UK sanctions confusion left Evraz investors not knowing where to stand

Trading in steelmaker’s shares continued for an hour after Roman Abramovich sanctions were announced

Chelsea fans don’t know where they stand and nor do outside shareholders in Evraz, the FTSE 100 steelmaker where Roman Abramovich is a 29% shareholder.

After the government unveiled sanctions against the oligarch on Thursday morning, trading in Evraz’s shares continued for more than an hour before the Financial Conduct Authority, in charge of listings on the London Stock Exchange, ordered a temporary suspension at 11am. The FCA said it had acted “in order to protect investors pending clarification of the impact of the UK sanctions”.

Well, yes, clarification is definitely required, because a reader of the asset freeze order against Abramovich would immediately wonder why Evraz itself hadn’t also been sanctioned. Here’s one passage: Abramovich “is or has been involved in destabilising Ukraine and undermining and threatening the territorial integrity, sovereignty and independence of Ukraine, via Evraz plc”.

In the gap between the government’s move and the FCA’s, Evraz’s shares fell from 93p to 82p. The stock is thinly traded (Abramovich isn’t the only chunky holder), but a few wide-awake investors may have used the window to get out quickly. That, in most books, counts as a disorderly market.

It’s hard to blame the FCA if it wasn’t given advance warning by government officials, but the market-related angle to the sanctions process in the past fortnight has been chaotic. With the global depositary receipts at sanctioned Russian companies, authorities veered from allowing outside investors to trade to slamming down the shutters suddenly. If there was an underlying methodology, it was hard to spot.

Evraz popped up later in the day to argue that UK financial sanctions should not apply to the company itself and that it didn’t consider Abramovich to be “a person exercising effective control”. It also denied the government’s allegation that it had supplied steel to the Russian military, which may have been used in the production of tanks.

The position will be resolved eventually, but ensuring an orderly market in the shares ought not to be as hard as the authorities are making it appear. The government and the FCA just have to talk to each other.

New M&S double act has big shoes to fill

A chief executive with the nickname “Nails” is exactly what Marks & Spencer needed circa 2016. The business had to be told a few home truths about getting competitive again. Steve Rowe, a virtual M&S lifer who had risen from the shop floor, was best placed to deliver them.

He got M&S out of most of its ragged international ventures, took it into online food with Ocado, and finally tackled the excess of floor space. Miracle of miracles, the clothing side even looks sharper. If Rowe is quitting because he’s knackered after six years in charge, including the tough pandemic period, you can’t blame him. He’s done an excellent job – certainly better than the share price makes it seem.

Worryingly, though, M&S seems to have concluded that Rowe is irreplaceable in conventional fashion. Stuart Machin and Katie Bickerstaffe will be co-chief executives, except that, weirdly, only Bickerstaffe will have the “co” bit in her job title.

Double acts at the top of large quoted companies have a terrible record; they rarely last. Maybe this time will be different because the pair have worked harmoniously as co-chief operating officers, but it rather looks as if the chairman, Archie Norman, is the real boss. The new set-up looks like a fudge.

Cost savings were key for John Lewis. Now it must invest well

It’s too soon to say the John Lewis Partnership is out of the woods, but there’s definitely progress; the self-help programme is probably about a year ahead of schedule.

The department stores were always the more troubled side and revenues there reached a record £4.93bn, despite the closure of 16 outlets. Indeed, for all the wailing in some quarters, last year’s numbers offered strong evidence that the closures had to happen. The online shift is relentless: two-thirds of non-Waitrose sales were online. That ratio may slip back this year, but the tally definitely won’t return to the pre-pandemic level of 42%.

Cost savings were the key driver of the recovery in overall profits (before tax, staff bonus and exceptional charges) to £181m. As important is the vastly improved state of the balance sheet. John Lewis can continue to invest.

The next task is to ensure it does so well. Adventures into financial services and build-to-rent flats are billed as big new sources of sustainable profits. There’s a commercial logic at work for a mutually owned company with long investment horizons, but diversification is rarely easy.

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