TIDMVTY
RNS Number : 0473N
Vistry Group PLC
18 January 2023
18 January 2023
Vistry Group PLC
Trading update
Vistry Group PLC ("Vistry" or the "Group") announces a scheduled
trading update for the year ended 31 December 2022, ahead of the
publication of its full year results on 22 March 2023.
Greg Fitzgerald, Chief Executive, commented:
"2022 was another year of excellent progress for Vistry, and
despite the more challenging market conditions following the
September mini-budget, profits are in-line with expectations and
ahead of where we were at the start of the year. I would like to
thank all of our employees and subcontractors for their continued
hard work and dedication.
"The combination with Countryside Partnerships in November
provided a transformative opportunity for the Group to accelerate
its strategy of rapidly growing its high return, less cyclical
revenues, and has firmly positioned Vistry as a leading provider of
affordable homes. The integration process is making excellent
progress and I am confident that with the combined expertise, track
record and assets, we are extremely well positioned to maximise the
opportunities from the continued strong demand for affordable
housing across the country.
"We start this year focused on maximising Vistry's unique
capability as a leading housebuilder and partnerships business to
increase the delivery of high quality housing across all tenures.
The Group's forward sales position totals an encouraging GBP4.6bn
and we have a strong pipeline of new opportunities within
Partnerships. It is too early in the current year to predict the
outturn for private sales, however I remain cautiously optimistic
that buyer sentiment will improve over the coming months."
Full year highlights
-- Transformational acquisition of Countryside Partnerships
("Countryside") completed on 11 November 2022, with integration
making excellent progress and strong cultural alignment
across the enlarged Partnerships business
-- Confident of delivering at least GBP50m synergies from
the combination and in excess of our target of GBP19m
synergies in FY23
-- Expect FY22 adjusted profit before tax [1] to increase
by c. 21% to c. GBP418m (FY21: GBP346.0m), in-line with
our expectations
-- Group net cash position is ahead of expectations at c.
GBP115m (31 December 2021: GBP234.5m), following the payment
of GBP300m cash as part of the consideration for Countryside
and GBP35m share buy-back
-- Excellent full year performance for Housebuilding with
completions [2] increasing by 3% to 6,774 units (FY21:
6,551), and adjusted gross margin [3] expected to increase
to at least 23% (FY21: 22.3%)
-- Partnerships continues to deliver excellent growth in
higher margin mixed tenure revenues, with mixed tenure
completions(2) up 17.6% to 2,455 units (FY21: 2,088) and
adjusted operating margin expected to increase to at least
10% (FY21: 9.2%)
-- Continued delivery of high quality build and customer
service, with a step up in construction quality awards
and sustained HBF 5-star customer satisfaction rating
-- Successful year in the land market with Group well positioned
on land and planning for FY23
Current trading and outlook
-- The Group starts the year with forward sales totalling
GBP4.6bn (31 Dec 2021: GBP2.7bn) including GBP3.6bn for
the enlarged Partnerships business
-- We are seeing a sustained level of demand across Partnerships
from Housing Associations, Local Authorities and the private
rented sector, with a strong Q1 pipeline
-- We believe the Partnerships model is resilient and are
confident that there is clear potential to generate material
value with enhanced scale and superior returns over the
medium-term
-- Housebuilding forward sales totals GBP1.0bn (31 December
2021: GBP1.3bn), an encouraging position given the challenging
market conditions and significant step-down in private
sales rates in Q4 22
-- Our two businesses are firmly focused on cost reduction
opportunities within our supply chain, including synergistic
benefits, and optimising work in progress
-- The Group has a strong pipeline of land for FY23 and will
continue to secure land on a selective basis
-- We will continue to ensure the Group has a healthy and
resilient balance sheet
-- A fuller outlook for FY23 will be provided with our FY22
results announcement in March
Operational update
The Group delivered a strong operational performance in FY22
with good progress made across all business areas.
