the times | Tuesday October 20 2020 2GM 37
Business
Ben Martin Senior City Correspondent
About £775 million has been wiped off
the stock market value of Boohoo after
the troubled fast-fashion group con-
firmed that PWC was standing down as
its auditor.
Investors took fright yesterday and
sent Boohoo’s shares down by 20 per
cent to 254p after the retailer said that
it was running a tender for a new
auditor and that PWC would not be
taking part.
The departure of the Big Four firm
follows a scandal over allegations of
poor factory conditions in Boohoo’s
supply chain in Leicester, including ille-
gally low pay and fire safety violations.
The auditor’s exit suggests that there
is mounting unease in the City. “It’s a
major red flag,” one analyst said.
Deloitte, KPMG, BDO and Grant
Thornton have all decided not to bid for
a contract to oversee Boohoo’s books,
according to The Daily Telegraph. EY is
the only top six firm still in the running.
Boohoo was founded by Mahmud
Kamani and Carol Kane in 2006 and
has rapidly grown to become one of
Britain’s leading online clothing retail-
ers. The Manchester-based group is
listed on the junior Aim market, where
regulations on governance are lighter
compared with the main market.
PWC has been Boohoo’s auditor
since 2014, when the fashion group
listed in London. It is yet to resign from
its position but has told Boohoo that it
is planning to stand down. Its impend-
ing departure has prompted the tender
process to find a replacement.
Boohoo said: “The group would like
to place on record that PWC is still the
group’s auditor at this time.” It added:“PWC signed an unqualified opinion
on the group’s 2020 financial state-
ments.” A spokesman for PWC de-
clined to comment.
While Boohoo did not give a reason
for its auditor’s exit, it was reported on
Friday that PWC planned to resign
because of worries about the risks of
working with the company.
Boohoo has faced growing scrutiny
this year after Shadowfall, a hedge fund
that is shorting the retailer’s shares,
questioned its accounting in May and
a Sunday Times investigation into a
supplier’s factory in Leicester in July
prompted modern slavery allegations.
Boohoo responded to the furore over
Leicester by commissioning a review by
Alison Levitt, QC, into working condi-
tions at its suppliers in the city.
In a critical 234-page report pub-
lished last month, Ms Levitt said thatcommodities currencies
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Sept 21 29 Oct 7 15 Sept 21 29 Oct 7 15 Sept 21 29 Oct 7 15 Sept 21 29 Oct 7 15 Sept 21 29 Oct 7 1530,00028,00026,00024,000
Sept 21 29 Oct 7 15PWC departure latest blow for fast-fashion group
Boohoo takes a tumble
as auditor stands down
“senior members of the Boohoo board
knew for a fact that there were some
serious examples of unacceptable
working conditions and poor treatment
of workers” from last December at the
latest but “there was insufficient sense
of urgency” to rectify the situation.
She concluded, however, that Boo-
hoo “did not deliberately allow poor
conditions and low pay to exist within
its supply chain, nor did it intentionally
profit from them”.
Yesterday’s share price fall lowered
Boohoo’s value to about £3.2 billion.
Matthew Earl, managing partner of
Shadowfall, noted that Boohoo share-
holders had overwhelmingly support-
ed PWC’s reappointment as auditor at
the retailer’s annual meeting in June
and said that this indicated it was the
Big Four firm’s decision to part ways.
Alistair Osborne, page 39SHAUN BOTTERILL/GETTY IMAGESRescue deal
to put Flybe
‘back in air
by next year’
Robert Lea Industrial Editor
A US vulture fund has claimed that
Flybe will be back in the air next year
despite buying none of its planes in a
rescue deal for the collapsed airline.
Administrators for Flybe said yester-
day that Cyrus Capital, a former part-
owner of the airline, had bought its
“brand, intellectual property, stock and
equipment” for an undisclosed sum.
The deal comes after Flybe went bust
in March, putting 2,300 pilots, crew and
other workers out of a job. At its height
Flybe carried 9.5 million passengers a
year, specialising in flying to and from
smaller UK airports.
However, it had faced financial diffi-
culties for some time, losing a cumula-
tive £80 million in three years before
2019, when Cyrus, Stobart Group and
Virgin paid just £2 million to rescue it.
The Cyrus deal includes none of Fly-
be’s 76 planes because its previous own-
ers mortgaged off the fleet to lenders.
The rights to its former take-off and
landing slots are also understood to be
part of a legal wrangle, with its Heath-
row rights thought to have reverted to
the British Airways group IAG. The
deal is also subject to the clearance of
the Civil Aviation Authority over whe-
ther Cyrus is a fit and proper operator.
Despite this, and the recession in the
aviation industry caused by the pan-
demic, Cyrus insists that Flybe will be
up and running again in early 2021.
Simon Edel, joint administrator of
Flybe and a partner with the account-
ants EY, said: “The upcoming comple-
tion of this sale will be great news to
communities around the country that
were previously served by Flybe. The
restart of this iconic brand will provide
a potentially significant boost to
aviation jobs, regional connectivity and
local economies.”
Cyrus offered little detail. A spokes-
man said: “While we plan to start off
smaller than before, we expect to create
valuable airline industry jobs, restore
essential regional connectivity in the
UK and contribute to the recovery of a
vital part of the country’s economy.”
With offices in New York and May-
fair in London, Cyrus describes itself as
“an active investor that is deep value-
focused with skill sets including bank-
ruptcy and restructuring”.
Flybe had operated several mono-
poly routes, though in reality many
were those rejected by other carriers.
The UK’s most lucrative short-haul
routes have been snared by Ryanair and
Easyjet. Data also shows that many of
Flybe’s 80-seater services operated at
only two-thirds full on average, lower
than the 90 per cent-plus demanded by
successful budget airlines.O
2 has signed
a five-year
partnership
deal with
the Rugby Football
Union, extending one
of the longest shirt
sponsorships in sport
(Alex Ralph writes).
The new agreement,
the value of which was
unspecified, will begin
from September next
year, 26 years after the
first partnership deal
was signed.
The mobile network
pledged to equally fund
the men’s and women’s
game. There are also
plans for Twickenham
to be able to utilise
O2’s new 5G network.
O2 is owned by
Telefonica, of Spain,
and is in the process of
merging with Liberty
Global’s Virgin Media
in the UK in a
£31 billion deal. It is the
UK’s largest network
with more than 34
million connections.O2 picks the
Red Roses
once again
The mobile operator
will fund the England
men’s and women’s
rugby teams equally