Kier Group (LON:KIE) shares sank on Monday as the group announced a strategic review and the suspension of its dividend. The group said it would shift focus to regional building, infrastructure, utilities and highways by selling or exiting its non-core businesses such as Kier Living and environmental services. Shares in Kier Group were down over 14% in Monday afternoon, trading at a little over 110p. Shares in Kier Group have fallen from highs around 1,400p in 2017. The company now has a market capitalisation of just £183m, the lowest in the FTSE 350. The strategic review is the result of debt levels the group today said were ‘too high’ and low levels of cash generation accentuating the companies debts. Andrew Davies, Chief Executive of Kier, commented: “Since becoming Chief Executive on 15 April, I have visited many of our key locations and spent time with all of our businesses, meeting the leadership teams and many of our dedicated people in the process. I have also met with many of our clients. Kier has a number of high-quality, market-leading businesses, in particular Regional Building, Infrastructure, Utilities and Highways. I believe that these businesses will deliver long-term, sustainable revenues and margins and are inherently cash generative.” “As previously announced, I have been leading a strategic review which has resulted in the actions being announced today. These actions are focused on resetting the operational structure of Kier, simplifying the portfolio, and emphasising cash generation in order to structurally reduce debt. By making these changes, we will reinforce the foundations from which our core activities can flourish in the future, to the benefit of all of our stakeholders.” The problems that led to the collapse of Carillion will be fresh in the minds of investors and there are significant similarities with the problems Kier Group are facing. Kier Group will be aware of this and have taken drastic steps to reduce head count by 1,200 – whether this provides a base to rebuild is to some extent out of Kier’s hands and will ultimately depend on government contracts.

The FTSE 100 has retreated further from 6 -week highs made earlier this week as tensions in the Gulf of Oman and poor Chinese data hits UK stocks. The FTSE 100 was down as much as 0.57% in early trade on Friday to 7327 as investors pondered the consequences of explosion on a number of oil tankers in recent weeks and whether it could lead to military confrontation between Iran and the United States. Iran has strenuously denied suggestions from the United States that they were involved in the explosions and have said they felt were being framed. There has so far been no solid evidence as to the parties involved in the explosions or the cause. Sentiment was further soured by a raft of Chinese data that suggested the US/Sino trade war was having a negative impact on the world’s second largest economy. “The Chinese data overnight was not good, the country clearly feeling the trade war pinch. Fixed asset investment fell from 6.1% to 5.6%, its worst level in 7 months, while industrial production dropped to 5.0% for the first time in 17 years. Only the retail sales reading avoided a precipitous decline, instead unexpectedly jumping from 7.2% to 8.6%,” said Connor Campbell, Financial Analyst at Spreadex. Chinese GDP growth has fallen to 6.4% and the measures imposed by the Trump administration are being blamed on slowdown which could have far reaching implications for the global economy and the globally focussed FTSE 100. In individual stock news, Autotrader fell 2.6% as it broke key technical levels following a strong 2019 which has seen shares rally from 429p to highs of 605p. The group recently report final results which revealed an 8% increase in revenue to £355.1 million. Profit before tax rose 15% in a strong year that has seen Autotrader enter the FTSE 100 index. The top riser was precious metals miner Fresnillo whose perceived safe haven characteristics has won favour of traders seeking an outlet in the face of geo-political tensions.    

Iofina announced it is set to explore producing and developing CBD oil and other hemp-based products on Thursday. The company said it had received conditional approval for its Hemp Processor/Handler License Application from the Kentucky Department of Agriculture. The will allow the company to explore the production of cannabidiol based products as part of its newly created IofinaEX subsidiary. Explaining the decision to move into the cannabis market, Iofina cited The 2018 Agriculture Improvement Act, which legalised the cultivation of hemp at a federal level. President and CEO Dr. Tom Becker commented: ‘‘The Directors are determined to explore the isolation of CBD oil and other valuable products from hemp, a market which is currently under developed but rapidly growing. Iofina’s expertise in speciality chemicals makes the new venture a suitable addition to the Iofina Group.