We saw a very strong start to 2022 with high levels of demand
resulting in increased sales rates and higher house prices. This
trend continued throughout the first half and the Group reported an
average weekly private sales rate per outlet in H1 22 of 0.84 (H1
21: 0.76), up 11% on the prior year. Our sales performance remained
robust during the summer months. In the fourth quarter we saw
demand for private sales reduce significantly reflecting the
heightened level of macro uncertainty and step-up in mortgage
costs. The Group achieved a weekly private sales rate per outlet[4]
of 0.46 in the fourth quarter, and 0.71 (FY21: 0.76) for the full
year. Our pricing remained firm in final quarter of FY22, and this
has continued in FY23 to date.
The combination of wider macro uncertainty and uncertainty
around the Government's Social Housing rent ceiling generated
hesitancy amongst housing providers during the fourth quarter which
is now dissipating.
Delivering high quality new homes and excellent customer
satisfaction remained our top priority in 2022. We are pleased to
report the continuation of an improving trend for our HBF customer
satisfaction survey which is sent out 9 months after completions
and a sustained HBF 5-star customer satisfaction rating for our 8
week survey.
Our sites have operated well during the year, and we were
delighted to have achieved our highest number of NHBC Pride in the
Job Quality Awards this year, totalling 34 for the enlarged Group.
We have seen good labour availability throughout the year and more
recently some reduction in labour costs, a trend which we expect to
continue in 2023.
We continue our constructive engagement with the Department for
Levelling Up, Housing and Communities in relation to the legal
agreement to codify the principles of the Building Safety
Pledge.
Housebuilding(4)
Housebuilding delivered 6,774 units (FY21: 6,551) in FY22,
including 1,348 (FY21: 1,287) from JVs. Private units in the year
totalled 5,184 (FY21: 4,891) with 1,600 (FY21: 1,590) affordable
units.
Total Housebuilding average selling price for FY22 increased by
c. 6% to c. GBP324k (FY21: GBP305k), reflecting changes in mix and
house price inflation across the year. Housebuilding's private
average selling price increased to c. GBP376k (FY21: GBP356k) and
affordable average selling price increased to c. GBP163k (FY21:
GBP158k). Housebuilding operated from an average of 142 (FY21: 143)
active sites in FY22 and we expect this to be at a similar level in
FY23.
The business made further progress with its strategy of
delivering controlled volume growth and significant margin
progression, with adjusted gross margin expected to increase to at
least 23% (FY 21: 22.3%) in FY22.
Vistry Partnerships(4)
Vistry Partnerships made excellent progress in the year with its
strategy of rapidly growing higher margin mixed tenure revenues,
with mixed tenure completions up by 17.6% to 2,455 (FY21: 2,088)
units including 938 (FY21: 904) from JVs. The average selling price
of mixed tenure units in the year was c. GBP256k (FY21: GBP237k)
and Partnerships operated from an average of 28 (FY21: 33) active
mixed tenure sites in FY22.
Vistry Partnerships continued to drive its operating margin
through increasing the proportion of higher margin mixed tenure
revenues and expects FY22 adjusted operating margin to be at least
10% (FY21: 9.2%).
Countryside Partnerships
The Group completed the acquisition of Countryside Partnerships
on 11 November 2022 forming one of the country's leading
homebuilders. The integration process is making excellent progress,
with the new organisational structure established and effective
since the start of January.
The majority of the acquired business is merging with the Vistry
Partnerships business and is already operating under the single
Countryside Partnerships brand. We are pleased to see strong
support for the combined business from our Partnerships' clients
who value the opportunity to work with a leading provider.
Certain acquired sites which have characteristics more akin to
housebuilding are being transferred from Countryside Partnerships
to Housebuilding and will be reported within this segment from
2023.
We have made good progress in reviewing the cost base and
engaging with suppliers of the enlarged business and have increased
confidence in delivering at least GBP50m synergies from the
combination, and in excess of our GBP19m target for synergies in
FY23.
For the short stub period between 11 November and 31 December
2022, Countryside Partnerships has continued to perform in line
with our expectations during what is typically a low volume period
of the year for the business.
Land(4)
The Group has a high quality, deliverable land bank reflecting a
successful year in the land market.
Housebuilding secured 5,352 (FY21: 7,667) plots across 30 (FY21:
38) developments. The rate of land acquisition in Housebuilding
consciously slowed in the fourth quarter reflecting the increased
level of uncertainty in the housing market. The business continues
to progress land opportunities on a selective basis and has a
strong deliverable land pipeline for FY23 completions.
