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Marks and Spencer Group PLC

M&S's FTSE 100 check-out leaves just 27 of the original companies

What happened to the original cohort of FTSE 100 companies?

Marks and Spencer Group PLC -

Marks and Spencer Group PLC (LON:MKS) is doomed to be demoted from the FTSE 100 index in the index reshuffle next Tuesday, to be replaced by Russian gold miner Polymetal International PLC (LON:POLY)

Unless M&S shares perk up substantially before 3 September, the retailer will drop out of the index for the first time since the FTSE 100 was formed in January 1984.

The food and clothing chain just avoided relegation in June but looks to have its head firmly on the block this time, with its shares having crumbled 17% since the start of June.

35 years of the FTSE 100

Some 35 years after its launch, the FTSE 100 will have just 27 of its original members left if Marks & Sparks checks out, of which 16 are still there under the same name. (The original list is here on the Stock Market Almanac, for the remaining names see the bottom of the article.)

This shows just how hard it is for companies to stay at the top for very long, said Russ Mould, investment director at AJ Bell

“The management team of Archie Norman and Steve Rowe continue to insist that the company is changing quickly and the all of the right pieces are in now in place to halt and then reverse a steady erosion of the company’s annual profits since 2011 (or even 2007 when pre-tax profit reached £1.1bn).”

Another that is close but not quite part of the original list, Centrica Plc (LON:CNA) is not far off from also dropping out of the blue chip index.

The group, which floated at British Gas as part of the government privatisation process in 1986, is also flirting with relegation with its shares plunging 30% since the end of May. 

Helal Miah, an investment research analyst at the Share Centre, noted the “clear distinction between those on the way up and those heading down and highly reflective of the current economic and political environment”. 

“Out go the more UK focussed businesses while those with a more global exposure look to replace them.”

He noted that M&S was a victim of the company’s struggles to find the right level or quality and price for its clothing line, while investors in Centrica, some of whom are still holding the shares since privatisation of the 1980’s, “face the prospect of a tougher regulatory stance or even the shares being taken off them without adequate compensation should the current uncertainty in UK politics lead to a Jeremy Corbyn government”.

Relegation rules

A company will automatically be relegated from the FTSE 100 index if it falls below 111th place among qualifying companies on the London Stock Exchange, or if a company on the FTSE 250 rises to 90th position or above.

Marks & Sparks, with a market cap of just under £3.7bn, was on Tuesday afternoon in 110th place and Centrica, valued at £3.9bn, was in 103rd place.

There were four current FTSE 250 companies with larger capitalisations than that: Merlin Entertainments PLC (LON:MERL) on £4.6bn, Meggitt PLC (LON:MGGT) with £4.8bn, Hikma Pharmaceuticals PLC (LON:HIK) at £5.0bn and Polymetal’s £5.4bn.

Three of them are currently due for automatic promotion, with Polymetal 79th largest on the London Stock Exchange, Hikma 85th and Meggitt 90th. 

Like some football teams we might suggest, Hikma is a FTSE 100 ‘yoyo club’, with this potentially being its fourth promotion to the UK’s corporate top flight, following campaigns in March 2015 and June 2016 that lasted just a year, before another in December 2016 where it remained blue chip for just six months.

Meggitt looks set for a returning to the FTSE 100 after dropping out in December 2015, having entered the index for the first time in October 2011.

Also in the mix for the drop, perhaps for the next FTSE reshuffle later in the year, Direct Line Insurance Group (LON:DLG) and Kingfisher PLC (LON:KGF) both valued around £4bn, with J Sainsbury Group (LON:SBRY) and WM Morrison Supermarkets PLC (LON:MRW) either side of £4.3bn and ITV PLC (LON:ITV) at £4.5bn. 

Metro Bank and Ted Baker

The depths of the mid-cap index are filled with tales of woe and some scandal.

