TIDMVTY
RNS Number : 2816Y
Vistry Group PLC
08 September 2020
8 September 2020
Vistry Group PLC - Half year results
Vistry Group PLC (the "Group") is today issuing its half year
results for the six-month period ended 30 June 2020.
First half key highlights
-- Transformational acquisition of Linden Homes and Vistry Partnerships completed in January
-- Successful business integration with GBP44m synergies now
expected, GBP9m ahead of initial target
-- 5-star HBF customer satisfaction rating awarded for 2019 and
we have continued to trend at a score above 90% through 2020
-- Net debt of GBP357.3m(1) at 30 June 2020 (18 May Trading
Update 2020: GBP476m), ahead of our expectations at the start of
the pandemic, reflecting resilience of Vistry Partnerships' revenue
model
-- Site closures significantly impacted Housebuilding production in H1, output and performance
-- Vistry Partnerships led an early return to site, underpinned
by the certainty of pre-sold developments and contracting
revenues
-- Production capacity returned to near normal levels from 1 July
Current trading and outlook
-- Strong start to the second half supported by positive market trends
-- Sales rate 20% ahead of prior year since 1 July, at 0.73
(2019: 0.61) sales per active site per week including Vistry
Partnerships
-- Pricing remains firm
-- Record forward sales position with Group forward sales
totalling GBP2.7bn(2) (30 June 2020: GBP2.6bn) including
Housebuilding forward sales up 17% to GBP1,478m (30 June 2020:
GBP1,264m)
-- Minimal cost inflation with Group to realise cost savings in
the second half and into 2021 from flow-through of procurement
synergy benefits
-- GBP20m of synergies expected in 2020 and the full run rate of
GBP44m to be achieved by end 2021
-- Full year profit before tax(3) for 2020 expected to be in the range of GBP130m to GBP140m
-- Assuming stable pricing and current sales rates and
productivity levels, the Group has the ability to deliver at least
GBP310m of profit before tax(3) in 2021
-- The balance sheet is strong, supported by significant and well-spread funding facilities
-- Priority for capital allocation remains deleveraging,
targeting gearing of 35%(4) including land creditors for December
2021
-- Aiming to resume dividends in respect of 2021 with a progressive dividend policy thereafter
Greg Fitzgerald, Chief Executive, commented:
"We moved quickly to integrate Linden Homes and Vistry
Partnerships at the start of the year. It has been a successful
process bringing together the best from each business, with the
benefits from the combination expected to be ahead of our initial
target. We have achieved this whilst maintaining our focus on
delivering excellent service to our customers.
"Housebuilding's first half performance was significantly
impacted by the lockdown and resultant site closures. Vistry
Partnerships demonstrated its market resilience and robust revenue
model and led the group to an early successful return to site, with
production levels across the Group now back at near normal
levels.
"We have seen positive sales trends since early May, with
consumer interest higher than at any time in recent years. Our
sales rate in the second half to date is running 20% ahead of last
year at 0.73, and pricing remains robust. The Group is well
positioned to capitalise on the opportunities available in the
second half and into 2021 when we expect to deliver a step-up in
completions and profitability, a reduction in gearing and a return
to dividend payments."
Key financials (5, 6, HY20 HY19 Change
7)
--------------------------- ------------ ---------- -------
Total completions (8) 1,724 1,647 +5%
Adjusted revenue GBP660.9m GBP472.8m +40%
Adjusted operating profit GBP21.2m GBP75.2m -72%
Adjusted profit before
tax GBP10.3m GBP72.5m -86%
Reported results(6,7) HY20 HY19 Change
--------------------------- ------------ ---------- -------
Group revenue GBP606.4m GBP472.3m +28%
Operating (loss)/profit GBP(9.7)m GBP75.8m -113%
(Loss)/profit before
tax GBP(12.2)m GBP72.5m -117%
(Loss)/earnings per share (5.4)p 41.9p(9) -113%
Net (debt)/cash(1) GBP(357.3)m GBP102m n/m
There will be a virtual presentation for analysts and investors
at 8:00am this morning.
To view the presentation please use the webcast link available
on our corporate website www.vistrygroup.co.uk or
https://webcasting.brrmedia.co.uk/broadcast/5f46a6a4b14d87262643c348
A playback facility will be available shortly after the
presentation and Q&A session has finished at
www.vistrygroup.co.uk
This announcement includes inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 and is being
released on behalf of Vistry Group PLC by Earl Sibley, Chief
Financial Officer.
Certain statements in this press release are forward looking
statements. Forward looking statements involve evaluating a number
of risks, uncertainties or assumptions that could cause actual
results to differ materially from those expressed or implied by
those statements. Forward looking statements regarding past trends,
results or activities should not be taken as representation that
such trends, results or activities will continue in the future.
Undue reliance should not be placed on forward looking
statements.