Vistry Partnerships grew the size of its owned land bank in FY22
to support continued strong growth in mixed tenure completions, and
in the year secured 3,061 (FY21: 4,131) plots on 17 (FY21: 23)
sites for mixed tenure development, significantly ahead of
replacement level. The business has a strong pipeline of
development opportunities, in particular working alongside Housing
Associations and Local Authorities.
Balance sheet
The Group had a net cash position of c. GBP115m as at 31
December 2022 (31 December 2021: net cash of GBP234.5m) following
the payment of GBP300m cash as part of the consideration for
Countryside and GBP35m share buy-back. This is ahead of our
expectations for the Group post acquisition and reflects stronger
cash generation in the second half at both Vistry and Countryside
Partnerships.
We will continue to ensure the Group has a healthy and resilient
balance sheet and retain the opportunity to selectively invest in
land and development opportunities as they arise.
Outlook
We start the year with forward sales totalling GBP4.6bn (31 Dec
2021: GBP2.7bn) including GBP3.6bn for the enlarged Partnerships
business. We are seeing a sustained level of demand across
Partnerships from Housing Associations, Local Authorities and the
private rented sector and with a higher level of pre-sold units and
a different portfolio of customers, the Partnerships business is
less sensitive to levels of open market demand than
Housebuilding.
Housebuilding forward sales totals GBP1.0bn (31 December 2021:
GBP1.3bn), an encouraging position given the challenging market
conditions and significant step-down in private sales rates in Q4
22.
Our two businesses are firmly focused on cost reduction
opportunities within our supply chain, including synergistic
benefits, and best managing work in progress. The Group has a
strong pipeline of land for FY23 and will continue to secure land
on a selective basis.
The combination with Countryside had a highly compelling
strategic rationale and has created a leader in the partnerships
housing sector, with the scale and expertise to accelerate
profitable growth across both Partnerships and Housebuilding, and
expand the delivery of much needed affordable housing across
England. Whilst the short term outlook for the UK housing market is
uncertain, we believe the Partnerships model is resilient and that
there is clear potential to generate material value with enhanced
scale and superior returns over the medium-term.
A fuller outlook for FY23 will be provided with our FY22 results
announcement in March 2023.
Greg Fitzgerald, Earl Sibley and Tim Lawlor will host a call for
analysts today at 8:00am. To join the call please dial: UK-Wide:
+44 (0) 33 0551 0200, UK Toll Free: 0808 109 0700. Please quote
Vistry when prompted by the operator.
For further information please contact:
Vistry Group PLC
Tim Lawlor, Chief Financial
Officer
Susie Bell, Group Investor Relations
Director 07469 287335
Powerscourt
Justin Griffiths
Nick Dibden
Victoria Heslop 020 7250 1446
Forward sales (GBPm) 31 December 2022 31 December 2021
-------------------------------- ----------------- -----------------
Housebuilding
* Private 330 554
* Private JVs (100%) 117 245
* Affordable 440 432
* Affordable JVs (100%) 85 118
Total Housebuilding 972 1,349
Vistry Partnerships
* Mixed tenure 391 309
* Mixed tenure JVs (100%) 291 282
Total mixed tenure 682 591
Total partner delivery 976 740
Total Vistry Partnerships 1,658 1,331
Total Countryside Partnerships 2,019 n/a
(inc 100% JVs)
Total Group 4,649 n/a
-------------------------------- ----------------- -----------------
Certain statements in this press release are forward looking
statements. Forward looking statements involve evaluating a number
of risks, uncertainties or assumptions that could cause actual
results to differ materially from those expressed or implied by
those statements. Forward looking statements regarding past trends,
results or activities should not be taken as representation that
such trends, results, or activities will continue in the future.
Undue reliance should not be placed on forward looking
statements.
[1] Adjusted profit before tax is stated excluding exceptional
items and amortisation of acquired intangibles
[2] Completions include 100% of JVs
[3] Adjusted basis to include the proportional contribution of
joint ventures
[4] Excludes any contribution from Countryside Partnerships
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END
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