TIDMVTY
RNS Number : 4638S
Vistry Group PLC
09 July 2020
9 July 2020
Vistry Group PLC
Half year trading update
Vistry Group PLC (the "Group") is issuing a trading update for
the six-month period ended 30 June 2020.
Key Highlights
-- Sales have continued throughout lockdown with our sales rate
increasing to an average of 0.62 in the last four weeks and pricing
remaining firm
-- Successful return to site with particularly resilient first
half performance from Vistry Partnerships
-- Excellent progress on integration with synergies expected to
be higher than level assumed at acquisition
-- Reduction in net debt to c. GBP355m (18 May 2020: GBP476m),
ahead of our expectations at the start of the pandemic
-- Strong forward sales position with housing reservations
(including Vistry Partnerships activity) totalling GBP1.66bn 1 (20
May 2020: GBP1.5bn) and Vistry Partnerships' contracting forward
order book totalling GBP920m (20 May 2020: GBP827m)
-- Group awarded 5-star HBF Customer Satisfaction rating for
2019 with score remaining at this level
Greg Fitzgerald, Chief Executive commented:
"With our integration ahead of plan and enormous commitment from
our employees and supply chain, the business has successfully
managed through the challenges since mid-March. We have focused on
delivering excellent service to our customers, maintaining our HBF
5-star customer satisfaction score. We have also managed our
liquidity position, achieving net debt significantly lower than our
expectations, without compromising on our investment for 2021.
"Vistry Partnerships has demonstrated its market resilience and
has been quick to accelerate productivity as lockdown restrictions
have eased. This high growth, counter cyclical part of the business
is a significant differentiator for the Group.
"We have seen an ongoing pick up in sales over the past eight
weeks with prices remaining firm, giving us a strong forward order
book and confidence for the second half."
Trading 2
Our sales teams remained open for business throughout the
lockdown period, offering virtual tours, taking new reservations,
progressing exchanges and handing over completed homes where a
customer has wanted to move in. Over the past ten weeks we have
seen a week-on-week increase in our sales rates, and over the last
four weeks our average private sales rate per site per week
including Vistry Partnerships' mixed tenure operations has been
0.62 (0.50 excluding bulk sales). Our pricing has remained firm
across all areas of the business.
Vistry Partnerships led the Group's return to site at the end of
April, being the most market resilient part of our business with
its high proportion of revenue from contracting and pre-sold
developments. Housebuilding's initial focus was on homes which were
watertight and where there was clear visibility of completion. With
positive sales trends and the Group's strong cash management and
liquidity, housebuilding has now commenced new infrastructure and
groundworks which will benefit performance in 2021. Across the
business, our sites are now able to deliver productivity at around
90%, with several sites already well ahead of this, utilising
extended working hours where appropriate and matching output with
sales demand.
In the first half, Vistry Partnerships delivered a total of 489
(2019: 574) units from its mixed tenure operations with an average
selling price of GBP233k. This resulted in revenue from mixed
tenure housing in the period of GBP84m (2019: GBP94m). Contracting
revenue totalled GBP213m (2019: GBP244m) with equivalent units of
1,250 (2019: 1,140). Revenue from Vistry Partnerships in the period
totalled GBP297m (2019: GBP338m).
Public sector land continues to be a strong source of
opportunities for Vistry Partnerships and in the period, we
exchanged contracts with Homes England on five sites. In addition,
we have obtained detailed planning on two Homes England sites -
Sandymoor, Runcorn and Lea Castle, Kidderminster, which will
provide over 900 new homes.
Housebuilding delivered a total of 1,235 (2019: 3,371)
completions in the first half of which 975 (2019: 2,199) were
private units and 260 (2019: 1,172) were affordable units. Private
average selling price in the period was GBP329k. Total average
selling price was GBP290k. Revenue from housebuilding activities in
the period totalled GBP344m (2019: GBP854m).
As at 30 June 2020 Vistry Partnerships were selling on 29 mixed
tenure active sites and housebuilding on 168 active sites, and we
expect these levels to be similar at the full year.
The wide-ranging effects of COVID-19 are expected to impact
margin for the first half across the business. The business has
incurred additional costs directly related to the period of
lockdown, lower levels of operating efficiency from social
distancing and the lengthening of development period expectations.
Margin is also impacted by our policy of recognising the full sales
and marketing costs across the financial year, similar to
administrative expenses, rather than apportioning them by
volume.
The Group has a strong forward sales position, with
housebuilding reservations totalling GBP1.26bn (including joint
ventures) 1 and Vistry Partnerships' mixed-tenure reservations
totalling GBP393m. The Vistry Partnerships' contracting forward
order book totals GBP920m, the same level as at the beginning of
January.
Funding and liquidity
Decisive management actions taken since mid-March have delivered
a reduction in the Group's net debt at 30 June to c. GBP355m (18
May 2020: GBP476m). This is ahead of our expectations at the start
of the pandemic reflecting the earlier return to site within
Partnerships including their contracting business, and improved
completion levels, putting the Group in a financially strong
position.
The Group has committed banking facilities totalling GBP770m,
with well spread maturities out to 2027. In addition, the Group has
the ability to increase liquidity through the Covid Corporate
Financing Facility ("CCFF"), although there is no present intention
to draw on this.