For further information please contact:
Vistry Group PLC 01675 437160
Earl Sibley, Chief Financial Officer 020 7250 1446
Susie Bell, Head of Investor Relations
Powerscourt
Justin Griffiths, Nick Dibden, Victoria
Heslop
Chief Executive's Review
First half review
Following the transformational acquisition of Linden Homes and
Vistry Partnerships at the start of this year, Vistry Group is
uniquely positioned as a top 5 UK housebuilder with a leading
partnerships housing business. Building high quality new homes and
providing our customers with excellent service remains our key
priority and we are delighted to have been awarded a 5-star HBF
Customer satisfaction rating for 2019, a significant turnaround
from our 2-star rating in 2017. We have continued to trend at a
score above 90 per cent through 2020 as an enlarged group.
The Group was quick to progress with the integration of Bovis
Homes and Linden Homes with a clear goal of taking the best from
each business and maximising the very significant benefits from the
combination. The successful integration is ahead of plan and the
synergy benefits from the combination are expected to total GBP44m,
GBP9m ahead of the initial GBP35m target. GBP20m of this is
expected in 2020 and the full run rate to be achieved by the end of
2021.
The Group delivered a rapid and co-ordinated response to
COVID-19 with the safety, health and wellbeing of our employees,
customers, suppliers and the wider society our top priority. A
superb response from our IT team facilitated a very quick transfer
to working from home. We temporarily stopped discretionary land
expenditure and restricted new infrastructure works. For two months
we reduced our working hours and salaries accordingly, whilst
ensuring that our lower paid employees were protected from any
reductions. Senior leadership accepted longer temporary
remuneration reductions. We took advantage of the Government's tax
deferral and job retention schemes, although we have now taken the
decision to repay monies received under the latter(7) .
Vistry Partnerships demonstrated its strong market resilience
with its high proportion of revenue from contracting and pre-sold
developments and led an early return to site. Site closures during
March and April significantly impacted the production, output and
first half financial performance of our Housebuilding business.
We have seen positive sales trends since early May, with
consumer interest higher than at any time in recent years.
Productivity across the Group returned to near normal levels during
July, with sites using extended working hours to facilitate
this.
The Group's half year net debt position of GBP357m(1) was
significantly lower than forecast at the start of the COVID-19
pandemic reflecting the resilience of Vistry Partnerships and
improved completion levels. We have a robust balance sheet with
significant financing headroom.
The Group maintains a valuable and deliverable land bank with
over 38,000 plots across Housebuilding and Partnerships and
including JVs. The Housebuilding land bank shows an embedded gross
margin of 24.2%, including our share of JV plots. We have a strong
strategic land capability with over 32k strategic land plots
delivering on average a 150-300 bps improvement to gross
margin.
Current trading and outlook
We have seen a strong start to the second half supported by
positive market trends, with our sales rate since 1 July up 20% on
the prior year at 0.73 (2019: 0.61) sales per active site per week
including Vistry Partnerships.
Pricing remains firm and we see minimal cost inflation, with
cost gains to be realised across the Group in the second half and
into 2021 from the flow-through of procurement synergy
benefits.
We have a record forward sales position with housing
reservations (including Vistry Partnerships) totalling GBP1.86bn
(30 June 2020: GBP1.66bn) and Vistry Partnerships' contracting
forward order book totalling GBP815m (30 June 2020: GBP920m).
The Group is well positioned to capitalise on the opportunities
going forwards and we are on track to deliver a stronger
performance in the second half, with full year profit before tax(3)
for 2020 expected to be in the range of GBP130m to GBP140m.
Assuming stable pricing and current sales rates and productivity
levels being maintained, the Group expects to deliver a significant
step up in Housebuilding completions for 2021, with all land
secured for forecast 2021 Housebuilding units. The Partnerships
business is fully focused on the growth of its high margin mixed
tenure revenues, as well as a strong contracting order book, with a
target of an operating margin of at least 10% in 2022. Combined,
the Group has the ability to deliver at least GBP310m of profit
before tax(3) in 2021.
With strong future cash generation, the Group's primary focus is
on deleveraging, targeting gearing of 35%(4) for December 2021. The
Group expects to maintain the size of its land bank for the
Housebuilding operation and invest in new land opportunities to
support the rapid growth in mixed tenure housing within
Partnerships. The Board also recognises the value of dividends to
shareholders and, subject to market conditions, is targeting to
resume dividend payments in respect of 2021, with a progressive
dividend policy thereafter.
Forward sales (GBPm) 4 September 2020 30 June 2020
---------------------- ----------------- -------------
Housebuilding
* Private 744 660
* Affordable 341 330
* JVs (100%) 393 274
Total Housebuilding 1,478 1,264
Partnerships
* Mixed tenure 174 178
* JVs (100%) 205 215
Total mixed tenure 379 393
Total contracting 815 920
Total Group 2,672 2,577
---------------------- ----------------- -------------
Operational update
Trading performance
In Housebuilding, we saw a strong start to the year with a
step-up in sales rates and upward momentum on underlying pricing.
