Blow for fraud office as Tesco directors’ retrial collapses. A retrial of two former Tesco (TSCO) executives has collapsed after they were acquitted of fraud and false accounting halfway through in a huge blow to the Serious Fraud Office. A jury at Southwark crown court was told yesterday that Chris Bush and John Scouler had been acquitted by the Criminal Court of Appeal on Wednesday after it upheld a ruling by Sir John Royce, the trial judge, who said that the men had no case to answer. Mr Bush was the former UK managing director of Tesco and Mr Scouler was the retailer’s former UK commercial food director. Both were charged with one count of fraud by abuse of position and one of false accounting. The fraud office accused the men of inflating Tesco’s 2014 interim profit forecast by “pulling forward” or improperly recognising income from suppliers. They were also accused of falsifying accounting records and of concealing information from auditors between February and September 2014.
Huawei investigation takes in HSBC. HSBC Holdings (HSBA) was dragged into the American investigation into Huawei last night after it emerged that a Chinese telecoms executive was arrested as part of inquiries into an alleged scheme to use the banking system to evade US sanctions against Iran. America has been exploring whether Huawei had violated sanctions against Iran since at least 2016 and more recently the company’s use of HSBC to make allegedly illegal transactions involving Iran, according to Reuters. A source close to HSBC said the bank was not under investigation in relation to Huawei. The source added that the bank is understood to be co-operating with investigators and could itself be a victim of the alleged violations.
Kier shares sink below price set for rights issue. Bankers working on the £264 million rights issue of Kier Group (KIE) face a nervous wait before its closing later this month as shares in the construction and contracting company fell further below the price at which they are attempting to sell new stock. Kier last month announced a rights issue underwritten by five banks, including HSBC and Citigroup, to pay off its debts and restructure its balance sheet. At the time the offer price of 409p was 46% below the share price and a 34% below the theoretical price at which the shares should trade after the capital-raising. The share price has since crashed by more than 40%, meaning that it is now cheaper for investors to buy the constructor’s stock in the open market than to buy in the rights issue, raising the possibility the shares will have to be picked up by the underwriters.
‘Bonkers busy’ DS Smith prepares to discard its plastic packaging. Smith (DS) (SMDS) has increased its profits by more than a quarter as the chief executive of the FTSE 100 maker of cardboard packaging said that it was “bonkers busy” providing boxes to retailers such as Amazon in the run-up to Christmas. The company posted a 27% year-on-year rise in pre-tax profits to £162 million in the six months to October 31, with revenue up 15% to almost £3.1 billion. DS Smith grew profits as it passed on the rising cost of raw materials and energy to its customers. The company has been raising prices for its boxes to offset higher pulp and paper costs.
Resilient Ted Baker shrugs off hug storm. Ted Baker (TED) insisted yesterday that it was “business as usual” as it updated the market on its trading amid a storm over founder Ray Kelvin’s alleged “forced hugging” of staff. The fashion chain said that it had recorded a resilient performance despite challenging conditions on the high street, with group revenue falling 0.2% in the 16 weeks to December 1. It said this reflected an expected decline in wholesale sales due to the timing of deliveries, which had been largely offset by its retail sales. Total retail sales including its online business were up by 2.3% during the period.
RBS signals Dutch move after Brexit. Royal Bank of Scotland Group (RBS) has warned that it will shift a fifth of its investment banking business to the Continent in the event of a hard Brexit that would leave UK-based institutions unable to access the single bloc. The taxpayer-backed lender said that it had activated plans to relocate client assets worth up to £6 billion to its Dutch subsidiary if Britain ended up leaving the European Union in a way that led to the “immediate loss of access to the European single market”. RBS said yesterday that it had submitted the legal documents required to transfer parts of its Natwest Markets business, which houses its investment banking, from Britain to the Netherlands before the March Brexit deadline for withdrawal from the EU.
Beazley feels heat from US wildfires. Beazley (BEZ), the London-based specialist insurer, warned yesterday that it would take a $40 million hit from the California wildfires, the worst to hit the United States in decades. In a trading update Beazley said early indications showed that claims from the fires would cost it tens of millions of dollars. The reinsurance of its risk will lower the ultimate bill to the company.
Genus (GNS) – British animal genetics company poised to capitalise from a global pork shortage triggered by the outbreak of African swine fever in China was among a handful of gainers in an unforgiving market. Genus breeds livestock after analysing its DNA and supplies pig and cow breeding stock to China, which accounts for about half the world’s pork production. The shares have fallen by more than 15% since August, when the first report of African swine fever in China triggered profit-taking over fears it would reduce demand from the region and hit sales volumes. However, Kepler Cheuvreux, the broker, told clients that the outbreak would prompt a global pork supply shortage and a restructuring of the Chinese supply chain, from which Genus is positioned to benefit. Analysts expect this will lead to increased demand for breeding stock, possibly at higher prices, as well as accelerating the market share of commercial farmers in China, a core client of Genus. They predict that Genus will double sales in its Chinese division by 2023. In a stock exchange filing shortly before the market closed yesterday, Genus announced plans to raise £68 million in a share placing to reduce net debt and capture growth opportunities, including expanding its herd facilities.
Eve Sleep PLC (EVE) has announced plans to sell shares at a steep discount to their market price, sending the mattress maker’s shares down by 13%. The company said that it would raise £15 million, much of it from existing investors. The London-based company said it would sell new shares at a price of 10p, a close to 30% discount to the stock’s previous closing price. Its shares closed down almost 2p at 12¼p in response, valuing the company at about £17 million.
Tempus – A J Bell: Buy. The shares weren’t aggressively priced and offer considerable growth and yield potential
