- Markets mixed amid return to Brexit limbo and patchy US earnings data
- Sterling falls below $1.29 after MPs reject Brexit bill timetable, but is still near five-month high
- Former Thomas Cook bosses accept they made mistakes at company
- Metro Bank founder Vernon Hill steps down as chairman with immediate effect
- Sports Direct rails against Goals Soccer Centres ‘skulduggery’
- Jeremy Warner: Britain’s savings market has long been a mess, it is also an accident waiting to happen
Wrap-up: A mixed bag
Those Metro results landed too late for markets, which mean – in this instance – that they’re too late for the blog.
We’ll have a full report up on them shortly, but for the share price reaction, tune back in tomorrow morning.
Tomorrow afternoon, we’ll have Mario Draghi’s final speech as he prepares to step down from the European Central Bank. Thanks for following along!
Metro Bank swings to £2.2m underlying loss
Oof – Metro Bank just published its third-quarter trading update, which shows it swung to an adjusted pre-tax loss of £2.2m, from a £6.7m profit in the second quarter.
It company said it had maintained a “strong liquidity and funding position”, adding:
Metro Bank is further evaluating its future plans to balance growth, profitability and capital efficiency, the results of which will be communicated in conjunction with the full year results.
That could be worse – Ian Gordon of Investec had warned the Telegraph last week that it would be “another tough quarter for Metro” and predicted a £7.6m quarterly loss.
- Here’s our story from earlier today on the exit of Metro’s founder: Metro Bank founder Vernon Hill becomes ‘emeritus chairman’
Lights out: Another energy supplier goes bust
I’ll wrap up markets shortly – before then, here’s my colleague Vinjeru Mkandawire:
Toto Energy, an energy company with around 134,000 domestic customers, has become the latest small supplier to cease trading. In a statement on Wednesday, Ofgem said that it would choose a new supplier to take on all of Toto Energy’s customers.
Cordelia Samson, an energy expert at uSwitch.com said: “This latest supplier failure must raise serious questions for the regulator, which allowed it to acquire over 40,000 customers from another now-defunct energy company only three months ago.
“Toto were known to be struggling with customer service and running their operations efficiently. They also missed making their payments for renewable energy this year. While they had made improvements, clearly these weren’t enough to keep them afloat.”
Toto is the eight energy company to go bust this year and the sixteenth since the start of 2018. It follows Ofgem’s announcement about tightening the rules for existing providers, to minimise the risk of more of them going out of business.
- Here’s more of spate of energy companies being forced to pull the plug: Energy suppliers to face tougher checks from watchdog Ofgem
Zuckerberg testimony: the battle begins
Our US tech reporter Laurence Dodds reports:
Mark Zuckerberg has begun his testimony to Congress in Washington DC, and it opened, as hearings with Facebook executives always do, with a barrage of criticism.
“Perhaps you believe that you are above the law, and it appears that you are... willing to step on and over anyone including people of colour, your own users and even our democracy to get what you want, said Congresswoman Maxine Waters.
“It should be clear why we have serious concerns about your plans to establish a global digital currency that will challenge the US dollar.”
Zuckerberg has two arguments against this.
- If the USA doesn’t own the next global digital currency, China will – so embrace Libra or the Commies might win.
- If the next global currency isn’t something regulated and controllable like Libra, it will be something anarchic and uncontrollable like Bitcoin. So far these arguments have persuaded some, particularly on the Republican side.
- Laurence examines those arguments in more detail here, explaining why Congress should think twice about rejecting Libra out of hand: Why we should think twice before rejecting Facebook’s Libra currency
Full report: Former Thomas Cook boss defends debt pile
And here’s another wrap, this time on the Thomas Cook hearing earlier. My colleague Oliver Gill reports:
Thomas Cook’s former boss has fired a stinging broadside at his successors, insisting they should have been able to cope with a doomsday debt pile built up during his time in charge.
Manny Fontenla-Novoa told a Commons committee probe that the 2007 debt-fuelled merger between Thomas Cook and MyTravel provided “a great platform for future growth”.
The Business, Energy and Industrial Strategy committee also heard how Harriet Green, Mr Fontenla-Novoa’s direct successor and the predecessor to Mr Fankhauser, was sacked following a bust-up with chairman Frank Meysman.
