TIDMVTY
RNS Number : 7837T
Vistry Group PLC
22 March 2023
22 March 2023
Full year results for the year ended 31 December 2022
Vistry Group PLC (the "Group") announces full year results for
the year ended 31 December 2022.
Greg Fitzgerald, Chief Executive commented:
"2022 was another landmark year for the Group as we delivered a
step up in financial performance and made excellent progress across
all areas despite the more challenging market conditions
experienced in the fourth quarter. The combination with Countryside
presents a unique opportunity and has created one of the country's
leading homebuilders, comprising a leading partnerships business
and a high quality major housebuilder. It has accelerated the
Group's strategy of rapidly growing its more resilient partnerships
revenues and of targeting sector leading return on capital
employed.
"The businesses have come together extremely well with a good
cultural fit, and the integration process is making excellent
progress. As a result, we are confident of delivering annualised
synergy benefits of c. GBP60m, ahead of our original target.
"We are focused on maximising the opportunities from our unique
market position and increasing the supply of high quality housing
across all tenures. The resilience of our Partnerships business is
reflected in its strong forward order book which gives us the
confidence that the business will deliver growth in FY 23 revenues
in line with its strategy. Housebuilding is focused on operational
excellence to maximise its sales opportunity and has the expertise,
embedded controls and disciplines in place to succeed. Market
conditions are improving and based on the assumption that private
sales rates continue to trend towards levels seen in 2019, we
expect Group adjusted profit before tax for FY23 to be in excess of
GBP440m [1] .
"Our people are key to the Group's success, and I would like to
thank all of our employees, subcontractors and supply chain for
their continued hard work and dedication."
Group financial highlights
GBPm unless otherwise
stated FY22 FY21 Change
---------------------------- -------- -------- --------
Adjusted basis [2]
Total completions 11,951 11,080 7.9%
Revenue 3,073.2 2,693.6 14.1%
Operating profit 451.1 368.4 22.4%
Operating profit margin 14.7% 13.7% 1.0ppts
Profit before tax 418.4 346.0 20.9%
Basic earnings per share 137.5p 125.5p 9.6%
Return on capital employed 28.3% 25.5% 2.8ppts
Statutory basis
Revenue 2,729.4 2,407.2 13.4%
Operating profit 212.5 285.4 (25.5)%
Profit before tax 247.5 319.5 (22.5)%
Basic earnings per share 86.5p 114.6p (24.5)%
Final dividend per share 32p 40p (20.0)%
Net cash 118.2 234.5 (49.6)%
---------------------------- -------- -------- --------
Highlights
-- Completion of transformational acquisition of Countryside
Partnerships ("Countryside") on 11 November 2022
-- Integration making excellent progress with annualised
synergies from the combination now expected to be c.GBP60m (ahead
of the GBP50m previously announced), with c.GBP25m expected in
FY23
-- 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 across the entire
Group
-- Vistry Partnerships continues to deliver rapid growth in
higher margin mixed tenure completions, up 17.6%, with adjusted
operating margin increasing to 10.7% (2021: 9.2%)
-- Vistry Housebuilding delivered controlled volume growth of
3.4% and excellent progress on adjusted gross margin, increasing to
23.4% (2021: 22.3%) despite challenging market conditions in Q4
2022
-- Countryside performed in-line with our expectations with a
minimal contribution to 2022 in the 7 weeks it was part of the
Group
-- The Group delivered a 20.9% increase in Group adjusted profit
before tax to GBP418.4m (2021: GBP346.0m)
-- Reported profit before tax for FY22 of GBP247.5m (2021:
GBP319.5m) after exceptional expenses of GBP153.9m (2021:
GBP12.2m), including GBP97.0m fire safety provision and GBP56.9m
transaction and integration related costs
-- High quality land bank totalling 81,342 (2021: 42,770) owned
and controlled plots (inc. JVs) as at 31 December 2022 and 65,813
(2021: 40,000) strategic land plots
-- Year end net cash of GBP118.2m (2021: GBP234.5m), ahead of
expectations and follows a net cash outflow of GBP95.2m for the
acquisition of Countryside, GBP35.2m share buy-back and GBP138.9m
of dividend distribution
-- Group ROCE increased to 28.3% (2021: 25.5%), with
Partnerships ROCE of 77.6% (2021: >100%) and Housebuilding ROCE
increasing to 28.2% (2021: 21.3%)
Current trading and outlook
Our Partnerships business is seeing a good level of demand from
Housing Associations and Local Authorities, with the PRS market
also improving. In the year to date, Partnerships has secured a
number of new development opportunities which at least meet our
targets of 40%+ ROCE and 50% pre-sold revenues and has a good
pipeline. The resilience of our Partnerships business is reflected
in its strong forward order book totalling GBP2,840m (25 Feb 2022:
GBP1,338m), with 68% of mixed tenure FY23 units and all of partner
delivery revenues secured, providing us with the confidence it will
deliver revenue growth in FY23, on pro forma FY22.
For the Group overall, we have seen an improving trend on
private sales in the first 11 weeks of the year, with the Group's
average private sales rate per site per week for the year to date
at 0.54, increasing to 0.62 in the last four weeks. We have seen
increased consumer confidence from Q4 2022, particularly as
mortgage rates have trended downwards and availability has
improved.
Housebuilding is focused on delivering operational excellence in
this more competitive marketplace, with top quality customer
service and the highest build standard critical to success. The
business has a very experienced management team, and with its focus
on and investment in high quality site teams, is well positioned.
Housebuilding's forward order book totals GBP1,339m (25 Feb 2022:
GBP1,324m) with 55% of FY23 units secured.
Net pricing has held relatively firm in the first 11 weeks
supported by an increase in the use of incentives. The Group sees
opportunity for cost reduction in the year, with some success
achieved in the year to date. The expected year on year reduction
in private sales rates is reflected in our current build rates,
with a key focus on working capital management.
The integration of Countryside Partnerships is making excellent
progress and we are now expecting to deliver c.GBP25m of synergies
from the combination in FY23. We expect total synergies to be
c.GBP60m, up from our previous target of GBP50m, with the full
annual run rate achieved by the end of FY24.
Based on these assumptions, we expect the Group to deliver
adjusted profit before tax for FY23 in excess of GBP440m(1) . As
part of a disciplined approach to capital allocation, we will
continue to ensure the Group has a healthy and resilient balance
sheet and will continue to invest selectively in high quality land
and development opportunities as they arise.
Forward sales
(GBPm) 20 March 2023 25 Feb 2022
------------------------------------------- -------------- ------------
Housebuilding
* Private 630 692
* Private - Vistry share of JVs 107 148
* Affordable 524 421
* Affordable - Vistry share of JVs 78 63
Total Housebuilding 1,339 1,324
Partnerships
* Mixed tenure 1,489 335
* Mixed tenure - Vistry share of JVs 381 143
Total mixed tenure 1,870 478
Total partner delivery 970 860
Total Partnerships 2,840 1,338
Total Group 4,179 2,662
------------------------------------------- -------------- ------------
Note: 25 February 2022 forward sales restated to include Vistry
share of JVs (previously included 100% of JV forward sales)
Dividend timetable
---------------------- --------------
Ex-dividend date 20 April 2023
Dividend record date 21 April 2023
Dividend payment date 1 June 2023
---------------------- --------------
There will be an investor and analyst presentation at 8:30am
today, 22 March 2023 at Numis, 45 Gresham St, London EC2V 7BF.
There will also be a live webcast of this event available on our
corporate website at www.vistrygroup.co.uk or via the following
link https://brrmedia.news/Vistry_Group_FY22 . A playback facility
will be available shortly afterwards.
Certain statements in this press release are, or may be deemed
to be, forward looking statements. Forward looking statements
involve evaluating a number of risks, uncertainties or assumptions,
many of which are beyond the Group's control, 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. Forward looking statements speak only as at the date of
this document and the Group and its directors and officers
expressly disclaim any obligation or undertaking to release any
update of, or revisions to, any forward looking statement
herein.
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
CEO Review
2022 review
2022 was another landmark year for the Group. The combination
with Countryside presented a unique and exciting opportunity for
Vistry and has created one of the country's leading homebuilders,
comprising a leading partnerships business and a high quality major
housebuilder. It has accelerated the Group's strategy of rapidly
growing its more resilient partnerships revenues and of targeting a
sector leading return on capital employed. The transaction
completed on 11 November 2022 and the businesses have come together
extremely well. There is a good cultural fit, and the integration
process is making excellent progress. As a result, we are confident
of delivering synergy benefits of GBP60m, ahead of the GBP50m
previously announced target, and with the full annual run rate
achieved by the end of FY24.
The Group made excellent progress in 2022 despite the more
challenging market conditions experienced in the fourth quarter. It
continues to deliver high quality homes and outstanding customer
service and we were pleased to have been awarded a 5-star HBF
Customer Satisfaction rating for the fourth consecutive year and to
have seen a significant improvement in our 9-month HBF customer
satisfaction score. Our people are key to the Group's success, and
I would like to thank all of our employees, subcontractors and
supply chain for their continued hard work and dedication.
2022 saw a further significant step up in financial performance,
with Group adjusted revenue in 2022 up 14.1% to GBP3,073.2m (2021:
GBP2,693.6m), adjusted profit before tax increasing by 20.9% to
GBP418.4m (2021: GBP346.0m) and adjusted basic earnings per share
of 137.5p (2021: 125.5p), up 9.6% on prior year. On a reported
basis, the Group delivered revenue of GBP2,729.4m (2021:
GBP2,407.2m [3] ), profit before tax of GBP247.5m (2021: GBP319.5m)
and earnings per share of 86.5p (2021: 114.6p). This was after
exceptional expenses of GBP153.9m (2021: GBP12.2m) including
GBP97.0m fire safety provision and GBP56.9m transaction and
integration related costs.
Vistry Partnerships, the Group's partnerships business prior to
the combination with Countryside, had another excellent year of
delivering against its strategy of rapidly growing its more
resilient revenues, improving margin and delivering at least a 40%
return on capital employed. Mixed tenure completions were up 17.6%
to 2,455 units (2021: 2,088), adjusted operating margin increased
to 10.7% (2021: 9.2%), and Partnerships' return on capital employed
in the period was 77.6% (2021: >100%). Housebuilding effectively
executed its strategy of delivering controlled volume growth and
margin progression from its existing business structure, with
completions increasing by 3.4% to 6,774 units (2021: 6,551) and
adjusted gross margin increasing to 23.4% (2021: 22.3%).
The contribution of Countryside to the Group's result for FY
2022 was minimal given the timing of the acquisition, with its
performance in line with expectations.
This strong financial performance combined with a stronger than
expected net cash contribution from Countryside and the Group's
on-going focus on good working capital management, resulted in a
year end net cash position of GBP118.2m (31 December 2021:
GBP234.5m). This was after a net cash outflow of GBP95.2m for the
acquisition of Countryside, GBP35.2m share buy-back and GBP138.9m
of dividend distribution. As part of its disciplined approach to
capital allocation, the Board is committed to retaining a healthy
and resilient balance sheet.
The Board is recommending a final ordinary dividend of 32 (2021:
40) pence per share, bringing the total ordinary dividend for 2022
to 55 (2021: 60) pence per share. This represents a total full year
dividend payment of GBP162.3m (2021: GBP133.1m), which is covered
two times by Group adjusted net earnings [4] . As previously
announced, the Board is reviewing the enlarged Group's allocation
policy to confirm whether it remains appropriate in the context of
the enlarged Group, and in doing so will be consulting with
shareholders.
Operational update
Trading performance
The Group delivered a strong operational performance in 2022
with good progress made across all business areas.
We saw a very strong start to the year 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.
The second half started strong, with our sales performance
across both businesses remaining robust during the typically
quieter summer months. There was a step-change in market conditions
in the fourth quarter with the mini-budget delivered on 23
September 2022 heightening macro uncertainty and leading to a
significant increase in mortgage costs. Demand for private sales
reduced markedly with the Group achieving a weekly private sales
rate per outlet [5] of 0.46 in Q4 2022. For the year as a whole,
the Group achieved a weekly private sales rate of 0.71 (FY21:
0.76). Despite the drop in demand, our pricing remained firm in the
final quarter of 2022.
In the partnerships market, the wider macro uncertainty and
concern around the Government's social housing rent ceiling
generated hesitancy amongst housing providers during the fourth
quarter. The Government confirmed its position on the rent ceiling
in the 17 November 2022 Autumn Statement, with the 7% ceiling at
the better end of expectations. We saw demand in our partnerships
business pick up accordingly towards the end of 2022.
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 in 2022, totalling 34 for the enlarged Group.
Our NHBC reportable items remain below industry benchmark at 0.23
(FY22: 0.22) for the Group. In a year that has been characterised
by heightened labour and material supply constraints as well as
price increases, the Group has been highly focused on working in
close partnership with our supply chain and subcontractors to best
manage this. With increased output from the supply chain in the
first half, we saw an improvement in the availability of materials.
