The Times - UK (2022-04-09)

48 Saturday April 9 2022 | the times

Business

In decline

2018 2019

August 17, 2018

Shares rise on stock market debut after being priced

at 175p, valuing the company at £225 million

October 24, 2018

Sir John Bell, a

government life

sciences adviser, steps

down as chairman to

“avoid any potential

conflicts of interest”

October 4, 2019

Reveals it failed to disclose a

combined £1 million of

bonuses paid to Lord Drayson

and Lorimer Headley, chief

financial officer

Share price since float

Source: Refinitiv

former finance director; and a censure

and fine of £406,000 in November

from the London Stock Exchange for

“serious failures” relating to the secret

payment of £1 million of executive

bonuses.

One source close to the restructuring

said: “We were all surprised by the rate

at which it was burning money. It

comes down to too many heads doing

not enough things that are productive

for the future of the business... and it’s

actually amazing that they really did

spend money in ways which did not

make sense.”

Sensyne’s failings stemmed from its

flotation, according to the source. The

pressure to set — and hit — revenue

targets to satisfy the public markets led

them to deviate from the core data busi-

ness, which was taking longer to mone-

tise, and into costly distractions. It

meant “overhiring, overspending” and

becoming “very unfocused”.

On Wednesday, Sensyne had un-

audited cash of only £1.52 million,

having generated revenue of barely

£1 million in the six months to October

and suffered an adjusted operating loss

of £14.7 million.

Beyond the strategic missteps, Sen-

syne was also riddled with governance

1

Britain needs to invest in more

high-speed electric car chargers

to avert an infrastructure crisis,

experts have warned. Motoring

groups are worried that electric car

sales are going to significantly

outpace investment in charging.

There are concerns that too much

emphasis is being put on installing

so-called slow chargers and fast

chargers, compared with ultra-

rapid and rapid devices. Page 25

2

Voters overwhelmingly

support wind farms near

their homes and would back

nuclear power plants to beat

President Putin, polling for The

Times shows. Conservative voters

are just as likely to back wind

farms, despite ministers’ fears

about local opposition, which led

to the dropping of targets for new

onshore wind turbines in this

week’s energy security strategy.

Page 38

3

Lord Drayson, the former

science and business minister,

has been ousted as chief

executive of Sensyne Health as

part of a planned emergency

refinancing and restructuring that

is set to lead to “lots” of job losses.

Page 47

4

Elon Musk trailed a dedicated

self-driving taxi and promised

that Tesla would start making

its delayed Cybertruck next year as

he opened the electric carmaker’s

latest $1.1 billion factory in Texas.

Page 47

5

Official figures are expected

to lay bare the fall in take-

home pay and the first signs

of the hit to the economy from

price rises, household bills and the

war in Ukraine. Data on inflation,

jobs and growth, to be published

next week, are set to show that the

cost of living is continuing to rise

and that wages are not keeping up,

contributing to a fall in overall

living standards. Page 47

6

Suitors including Vodafone

and Sky are said to be circling

TalkTalk, little more than a

year since the broadband provider

was taken private.

7

Fears that Russia’s invasion of

Ukraine would deal a heavy

blow to Ferrexpo, the

Ukrainian FTSE 250 group, were

eased when the iron ore producer

reported that its first-quarter

output was near normal. Page 50

8

Global food prices rose by

13 per cent to a new record

high last month as war in

Ukraine caused turmoil in markets

for staple grains and vegetable oils,

according to the food prices index

published by the United Nations’

Food and Agriculture

Organisation. Page 51

9

The privatisation of

Channel 4 is expected to

attract interest from up to 40

prospective bidders, ranging from

American pay-TV giants to rival

British broadcasters. Pages 52-53

10

Johnson Matthey, the

industrial chemistry

technology specialist, is

the latest company to warn that

the transition to a cleaner world

will come at a cost amid the shock

of the Russian invasion of

Ukraine, the rising cost of raw

materials and the dislocation to

supply chains. Pages 53

Need to know

TalkTalk rivals make early approach

TalkTalk has asked Lazard, the

investment bank, to review its strategic

options after receiving unsolicited

approaches for the business.

The broadband provider was taken

private 16 months ago in a £1.1 billion

deal backed by Toscafund, the hedge

fund.

Vodafone and Sky are among those

said to have made tentative approaches

to Sir Charles Dunstone, TalkTalk’s

founder and executive chairman. No

formal offer has been made.

TalkTalk, which is run by Tristia

Harrison, its chief executive, provides

landline, broadband and mobile ser-

vices to four million customers. In 2021,

it turned over £1.4 billion. Net debt over

the period increased to £972 million, up

from £950 million a year earlier.

Talktalk was founded in 2003 by

Dunstone as part of the Carphone

Warehouse business and was spun off

in 2010. Toscafund and Dunstone, who

still owns 30 per cent, believe that the

business is worth at least £3 billion,

according to Sky News, which first re-

ported Lazard’s appointment.

