Aston Martin shares crash as it reveals £136m IPO costs

Aston Martin’s flotation is turning rapidly sour for the luxury carmaker after its shares crashed more than 20% as it revealed a £136m bill to secure its stock market listing pushed it to a £68m annual loss.

James Bond’s favourite car brand has lost £1.8bn in value – or 42% of its worth – since its stock market debut in October last year. The company’s under-pressure shares fell a further 21.4% on on Thursday to £10.80 after it revealed a loss for 2018, following a profit of £84.5m in 2017, with flotation costs of £136m weighing on the balance sheet.

Jordan Hiscott, chief trader at trading platform Ayondo Markets, said: “From an investor perspective, having IPO’d at £19 … it’s been an abject failure. This has been even more eye-watering for the company itself with the cost of £136m to gain its public listing.”

Aston Martin’s shares were immediately demoted to a “sell” by one City firm, which warned that investors in the Warwickshire-based carmaker faced a cash call from the company. “We can see a scenario where Aston Martin may need to return to investors for more capital to fund the business,” said James Congdon of Canaccord Genuity.

After the latest share slump Aston Martin’s stock market valuation fell to £2.5bn from £4.3bn on flotation. At the time of the IPO, its chief executive, Andy Palmer, said the company wouldn’t “worry about what the shares are doing initially” and would “look over the longer term”.

The 106-year-old company said flotation costs included £61m in long-term share incentives for management and other staff. Other costs included money to pay off shareholders and payment for those firms advising on the listing.

Revenues rose 25% to £1.1bn in 2018, while car sales – including the Rapide and Vanquish models – were better than expected, up 26% to 6,441. Aston Martin said its special editions were in high demand.

The company said it was setting aside £30m in readiness for no deal or a disorderly Brexit, including £2m for revised supply chain routes. It has hired a new supply chain chief, stockpiled five days’ worth of components and pallets to carry engines. The company has also made plans to bring in parts through naval ports if the Calais-Dover route gets clogged up, or will fly in components as a last resort.

Palmer said a delay to Brexit would be a “further annoyance”. MPs could vote on whether to delay Brexit on 14 March, a fortnight before the scheduled departure date of 29 March.

He added: “You’re holding that contingency stock for longer, which means that your working capital is tied up for longer. And continued uncertainty around Brexit means there is a propensity for EU and UK customers to delay purchases. I don’t think you’ll find a carmaker who wants this to go on any longer … I just want to get it over with.”

Laith Khalaf, a senior analyst at financial advisor Hargreaves Lansdown, said:

“Brexit casts a shadow, as it does for the rest of the UK car industry, and that may present some big road bumps in the immediate future if some sort of deal isn’t reached between the UK and the EU.”

The carmaker produced five new models last year: the Vantage and DBS Superleggera, along with special editions of the Vanquish Zagato sports cars and a remake of the DB4 GT Continuation, which won on its race debut at Silverstone in 1959 when driven by Stirling Moss. The average selling price per vehicle was £141,000.

Aston Martin will start the first production trial of the crossover model DBX, its first sports utility vehicle, at its new St Athan factory in south Wales between April and June, with full production starting early next year.

The site will also be the centre for battery electric vehicle production and the home of the Lagonda and the Rapide E – Aston Martin’s first all-electric production car – which is on track to start production this year.