Wider industry cost pressures however continued, specifically
rising energy costs and wage inflation, resulting in an increase in
our overall cost base of c. 9 to 10% in the year.
In Partnerships, where we have a higher element of fixed
revenue, we manage our risk in the pre-procurement phases through
passing elements of cost risk to our subcontractors, include a
sensible level of cost contingency or fixed price allowances to
cover some level of inflation, and for the long duration contracts,
seek to link the pre-sold revenue to a build cost inflation
index.
Partnerships(2,) (5)
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 (2021: 2,088)
which includes 738 (2021: 904) delivered in joint ventures (JVs).
The average selling price of mixed tenure units in the year on an
adjusted basis was GBP256k (2021: GBP237k). Partnerships operated
from an average of 28 (2021: 33) active mixed tenure sites in 2022
which was lower than forecast reflecting stronger sales rates on
existing sites and some planning delays.
Vistry Partnerships continued to drive its operating margin
through increasing the proportion of higher margin mixed tenure
revenues, and in 2022 adjusted operating margin increased to 10.7%
(2021: 9.2%).
Housebuilding(2, 5)
Housebuilding had an excellent year delivering 6,774 units
(2021: 6,551) in 2022, which includes 1,343 (2021: 1,287) in JVs.
Private units in the year totalled 5,184 (2021: 4,891) with 1,590
(2021: 1,660) affordable units, representing 23.5% (2021: 25.3%) of
total completions.
Total Housebuilding average selling price for 2022 increased by
6.2% to GBP324k (2021: GBP305k) on an adjusted basis, reflecting
changes in mix and house price inflation across the year.
Housebuilding's private average selling price increased to GBP376k
(2021: GBP356k) and affordable average selling price increased to
GBP163k (2021: GBP158k). Adjusted revenue from Housebuilding
activities in the year totalled GBP1,982.4m (2021: GBP1,829.3m).
Housebuilding operated from an average of 142 (2021: 143) active
sites in 2022 and we expect this to increase to an average of c.150
in FY23 reflecting the transfer of sites to Housebuilding from
Countryside.
Housebuilding adjusted gross margin saw a further step-up,
increasing to 23.4% (2021: 22.3%) with the business making good
progress towards delivering its adjusted gross margin target of
25%.
Countryside
In the period post-acquisition Countryside delivered 649 units,
which includes 70 from JVs. The Countryside adjusted operating
profit for the period post-acquisition was GBP0.5m. The
contribution of Countryside to the Group's FY 2022 result was
minimal, which is in line with expectations given that Q4 is
typically a quieter period for Countryside.
Integration of Countryside
The combination with Countryside Partnerships completed on 11
November 2022. The integration, which has moved at pace, has been
collaborative and focused on building on the best from each
business. The Group expects to deliver c.GBP60m of pre-tax
recurring cost synergies on an annual run-rate basis by the end of
FY24, up from our previous target of GBP50m. Of this, c.GBP25m are
expected to be delivered in FY23, ahead of our original GBP19m
target.
The integration is being managed by the Integration Oversight
Board, a subset of the Executive Leadership Team, and is supported
by a central management office and a number of integration
workstreams with appropriate expertise from Vistry and
Countryside.
The transition to date has been very positive reflecting the
active engagement and common culture of our people, detailed
planning through the various phases of integration, and our
continued focus to deliver a timely integration with minimal
operational disruption.
Key achievements to date include the restructuring of
Partnerships, with the new organisation structure in place from 1
January 2023 all operating under the Countryside Partnerships name
and the combination of all central functions under the banner of
Vistry Services. We are making good progress on aligning our
corporate governance and the full alignment of our business
policies, processes, and procedures including the Group's SHE
Management System is expected to be completed by April. We have
implemented a number of key IT changes and are well on our way to
unification of our systems, which is expected to complete in the
Autumn of 2023.
Vistry Works
The timber manufacturing operations acquired with Countryside
have been fully rebranded and relaunched as Vistry Works. The Group
sees Vistry Works as a valuable opportunity to create an industry
leading manufacturing capability with the potential to deliver
significant benefit to the broader Group in the medium term.
The business currently operates from its two factories at
Warrington and Leicester which together have the capacity to
deliver c.2,800 units in FY23. The Group is committed to re-opening
the Vistry Works East Midlands factory and this is targeted for the
second half of 2023. Good progress is being made with recruitment,
electric capacity enhancement and machine remobilisation, and a
review of additional manufacturing options to utilise surplus floor
space is being undertaken. In the medium term, the business is
targeting the manufacture of c.5,000 units.
Establishing good working relationships between the business
units and Vistry Works is a priority, and a framework has been put
in place to improve coordination between factories and the relevant
business unit to help ensure capacity levels are as fully utilised
as possible going forwards.
House type standardisation is fundamental to the efficiency of
the manufacturing operations, and we are working hard to ensure all
three of our brands' house types incorporate timber frame
construction with a heavy focus on delivering Future Homes
Standard. The current closed panel solution is being scaled back
with an open panel without plasterboard (hybrid) solution being the
preferred option to allow a more cost effective product offering to
the Group nearer term. We have a strong emphasis on R&D and
will evolve the product over time as the business gains
momentum.
Fire safety
The Group is committed to playing its part in delivering a
lasting industry solution to fire safety and its strong view
remains that the costs of remediation should not be borne by
leaseholders. Both Vistry and Countryside signed the Building
Safety Pledge Letter in April 2022 and on 13 March 2023, Vistry
signed the Department for Levelling Up, Housing and Communities'
Developer Remediation Contract.
We are making progress with the remediation works and of the 304
buildings identified, work has been completed on 59, we are on site
on 30, are engaged in the remediation process on 188, with 27
buildings to yet commence. The dedicated teams in both Vistry and
Countryside have been integrated under single management following
completion of the Countryside transaction and the cladding and
remedial fire safety provisions have been consolidated and aligned
under a consistent method of estimation.
As at 31 December 2022, the Group fire safety provision was
GBP309.2m. This includes a provision of GBP191.8m acquired through
the combination with Countryside, a charge of GBP97.0m in the year
covering additional requirements under the Pledge and the Developer
Remediation Contract and the adoption of a consistent approach
across the enlarged Group, and net spend of GBP4.8m on remediation
work in the year.
In addition, from 1 April 2022, the Group has been paying the 4%
Residential Property Developer Tax (RPDT) as part of the
contribution from the UK's largest residential property developers
towards the Government's cost of dealing with fire safety and
cladding remediation work. RPDT is intended to raise at least
GBP2bn from the industry over a ten-year period.
Balance sheet
The Group had a net cash position of GBP118.2m as at 31 December
2022 (31 December 2021: net cash of GBP234.5m) following a net cash
outflow of GBP95.2m for the acquisition of Countryside, GBP35.2m
share buy-back and GBP138.9m of dividend distribution. 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.
Inventories have increased by GBP876.0m year on year, primarily
driven by the Combination which added GBP792.3m of WIP and
continued investment in land and WIP during the period.
Similarly, land creditors have increased to GBP667.4m at 31
December 2022 from GBP414.2m at the beginning of the year. This is
driven primarily by the acquisition of GBP246.0m in land creditors
on the Combination with Countryside and the investment in land in
the period.
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.
Sustainability
Our purpose is to deliver sustainable new homes and communities
across all sectors of the UK housing market and our strategy is
split into three priority areas: our people, our homes and
communities, and our operations.
We made significant progress with our sustainability strategy in
2022 which is covered in detail in our Sustainability Report. Key
highlights include the linking of three key sustainability metrics
to executive remuneration and our sustainability linked loan, the
SBTi (science based targets initiative) verification of our carbon
reduction targets, and the publication of our Carbon Action Plan
focused our direct emissions, which complements our existing
roadmap to net zero carbon homes.
Following the success of our Europa Way development, which
delivered 54 zero-embodied carbon homes for Warwickshire District
Council, we commenced another joint venture with the Council to
deliver 310 zero-carbon homes at our Kenilworth site. This unique
partnership, which broke ground in March 2022 and was the first of
its kind to get underway in the UK, will deliver zero carbon
affordable homes at scale with improved building fabric
efficiencies and air source heat pumps.
For the year ahead, and following our combination with
Countryside, we are undertaking a review of our sustainability
strategy to ensure that it continues to be relevant to the business
and stakeholders of our enlarged Group and we will incorporate a
number of Countryside's best practice sustainability processes into
our existing procedures. In 2023, we will conduct a full review of
our materiality assessment, update our sustainability strategy as
required and set new targets.
Quality and customer service
Delivering high quality new homes and excellent customer
satisfaction remain our key priorities and we consider our
customers in all of our decision making.
We were pleased to have been awarded the maximum 5-star HBF
customer satisfaction rating in the most recent annual review for
the fourth consecutive year, with our score for Q3 2022 at 92.6%
(Q3 2021: 92.2%), in the most recently published HBF 12-month
rolling customer satisfaction data. We have focused on improving
our score for the HBF customer satisfaction survey which is sent
out nine months after completion and are pleased to have seen our
score on this ended at over 79% for the closed year 2020/2021.
The Group welcomes the introduction of the New Homes Ombudsman
and fully supports the New Homes Quality Code. It has completed
registration and is working on activation following the need for
alignment following the acquisition of Countryside.
During the year we expanded our customer relationship management
(CRM) capabilities across our Partnerships business, enriching the
customer experience and supporting our teams to work more
effectively across the customer journey. Rolling out our CRM
capabilities across the Countryside business is a key part of our
integration programme.
We continue developing our digital capabilities and our
immersive portal has played a key role in strengthening our
customer experience, giving them more choice about how, when and
where they do business with us. Over 77% of our customers are now
choosing to use our portal to make their reservation within six
clicks. Customers are also increasingly using the virtual personal
experience, which includes the opportunity to virtually visit our
developments, look around the homes and personalise them, including
changing worktops, cupboards, and flooring.
People
Our people make Vistry and are critical to the on-going success
of the Group. As was expected with the integration of Countryside,
we saw a decline in our latest Peakon employee engagement survey
carried out during March 2023, with the score at 7.8 (August 2022:
8.6), in-line with the Peakon benchmark. We are very focused on
maintaining an open and informative dialogue with all our employees
during this integration period and the Executive Leadership team
and other senior management have hosted drop-in Q&A sessions
and delivered ad hoc video updates to keep people informed. We were
pleased to have recently achieved certification as a 'Top Employer'
with the Top Employers Institute which recognises our people
strategy and workplace environment.
The safety of our people, and those who work with us, is also a
top priority. Health and safety is one of the first topics to be
covered in executive meetings, with clear linkage to our values and
ethos. Our year on year reduction in both accident incident rate
and service strike incident rate demonstrates our commitment to
continual improvement driven by a positive safety behaviour
culture.
Recognising the cost of living crisis and the heightened levels
of inflation over the past 12 months, we were pleased to award a
minimum 4% pay rise for all employees at the start of 2023. In
addition, in April 2022 we put in place a temporary cost of living
allowance of up to 3.75%, ensuring that the lowest paid employees
received the most support. These allowances became a permanent part
of all annual salaries under GBP60,000 from January 2023.
Land
The Group has a high quality, deliverable land bank reflecting a
successful year in the land market.
Vistry Partnerships continued to invest in its owned land bank
to support the growth of mixed tenure completions and in the year
secured 3,213 (2021: 4,131) plots on 19 (2021: 23) sites for mixed
tenure development, significantly ahead of replacement level.
Following our combination with Countryside, the enlarged
Partnerships business had an owned and controlled land bank of
44,258 (2021: 11,756) plots as at 31 December 2022.
Partnerships is well positioned on land and has 93% of the land
required for forecast FY23 completions secured and 80% of the land
for FY24 completions secured. There is a good pipeline of
attractive development opportunities, in particular working
alongside Housing Associations and Local Authorities.
Housebuilding secured 5,334 (2021: 7,667) plots across 32 (2021:
38) developments at an average gross margin and ROCE hurdle rate of
at least 25%. The rate of land acquisition in Housebuilding
consciously slowed in the fourth quarter reflecting the increased
level of uncertainty in the housing market. Following our
combination with Countryside, 32 sites totalling 5,039 plots have
been transferred from Countryside Partnerships to Vistry
Housebuilding from 1 January 2023. As at 31 December 2022,
Housebuilding had a total controlled land bank of 37,084 (2021:
31,014) plots. The business has a strong deliverable pipeline of
land with all of the land required for forecast 2023 completions
secured and 95% of the land for FY24 completions secured.
Housebuilding continues to progress high quality land opportunities
on a selective basis and with deferred payment terms.
Strategic land is a key component of the Group's land supply,
and we are targeting a greater proportion of total completions to
be delivered from higher margin strategic land in the medium term.
