The Times - UK (2021-11-10)

the times | Wednesday November 10 2021 41

Business

The end of the stamp duty holiday,
changes to the Help to Buy scheme and
rising costs appear to have done little to
dampen demand for homes built by two
of Britain’s biggest listed developers.
Persimmon and Vistry Group pub-
lished upbeat trading updates yesterday,
with each saying that customer interest
was rising and that profit margins,
despite cost pressures, were healthy.
The number of people reserving
homes at Persimmon’s sites over the
past four months was said to be up 16 per
cent on the same period of 2019, while
Vistry said that more homes were being
reserved each week than at this time last
year, when the market — fuelled by the
stamp duty holiday and lockdown
savings — was booming.
Persimmon expects to build about
15,000 homes this year. The FTSE 100
company said that 92 per cent of its cus-
tomers were satisfied with the houses
they had bought, in contrast with the
situation a couple of years ago when the
company was under scrutiny over the
quality of its homes.
Vistry, a FTSE 250 group formed at
the beginning of last year by the combi-
nation of Bovis Homes and Galliford
Try’s housebuilding division, is on track
to build 11,000 houses this year and it
expects to report an annual pre-tax
profit of £345 million.
The industry has been battling rising
costs for more than a year. A post-lock-
down surge in demand for building
materials meant that items such as
timber, plaster and steel were more
expensive. Vistry expects price pres-
sure on materials to fall, but believes
that labour, with tradesmen such as
bricklayers and carpenters in high
demand, will remain expensive.
Both developers expect build cost
inflation to remain about 5 per cent

A new contract with a key customer
and shareholder in the United Arab
Emirates has prompted Oxford Nano-
pore Technologies to raise its revenue
guidance for a second time since its
£3.4 billion float in September.
The gene sequencing company will
provide devices and other support
services worth about $68 million under
the 36-month contract with G42
Laboratory, part of G42, an artificial
intelligence specialist based in Abu
Dhabi.
G42 is one of Oxford Nanopore’s
largest shareholders with a stake of
5.4 per cent, according to Refinitiv, the
data firm. It is also one of the company’s
leading customers, accounting for most
of the 17.5 per cent, or £10.3 million, of
group revenues generated in the region
in the first half of the year.
The contract to help to set up a large-
scale, state-backed human genomics
programme had been due to expire this
year, but Oxford Nanopore said in its
prospectus before its initial public

offering that it was in talks with G42,

which had said that the department of

health aimed to sequence the UAE’s

“founder” population of about 1.1 mil-

lion people. Oxford Nanopore said that

the project aimed to “pursue scientific

understanding and explore improved

health delivery for the region”.

The new contract is expected to gen-

erate revenues mainly from next year.

It means that guidance of £105 million

to £111 million this year from its core life

science research tools business and

growth of 60 per cent to 70 per cent,

household, holiday, pet and small busi-

ness insurance cover. Spun out of Royal

Bank of Scotland in 2012, it has 14.4 mil-

lion policies outstanding.

Shares in the group fell 12¼p, or

4.2 per cent, to 276p yesterday after the

company warned of volatility in the

pricing of its insurance products as new

rules come fully into force on January 1.

Insurers will be barred from selling

insurance to renewing customers at a

higher price than for new customers.

There will be restrictions on automatic

renewal. The Financial Conduct

Authority found the extra cost to loyal

policyholders was £1.2 billion in 2018.

Penny James, 52, chief executive,

said: “While market pricing in the first

few months of 2022 is likely to be vola-

tile as the market resets, our brands,

customer focus and diversified business

model mean we remain confident.”

Gross written premiums were up

0.7 per cent to £857 million in the three

months to September.

Insurance claims driven up

by soaring used car prices

Patrick Hosking Financial Editor

Emirates deal boost to Oxford Nanopore

which was raised last month, is un-

changed. However, Oxford Nanopore

said that it expected revenues of

£135 million to £145 million in 2022 and

£170 million to £190 million for 2023.

It had cautioned in its prospectus

that a small group of customers were

expected to continue to account for a

substantial chunk of its group revenues.

Shares in Oxford Nanopore rose 42p,

or 7.7 per cent, to 587½p yesterday. The

company was floated on the London

Stock Exchange at 425p per share at the

end of September, raising about

£350 million, and the stock rose to a

peak of 615p shortly after.

The company, spun out of the

University of Oxford in 2005, is based

at the city’s science park. It employed

about 640 full-time people, roughly

500 of them in Britain, before its float. It

also has offices in Shanghai, Beijing and

San Francisco.

Its technology enables customers to

perform scientific research in a range of

areas including human genetics, cancer

research and viral outbreak surveil-

lance.

