42 1GM Tuesday September 15 2020 | the times
BusinessMarkets
news in brief
Airbus men charged
A former executive at an Airbus
subsidiary has appeared in court
accused of corruption over a
£2 billion contract with the Saudi
Arabian military. Jeffrey Cook,
64, is the former boss of GPT
Special Project Management.
GPT and John Mason, 77, a
finance officer, are charged with
the same offences. Mr Cook also
faces a charge of misconduct in
public office at the Ministry of
Defence. Terence Dorothy, 79, of
Dartford, Kent, has been charged
with aiding and abetting him. The
three appeared at Westminster
magistrates’ court via video link
on Monday and granted bail with
the condition that they notify the
court of any change of address or
any overseas travel. The case was
sent to Southwark crown court
for a hearing on October 12.Bank QE buy delayed
The Bank of England had to delay
a quantitative easing gilt purchase
of £1.5 billion because of technical
problems at the Crest financial
markets system. A spokesman said
the Bank chose to postpone the
purchase to Thursday “as a
precaution”. A separate £4.5 billion
gilt purchase is due to be
completed today if Crest’s system
is operational. Euroclear, which
owns Crest, said a full service had
resumed late yesterday afternoon.Burford eyes NYSE
Burford Capital is pressing ahead
with plans to trade its shares on
the New York Stock Exchange as
well as Aim. The litigation funder
said it had secured approval for
its shares to be listed in the US
and was waiting on permission
from the Securities and Exchange
Commission. Last August Muddy
Waters, a short-seller, made
allegations about the firm’s
accounting. Burford has denied
all of the claims.Domino’s effect
Domino’s Pizza is to create 5,000
new jobs and more than 1,000
work placements. The pizza
delivery group said the new roles
included pizza makers, customer
service workers and delivery
drivers. The positions are on top
of the 6,000 jobs created by the
company since the start of the
pandemic. Under the
government’s Kickstart scheme it
will create more than 1,000
placements for young people.solid returns, with an average of
15.6 per cent annual growth since
they took over. The aim is to pick the
best of UK smaller and mid-cap
companies with a long-term view.
Mr Nimmo, 63, states that the
principles of “risk-aversion,
resilience, growth and momentum”
have not changed and that the
pandemic may actually accelerate
trends beneficial for smaller
companies. However, “with the
potential for further spikes in Covid
outbreaks, a vaccine some way off
and a difficult negotiation on Brexit
ahead, the recovery may be
punctuated by setbacks”.
Digital businesses are a favourite,
with Kainos, the software developer,concern for some investors, perhaps,
but look a little deeper and the trust
has comfortably outperformed its
benchmark — the Numis Smaller
Companies plus Aim index,
excluding investment companies —
in both periods. And having seen the
value of its portfolio dive by close to
40 per cent in March, a net asset
value total return of -0.5 per cent
over the full year to the end of June
underlines the recovery in equities
post-lockdown.
Harry Nimmo has run the trust
since 2003 and oversaw an
expansion in 2018, when it was
merged with Dunedin Smaller
Companies Investment Trust. He
and his team have a strong record ofT
he challenges that have faced
the Standard Life UK Smaller
Companies Trust in the past
couple of years are clear for all to see
(Greig Cameron writes). Its financial
year runs to June 30, so its 2019
results were affected by the sell-off in
stock markets near the end of 2018;
this year’s results, published last
week, took into account the initial
impact of Covid-19.
The resulting two years of negative
absolute returns could be a cause forTempus
Buy, sell or hold: today’s best share tips
No Blanc cheque, but worth a punt
T
he new boss of Aviva is
putting her money where
her mouth is (Ben Martin
writes). The FTSE 100
insurer disclosed yesterday
that Amanda Blanc, who said last
month that she believed “we have
many of the ingredients to make
Aviva a winner”, had bought
£1 million of shares in the company
in her first purchase since becoming
chief executive in July. Should
investors follow her lead?
Ms Blanc, 53, must build up a stake
worth 300 per cent of her £1 million
basic annual salary under the terms
of her employment. To this end, she
is required to hold on to half the
share awards she receives until she
reaches this target.