Our strategic land team delivers consented land to both our
Housebuilding and Partnerships businesses, with the two businesses
co-developing sites, particularly larger strategic sites, to
maximise returns. On average, our strategic land delivers an
incremental 150 to 300 basis points to the development gross
margin. The Group added 4,503 (2021: 7,721) strategic land plots
across 9 (2021: 12) developments to its strategic land bank in the
year and a further 22,204 strategic land plots across 48
developments following our combination with Countryside. In total,
the Group had 65,813 (2021: 40,000) strategic land plots as at 31
December 2022.
Group strategy
One Vistry
The Group exists to develop sustainable new homes and
communities across all sectors of the UK housing market. The Group
holds a unique market position. As a top housebuilder with a
leading partnerships business, Vistry is well positioned to deliver
strong growth, earnings resilience and sector leading return on
capital employed in the medium term.
Our combination with Countryside has materially accelerated our
One Vistry strategy of rapidly growing the more resilient
Partnerships revenues, and we expect Partnerships revenue to
represent at least 50% of total Group revenues in the near
term.
The Group has a strong market position and capability across all
housing tenures. It has three leading retail brands, Bovis Homes,
Linden Homes and Countryside Homes, each of which has its own
differentiated housing range and combined, gives the Group a
broader market reach. With a high quality, deliverable consented
land bank and an excellent strategic land capability, as One Vistry
we are especially focused on maximising absorption rates and
returns from larger multi-tenure developments where Partnerships
and Housebuilding develop alongside each other.
We are focused on realising the procurement cost benefits from
the Group's enlarged scale and on leveraging expertise and best
practice across all business units. In particular, our Partnerships
business is leading the way on Future Homes Standards on a number
of developments where it is working in partnership with Local
Authorities or Housing Associations. The experience and knowledge
gained is incredibly valuable across the entire Group.
In addition, we are integrating Countryside's timber frame
manufacturing operations across both Partnerships and Housebuilding
and effectively utilising modern methods of construction with the
objective of achieving procurement savings and de-risking the
supply chain.
Our strategy is to deliver greater profitability and higher
returns as One Vistry than would be achievable from the standalone
businesses. However, if the market does not recognise the full
value of the enlarged Group by 2025, it is expected that each of
Housebuilding and Partnerships would be large enough to succeed as
independent businesses, giving the option to separate them at that
time if the Board considered this to be in the best interest of
shareholders.
Partnerships
Countryside Partnerships holds a leading position within the
high growth, high demand affordable housing market, with its
unrivalled track record, established relationships and operational
capability, being its key competitive advantages. Successfully
integrating Countryside Partnerships and Vistry Partnerships and
maximising the benefits of the combination and being part of the
larger Group is our key focus for 2023, and we are making excellent
progress.
The enlarged Partnerships business has good geographical
coverage through its 19 business units and three operating
divisions, each with a highly experienced management team. The
business is targeting strong revenue growth of c.10% per annum over
the medium term, which is supported by the acute need for
affordable housing across the country, the programme of Government
funding for affordable housing including through Homes England, and
the strong demand for affordable housing and private rental stock
from Housing Associations, Local Authorities and other housing
providers including institutional investors.
Central to the Partnerships strategy is a target ROCE of above
40%. Vistry Partnerships has a strong track record of delivering
ROCE significantly in excess of 40%. Historically Countryside has
not prioritised ROCE resulting in a level below our 40% target. The
business is focused on increasing the proportion of pre-sold
revenues on a number of sites, particularly the more capital
intensive, high-rise developments in London, in order to drive ROCE
towards our target. All new development opportunities for
Partnerships have a minimum 40% ROCE hurdle and minimum 50%
pre-sold revenue hurdle.
Partnerships is targeting an adjusted operating margin of 12%+
(FY22: 10.7%) in the medium term, primarily through driving
operational efficiency, the benefits of scale, and procurement
savings.
Housebuilding
Near term, our high quality housebuilding business is focused on
maximising its performance against a more constrained market
backdrop. Key is operational excellence, with delivering the
highest quality build and customer service experience critical to
success in a more competitive sales environment. Our housebuilding
business has the management, site teams and embedded controls and
disciplines in place for this. On costs, our business units are
working closely with our preferred suppliers, and in particular our
subcontractors to deliver cost efficiencies whilst maintaining a
quality supply. Working capital is tightly managed on a site by
site basis and Housebuilding is selectively acquiring land and is
seeing increased success in securing land with deferred payment
terms.
Countryside's non-core legacy assets have been transferred to
Vistry Housebuilding, with all the sites expected to trade out
during FY23/FY24 other than two longer dated sites. In addition, as
highlighted at the time of acquisition, we have identified a number
of other schemes that we believe have the attributes of
housebuilding developments and these have been transferred in to
the Housebuilding business from 1 January 2023. Housebuilding is
also to retain a number of yet to be developed land opportunities
which were to be sold by Countryside, de-risking the Housebuilding
land pipeline and reducing its land acquisition requirements.
Housebuilding's medium term focus remains to deliver controlled
volume growth and further margin progression from its existing
operating structure. It is targeting 25% adjusted gross margin and
25% return on capital employed in the medium term.
The business has national coverage through its 13 operating
regions with each targeting annual output of between 550 to 625
units including JVs, giving an overall capacity for Housebuilding
of more than 8,000 units (2022: 6,774 units).
Key to driving gross margin and return on capital employed
are:
Land buying: leveraging the 'One Vistry' proposition and
relationships including joint bids with Vistry Partnerships on
larger developments.
Strategic land: maximising our strong in-house capability,
targeting 30% of completions from strategic land.
Operating structure: increasing volumes through the business'
existing infrastructure, with a highly experienced leadership team
in place.
Future Homes Standard: continual review of build product and
processes, realisation of a 'Green Premium'.
Multiple branding: increasing proportion of multiple branded
developments on Housebuilding sites.
Extras: our improving offering and customer proposition is
delivery strong growth in profitable 'Extras' revenues.
Board of Directors
There have been a number of changes to the Board during the
year. Ian Tyler stepped down as Chair of the Company at the Group's
Annual General Meeting on 18 May 2022. We thank Ian for his
invaluable contribution to the Group since 2013. Ralph Findlay OBE,
who has served as Non-Executive Director of the Company since April
2015, succeeded him as Chair. Ralph's appointment as Chair followed
a thorough and comprehensive succession planning process and has
enabled an effective transition of the leadership of the Board.
Upon becoming Chair, Ralph stepped down as Chair of the Audit
Committee and as a member of the Audit and Remuneration Committees.
At the same time, Ashley Steel who joined the Board in June 2021,
was appointed as Senior Independent Director.
The Board was delighted to appoint Rowan Baker as a
Non-Executive Director of the Company and as Chair of the Audit
Committee in May 2022. Rowan is a highly experienced CFO in
construction and development.
On completion of our combination with Countryside on 11 November
2022, as previously announced, Graham Prothero stepped down as
Chief Operating Officer and Director of the Company. Graham has
been a very valued colleague, we thank him for his commitment and
contribution to the Group and wish him all the best with his new
position as CEO at MJ Gleeson PLC. Earl Sibley, who was the Group's
Chief Financial Officer assumed the position of Chief Operating
Officer and remains a Board Director. Tim Lawlor joined the Group
as Chief Financial Officer and joined the Board of Directors. Tim
was formerly the CFO at Countryside Partnerships PLC.
Today we announced three further Board changes. Jeff Ubben has
been appointed as a Non- Executive Director with effect from 23
March 2023. Jeff is Managing Partner and Founder of Inclusive
Capital Partners L.P. , one of the Company's largest shareholders.
Jeff is a highly experienced Board member and investor in both the
United States and the UK and his deep expertise and insights,
particularly in ESG and sustainability, will be of enormous value
as our we continue our integration with Countryside. Nigel Keen and
Katherine Innes Ker are stepping down from the Board with effect
from 23 March 2023 and the close of our Annual General Meeting on
18 May 2023 respectively. Searches for two new Non-Executive
Directors have been commissioned.
Capital allocation and dividends
The Board is committed to retaining a healthy and resilient
balance sheet. The Group's priority remains to invest in high
returning land market opportunities in line with our land
investment strategy and growth targets for both Housebuilding and
the less capital-intensive Partnerships business. During the more
recent period of heightened market uncertainty, the Group has
maintained a selective approach to acquiring land, particularly for
the Housebuilding business.
The Board is recommending a final ordinary dividend of 32 (2021:
40) pence per share, bringing the total ordinary dividend for 2022
to 55 (2021: 60) pence per share. This represents a total full year
dividend payment of GBP162.3m (2021: GBP133.1m), which is covered
two times by Group adjusted net earnings.
As previously announced, the Board is reviewing the enlarged
Group's allocation policy to ensure it remains appropriate in the
context of the enlarged Group, and in doing so will be consulting
with shareholders.
Current trading and outlook
Our Partnerships business is seeing a good level of demand from
Housing Associations and Local Authorities, with the PRS market
also improving. In the year to date, Partnerships has secured a
number of new development opportunities which at least meet our
targets of 40%+ ROCE and 50% pre-sold revenues and has a good
pipeline. The resilience of our Partnerships business is reflected
in its strong forward order book totalling GBP2,840m (25 Feb 2022:
GBP1,338m), with 68% of mixed tenure FY23 units and all of partner
delivery revenues secured, providing us with the confidence it will
deliver revenue growth in FY23, on pro forma FY22.
For the Group overall, we have seen an improving trend on
private sales in the first 11 weeks of the year, with the Group's
average private sales rate per site per week for the year to date
at 0.54, increasing to 0.62 in the last four weeks. We have seen
increased consumer confidence from Q4 2022, particularly as
mortgage rates have trended downwards and availability has
improved.
Housebuilding is focused on delivering operational excellence in
this more competitive marketplace, with top quality customer
service and the highest build standard critical to success. The
business has a very experienced management team, and with its focus
on and investment in high quality site teams, is well positioned.
Housebuilding's forward order book totals GBP1,339m (25 Feb 2022:
GBP1,324m) with 55% of FY23 units secured.
Net pricing has held relatively firm in the first 11 weeks
supported by an increase in the use of incentives. The Group sees
opportunity for cost reduction in the year, with some success
achieved in the year to date. The expected year on year reduction
in private sales rates is reflected in our current build rates,
with a key focus on working capital management.
The integration of Countryside Partnerships is making excellent
progress and we are now expecting to deliver c.GBP25m of synergies
from the combination in FY23. We expect total synergies to be
c.GBP60m, up from our previous target of GBP50m, with the full
annual run rate achieved by the end of FY24.
Based on these assumptions, we expect the Group to deliver
adjusted profit before tax for FY23 in excess of GBP440m(1) . As
part of a disciplined approach to capital allocation, we will
continue to ensure the Group has a healthy and resilient balance
sheet and will continue to invest selectively in high quality land
and development opportunities as they arise.
Financial review
Group performance
The Group has delivered strong financial results despite
challenging market conditions in the fourth quarter of FY22. The
market outlook remains uncertain but the Group, strengthened by the
Combination, is well placed both to overcome potential difficulties
and to capture opportunities that may be presented by the changing
economic conditions.
Completions 2022 2021 Change
----------------------------- ------ ------ -------
Housebuilding 6,774 6,551 +3.4%
Partnerships Mixed Tenure 2,455 2,088 +17.6%
Countryside (11 Nov to 31 649 N/A N/A
Dec 2022)
Total Group Completions 9,878 8,639 +14.3%
Partner Delivery Equivalent
Units 2,073 2,441 -15.1%
During the year, the Group delivered 9,878 (2021: 8,639) legal
completions, including 100% of JV completions. Excluding
completions in the acquired Countryside business, there were 9,229
completions representing a 6.8% increase to the prior year.
Total adjusted revenue, including share of joint venture
revenue, was GBP3,073.2m, 14.1% higher than prior year (2021:
GBP2,693.6m). Excluding revenue from the Countryside acquisition,
adjusted revenue was up 8.4%. The average selling price across the
Group was GBP305,000 up 5.2% on the prior year. On a reported
basis, revenue was GBP2,729.4m, 13.4% higher than last year (2021:
GBP2,407.2m after restatement for trading with joint ventures).
There was a step up in adjusted gross profit in 2022 to
GBP636.9m (adjusted gross margin: 20.7%) from GBP543.0m in 2021
(adjusted gross margin: 20.2%). The gross margin improvement was
driven by the improved margin in the land bank brought into the
year and supported by sales price increases despite significant
build cost inflation in the year.
We have seen material availability return to pre-pandemic levels
in early 2023 and a softening in overall build cost inflation, but
some risk remains around categories impacted by global
macro-economic factors, in particular those materials exposed to
high energy use in the manufacturing process. Group purchasing
agreements have provided some protection against a number of
material price increases and we expect to see increased benefits
from our central procurement with the increased scale of the
business following the Countryside acquisition.
