Daily Mail - 06.09.2019

Daily Mail, Friday, September 6, 2019

BODEN’S BOSS

QUITS WITH

WARNING

OVER PROFITS

T

HE ‘improve’ phase of Mel-

rose’s ownership of GKN is

going jolly well. Not quite

so well for the 200 employ-

ees at the company’s Kings

Norton aerospace plant in Birming-

ham who lost their jobs in April.
Or the 1,000 aerospace workers who
learned earlier this week that they are
facing the axe as chief executive Simon
Peckham and his team seek to ramp up
margins and bonus payments.
It was always the case that after problems
with the Pentagon were resolved, GKN aer-
ospace was going to be the jewel in the
crown. The 7pc upsurge in sales in the first
half of this year should not come as a
surprise. The car division is more tricky,
given the deep-seated ructions in the global
industry. But as GKN pointed out during
the takeover battle of last year, the focus on
developing the eDrive for electric cars
would eventually come good.
Melrose is prevented from moving to the
‘sell’ phase for aerospace for at least five
years. The bigger concern for the UK is that
R&D and manufacturing skills in the
broader aerospace sector might be lost for-
ever while the eyes of government are
diverted by Brexit.
The group is a vital supplier of parts for

the Typhoon fighter as well as Airbus. The

danger of losing control of vital technologies

has been underlined by the decision of the

board of flight refuelling champion Cobham

to sell itself to private equity outfit Advent.

The shameful way in which the board

capitulated without conducting a proper

process is an affront to governance.

It is among the reasons why people find

the interventionist Jeremy Corbyn approach

to vital British industries alluring.

If Cobham can be swallowed so easily, how

long will it be before the next chancers try

their arm at Meggitt?

If that happens, the UK will be left with

two aerospace leaders, BAe and Rolls-

Royce, and a supply chain dominated by

short-termist, financially-driven owners

more interested in turning a quick profit

than the country’s industrial future.

Anyone seeking to understand Melrose

results must navigate through a forest of

accounting jargon. In spite of all the bril-

liant improvements at GKN, the company

made a loss before taxes of £128m in the

first half of the year. But after directors

waved a magic wand, deploying opaque

acquisition accounting, this turned into an

‘adjusted’ profit of £429m sharply up on the

previous year.

Investors were delighted and, amid gloom

elsewhere, marked the shares up nearly 8pc.

For the sake of British engineering, it is to

be hoped that the bulls have this one right.

Free money

PAyMENT protection insurance (PPI) is

the scandal that keeps on giving.

Hard on the heels of the confession from

Royal Bank of Scotland that it is setting

aside a further £900m comes challenger

bank CyBG, which has revealed that PPI is

going to cost it a further £300m to £450m.

We are so used to impairments at RBS

that another hit doesn’t seem that impor-

tant. It is embarrassing for outgoing chief

executive Ross McEwan, who only a few

weeks ago was signalling that the long leg-

acy of the crisis was over and safe for him to

retreat to a new job Down Under. The prob-

lem is more serious for CyBG, which moved

up the banking league table when it merged

with Virgin Money.

The dividend is in the firing line, which

explains the 20pc plunge in the shares.

Bank investors must now brace themselves

for PPI market leader Lloyds Bank and oth-

ers to come clean.

Weaker players such as privately-owned

Co-op Bank and Spanish-controlled TSB,

still reeling from IT failures, can ill-afford

setbacks.

PPI has been the banking system’s own

quantitative easing scheme, gifting more

than £50bn to customers.

At the peak of payouts, one City firm

attributed the boom in the new car market

to the arrival of unexpected cash sums

which funded deposits. Faced with plung-

ing sales, hard-pressed car makers will be

praying for more of the same.

Uncaring sharing

THE We Company, owner of hipster office

sharing group We Work, had been set for a

£40bn float in New york.

But exposure of governance problems,

including the founder Adam Neumann’s

personal stake in some of the leases, have

made investors queasy and the valuation is

being slashed to just £17bn.

What’s a few billion among friends?

Selling aerospace short

Alex

Brummer

CITY EDITOR

Online boom

drives Boohoo

to £1bn in sales

BOOHOO will rake in more

than £1bn sales for the first

time this year as it contin-

ues to cash in on the boom

in online shopping.

Shares in the internet-only

fashion business surged 15pc,

or 36.7p, to 280p – a record

high – last night after it said

full-year sales will be higher

than expected.

The company expects sales

to grow by 33pc to 38pc this

year, compared with 25pc to

30pc previously forecast.

It means Boohoo is likely to

post sales of as much as £1.2bn,

up from £856.9m in 2018.

Neil Wilson, chief market ana-

lyst at online trading platform

Markets.com, said: ‘Boohoo

continues to defy the broader

gloom on the High Street

thanks to its appeal among

younger shoppers, its tight mar-

keting and laser focus around

celebrities and social media.

