Female Tech Founders Bag ￡3.6bn Despite Wider Investment Slump

I hope you’ve had an amazing week and that you’ve got something lovely planned for the weekend.

Every week I’m here to bring you the latest business news of what’s going on both in the UK but also globally. Feel free to let me know if there’s anything specific you’d like me to cover in future updates.

In the meantime happy reading!

GENERAL

UK economy up 0.3% in January - The Office for National Statistics (ONS) has reported that monthly real gross domestic product (GDP) is estimated to have increased by 0.3% in January. Back in December 2022 it fell by 0.5%, however overall GDP was flat in the three months to January 2023. Figures from ONS revealed that the services sector, which includes wholesale and retail trade, was the main driver of the increase in GDP, growing by 0.5%. The largest contributions to the increase came from education, transport and storage, private healthcare, arts and recreation sectors.

Female tech founders bag ￡3.6bn despite wider investment slump - Venture capital investment into tech firms founded by women jumped last year despite soaring inflation and volatility sparking a slowdown in funding across the sector, new figures reveal. Female founders shrugged off the downturn that hit the UK’s tech sector last year and bagged some ￡3.6bn of VC, up from ￡2.9bn the previous year, according to data from Dealroom analysed for the Department for Science, Innovation and Technology. The uptick in funding for women-founded businesses comes despite VC firms reining in their investments last year in a downturn that has sent valuations of tech companies plummeting. Total VC investment levels into UK businesses fell by almost a quarter last year, KPMG found.

Hundreds of thousands of small businesses may fold this year - wiping ￡12bn from economy, report says - The owners of nearly one in eight microbusinesses, defined as employing fewer than 10 people, fear they will have to fold, equating to 630,000 businesses. The annual Venture Forward study by website builder GoDaddy found that only a fifth of microbusiness owners think the government is doing enough. More than three quarters also described the cost of living crisis as the greatest challenge they've ever faced, with the price of energy the biggest single concern.

ON THE UP

Housebuilder Berkeley on track to post ￡600m profits despite Truss’ mini-budget shocks - In a trading update, the FTSE 100 firm said it expects to deliver a pre-tax profit of around ￡600m for the year to the end of April, in-line with prior guidance. The homebuilder posted profits of ￡551.5m for the full year last year. Berkeley, the sixth biggest housebuilder in the UK, is also expected to rake in more then ￡2bn on exchanged forward sales at the end of the financial year.

MANGO profits soar due to record sales - Pre-tax profit at Spanish retailer Mango increased by 26.2% year-on-year to €103.3m (￡91.6m), with record sales driving the increase. Turnover for the year was €2.7bn (￡2.3bn), an increase of 20.3% compared to 2021, and 13.2% compared to 2019's pre-pandemic levels, when the company last achieved a record turnover. The business cited that its womenswear range remains the main driver of the group’s sales, accounting for 82% of total turnover. Alongside this, menswear increased by 30%, and kidswear by 18%, and were said to have “evolved strongly” during 2022.

Legal & General in upbeat mood as full-year profit beats expectations - Legal & General raised its dividend by 5% and said it remained on track to deliver its five-year strategic ambitions. "We have delivered another strong result in 2022, ahead of market expectations,” commented Sir Nigel Wilson, group chief executive. The FTSE 100-listed insurer posted operating profit of ￡2.523bn in the 12 months to 31 December 2022, up 12% from ￡2.262bn in 2021, while earnings per share advanced 12% to 38.33p from 34.19p previously and the total dividend was increased by 5% to 19.37p. Analysts had forecast operating profit of?￡2.451bn.

Greggs plans to open 150 new stores despite elevated pay and energy costs - The company, best known for its sausage rolls and steak bakes, said that it expected challenges from high inflation to remain throughout 2023 while revealing upbeat sales figures for its last financial year. It reported like for like sales growth in company-managed shops of almost 18%, taking revenues above ￡1.5bn during 2022.

Costa Coffee follows Pret A Manger with third staff pay rise in a year - Costa Coffee is to give its staff their third pay rise in a year, as rivals make similar moves amid a labour shortage. The increase will apply to about 16,000 of Costa's UK workers. The pay increase will be between 6.1% and 7.3% from 1 April, depending on experience and location. The announcement comes days after Pret A Manger said it was giving its staff a similar pay rise within the same time frame.

IN THE DOLDRUMS

HS2 (High Speed Two) Ltd line between Birmingham and Crewe delayed by two years - The Birmingham to Crewe leg of high speed railway HS2 will be delayed by two years to cut costs. The government suggested Euston station's opening could also be delayed as an "affordable" design is worked on. Transport secretary Mark Harper blamed soaring prices and said he was "committed" to the line linking London, the Midlands and North of England. HS2 has been beset by delays and cost rises. In 2010, it was expected to cost ￡33bn but is now expected to be ￡71bn.