The Group delivered an adjusted operating profit for the year of
GBP451.1m (2021: GBP368.4m) and an adjusted profit before tax of
GBP418.4m (2021: GBP346.0m), with the year-on-year increase coming
through from higher levels of gross margin, partially offset by a
small increase in administrative expenses and finance costs.
Adjusted operating margin was 14.7% (2021: 13.7%).
On a reported basis, the Group saw a profit before tax of
GBP247.5m (2021: GBP319.5m), comprising operating profit of
GBP212.5m (2021: GBP285.4m) after exceptional costs of GBP153.9m
(2021: GBP12.2m), net financing expense of GBP12.2m (2021: net
income of GBP4.1m) and share of joint venture profit of GBP47.2m
(2021: GBP30.0m).
Partnerships performance
2022 2021 Change
-------------------------------- ----------
Mixed tenure 1,717 1,184 +45.0%
JV's (100%) Private 601 630 -4.6%
JV's (100%) Affordable 137 274 -50.0%
-------------------------------- ---------- ---------- ----------
Total mixed tenure completions 2,455 2,088 +17.6%
Partner delivery units 2,073 2,441 -15.1%
Adjusted revenue GBP938.4m GBP864.3m +GBP74.1m
Adjusted operating profit GBP100.8m GBP79.7m +GBP21.1m
Adjusted operating
margin 10.7% 9.2% +1.5ppts
TNAV(6) GBP159.1m GBP78.8m >100%
Partnerships completed a total of 2,455 units (2021: 2,088
units) from its mixed tenure operations (including 100% of JVs),
with an average selling price of GBP256,000 (2021: GBP237,000) and
partner delivery revenue generated equivalent units of 2,073 (2021:
2,441). The Partnerships business operated from an average of 28
active mixed tenure sites in 2022, with this number expected to be
over 80 in 2023.
In line with our strategy, the mix of revenue has continued to
switch towards mixed tenure developments in the year. Of the
GBP938.4m total Partnerships revenue, 54% derived from mixed tenure
(GBP507.7m) with 45% (GBP422.0m) from partner delivery projects,
compared with 46% deriving from mixed tenure last year (2021: total
GBP864.3m, partner delivery: GBP468.7m, mixed tenure: GBP395.6m).
This shift in mix is partly responsible for the improved adjusted
operating margin which has increased to 10.7% (2021: 9.2%) and
contributes to the increase in adjusted operating profit to
GBP100.8m (2021: GBP79.7m).
The Partnerships business has experienced similar build cost
inflation pressures to Housebuilding and has been able to mitigate
some of these pressures through strong supplier relationships,
matching cost arrangements to pre-sale pricing arrangements.
The recently acquired Countryside business performed in line
with expectations in the seven weeks between the Combination and
the year end. Adjusted revenue of GBP152.5m was delivered in the
period, with adjusted gross profit of GBP16.2m and adjusted
operating profit of GBP0.5m. This is historically a quieter period
for the Countryside business with its annual peak trading occurring
in the quarter ending 30 September.
Housebuilding performance
2022 2021 Change
--------------------------- ------------ ------------ -----------
Private 4,076 3,895 +4.6%
Affordable 1,355 1,369 -1.0%
JV's (100%) Private 1,108 996 +11.2%
JV's (100%) Affordable 235 291 -19.2%
--------------------------- ------------ ------------ -----------
Total completions 6,774 6,551 +3.4%
--------------------------- ------------ ------------ -----------
Adjusted revenue GBP1,982.4m GBP1,829.3m +GBP153.1m
Adjusted gross profit GBP464.5m GBP407.1m +GBP57.4m
Adjusted gross margin 23.4% 22.3% +1.1pp
Adjusted operating profit GBP383.4m GBP305.4m +GBP78.0m
Adjusted operating
margin 19.3% 16.7% +2.6ppts
TNAV ([6]) GBP1,368.8m GBP1,373.1m -0.3%
Total completions in Housebuilding (including 100% of JVs)
showed controlled growth of around 3%, as planned, at 6,774 units
which included 1,590 affordable homes representing 23.5% of total
completions (2021: 1,660 affordable homes, 25.3% of total
completions).
Housebuilding pricing and demand was strong in the first three
quarters of the year prior to the September mini-budget, after
which there was a sharp reduction in demand although pricing
remained firm. Over the year there was a 5.6% increase in average
private sales price to GBP376,000 (2021: GBP356,000). The total
average sales price increased to GBP324,600 (2021: GBP305,000) as a
result of the reduction in proportion of affordable housing and
house price inflation in the private market. The average number of
sales outlets was 142 broadly in line with the previous year, as
expected.
Housebuilding adjusted gross profit of GBP464.5m and
Housebuilding adjusted gross margin of 23.4% advanced from 2021
(adjusted gross profit: GBP407.1m, adjusted gross margin: 22.3%),
benefitting from a greater share of completions on sites with
strategically sourced land.
Housebuilding adjusted operating profit of GBP383.4m has risen
by 25.5% from the previous year (2021: GBP305.4m) with adjusted
operating margin also growing to 19.3% (2021: 16.7%). The
Housebuilding segment has maintained its operating structure, with
13 regional business units and has capacity within this structure
to accommodate the transfer of those sites from the Countryside
acquisition which more closely fit the characteristics of a
Housebuilding business.
Finance costs
The net financing expenses of the Group of GBP12.2m during 2022
compares to a net finance income of GBP4.1m during 2021 with
primary components as follows:
2022 2021 Change
----------------------------------- ----------- ----------- -----------
Bank, commitment fees and other (GBP17.4m) (GBP12.9m) (GBP4.5m)
interest
Interest on land creditors and (GBP9.4m) (GBP6.0m) (GBP3.4m)
lease liabilities and provisions
Interest income GBP14.6m GBP23.0m (GBP8.4m)
Net finance (cost)/income GBP(12.2m) GBP4.1m (GBP16.3m)
The increase in bank, commitment fees and other interest is
largely driven by the higher rates on our variable interest rate
debt.
The Group also incurred a GBP7.1m charge (2021: GBP5.1m),
reflecting the imputed interest on land bought on deferred terms
and an additional GBP1.4m charge (2021: GBP0.9m) in relation to
lease liabilities.
Joint ventures which are funded through loans are charged
interest by the Group, and this generated the majority of the
GBP14.6m of finance income recognised (2021: GBP23.0m).
Taxation
The Group has recognised a tax charge of GBP43.1m at an
effective tax rate of 17.4% (2021: GBP65.4m, at an effective rate
of 20.5%). The effective tax rate reduction is driven by prior year
adjustments and the write off of provisions in the period.
The introduction of the Residential Property Developer Tax
(RPDT) at a rate of 4% on profits from 1 April 2022 was
substantively enacted on 2 February 2022. The anticipated liability
arising post 1 April 2022 and prior to 31 December 2022 has been
included in the reported tax charge.
The Group's effective tax rate for FY23 is expected to be in the
region of 27.5% with nine months of the higher Corporation Tax rate
of 25% being introduced in April 2023 and a full year impact of the
RPDT of 4%.
Adjusting items
The Group manages the business by focussing on non-GAAP
measures, which we refer to as adjusted measures as we believe they
provide a better comparison of underlying performance measures from
one period to the next. GAAP measures can include one-off,
non-recurring items and recurring items.
The Group's share of revenue, gross profit and operating profit
from joint ventures and associate is included within the respective
adjusted measures in order to more accurately reflect the full
scale of the Group's operations and performance. At an adjusted
revenue level, revenue recognised on transactions with joint
ventures is eliminated. The impact of these transactions at a gross
profit level is de minimis.
The adjustments made to performance measures include the
following items:
- an incremental fire safety provision (2022: GBP97.0m, 2021:
GBP5.7m),
- exceptional costs of GBP56.9m relating to the Combination,
consisting of GBP29.5m of transaction costs and GBP27.4m of
acquisition-related integration and restructuring costs (2021:
GBP6.5m in relation to the integration of Linden and
Partnerships),
- the amortisation of acquired intangible assets 2022: GBP17.1m
(2021: GBP14.2m).
Fire safety provision
On 7 April 2022, the Group signed up to the government's
Developer Pledge for fire safety remedial work required on
developments over 11 metres high. A provision of GBP71.4m was
recognised in the Interim accounts for 30 June 2022.
On 13 March 2023 the Group became a signatory to the Developer
Remediation Contract which they were committed to signing at the
year end, and as such this has been treated a post-balance sheet
adjusting event. This contract clarifies the extent of the
additional obligations of the Group regarding fire safety remedial
works; resulting in the recognition of an incremental GBP24.7m in
provision. The acquired fire safety provision on the Combination
with Countryside was GBP191.8m, which included the additional
commitments of the Developer Remediation Contract.
The Group has spent GBP4.8m during the year on remediation
(2021: GBP1.4m) resulting in the Group's closing provision for
remedial works being GBP309.2m at 31 December 2022, after unwinding
GBP0.9m of interest. A combined portfolio of 304 buildings is
provided for in respect of remediation costs for multi-occupancy
buildings, with work complete on 59.
Acquisition accounting
The acquisition accounting in relation to the Combination with
Countryside is well progressed and we continue to review the
provisional fair values for intangibles and inventories. We will
complete this work in 2023 as the accounting standards require that
the provisional fair values are finalised within twelve months from
the acquisition date of 11 November 2022.
Prior to performing the fair valuation exercise, the accounting
policies of Countryside first had to be aligned to those of the
Group. The policies differ in the treatment of the capitalisation
of certain personnel and pre-development costs, which has resulted
in an GBP86m write down, net of deferred tax, to Countryside's
assets at acquisition date. Simply put, on an assumption that the
level of activity remained the same as prior years, the reduction
in future cost of sales arising from the write-down of these assets
is expected to be broadly offset by the increase in period costs
arising from the non-capitalisation of such costs going
forward.
The provisional fair value exercise has allocated the purchase
price of Countryside of GBP1,137m as follows: inventories of
GBP792m, investments, right of use assets and PP&E of GBP140m,
intangibles such as brands and relationships of GBP349m and
goodwill of GBP257m, less GBP209m of provisions and GBP192m of net
working capital and other items, including cash and deferred tax.
The total fair value adjustments which will unwind to underlying
earnings is a credit of GBP107m, and this will unwind predominantly
in underlying earnings over the next 6 to 8 years.
Net assets
2022 2021
-------------------------- ---------------------------- -------------- --------------
Vistry Countryside Vistry Change
(excl. (excl. in Vistry
Countryside) Countryside) (excl.
Countryside)
-------------------------- -------------- ------------ -------------- --------------
Goodwill and intangibles GBP657.2m GBP603.5m GBP675.3m -GBP18.1m
Tangible net assets GBP1,486.9m GBP130.2m GBP1,305.6m +GBP181.3m
excluding investments
in joint ventures and
associate
Investment in joint GBP204.8m GBP48.9m GBP175.1m +GBP29.7m
ventures
Net cash -GBP196.5m GBP314.7m GBP234.5m -GBP431.0m
Net assets GBP2,152.4m GBP1,097.3m GBP2,390.5m -GBP238.1m
As at 31 December 2022, net assets of GBP3,249.7m were GBP859.2m
higher than at the start of the year, primarily driven by the
Combination and partially offset by the costs incurred in relation
to the Combination and incremental fire safety provisioning. Net
assets per share were 937p (2021: 1,075p).
Goodwill and intangibles totalled GBP1,260.7m at 31 December
2022 (2021: GBP675.3m) with the increase resulting from the
recognition of GBP349.1m of intangible assets following the
Combination, relating to the Countryside Partnerships brand name,
customer relationships and secured customer contracts (which were
then amortised in the period post acquisition), and the recognition
of GBP257.2m in goodwill.
Tangible net assets, including investments in joint ventures,
increased from GBP1,480.6m at 31 December 2021 to GBP1,870.8m at 31
December 2022 driven by the Combination, with the provisional
acquisition balance sheet shown in Note 11, as well as investment
in land and work in progress which increased by GBP876.0m to
GBP2,838.1m.
Trade and other receivables increased by GBP208.0m to GBP449.4m,
and trade and other payables increased by GBP589.8m to GBP1,767.2m;
both movements primarily driven by the Combination.
Cash flow and financing
As at 31 December 2022 the Group's net cash balance was
GBP118.2m. Having started the year with GBP234.5m, the Group
generated an operating cash inflow before land expenditure of
GBP529.1m (2021: GBP635.6m). Net cash payments for land investment
increased to GBP476.2m (2021: GBP368.6m).
Investing cash inflows totalled GBP19.3m, mainly driven by net
inflows from joint ventures of GBP97.7m and offset by net outflows
of GBP95.2m related to the Combination with Countryside.