From the third week in March, COVID-19 had a significant impact on
sales within Housebuilding. Our sales teams remained open for
business throughout the lockdown period, offering an online service
with virtual tours, taking new reservations, progressing exchanges
and handing over completed homes where a customer wanted to move
in.
Sales trends picked up from the start of May, with sales rates
returning to more normal levels by the end of May. Help to Buy
remains important with 30% of completions in the first half
utilising the scheme, albeit lower than the industry average. In
the first half 10% of private completions utilised part
exchange.
Housebuilding delivered a total of 1,235 (HY19 proforma:
3,371)(8, 10) completions, including 169 (HY19 proforma: 501) from
JVs, in the first half of which 975 (HY19 proforma: 2,199) were
private units and 260 (HY19 proforma: 1,172) were affordable units.
Total Housebuilding average selling price was GBP294k with revenue
from Housebuilding activities in the period totalling GBP349m (HY19
proforma: GBP854m)(11) . Housebuilding is currently selling on 160
active sites and we expect site numbers to stay at a broadly
similar level for the full year.
Partnerships also started the year strongly, pursuing its
strategy of accelerating growth in higher margin mixed tenure
development revenues. With its high level of contracting revenues
and pre-sold mixed tenure developments, Vistry Partnerships
demonstrated its strong market resilience during the COVID-19
pandemic and reinforced our rationale for the acquisition of this
business. Whilst impacted by a slowdown in production, the business
led an early return to site and has been running at near full
production capacity since July.
Vistry Partnerships delivered a total of 489 (HY19 proforma:
574) units from its mixed tenure operations with an average selling
price of GBP222k, resulting in revenue from mixed tenure housing in
the period of GBP88m (HY19 proforma: GBP94m). As at 30 June 2020
Vistry Partnerships was selling on 26 mixed tenure active
sites.
Contracting revenue totalled GBP223m (HY19 proforma: GBP244m)
with equivalent units of 1,310(12) (HY19 proforma: 1,140). Revenue
from Vistry Partnerships in the period totalled GBP311m (HY19
proforma: GBP338m).
The wide-ranging effects of COVID-19 impacted margin in the
first half across the business. The business incurred additional
costs directly related to the period of lockdown, lower levels of
operating efficiency from social distancing and the lengthening of
development period expectations. A total of GBP10.2m of
non-productive direct costs have been identified as impacting the
period. Margin was also impacted by our policy of recognising the
full sales and marketing costs incurred during the period, similar
to administrative expenses, rather than apportioning them into work
in progress.
Integration and synergies
The Group set out to integrate the two housebuilding businesses
of Bovis Homes and Linden Homes as quickly as possible, taking the
best from each business to strengthen the overall Group position.
This was delivered ahead of plan, positioning us well to manage the
challenges of the COVID-19 pandemic.
The Housebuilding re-organisation resulted in 13 operating
regions and four regional office closures and was completed by
March. There has been a full review of the Bovis Homes - Phoenix
Range, and Linden Homes - Linden Collection, product ranges with
clear market positioning and established branding. Vistry
Partnerships was successfully rebranded on acquisition.
Technical specifications have been reviewed and aligned across
both divisions resulting in design improvements and cost savings.
Our centralised procurement team has renegotiated over 200 supplier
agreements delivering gains through increased volumes and better
pricing.
The implementation programme for a common IT environment, along
with consistent systems and processes is progressing well and will
be delivered ahead of our initial expectations, removing third
party dependencies for the acquired businesses by the end of
2020.
We now expect to deliver synergy benefits totalling GBP44m,
GBP9m ahead of our initial target of GBP35m on acquisition, and at
a cost of GBP30m, lower than our initial target cost. GBP20m is
expected to be delivered in 2020 and the full run rate to be
achieved by the end of 2021.
Funding and liquidity
Group net debt at 30 June of c. GBP357m(1) (18 May Trading
Update 2020: GBP476m) was lower than our expectations at the start
of the COVID-19 pandemic, and reflects the earlier return to site
within Partnerships, including their contracting business, and
improved completion levels, putting the Group in a financially
strong position.
The increase in net debt from the net cash position of GBP362m
as at 31 December 2019 reflects the cash payment of GBP401m and
assumption of GBP107m US Private Placement borrowing notes as part
of the Acquisition consideration for Galliford Try's Linden Homes
and Partnerships & Regeneration businesses ("the Acquisition"),
which completed on 3 January 2020.
The Group has committed banking facilities totalling GBP770m,
with well spread maturities out to 2027. In addition, the Group has
the ability to increase liquidity by up to GBP300m through the
Covid Corporate Financing Facility ("CCFF"), although there is no
present intention to draw on this.