Full report: Boeing revenues devastated by 373 MAX crisis
My colleague Simon Foy has a full report on Boeing’s revenue fall:
The company said it will reduce the production of the 787 to 12 planes a month beginning in late 2020, blaming the “global trade environment”.
Revenues fell to $19.9bn (£15.5bn) for the three months to September, down from $25.1bn for the same quarter last year.
Boeing has been mired in crisis since its 737 Max fleet was grounded worldwide last March following two fatal crashes that killed 356 people.
The mystery of cryptocoining...
Here’s Markets.com’s Neil Wilson on the Bitcoin price drop:
To be honest right now it’s a bit of a headscratcher and may be down to technical selling inspired by the rejection of the move towards $8,400 earlier in the week. The market has been waiting for a major move for a while as the completion of the descending triangle neared completion.
Of course with Mark Zuckerberg about to testify on Capitol Hill about Libra, you could draw some correlation between this and shakier sentiment towards cryptos more broadly, however such a conclusion appears quite tenuous.
The blowout has sparked a broad-based selloff in our other crypto markets with Ethereum, Bitcoin Cash, Dash, Litecoin and Ripple all down 7-9pc.
And here’s our columnist Garry White:
As Facebook's lovely CEO testifies in DC, here's my column from last week on why - despite the undeniable urge - we shouldn't break up Big Tech > > Dismantling Big Tech would help no one but China https://t.co/fNiwGun78J via @telebusiness— Garry White (@GarryWhite) October 23, 2019
Mel Stride is new chair of Treasury Select Committee
Telegraph deputy political editor Anna Mikhailova tweets:
Some MPs were concerned Stride will be 'marking his own homework' - scrutinising policies he was running as Treasury minister— Anna Mikhailova (@AVMikhailova) October 23, 2019
However he has a reputation as a v capable minister and was a high flier - promoted to Leader of the House just before Boris Johnson came in
Parliament has made a decision...— Lewis Goodall (@lewis_goodall) October 23, 2019
Yes that's right...for the new Treasury Select Committee Chair
263 votes for @MelJStride.
Mr Stride, a Conservative, beat candidates in a race drained of big beasts by the Tories’ recent purge.
- Read more about the selection process here: Race for Treasury Committee chair decimated by Tory expulsions
Sports Direct finally finds an auditor
Combining two of this blog’s favourite topics, Sports Direct has managed to find itself an auditor!
Mike Ashley’s retail giant has had to settle outside of the Big Four (Deloitte, EY, KPMG and PwC) to find a willing candidate, opting for RSM UK, one of the UK’s smaller ‘challenger’ audit firms.
The decision ends speculation that the government will have to intervene to install an auditor at the FTSE 250 firm.
Previously bean-counter Grant Thornton quit abruptly after the the two companies fell out over the retailer’s most recent accounts.
- Read more on Sports Direct’s search here: Sports Direct taps smaller firms for help in race to find an auditor
Zuckerberg faces congressional committee over Libra
Over in the US, Facebook boss Mark Zuckerberg is giving testimony to the US Congress House Financial Services Committee, where he is being grilled by politicians over the social media company’s plans for digital coin Libra.
On Wall Street, things are fairly balanced out, with Boeing shares rising despite its steep profit fall.
Gold miner Centamin is the biggest riser on the FTSE 250 today, after reporting it is still on track to meet its 2019 targets as it heads for its best month of production so far this year.
The company, which operates the Sukari mine in Egypt, said it remains set to hit a target of 490,000 ounces of gold, which is at the lower end of its guidance. It had produced 332,141 ounces so far.
Despite October’s strength, gold production was 17pc lower overall than in the second quarter, and down the same amount for the year before.
Andrew Pardey, its chief executive, said:
This quarter was one of continuing transition. Further key staff changes were made at Sukari as we continue to strive for increased performance in key areas of the operation. The operational leadership team have commenced a comprehensive review, supported by external consultants, across all sections of the mine, including mining methodology and infrastructure.
US results: Profit falls at Boeing and Caterpillar
Two big sets of results from the US: plane-maker Boeing said its quarterly profit fell 53pc amid pressure from the scandal around its 737 MAX jets, while machinery company Catterpillar – a bellwether for the construction sector – recorded its first fall in quarterly profit in three years.
Here’s Reuters on Boeing:
Boeing cut production of its flagship Dreamliner and delayed the arrival of a successor to its 777 mini-jumbo, piling new pressures on a rejigged senior management team as the continued safety grounding of its 737 MAX sliced third quarter profits.