Customer service
Delivering high quality homes and excellent customer service
remains a key priority. The Group achieved a 5-star HBF Customer
Satisfaction rating for 2019 and we are pleased to report that our
score continues to trend at above 90% from c. 1,300 responses. We
continue to see an improving score for the Group for the HBF
nine-month survey.
Integration and synergies
We have made excellent progress with the integration of Linden
Homes and Vistry Partnerships, with the operational restructuring
within housebuilding achieved ahead of expectations. We have closed
four regional offices, restructured our teams and completed our
work on procurement. The implementation programme for a common IT
environment, along with consistent systems and processes is
progressing well and will be delivered ahead of our initial
expectations removing third party dependencies for the acquired
businesses.
As previously reported, additional opportunities to drive
efficiency across the Partnerships division and within our Central
Services Team have been actioned. With our increased site numbers,
we also see significant opportunity to improve our sales function
through adopting a more centralised, digital and less site-based
approach.
Land
The Group has remained active in the land market throughout the
year, contracting and progressing new development opportunities.
Whilst all discretionary land spend was paused at the end of March,
we have continued to progress opportunities in all regions to meet
our requirements for 2021 and beyond. We have been successful in
negotiating option agreements, conditional contracts and deferred
payment terms to minimise our cash expenditure in the near
term.
During the period, our housebuilding business acquired 1,815
plots across eight sites and conditionally contracted on 823 plots
on three sites. We continue to make good progress on strategic land
including the pull through of 1,000 plots at our development in
Collingtree, planning consent gained for 640 plots at Salisbury and
a further 1,426 strategic land plots contracted under options in
the period.
Vistry Partnerships added a total of 725 plots on one site to
the mixed tenure land bank in the period and conditionally
contracted on a further 420 plots across three sites. The land
pipeline for Vistry Partnerships is strong with 314 plots across
two sites with terms agreed.
Dividends
In light of the impact of the COVID-19 pandemic, the Board took
the decision not to pay the Second Interim Dividend of GBP60
million in cash, but to return value to shareholders by way of a
bonus issue to shareholders on the Company's register of members as
at 6.00 p.m. on 27 December 2019. The Bonus Issue, which is subject
to shareholder approval, will equate to 4,369,992 ordinary shares
of GBP0.50 each in the capital of the Company (in aggregate) valued
at GBP60 million based on a share price of GBP13.73, being the
closing share price of the Company on 27 December 2019. The Board
recognises the value of dividends to shareholders and will consider
this in its future dividend strategy.
Outlook
We are pleased to report a continuing improvement in market
trends over recent weeks in terms of increased consumer demand.
House prices have remained stable and we currently see deflationary
pressure in our supply chain. This, combined with completions
returning to a more normal level and the flow-through of synergy
benefits, will support an anticipated restoration of gross margin
in the second half and retain the strong value from the margin in
our future land bank.
We are commencing new groundworks and progressing the build
programme across our developments and expect to see an increase in
the level of completions in the coming months.
Vistry Partnerships continues to see a good pipeline of
opportunities both in contracting and mixed-tenure developments,
and in larger regeneration projects. The business is increasing and
diversifying its range of partners and remains confident of rapid
growth in a strong and resilient market.
We welcome the Chancellor's announcement yesterday regarding a
stamp duty exemption for homes worth up to GBP500,000 until 31
March 2021. We anticipate this positive stimulus will support
buyers as well as the wider economy.
Given the present economic uncertainty, short-term financial
guidance remains suspended. We will provide a further update with
our Half Year results in September.
This announcement includes inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 and is being
released on behalf of Vistry Group PLC by Earl Sibley, Chief
Financial Officer.
Appendices
1. Completions - units H1 2020 H1 2019
------------------------------ -------- --------
Housebuilding
* Private 830 1,854
* Affordable 236 1,016
* JV's (100%) 169 501
-------- --------
Total housebuilding 1,235 3,371
Partnerships
* Mixed tenure 299 288
* JV's (100%) 190 286
-------- --------
Total mixed tenure 4 89 5 74
Contracting equivalent units 1,250 1,140
Note: Pro forma H1 2019 completions calculated using published
data for Linden Homes and Vistry Partnerships and represent the
Vistry Group H1 period of 1 Jan 2019 to 30 June 2019
2. Forward sales - GBPm 30 June 2020
Housebuilding
* Private 660
* Affordable 330
* JV's (100%) 274
Total housebuilding 1,264
Partnerships
* Mixed tenure 178
* JV's (100%) 215
Total mixed tenure 393
Contracting 920
For further information please contact:
Vistry Group PLC 01242 388789
Earl Sibley, Chief Financial Officer 020 7250 1446
Susie Bell, Head of Investor Relations
Powerscourt
Justin Griffiths, Nick Dibden, Victoria
Heslop
[1] Total forward sales of GBP1.66bn includes GBP0.24bn in
respect of our joint venture partners' share of revenue
[2] Pro forma H1 2019 completions calculated using published
data for Linden Homes and Vistry Partnerships and represent the
Vistry Group H1 period of 1 Jan 2019 to 30 June 2019
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END
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