Quality and customer service
The Group has transformed its customer service and is delighted
to have been awarded a 5-star rating by the HBF for 2019, with both
Housebuilding and Partnerships continuing to trend at a score above
90% through 2020. We have also seen a significant year on year
improvement in our HBF 9-month customer satisfaction survey and
will continue to target further progress with this. The Group's
latest NHBC Construction Quality review reported a 10% overall
improvement.
We recently launched an initiative designed to empower our
customers with an omnichannel, high quality and highly personalised
service; making it much easier for them to do business with us. Our
Keys CRM system, launched in 2019, provides an established platform
for this and is being rolled out across the Linden Homes and Vistry
Partnerships operations.
We are introducing regional sales centres with a more
centralised 'best practice' customer experience which will reduce
our reliance on traditional site-specific sales offices. This will
drive the quality and transparency of our service, facilitate
better efficiency and engagement, and promote cross selling between
brands and developments. We are further investing in our digital
capability to provide customers with an enhanced virtual sales
experience to complement our sales activities on site.
People
Our people remain a key priority and we are thankful for the
enormous commitment and resilience our employees, contractors and
suppliers have demonstrated during this challenging period. We are
conscious that this period has seen an unprecedented level of
change and are very pleased that our recent Peakon employee
engagement study reported a score of 7.6, ahead of the relevant
benchmark.
We have placed a greater emphasis on mental health this year and
have rolled out a programme of Mental Health First Aid across the
Group including a half-day awareness training for all line
managers.
Our centralised learning and development function continue to
develop and deliver a comprehensive learning and development
platform and is facilitating remote professional development in
partnership with, for example, the NHBC and CITB.
Land
The Group has remained active in the land market throughout the
year, contracting and progressing new development opportunities.
While all discretionary land spend was paused at the end of March,
we have continued to progress opportunities in all regions to meet
our requirements for 2021 and beyond. We have been successful in
negotiating option agreements, conditional contracts and deferred
payment terms to minimise our cash expenditure in the near
term.
In the year to date, our Housebuilding business has acquired
2,086 plots across 10 sites and conditionally contracted on 823
plots on 3 sites. We continue to make good progress on strategic
land including the pull through of 1,000 plots at our development
in Collingtree, gaining consent for 640 plots at Salisbury and a
further 1,426 strategic land plots contracted under options in the
period.
Vistry Partnerships has added a total of 1,320 plots on three
sites to the mixed tenure land bank in the year to date and
conditionally contracted on a further 523 plots across 4 sites. The
land pipeline for Vistry Partnerships is strong with 645 plots
across 3 sites with terms agreed.
Group strategy
The successful integration of Linden Homes and Vistry
Partnerships, and formation of Vistry Group, uniquely positions us
to take advantage of the strong, under supplied, housing market.
Robust and efficient shared services across the Group including
sales and marketing, strategic land and health and safety support
both divisions to deliver their growth strategies. In addition, the
Group's strong balance sheet, national coverage, established
reputation and leading brands provide the platform for the whole
business.
Housebuilding
The Housebuilding business is focused on driving revenue growth
and delivering significant margin improvement from its existing
operating structure. The business has 13 operating regions, and
each are targeting annual output of between 550 and 625 units,
incl. JVs, resulting in an overall capacity and target for the
Housebuilding business of more than 8,000 units p.a., incl. JVs
(FY19 proforma Housebuilding total completions incl. JVs:
6,826).
The business has a high quality landbank of more than 38,000
owned plots including JVs located in desirable edge or out of town
locations with minimal exposure to London or other city centres. It
continues to increase the proportion of two and three-bedroom homes
where it sees the most resilient market demand, which will result
in a lower overall average selling price. With two leading housing
brands, Bovis Homes and Linden Homes, brand differentiation is key
to maximising dual branding opportunities. Bovis Homes is
positioned to feature larger, more distinctive homes with enhanced
design features and Linden Homes to offer well designed, more
competitively priced homes.
There are 8 major projects with a total of more than 11,000
units which currently within our Housebuilding business including
Wellingborough, Sherford and North Whiteley. All share similar
characteristics in that they are large, strategically sourced sites
with long term build out plans. They have good margins, however
given the high level of upfront infrastructure investment required,
have low initial ROCE, with highly attractive long-term returns. To
manage risk and optimise returns, they are being developed in
partnerships and are suitable to multiple forms of tenure
development. The Group's key objective is to maximise the returns
and we are undertaking a review of each to consider additional
opportunities including PRS or other tenure opportunities, and
investor options.
The Housebuilding business is focused on driving margins towards
the embedded gross margin of 24.2% as at 30 June 2020 in the owned
land bank.