‘There are doubts though

about whether it can maintain

margins as well as this rapid

sales growth, but for now it’s

one of the top performers.’

Boohoo was founded in Man-

chester in 2006 by Mahmud

Kamani, 55, and Carol Kane,

52 (pictured). The pair stepped

back from the day-to-day run-

ning of the retailer last year,

with former Primark executive

John Lyttle taking the reins.

Since listing on junior mar-

ket AIM in 2014, Boohoo’s

share price has rocketed as

fashion conscious millennials

flock to its website for cheap

dresses and jumpsuits.

It has embarked on a buying

spree, snapping up smaller

rivals such as Pretty Little

Thing and Nasty Gal.

The company is worth

£3.3bn, making it more

valuable than main

rival Asos which is

worth £2bn. Boohoo

is also closing in on

traditional clothes

retailer Marks &

Spencer, which is

worth £3.8bn. And

following its

huge success

among younger

customers,

Boohoo wants

to target older

female shoppers that M&S has

long courted.

Last month it paid £18.2m for

Karen Millen and Coast’s online

business after the fashion

chains fell into administration.

Kamani and his family are

now worth £2.7bn, while Kane

has built a personal fortune

totalling £141m, according to

The Sunday Times Rich List.

Meanwhile, Boohoo has ben-

efited as shoppers shun the

High Street and go online

instead. Critics have raised

concerns Boohoo may not be

able to maintain such rapid

growth. But Russ Mould,

investment director at AJ

Bell, said its success was

likely to continue for

some time.

He said: ‘The company

is clearly on a roll.’

■ Property landlord

British Land has

mounted a legal bid

against retailer

Monsoon Accesso-

rize’s rescue

package, which

involves rent

cuts, according

to Sky News.

by Hannah Uttley

Tesla’s UK best-seller

TESLA’s electric-powered
Model 3 has become one of
the UK’s best-selling cars.
The £36,500 Model 3 was
the third biggest-selling car
in August, behind only the
Ford Fiesta and the VW
Golf, according to the Soci-
ety of Motor Manufacturers
and Traders (SMMT).
The surge in Tesla sales is
thought to have followed a
big delivery of the vehicles

from America to drivers

who had reserved them,

with experts describing it

as an ‘abnormal blip’. How-

ever it is thought around

2,000 were registered dur-

ing the month.

Demand for cars generally

fell 1.6pc. Some 92,573 new

cars were registered in

August compared with 94,094

during the same month

in 2018, the SMMT said.

TROUBLED Dixons Carphone

has suffered an investor

revolt over fat-cat pay.

Almost a quarter of

shareholders voted

against the remuneration

report at the annual meet-

ing on Thursday.

A controversial share-

based incentive award

handed to chief executive

Alex Baldock has caused

anger. The 48-year-old has

presided over a near 40pc

fall in the share price since

joining in April 2018. But he

was granted almost 1.2m

shares with a face value of

£2.3m earlier this year as

part of the group’s long-

term incentive plan.

Dixons Carphone said it

would consult with share-

holders over the awards.

MPs want a public inquiry

into claims the Treasury

botched payouts to victims of

the Equitable Life scandal.

The near collapse of the

pension company in 2000

left thousands facing a

bruising fight for compen-

sation – and many have died

before receiving redress.

The Government set up a

scheme for victims of the

scandal in 2010 after an

ombudsman report found

evidence of ‘maladministra-

tion’ by regulators from

1992 to 2000.

Campaigners say the

Treasury, which runs the

scheme, made mistakes

which left some thousands

of pounds out of pocket.

MPs David Davis, Dame

Margaret Hodge and Sir

Edward Leigh have backed

calls for an inquiry.

Dixons Carphone revolt Equitable Life inquiry

Page 73

BODEN’S boss is leaving the retailer

after warning profits will take a hit

this year.

The clothes seller, which is popu-

lar among middle-class families,

has no plans to replace Jill

Easterbrook.

Instead, executive chairman

Julian Granville and finance chief

Paul O’Leary will run the busi-

ness. O’Leary will be promoted

to chief operating officer as

part of the shake-up.

Easterbrook, 48, joined Boden

in February 2017 and will depart

at the end of this year. Before join-

ing the retailer, she spent 15 years

at Tesco. She told Boden board

members she no longer wants to

work in an executive position and

plans to focus on building her non-

executive career.

She warned that profits at Boden

would take a hit this year as it con-

tinued to invest in the business.

‘We have felt the impact of ongo-

ing consumer uncertainty. This

environment and our continued

investment is likely to have a

negative impact on profitability

this year,’ she said.

Boden posted a 10pc jump

in sales to £383m during 2018.

Profits climbed from £27m in 2017

to £30m.