It reported a 53pc drop in quarterly profit on Wednesday and had a negative free cash flow of $2.89bn in the quarter, compared with a positive free cash flow of $4.10bn a year earlier.
...and Bloomberg on Caterpillar:
Caterpillar lowered its earnings forecast for 2019, blaming heightened “economic uncertainty” for slowing customer purchases.
The world’s largest maker of mining and machinery equipment reported the first decline in quarterly profit in almost three years. The Deerfield, Illinois-based company said sales fell 5.2pc and it expects demand to be flat in the fourth quarter.
Wall Street is set to open fairly flat.
Round-up: Moody’s warns over Brexit delay, Monzo loses another executive, FundingSecure collapses
Here are more of the day’s top stories:
- Brexit delay is 'negative' for UK, Moody’s warns: The latest delay to Brexit leaves the UK mired in uncertainty and delivers a potential blow to the country’s creditworthiness, one of the world’s biggest ratings agencies warned on Wednesday.
- Monzo loses another senior executive: Monzon has lost another senior executive just months after its chief financial officer departed the digital bank in March.
- Woe for thousands of peer-to-peer investors as FundingSecure platform collapses: The troubled peer-to-peer sector has been dealt a further blow after another platform, FundingSecure, fell into administration.
Bitcoin price slumps to four-month low
The price of popular cryptocurrency Bitcoin has taken a chunky hit in the past few minutes, and has hit its lowest level since June – with about 5pc coming off the currency.
Bitcoin moves can be a little bit... unhinged, but if I see anyone explaining why this has happened I’ll let you know.
AIG to launch new syndicate at Lloyds of London, to focus on wealthy American
US group AIG will use the Lloyds of London insurance marketplace to mount a major push to provide coverage for ultra-high-net-worth clients.
AIG hopes the new operation – dubbed Syndicate 2019 – will bring in $1bn in premiums. It will launch at the start of 2020.
Peter Zaffino, AIG’s chief operating officer, said:
We look forward to working closely with Lloyd’s to bring Syndicate 2019 to market, and to delivering enhanced differentiation and value to the US high net worth customer base.
AIG’s outline of its existing offerings for ultra-high-net-worth individuals includes “wine cover” and a subsection on yacht insurance.
Doubts grow over British Steel deal ahead of Thursday deadline
Hopes British Steel will be rescued by Turkish investor Ataer Holding are fading ahead of a deadline for the bid on Thursday, my colleague Ed Clowes reports. He writes:
The steelmaker's future will again be thrown into doubt if military pension fund Ataer walks away from a provisional deal with the UK government to buy it.
British Steel collapsed in May after running out of cash and has since been kept on life support by taxpayers.
Ataer made an approach two months ago and was given exclusive access to the company's accounts.
The pension fund, which owns 50pc of Turkey’s largest steel producer, has until Thursday to strike a deal and save 5,000 jobs, mostly at its sprawling 2,800 acre site in Scunthorpe.
- Read more here: British Steel deal in doubt as deadline looms
Markets still mixed...
Other than Germany’s DAX, which is flat, the FTSE 100 is the only major European index not experiencing a drop today – boosted by the pound’s weakening.
Sterling hangs tight
Boris Johnson is currently facing questions in Commons chamber, but thus far it seems like nothing substantive has come through from a markets perspective.
Traders, who are currently keeping the pound just under $1.29, want to know one thing: when the Brexit delay is until.
- Follow live political updates here: Brexit latest news: Boris Johnson meets Jeremy Corbyn to discuss new way forward on Brexit Bill before they clash at PMQs – watch live
Round-up: Construction cartel fined, self-driving cars will save more lives than they take, fracking security bill hits £13m
With the Thomas Cook hearing wrapped up (and MPs scuttling back to the Chamber ahead of Prime Minister’s Questions), here is a wrap-up of the morning’s top stories:
- Taxpayer spending on fracking protests and security hits £13m: Taxpayers have forked out more than £13m to police fracking protests and provide security at shale gas drilling sites since 2011, a report has revealed.
- Self-driving cars will kill - but also save lives, says Toyota boss: Self-driving cars will kill people, but will save more lives than they take, according to Toyota’s research chief.
- Construction cartel fined £36m by competition watchdog: Three construction firms have been fined more than £36m by the competition watchdog for price-fixing.