Partnerships
Vistry Partnerships has a strong and unique position within the
partnerships market, combining cash generative contracting work
with an increasing proportion of margin enhancing development work.
The contractor/developer model provides the optimum solution for
clients with the business' national footprint aligned with both
national and regional clients.
Partnerships is targeting revenues including JVs of more than
GBP1 billion and a margin in excess of 10% by 2022, driven by a
rapid increase in higher margin mixed tenure revenues to 50% of
total Partnerships revenues. The operating margin for mixed tenure
development ranges from 11% to 18%.
The accelerated revenue growth will be supported by the
division's 11 operating regions and continued expansion into new
geographies. The Group's land supply and strategic land capability
will support the growth of higher margin mixed tenure developments
revenues.
Environmental, Social and Governance ('ESG')
The formation of our enlarged Group has provided an exciting
opportunity to build on the elements of best practice adopted by
our business and leverage greater depth of skills and knowledge
from our new employee population, enabling us to advance the
sustainable approach that we already take as a Group, to reset our
goals and develop a renewed long-term ESG strategy.
During the first half of this year, we committed dedicated
resource to undertake a review of the Group's sustainability
strategy to ensure that we manage material ESG risks and
opportunities in a way that leverages the societal benefits
intrinsic to building mixed tenure homes and communities.
This work has included a risk review of the legislative and
planning context to 2050, as well as an assessment of material
requirements under the Taskforce for Climate Financial Disclosures,
UN Sustainable Development Goals and ESG indices. We have consulted
with key stakeholders to understand their ESG priorities and
concerns and have standardised the collection key data across the
Group to better understand our carbon footprint. We have also
appointed Sustainability Champions to increase awareness and
knowledge across the Group.
The outcome of these actions will aid the development of a new
Group ESG strategy which is targeted in its approach to link long
term value creation and will ensure that its principles are
embedded in the Group's objectives and activities. Further detail
on targets, divisional action plans and next steps will be provided
in the Group's 2020 Annual Report and Accounts.
Dividends
The Group's dividend policy continues to be to maintain a robust
and efficient balance sheet and to maximise sustainable dividends
to shareholders through a progressive ordinary dividend cover. The
Board recognises the value of dividends to shareholders and,
subject to market conditions, is targeting to resume dividend
payments in respect of 2021.
Financial review
Trading performance
Total completions
The Group delivered 1,724 legal completions(8) during the first
half representing a 5% increase on the prior year, driven by the
Acquisition which completed on 3 January 2020, but which was lower
than expectations as a result of the COVID-19 pandemic and
nationwide lockdown.
H1 2020 H1 2019 % Change
Housebuilding
-------- -------- ---------
* Private 830 1,028 -19%
-------- -------- ---------
* Affordable 236 616 -62%
-------- -------- ---------
* JV's (100%) 169 3 > +100%
-------- -------- ---------
Total Housebuilding 1,235 1,647 -25%
-------- -------- ---------
Partnerships
-------- -------- ---------
299 - N/A
* Mixed tenure
-------- -------- ---------
190 - N/A
* JV's (100%)
-------- -------- ---------
Total mixed tenure 4 89 - N/A
-------- -------- ---------
Total completions 1,724 1,647 +5%
-------- -------- ---------
Contracting equivalent 1,310 - N/A
units(12)
-------- -------- ---------
Proforma Completions Analysis
During the same period in 2019 on a proforma basis(10) the Group
delivered 3,945 legal completions representing a decrease of
56%.
H1 2020 H1 2019 % Change
Housebuilding
-------- -------- ---------
* Private 830 1,854 -55%
-------- -------- ---------
* Affordable 236 1,016 -77%
-------- -------- ---------
* JV's (100%) 169 501 -66%
-------- -------- ---------
Total Housebuilding 1,235 3,371 -63%
-------- -------- ---------
Partnerships
-------- -------- ---------
* Mixed tenure 299 288 +4%
-------- -------- ---------
* JV's (100%) 190 286 -34%
-------- -------- ---------
Total mixed tenure 4 89 5 74 -15%
-------- -------- ---------
Total completions 1,724 3 ,945 -56%
-------- -------- ---------
Contracting equivalent
units(9) 1,310 1,140 +15%
-------- -------- ---------
Revenue
Total adjusted revenue(5) was GBP660.9m, 40% higher than prior
year (2019: GBP472.8m) and 45% lower on a proforma basis (2019:
GBP1,192.0m). On a reported basis revenue was GBP606.4m, 28% higher
than last year (2019: GBP472.3m).
