 | Two former Serco Group (SRP) directors have been charged with fraud and false accounting over its electronic tagging scandal. Nicholas Woods, ex-finance director of Serco Home Affairs, and Simon Marshall, former operations director of field services within the outsourcing group, face the allegations after an investigation by the Serious Fraud Office (SFO). It comes after Serco paid a £23million fine to the authority as part of an out-of-court settlement. The company reported itself to the SFO in 2013 after it was revealed to have charged the Government for tagging criminals who were dead, in jail, or had left the country. Yesterday the SFO said it had jointly charged Woods and Marshall with one count of fraud by false representation and one count of false accounting over representations made to the Ministry of Justice between 2011 and 2013. Marshall is also accused of two counts of fraud by false representation, and Woods of one count of false accounting in relation to the 2011 statutory accounts of Serco Geografix. |
 | FirstGroup (FGP) has announced the appointment of advisers to formally look into selling its US assets following pressure from shareholders. Previously the company hailed its US business, including First Student and First Transit, as ‘valuable assets and well positioned in markets with profitable growth’, although it said it would give any offers ‘serious consideration’. Bosses also said they would look at selling the First Bus business in the UK, alongside existing plans to ditch the Greyhound coach business. But on Monday, the company said it had appointed advisers to ‘formally explore all options in respect of our North American contract businesses, First Student and First Transit, including a potential disposal’. |
| has said a tax audit by the Belgian authorities ‘will not lead to material liabilities’ as the company recorded a sharp rise in revenues and pre-tax profits. The company said a €674million tax inquiry into unpaid VAT in Belgium is progressing well and bosses expect a decision to be made by early next year. The parent company of House of Fraser and Lillywhites saw revenues in the first half of the financial year rise by 14% to £2.04billion and profits soar to £193.4million. Nearly half of the rise in revenue was due to an expansion in premium lifestyle sales, which rose by 79.2% in the six months to 27 October. The company also received a boost from the £84.9million sale and leaseback of its Shirebrook distribution centre. | |
 | Yu Group (YU.) soared after announcing a deal which should allow it to free up more cash. The firm has previously had to keep cash aside to cover its hedging deals. These agreements involve Yu buying wholesale energy ahead of time to mitigate soaring energy prices in the future. But it has agreed a £13m credit facility with Smartest Energy to cover hedging, so it won’t have to set aside the cash any more. |
 | Tullow Oil (TLW) slid another 6.9p, to 60.9p yesterday a week after the company ousted its chief executive, slashed its future production forecasts and cancelled its dividend. Analysts at HSBC cut their recommendation on the FTSE 250 stock from hold to reduce, prompting last week’s 52% slump to resume. Investors had already been hit by a sell-off in November, after Tullow revealed problems with its Ghana drilling operations and the disappointing discovery of heavy crude oil, rather than the more desirable light crude, at its site in Guyana. |
| Studio Retail Group, added to Mike Ashley’s stellar day. The value clothing and homeware company, previously called , sold its educational resources arm for £50million to the Council of the City of Wakefield, which is the lead authority in the Yorkshire Purchasing Organisation. The deal, which should help Studio to focus on its consumer business, caused shares to jump 13.5p, to 233.5p. It boosted the value of Ashley’s 37% stake, owned through Sports Direct, by more than £1million. | |
 | Influential asset manager Royal London said that Playtech (PTEC) latest pay proposals, which are due to be put to a vote this Thursday at the annual shareholder meeting, give investors a ‘raw deal’. The bonus scheme Playtech is suggesting it could hand its chief executive Mor Weizer more than £30million of shares, and has already been rejected by shareholder advisory groups ISS and Glass Lewis. Royal London’s head of responsible investment, Ashley Hamilton Claxton, pointed out that the scheme offers Weizer rewards for meeting share price targets which are below the level at which Playtech’s shares traded in July last year, before a profit warning. She added that Weizer will be able to claim his rights to each chunk of rewards after the shares have seen just one month of sustained performance. Hamilton Claxton said: ‘Structures like this can potentially encourage management to prioritise short-term share performance over long-term value creation. ‘We will therefore be voting against this plan at the company’s upcoming general meeting.’ |