Dunstone is one of Britain’s most

successful entrepreneurs. Through

Freston Ventures, his investment

vehicle, he has invested in many

businesses, including Strike, the

online estate agent.

Nick Read, Vodafone’s chief

executive, has been looking at

potential deals as he comes

under pressure from Cevian

Capital, an activist investor,

to revive the telecoms

group’s fortunes. In Feb-

ruary Read told investors

that Britain was one of a

number of markets where

he saw “a very strong case

for consolidation without the need for

punitive remedies” from competition

regulators.

Any deal involving Sky or Vodafone

would be likely to face tough regulatory

scrutiny. Telecoms executives have

long argued that consolidation could

provide savings and allow increased

investment in the expansion of high-

speed broadband, but regulators re-

main unconvinced.

There had been widespread

expectations that TalkTalk would

be acquired by one of its larger

rivals before it was taken

private by Dunstone and Tos-

cafund. TalkTalk, Vodafone

and Sky, owned by Comcast,

the American telecoms

giant, all declined to com-

ment. Vodafone shares

closed 2½p, or 1.9 per cent,

higher at 129¼p on the back

of the takeover talk, valuing

the group at £36.6 billion.

Tom Howard

How Sensyne

found itself

trapped in a

‘death spiral’

The company has

stumbled through a

series of mis-steps

towards a delisting,

reports Alex Ralph

When Lord Drayson floated Sensyne

in London in 2018, the healthcare

technology company’s prospects

looked good.

Fifteen years after selling Powder-

ject, his first health company, for

£540 million, he had returned to the

stock market with his new NHS-backed

venture, having decided that “I had one

more business in me”. The shares rose

strongly after their August debut on

Aim, valuing the Labour peer’s then-

29 per cent family stake at £70 million,

and Drayson thanked investors for

having provided the “resources to make

the vision a reality over the next few

years”.

Three and a half years on and after a

series of stumbles, “reality” has come to

mean something very different. Dray-

son finally lost control of Sensyne yes-

terday after being brought down by

what one insider called a “death spiral”.

Drayson, 62, Sensyne’s founder, chief

executive and largest shareholder, has

been ousted by noteholders that have

seized control as part of the latest emer-

gency financing, worth up to £15 mil-

lion, that will hand them between

90 per cent and 95 per cent of the equity.

The “highly dilutive” financing, after

an earlier round in January, will all but

wipe out other shareholders, including

Drayson and his wife Elspeth, as well as

the NHS trusts that own a combined 16

per cent, and will lead to Sensyne

delisting from the stock market.

Shares in Sensyne, which had floated

at 175p in August 2018 and peaked at

more than 200p shortly after, slumped

by 78.2 per cent, or 7¾p, to 2¼p.

A painful restructuring to create a

“sustainable financial model” is

expected to lead to redundancies

among its 165 workforce, according to

the source, as noteholders including the

shareholders Sand Grove, Lansdowne

Partners and Gatemore Capital Man-

agement refocus Sensyne on its core

founding business. In July Gatemore

had pressed Sensyne’s board to launch

a secondary listing on Nasdaq.

Sensyne, based at the Oxford Science

Park, has been seeking to capitalise on

the potential of big data by working

with pharmaceuticals companies to

discover medicines. It built access to a

data set of more than 22.5 million

anonymised patient records with 13

NHS trusts, including from Oxford

University Hospitals, Chelsea and

Westminster Hospital and South War-

wickshire and the potential to access a

further 22 million American patient

records via an agreement with Omny

Health, a US data company, and 42 mil-

lion clinical trial records through a deal

with Phesi, another American firm.

The downfall of Drayson’s Sensyne

since the early promise of its float has

been marked by misfortune and self-

inflicted damage.

The meltdown of Woodford

Investment Management, a large

shareholder, hung over the share price

— but the company also has been

embroiled in boardroom bust-ups and

the departures of of directors that de-

stabilised the company; a £380,000 set-

tlement after an employment tribunal

claim brought by Lorimer Headley, its

continued from page 47

Cost of living crisis laid bare

the year. Beckett said that inflation

would rise to 6.7 per cent in the March

figures before peaking at 8.3 per cent in

April. “A lot of it is to do with the

Ukraine conflict, but we are also more

worried about the congestion at ports

and global impact of lockdowns in

China,” she said. People would dip into

the “excess” savings many accumulated

over the pandemic to continue spend-

ing, which would help the UK to avoid

a recession, she added.

However, households most likely to

be hit by the cost-of-living crisis are less

likely to have extra savings, according to

Barret Kupelian, consultant economist

at PwC. “The current inflation crisis is

disproportionately affecting the lower-

income households,” he said.

Separate data yesterday showed that

Britons’ confidence in their finances

sank to new lows in March, according to

YouGov, the pollster, and Cebr, the con-

sultancy, with their consumer confi-

dence index falling to 103.9, its lowest

level since January 2021.

Lord Drayson lost

control of Sensyne

after three years

Tristia Harrison has been

with TalkTalk since 2010