Her decision to use her own
money to buy stock in the market,
rather than using share-based
bonuses, will be taken as a sign of her
confidence in Aviva’s prospects. It
might cheer long-suffering
shareholders accustomed to years of
underperformance.
Aviva is Britain’s largest composite
insurer, selling life and general cover,
and was created two decades ago
through the merger of Norwich
Union and CGU. It has an army of
more than 500,000 small investors
and serves 33 million customers.
Ms Blanc succeeded Maurice
Tulloch, who stepped down afteronly 16 months as chief executive
because of an illness in his family.
His short tenure was dogged by
shareholder frustration over a lack of
growth. Mark Wilson, who was Mr
Tulloch’s predecessor, was ousted
two years ago. He had taken the
helm in 2013 and successfully
restructured Aviva, but he left after
his overhaul faltered and Aviva’s
share price languished.
Some shareholders had hopedthat Mr Tulloch would boost value
by breaking up the business and
were disappointed when his plans
fell short. Ms Blanc, however, has
signalled that she is prepared to
take big steps to revive Aviva’s
fortunes.
The insurance industry veteran
said at Aviva’s half-year results last
month that the group would
concentrate on its businesses in
Britain, Ireland and Canada. While
she rejected the idea of breaking up
Aviva’s UK life and general divisions,
her approach suggests that its
interests in France, Italy, Poland and
Turkey could be sold off.
Ms Blanc has wasted little time in
getting started. On Friday, AvivaShow of confidence
Source: RefinitivH1 2020 H1 2019
£1.23bn
£1.39bn
Operating profit
£323m
£202m
Value of new business at UK life division
Solvency II ratio at June 30
194%
Solvency II ratio at December 31
206%
2016 17 18 19 200
100
200
300
400
500
600p
announced that it had struck a
£1.6 billion deal to sell a majority
shareholding in its Singapore
business. City analysts expect other
deals to follow and believe that they
could raise more than £6 billion,
some of which might be returned to
shareholders.
Still, there are obstacles ahead.
Like other insurers, Aviva has
suffered in the Covid-19 pandemic.
Its first-half operating profits fell by
12 per cent to £1.2 billion after it set
aside £165 million for claims linked to
the outbreak.
However, Aviva’s profits were
slightly better than expected and the
group was buoyed by a robust
performance in Britain, where the
value of new business at its life
division climbed to £323 million from
£202 million a year earlier.
Its Solvency II ratio stood at
194 per cent at June 30. A ratio over
100 per cent shows that an insurer
has enough capital even if it is hit by
a rare financial shock.
It also resumed dividends, with a
6p-a-share interim payout for last
year. It withdrew its final dividend
for 2019 in April amid regulatory
pressure to conserve cash during the
pandemic.
Aviva’s share price stood at 273½p
before Ms Blanc’s appointment and
has risen 10 per cent since then to
close at 302p last night.
Tempus recommended buying
Aviva in November, when its shares
changed hands for about 400p. They
have since been knocked by Covid-19
but remain a “buy”.ADVICE Buy
WHY New chief’s turnaround
should buoy the share price
Gamma Communications, a
telecoms company, and Future, the
magazine and online publisher,
among its biggest holdings.