 | A weekend meeting between the bosses of gold miner Centamin (DI) (CEY) and its suitor Endeavour means the possibility of a deal between the two companies is now inching closer. Centamin, which is focused mainly on Egypt, rejected a £1.47billion bid from Canadian rival Endeavour earlier this month, saying the deal did not offer enough value to shareholders. But Centamin’s chairman and Endeavour’s chief executive met in the Australian city of Perth this weekend and agreed that they would both examine each other’s companies as part of a due diligence exercise. Endeavour said this would be ‘a critical precursor’ to agreeing further terms of the deal. Under takeover rules, Endeavour must state whether it will make a formal bid or not by December 31. It now wants Centamin to request an extension to the deadline, to give it more time. |
| Boeing will halt commercial production of its 737 Max aircraft in January following two fatal crashes in five months, it was announced on Monday. The jet was still in production, despite it having been grounded since March after two crashes in Indonesia and Ethiopia killed 346 people. Boeing’s board decided at a two-day meeting in Chicago to stop making the plane after the costs of grounding the aircraft had already run to more than $9 billion (about £6.75 billion). Last week the Federal Aviation Administration said it would not approve the plane’s return to service before next year. | |
 | Cineworld Group (CINE) has doubled down on an expansion across the Atlantic, splashing out £1.6bn on Canada’s biggest cinema chain – and raising fresh fears over its sky-high debts. The British movie theatre chain is seeking to buy Cineplex, which runs three quarters of the Canadian market, for C$34 a share in cash. It follows the 2017 acquisition of US cinema operator Regal. The Cineplex deal – which must be backed by a majority of Cineworld investors – raised eyebrows over concerns it will add to the company’s already heavy debts, which stood at $3.3bn (£2.5bn) at the end of June. |
 | Boris Johnson’s new government must reform business rates immediately to save the country’s ailing high streets, the boss of pizza chain Franco Manca has said. Ministers must make the rates system clearer and sort out a backlog of complaints over firms’ often sky-high bills according to David Page, who made his name running Pizza Express and is now executive chairman of Franco Manca owner The Fulham Shore (FUL). The company has challenged the calculation of some of its business rates bills. He said: “We’ve got rate appeals going on all over the place. “It can take years. It can’t be right. I am not sure that smaller businesses can wait that long.” |
| Footfall at British retailers has failed to kick on after Black Friday sales fuelled a surge in shoppers taking to the high street at the end of last month. The number of shoppers taking to the high street slipped 0.9% in the second week of December according to data from Springboard, which tracks shopper numbers at bricks and mortar retailers across the UK. The figures reveal a heavy 5pc drop in the number of shoppers compared to the same period last year as the trend towards online shopping continues to gather pace, buffeting traditional retailers in towns and shopping centres. | |
| tycoon Mike Ashley is planning a £100m share giveaway to staff after renaming his firm and unveiling a jump in profits that sent shares rocketing by almost a third. His proposal will be introduced by September 2020 if it wins shareholder support, and is likely to be seen as part of a charm offensive after the 55-year-old was heavily criticised over how Sports Direct treats its staff. It came as the firm rebranded itself as Frasers and vowed to focus more on luxury products following a rescue of the House of Fraser department store in July. Sports Direct reported a 14% rise in revenues to £2bn for the six months to October after a string of takeovers of struggling rivals. | |
| FirstGroup (FGP) has hired investment bank Rothschild to spearhead the potential sale of its remaining North American businesses after months of mounting pressure from investors. The FTSE 250 company said it will explore all options for its school and city bus operations across the Atlantic. FirstGroup is close to selling troubled long-distance US coach arm Greyhound and is mulling options for its UK bus operations. Activist investors have been pressuring the firm to break up its business for more than a year. Chief executive Matthew Gregory said the potential sale of First Student – the biggest operator of school buses in the US – and city service First Transit is the next logical step. |
