Tesco (TSCO) ‘threw me under bus’ over fraud claims. Executive hits out at store chain after being cleared of charges. Tesco’s former UK finance boss has accused the supermarket group of “throwing him under a bus” and abandoning truth and justice for its own “commercial imperatives”. Carl Rogberg, 52, said that he believed that no fraud had ever taken place at Tesco, but this had not stopped the grocer rushing to wrong conclusions and opportunistically taking advantage of the situation to “take all sorts of other charges”. In an exclusive interview with The Times, Mr Rogberg said that the events of the past four years had taken away his son’s childhood and contributed to a heart attack that resulted in him requiring a quadruple bypass operation.
Barclays chief ‘lied to investors over secret £300m Qatar fees’. One of Britain’s most senior bankers has been accused of lying to investors over £322 million of secret fees paid to Middle Eastern investors to shore up Barclays (BARC) during the financial crisis ten years ago. John Varley, the bank’s chief executive at the time, and three former colleagues were accused by the Serious Fraud Office of creating a “dishonest mechanism” to pay investors from Qatar to persuade them to inject emergency funds into Barclays in 2008 so that it could avoid a bailout from the government. The four appeared at Southwark crown court yesterday, six and a half years after the SFO began its investigation. They are the most senior bankers to face trial over events linked with the crisis and among the most high-profile executives ever prosecuted. Barclays is one of Britain’s biggest banks, with about 1,300 branches as well as an investment bank. In 2008 it raised almost £12 billion from private investors, including Qatar, as Royal Bank of Scotland and Lloyds received multibillion-pound state bailouts.
Metro Bank chief defiant as shares fall 39% after blunder. The chief executive of Metro Bank (MTRO) has insisted he is not under pressure to resign, despite the lender revealing a mistake in its loan book and a profit warning that wiped more than £800 million off its market value. Shares in the challenger bank fell by almost 39% yesterday amid concerns that it may be forced to turn to shareholders to raise fresh capital. Metro disclosed what Craig Donaldson, its boss, called a “misinterpretation of the regulations” that knocked its capital position and said that annual profits would fall short of analysts’ expectations. It is a blow to the credibility of Metro, one of a host of challenger banks trying to break the dominance of the big high street lenders. It was listed in London in 2016 and has attracted £15.7 billion in deposits since it was founded in 2010.
Luke Johnson ‘unlikely to buy back failed Patisserie chain’. The administrator of Patisserie Holdings (CAKE) is confident of selling the failed café chain, but Luke Johnson is said to be unlikely to buy it back. KPMG was appointed administrator of Patisserie Holdings, the group behind the chain, on Tuesday after an alleged £40 million accounting fraud left it unable to pay bank debts. It confirmed yesterday that 71 outlets had been closed, including 27 loss- making Patisserie Valerie stores, 19 Druckers stores and 25 Patisserie Valerie concessions in Debenhams, Next and at motorway services areas. The closures have resulted in 920 redundancies, but the remaining 122 outlets continue to trade while KPMG seeks a buyer for the business.
Builders hit brakes on new projects. The construction of new shops, offices and warehouses in Britain has come to a standstill for the first time in six years. A survey by the Royal Institution of Chartered Surveyors found almost no growth in commercial and industrial construction work in the final quarter of last year. The quarterly research is used by the Bank of England and leading financial institutions. Almost 300 chartered surveyors responded to the latest survey on workload activity, defined as making tenders for new projects. It does not include construction that has started. Commercial property activity fell sharply in the final three months of 2018, compared with the previous quarter, with almost 80% citing financial constraints as the most significant impediment to building activity.
Investor protests after Aviva wraps up RPC Group (RPC) takeover. Europe’s biggest plastics packaging company has come under fire after agreeing to be bought for £3.3 billion. RPC Group said yesterday that it was recommending an agreed 782p-per-share offer from Apollo Global Management, the American private equity firm, after months of talks. However, one of its leading shareholders immediately said that the price was too low. David Cumming, chief investment officer for Aviva (AV.), with 1.9% of the stock, complained that the bid process had “not delivered fair value” to shareholders and that the valuation “clearly underestimates future growth prospects that will now accrue to the buyer and the RPC management team”. RPC’s senior executives are in line for bonuses under yet-to-be-decided “incentivisation arrangements” that Apollo said it intended to put in place.
Vodafone and O2 to share 5G as they line up mast deal. Two of Britain’s biggest mobile phone companies have paved the way for a potential sale of their joint venture phone masts business. O2 and Vodafone Group (VOD) manage about 16,500 sites in Britain through a 50-50 company called CTIL. They said yesterday that they were looking at opening it up to potential new tenants and also considering its “potential monetisation”. The update came alongside plans to extend their existing network-sharing partnership to cover 5G, which they said would allow them to deploy the next-generation service more quickly, at a lower cost and to a wider area. Vodafone is one of the world’s biggest telecoms companies, with mobile operations in 25 countries and partnerships in 44 others. O2 provides mobile access for seven million customers of brands including Tesco, Sky and Giff Gaff.
Tariffs in no-deal Brexit would cost us millions, says Burberry. Burberry Group (BRBY) has warned that a no-deal Brexit could cost it tens of millions of pounds in extra costs as it updated the City on its Christmas trading. The luxury fashion house, which is in the midst of a turnaround, said that its earnings could be hit by “the low tens of millions” as a result of tariffs imposed if Britain had to trade under World Trade Organisation rules. Julie Brown, chief financial officer at Burberry, said: “The biggest concern [of a no-deal Brexit] is the disruption to the supply chain. Burberry imports and exports significant volumes of raw materials, samples and finished goods between the UK and the EU and it is the logistical delays that would impact design, product development and customer fulfilment.”