Alex Ralph

The soaring price of used cars is

pushing up the costs of motor claims,

according to Direct Line.

The insurance group said that claims

inflation was slightly above its expected

range of 3 per cent to 5 per cent mainly

because of the rise in the cost of second-

hand vehicles.

The supply of new cars has been

severely restricted by the shortage of

computer chips for components,

driving up demand for used cars. Cus-

tomers in accidents where the car is a

write-off are paid out according to its

market value. Used car prices are

21.4 per cent higher than they were a

year ago, according to AutoTrader.

Payouts, therefore, were higher,

Direct Line said, although it had been

able to mitigate the impact by using its

in-house vehicle repair operation.

Direct Line, a member of the FTSE

250, is a leading car insurer. It also sells

The gene sequencing group will help

improve health delivery in the region

ALEX WINSHIP/SAVILLS

Housing market

foundations are

still solid for

upbeat builders

over the next year. Vistry noted that the

rise in build costs had been “more than

offset” by higher house prices, while

Persimmon predicted that its margins

would “remain resilient”. Buyers have

reserved £1.15 billion of houses that

Persimmon is building, while Vistry’s

order book stands at £1.6 billion.

Both companies have been buying

land this year to meet demand. Persim-

mon has spent £380 million adding

16,200 plots and Vistry has secured

6,373 plots across 31 developments.

The buoyant property market has

left builders sitting on large piles of

cash. By the end of the year, Vistry

expects to have net cash of £225 million,

while Persimmon has a cash balance of

£895 million.

“We continue to see strong demand

across all our business areas and we are

actively mitigating any supply chain

pressures,” Greg Fitzgerald, 57, chief ex-

ecutive of Vistry, said. “As a result, we

are firmly on track to deliver a signifi-

cant improvement in profits this year.”

Dean Finch, 55, Persimmon’s chief

executive, said that it had “continued to

perform well through the period, with

private sales reservation rates per site

remaining well ahead of 2019, as sales

followed a more normal seasonal pat-

tern when compared with 2020”.

Analysts at Jefferies suggested that

reaction to the updates “may prove

lacklustre” given the lack of detail. Vis-

try shares dipped 18½p, or 1.6 per cent,

to £11.29 and Persimmon fell 71p, or

2.6 per cent, to £26.50.

Tom Howard

15,000

Homes Persimmon expects to build

this year

Source: Persimmon

A

leading estate

agent believes

that this year’s

profits will

“materially

exceed” its expectations

thanks to a boom in

demand for multimillion-

pound homes (Tom

Howard writes).

The property market

has been on fire for much

of the past 12 months as

people seek more space

and bigger gardens

having suffered repeated

lockdowns and after the

introduction of the stamp

duty holiday, which saved

buyers as much as

£15,000.

There have been signs

that the property market

is cooling a little and the

management of Savills

had expected as much.

However, demand for

houses worth more than

£2.5 million has proved

more resilient.

“The continued

strength of UK prime

residential markets has

exceeded expectations

and the anticipated

tapering of market

volumes in our segments

is now expected to take

effect through 2022

rather than significantly

affecting performance in

[the] second half of 2021,”

the estate agency said.

The top end of the

market has been boosted

by the recent return of

overseas buyers, who

account for a big chunk

of prime property deals,

particularly in London.

Savills’ research team

believes that prime

central London, where

houses can sell for more

than £30 million, will be

the fastest-growing part

of the UK property

market over the next five

years. By 2026, the

analysts expect that

prices will have risen by

almost 24 per cent, taking

them back to their 2014

peak for the first time.

“After seven years of

falling values, totalling

-20 per cent, property in

the capital’s most

prestigious postcodes is

overdue a recovery,”

Frances Clacy, a research

analyst at Savills, said.

“We’ve already seen the

beginnings of this,

primarily driven by

demand for larger houses

and, as such, by locations

such as Notting Hill and

Holland Park [in west

London].”

Founded in 1855, Savills

employs 40,000 workers

in its 600 offices across 71

countries. It is best-

known for its residential

estate agency business,

but it also has a property

management division, an

investment management

unit and advises on

commercial property

deals. The number of

commercial deals this

year has been “better

than anticipated” and

investment management

has traded “somewhat

ahead of expectations”.

Numis, the broker,

increased its pre-tax

profit estimate for Savills

for 2021 by a fifth to

£158.2 million — 10 per

cent above what the

property agency made in

2019, before the

coronavirus pandemic

struck.

Savills shares were

largely flat, losing only a

penny, or 0.1 per cent, to

close at £14.19.

Savills says

outlook is

looking

brighter

Savills said properties in

prime locations, such as

this £3.75 million Chelsea

townhouse, would form its

fastest-growing market