     | Boeing is to halt production of its troubled 737 Max in a move that will send a shockwave through British industry. Hundreds of suppliers to the aviation giant will be affected by the temporary suspension, which begins next month. International Consolidated Airlines Group SA (CDI) (IAG) had signed a letter of intent to buy 200 Max jets and Ryanair Holdings (RYA) has 135 on order. Three British aerospace components suppliers will also be affected by the decision. Melrose Industries (MRO), the £12 billion FTSE 100 group, makes wing tips, engine casings and other parts for the Max. Melrose said in April that it expected to make about $500,000 from every jet. Senior (SNR), the FTSE 250 group based in Hertfordshire, has warned several times this year that its financial situation has been hurt by the Max groundings. The company, which has an outpost near Boeing’s Seattle factory, makes wing and wheel well components for the aircraft. Meggitt (MGGT), also a FTSE 250 constituent, supplies seals and composite parts for the Max’s control systems. The group has estimated that it makes about $155,000 per jet. |
| The Serious Fraud Office has charged two former Serco Group (SRP) directors with fraud in relation to the company’s prison tagging contract with the Ministry of Justice. Nicholas Woods, 50, former finance director of Serco home affairs, and Simon Marshall, 58, former operations director of field services, were charged with fraud and false accounting in relation to representations made to the Ministry of Justice between 2011 and 2013. Mr Woods was additionally charged with false accounting in relation to the 2011 statutory accounts of Serco Geografix, a subsidiary of Serco that ran the electronic tagging service. They both deny the charges. |
| – Mike Ashley yesterday revealed plans to hand £100 million to staff after his retail empire posted a rise in interim sales and profits, although he warned that losses at House of Fraser would lead to more shop closures. The company yesterday rebranded to call itself Frasers, a move unexpectedly announced last month as part of efforts to “elevate” its reputation. There is only one Frasers store, in Glasgow, but there are plans to open a second luxury department store in Belfast next year. Mr Ashley said that the retailer must get used to “canoodling the luxury brands”. Frasers Group announced a 58% rise in underlying pre-tax profits from £64.4 million to £101.8 million in the six months to September 27, while statutory profits rose 160% to £193.4 million, boosted by a £120 million sale and leaseback deal of its company headquarters. Group sales rose by 14% to £2.04 billion, including House of Fraser and Flannels’ stores. The UK sports business increased sales by 6.7% to £1.2 billion but, excluding acquisitions, sales fell by 8.6%. | |
| Cineworld Group (CINE) is to increase its exposure to the North American market after announcing a C$2.8 billion (£1.6 billion) acquisition of Canada’s biggest cinema operator. The proposed takeover of the Toronto-listed Cineplex, which has a 75% share of Canada’s C$1 billion box office, follows the audacious $5.8 billion acquisition in February last year of Regal Entertainment, which is based in Tennessee. The C$34-a-share deal, which brings 165 cinemas and 1,695 screens, values Cineplex at almost C$2.2 billion, or C$2.8 billion including debt, a multiple of 6.3 times earnings including merger benefits. Cineworld said that the transaction was “highly synergistic”, forecasting at least $130 million of benefits by the end of 2021. |
| The restaurant group behind the Franco Manca and Real Greek chains is in talks with potential partners about establishing one of the brands internationally. The Fulham Shore (FUL) said that although both concepts had received interest, only one would be taken abroad and the international appeal of pizza made Franco Manca the likelier option. “We’ve had lots of inquiries about taking Franco Manca to Switzerland, Sweden, America and the Far East,” Mr Page said. “We haven’t got to any agreements yet but I’m sure we’ll try it in one of those territories over the next two years, either as a franchise or a joint venture in which we take a small stake.” To date the only franchise deal it has agreed has been with Giuseppe Mascoli, the founder of Franco Manca, who runs a branch on the Italian island of Salina, north of Sicily, albeit only during the busy summer months. |
| FirstGroup (FGP) could call time on its American operations after formally appointing advisers to “explore all options” for its student and transit businesses there. The transport operator, which is also offloading its North American Greyhound intercity coach network, has shelved plans to dispose of its British buses business. Investors including Coast Capital, the US activist which has built a 10% stake, have repeatedly called on First to clear up its strategy and overhaul its board. The company said yesterday that it was considering the future of its North American contract businesses, “including a potential disposal [and] has appointed advisers to formally explore all options”. Having previously raised the prospect of selling its First Bus division in the UK, the company believes that “greater value will be achieved by delivering . . . margin enhancement prior to any launch of a formal sale process”. |