If you want to know more about the Thomas Cook bosses...
...here’s a good backgrounder by the Financial Times, which categorises Mr Fontenla-Novoa, Ms Green and Mr Fankhsauser as ‘the dealmaker’, ‘the slash-and-burn specialist’ and ‘the stabiliser’ respectively:
Thomas Cook inquiry today: Five key takeaways
Here are the five main points that jump out to me from today’s session:
- Hays Travel paid just over £6m for 555 bricks-and-mortar Thomas Cook stores – just over £10,800 a pop.
- KPMG and AlixPartners have bagged £11m in fees since the tour operator collapsed last month.
- Manny Fontenla-Novoa, chief executive until 2011, said the company could have succeeded if it continued, adding that he never thought its debt pile could not be managed.
- Harriet Green, chief executive from 2012 until 2014, says the company could have been saved by taking an asset-light, digitally-driven approach, but says she was forced out before she could complete her transformation plan.
- Ms Green says there “clearly should have been” a different approach to how the company handled goodwill from its purchases.
Closing remarks: Regrets, they have a few...
Some valedictory statements here...
Ms Green says she should have made sure board had experience of transformations, and should have done more to emphasise models that were less asset-heavy (i.e. by buying fewer aeroplanes).
Mr Fontenla-Novoa says he is “desperately sad” about the collapse.
Mr Scott says the company should have moved more quickly.
The witnesses were also asked what they are doing now. From their responses:
- Ms Green operates businesses in Asia and the Pacific for IBM
- Mr Fontenla-Novoa runs a consultancy business
- Mr Scott is not working
After some more chatter, Mr Fontenla-Novoa says the model he attempted to install at Thomas Cook “was not broken”, pointing to the example of rival Tui (which is still operating).
Rachel Reeves, in briefing closing statements, says Mr Fontenla-Novoa should reconsider his statement given the blame placed upon him by his successors, saying the former boss has “missed the opportunity” for humility.
...and that’s it! I’ll wrap that all up in a moment.
Under further questions from Mr Kyle, Ms Green is describing press reports from the time of her exit about her spending, and over alleged tensions within the company.
Here’s some of our reporting from before and after her exit:
- Harriet Green steps up Thomas Cook turnaround
- Harriet Green in shock exit as Thomas Cook boss
- Former Thomas Cook boss Harriet Green awarded £5.6m share bonus
Ms Green says there were disagreements within the company about its strategic approach.
She says her expenses were higher in her first year as she was focused on rescuing the company, and says they fell by a third in he second year. She also says she was paid less than her predecessor and successor.
The best-laid plans...
MP Peter Kyle is drilling down on the company’s strategic planning, saying “every two years there was just a new, fresh approach” and suggesting Thomas Cook could never “find its feet” because it was constantly undergoing new strategic reviews.
Mr Fontenla-Novoa says he cannot comment on things that occurred after he left the firm in 2011, but says it had a consistent plan until then.
Ms Green says the company came up with a plan to create an internet business when she arrived, to chip away at a “wall of debt” and make the company more efficient. As an example, she says that when she arrived, Thomas Cook was entering into internal negotiations over things like renting its own hotels internally.
Ms Green adds that “yielded a significantly better debt position”. She says she was unable to complete her “six-year plan” before leaving the company, saying that there are “asset-light”, “digitally-driven” models for tour companies that Thomas Cook could have moved towards.
She says the company “needed to focus” in 2012, and needed cash to invest. Describing selling off parts of the company as “self help”, she said she is “incredibly frustrated and sad” that the company did not continue her plan after she left.
Pressed by Mr Kyle, Ms Green says despite positivity around the company’s plans, and a rising share price, she was told in late 2014 that Thomas Cook wanted “a traditional travel person to take this business forward”.
‘Potential for manipulation’
MP Drew Hendry is focusing on a letter sent from auditors EY to Thomas Cook management (after Mr Scott left the company), which said the company’s accounting standards offered “potential for manipulation”.
Mr Scott says that he would not have characterised the use of goodwill that way. He says PwC and EY took part in “detailed discussions” over how to handle the companies accounts, and is insisting that that there was a robust debate over topics such as goodwill levels.
Green: Approach should have been different
Ms Green says when she joined overall goodwill was at £2.66bn, and was “a bit less” by the time she left. She says discussion over the levels of goodwill was “quite intense”, adding “clearly” there “should have been” a different approach taken.