Adjusted gross and operating profit
Adjusted gross profit(5) is GBP84.7m in H1 2020 (adjusted gross
margin: 12.8%), which compares to GBP101.9m in 2019 (adjusted gross
margin: 21.6%). The margin was impacted by COVID-19, including the
impact of non-productive site overhead costs being expensed
directly to the income statement which under normal productive
circumstances would be capitalised into inventory and recognised in
the income statement as plots complete. There were also costs
incurred relating to the closing and reopening of sites as a result
of lockdown, and implementation of COVID-19 safe working procedures
and health and safety precautions. The direct costs identified
relating to COVID-19 recognised in the income statement totalled
GBP10.2m. This has been partially offset by GBP6.3m of furlough
income received from the Government's job retention scheme which
will be repaid before the end of the year when the income will be
reversed.
Adjusted operating profit(5) is GBP21.2m (2019: GBP75.2m)
resulting from the lower than expected gross profit and the
increased overhead costs of the enlarged Group following the
Acquisition in January 2020, primarily resulting from higher
employee numbers and additional establishment costs.
Adjusted operating margin(5) was 3.2% (2019: 16.0%). Reported
operating loss was GBP9.7m (2019: GBP75.8m profit).
The Group delivered an adjusted profit before tax(5) of GBP10.3m
(2019: GBP72.5m).
On a reported basis the Group saw a loss before tax for the six
months ended 30 June 2020 of GBP12.2m, comprising operating loss of
GBP9.7m after exceptional costs of GBP15.4m, net financing charges
of GBP5.2m and share of JV profit of GBP2.6m. This compares to
GBP72.5m of profit before tax in 2019, which comprised GBP75.8m of
operating profit, GBP2.8m of net financing charges and share of JV
losses of GBP0.6m.
Housebuilding(5,6)
H1 2020 H1 2019 % Change
Total completions incl.
100% JVs 1,235 1,647 -25.0%
------------ ---------- ---------
Adjusted revenue GBP349.4m GBP472.8m -26.1%
------------ ---------- ---------
Adjusted gross profit GBP49.1m GBP101.9m -51.8%
------------ ---------- ---------
Adjusted gross margin 14.1% 21.6% -7.5bps
------------ ---------- ---------
Adjusted operating profit GBP8.5m GBP79.7m -89.3%
------------ ---------- ---------
Adjusted operating margin 2.5% 16.9% -14.4bps
------------ ---------- ---------
TNAV ([13]) GBP1,693.0m GBP974.6m +74.0%
------------ ---------- ---------
Housebuilding total completions (including 100% of JVs) included
260 affordable homes representing 21% of total completions.
Housing prices have largely remained firm throughout the first
half, with the average sales price for our private homes in
Housebuilding having decreased 3.0% to GBP332,000 (2019:
GBP342,800) and overall average sales price having increased by
9.0% to GBP294,000 (2019: GBP269,200).
Included within Housebuilding revenue is GBP5.2m (2019:
GBP21.9m) related to land sales and GBP0.1m (2019: GBP0.4m) related
to the release of deferred income from disposals within PRS joint
ventures.
Housebuilding adjusted gross profit of GBP49.1m and housing
adjusted gross margin of 14.1%, were impacted by COVID-19 direct
costs in the period totalling GBP8.6m which had a 2.5% impact on
housing adjusted gross margin. Additional costs relating to
implementing safe working practises and the reduced operating
efficiency on site are estimated to have a further 0.9% impact on
margin.
Housebuilding gross margin is also impacted by our policy of
recognising direct sales and marketing costs in the period they
arise, similar to administrative expenses, rather than apportioning
them by volume. The impact of this, on margin, due to the lower
than expected volume was c. 2.8% in the period. The Group also
recognised costs relating to completed sites and the impairment of
inventory totalling GBP3.4m in the period (2019: GBP0.8m). In
addition, the mix of homes completed in the first half included a
higher proportion of completions from sites that had been largely
built out at the beginning of the period which had, on average, a
lower margin.
Build costs have not moved significantly in the first half; the
Group saw initial inflationary pressure early in 2020 however this
pressure eased with the outbreak of COVID-19 and was offset by some
gains towards the end of the first half. The Group expects to
benefit from material supplies synergies in the full year.
Housebuilding adjusted operating profit of GBP8.5m and adjusted
operating profit margin of 2.5% is impacted by the above gross
margin reduction in addition to the fact that a full overhead cost
has been incurred despite reduced volumes.
Partnerships(5)
H1 2020
Total mixed tenure completions
incl. 100% JVs 489
----------
Adjusted Revenue GBP311.4m
----------
Adjusted Operating profit GBP12.4m
----------
Adjusted Operating margin 4.0%
----------
TNAV(7) GBP64.1m
----------
Adjusted revenue from Partnerships in the period totalled
GBP311.4m, made up of GBP223.2m from contracting and GBP88.2m from
mixed tenure operations.
Partnerships sold a total of 489 units from its mixed tenure
operations, including JVs, with an average selling price of GBP222k
and Contracting revenue generated equivalent units(12) of
1,310.
Adjusted operating profit of GBP12.4m and adjusted operating
profit margin of 4.0% are impacted by COVID-19 as well as a full
overhead cost being incurred despite reduced volumes.