| A £1.5 billion takeover of Centamin (DI) (CEY) has moved a step closer after the chairman of the Egypt-focused gold company met the boss of its Canadian suitor to begin talks. Josef El-Raghy, 48, chairman of the FTSE 250 miner, met Sébastien de Montessus, 44, chief executive of the Toronto-listed Endeavour Mining, in Australia on Saturday “to discuss the merits of the proposed transaction and proposed next steps”, Endeavour said yesterday. Endeavour said that the two companies had agreed to “conduct a reciprocal due diligence exercise” to better understand each others’ assets. This was “a critical precursor to allowing the parties to determine whether the financial terms of a transaction could be agreed that was in the best interests of both companies’ shareholders”. |
 | Pearson (PSON) the education services provider missed out on the rally sweeping global equity markets, becoming just one of three companies to end the session in the red and the biggest faller. Analysts at Berenberg said that 2020 was set to be another exacting year, with the “accelerated deterioration in the higher education courseware market . . . likely to have a significant impact on next year’s numbers as well”. The broker said that management was likely to “guide cautiously when it provides its next update in mid-January”. This prompted Berenberg, which rates the stock a sell, to cut its target price to 525p from 660p. |
 | British American Tobacco (BATS) was also among the biggest gainers after a double upgrade to “buy” from Bank of America Merrill Lynch. The broker said that BAT’s recent shake-up of its e-cigarette portfolio showed a “much-needed sense of urgency to compete in the new world of tobacco”. It also said the “competitive environment is turning favourable to BAT” and that although the regulatory threat from a potential reduction to nicotine levels and a menthol ban were significant “it has become unlikely we will see any major progress over the next 12 months”. |
 | Ofwat proposed lowering the cap on the shareholder returns of water companies to their lowest level since the sector was privatised three decades ago. The changes, part of Ofwat’s pricing settlement over the next five years, intend to increase investment and raise standards. Severn Trent (SVT) added 77p to £24.97. |
 | Clients of Selftrade could not complete buy or sell orders on fund products for almost three hours on a busy trading day following the general election. Selftrade said weekend maintenance work had caused problems that prevented some trades between 8am, when the London stock market opened, and 10.45am. It said the issues did not extend to other areas such as shares. Selftrade is owned by Equiniti Group (EQN). Selftrade says it has more than 100,000 customers. A spokesman said: “We had a small issue for a couple of hours which will have affected some customers placing fund orders. The issue has been resolved now and our fund customers will have been able to complete their orders at today’s price before our daily cut-off time.” The disruption is understood to have been limited by Selftrade having the capacity to process all trades in-house, so that orders could go through afterwards. |
 | Tempus – Witan Inv Trust (WTAN): Hold. Recent signs of improvement in performance augur well, as do changes in wider sentiment |
 | Tempus – Inchcape (INCH): Buy. Inexpensive and a less risky way to invest in motor market growth |
 | London Stock Exchange Group (LSE) extends senior management team revamp. Anthony McCarthy to replace Chris Corrado as chief operating officer |
 | Toscafund scoops up 12% of troubled retailer Ted Baker (TED). Hedge fund now second-biggest shareholder behind departed chief executive Ray Kelvin |
 | Sainsbury (J) (SBRY) has overhauled the management of its banking arm as it seeks to offload its mortgage business and improve returns. Jim Brown, appointed chief executive of Sainsbury’s Bank in June, has reshuffled senior staff and bid farewell to a string of executives. David Jones, chief customer officer, is leaving the business, as is Mark Hunter, chief transformation officer. Marcia Campbell, a non-executive director, left in September, according to Companies House filings. Graeme Forrester, chief risk officer, will no longer sit on the bank’s board, but is still with the business. Sainsbury’s Bank has been weighing on the supermarket chain’s profits and consuming cash for years. |
 | Lenders to Premier Oil (PMO) are demanding a break-up of the FTSE 250 explorer as it hurtles towards a deadline to pay back more than £2bn of loans. A group of hedge funds has bought into its debt, appointing investment bank Lazard and lawyer Akin Gump to press it to hasten the sale of oil assets. Premier Oil, understood to be supported by law firm Slaughter & May and accountants EY, has $2.6bn (£1.9bn) of loans due for repayment in May 2021. Sources said the company hopes to refinance the debt before May 2020 to avoid causing complications in having its accounts signed off by auditors. The hedge funds own around 40pc of Premier Oil’s loans, giving them the power to block any debt restructuring. |