Down towards the bottom of the FTSE 250 index, Metro Bank PLC's (LON) 80%-plus crash so far this year has given the challenger bank a market cap of around £471mln, making it the fifth smallest in the FTSE 350.

As revealed last week, the bank is the ninth most-shorted company on the LSE with 7.6% of its shares held by short sellers in the wake of the announcement that chairman Vernon Hill is stepping down.

After January scandalous admission that many commercial loans had been incorrectly classified in an accounting error, leading to the loss of a small number of large customers, last month the company said the bank has “now reached a size and scale where it is appropriate to appoint an independent chair”, adding that the change would bring its board “in-line with best practice corporate governance guidelines”. 

Clothing chain Ted Baker PLC (LON:TED), after its own scandal around the alleged “forced hugging” of former boss Ray Kelvin last year and slowing growth this year amid a difficult premium market, has dropped 57% over the past 12 months to a valuation of under £414mln.

Investors in the initial public offer of Funding Circle Holdings PLC (LON:FCH) last September will quite rightly feel that the original valuation they were duped into believing for the peer-to-peer lender is a scandal, with the shares having plunged more than 70% since floating.  

The company is now worth around £411mln.

Woodford Patient Capital Trust PLC (LON:WPCT) is another with a trail of negative news in recent months.

Beleaguered fund manager Neil Woodford was dealt another blow last Friday after the Patient Capital Trust was forced to cut the value of one of its investments by around 4%, with the investment trust also still reeling from the association with the manager's the flagship Equity Income fund, which was gated in June after a rush of investor redemptions followed a period of terrible performance.

The trust has halved in value so far this year to around £380mln.

Restaurant Group is the smallest company on the FTSE 250 index, simmering at around £299mln after a 25% fall over the past 12 months, including a solid rally since sinking to a decade low in early April. 

It revealed an improvement in first-quarter sales from its Wagamama acquisition last November and its interim results are due on 3 September, which will need to be strong to improve its fate in the mid-cap index.

Where are they now? The original FTSE 100

Those still on the FTSE 100 from the original cohort are:

  1. Associated British Foods
  2. Barclays
  3. Barratt Development
  4. Johnson Matthey
  5. Land Securities
  6. Legal & General
  7. Lloyds Bank
  8. Marks & Spencer
  9. Pearson 
  10. Royal Bank of Scotland
  11. Sainsbury
  12. Smith & Nephew
  13. Standard Chartered
  14. Tesco
  15. Unilever
  16. Whitbread

Then those still on the FTSE 100 but with a different name:

  1. BAT Industries (BAT)
  2. British Aerospace (BAE Systems)
  3. British Petroleum (BP)
  4. Commercial Union (Aviva)
  5. Glaxo (GlaxoSmithKline)
  6. Imperial (Imperial Brands)
  7. Prudential Assurance (Prudential)
  8. Reckitt & Colman (Reckitt Benckiser)
  9. Reed International (RELX)
  10. Rio Tinto-Zinc (Rio Tinto)
  11. Royal Insurance (RSA)
  12. Shell Transport & Trading (Royal Dutch Shell)

And more from that research, those company that have been acquired and now part of FTSE 100 firm

  1. Allied Lyons (merged with Pedro Domecq in 1994 then acquired and broken up by Pernod Ricard, Fortune and Diageo)
  2. Beecham (now part of GSK)
  3. Britoil (acquired by BP in 1988)
  4. Distillers (now part of Diageo)
  5. General Accident (part of Aviva)
  6. Great Universal Stores (some part of Experian others part of Home Retail and so acquired by Sainsbury's)
  7. Guest, Keen & Nettlefolds (acquired by GKN and now part of Melrose)
  8. Midland Bank (now part of HSBC)
  9. National Westminster Bank (now part of RBS)
  10. Plessey (acquired by GEC and Siemens (1989) and then merged to form BAE Systems in 1999)
  11. Sun Alliance & London Insurance (now part of RSA)
  12. Tarmac (acquired by Anglo American in 1999 and part-sold 2013 and now part of JV with Lafarge)
  13. Wimpey (George) (now part of Taylor Wimpey)

