Big housebuilders were mostly agreed last autumn: their sector had rebounded from the first national lockdown but more subsidies were needed to avoid a crunching slowdown this spring.
Would the chancellor like to extend his one-year stamp duty holiday on house purchases worth less than £500,000 in England and Northern Ireland? Or delay the post-March slimming of the help-to-buy scheme? If not, it was suggested, a cliff edge awaited.
It sounded unconvincing at the time because big housebuilders, even in good times, like to frighten chancellors into crowd-pleasing measures that usually end up fattening their own profit margins. But, with the passage of a few months, the pleas sound even limper.
Look at Tuesday’s update from Vistry Group, the former Bovis Homes. Sales in the last six weeks of 2020 were 20% higher than the previous year and there is no sign of looming slowdown after the stamp duty holiday expires at the end of March. Forward reservations for 2021 stand at healthy levels and prices are strong.
As for profits, Vistry will arrive at £140m-ish for 2020, a fall on 2019 but at the top end of expectations. And, since there has been “no impact” so far from the third lockdown, the company expects an increase in profits to £310m in 2021. Dividends are also coming back. Chief executive Greg Fitzgerald now says he is “less concerned” about the end of the stamp-duty holiday.
Rishi Sunak, let’s hope, will draw the obvious conclusion: Treasury support is best directed at those sectors that are genuinely suffering in lockdown – think hospitality and events. We won’t hold our breath but it would be nice if housebuilding’s lobbyists conceded it is time to step off the subsidy treadmill.
Moonpig float unlikely to fly at £1bn valuation
Moonpig, apparently, is on a journey “to transition into a holistic online gifting companion”. Let’s hope the copywriting in its greetings cards is less clunky. There is a clue there, though, as to how this flotation will be marketed. Prepare to be told that Moonpig doesn’t merely flog cards and flowers online but is, in fact, a whizzy technology company.
It is on that basis, one assumes, that private equity owner Exponent hopes Moonpig will be worth £1bn-plus. One can’t say pigs might fly because most online-only retailers tend to command lofty valuations. But, come on, this is hardly The Hut, a company whose cosmetics and nutrition products generate order sizes of rather more than Moonpig’s humble average of £7.10.
Moonpig is still a neat business – operating profits in the year to last April were £33m on revenues of £173m. But how does that add up to a £1bn valuation? Yes, lockdown has boosted trade since then, but it’s hard to know how many new punters will hang around when shops reopen.
Even if one assumes revenues of £300m in the current financial year, valuing Moonpig at more than three times as much looks a stretch. Kate Swann, former miracle-worker for shareholders at WH Smith, is a welcome presence in the chair, but her old shop runs a direct competitor called Funky Pigeon, so this is not one of those winner-takes-all online tales. Nice business, wrong price.
Business should back Autonomy founder Mike Lynch
The UK’s extradition treaty with the US is shockingly unbalanced, almost everyone on this side of the Atlantic agrees. It is only slightly less shocking that the British business establishment has been so slow to offer support to Mike Lynch, the former Autonomy software founder who could be hauled over there to face charges arising out of a dispute with US firm Hewlett-Packard.
Remember that allegations of improper accounting at Autonomy were investigated by the UK Serious Fraud Office, which decided there was insufficient evidence to bring charges. Yet the US Department of Justice continues its pursuit of Lynch, even though Autonomy was a UK company and was bought under UK takeover rules in 2011. An extradition hearing is set for next month.
So well done Marcus Agius, Sir John Rose, Brent Hoberman and Davie Robbie – four senior British figures who signed a letter to the Times, alongside five former cabinet ministers and other MPs and peers, pointing out what’s at stake. In short: “Any British businessman or woman who finds themselves at odds with a powerful US company could face the same fate.”
Lynch, a spiky individual, was never a popular figure on the UK corporate scene. But that ought to be irrelevant. British business should recognise his cause is important – and say so.