United Kingdom

MARKET REPORT: Tasty court ruling for Deliveroo investors

Deliveroo shares raced ahead as the takeaway app won the latest showdown in a long-running legal battle about the status of its riders.

Senior judges ruled its 'roos' can be classed as self-employed contractors rather than 'workers' – meaning the company need not provide them with the same rights as staff such as sick pay and annual leave.

This is the fourth time a court – this time the Court of Appeal – has ruled in Deliveroo's favour.

Senior Judges have ruled Deliveroo's riders can be classed as self-employed contractors rather than 'workers' - meaning the company need not provide them with sick pay and annual leave

The company has been fighting a case dating back to 2017, brought by the Independent Workers Union of Great Britain.

The decision is a big win for Deliveroo whose float flopped in March amid questions from institutional investors over the company's business model and status of its riders.

The classification of people working in the so-called 'gig economy' has been a hotly debated over the last few years.

In February the Supreme Court ruled that Uber drivers be classed as workers, giving them access to the minimum wage and paid holidays. 

Stock Watch - Xeros Technology 

Xeros Technology made gains after it struck a licensing deal for its laundry filtration system with a company based in Barcelona.

The AIM-listed business has created a product that can capture more than 90 per cent of the microfibres released from clothes and fabrics during laundry cycles.

Many of these are plastic microfibres that are otherwise flushed into rivers and seas.

After announcing the deal with commercial laundry equipment group Girbau, shares in the environmentally focused firm, which is based in Rotherham, South Yorkshire, rose 3 per cent, or 7p, to 238p.

Meanwhile, Deliveroo rival Just Eat Takeaway has decided to adopt an employment model in order to avoid any controversy and negative press.

But Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown warned that the latest Deliveroo judgment does not mean the gig economy battle is over.

Streeter said Deliveroo may yet be forced to change its model by investors who are becoming increasingly aware about societal issues, like workers rights.

When it went public, Deliveroo had warned that it might not be successful in defending its contractor model. 

Nevertheless shareholders celebrated yesterday, sending its stock soaring 9.3 per cent, or 23.3p, to 274.9p – still falling short of the 390p listing price, however.

Just Eat Takeaway was trading higher too, rising 2.7 per cent, or 171p, to 6,573p by the close.

Mid-cap housebuilder Crest Nicholson also had a bumper day after it told investors profits would be higher than expected because of the property market boom.

The company estimates it will make more than £100million this year after making £36.3million in the six months to April 30, which was boosted by home sales rocketing 31 per cent to 1,017.

Shares in Crest Nicholson rose 1.1 per cent, or 4.8p, to 435.2p.

The optimism was contagious, with fellow builders Vistry (up 0.4 per cent, or 5p, to 1213.5p) and Berkeley Group (up 1.1 per cent, or 50p, to 4668p) also advancing.

Elsewhere, Royal Mail was in investors' good books, climbing 1.8 per cent, or 10.2p, to 589p after revealing it wants to recruit 1,000 postie apprenticeships.

Participants will be offered a permanent job if they successfully complete the 13-month scheme, it said. But it was a less well known name, Chrysalis Investments, that shot to the top of the FTSE 250 leaderboard.

Its stock rose 4.9 per cent, or 12p, to 255p after announcing it has invested £35million in Starling Bank.

Turnover at the fast-growing online bank – which is led by Anne Boden – rose by 400 per cent last year.

Chrysalis' rise wasn't enough to keep the wider index in the black, however. The FTSE 250 fell 0.7 per cent, or 149.3 points, to 22,510.12, while the FTSE 100 rose 0.5 per cent, or 35.91 points, to 7,109.97.

Scottish Mortgage Investment Trust (up 1.8 per cent, or 23p, to 1,291.5p) was one of the blue-chip climbers as the Nasdaq set another intraday record high.

Scottish Mortgage is one of the main investment trusts in the UK for US technology companies such as Tesla, Apple and Google-owner Alphabet, which are all listed on the Nasdaq.

Baillie Gifford US Growth Trust followed suit, rising 2.2 per cent, or 7.5p, to 343.5p.

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