Non-underlying and group costs
The reported Group segment of the business includes the
non-underlying exceptional restructuring costs of GBP15.4m related
to the Acquisition and the amortisation of acquired intangibles of
GBP7.1m, in addition to direct PLC costs totalling GBP6.1m,
including the costs of the PLC Board, share based payments and
related items, and furlough income of GBP6.3m.
Financing and Taxation
Net financing charges during the first half were GBP5.2m (2019:
GBP2.8m). Net bank interest and commitment fees were GBP7.9m (2019:
GBP3.2m), as a result of higher net debt during 2020 following the
acquisition and supporting the enlarged Group. We incurred a
GBP3.4m charge (2019: GBP1.7m), reflecting the imputed interest on
land bought on deferred terms. Finance income of GBP7.2m (2019:
GBP0.5m) is primarily generated on loans made to JVs and the
significant increase on prior year is driven by the acquisition of
loans to JVs with the acquired businesses.
The Group has recognised a tax credit of GBP0.5m representing
4.7% of the loss before tax (2019: tax charge of GBP13.7m at an
effective rate of 18.9%). The tax rate is driven by non-deductible
costs and is based on the expected full year effective tax rate
which is expected to be marginally above the standard rate of 19%.
The Group has a current tax asset of GBP14.5m in its balance sheet
as at 30 June 2020 (31 December 2019: liability of GBP20.9m).
Dividends and earnings/loss per share
During the period, the Board took the decision to postpone the
second interim cash dividend payment totalling c.GBP60m to conserve
cash in light of COVID-19. Following shareholder approval on 14
July 2020, this dividend was paid by way of a Bonus Issue.
The Board determined on 8 September 2020 that no interim
dividend was to be paid for the first half of 2020.
Both basic LPS of (5.4)p (2019: EPS of 41.9p) and basic EPS
before exceptionals and amortisation of acquired intangibles of
5.0p (2019: 41.9p) have decreased year on year, by 113% and 88.0%,
respectively.
Acquisition and Integration
The Group completed the Acquisition on 3 January 2020, at a
cost(14) of GBP1,253.7m including GBP398.3m in cash and GBP855.4m
in shares.
The Acquisition resulted in the recognition of GBP155.0m of
intangible assets related to the Linden and Drew Smith brand names,
as well as customer relationships and secured contracts held by the
acquired businesses. Provisional goodwill of GBP548.4m has been
recognised, reflecting intangible assets which do not qualify for
separate recognition including relationships with private customers
and the assembled workforce, in addition to future prospects and
the synergies that will be achieved as an enlarged business going
forwards.
Exceptional costs of GBP15.4m have been recognised in the income
statement relating to the acquisition, primarily driven by
redundancy costs, onerous lease costs on closed offices and
rebranding.
Net Assets and Cash flow
As at 30 June 2020 net assets of GBP2,118.8m were GBP846.8m
higher than at the start of the year, primarily resulting from the
Acquisition. Net assets per share as at 30 June 2020 were 973p (31
December 2019: 857p).
Goodwill and intangibles totalled GBP700.2m at 30 June 2020 (31
December 2019: GBP4.3m), directly resulting from the
Acquisition.
Tangible net assets(13) increased from GBP905.6m at 31 December
2019 to GBP1,776.0m at 30 June 2020, again primarily driven by the
addition of the acquired balances in January 2020.
Within tangible net assets, inventories increased during the
year by GBP793.3m to GBP2,001.0m, GBP716.5m of which was acquired
in January and the remainder driven by the lower level of
completions in the period.
Trade and other receivables increased by GBP146.5m, as a result
of the Group being significantly larger following the Acquisition.
Trade and other payables increased by GBP514.8m again as a result
of the Acquisition and enlarged business and includes land
creditors which increased by GBP111.6m to GBP372.3m (2019:
GBP260.7m) following the Acquisition.
As at 30 June 2020 the Group's net debt balance was GBP357.3m(1)
. Having started the year with net cash of GBP362.0m, the Group
generated an operating cash outflow before land expenditure of
GBP1.5m (2019: GBP64.7m). Net cash payments for land investment
were reduced at GBP84.0m (2019: GBP95.9m), reflecting the Group's
proactive decision to pause expenditure on new land as a response
to COVID-19, as well as deferred payment terms achieved. Investing
cash outflows totalling GBP522.6m includes the GBP401.3m cash
consideration for the Acquisition, as well as loans made to and
investments made in joint ventures and dividends received from
joint ventures. Financing cash inflows of GBP466.8m include
GBP475.0m of loan drawdowns, no dividends were paid in HY20.
