Daill Mail - 08.08.2019

Daily Mail, Thursday, August 8, 2019

‘Standard Life

deal was right

despite £6.3bn

share plunge’

by Lucy White

Oil prices

sink to the

lowest in

7 months

OIL prices hit a seven-

month low amid fears over

Donald Trump’s trade war

with China.

Brent crude fell as much

as 5pc to $56 a barrel fol-

lowing a surprise rise in US

reserves and fears that

demand will shrink due to

Washington’s escalating

trade war with Beijing.

If the drop lasts, it should

boost drivers by cutting

prices at the pump.

It means the price of a

barrel is now at its lowest

level since January, and

down 25pc from April when

it peaked this year at $75.

Analysts blamed escalat-

ing tensions between the

US and China. The US

branded China a currency

manipulator this week,

claiming it had deliberately

devalued the yuan. Presi-

dent Donald Trump retali-

ated by slapping further

tariffs on Chinese goods.

Gene McGillian, vice-

president at consultancy

Tradition Energy, said:

‘The market continues to

trade lower on concerns

about demand growth and

the idea that economic

growth can be impacted by

the trade war.

‘The market isn’t con-

cerned about anything

other than how demand is

going to play out through

the rest of the year.’

DRINKS giant Diageo has snapped up

a major stake in non-alcoholic spirit

Seedlip amid booming demand for

alternatives to spirits.

Seedlip is the first non-alcoholic

brand to be acquired by the mega-

brewer, which owns labels such as

Guinness and Johnnie Walker.

The deal means a majority of the

firm is now owned by Diageo.

Seedlip was founded in 2015 by Ben

Branson. The drink is stocked in more

than 25 countries and is made using

ingredients such as peas, rosemary,

grapefruit, spice and ginger. More

than a fifth of adult Britons now say-

ing they do not drink.

Branson said: ‘We want to change

the way the world drinks and today’s

news is another big step forward to

achieving this.’

Seedlip was already backed by

Diageo’s investment programme Dis-

till Ventures, which became a minor-

ity shareholder in 2016.

÷ More than 76m bottles of gin were

sold in the UK in the year to March.

Exports were worth more than

£700m, the Wine & Spirit Trade Asso-

ciation said. Total sales were £3bn.

THE boss of Standard Life

Aberdeen has defended the

mega-merger which formed his

savings firm – even though

shares have since tumbled by

more than the value it paid for

Aberdeen Asset Management.

City veteran Keith Skeoch said

merging Standard Life and

Aberdeen (SLA) was still the

right decision. SLA has strug-

gled to stem a rush for the exits

by savers since the deal in 2017.

The stock has fallen 37pc since

the company was formed, wip-

ing £6.3bn off its value – more

than the £3.8bn which Aberdeen

was worth at the time.

Half-year results yesterday

revealed withdrawals from

SLA’s funds are continuing, with

£15.9bn taken out in the first six

months of the year.

Skeoch blamed cheap online

funds which seek to track the

market and compete with tradi-

tional stock pickers, who aim to

only buy the best-performing

shares and charge a premium

for their expertise.

He said: ‘The deal was strate-

gic, the decision was taken with

a three-year view. Our strategic

transformation is absolutely

about positioning us for long-

term growth, and I believe it’s

the right thing to do.’

Performance has improved,

with 65pc of assets under man-

agement now in funds which are

beating their competitors.

It comes after several years of

disappointing returns.

A rise in its funds boosted

SLA’s total portfolio size by 5pc

to £577.5bn. Even though its

shares have fallen since the

merger, SLA has still returned

just under £3bn to shareholders

over the two years through buy-

backs and dividends.

Skeoch promised to maintain

dividends for the foreseeable

future, holding the interim pay-

out steady at 7.3p per share.

He also unveiled a £200m share

buyback. The company made a

£280m profit, down from £11m

for the same period in 2018.

But, excluding a one-off boost

from selling part of its stake in

India’s HDFC Life, profits fell

short of expectations. Shares

fell 7.5pc, or 21.2p, to 260.6p.

2015

Seedlip was founded by

farmer Ben Branson

pictured, right

£28

Price of a 70cl bottle

of Seedlip, which

comes in three

flavours

300 Michelin

starred

restaurants

globally

serving

Seedlip

6 Number of

botanicals in each

bottle including

peas and

rosemary

£27m

Sales of non-

alcoholic wine and

spirits last year

21pc

Proportion of

British adults

who are

non-drinkers

DRINKS GIANT TAKES CONTROL

OF ALCOHOL-FREE SPIRIT FIRM

C

LIEnTS of Hargreaves

Lansdown will find it hard

to forgive the stockbroker,

irrespective of steps taken

to make amends for the

intimate relationship with

defrocked guru neil Woodford.

The top brass at Hargreaves, led by

chief executive Chris Hill, have mag-

nanimously agreed to waive bonuses

given that so many clients are badly

affected by the cavalier way in which

Woodford has looked after savings.

Hargreaves also was quick to suspend its

fees for handling Woodford funds when the

scandal broke.

But the loss of a year’s bonuses, worth a

potential £3.6m to Hill and finance chief

Philip Johnson, will not result in them end-

ing up in a Bristol poorhouse.

As for research chief Mark Dampier, he

happily will continue to landscape his gar-

den armed with the £6m he and his family

extracted in Hargreaves share sales shortly

before Woodford was forced to ‘gate’ the

flagship Equity Income fund.