In order to fund the Combination the Group took out a GBP400m
Acquisition Term Loan, which matures in March 2025. As part of the
same re-financing process, the Group exercised an option to extend
its existing GBP500m Revolving Credit Facility (RCF) arrangement
for a further year, meaning that it will now mature in December
2026. Together with a GBP100m US Private Placement, a retained
GBP50m Bilateral Term Loan (repaid in March 2023), an overdraft of
GBP5m and a Homes England loan facility of GBP10.7m, the Group had
external funding facilities totalling GBP1,065.7m (2021: GBP665.7m)
at 31 December 2022. These facilities are used to fund intra-period
working capital movements and land investments with average monthly
debt for the full year 2022 of GBP110.0m.
Shareholder distributions
The Group has stated a dividend expectation of two times
earnings cover. In line with this policy, the Group is proposing to
distribute 50% of the full year Adjusted Net Earnings(4) of
GBP324.7m as dividends. Total interim dividend payments of GBP50.1m
were made in November 2022. The proposed final dividend payments
total GBP112.2m and represent a final dividend per share of 32p.
Total dividend payments in respect of the financial year 2021 were
GBP133.1m. Subject to AGM approval, the final dividend will be paid
on 1 June 2023.
Following the announcement of the Group's share buy back scheme
in May 2022, 4,056,968 shares were purchased in July 2022,
representing a total share buy back of GBP35.2m.
As outlined in the shareholder circular dated 7 October 2022,
following a period of integration we will now review, in
consultation with shareholders, the enlarged Group's capital
allocation policy to confirm whether it remains appropriate for the
enlarged Group. Under the existing policy, any surplus capital,
following investment in the business to support the enlarged
Group's growth strategy and the payment of the ordinary dividend,
is expected to be returned to the Group's shareholders through
either a buyback or special dividend.
Land bank
Partnerships land bank
As at 31 December 2022 2021
-------------------------------------- ----------- -----------
Consented plots added 3,213 2,266
Sites added 19 11
Sites owned at year end 131 72
Sites controlled at year end 88 14
Total plots in land bank at year end
inc. joint ventures 48,579 11,756
Average selling price inc. share of GBP325,000 GBP285,000
joint ventures
Average consented land plot price GBP41,000 GBP42,000
The Partnerships land bank including joint ventures as at 31
December 2022 consisted of 48,579 plots across 219 sites. The land
bank benefitted from the acquisition of 34,623 plots through the
Combination from 62 owned and 79 controlled sites.
The 2,455 mixed tenure plots that legally completed in the year
were more than offset by the acquisition of 2,371 owned plots on 14
sites. In addition, 842 plots were secured on a conditional basis
on 5 sites. Of the 3,213 owned plots, 298 were sourced
strategically. All sites acquired for Partnerships will support
future returns on capital employed for the segment in excess of
40%.
The average selling price of all units within the consented land
bank increased over the year to GBP325,000 (2021: GBP285,000). The
estimated embedded gross margin in the land bank as at 31 December
2022, based on prevailing sales prices and build costs is 19.4%
(2021: GBP19.3%).
Housebuilding land bank
As at 31 December 2022 2021
---------------------------------- ----------- -----------
Consented plots added 5,334 6,432
Sites added 32 28
Sites owned at year end 210 216
Sites controlled at year end 26 14
Total plots in land bank at year
end inc. joint ventures 32,763 31,014
Average selling price inc. share GBP346,000 GBP319,000
of joint ventures
The Housebuilding land bank including joint ventures of 32,763
plots as at 31 December 2022 represents c 4.1 years of supply based
on 2022 completion volumes (2021: 31,014 plots and 4.8 years),
including plots acquired with Countryside. A total of 5,039 plots
were added to the Housebuilding land bank through the Combination
and includes sites previously classified as Legacy Operations
within Countryside Partnerships.
The land bank reflects our Housebuilding strategy to deliver
controlled growth in the medium term using existing operating
structures and improving both gross margin and return on capital
employed to 25%.
The 6,744 plots that legally completed in the year were replaced
by a total of 5,334 plots from a combination of site acquisitions
representing 4,285 owned plots and a further 1,049 plots secured on
a conditional basis across 10 sites. Of the 4,285 owned plots,
2,273 were sourced strategically.
The average selling price of all units within the consented land
bank increased over the year to GBP346,000 (2021: GBP319,000). The
estimated embedded gross margin in the consented land bank as at 31
December 2022, based on prevailing sales prices and build costs is
23.6% (2021: 25.0%). The decrease in margin is primarily driven by
the inclusion of the Countryside sites.
Strategic land
As at 31 December 2022 Total sites Total plots
------------------------ ------------ ------------
By size
0 - 150 plots 62 5,457
150 - 300 plots 48 10,230
300 - 500 plots 20 8,698
500 - 1,000 plots 20 13,221
1,000+ plots 17 28,207
Total 167 65,813
------------------------ ------------ ------------
By planning status
Planning agreed 11 8,839
Planning application 15 3,212
Ongoing application 141 53,762
Total 167 65,813
------------------------ ------------ ------------
As at 31 December 2021 118 40,000
Strategic land continues to be an important source of supply and
during the year 2,571 plots have been converted from the strategic
land pipeline into the consented land bank. A further 4,503 plots
were secured under options and planning consent gained on 1,453
plots over the year. 22,404 plots were added to strategic land as a
result of the Combination.
Strategic land remains well positioned to deliver high quality
developments in the near to medium term with good progress on a
number of significant projects.
Risks and uncertainties
The Group is subject to a number of risks and uncertainties as
part of its activities. The Board regularly considers these and
seeks to ensure that appropriate processes are in place to manage,
monitor and mitigate these risks.
Risks relating to sustainability are becoming increasingly
important in the medium term, especially with the emerging
transitional risks which are becoming enshrined in regulation.
Group income statement
*Revenue and cost of sales for 2021 have been restated in
relation to trading with our joint ventures (see note 1).
2022 2021*
For the year ended 31 December Note GBP000 GBP000
Revenue 2 2,729,432 2,407,158
============================================== ==== =========== ===========
Cost of sales (2,315,703) (1,967,886)
============================================== ==== =========== ===========
Gross profit 413,729 439,272
Analysed as:
============================================== ==== =========== ===========
Adjusted gross profit 12 636,855 542,965
============================================== ==== =========== ===========
Other operating income (57,713) (40,659)
============================================== ==== =========== ===========
Exceptional cost of sales 4 (96,113) (5,744)
============================================== ==== =========== ===========
Share of joint ventures' and associate
gross profit (69,300) (57,290)
============================================== ==== =========== ===========
Gross profit 413,729 439,272
============================================== ==== =========== ===========
Administrative expenses including exceptional
items (258,936) (194,517)
============================================== ==== =========== ===========
Other operating income 57,713 40,659
============================================== ==== =========== ===========
Operating profit 212,506 285,414
Analysed as:
============================================== ==== =========== ===========
Adjusted operating profit 12 451,090 368,368
============================================== ==== =========== ===========
Exceptional expenses 4 (152,977) (12,225)
============================================== ==== =========== ===========
Amortisation of acquired intangibles (17,065) (14,240)
============================================== ==== =========== ===========
Share of joint ventures' and associate
operating profit (68,542) (56,489)
============================================== ==== =========== ===========
Operating profit 212,506 285,414
============================================== ==== =========== ===========
Financial income 14,547 23,062
============================================== ==== =========== ===========
Financial expenses including exceptional
items (26,776) (18,931)
============================================== ==== =========== ===========
Net financing (expenses) / income (12,229) 4,131
============================================== ==== =========== ===========
Share of profit of joint ventures and
associate 7 47,207 29,991
============================================== ==== =========== ===========
Profit before tax 247,484 319,536
Analysed as:
Adjusted profit before tax 418,426 346,001
============================================== ==== =========== ===========
Exceptional expenses (153,877) (12,225)
============================================== ==== =========== ===========
Amortisation of acquired intangibles (17,065) (14,240)
====
Profit before tax 247,484 319,536
============================================== ==== =========== ===========
Income tax expense (43,139) (65,411)
============================================== ==== =========== ===========
Profit for the year attributable to ordinary
shareholders 204,345 254,125
===========
2022 2021
================================================= ====== ======
Earnings per share
================================================= ====== ======
Basic 86.5p 114.6p
================================================== ====== ======
Diluted 86.3p 114.1p
================================================== ====== ======
Basic earnings per share (before exceptional
items and amortisation of acquired intangibles) 137.5p 125.5p
================================================== ====== ======
Diluted earnings per share (before exceptional
items and amortisation of acquired intangibles) 137.1p 124.9p
================================================== ====== ======
Group statement of comprehensive income
2022 2021
For the year ended 31 December GBP000 GBP000
Profit for the year attributable to ordinary
shareholders 204,345 254,125
============================================== ======== =======
Other comprehensive income / (expense)
============================================= ======== =======
Items that will not be reclassified to
the income statement
============================================= ======== =======
Remeasurements on defined benefit pension
scheme (16,374) 33,838
============================================== ======== =======
Deferred tax on remeasurements on defined
benefit pension scheme 2,399 (9,148)
============================================== ======== =======
Total other comprehensive (expense) /
income (13,975) 24,690
============================================== ======== =======
Total comprehensive income for the year
attributable to ordinary shareholders 190,370 278,815
============================================== ======== =======
Balance sheets
2022 2021
As at 31 December Note GBP000 GBP000
======================================== ==== ========= =========
Assets
======================================== ==== ========= =========
Goodwill 804,742 547,509
======================================== ==== ========= =========
Intangible assets 455,965 127,809
======================================== ==== ========= =========
Property, plant and equipment 20,945 4,742
======================================== ==== ========= =========
Right-of-use assets 77,217 31,069
======================================== ==== ========= =========
Investments 7 253,659 175,064
======================================== ==== ========= =========
Amounts recoverable from joint ventures
and associate 391,382 308,217
======================================== ==== ========= =========
Trade and other receivables 601 454
======================================== ==== ========= =========
Restricted cash 382 778
======================================== ==== ========= =========
Deferred tax assets 1,819 -
======================================== ==== ========= =========
Retirement benefit asset 34,251 45,318
======================================== ==== ========= =========
Total non-current assets 2,040,963 1,240,960
======================================== ==== ========= =========
Inventories 2,838,140 1,962,155
======================================== ==== ========= =========
Trade and other receivables 449,440 241,420
======================================== ==== ========= =========
Cash and cash equivalents 676,760 398,714
======================================== ==== ========= =========
Current tax asset 10,417 -
======================================== ==== ========= =========
Total current assets 3,974,757 2,602,289
======================================== ==== ========= =========
Total assets 6,015,720 3,843,249
======================================== ==== ========= =========
Equity
======================================== ==== ========= =========
Issued capital 173,605 111,154
======================================== ==== ========= =========
Share premium 360,801 361,081
======================================== ==== ========= =========
Capital redemption reserve 1,278 -
======================================== ==== ========= =========
Merger reserve 1,597,756 823,513
======================================== ==== ========= =========
Retained earnings 1,116,232 1,094,833
======================================== ==== ========= =========
Total equity attributable to equity
holders of the parent 3,249,672 2,390,581
======================================== ==== ========= =========
Liabilities
======================================== ==== ========= =========
Bank and other loans 8 508,657 164,260
======================================== ==== ========= =========
Trade and other payables 334,484 211,296
======================================== ==== ========= =========
Lease liabilities 71,826 18,836
======================================== ==== ========= =========
Provisions 280,764 30,928
======================================== ==== ========= =========
Deferred tax liabilities - 38,444
======================================== ==== ========= =========
Total non-current liabilities 1,195,731 463,764
======================================== ==== ========= =========
Bank and other loans 8 49,938 -
======================================== ==== ========= =========
Trade and other payables 1,432,711 966,127
======================================== ==== ========= =========
Lease liabilities 14,756 14,215
======================================== ==== ========= =========
Provisions 72,912 8,455
======================================== ==== ========= =========
Current tax liabilities - 107
======================================== ==== ========= =========
Total current liabilities 1,570,317 988,904
======================================== ==== ========= =========
Total liabilities 2,766,048 1,452,668
======================================== ==== ========= =========
Total equity and liabilities 6,015,720 3,843,249
======================================== ==== ========= =========
Group statement of changes in equity
Own Other Total Capital
shares retained retained Issued Share Redemption Merger
held earnings earnings capital premium reserve reserve Total
For the year ended 31
December Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP'000 GBP000 GBP000
Balance at 1 January
2021 (6,956) 906,741 899,785 111,127 360,657 - 823,513 2,195,082
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Profit for the year - 254,125 254,125 - - - - 254,125
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Total other comprehensive
income - 24,690 24,690 - - - - 24,690
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Total comprehensive
income - 278,815 278,815 - - - - 278,815
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Issue of share capital - - - 27 424 - - 451
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
LTIP shares exercised 3,584 (3,584) - - - - - -
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Share-based payments - 4,543 4,543 - - - - 4,543
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Dividends paid 6 - (88,709) (88,709) - - - - (88,709)
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Deferred and current
tax on share-based
payments - 399 399 - - - - 399
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Total transactions with
owners recognised