PwC has been fined £4.55 million over the conduct of its audit of Redcentric. PwC was dealt the fine by The Financial Reporting Council (FRC), the UK’s audit regulator. The FRC had initially fined the auditor £6.5 million, however it was reduced after PwC publicly apologised for its mistakes. The council also imposed sanctions against two partners, Jaskamal Sarai and Arif Ahmad, in relation to an audit conducted between March 2015 and March 2016. Both individuals were fined £140,000 pounds each. Claudia Mortimore, Deputy Executive Counsel to the FRC, said in a statement: “The sanctions reflect the seriousness and extent of the breaches. Professional scepticism was lacking in this audit. Had it been applied, it is likely that certain material misstatements would have been detected. As this is the second Final Decision Notice involving PwC Leeds’ office in recent years, we have mandated that the firm supplements its ongoing monitoring and support for that office, to further improve the quality of audit work in the future.” A PwC spokesperson added: ‘We are sorry that our work fell below the professional standards expected of us. Since the work in question was completed, we have taken numerous steps to strengthen processes. In addition, this month we announced an additional £30m investment annually as part of a new wide-ranging action plan to provide greater focus on the quality and public interest responsibilities of PwC’s statutory audit services. Accountancy firms such Deloitte, KPMG, EY and PwC are under pressure amid calls for reform in the industry. MPs have called for the so-called ‘Big Four’ to be broken up to lessen their “stranglehold” on the industry.

Tesco (LON:TSCO) reported a slowdown in sales growth in the first quarter in a trading update on Thursday. The UK’s largest supermarket said that like-for-like sales increased 0.4% year-on-year in three month period until 25 May. This marked a slowdown from 1.7% reported for the previous quarter. Meanwhile, total sales slipped by 0.4%, impacted by the closure Tesco Direct last year. Nevertheless, the supermarket said that this proved ahead of the UK market. Chief Executive Dave Lewis, commented on the results: “We have had a strong start to the year, growing ahead of the UK market on both a volume and value basis. Our customer offer is more competitive than ever, with a wider choice of our ‘Exclusively at Tesco’ products now available in more stores, helping to drive more than 10% sales growth across the range.” In recent years Tesco has faced intensified competition from rivals such as Lidl and Aldi, both of whom have continued to grow market share. On Wednesday, Lidl announced plans to further expand into London, opening a further 40 stores. The move could prove a blow to the various Tesco Express locations in the capital. Last year, Tesco unveiled a new discount store, Jack’s, with the aim of taking on the growing popularity of Lidl and Aldi. Shares in the supermarket are currently down -0.53% as of 12:24PM (GMT).  

Arcadia avoided collapsing into administration this week after landlords and creditors voted in favour of Sir Philip Green’s rescue plan. The restructuring deal will see Arcadia close 48 stores, costing thousands of jobs. It will also mean rents for its locations will be cut by as much as 70%. However, this aspect of the deal proved the most controversial, with landlords such as Intu, the owner of various shopping centres, opposing the company voluntary arrangement (CVA). Intu said: “We firmly believe that the terms . . . are unfair to our full-rent-paying tenants and not in the interests of any of our other stakeholders.” Arcadia owns various retail brands such as Topshop, Burton, Miss Selfridge and Dorothy Perkins. The retail giant has been struggling to compete amid an increasingly saturated market and the rise of online competitors such as Asos (LON:ASC), Boohoo and PrettyLittleThing (LON:BOO). Whilst Topshop has continued to attract shoppers, some of its other brands such as Dorothy Perkins and Wallis have lost relevance among its target market. Sales fell by 16.6% year on year in the three months to 18 November 2018, and in 2017, the group posted a £10.9 million loss. Meanwhile, its chairman Sir Philip Green has been under intense scrutiny amid a series of controversies, in particular the company’s handling of the closure of BHS. Sir Green came under fire after the collapse of BHS led to a pension deficit estimated at £571 million, with many calling for his knighthood to be removed. Rt Hon Frank Field MP, Chair of the Work and Pensions Committee, commented on the landlord’s decision: “Now that, thankfully, Arcadia’s life has been extended, the Committee will try to ensure that the Pensions Regulator gets an effective programme in place to ensure that Arcadia staff receive in full the pensions that Sir Philip and Lady Green have promised them.”