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TUESDAY 21 FEBRUARY 2023
CITYAM.COM
ISSUE 3,937
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CYBER FIRM READIES FOR BATTLE WITH SHORT-SELLER LOUIS GOSS BRITISH tech darling Darktrace has hired EY to review its finances in a bid to win back credibility after a shortseller questioned its accounts. Darktrace has recruited the Big Four auditor to carry out an independent review after New York investment fund Quintessential Capital Management cast doubt over the “validity” of the tech firm’s financial results. In a 70-page report, published last month, Quintessential said it was “deeply sceptical about the validity of Darktrace’s financial statements”. The New York short-seller raised concerns that Darktrace’s “sales, margins, and growth rates may be overstated” and warned the tech firm’s accounts contain “serious accounting red flags”. The investment fund alleged Darktrace may have used “phantom” customers to bolster
its sales as it raised concerns about the tech firm’s links to shadowy offshore companies. Darktrace later responded to Quintessential’s allegations, with company chief executive Poppy Gustafsson (pictured) saying the firm is run with the “greatest integrity”. Quintessential told City A.M. that it welcomed the review but said it would need to be of “sufficient granularity, scepticism and impartiality to provide insights about the dubious transactions” flagged in the report. Managing partner Gabriel Grego said: “What I say to your readers is do your own due diligence... We’ve always been validated one way or another.” Grego also took aim at the choice of EY to do the audit, with the accounting giant still bruised from its failure to notice fraud at the collapsed German payments outfit
Wirecard, which it audited for several years. “EY doesn’t have a great record in uncovering fraud,” said Grego. Markets and analysts however appeared to be more upbeat about the independent audit. Shares were up nearly 3 per cent at yesterday’s close. Analysts at Jefferies said: “Reviews of this nature take time but we see this as another sensible step towards putting quality of earnings issues to bed.” They added: “Management has handled recent newsflow extremely well” citing a “robust response” to the claims and a share buyback move. Darktrace chairman Gordon Hurst said: “The board believes fully in the robustness of Darktrace’s financial processes and controls.” “As a sign of that confidence, we have commissioned this independent thirdparty review by E&Y. We look forward to the outcome of this review,” he said. The review will not be completed in time for a trading update on 8 March.
BIDEN IN UKRAINE US President makes surprise stop-off in Kyiv JESSICA FRANK-KEYES US PRESIDENT Joe Biden made a surprise visit to Kyiv yesterday, in the week which will mark a year since Russia’s invasion of Ukraine. The President was filmed walking the city’s streets with Ukrainian President Volodymyr Zelensky. Biden and Zelensky visited the Wall of Remembrance of the Fallen for Ukraine while air raid sirens blared.
Zelensky posted a photo of the two men shaking hands in front of the US and Ukrainian flags on his Telegram account. He wrote: “Joseph Biden, welcome to Kyiv! Your visit is an extremely important sign of support for all Ukrainians.” The US revealed after the visit that it had informed the Kremlin of Biden’s visit in the hours beforehand for “deconfliction” purposes.
Human rights campaigners Brewdog sign China brewing accord LAURA MCGUIRE AND CITY A.M. REPORTERS BREWDOG, the self-styled ‘punk’ craft brewer, will soon manufacture its beers in China after a deal with Budweiserowned AB InBev. The joint venture will see the
Scottish brewer sell its most popular brands such as Punk IPA and Elvis Juice across the growing Chinese market, which will be manufactured at a Chinese Budweiser brewery. As part of the venture, Brewdog said it was also looking to open several new
hospitality venues in China by 2026, adding to its singular site in Shanghai. James Watt, founder of Brewdog, described the move as “genuinely transformational” as he claimed that he is looking to bring Brewdog to “every corner” of China.
The deal will raise eyebrows in the wake of Brewdog’s decision to criticise human rights abuses in Qatar just months ago, launching a highprofile advertising campaign on the subject. The Chinese government has also been accused of similar abuses, with
particular focus on the treatment of Uyghur Muslims in Xinjiang — which some international observers have described as ‘genocide.’ BrewDog operates across an international network of more than 110 bars, with two-dozen sites across London.
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