directly in equity 3,584 (87,351) (83,767) 27 424 - - (83,316)
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Balance at 31 December
2021 (3,372) 1,098,205 1,094,833 111,154 361,081 - 823,513 2,390,581
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Balance at 1 January
2022 (3,372) 1,098,205 1,094,833 111,154 361,081 - 823,513 2,390,581
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Profit for the year - 204,345 204,345 - - - - 204,345
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Total other comprehensive
expense - (13,975) (13,975) - - - - (13,975)
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Total comprehensive
income - 190,370 190,370 - - - - 190,370
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Issue of share capital - - - 7 (280) - - (273)
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Purchase of own shares (14,484) - (14,484) - - - - (14,484)
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Cancellation of shares - (22,413) (22,413) (1,278) - 1,278 - (22,413)
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Shares issued as
consideration - 854 854 63,722 - - 774,243 838,819
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
LTIP shares exercised 456 (456) - - - - - -
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Share-based payments - 6,337 6,337 - - - - 6,337
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Dividend paid 6 - (138,858) (138,858) - - - - (138,858)
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Deferred and current
tax on share-based
payments - (407) (407) - - - - (407)
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Total transactions with
owners recognised
directly in equity (14,028) (154,943) (168,971) 62,451 (280) 1,278 774,243 668,721
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Balance at 31 December
2022 (17,400) 1,133,632 1,116,232 173,605 360,801 1,278 1,597,756 3,249,672
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Group Statements of cash flows
2022 2021
For the year ended 31 December Note GBP000 GBP000
============================================= ==== ========= =========
Cash flows from operating activities
============================================= ==== ========= =========
Profit for the year 204,345 254,125
============================================= ==== ========= =========
Depreciation and amortisation 35,272 32,524
============================================= ==== ========= =========
Impairment losses 9,505 -
============================================= ==== ========= =========
Financial income (14,547) (23,062)
============================================= ==== ========= =========
Financial expense 26,776 18,931
============================================= ==== ========= =========
Loss on disposal of property, plant and
equipment 3 1
============================================= ==== ========= =========
Equity-settled share-based payment expense 6,337 4,543
============================================= ==== ========= =========
Income tax expense 43,139 65,411
============================================= ==== ========= =========
Share of profit of joint ventures and
associate 7 (47,207) (29,991)
============================================= ==== ========= =========
Profit released on sale of assets from
joint ventures and associate - (265)
============================================= ==== ========= =========
(Increase) in trade and other receivables (86,059) (15,308)
============================================= ==== ========= =========
Increase in inventories (83,656) (125,634)
============================================= ==== ========= =========
(Decrease) / increase in trade and other
payables (64,343) 143,604
============================================= ==== ========= =========
Increase / (decrease) in provisions 105,589 (1,018)
============================================= ==== ========= =========
Cash generated from operations 136,151 323,861
============================================= ==== ========= =========
Interest paid (16,570) (17,835)
============================================= ==== ========= =========
Interest paid on lease payments^ (1,408) (905)
============================================= ==== ========= =========
Income taxes paid (65,300) (39,000)
============================================= ==== ========= =========
Net cash generated from operating activities 52,873 266,121
============================================= ==== ========= =========
Cash flows from investing activities
============================================= ==== ========= =========
Bank interest received 477 12
============================================= ==== ========= =========
Acquisition of intangible assets (43) (1,516)
============================================= ==== ========= =========
Acquisition of property, plant and equipment (1,586) (1,546)
============================================= ==== ========= =========
Acquisition of Countryside net of cash
acquired 11 (77,667) -
============================================= ==== ========= =========
Loans made to and investments in joint
ventures and associate (139,476) (126,423)
============================================= ==== ========= =========
Interest received on loans to joint ventures
and associate 10,602 32,730
============================================= ==== ========= =========
Loan repayments from joint ventures and
associate 188,484 124,947
============================================= ==== ========= =========
Distributions from joint ventures and
associate 7 38,065 16,989
============================================= ==== ========= =========
Decrease in restricted cash 396 415
============================================= ==== ========= =========
Net cash generated from / (used in)
investing activities 19,252 45,608
============================================= ==== ========= =========
Cash flows from financing activities
============================================= ==== ========= =========
Dividends paid 6 (138,858) (88,709)
============================================= ==== ========= =========
Principal elements of lease payments (16,141) (15,745)
============================================= ==== ========= =========
Net (spend on) / proceeds from the issue
of share capital (273) 451
============================================= ==== ========= =========
Share buyback (35,245) -
============================================= ==== ========= =========
Drawdown of bank and other loans 1,390,000 220,000
============================================= ==== ========= =========
Repayment of bank and other loans (993,562) (370,000)
============================================= ==== ========= =========
Net cash generated from / (used in)
financing activities 205,921 (254,003)
============================================= ==== ========= =========
Net increase in cash and cash equivalents 278,046 57,726
============================================= ==== ========= =========
Cash and cash equivalents at 1 January 398,714 340,988
============================================= ==== ========= =========
Cash and cash equivalents at 31 December 676,760 398,714
============================================= ==== ========= =========
1 Basis of preparation
General information
Vistry Group PLC (the "Company") is a public company, limited by
shares, domiciled and incorporated in England, United Kingdom. The
shares are listed on the London Stock Exchange. The consolidated
financial statements of the Company for the year ended 31 December
2022 comprise the Company and its subsidiaries (together referred
to as the "Group") and the Group's interest in joint ventures and
associate. The financial statements were authorised for issue by
the Directors on [22] March 2023. The registered office for Vistry
Group PLC is 11 Tower View, Kings Hill, West Malling, Kent, ME19
4UY.
Basis of accounting
The financial information set out above does not constitute the
Company's statutory financial statements for the years ended 31
December 2022 or 2021 but is derived from those financial
statements. Statutory financial statements for 2021 have been
delivered to the registrar of companies, and those for 2022 will be
delivered in due course. The auditors have reported on those
financial statements; their reports were (i) unqualified, (ii) did
not include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
For the year to 31 December 2022, the financial statements of
the Company and the consolidated financial statements of the Group
have been prepared in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act
2006 as applicable to companies reporting under those
standards.
The Company has elected to take the exemption under section 408
of the Companies Act 2006 to not present the Company income
statement and statement of comprehensive income.
There are no new standards effective for the first time in the
year beginning 1 January 2022 which have had a material impact on
the Group's reported results.
In accordance with section 612 of the Companies Act 2006,
advantage is taken of the relief from the requirement to create a
share premium account to record the excess over the nominal value
of shares issued in a share for share transaction. Where the
relevant requirements of section 612 of the Companies Act 2006 are
met, the excess of any nominal value is credited to a merger
reserve.
All other accounting policies have been applied consistently to
the Company and the Group.
The financial statements are prepared on the historical cost
basis unless otherwise stated.
The functional currency of the Group is Pounds Sterling (GBP),
and the accounts are presented in the same currency.
Going concern
The Group has prepared a cash flow forecast to confirm the
appropriateness of the going concern assumption in these accounts.
The forecast was prepared using a likely base case and a severe but
plausible downside sensitivity scenario. In the downside scenario
the Group have assumed decreased affordability, leading to reduced
demand for housing and falling house prices. We continue to see
some build cost inflation with higher energy prices impacting a
selected range of materials required. Whilst this has not been
factored into our assumptions we are targeting a reduction in
labour rates as the labour market softens. In both the base case
and the downside sensitivity scenario, the forecasts indicated that
there was sufficient headroom and liquidity for the business to
continue based on the facilities available to the Group. In each of
these scenarios the Group was also forecast to comply with the
required covenants on the aforementioned borrowing facilities.
Consequently, the Directors have not identified any material
uncertainties to the Group's ability to continue as a going concern
over a period of at least twelve months from the date of the
approval of the financial statements and have concluded that using
the going concern basis for the preparation of the financial
statements is appropriate.
In the downside sensitivity scenario, the following assumptions
have been applied (in aggregate):
- A 10% reduction in private sales volumes in 2023 and 20%
reduction in 2024, with a corresponding reduction in development
spend
- A 10% reduction in private sales prices
- A rise in interest cost of 100bps
- No sensitivity has been applied to either the affordable and
PRS or partner delivery revenue streams as it is assumed that these
would not be impacted by a downturn due to the significant
proportion of this revenue which is pre-sold
In a severe but plausible downside, the following mitigating
actions have been modelled:
- Cessation of uncommitted land spend
- Reduction in planned dividend outflows by 50% from H2 2023 onwards
The Board continues to take prudent decisions to best support
the business through this period of uncertainty, including measures
to protect the Group's cash position, liquidity and maintain a
robust balance sheet.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 December 2022. Subsidiaries are
entities controlled by the Group. The Group controls an entity when
it is exposed to, or has rights to, variable returns from its
involvement with the entity and can affect those returns through
its power over the entity.
In assessing control, the Group takes into consideration
potential voting rights that are currently exercisable. The
acquisition date is the date on which control is transferred to the
acquirer. The financial statements of subsidiaries are included in
the consolidated financial statements from the date that control
commences until the date that control ceases. A joint arrangement
is an arrangement over which the Group and one or more third
parties have joint control. These joint arrangements are in turn
classified as:
- Joint ventures whereby the Group has rights to the net assets
of the arrangement, rather than rights to its assets and
obligations for its liabilities; and
- Joint operations whereby the Group has rights to the assets
and obligations for the liabilities relating to the
arrangement.
The consolidated financial statements include the Group's share
of the comprehensive income and expenses of its joint ventures and
associate on an equity accounted basis and its share of income and
expenses of its joint operation within the corresponding lines of
the income statement, from the date that joint control
commenced.
Restatement of Vistry Group PLC 2021 financial statements and
notes
Reported revenue and cost of sales have been restated for the
year ended 31 December 2021 (increasing partner delivery revenue
and cost of sales by GBP48.1m). This adjustment was to correct a
prior period error in calculating the revenue and associated cost
of sales that recognised in relation to assets previously sold by
the Group to joint ventures that have subsequently been sold by
these joint ventures to external parties. The gross profit element
of this error is de minimis, and as a result no adjustment to gross
profit has been made in the restatement.
2 Revenue
2022 2021
Revenue by type GBP000 GBP000
Private housing 1,895,566 1,599,616
======================================= ========= =========
Affordable housing and PRS revenue 350,465 261,894
======================================= ========= =========
Partner delivery revenue* 470,357 516,769
======================================= ========= =========
Bare land sales 5,654 22,727
======================================= ========= =========
Release of deferred revenue from joint
ventures - 243
======================================= ========= =========
Other 7,390 5,909
======================================= ========= =========
Total 2,729,432 2,407,158
======================================= ========= =========
* Revenue and cost of sales for 2021 has been restated in
relation to trading with our joint ventures
3 Segmental reporting
All revenue and profits disclosed relate to continuing
activities of the Group and are derived from activities performed
in the United Kingdom.
The Chief Operating Decision Maker (CODM), which is the Board,
notes that the Group's main operation is that of a housebuilder and
it operates entirely within the United Kingdom.
Segmental reporting is presented in respect of the Group's
business segments reflecting the Group's management and internal
reporting structure and is the basis on which strategic operating
decisions are made by the Group's CODM.
Following the Combination on 11 November 2022, the Board have
identified three separate segments for 2022 having taken into
consideration IFRS 8: "Operating Segments" criteria, Housebuilding,
Partnerships and Countryside, since the CODM has reviewed
information relating to the recently acquired Countryside business
separate to the existing Housebuilding and Partnerships
businesses.
The Housebuilding segment develops sites across England,
providing private and affordable housing on land owned by the Group
or the Group's joint ventures. Housebuilding offers properties
under both the Bovis and Linden brand names.
The Partnerships segment specialises in partnering with housing
associations and other public sector businesses across England,
including London, to deliver either the development of private,
affordable and PRS housing on land owned by the Group or the
Group's joint ventures, or to provide contracting services for
development. The Partnerships segment currently operates under the
Vistry Partnerships and Drew Smith brand names, though the Drew
Smith and Vistry Partnerships brand names will cease to be used
once current sites complete and the segment will operate under the
Countryside Partnerships brand going forwards.
During the year, one development site was transferred from the
Housebuilding to the Partnerships operating segment due to their
closer alignment with the Partnerships commercial proposition. The
impact of the transfer on the adjusted gross margin for
Partnerships was to increase it by 2bps and the impact on adjusted
gross margin for Housebuilding was to increase it by 2bps.