The 7.7p dividend was flat year-on-
year, with the trust dipping into its
revenue reserves to maintain it at
that level. The shares entered 2020
at more than 630p, but halved to
314p in March. A recovery since then
means that the shares are now
changing hands for about 540p.ADVICE Hold
WHY Growth potential for
patient investors
aviva
Market cap
£11.9bnPrice/earnings
ratio 5.5standard life uk smaller
companies trustTotal assets
£565m (July 31)Dividend 7.7p
(year to June 30)Commodities
ICIS pricing (London 7.30pm)Crude Oils ($/barrel FOB)Brent Physical 38.59 +0.06
BFOE(Nov) 39.71 -0.46
BFOE(Dec) 40.36 -0.57
WTI(Nov) 37.53 -0.31
WTI(Dec) 37.90 -0.47Products ($/MT)Spot CIF NW Europe (prompt delivery)Premium Unld 325.00 326.00 -4.00
Gasoil EEC 318.75 320.75 -4.25
3.5 Fuel Oil 214.00 215.00 -2.00
Naphtha 345.00 347.00 -5.00ICE FuturesGas OilOct 321.00-320.75 Jan 336.75-336.50
Nov 327.50-327.25 Feb unq
Dec 331.50-331.25 Volume: 590827Brent (9.00pm)Nov 39.63-39.62 Feb unq
Dec 40.30-40.29 Feb unq
Jan 40.89-40.87 Volume: 1596553LIFFECocoaSep 1752-1603 Dec unq
Dec 1807-1805 Mar unq
Mar unq May unq
May unq
Jul unq
Sep unq Volume: 68214RobustaCoffeeSep 1531-1472 May unq
Nov 1385-1384 Jul unq
Jan 1402-1398
Mar unq Volume: 21024White Sugar (FOB)Reuters May unq
Aug unq
Oct 353.70-349.20 Oct unq
Dec 348.00-347.70 Dec unq
Mar unq Volume: 47582PRICES
Major indices
New York
Dow Jones 27993.33 (+327.69)
Nasdaq Composite 11056.65 (+203.11)
S&P 500 3383.54 (+42.57)
Tokyo
Nikkei 225 23559.30 (+152.81)
Hong Kong
Hang Seng 24640.28 (+136.97)
Amsterdam
AEX Index 552.44 (+0.43)
Sydney
AO 6078.50 (+39.60)
Frankfurt
DAX 13193.66 (-9.18)
Singapore
Straits 2482.55 (-7.54)
Brussels
BEL20 3353.62 (+2.38)
Paris
CAC-40 5051.88 (+17.74)
Zurich
SMI Index 10457.43 (+17.91)
DJ Euro Stoxx 50 3316.79 (+0.98)London
FTSE 100 6026.25 (-5.84)
FTSE 250 17677.26 (+121.39)
FTSE 350 3401.69 (+1.33)
FTSE Eurotop 100 2704.18 (+0.97)
FTSE All-Shares 3367.56 (+1.66)
FTSE Non Financials 4116.74 (-1.59)
techMARK 100 5791.73 (+45.32)
Bargains n/a
US$ 1.2856 (+0.0051)
Euro 1.0837 (+0.0025)
£:SDR 0.98 (+0.00)
Exchange Index 76.06 (-0.34)
Bank of England official close (4pm)
CPI 109.07 Jul (2015 = 100)
RPI 294.20 Jul (Jan 1987 = 100)
RPIX 290.10 Jun (Jan 1987 = 100)
Morningstar Long Commodity 484.06 (+0.57)
Morningstar Long/Short Commod3804.44 (-20.70)London Financial Futures
Period Open High Low Sett Vol Open Int
Long Gilt Sep 20 137.59 137.61 137.40 137.33 2109 22582
Dec 20 136.72 136.86 136.31 136.40 147906 518205
3-Mth Sterling Sep 20 99.940 99.945 99.935 99.940 26405 376843
Dec 20 99.940 99.945 99.935 99.940 53310 587056
Mar 21
Jun 21
Sep 21
3-Mth Euribor Sep 20 100.49 100.49 100.48 100.48 4912 462700
Dec 20 100.49 100.50 100.48 100.49 113992 497612
Mar 21
Jun 21
Sep 21
3-Mth Euroswiss Sep 20 100.75 100.75 100.75 100.74 257 39209
Dec 20 100.76 100.76 100.75 100.76 1583 39196
Mar 21
Jun 21
FTSE100 Sep 20 6070.5 6082.0 6011.0 6034.0 413501 698483
Dec 20 6031.5 6051.5 5980.0 6003.5 351321 100210
FTSEurofirst 80 Sep 20 4504.5
Dec 20 4499.0© 2019 Tradeweb Markets LLC. All rights reserved.
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