Goodwill was ‘unusual’
Stephen Kerr says that, by the start of the decade, Thomas Cook was using its suppliers “as a bank”, leading it to build up substantial end-of-year debts. Ms Reeves adds that the tour operator was not paying suppliers within 30 days during this period.
Mr Fontenla-Novoa says that Thomas Cook would not have done anything that was outside of regular practice, and says he would need to investigate further.
Questions have now switched on Ms Green and Mr Scott, who were more recently in place at the travel group, having both joined in 2012. Ms Sandbach is focusing on why the goodwill from MyTravel was not written down until 2018.
- Here’s out story from when the write-down came to light: Thomas Cook crisis escalates as it lands £300m in emergency funding
Q: Why was the goodwill not written down?
Mr Scott is saying that there were sensitivities, but they did not see any changes major enough to warrant an adjustment.
Ms Reeves has accused Mr Scott of “passing the buck”, asking: “should you have done something sooner?”
Mr Scott admit, under pressure, says that it was “unusual” that such a big write-down could occur. He says the financial plan “clearly” deteriorated over 2018.
Disposables and debts
Mr Fontenla-Novoa, now being cross-examined by MP Stephen Kerr, is defending the rationale behind Thomas Cook sticking to a strategy of utilising high-street stores to sell holidays, despite the role of the internet. The MPs are focusing on whether decisions made while Mr Fontenla-Novoa was in charge ultimately doomed the company.
Q: Did the debt build-up doom your strategy?
Mr Fontenla-Novoa says he “can’t accept that”, and says Peter Fankhauser, who was the group’s chief executive when it collapsed, should have (along with his board) looked at selling off some assets sooner than that. He says “I believe there was growth in the market”, pointing out competitors have grown.
Rachel Reeves, channelling Mr Fankhauser, says the ex-CEO would argue that Thomas Cook could not invest in expanding because it was overly burdened by debt.
MP Ian Liddell-Grainger is focusing on Manny Fontenla-Novoa, asking about Thomas Cook’s purchase of MyTravel, a rival package holiday firm.
Q: Was the debt taken on by Thomas Cook buying MyTravel what began the group’s downfall?
Mr Fontenla-Novoa said the decision was taken to merge the two business was taken because it gave the company a “huge presence” in Northern Europe, as well as in Canada.
He says the move to consolidate allowed it to create a group with £9bn in revenue. He says he thought the debt taken on seem appropriate to him at the time, but added that the financial crisis a year after the takeover had a “huge impact” on consumer confidence.
The ex-chief executive also cited the Icelandic ash cloud and a weaking pound as reasons that the tour group entered “tough times”.
Audit reform chatter
BEIS Committee chair Rachel Reeves reflects that this is another case of MPs having to hear about audit failures “after the horse has bolted”, and reaffirming the committee’s call for audit reform, which began after the collapse of outsourcer Carillion.
- New boss of audit watchdog fails to publish his own accounts on time
- Auditor walkouts on the rise in ‘watershed moment’ for accountants, industry body warns
The former bosses are entering now...
We’re focusing now on the issue of goodwill, which MP Antoinette Sandbach is saying kept Thomas Cook from trading while insolvent.
Q: Why was the goodwill not written down sooner?
Mr Rule says: “I can see that there are questions to be asked about the goodwill.”
Mr Barrett adds it is likely to be something that the watchdog looks at as it continues to probe Thomas Cook’s 2018 accounts.
Continuing, Mr Rule says the FRC tells companies to regularly re-assess their goodwill levels and ensure that they are being written down when appropriate.
Tough at the top
We’re onto the ethics of audit, which is one of the BEIS Committee’s favourite topics. David Rule is saying that when the FRC inspects audits, it tends to find there are three main problems:
- Auditors being unwilling to push back against management
- Audits being done too quickly
- Senior audit firm partners not being fully engaged with the process
Here’s more from the FRC:
Elizabeth Barrett, from the FRC, says the audit watchdog has already been looking into Thomas Cook’s 2018 audit when the travel giant went bust.
She adds however that more than 100 firms seen as a “risky” are picked for such expectations, and said pressure from public opinion and the press did not impact the decision to begin an investigation.
Q: Why was the FRC scrutinising Thomas Cook’s accounts?
David Rule adds that levels of short-selling in Thomas Cook shares were among the reasons they decide to look into its audit.