Frankie & Benny's owner to close 35 more restaurants - The owner of chains such as Frankie and Benny's and Chiquito has announced it will close up to 35 more of its restaurants. The Restaurant Group blamed the move on rising running costs and customers cutting back their spending. The company, which has about 410 restaurants, said it would reduce its estate by 30% by next year by closing loss-making sites. However, its successful Wagamama chain will not see any closures.

Morrisons posts ￡1.5bn loss after being sold to CD&R - Morrisons has racked up ￡1.5bn of losses, a year after being bought by US private equity firm CD&R. The grocer was acquired by CD&R in October 2021 for ￡7bn, in a debt-fuelled deal led by former Tesco boss Sir Terry Leahy. The deal saw ￡6.1bn of debt piled onto Morrisons’ balance sheet, resulting in large interest payments and high exposure to increases in borrowing rates. The current loss of ￡1.5bn, posted on Companies House, also accounts for ￡400m cost that the business took as interest payments.

Hotel Chocolat posts drop in half year sales and profit - Hotel Chocolat has posted a drop in half year sales and profit following a significant deterioration in international sales. In the 26 weeks to 25 December, group revenue declined to ￡129.8m from ￡142.9m while underlying pre-tax profit fell to ￡10.2m from ￡25.4m a year earlier. Revenue in the UK and Ireland dropped by 5% in the period, but sales in Japan, the US and St Lucia fell by 90%, 94% and 48% respectively.

In The Style opts to sell business for just ￡1.2m to avoid administration - The online fashion retailer, which was valued at ￡105m when it floated in 2021, has agreed for In The Style Fashion Limited (ITSFL) to be acquired by private equity investor Baaj Capital. Founder and chief executive Adam Frisby has agreed to take an equity position in the newly established bidco formed for the purposes of the sale.

ONES TO WATCH

SHEIN set for ￡1.6 billion funding round ahead of potential US IPO - The Chinese fast-fashion giant, is reportedly set to raise ￡1.6bn in a new funding round this month, ahead of its potential US IPO later on this year. The round’s major investors include The United Arab Emirates’ sovereign wealth fund, Mubadala, as well as private equity firm General Atlantic (GA) and venture capital group Sequoia Capital China. In addition, Tiger Global Management is set to become a new investor. This move would allow the company to open a US IPO by the end of 2023.

安永 split paused amid partner infighting over fate of tax experts - EY has “paused” its plan to split in two amid a fierce dispute over how much of its tax business should stay with the audit side of the firm. Julie Boland, the head of EY’s US business, who has been picked to run EY after it spins off its consulting arm, told partners on a call that the deal needed to be reworked, according to people familiar with the matter. The US business accounts for about 40% of EY’s $45bn in annual global revenues, giving it strong negotiating power in internal talks over the split.

boohoo shareholders revolt ‘growth share plan’ which will see bosses pocket ￡175m - Boohoo had faced a shareholder backlash over its plans to hand executives ￡175m if its share price improves, although the scheme was narrowly approved. The fast fashion retailer‘s “growth share plan” has proved controversial to investors, with 37% of shareholders voting to reject it. Boohoo is set to go ahead with its plans, which make it the third bonus plan to be rolled out in four years.

宝马 revs up ￡500m plan to secure Mini production in Britain - The German car manufacturer, is applying the finishing touches to plans to invest hundreds of millions of pounds into its Oxford plant, securing future production of the iconic Mini in Britain. BMW hopes to announce its decision later in the spring, with one industry insider saying that it was expected to be unveiled in several weeks' time. If confirmed, the investment package, which is thought to be worth close to ￡500m, would deliver a major boost to Britain's car industry.

Heathrow told to cut passenger charges in move that could lower fares - Heathrow airport has been ordered to cut average passenger charges by about 20% next year, in a move that could translate to lower ticket prices for travellers. The decision by the UK regulator the Civil Aviation Authority (CAA) comes despite Heathrow having argued for higher fees, which are charged to airlines and are used to fund baggage handling, security and other costs across the airport’s terminals. The CAA said its decision reflected the fact that travel was set to return to pre-pandemic levels from 2024 and “should benefit passengers in terms of lower costs”.

高盛 arm among bidders with appetite for $10bn Subway - An arm of the Wall Street behemoth Goldman Sachs is among the suitors hoping to take a mouthful of Subway, the global sandwich chain which has been put up for sale with an estimated $10bn price tag. Goldman Sachs Asset Management (GSAM) is one of at least a handful of parties which tabled indicative offers for Subway this week. People close to the process said on Saturday that Bain Capital, TDR Capital - which jointly owns Asda and the petrol forecourts giant EG Group - and TPG had also lodged their interest.

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