WH Smith’s numbers are travelling in right direction. Strong sales in airports, stations and motorway services have more than offset a slowdown on the high street for WH Smith (SMWH). The newsagent reported a 6% rise in total sales in the 20 weeks to January 19, boosted by growth in its “travel” stores and the £155 million acquisition of Inmotion, which sells digital accessories in American airports. The travel division reported a 3% rise in like-for-like sales, rising to 8% growth when new WH Smith store openings were taken into account, and 16% growth including the addition of the Inmotion outlets. The high street business suffered a 2% drop in sales on a like-for-like basis, or a 1% drop once sales from the acquisition of Cult Pens, an online retailer, was taken into account. Excluding acquisitions and new store openings, like-for-like sales were flat in the period.
Joules walks the walk as it defies high street gloom. Profits at Joules Group (JOUL) rose by almost 15% in the six months to late November as the premium fashion brand defied the high street gloom. However, the company, known for its brightly coloured wellies and patterned clothing, warned that it expected conditions in the retail sector to remain tough for “the foreseeable future”. Joules upgraded expectations for its profits in December when it disclosed that revenues for the six months to November 25 had risen by 17.6% to £113.1 million. It said yesterday that this had translated into a 14.7% rise in underlying pre-tax profits, to £10.7 million. The underlying figures strip out the cost of £1.4 million in share-based bonuses to executives and employees under a scheme set up when it was listed in 2016.
Debt fears force Marston’s to ease back on expansion. The pubs group and brewer behind Hobgoblin beer is slashing its expansion plans by two thirds in an attempt to allay concerns over its £1.4 billion of borrowings. Marston’s (MARS) is planning to cut new openings to reduce its net debt by £200 million to £1.2 billion by 2023. The company, with 14,300 staff, is one of Britain’s biggest brewers, tracing its roots back 185 years to when John Marston set up his brewery in Burton upon Trent. It has six breweries and is a leading pub group, selling drinks and food as well as about 1,550 hotel bedrooms from 1,545 sites. Ralph Findlay, chief executive, plans to cut investment in new building projects to about £25 million a year from 2020. That compares with more than £80 million in 2017, analysts at Peel Hunt said. The business will offload between £80 million and £90 million of non-core assets, but is not planning any cuts to the dividend.
Trading with cherry on top for Hotel Chocolat. Christmas trading proved to a sweet spot for Hotel Chocolat Group (HOTC). The upmarket confectionery brand said that revenue had increased by 15% year-on-year for the 13 weeks to December 30, with growth in its retail, wholesale and digital operations. Mr Thirlwell, chief executive, said: “This was another strong Christmas for Hotel Chocolat. Our new store openings contributed 5% of the growth in the period, with the balance coming from existing stores, digital and wholesale channels. Our wholesale partnerships were notable successes.”
G4S (GFS) has settled a class action lawsuit in California relating to claims for meal and rest breaks that may not have been received by about 13,500 of its employees from 2001 to 2010. The legal issue wasn’t specifically disclosed in its 2017 annual accounts, hence the surprise among shareholders, and the company said that it would add the provision to its 2018 full-year results. It added that two similar claims had been settled for modest sums in 2015 and 2017, but those terms were not possible this time. JP Morgan Cazenove said that the fine would increase the group’s net debt to 2.4 times earnings before interest, tax and other charges. “While we make no material estimates changes, global growth is slowing and wage growth is continuing to ramp up, hence we see the fundamentals for the company as somewhat weaker than at the time of our November note,” the broker said as it downgraded the stock to “neutral”, from “overweight”.
The chief executive of IG Group Holdings (IGG), the City trader, spent almost £100,000 buying shares in the business, a day after it had fallen by 9.5% when interim results showed drops in revenue, profit and new customer numbers. June Felix’s splurge was seen as a sign of her confidence in the business, helping to boost the shares by 35p to 615p.
Sanne Group (SNN) fell sharply after announcing the departure of Dean Godwin, its chief executive, less than 12 months after the exit of the company’s chief financial officer. Sanne, which provides outsourced services to fund managers, said that Mr Godwin has decided to retire after seven years as its head. He will be replaced by Martin Schnaier, the chief commercial officer. The news came as the company said that it expected to report full-year profits broadly in line with expectations. Rahim Karim, equity analyst at Liberum, said: “Although we believe that Martin has the required experience to lead the company into its next phase of growth, the surprise nature of this announcement, especially given the departure of the chief financial officer less than 12 months ago, is likely to raise questions.”
Richard Griffiths, a former Welsh sheep farmer, has overtaken M&G to become the biggest shareholder in Mothercare (MTC), the troubled maternity retailer, after buying 6.9 million shares. The investor has increased his stake in the business from 15.5% to 17.8%, according to regulatory filings.
AJ Bell rings in the new year. AJ Bell (AJB) added more than 7,000 new clients in the last quarter of 2018, but reduced its assets under management amid choppy markets. In its first results since going public, the stockbroker and investments provider said that it had increased its customer numbers by 7,285 to 190,498 in the three months to the end of December. Underlying platform inflows increased by 20% to £1.2 billion, compared with the same period last year. However, negative market movements of £2.7 billion led to a 4% fall in assets under management to £44.2 billion. Andy Bell, chief executive of the company, said: “We continued to attract new customers and inflows to the platform in the face of volatile investment markets, which demonstrates the strength and resilience of our business model as we approach our busiest period of the year.”
Tempus – Baillie Gifford US Growth Trust (USA): Buy. The trust is about more than technology’s giants; for those with a long-term view, recent price weakness could be an attractive entry point
Tempus – Wetherspoon (J.D.) (JDW): Hold. Sales are encouraging but costs weigh and margins are tight