Ms Barrett says the FRC will be looking closely at “audit assumptions” made by EY, the tour operator’s most recent auditor, as well as whether accountants adequately pushed back against management assumptions.
She says she is hesitant to go further, because the FRC is already conducting a probe into EY’s role in the collapse.
Regarding FRC's investigation of accounting firm EY's audit of Thomas Cook: Relates to "sufficiency of challenge that they have applied to management’s estimates and assumptions and the sufficiency of the audit evidence to support the work that they’ve done."— Rob Davies (@ByRobDavies) October 23, 2019
The questions and responses so far have been quite focused on the role of the Official Receiver, the official who takes control of a company’s property after it collapses.
MP Vernon Coaker is asking Mr Beale whether the Government came to the Insolvency Service for advice over what would happen if Thomas Cook entered liquidation.
Q: Did you speak to the Government ahead of the collapse?
Mr Beale says that after taking up his position as chief executive of the Insolvency Service on September 2, he met with officials on September 6, and and September 13 sent Transport Secretary Grant Shapps a memo about the role the Insolvency Service would pay if Thomas Cook failed.
Hays Travel paid just over £6m for Thomas Cook stores
One revelation already: Hays Travel, the firm that swept in to buy Thomas Cook’s 555 physical locations after the group’s collapse, paid just over £6m for the stores according to Dean Beale, from the Insolvency Service.
- ‘If you look at our advantage, the sums are very nice’ – why Hays Travel’s owners bought Thomas Cook’s stores
Mr Beale said:
The assessment of the Official Reciever was that this was a good deal.
He added, following a question from MPs, that: “the recommendation was that this was the best deal on the table”.
He says he does not know how much the repatriation of stranded Thomas Cook customers (dubbed Operation Matterhorn) cost.
Finally, he says special managers KPMG and AlixPartners have already been paid £11m in fees since Thomas Cook collapsed.
Bosses speaking shortly...
Currently, MPs are hearing from Dean Beale, chief executive of the Insolvency Service; and Elizabeth Barrett and David Rule from the Financial Reporting Council, which is the UK’s audit watchdog. The former bosses will speak from 10:45am.
- You can follow along with the video live here, via Parliament’s website.
Highlights from the hearings so far
Here are some of the key toplines from the first two BEIS Committee hearings:
The (recent) bosses
- Thomas Cook bosses only had one meeting with a Government minister in the build-up to last month’s collapse.
- Former chief executive Peter Fankhauser said that if the Government had provided £200m to secure a bailout from Chinese lender Fosun, then the tour company would have been saved.
- Mr Fankhauser says he will consider whether to return some salary to support victims of the collapse.
- Read more: UK minsters ‘stood on sidelines as Thomas Cook bosses were offered overseas government help’
- PwC said the firm would now never take on a dual role of advising on a company’s remuneration policy while also handling its accounts (somewhat of a moot point, since doing so is now banned).
- Read more: Thomas Cook auditors defend fee bonanza as MPs lash out
Three key points that may come under scrutiny
These are the main things MPs may focus on during today’s session (which you can wtach live here):
- Pay: Ms Green and Mr Fontenla-Novoa are likely to come under strutiny for their own remuneration the chief executives of Thomas Cook, during years where the company was quickly accumulating debt as part of its efforts to expand.
- Accounting practices: Thomas Cook used a controversial system, in which exceptional items – totalling £1.8bn over eight years – were stripped out to calculate a ‘underlying profit’ figure, which was then used to calculate executive pay.
- Goodwill: MPs may question the ex-bosses over the group taking more than a decade to write down £1.1bn of goodwill (effectively intangible assets such as brand recognition or staff training) from its purchase of MyTravel in 2007.
Thomas Cook’s debt problem dates back to the acquisitions made by previous CEO Manny Fontenla-Novoa (who is not here today). As you can see from this chart, the group’s debt level at year end remained stubbornly above £1 billion at year-end for a decade. (Source: Berenberg) pic.twitter.com/IHqLZBNmzg— Joel Hills (@ITVJoel) October 15, 2019
Here’s a reminder of the travel group’s storied 187-year history.
Here’s a reminder of the scale of the Thomas Cook collapse...