 | The housing market is expected to be boosted by Boris Johnson’s decisive election victory, but property experts fear that it will not fully recover until Brexit is “well in the past”. House prices will rise by an average of 2% in 2020, more than double the 0.8% growth rate this year, after the Conservative majority gave homeowners a “window of certainty” that will release pent-up demand for the spring selling season, according to Rightmove (RMV). The property website, which measures the prices of 95% of property coming to market, said prices have been supported by demand outstripping supply. The number of properties put up for sale is down 8% on the previous year. Demand from buyers has remained almost level, with the number of sales agreed so far this year down 3% on 2018 despite the increased level of political uncertainty. |
 | Capita (CPI) is launching an IT consultancy in an attempt to put itself in the same league as large, high-margin professional services firms such as Accenture and Cap Gemini. The company has started Capita Consulting, with plans to have 450 consultants next year. It wants to advise large organisations on their needs in the digital economy rather than, as hitherto, acting as a much lower-margin contractor. The plan has been unveiled by Jon Lewis, a turnaround specialist who has been Capita’s chief executive for the past two years. He pulled the firm back from the brink via a £700 million rescue rights issue to prevent its borrowings from spiralling out of control. The plan to get Capita consultants into client’s executive suites rather than its contractors taking orders from a client’s IT team is part of Mr Lewis’s aim to rebuild earnings and the share price. |
| Britain’s biggest commercial property landlord is reviewing its investment strategy as it comes under pressure from its exposure to shops, shopping centres and retail parks. The real estate division of Aberdeen Standard Investments (ASI) has £43 billion of assets under management, of which two thirds are in the UK. It is being shaken up by Neil Slater, who took over as global head of real estate at the asset manager six weeks ago, having previously run the Tokyo office. Mr Slater’s arrival has coincided with concerns about ASI’s £1.2 billion property fund, which has been hit by redemptions after fears over declining retail property valuations prompted its rival, M&G, to gate one of its property funds. |
| The “phase one” US-China trade deal will nearly double US exports to China over the next two years and is “totally done” despite the need for translation and revisions to its text, US trade representative Robert Lighthizer said on Sunday. Lighthizer, speaking to CBS’s Face the Nation, said there would be some routine “scrubs” to the text but “this is totally done, absolutely”. Lighthizer said a date and location for senior US and Chinese officials to formally sign the agreement was still being determined. The deal, announced on Friday after more than two and a half years of on-and-off negotiations between Washington and Beijing, will reduce some US tariffs on Chinese goods in exchange for increased Chinese purchases of US agricultural, manufactured and energy products by some $200bn over the next two years. China has also pledged to better protect US intellectual property, to curb the coerced transfer of US technology to Chinese firms, to open its financial services market to US firms and to avoid manipulation of its currency. | |
| The average price of a home will rise by 2% over the next year, with northern regions performing more strongly than those further south, according to predictions from the UK’s biggest property website. Rightmove said it expects to see asking prices rise by 2% in 2020 – and that the election result could pave the way for increased housing market activity this coming spring. The rebound in the market follows a moribund 2019, in which the number of sales agreed fell 3% on last year and the number of properties coming to market fell by 8%, said Rightmove. The website’s data for the latest month – to mid-December 2019 – revealed that prices were still declining as the election took place. Rightmove said the average price fell by 0.9% to £300,025 in December, leaving the market just 0.8% ahead of this time last year. But a re-acceleration next year, even to just 2% growth, will mean buyers having to pay £6,000 more for the average home. |
| The number of visitors to Britain’s high streets over the past six weeks is ‘significantly’ down on last year, raising fears of a disaster for some of Britain’s struggling shops. Figures provided to The Mail on Sunday by data firm Springboard, give the first clear picture of the festive shopping season so far. They show that the number of visitors to retail parks, shopping centres and high streets fell by 3.5% in the six weeks from November 1 to the end of last week. The number of visitors to high street shops alone was down 4.5% in the period. The drop appears to have accelerated since the beginning of autumn. The 12-month average across all locations – high street, shopping centres and retail parks – to the end of September was down 1.7% compared with the previous year. | |
