View from City Road: Wimpey call deserves the benefit of the doubt
Friday 11 June 1993
That gives the group the dubious distinction of being the first general builder - John Laing's pounds 39m convertible preference issue apart - to ask for money since early 1991, when builders and materials suppliers were queueing up to tap their shareholders. Judging by the dismal performance of most of their shares since then, Wimpey should be grateful that the Grove stake stopped it joining the crowd.
The recovery talked about then proved no more than a figment of the industry's imagination; this time round, however, the foundations look rather more solid. The 27 per cent rise in private house sales since the start of the year reported by Wimpey was better than had been expected and enough other companies are talking about rising minerals prices to give some confidence that it is true. Contracting will remain a weak spot for another two years but Wimpey - unlike some of its rivals - is strong enough not to have to chase work at any margin.
The difficulty of doing a cash call before the Grove sale also meant it had to rely on good housekeeping, through cost-cutting and the sale of peripheral businesses, to survive the recession. The 30 per cent gearing which is the result of that programme means it does not really need the money, but at least shareholders can be confident that it will be invested in housing land and minerals. Those who raised money in 1991 simply tried (and generally failed) to use it to maintain their dividend payments.
The painful memories of 1991 mean that it is no coincidence that those builders that have tapped the market so far this year have been those which have least need of the cash. The walking wounded like Costain and YJ Lovell can only look on in envy while even Tarmac - which, with gearing of more than 60 per cent is everyone's favourite fund-raising candidate - has to persuade investors that Neville Simms, its chief executive, can manage the business.
Mr Dwyer himself has yet to prove he can grow the business as successfully as he shrank it, but he deserves the benefit of the doubt. Take up the rights.
- 1 Michelle Rodriguez: Fast & Furious actor apologises after telling 'minorities' to stop taking on 'white' roles
- 2 Raif Badawi, the Saudi Arabian blogger sentenced to 1,000 lashes, may now face the death penalty
- 3 PornHub turns masturbation into energy in bid to save the planet
- 4 Robert Mugabe eats a zoo for 'obscene' 91st birthday party
- 5 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
Michelle Rodriguez: Fast & Furious actor apologises after telling 'minorities' to stop taking on 'white' roles
Boris Nemtsov shot dead: Putin critic may have been murdered by Islamic extremists, says president-led committee
British are sexually uptight, dirty and drink too much – according to Spanish book
Raif Badawi, the Saudi Arabian blogger sentenced to 1,000 lashes, may now face the death penalty
PornHub turns masturbation into energy in bid to save the planet
New theory could prove how life began and disprove God
This is what it's like to be dead, according to a guy who died for a bit
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Ukip would cut billions from Scottish budget to fund English tax cuts
Russia's roadmap for annexing eastern Ukraine 'leaked from Vladimir Putin's office'
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...