Coming up: former Thomas Cook bosses to face questioning by MPs
At 10:45am, former Thomas Cook chief executives Harriet Green and Manny Fontenla-Novoa will face questioning by MPs on the Business, Energy and Industrial Strategy committee, who are holding an inquiry into the travel group’s collapse last month. The ex-CEOs will be joined by former chief financial officer Bill Scott.
In the second half of tomorrow's evidence session on the collapse of Thomas Cook we are questioning former Thomas Cook CEOs Manny Fontenla-Novoa and Harriet Green as well as former CFO Bill Scott. You can watch on https://t.co/dvOvoTLXhwhttps://t.co/w6GCXdprFtpic.twitter.com/POoq8EDZBz— Business, Energy and Industrial Strategy Committee (@CommonsBEIS) October 22, 2019
The session follows panels with Thomas Cook’s leadership, and its former auditors PwC and EY.
- UK minsters ‘stood on sidelines as Thomas Cook bosses were offered overseas government help’
- Thomas Cook auditors defend fee bonanza as MPs lash out
The bosses today are likely to face questions about the company’s substantial debt piles, its approach to accounting for exceptional items, and its delay in writing down £1.1bn in goodwill from its acquisition of MyTravel in 2007.
FTSE 100 pulls back to flat
After an early drop, the FTSE 100 is the green side of flat now, despite pressure from some Brexit-exposed stocks. The blue-chip index has experienced mixed trading over recent sessions, with a climbing pound doing no favours to business who primarily operate abroad.
How the pound shifted during last night’s Commons drama
Sterling fell sharply after the Commons rejected Boris Johnson’s timetable for votes on the Withdrawal Agreement Bill last night.
The currency is still well up on the month however, and only a little more than a cent off a five-month high, following two weeks of big gains that say it climb as high as $1.30.
It is is also (if we go even further back), solidly below its pre-referendum levels, and even where it stood early last year.
Markets.com’s Neil Wilson said:
The pound remains the proxy for the Brexit process and it’s displaying nervousness that Parliament still can’t get its act together and see a deal through. Uncertainty prevails for the time being, but Parliament has backed a deal and that feels like a key moment.
As the likelihood of a no-deal outcome reduced over recent weeks, the level of traders betting that the pound will weaken fell back from two-year highs:
Fresnillo falls after predicting production at low end of estimates
Fresnillo is the biggest faller on the FTSE 100 today, after the gold and silver miner said production this year would land towards the lower end of its guidance.
The company, which has been plagued by production problems, said it expected higher silver production in the fourth quarter.
Chief executive Octavio Alvidrez said:
...while grades remain variable, we are now processing higher volumes of ore on a more consistent basis at Fresnillo
The company has tended to be boosted by macroeconomic worries, often gaining strongly whenever the US-China trade war grows more intense, causing precious metals to rally.
Sports Direct accuses Goals Soccer Centres of ‘skulduggery’
Sports Direct has hit out at the management of Goals Soccer Centres, accusing the firm of wiping out shareholders through “skulduggery”, my colleague Michael O’Dwyer reports. He writes:
The pile-them-high-sell-them-cheap sportswear retailer, owned by tracksuit tycoon Mike Ashley, launched a blistering tirade on the five-a-side football pitch operator on Wednesday.
The invective followed Sports Direct's announcement on Monday that it did not intend to make an offer for the troubled business.
Goals did not “truly engage with an offer process”, Sports Direct claimed, adding that it had been granted only “limited and fitful” access to information required for its bid.
- Read more here: Sports Direct rails against Goals Soccer Centres ‘skulduggery’
European market open downbeat
Stock markets across Europe have opened down, with the FTSE 100 falling despite the weaker pound – which usually offers support to the internationally-exposed index.
Takeaway.com boss stands by Just Eat tie-up plans
Following the launch of a £5bn takeover offer for Just Eat by investment group Prosus yesterday, the boss of Takeover.com – the food delivery firm’s preferred tie-up partner – has stood by their previous deal plans.
In a statement, Jitse Groen, chief executive of the Netherlands-headquartered company, said:
The merger of Just Eat and Takeaway.com is going to create a superb company. It will benefit from leadership positions in what will be three of the world’s largest profit pools: the UK, Germany and Holland. It will be a global leader, built around a solid, profitable, and proven business model. More importantly, it will be led by the most experienced team in the industry with more than 40 years of combined experience.
Just Eat shares are up narrowly today. The company dropped back into the FTSE 250 today, after being caught in the wrong place at the wrong time when M&G secured its place among the blue-chips on Monday.