  | Marks & Spencer Group (MKS) has raided rival Sainsbury (J) (SBRY) to fill a key role at its food division as it prepares to further ramp up its ambitions. M&S grocery boss Stuart Machin has poached Sainsbury’s logistics director Chris Marrow, who has worked at the supermarket chain for almost 14 years. Machin has galvanised plans to reduce prices and develop new ranges in recent months ahead of its home delivery partnership with Ocado Group (OCDO). He wants to target more family shoppers and offer a full range in more stores. But he told suppliers he wants to ‘protect the magic’ of M&S too, which means ‘looking after the things our customers love most about M&S food’. M&S is braced for its busiest period, when it typically sees its UK food market share double in the week before Christmas. |
 | Bosses at beleaguered advertising group M&C Saatchi (SAA) want to appoint four new board members by next month after bringing in a top City headhunter. It follows last week’s shock when three non-executive directors and co-founder Lord Saatchi resigned in the midst of an accounting scandal. Remaining bosses – who include co-founders chief executive David Kershaw and chairman Jeremy Sinclair – expect a PwC report into its accounts to complete by Christmas. They have appointed Carol Leonard, of the Inzito Partnership, to find new non-executive directors. They would then be expected to launch their own review into what has gone wrong at M&C Saatchi, best known for its political advertising campaigns. |
 | Go-Ahead Group (GOG) will today launch Norway’s first privately run railway service. The group will operate its first route between Stavanger and Oslo. Go-Ahead, which runs Southeastern as well as bus services across the UK and has nearly 30,000 staff, won the eight-year contract last year to run the new Norway South rail franchise. The firm already has foreign operations in Ireland, Germany and Singapore. Chief executive David Brown said: ‘Working with the Norwegian authorities to bring our international rail expertise to deliver Norway’s first contracted rail service is another step forward.’ |
 | Lloyds Banking Group (LLOY) has launched an internal investigation into a leak that reveals a mountain of compensation claims at the bank. Documents seen by The Mail on Sunday show Lloyds owed about £770million to an astonishing 4.37million people at the end of August – equal to around one in seven of its 30 million customers. This was on top of payouts earmarked for mis-sold payment protection insurance. The figures dwarf official complaints data, which show Lloyds received one million new gripes in the first six months of the year. The bank said it had since paid compensation to the ‘vast majority’ of those affected. However, a spokesman refused to reveal how many new redress cases have been added to the pile over the past three and a half months. |
| The water industry has dodged renationalisation under Jeremy Corbyn but now faces serious extra regulatory burdens as Ofwat is set to unveil potentially its toughest-ever crackdown on the utilities on Monday. Draft proposals from the regulator in the summer indicated the companies will have to spend an extra £12bn on service improvements and plugging leaks, while cutting £50 from the average customer’s bill. It is intended to force the regional monopolies to become more efficient and to take less profit, with the biggest ever cut in returns allowed, under the post-privatisation regime. | |
 | One of Britain’s biggest pub operators is considering plans to open dozens of “dark kitchens” to meet the growing demand from the likes of Deliveroo and McDonald’s. NewRiver REIT (NRR) runs more than 700 inns and hopes to invite fast-food companies and tech-savvy delivery firms to rent unwanted kitchen space. The FTSE 250 property company has been on an acquisition spree in recent years, snapping up pubs from more traditional operators Greene King and Marston’s as they offload hundreds to pay down debts. Many of the pubs NewRiver buys rely largely on drink sales, with little or no demand for food, leaving kitchen space unusused. |
 | Britvic (BVIC) has slashed retirement benefits for its new finance chief as investors challenge listed companies over lavish pension rewards. The owner of brands including Robinsons, J2O, Purdeys and Fruit Shoot, has radically reduced pension contributions for chief financial officer Joanne Wilson, who joined from Tesco in September. Ms Wilson will receive contributions equivalent to 7.5% of her £395,000 salary, compared with 23% for her predecessor Matthew Dunn, in an effort to bring executive retirement benefits in line with the rest of the workforce. |
