected to be both cash generative and profitable”. Newton-Jones added: “We are confident in the future of the Mothercare brand. We believe that, without the financial and management burden of running a UK retail operation, we can singularly focus Mothercare on its global international franchise.”
Ted Baker (TED) could be forced to raise cash after warning of a 90% profits crash and the departure of both its chief executive and executive chairman. The beleaguered retailer said it now expected to make full-year pretax profit of £5m to £10m, depending on Christmas trading, down from more than £50m last year. It was the retailer’s fourth profits warning in a year. The company blamed the downgrade on “unprecedented” levels of discounting on the high street, which have battered its profit margins. Shares in the company plunged 35% as the grim profits update was revealed, although they later recovered to close down 13% at 346p. The shares had already lost three-quarters of their value this year after the departure of the founder, Ray Kelvin, in the wake of allegations of inappropriate behaviour, and an accounting problem. They are now down some 90% in less than two years.