Here’s more on the takeover story from yesterday, via my colleague Oliver Gill:
Prosus – the Dutch arm of South African tech behemoth Naspers – tabled an all-cash offer for the business on Tuesday, gatecrashing Just Eat’s own plans for a £9bn merger with its rival Takeaway.com.
The swoop has been rejected by Just Eat’s board but could still be rammed through if it wins their backing. Analysts said Prosus, armed with a $20bn M&A warchest, could gain enough support if they offered around 800p-a-share.
Metro Bank founder steps down with immediate effect
Metro Bank founder Vernon Hill will step down from his role as chairman with immediate effect and has agreed to accept an honorary position as “emeritus chairman”, my colleague Simon Foy reports. He writes:
The American billionaire will be replaced on an interim basis by City grandee Sir Michael Snyder, who joined Metro’s board in 2015 and was the City of London’s policy chairman from 2002 to 2008. Sir Michael was previously tipped as the obvious internal candidate to replace Mr Hill.
“The board thanks Vernon for his vision which inspired and created Metro Bank 10 years ago. He leaves a lasting legacy of creating fans through exceptional customer service and has revolutionised British banking,” said Sir Michael.
We’re still awaiting the company’s results, which are expected to come out later today.
Pound loses ground
Sterling is down around 0.6pc against the dollar at $1.2870 and 0.5pc against the euro at €1.1567 after yesterday's events in Westminster.
The FTSE 100 is tipped to open slightly lower, at 7,181.5.
Welcome to Wednesday’s blog
Good morning. Yesterday was a bright day for the FTSE 100, which saw its biggest gains in seven sessions after a poor day of trading for the pound.
The currency spent the London session below the five-month high of $1.30 that was reached yesterday. The pound fell after MPs in Westminster rejected the Government's timetable for implementing the Brexit Withdrawal Bill.
5 things to start your day
1) Canadian copper miner Taseko is preparing to list in London as it seeks to woo more investors who can fund its expansion. The firm – which is already on the Toronto and New York stock exchanges – runs Canada’s second largest copper mine, and is about to start production at another site in Arizona.
2) Taxpayer spending on fracking protests and security hits £13m: The full cost of the shale gas industry to government departments, regulators, police forces and local authorities has reached £32.7m in less than a decade, according to research from the National Audit Office.
3) The UK’s security services have revealed details of a previously secret operation to block criminals from making fraudulent purchases using stolen credit card information. The National Cyber Security Centre (NCSC), a division of spy agency GCHQ, said Operation Haulster has stopped millions of pounds being stolen from families by hackers.
4) Boeing is facing fresh woes as Kevin McAllister becomes the first senior executive to be ousted from the company amid its 737 MAX crisis. Mr McAllister, who joined the firm three years ago, was replaced immediately by Stan Deal, chief executive of Boeing’s services division.
5) More shoppers will be able to buy milk, butter and bread from hundreds of local corner shops as Uber Eats, the loss-making takeaway app, makes its first foray into the competitive grocery arena. The tech company has inked a deal with Costcutter, the convenience store chain, which will allow more than 1,700 shops to sell everyday items via the app across the country,
What happened overnight
Stocks in Asia headed for a mixed start Wednesday after developments on Brexit sapped risk appetite, dragging US shares lower with Treasury yields. The pound sank.
Equity futures dropped in Japan and were little changed in both Hong Kong and Australia.
Coming up today
It has been something of a year from hell for Metro Bank, with a cancelled bond sale last month preceding the announcement that its founder and chairman Vernon Hill would step down from the challenger lender’s board.
Though Metro was later able to complete a £350m fundraising effort, initial issues with the sale arrived amid low shareholder confidence after a share price crash, an accounting scandal and fears over the future of the lender following poor results.
Despite the headaches, Jefferies analysts have kept a “buy” rating on Metro’s shares – which are down about 85pc this year – but said store openings and loan growth are both expected to be weak in its third quarter results today.
"The big test for Metro Bank is not whether the worst is behind them,” said CMC Markets’ Michael Hewson, “but whether new management can turn around market perceptions of competence, and restore trust at a time when margins in UK banks are already tight, and competition is fierce.”
Preliminary results: Filtronic, Softcat
Interim: Antofagasta, Centamin, Fresnillo, HarbourVest, Hochschild Mining, Quilter, Metro Bank