 | Struggling investment trust has wagered £83m that the struggle to take away Just Eat (JE.) will explode into an all-out bidding war, as the target’s two suitors prepare for an auction showdown. Secretive Mayfair fund manager Boussard & Gavaudan Holding has invested heavily in Just Eat derivatives since Prosus gatecrashed a planned takeover by its rival Takeaway.com. Boussard & Gavaudan has joined half a dozen aggressive hedge funds that have taken positions worth a total of more than £370m in recent weeks. The high-stakes bet offers a chance for Boussard & Gavaudan to end a difficult year on a high. |
 | Questor: Burberry Group (BRBY) has refashioned its business model and merits a premium valuation. Buy. Questor share tip: the fashion chain’s design chief has been a hit with customers and the firm is adopting a more upmarket feel |
| Water giants are set to launch a wave of appeals against the industry watchdog after it imposes one of the toughest financial settlements in years. New rules on spending and efficiency are expected when Ofwat publishes its long-awaited “final determination” on suppliers’ latest five-year business plans tomorrow. Industry insiders expect those demands to trigger a surge of appeals to the Competition and Markets Authority (CMA). Yorkshire, Anglian, Northumbrian, Thames and Southern are expected to be among the hardest-hit companies. The water industry in England and Wales, which operates under regional monopolies, has faced a sharp reversal after paying huge dividends and piling on debt since the privatisation boom of the 1980s and 1990s. | |
| The board of M&C Saatchi (SAA) has been accused of backtracking on a promise to hold an independent investigation into its accounting crisis. Four directors, including co-founder Lord (Maurice) Saatchi, triggered turmoil last week when they quit in a row over responsibility for the scandal. In a blistering letter, the three non-executives claimed they had not been allowed to fulfil their roles properly. “Our recommendations have repeatedly not been accepted,” said the letter, signed by Lord (Michael) Dobbs, Sir Michael Peat and Lorna Tilbian. They claimed chief executive David Kershaw and chairman Jeremy Sinclair had reneged on a promise to establish an independent committee overseen by the non-executives. |
| Mike Ashley’s discount sportswear empire is expected to reassure the City over a shock €674m (£562m) Belgian tax bill tomorrow. — due to be renamed Frasers, after the House of Fraser department store chain it acquired for £90m last year — upset the market and its own auditors at Grant Thornton when it disclosed the surprise possible charge at the end of a heavily delayed results statement in July. It said the notice, which included 200% penalties and interest, was not a formal demand but a “proces verbal” that would lead to a mediation process. The claim is understood to relate to goods transported through Belgium. | |
 | Tony Pidgley has swooped on a central London development site amid speculation that the capital’s housing market could recover, despite Brexit and higher stamp duty. Berkeley Group Holdings (The) (BKG) has bought a store in Camden, north London, owned by Morrisons. Berkeley will pay the supermarket chain about £120m, comprising £85m for the land plus the £35m cost of building a replacement for the 40,000 sq ft supermarket. The site comes with planning permission for about 450 homes and 100,000 sq ft of offices. Pidgley has said he thinks the London market is set to recover after three years of depressed trading since stamp duty was raised and Britain voted to leave the EU, creating uncertainty for foreign buyers. His view is likely to have been reinforced by Boris Johnson’s thumping election victory. |
| The hedge fund tycoon building a stake in Ted Baker (TED) has said the struggling fashion retailer reminds him of Redrow, the housebuilder he shook up by reinstating its founder as boss in 2009. Toscafund, run by Martin Hughes, increased its holding in Ted Baker to 12% on Friday, making it the second-biggest investor after Ray Kelvin, the disgraced founder, who owns 35%. Shares in the retailer have crumbled by three-quarters to 372.8p this year due to four profit warnings and an accounting error, valuing it at £166m. Chairman David Bernstein and chief executive Lindsay Page resigned on Tuesday. |
    | Britain’s six biggest banks and building society Nationwide are braced for the results tomorrow of the most gruelling test of their ability to withstand “Armageddon”. Lloyds Banking Group (LLOY), HSBC Holdings (HSBA), Barclays (BARC), Royal Bank of Scotland Group (RBS), Standard Chartered (STAN), Santander UK and Nationwide face the toughest test of their resilience in an economic storm designed to be worse than a disorderly Brexit. The test assumes that serious headwinds hit at the same time. These include a drop in economic growth, a 33% plunge in house prices, a jump in unemployment to 9.2%, a 30% fall in the value of sterling and a leap in interest rates to 4%. The assessment, which has become tougher since the 2008 financial crisis, checks whether banks can continue to lend while paying for past misconduct, such as payment protection insurance, which has cost more than £50bn. |