Spin-outs or mergers to create new FTSE 100 firms

  1. Grand Metropolitan (has become Diageo)
  2. Racal (spun out and became Vodafone, was acquired by Thales in 2000)

Still quoted, but on another index

  1. Edinburgh Investment Trust (now on FTSE 250)
  2. Harrisons & Crosfield (now part of Elementis on the FTSE 250)
  3. Rank (on the FTSE 250)
  4. Hammerson (FTSE 250)

Acquired by another firm

  1. Associated Dairies
  2. BICC (bought by Balfour Beatty)
  3. BOC 
  4. BPB Industries
  5. BTR
  6. Berisford
  7. Blue Circle
  8. Boots
  9. Bowater
  10. British Electric Traction (bought by Rentokil Initial)
  11. British Home Stores
  12. Burton 
  13. Cable & Wireless
  14. Consolidated Gold Fields 
  15. English China ClaysAcquired
  16. Exco International (bought by ICAP)
  17. Fisons 
  18. Globe Investment Trust
  19. Guardian Royal Exchange 
  20. Hambro Life 
  21. Hawker Siddeley 
  22. House of Fraser (bought by Sports Direct)
  23. Ladbrokes (fell into the FTSE 250 and since bought by GVC, which gained promotion to the FTSE 100)
  24. MEPC 
  25. Northern Foods 
  26. Peninsular & Oriental Steam 
  27. Pilkington 
  28. Magnet & Southerns 
  29. RMC
  30. Redland 
  31. Rowntree Mackintosh
  32. Scottish & Newcastle 
  33. Sears 
  34. Sedgwick
  35. Standard Telephone & Cables
  36. Sun Life Assurance
  37. Trafalgar House
  38. Trusthouse Forte (bought by Granada which became part of ITV, which has since risen up to the FTSE 100)
  39. Ultramar
  40. United Biscuits 

There were also original FTSE 100 outfits that were broken up and sold off or shut down:

  1. Bass (Sold brewing arm to Interbrew in 2000, became Six Continents and then split to form Mitchells & Butler and InterContinental Hotels, which in turn sold off Britvic in 2005)
  2. Cadbury Schweppes (Drinks unit demerged in 2008 and then merged to form Dr Pepper Snapple, with Cadbury buying Kraft in 2010 and itself since broken into two)
  3. Charterhouse J. Rothschild (broken up and parts now in St. James's Place)
  4. Courtaulds (Split into two in 1990, with the textiles arm now part of Sara Lee, while chemicals is part of Akzo Nobel and PPG Industries)
  5. Dalgety (Now part of Kerry Group, Nestle and Wesfarmers)
  6. General Electric Company (Broken up, renamed Marconi, the rump of which was sold to Sweden's Ericsson following bankruptcy. The remainder, Telent, is now private.)
  7. Hanson Trust (Broken up and the final unit bought by HeidelbergCement in 2007)
  8. ICI (Broken up with final rump sold to Akzo Nobel in 2007)
  9. Imperial Continental Gas (Broken up 1987. Calor now owned by SHV, Contibel by Tractebel)
  10. Thorn EMI (Thorn and EMI demerged 1996. Thorn now owned by private equity, EMI by Universal and a consortium)

Then finally, there are the bankrupts - and before we finish, a big thanks to AJ Bell for the research. 

  1. British & Commonwealth Shipping (Went under in 1990 after diversification spree, including Atlantic Computers)
  2. Ferranti (Went bust in 1993 following disastrous International Signal & Controls acquisition)
  3. MFI Furniture (Failed in 2008, having been acquired in 1984 by Associated Dairies Group)

 

Quick facts: Marks and Spencer Group PLC

Price: 177.55 GBX

Market: LSE
Market Cap: £3.46 billion
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