How vulnerable Woodford’s pump and

dump investment choices are to shifts in

sentiment was demonstrated by the slump

in the shares of legal outfit Burford Capital,

which tanked 46pc after hedge fund Muddy

Waters ripped apart its model.

One of the hardest-to-forgive aspects of

the Woodford fiasco is what it has revealed

about cosy relationships between all the

parties. Clearly, Hargreaves should never

have encouraged as many as a quarter of its

investors to be exposed to Woodford funds.

nor should Patient Capital Trust, another

of the stock picker’s funds, tamely have

accepted a shameful cargo of unwanted

Equity Income holdings.

Why the board of Patient Capital has been

so slow to rid itself of Woodford in favour of

a more trustworthy manager speaks to a

feeble board run by a compliant chairman,

Susan Searle.

Under-pressure Burford’s biggest investor

is none other than Invesco, with 14pc. The

same toxic and cosy combination of Wood-

ford and Invesco, where the manager used

to work, received a bloody nose in the sum-

mer when a bid by Dad’s Army lender non-

Standard Finance for bigger rival Provident

Finance was called off in the face of regula-

tory opposition.

Hargreaves cannot escape opprobrium for

weak research, flaccid governance and

unfettered greed, which has helped deliver

profit margins in excess of 60pc.

The founders and executives of Har-

greaves joined the ranks of Britain’s richest

0.1pc of the population on the backs of

excessive fees charged to ordinary savers.

That is unforgivable.

Air time

IF YOU run an airline, the highest priorities

are safety of the fleet, expertise of the engi-

neers and the skill of the pilots.

As the business of making reservations

and buying tickets has moved online, carri-

ers’ IT has become ever more important.

Users of BA’s sites will know they can be

incredibly clunky and logging in, if you have

forgotten your password, can drive passen-

gers to distraction.

The latest IT glitch at London’s leading

airports, which saw 82 flights cancelled and

hundreds delayed, is unacceptable. This is

the third time in recent years that BA has

badly let down loyal customers.

In September last year hackers injected a

malicious code into a BA website, allowing

them to access vital financial details con-

tained in 380,000 transactions.

And it is not easily forgotten that in May

2017, the carrier came to a halt when an

engineer disconnected the power supply.

It is something to be proud of that IAG,

owner of BA, is among the most profitable

world airlines, earning £2bn last year with-

out the state subventions of Gulf carriers.

If BA, Iberia and the other IAG brands

want to endure, then shareholders must

recognise that investing in IT – so it is as

safe as planes – is as big a priority as the

next dividend payment.

Gin sling

THE idea of non-alcoholic spirit seems like

an oxymoron.

But Johnnie Walker giant Diageo had

enough faith in 2015 to provide venture cap-

ital to Ben Branson, who created gin tastea-

like Seedlip on his farm in the Chilterns.

The brand – at a hefty £28 a bottle – took

off, and is available in 25 countries.

Diageo boss Ivan Menezes is a fan and the

distiller has moved to fully capture the

growth by taking majority control. It is not

just HS2 that is stirring up the Chilterns.

Stockbroker sounds retreat

Alex

Brummer

CITY EDITOR

Earnings slump at Eon

GErMAn energy firm Eon

blamed the electricity price

cap as it lost 400,000 cus-

tomers and posted a 65pc

slump in UK earnings.

UK profits fell from around

£187m to almost £66m in

the first six months of the

year and total profits were

down 12pc to £1.6bn.

Customer numbers tum-

bled by 400,000 to 6.2m in

the first half but Eon said

that there was an increase

in July. Prices are set to fall

even further in October,

after the regulator Ofgem

confirmed it will lower price

caps to £1,179 per year.

Marc Spieker, chief

financial officer at Eon, said:

‘The market is currently

particularly challenging. We

have responded with attrac-

tive new products and clear

cost management.’

GAS mask maker Avon Rub-

ber has bucked Brexit

gloom to buy a US body

armour business.

Avon Rubber, which also

manufactures components

for milking machines, has

bought the unit from Min-

neapolis-based 3M as well

as the rights to a brand of

protective gear.

Avon will pay £75m

initially, along with a fur-

ther £21m depending on

further contracts.

It comes at a time when

the weak pound is making

UK firms sit on their hands.

Most recent deals have

involved US businesses

snapping up British firms.

The body armour unit

makes helmets and pro-

tective vests for the army.

THE UK’s biggest auditors

are ditching their most risky

and unprofitable clients

after a string of scandals.

KPMG, PwC, Deloitte and

EY – known as the ‘Big

Four’ – are reviewing cus-

tomers, amid growing scru-

tiny from regulators.

Smaller auditors Grant

Thornton and BDO are said

to be doing likewise. It fol-

lows high-profile

collapses of businesses such

as BHS and Carillion.

MPs have attacked audi-

tors for failing to sound

alerts and being too cosy

with bosses.

Beancounters also missed

a suspected fraud at cake

chain Patisserie Valerie, as

well as multi-million pound

black holes at supermar-

ket giant Tesco and the

Co-op Bank.

Avon’s body armour deal Auditors ditch clients

Page 71

ПОДГОТОВИЛА

ГРУППА

"What's News"

VK.COM/WSNWS