| The boss of Lloyds Banking Group (LLOY) has agreed to meet victims of the HBOS Reading fraud for the first time this week, as the crisis threatens to engulf the bank again more than a decade after it was exposed. Antonio Horta-Osorio will meet the victims to discuss compensation following a damning review published last week by former High Court judge Sir Ross Cranston. This found that Lloyds had been “neither fair nor reasonable” in its attempts to redress the wrongdoing. The intervention is seen as an attempt to prevent further embarrassment from the scandal, first uncovered in 2007. |
 | Learning Technologies Group (LTG) has felt pressure from the hedgies. After taking over rival Line Communications in 2014, it set its sights on growing sales to £50m within three years. That target is now in the rear-view mirror, but not all investors have been convinced. LTG has been hit by bearish bets: about 5% of its stock was out on loan to short-sellers last year. Amid concerns over LTG’s ability to turn itself from a training provider to a software company offering a broader range of services. Sales had jumped by 83% to £93.9m for the year to December 2018 when it announced results in March. Pre-tax profits rose from £12.7m to £25.6m. That performance was partly driven by a $150m swoop in the US last year for the cloud-based talent-management business PeopleFluent. It took another step in that direction in April this year when it splurged $12m on Breezy, a developer of recruitment software. Analysts expect sales to grow by 38% to £130m and profits to leap by 46% to £37.4m. That growth has silenced a few of the naysayers, but doubters remain. The percentage of shares out on loan eased to 2.5% in September. Since then, it has crept back up to 4%, according to IHS Markit. Numis analyst Gareth Davies is bullish, believing that LTG’s “active pipeline of acquisitions” could help lift the shares by a further 50% to 185p. A boost could also come in May if it secures a bumper Ministry of Defence training contract, says Panmure Gordon analyst Paul Morland. With its dominant position, and a track record of outperforming financial goals, LTG’s shares should soar again. Buy. |
| An activist investor has more than doubled its stake in Ted Baker (TED) days after a profit warning resulted in the chairman and chief executive resigning. Toscafund took a 5.9% stake on Tuesday but took advantage of the fashion retailer’s sinking share price to build it to 11.9%. This week in a third profit warning it said full-year profits would be £5 million, a 90% nosedive on the year. A week ago the retailer had admitted a £25 million accounting error. The shares have lost three quarters of their value this year but rose after the Toscafund stake was revealed. One commentator said there was little for the activist to agitate for as the board had already been cleared out. “The numbers have been kitchen-sinked, there is fresh leadership in key positions and there is an upside from asset disposals and cost reductions,” he said. “Acting chairman Sharon Baylay is not wasting any time.” |
| Aston Martin Holdings (AML) has confirmed that it has held early stage talks with potential investors about building “longer-term relationships” that could involve equity investment, as part of a funding review. In a stock market statement after the London market closed the luxury car maker said it was reviewing its funding requirements and other options. One of the interested investors in the Warwickshire-based sports car manufacturer is Lawrence Stroll, the billionaire owner of the Racing Point Formula One motor racing team, who is preparing to bid for a significant stake in Aston Martin Lagonda, according to Autocar magazine. | |
| Centamin (DI) (CEY), the gold mining group being pursued by a larger Canadian rival has hired an investment banking veteran as its deputy chairman. Centamin, which has rebuffed approaches from Endeavour Mining and refused to engage over its £1.5 billion all-share offer, said that Jim Rutherford would join its board on January 1. It said the plan was for him to become non-executive chairman by the end of 2020, succeeding Josef El-Raghy, 48. Mr Rutherford, 60, spent much of his career as a senior vice-president of Capital International Investors and previously worked as an investment analyst. He is also a director of Anglo American, the FTSE 100 miner. |
| A City backlash is brewing against Playtech (PTEC) over a plan by the gambling software supplier to introduce a bonus scheme that could hand its chief executive more than £30 million of shares. Two influential shareholder advisory groups, Institutional Shareholder Services and Glass Lewis, have urged investors to reject the company’s proposal for a share award scheme for Mor Weizer at a vote on Thursday. A revolt would be the latest investor rebellion over Playtech’s executive pay. |
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