(^) Daily Mail, Thursday, August 1, 2019
City Editor: Alex Brummer http://www.thisismoney.co.uk Business Editor: Ruth Sunderland
City Finance
£35.7 billion
compensation paid
by banks to victims
of PPI mis-selling
£3.2bn car crash
at Aston Martin
US stocks fall
after rate cut
US interest rates have been cut for
the first time in over a decade as
the Federal Reserve battles to
shore up the economy.
Rates were cut by 0.25 percentage
points, with the Fed now targeting
a rate of 2pc to 2.25pc.
It was the first reduction since the
financial crisis in 2008.
The Fed said it had acted as the
US economy is buffeted by a global
slowdown and a trade crackdown
under President Donald Trump.
It also hinted a further cut could
come later in the year and said it
will ‘act as appropriate to sustain
the expansion’.
It follows a series of hikes which
began in late 2016 and continued as
Trump’s election and tax cuts kick-
started a boom.
The cut is likely to please Trump,
who had accused the Fed of dam-
aging economic growth by
raising rates too quickly.
Trump even threatened to
sack the central bank’s chair-
man Jerome Powell, saying
last month: ‘I don’t think
he’s done a good job.’
The cut is likely to boost
stock markets over the medium
term in the US, as shares typically
perform better in a lower-rate
environment.
BAE dividend
and profits rise
BRITISH defence giant BAE Systems
revealed a 36pc rise in profits and
hiked the dividend.
The maker of Typhoon fighter
jets, combat vehicles and Astute
Class nuclear submarines said
earnings rose to £776m in the six
months to June 30, compared to
£571m the previous year.
It announced it was increasing
the half-year dividend from 9p to
9.4p per share and forecast ‘mid-
single digit’ growth in full-year
profits – meaning another divi-
dend increase could follow.
Revenues rose from £8.1bn to
£8.7bn over the same period.
Boss Charles Woodburn said: ‘The
first-half performance underpins
our guidance for the full year with
improvements being made on a
number of operational fronts.
‘Our priority is to deliver consist-
ent and strong operational per-
formance for our customers and
shareholders to enable us to meet
our growth expectations over the
medium term.’
BAE said it had an order backlog
of £47.4bn, up from £39.7bn at the
same time last year. Shares rose
1.1pc, or 6p, to 548.6p yesterday.
Shares shaken
and stirred after
disastrous float
by Matt Oliver
ASTON Martin shares
sunk to fresh lows after a
£79m loss.
The company – whose cars
are featured in a string of
James Bond films (including
1964’s Goldfinger, starring
Sean Connery, pictured) – said
first half sales were hit by a
slump in demand across the
UK and Europe.
The bleak update sent the stock
tumbling 12.3pc, or 70p, to 498p,
bringing investors’ total losses to
74pc since the company’s float at
1900p a share last autumn.
The slump has slashed Aston
Martin’s value from £4.3bn when
it joined the stock market to
just £1.1bn.
It was another blow to the 106-
year-old group a week after it
issued a profit warning and said
it was cutting back production.
Boss Andy Palmer admitted the
firm was going through a ‘difficult
period’ but insisted it would stick
to its current plans.
But the gloomy results piled
further pressure on the chief
executive as speculation grew
that he would need to tap inves-
tors for money to prop up the
company’s finances.
Palmer, 56, acknowledged the
sharp reaction from investors but
insisted: ‘I’m confident that we
are taking the right actions.’
Aston Martin reported a loss of
£78.8m for the six months to June
30, compared to a £20.8m profit
over the same period in 2018.
Sales fell from £424.9m to
£407.1m. The company shifted
2,442 vehicles during the first
half, up from 2,299 last year.
But a higher proportion of these
were £121,000 Vantages and
£225,000 DBS Superleggeras,
with fewer so-called ‘specials’
such as the £2m Valkyrie sold.
That brought the average sell-
ing price of Aston Martin’s cars in
the period down from £167,000
to £145,000.
The malaise is likely to bring
tougher scrutiny of the company’s
‘Second Century’ plan under
Palmer, which will see it aim to
launch seven new cars in seven
years, and target major markets
such as the US and China.
It is banking on the success of
newer models such as the
upcoming DBX, its first SUV car,
and the £1m Valhalla, to help
boost sales.
Palmer said part of the decision
to cut back production was to
prevent too many vehicles being
sent out to dealerships – some-
thing which could encourage dis-
counting. The company now only
expects to sell 6,300 to 6,500 cars
this year, down from 7,100 to 7,300
it forecast in February.
It is also braced for further pain
in the event of a No Deal Brexit
on October 31.
Palmer said Aston Martin had
been planning extensively, for
example importing parts via mul-
tiple UK ports, and the firm could
now ‘live with’ that outcome.
‘The car industry in general is
pretty resilient once it knows
what it’s dealing with,’ he added.
The company has haemor-
rhaged more than £10m in value
daily since making its stock
market debut, raising further
questions about the decision to
go public.
Yesterday the Daily Mail
reported that shares sold by
Palmer during the float would
now be worth a fraction of the
£35.6m he made from them at
the time.
Palmer banked £6.6m of the
proceeds while the remaining
£29m went towards tax.
£4.3bn
Value at float in October
£1.1bn
Value now
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Guernsey stock market cuts Woodford ties
NEIL Woodford has been dealt another by Lucy White
blow as the Channel Islands stock exchange
moved to sever ties with the fund manager.
Woodford controversially listed stakes in
four privately-owned companies on Guern-
sey-based The International Stock
Exchange (TISE) earlier this year.
The highly unusual move was designed to
dodge rules aimed at protecting investors,
which state that only 10pc of a fund can be
invested in private companies.
But three of the companies – Industrial
Heat, Ombu and Benevolent AI – have now
left the exchange after they were told to
delist or face ejection. TISE wanted to wash
its hands of Woodford to protect its reputa-
tion after the fund manager stopped savers
withdrawing their cash from his flagship
Equity Income fund.
In a further blow for Woodford, the removal
of the three firms means that the Equity
Income fund has now breached the rules
that put a limit on unquoted stocks.
Woodford Investment Management said:
‘Following the inadvertent passive breach,
action to bring the fund back into compli-
ance is already underway.’ Woodford’s flag-
ship Equity Income fund was frozen in June,
locking savers’ money inside, as it became
unable to sell its assets fast enough to give
investors their money back.
Woodford expects the fund to remain sus-
pended until December, by which time the
firm will have bagged around £12m in fees
which it has refused to waive.
Woodford, 59, is also facing scrutiny from
the board of his separate Patient Capital
Trust, who may fire him as manager. A stake
in another of his companies, Ibiza property
business Sabina Estates, is still listed on
TISE. Woodford’s listing of the four raised
eyebrows because, although it appeared to
satisfy the rules on unquoted stocks by
putting them on a public exchange, it didn’t
make them easier to sell.
None of the stocks were traded in the
months that they were listed.
TISE suspended Industrial Heat, Benevo-
lent AI and Ombu from the Guernsey
exchange earlier this year, after media
reports suggested Woodford was exploring
a loophole in investor protection rules.
It also referred its worries to the Financial
Conduct Authority.
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jacob rumans
(Jacob Rumans)
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