The Countryside segment represents the business acquired on 11
November 2022 and is a business which primarily partners with
housing associations and other public sector businesses across
England, including London, to deliver the development of private
and affordable housing on land owned by the Group or the Group's
joint ventures or associate. The Countryside segment operated under
the Countryside Partnerships brand name.
Segmental adjusted operating profit and segmental operating
profit include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Central head
office costs are allocated between the segments where possible, or
otherwise reported within the separate column for Group items
together with acquisition related exceptional items and
amortisation of acquired intangibles.
Segmental tangible net asset value (TNAV) includes items
directly attributable to the segment as well as those that can be
allocated on a reasonable basis, with the exception of net cash or
debt, retirement benefit assets / liabilities and tax balances
payable / receivable.
Adjusted financial results include share of joint ventures and
associate and exclude exceptional items. Adjusted revenue is stated
exclusive of revenue recognised by the Group on transactions with
joint ventures and associate, no adjustment is made to adjusted
gross margin as the impact is de minimis. Adjusted gross profit is
stated including other operating income.
Segmental financial performance
Countryside Group
Housebuilding Partnerships items Total
Year ended 31 December 2022 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 1,737,944 854,504 136,984 - 2,729,432
================================== ============= ============ =========== ======== =========
Share of joint ventures'
and associate's revenue 244,409 132,715 15,505 - 392,629
================================== ============= ============ =========== ======== =========
Elimination of revenue recognised
on transactions with joint (48,824
ventures and associate - (48,824) - - )
================================== ============= ============ =========== ======== =========
Adjusted revenue 1,982,353 938,395 152,489 - 3,073,237
================================== ============= ============ =========== ======== =========
Gross profit 294,908 108,268 10,553 - 413,729
================================== ============= ============ =========== ======== =========
Share of joint ventures'
and associate's gross profit 45,461 19,061 4,778 - 69,300
================================== ============= ============ =========== ======== =========
Exceptional cost of sales 91,123 4,990 - - 96,113
================================== ============= ============ =========== ======== =========
Other operating income 33,001 23,876 836 - 57,713
================================== ============= ============ =========== ======== =========
Adjusted gross profit 464,493 156,195 16,167 - 636,855
================================== ============= ============ =========== ======== =========
Operating profit 244,343 57,507 (12,814) (76,530) 212,506
================================== ============= ============ =========== ======== =========
Share of joint ventures'
and associate's operating
profit 45,131 18,855 4,556 - 68,542
================================== ============= ============ =========== ======== =========
Exceptional items 91,123 12,932 5,974 42,948 152,977
================================== ============= ============ =========== ======== =========
Amortisation of acquired
intangibles 2,757 11,480 2,828 - 17,065
================================== ============= ============ =========== ======== =========
(33,582
Adjusted operating profit 383,354 100,774 544 ) 451,090
================================== ============= ============ =========== ======== =========
Adjusted gross margin 23.4% 16.6% 10.6% - 20.7%
================================== ============= ============ =========== ======== =========
Adjusted operating margin 19.3% 10.7% 0.4% - 14.7%
================================== ============= ============ =========== ======== =========
3 Segmental reporting (continued )
Group
Housebuilding Partnerships items Total
Year ended 31 December 2021 GBP000 GBP000 GBP000 GBP000
===================================== ============= ============ ======== =========
Revenue* 1,621,692 785,466 - 2,407,158
===================================== ============= ============ ======== =========
Share of joint ventures' revenue 207,614 126,977 - 334,591
===================================== ============= ============ ======== =========
Elimination of revenue recognised
on transactions with joint ventures
and associate * - (48,116) - (48,116)
===================================== ============= ============ ======== =========
Adjusted revenue 1,829,306 864,327 - 2,693,633
===================================== ============= ============ ======== =========
-
===================================== ============= ============ ======== =========
Gross profit 337,449 101,823 - 439,272
===================================== ============= ============ ======== =========
Share of joint ventures' gross
profit 39,348 17,942 - 57,290
===================================== ============= ============ ======== =========
Exceptional cost of sales 3,174 2,570 - 5,744
===================================== ============= ============ ======== =========
Other operating income 27,154 13,505 - 40,659
===================================== ============= ============ ======== =========
Adjusted gross profit 407,125 135,840 - 542,965
===================================== ============= ============ ======== =========
Operating profit 260,734 47,827 (23,147) 285,414
===================================== ============= ============ ======== =========
Share of joint ventures' operating
profit 38,689 17,800 - 56,489
===================================== ============= ============ ======== =========
Exceptional items 3,174 2,570 6,481 12,225
===================================== ============= ============ ======== =========
Amortisation of acquired intangibles 2,760 11,480 - 14,240
===================================== ============= ============ ======== =========
Adjusted operating profit 305,357 79,677 (16,666) 368,368
===================================== ============= ============ ======== =========
Adjusted gross margin 22.3% 15.7% - 20.2%
===================================== ============= ============ ======== =========
Adjusted operating margin 16.7% 9.2% - 13.7%
===================================== ============= ============ ======== =========
* Revenue and cost of sales for 2021 have been restated in
relation to trading with our joint ventures (see note 1).
Segmental financial position
As at 31 December 2022 Countryside Group
Housebuilding Partnerships items Total
GBP000 GBP000 GBP'000 GBP000 GBP000
Goodwill and intangibles 275,255 381,923 603,529 - 1,260,707
============================== ============= ============ =========== ========= =========
Tangible net assets excluding
investments in joint
ventures and associate 1,235,675 87,404 130,208 163,854 1,617,141
============================== ============= ============ =========== ========= =========
Investments in joint
ventures and associate 133,125 71,683 48,851 - 253,659
============================== ============= ============ =========== ========= =========
Net cash - - 314,719 (196,554) 118,165
============================== ============= ============ =========== ========= =========
Housebuilding Partnerships Group items Total
As at 31 December 2022 GBP000 GBP000 GBP000 GBP000
Goodwill and intangibles 278,381 396,937 - 675,318
============================== ============= ============ =========== =========
Tangible net assets excluding
investments in joint
ventures 1,222,002 54,782 28,786 1,305,570
============================== ============= ============ =========== =========
Investments in joint
ventures 151,080 23,984 - 175,064
============================== ============= ============ =========== =========
Net cash - - 234,454 234,454
============================== ============= ============ =========== =========
4 Exceptional expenses
Exceptional items are those which, in the opinion of the Board,
are material by size and irregular in nature and therefore require
separate disclosure within the income statement in order to assist
the users of the financial statements in understanding the
underlying business performance of the Group.
2022 exceptional expenses relate to the Combination with
Countryside and an incremental fire safety provision.
2021 exceptional expenses relate to one-off integration
activities following the 2020 acquisition of Linden and
Partnerships from Galliford Try and an incremental fire safety
provision.
2022 2021
GBP000 GBP000
Administrative expenses relating to the Combination
with Countryside 56,864 -
====================================================== ======= ======
Administrative expenses relating to the Acquisition
of Linden and Partnerships - 6,481
====================================================== ======= ======
Cost of sales relating to legacy property fire safety 96,113 5,744
====================================================== ======= ======
Interest on fire safety provision 900
====================================================== ======= ======
Total exceptional expenses 153,877 12,225
====================================================== ======= ======
On 11 November 2022, the Group completed the Combination with
Countryside Partnerships PLC. The administrative expenses incurred
in the year ended 31 December 2022 in relation to this transaction
include legal, financing and accounting advisory service fees,
transaction insurance costs totalling GBP29.5m and costs directly
attributable to the integration and restructuring of the Group,
totalling GBP27.4m. Further exceptional costs are expected to be
incurred in 2023 in relation to integration activities and further
restructuring.
On 3 January 2020, the Group completed the acquisition of Linden
and Partnerships from Galliford Try PLC. In the year ended 31
December 2021, the exceptional administrative expense solely
related to the conclusion of system integration work and residual
restructuring related to this acquisition.
Exceptional expenses relating to legacy property fire safety
result from ongoing investigations into properties developed where
remediation works may be required. The amount of the provision
reflects our best estimate to carry out these remediation
works.
Tax on exceptional items in 2022 was GBP30.7m (2021: GBP2.3m
).
5 Earnings per share
Profit attributable to ordinary shareholders
2022 2021
GBP000 GBP000
Profit for the year attributable to equity holders
of the parent 204,345 254,125
========================================================== ======= =======
Profit for the year attributable to equity holders
of the parent (before exceptional items and amortisation
of acquired intangibles) 324,687 278,267
========================================================== ======= =======
Earnings per share
2022 2021
============================================================================================ =========== ===========
Basic earnings per share 86.5p 114.6p
============================================================================================ =========== ===========
Diluted earnings per share 86.3p 114.1p
============================================================================================ =========== ===========
Basic earnings per share (before exceptional items and amortisation of acquired
intangibles*) 137.5p 125.5p
============================================================================================ =========== ===========
Diluted earnings per share (before exceptional items and amortisation of acquired
intangibles*) 137.1p 124.9p
============================================================================================ =========== ===========
Weighted average number of shares used as the denominator
============================================================================================ =========== ===========
2022 2021
============================================================================================ =========== ===========
Weighted average number of ordinary shares for the year ended 31 December 236,161,867 221,788,132
============================================================================================ =========== ===========
Basic earnings per share
Basic earnings per ordinary share for the year ended 31 December
2022 is calculated on a profit attributable to shareholders of GBP
204,345,000 ( 20 21: GBP254,125,000) over the weighted average of
236,161,867 (2021: 221,788,132 ) ordinary shares in issue during
the year.
Diluted earnings per share
The calculation of diluted earnings per share for the year ended
31 December 2022 was based on the profit attributable to ordinary
shareholders of GBP 204,345,000 (2021: GBP254,125,000) over the
diluted weighted average ordinary shares potentially in issue for
the year ended 31 December 2022 of 236,748,342 (2021: 222,787,131
).
The average number of shares is increased by reference to the
average number of potential ordinary shares held under option
during the year. This reflects the number of ordinary shares which
would be purchased using the aggregate difference in value between
the market value of shares and the share option exercise price and
fair value of future employee services. The market value of shares
has been calculated using the average ordinary share price during
the year. Only share options which are expected to meet their
cumulative performance criteria have been included in the dilution
calculation.
6 Dividends
The following dividends were paid by the Group:
2022 2021
GBP000 GBP000
Prior year final dividend per share of 40p
(2021: 20p) 88,747 44,340
=========================================== ======= ======
Current year interim dividend per share
of 23p (2021: 20p) 50,111 44,369
=========================================== ======= ======
138,858 88,709
=========================================== ======= ======
A final dividend of 32 pence per share (cumulative amount:
GBP162.3m)has been declared and, subject to shareholder approval at
the AGM, will be paid on 1 June 2023 in respect of 202 2.
7 Investments
The movement in investments accounted for using the equity
method during the year is as follows :
2022 2021
GBP000 GBP000
Beginning of the year 175,064 145,153
============================================= ======== ========
Acquired with the acquisition of Countryside
Partnerships PLC 61,617 -
============================================= ======== ========
Investments in joint ventures and associate 2,642 16,909
============================================= ======== ========
Profit for the year 47,207 29,991
============================================= ======== ========
Distributions paid (32,871) (16,989)
============================================= ======== ========
253,659 175,064
============================================= ======== ========
8 Bank and other loans
Interest rate profile of bank and other loans
Rate Available Facility Carrying Carrying
facility maturity value value
2022 2021
At 31 December GBP000 GBP000 GBP000
Revolving credit facility* SONIA +160-250bps 500,000 2026 - -
=========================== ================== ========= ========= ======== ========
Term Loan** SONIA +190-310bps 400,000 2025 400,000 -
=========================== ================== ========= ========= ======== ========
USPP Loan*** 403bps 100,000 2027 105,564 106,475
=========================== ================== ========= ========= ======== ========
Prepaid facility fee n/a n/a n/a (4,191) (312)
=========================== ================== ========= ========= ======== ========
Bilateral Term Loan**** SONIA +265bps n/a 2023 - 50,000
=========================== ================== ========= ========= ======== ========
Homes England development
loan ECRR +120-220bps 10,667 2029 7,284 8,097
=========================== ================== ========= ========= ======== ========
Overdraft facility BoE Base +150bps 5,000 2025 - -
=========================== ================== ========= ========= ======== ========
Non-current borrowings 1,015,667 508,657 164,260
=============================================== ========= ========= ======== ========
Bilateral Term Loan**** SONIA +265bps 50,000 2023 50,000 -
=========================== ================== ========= ========= ======== ========
Prepaid facility fee n/a n/a n/a (62) -
=========================== ================== ========= ========= ======== ========
Current borrowings 50,000 49,938 -
=============================================== ========= ========= ======== ========
Total borrowings 1,065,667 558,595 164,260
=============================================== ========= ========= ======== ========
* This facility commenced on 17 December 2021. This is a
sustainability linked finance agreement with a margin ratchet of
+/-2.5bps in addition to the rate above, dependant on performance
against sustainability KPIs. The facility includes two options to
extend the agreement by one year, the first of which was exercised
in November 2022, extending the facility maturity to December
2026.
