Metro Bank (MTRO) boss said he feels ‘humbled and chastened’ after an accounting error wiped more than £1billion off the lender’s market value. Craig Donaldson, 47, issued an extraordinary apology to shareholders for the problems which have sent Metro stock plummeting 83% from its peak in March last year. He admitted it had made serious mistakes, including the accounting error which saw it underestimate the riskiness of some property loans. That alone knocked more than £1billion off the bank’s value when it was revealed in January. Donaldson gave up his annual bonus and offered to resign in the wake of the fiasco, but was asked to stay by Metro’s board. The apology was not enough for some investors, with 10% voting against Donaldson’s reappointment to Metro’s board at its annual meeting yesterday.
Tesco (TSCO) – Tesco Bank is pulling out of the mortgage market after its profits were hit by a brutal price war. It will stop offering home loans, and look to sell its existing book of 23,000 customers, with £3.7billion of debt, to another business. It comes as banks and building societies battle to attract new customers by cutting fixed-rate deals. There is particularly tough competition for customers with low deposits. A buyer who only has 5% of their property’s value saved up can now get a mortgage at an average 3.26%, according to research firm Moneyfacts, down from 4.11% a year ago. This fall is particularly surprising because the Bank of England base rate has actually gone up in the past year, which would usually mean that interest rates would have also risen. The competition means that it is increasingly difficult to charge high enough interest rates to make a profit.
The private equity company that drove Comet into the ground is on a shortlist of bidders for Majestic Wine (WINE) 200 British stores. Opcapita is understood to be fighting it out with a US-based investor and another turnaround group to buy Majestic’s retail business. The wine firm’s chief executive Rowan Gormley is looking to sell all of its shops in Britain to focus on online sales. Majestic’s stores are on the market for £100million, Sky News reported. The involvement of Opcapita, which owns the football pools, will spark fears the estate could be exploited by a cut-and-run vulture fund, threatening jobs. Opcapita is notorious for the collapse of electricals chain Comet in 2012, which left taxpayers with a bill thought to be up to £50million.
Strong sales of academic textbooks lifted annual profits up to £14million at Bloomsbury Publishing (BMY) – as Harry Potter again worked his magic. Profits were 9% higher than the previous year, while revenues edged up 0.7% to nearly £163million. The biggest UK hit in the year to February 28 was young adult title A Court of Frost and Starlight, by American writer Sarah J Maas. The next two top performers were both Potter novels by JK Rowling, more than two decades after she launched her teenage wizard tales.Children’s book sales dropped from £11.6million to £9.7million but academic and professional book sales boosted non-consumer revenues by 7%
The finance head of landlord Hammerson (HMSO) is leaving after a share price slump, a botched merger bid and a revolt by investors. Timon Drakesmith, who has held the position for eight years, will depart later this year after a successor has been appointed. Shopping centre owner Hammerson has been hit as rental income dips because retailers struggle to attract customers due to a High Street crisis. Many tenants, including prominent chains such as New Look and Topshop, are looking for cheaper rents.
West End landlord Shaftesbury (SHB) is preparing to fight off a £10million lawsuit launched by a shareholder. Hong Kong billionaire Samuel Tak Lee, who owns 26% of Shaftesbury, refuses to drop allegations it acted improperly in raising £265million from shareholders. He claims the aim was to dilute his stake and make it harder for him to mount a takeover bid. In its half-year results yesterday, Shaftesbury said it does not consider the claim to have any merit. It is understood it plans to defend itself against any legal action.
Renationalising the water industry could raise customer bills and lower investment, Severn Trent (SVT) claims. Utilities companies are laying the ground for a potential fight with a future Labour government, after leaked documents suggested the party plans to bring them back under state control for less than their current market value. Severn Trent, which provides water to 8m people in England and Wales, said it is in discussions with MPs about the industry’s future. It said: ‘The renationalisation of the water industry remains a possibility in the event of a change of Government. ‘Any associated changes in Government policy may fundamentally impact our ability to deliver the group’s strategic objectives, impacting shareholder value.’
Sales have plunged 25% at the world’s biggest diamond producer. De Beers made £326million from its latest auction of diamonds, down from £437million a year earlier. Part of FTSE 100-listed mining giant Anglo American (AAL), it sells its rough diamonds in ten auctions a year in Botswana. The diamonds are mostly bought by diamond cutting companies and retailers, which polish them and put them in jewellery. De Beers, whose products are promoted by Chinese actress Fan Bingbing, revolutionised sales of engagement rings after the Second World War when it came up with the slogan ‘A diamond is forever’. Chief executive Bruce Cleaver said May was traditionally quiet as factories in India are closed for holidays. But he also blamed global economic uncertainties. The results will spark fears that the global diamond market is not recovering.
Galliford Try (GFRD) is set to cut 350 jobs as it goes ahead with the reduction of its struggling construction arm following a profit warning last month. The company, which launched a strategic review of its core construction business launched last month, said it will concentrate on its house building, water and highways businesses instead. Investors reacted well to the news, with shares rising 15% to 619p towards the close. Galliford, which had previously warned that the review would hit annual profits, said revenues from its construction arm would decline to about £1.3billion. However, it will also mean cost savings of up to £15million. The company’s profits have been hit by rising costs for its Queensferry Crossing, a bridge that connects Edinburgh and Fife. It has also struggled with higher bills linked to a bypass in Aberdeen after a project partner, Carillion, collapsed into administration, and problems with unnamed contracts. Galliford said its housebuilding arm – Linden Homes – continued to perform well and enjoyed ‘stable trading conditions’. However, sales and selling prices both fell in the year to date.
WH Smith (SMWH) has announced its boss Stephen Clarke will step down at the end of October after 15 years at the company and six years at the helm. The chain also said that its travel business continues to do well, while sales at its high street stores continue to fall in its third quarter. Clarke’s stint as chief executive has seen the chain’s shares nearly triple as its travel division has buoyed sales and profits amid tough retail conditions. Clarke will be replaced by Carl Cowling, who’s the managing director of the group’s high street arm, having previously been the boss of the travel arm. The company said travel sales rose 26%, although this was mostly down its acquisition of US airport retailer InMotion last year. Excluding the acquisition, sales rose 7%. But high street store sales fell 1% on a like-for-like basis in the 11 weeks to 18 May.
VR Education Holdings plc (VRE), which creates educational apps for virtual reality headsets, jumped as it said a programme will be sold on Facebook’s new Oculus Quest headset. Its Apollo 11 VR programme, which follows the space trip to the moon, will be available to buy. Boss David Whelan said: ‘We expect this platform to quickly become the most used virtual reality device, enticing many new users to jump on board.’
Investors were not happy with gambling firm 888 Holdings (888), or more specifically its chairman Brian Mattingley, who appears to have outstayed his welcome. He has been on the board for nearly 15 years, well beyond corporate governance guidance which states that chairmen should leave after nine.
Adhesive maker Scapa Group (SCPA) plunged after profits came unstuck and boss Heejae Chae stepped down. The firm, which makes sticky plasters and wound dressings as well as bonding products for industrial uses, said profit before tax had halved from £28.8million to £14.9million in the year to March 31. It took a hit from site closures, as it attempted to cut the fat from its business. Revenue however climbed 7% to £311.8million.
