M&G PLC (MNG) has suspended trading in a property fund that manages more than £2.5 billion of assets after suffering a rush of redemptions and struggling to sell assets in a market plagued by Brexit uncertainty. The fund manager said that there had been “unusually high and sustained outflows” from the M&G Property Portfolio Fund, which is held by tens of thousands of small investors, because of “Brexit-related political uncertainty and ongoing structural shifts in the UK retail sector”. Difficult market conditions also had made it difficult to sell commercial property such as shops and offices, M&G warned. The decision to suspend trading will cause concern that other open-ended property funds will suspend investor withdrawals.
The founders of Boohoo.com (BOO) have announced plans to sell shares worth up to £150 million in the online fast-fashion retailer. Mahmud Kamani, 55, and Carol Kane, 53, founded Manchester-based Boohoo in 2006 and supplied clothes to high street retailers such as Topshop. They began selling directly to consumers, undercutting their clients. The company has grown into a retailing giant with a market value of almost £3.5 billion. At yesterday’s closing price of 297¼p they would raise about £104 million and almost £45 million respectively, although the stock is expected to be placed at a discount.
The chief executive of Metro Bank (MTRO) is to leave after paying the price for a terrible year in which an accounting scandal forced it to raise emergency cash. Craig Donaldson led the embattled high street lender for ten years, including its stock market listing in 2016. However, Metro’s share price has collapsed since January, when it discovered that it had misclassified almost £1 billion of loans that were actually more risky than it had reported. It has had to raise £725 million in new equity and debts in order to shore up its balance sheet. Mr Donaldson, 47, offered to resign several times after the scandal, details of which are being investigated by the Financial Conduct Authority and the Prudential Regulation Authority.
Concerns about the general election weighed on the dominant services sector last month, causing business activity to shrink at its steepest rate since March. The economy is on course to decline in the final quarter of the year, after the IHS Markit/CIPS UK services purchasing managers’ index fell to 49.3, down from 50 in October. The index, based on a monthly survey of 650 services sector companies, is regarded as a good guide to economic health and is carefully monitored by policymakers. Although the services sector shrank, the reading was higher than the preliminary “flash” reading of 48.6.
A reshuffle of Morrison (Wm) Supermarkets (MRW) top team has been welcomed by analysts as the next stage of the supermarket group’s succession planning. Trevor Strain has been made full-time chief operating officer and is handing his chief financial officer role to Michael Gleeson, the trading director. Mr Strain, 44, will be responsible for commercial, manufacturing, supply chain, logistics, online and wholesale functions and will report to David Potts, the chief executive. Analysts at HSBC said: “After taking on expanded responsibilities in commercial a little while ago, this evolution in the Morrisons management team is understandable and logical.” The Bradford-based chain was started as an egg and butter stall by William Morrison in 1899. His son Ken took over in 1952.
Workers’ representatives at Eddie Stobart Logistics (ESL) have begun an 11th-hour attempt to prevent a takeover of the trucking group, saying that a promised £75 million cash injection by Dbay could be worth a fraction of that amount. Investors in the logistics company, shares of which have been suspended on the stock market since the summer, are voting tomorrow on a proposal for the Isle of Man-based private equity firm to take control of the business, which employs 6,000 people and operates 2,600 lorries. Dbay has promised a £55 million high-interest loan plus a £20 million overdraft facility with the group’s lending banks.
A fashion chain has warned that it will shut a significant number of stores unless landlords cut rents, putting still more pressure on the high street. Quiz (QUIZ) yesterday announced an 11% fall in like-for-like shop sales in the six months to September 30. Group sales fell by 5% to £63.3 million. The retailer, which has issued three profit warnings in the past year, swung into the red with a £6.8 million statutory pre-tax loss, compared with a £3.8 million profit a year ago.
The crisis at M&C Saatchi (SAA) has deepened after the advertising agency revealed that an accounting scandal was worse than had been thought and issued a profit warning. Shares in the company plunged by 67¾p to 79p yesterday — their lowest level since 2010 — after it disclosed that its accounting problems could date back to 2014 and that weak spending by customers meant that underlying annual pre-tax profits were likely to be “significantly lower” than had been forecast previously. It said that its profits were likely to fall by between 22% and 27% from £29.5 million last year.
A slump in flotations and thin equity trading volumes contributed to a 61% profit slide for the year to September at Numis Corporation (NUM), although the broker yesterday reported a strong start to its new financial year. Numis said that revenues for October and November were ahead of last time thanks to a pick-up in deals and in share trading volumes. The mid-market group blamed the worst market conditions for flotations since 2012 for a 16.1% fall in deal fees during the year. Revenues from equities trading and research were down by 21.4%. Overall profit before tax slumped to £12.4 million, not a surprise after a profit warning in September.
The competition watchdog has issued an interim order against JD Sports Fashion (JD.) proceeding any further with its £90 million takeover of Footasylum (FOOT) pending the conclusion of its phase 2 investigation into the deal. The Competition and Markets Authority started scrutinising the deal in May, two months after JD Sports swooped on its smaller rival. In October, the regulator increased its scrutiny of the merger on the grounds that it could “result, in a substantial lessening of competition in any market or markets in the UK for goods or services.” Yesterday the watchdog said it “wishes to ensure that no action is taken pending final determination of the reference which might prejudice the reference or impede the taking of any action by the CMA”.
A war of words has broken out in the Irish High Court, where Michael O’Leary, the boss of Ryanair Holdings (RYA), has been accused of being a bully by a former senior executive who has resigned to go to easyJet (EZJ). Peter Bellew, Ryanair’s chief operating officer, left in the summer for a job at its arch-rival. Ryanair has taken him to court to prevent him from joining Easyjet soon because of the amount of commercially sensitive information to which he is party. Mr Bellew, 54, accused Mr O’Leary of bullying him when trying to enforce a 12-month non-compete clause to prevent him from joining a rival.
International Consolidated Airlines Group SA (CDI) (IAG) – Sir Richard Branson plans to redouble his efforts to wage war on British Airways and achieve parity at Heathrow after revealing that he is not selling his interest in Virgin Atlantic after all. Sir Richard said this week that he was reversing his plan negotiated two and half years ago to sell a 31% stake in Virgin Atlantic to Air France-KLM to raise £220 million. Instead, he will keep his residual 51% in the airline that he founded and, with Delta Air Lines, the American carrier that is the 49% shareholder, will arrange a code-sharing deal with Air France and KLM to sell seats and services on each other’s airlines.