** Term Loan agreement entered into on 5 September 2022 in order
to finance the Combination with Countryside Partnerships PLC,
ending March 2025.
*** Carrying value is quoted including impact from the fair
value of future interest payments.
**** This loan commenced on 17 March 2020. The maturity date for
this facility was amended on 23 February 2021 from 17 March 2021 to
17 March 2023 and it was therefore presented within non-current
liabilities in 2021 and current liabilities in 2022
The GBP500 million four-year revolving credit facility syndicate
comprises eight banks, six of which form the syndicate for the
GBP400m term loan. The revolving credit facility, Term Loan, USPP
Loan and Bilateral Term Loan all include a covenant package,
covering interest cover, gearing and tangible net worth
requirements, which are tested semi-annually.
9 Related party transactions
Transactions between fellow subsidiaries, which are related
parties, have been eliminated on consolidation, as have
transactions between the Company and its subsidiaries during this
year.
Transactions between the Group, Company and key management
personnel in the year ended 31 December 2022 were limited to those
relating to remuneration.
Mr. Greg Fitzgerald, Group Chief Executive, is non-executive
Chairman of Ardent Hire Solutions Limited ("Ardent").
Mr. Graham Prothero, former Chief Operating Officer who ceased
to be a Director of the Group from 31 December 2022 is
non-executive Director and Chair of the Audit Committee of
Marshalls PLC. The Group incurred costs with Marshalls PLC in
relation to landscaping services.
Ms. Katherine Innes Ker, is a non-executive Director of Forterra
PLC. The Group incurred costs with Forterra PLC in relation to the
supply of bricks.
Mr. Ian Tyler, former non-executive Chairman who resigned in
2022, was also the Chairman of Affinity Water Limited and a
non-executive Director of BAE Systems PLC. The Group received water
services and incurred car parking charges with these companies,
respectively, during the prior year.
Mr. Stephen Teagle, Chief Executive of Vistry Partnerships, is
the Chair of The Housing Forum. The Group paid for a subscription
to The Housing Forum during the year.
The total net value of transactions with related parties
excluding joint ventures and associate have been made at arms
length and were as follows:
Expenses paid Amounts payable Amounts owed
to related parties to related parties by related parties
===================== ===================== =====================
31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec
2022 2021 2022 2021 2022 2021
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
========== ========= ========== ========= ========== =========
Trading transactions
===================== ========== ========= ========== ========= ========== =========
Ardent 5,319 5,598 774 426 - -
====================== ========== ========= ========== ========= ========== =========
Marshalls PLC 1 16 91 - - -
====================== ========== ========= ========== ========= ========== =========
Forterra PLC 67 579 48 115 - -
====================== ========== ========= ========== ========= ========== =========
Affinity Water
Limited 4 31 2 - - 1
====================== ========== ========= ========== ========= ========== =========
BAE Systems PLC - 1 - - - -
====================== ========== ========= ========== ========= ========== =========
The Housing Forum 13 - - - - -
====================== ========== ========= ========== ========= ========== =========
Transactions between the Group and its joint ventures and
associate are disclosed as follows:
Interest income
and dividend
Sales to related distributions
parties from related parties
================== =======================
31 Dec 31 Dec 31 Dec 31 Dec
2022 2021 2022 2021
GBP000 GBP000 GBP000 GBP000
======== ======== =========== ==========
Trading transactions* 134,817 142,606 - -
========================== ======== ======== =========== ==========
Non-trading transactions - - 46,564 40,183
========================== ======== ======== =========== ==========
Amounts owed by Amounts owed to
related parties related parties
================== =======================
31 Dec 31 Dec 31 Dec 31 Dec
2022 2021 2022 2021
GBP000 GBP000 GBP000 GBP000
======== ======== =========== ==========
Balances with joint
ventures and associate 391,382 308,217 139,672 46,010
========================== ======== ======== =========== ==========
* Trading transactions with joint ventures in the year ended 31
December 2021 has been restated within this note to include
GBP100.6m of sales to Gallions LLP, Opal Silvertown LLP and Enfield
LLP.
Sales to related parties including joint ventures and associate
are based on normal commercial terms available to unrelated third
parties. The loans made to joint ventures and associate bear
interest at rates of between 0.0% and 6.0% ; all balances with
related parties will be settled in cash.
As at the reporting date, 3 (2021: 3) of the Group's employees
have a close family member on the Executive Committee. These
individuals were recruited through the normal interview process and
are employed at salaries commensurate with their experience and
roles. The combined annual salary and benefits of these individuals
is less than GBP0.4m (2021: GBP0.3m).
There have been no other related party transactions in the
financial year which have materially affected the financial
performance or position of the Group, and which have not been
disclosed.
10 Reconciliation of Return on Capital Employed performance
measure
The ROCE calculation for the Group is detailed below:
2022 2021
GBP000 GBP000
Adjusted operating profit (see note 2.2) 451,090 368,368
============================================= ========= =========
Opening total equity 2,390,581 2,195,082
============================================= ========= =========
Deduct: goodwill 547,509 547,509
============================================= ========= =========
Deduct: intangible assets 127,809 143,585
============================================= ========= =========
Deduct: net cash 234,454 37,885
============================================= ========= =========
Deduct: retirement benefit asset 45,318 9,077
============================================= ========= =========
Opening capital employed 1,435,491 1,457,026
============================================= ========= =========
Closing total equity 3,249,672 2,390,581
============================================= ========= =========
Deduct: goodwill 804,742 547,509
============================================= ========= =========
Deduct: intangible assets 455,965 127,809
============================================= ========= =========
Deduct: net cash 118,165 234,454
============================================= ========= =========
Deduct: retirement benefit asset 34,251 45,318
============================================= ========= =========
Closing capital employed 1,836,549 1,435,491
============================================= ========= =========
Average capital employed* 1,593,106 1,446,259
============================================= ========= =========
Group ROCE including share of joint ventures
and associate 28.3% 25.5%
============================================= ========= =========
* Average of opening and closing capital employed for the year,
adjusted for the pro-rated average capital employed by Countryside
during the post-acquisition period
11 Business combinations
On 11 November 2022, the Group completed the Combination with
Countryside Partnerships for a consideration of GBP1,137m. The
Combination has positioned the Group as the largest national
housebuilder by volume, expanded the Group's presence across the UK
and established the Group as the industry leader in the highly
attractive, high-growth Partnerships business. The acquisition was
of 100% of the share capital and control of Countryside
Partnerships PLC and all of its subsidiaries. Details of the
purchase consideration, the net assets acquired and goodwill at 11
November 2022 are as follows:
Purchase consideration
GBP000
Cash consideration 299,876
================================================= =========
Shares in Vistry Group PLC issued 837,967
================================================= =========
Replacement of SAYE schemes 852
================================================= =========
Less: shares issued to acquired employee benefit
trust (1,651)
================================================= =========
Total purchase consideration 1,137,044
================================================= =========
The share consideration included 127,447,399 Vistry Group PLC
shares with nominal value of GBP0.50 per share and a fair value of
GBP6.58, being the opening share price on 14 November 2022, the
first time the consideration shares could have been traded.
GBP774.2m was recognised within the merger reserve in relation to
these consideration shares issued, being the excess of the share
price on the date of issue over nominal value of the shares. The
consideration related to the replacement of SAYE schemes is
calculated based on the fair value of the various options granted
to former Countryside employees multiplied by the number of options
and the estimated likelihood of vesting.
The provisional fair value of the assets and liabilities
recognised as a result of the Combination are as follows:
Provisional fair value
11 November 2022
GBP000
Cash and cash equivalents 224,702
=================================== ======================
Property, plant and equipment 18,101
=================================== ======================
Right-of-use assets 60,849
=================================== ======================
Intangible assets 349,102
=================================== ======================
Investments 61,617
=================================== ======================
Inventories 792,329
=================================== ======================
Amounts owed by joint ventures and
associate 108,380
=================================== ======================
Trade and other receivables 122,108
=================================== ======================
Trade and other payables (608,741)
=================================== ======================
Borrowings (2,493)
=================================== ======================
Lease liabilities (64,230)
=================================== ======================
Provisions (208,706)
=================================== ======================
Net deferred tax asset 26,793
=================================== ======================
Net identifiable assets acquired 879,811
=================================== ======================
Goodwill 257,233
=================================== ======================
1,137,044
=================================== ======================
The acquired intangibles include the Countryside Partnerships
brand name, the customer relationships and the secured contracts of
the acquired business. The acquired intangible assets have
estimated useful lives of between 5 and 25 years. KPMG supported
management in the fair valuation of the acquired intangible assets
and preparation of the purchase price allocation.
The goodwill for the acquired business reflects intangible
assets which do not qualify for separate recognition including the
strong position in the market and future prospects, as well as the
assembled workforce and synergies that will be achieved as an
enlarged business.
None of the goodwill is expected to be deductible for tax
purposes.
There have been no further business combinations in 2022.
12 Alternative performance measures
The Group uses alternative performance measures which are not
defined within UK-adopted International Accounting Standards. The
Directors use these alternative performance measures, along with
UK-adopted International Accounting Standards measures, to assess
the operational performance of the Group. The Group's alternative
performance measures reflect the contribution of the joint venture
and associate investments held and the impact of amortisation of
intangibles resulting from the acquisitions of Linden and
Partnerships from Galliford Try PLC in 2020 and of Countryside in
2022 .
The inclusion of associate share of results within the below
alternative performance measures reflects the acquisition of an
investment in associate as a result of the Combination with
Countryside. The Group did not have any associates in 2021 and
therefore the 2021 comparative is unchanged.
Adjusted revenue
Adjusted revenue is defined as revenue including share of joint
ventures' and associate revenue:
2022 2021
GBP000 GBP000
Revenue per Group income statement* 2,729,432 2,407,158
================================================== ========= =========
Share of joint ventures' and associate revenue 392,629 334,591
================================================== ========= =========
Elimination of revenue recognised on transactions
with joint ventures and associate (48,824) (48,116)
================================================== ========= =========
Adjusted revenue 3,073,237 2,693,633
================================================== ========= =========
*Revenue and cost of sales for 2021 have been restated in
relation to trading with our joint ventures (see note 1).
Adjusted gross profit
Adjusted gross profit is defined as gross profit including share
of joint ventures' and associate gross profit, plus other operating
income and before exceptional cost of sales:
2022 2021
GBP000 GBP000
Gross profit per Group income statement 413,729 439,272
============================================= ======= =======
Share of joint ventures' and associate gross
profit 69,300 57,290
============================================= ======= =======
Exceptional cost of sales 96,113 5,744
============================================= ======= =======
Other operating income 57,713 40,659
============================================= ======= =======
Adjusted gross profit 636,855 542,965
============================================= ======= =======
Adjusted operating profit
Adjusted operating profit is defined as operating profit
including share of joint ventures' and associate operating profit,
before exceptional expenses and amortisation of acquired
intangibles:
2022 2021
GBP000 GBP000
Operating profit per Group income statement 212,506 285,414
================================================= ======= =======
Share of joint ventures' and associate operating
profit 68,542 56,489
================================================= ======= =======
Exceptional expenses 152,977 12,225
================================================= ======= =======
Amortisation of acquired intangibles 17,065 14,240
================================================= ======= =======
Adjusted operating profit 451,090 368,368
================================================= ======= =======
Adjusted profit before tax
Adjusted profit before tax is defined as profit before tax
before exceptional expenses and amortisation of acquired
intangibles:
2022 2021
GBP000 GBP000
Profit before tax per Group income statement 247,484 319,536
============================================= ======= =======
Exceptional expenses 153,877 12,225
============================================= ======= =======
Amortisation of acquired intangibles 17,065 14,240
============================================= ======= =======
Adjusted profit before tax 418,426 346,001
============================================= ======= =======
[1] Vistry Group consensus estimate (based on 15 analysts
forecasts): FY adjusted profit before tax - GBP403m
[2] Completions include 100% of JVs. All other financials are
shown on an adjusted basis to include the proportional contribution
of the joint ventures.
[3] Revenue and cost of sales for 2021 have been restated in
relation to trading with our joint ventures.
[4] Adjusted net earnings is calculated as adjusted profit
before tax, net of tax calculated at the adjusted effective tax
rate. The adjusted effective tax rate is defined as the reported
tax rate, as adjusted for exceptional items, amortisation of
acquired intangibles and significant prior period adjustments.
[5] Excludes any contribution from Countryside.
[6] TNAV represents tangible net asset value and is calculated
as net assets, less goodwill, intangible assets, cash and debt.
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