At 30 June 2020 the Group has borrowing facilities of GBP770m,
including a 5 year committed revolving credit facility of GBP410m,
a 3 year revolving credit facility of GBP40m, GBP150m of 3 year
term loans, a GBP100m US Private Placement facility and GBP70m of
additional facilities. In addition, Vistry Group have been
confirmed as eligible for the CCFF, for borrowing of up to
GBP300m.
Land Bank
Housebuilding Land Bank
H1 2020 H1 2019
--------------------------------------- ---------- ----------
Consented plots added 1,815 1,004
Sites added 8 8
Sites owned at period end 222 115
Total plots in land bank at period end
incl. joint ventures 30,531 16,215
--------------------------------------- ---------- ----------
Average consented land plot ASP incl. GBP313,000 GBP316,000
share of joint ventures
Average consented land plot cost incl. GBP51,000 GBP58,000
share of joint ventures
--------------------------------------- ---------- ----------
The average selling price of all units within the consented land
bank decreased over the year to GBP313,000, 1% lower than at 31
December 2019. The estimated embedded gross margin in the consented
land bank as at 30 June 2020, based on prevailing sales prices and
build costs is 24.2%.
The Housebuilding land bank including joint ventures of 30,531
plots as at 30 June 2020 represents c4.0 years of supply based on
the 2019 proforma completion volume. The land bank reflects our
strategy to deliver c. 8,000 Housebuilding completions per year in
the medium term and maintain an optimal land bank at 3.5 to 4.0
times.
The 1,235 plots that legally completed in the half year were
replaced by a combination of site acquisitions and conversions from
our strategic land pipeline. Based on our appraisal at the time of
acquisition, the new additions, on average are expected to deliver
a future gross margin and ROCE in excess of 25%. In addition to the
acquisitions and conversions, during the period a further 823 plots
were conditionally contracted on 3 sites.
Partnerships Land Bank
H1 2020
------------------------------------------------- ----------
Consented plots added 1,320
Sites added 3
Sites owned at period end 51
Total plots in land bank at period end including
joint ventures 7,717
------------------------------------------------- ----------
Average consented land plot ASP GBP264,000
Average consented land plot cost GBP29,000
------------------------------------------------- ----------
The average selling price of all units within the consented land
bank at the period end was GBP264,000. The estimated embedded gross
margin in the consented land bank as at 30 June 2020, based on
prevailing sales prices and build costs is 18.1%.
The Partnerships land bank including joint ventures of 7,717
plots as at 30 June 2020 and reflects our strategy to grow the
level of mixed tenure development to contribute to the delivery of
completions and contracting equivalent(12) units in aggregate of c.
6,000 per year in the medium term.
The 489 mixed tenure plots that legally completed in the half
year were replaced by acquisition of 1,320 plots and a further 420
plots were conditionally contracted on 3 sites. Based on our
appraisal at the time of acquisition, the new additions, on average
are expected to deliver a future gross margin in excess of 17% and
ROCE of 40%.
Public sector land continues to be a strong source of
opportunities for Vistry Partnerships and in the period, we
exchanged contracts with Homes England on five sites. In addition,
we have obtained detailed planning on two Homes England sites -
Sandymoor, Runcorn and Lea Castle, Kidderminster, which will
provide over 900 new homes.
Strategic Land
As at 30 June 2020 Total sites Total plots
--------------------- ----------- -----------
0 - 150 plots 46 3,464
150 - 300 plots 41 9,061
300 - 500 plots 15 6,076
500 - 1,000 plots 15 8,897
1,000 + plots 5 5,333
--------------------- ----------- -----------
Total 122 32,831
--------------------- ----------- -----------
Planning agreed 12 5,096
Planning application 8 2,676
Ongoing promotion 102 25,059
--------------------- ----------- -----------
Total 122 32,831
--------------------- ----------- -----------
During the year 1,173 plots have been converted from the
strategic land pipeline into the consented landbank. A further
1,426 plots were contracted under options and planning consent
gained on 652 plots over the period.
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.
Following the Acquisition and COVID-19 pandemic the Board have
considered additional risks to the Vistry Group presented by the
Partnerships business. In particular the controls in respect of the
contracting element of the business, understanding the process for
tendering new work, ongoing management oversight of contracts and
the commercial controls in place.
Other than the above, the directors consider that the principal
risks and uncertainties facing the Group remain those as outlined
in the 2019 annual report, pages 34 to 37, which were: economic and
sales environment, materials and subcontract labour, project
delivery, customer service, people, change and business continuity,
health, safety and environmental, liquidity and funding; and
increased regulation.
The outbreak of COVID-19 in 2020 required the Group to respond
quickly and carefully to protect the health and wellbeing of our
employees, customers, suppliers and wider society. The Executive
Leadership Team has been focussed on managing the business to
balance the protection of profitability and preservation of
operating cash flow with the long-term needs of the Group, and
conserving cash in a time of great uncertainty.
Group income statement
Six months Represented Represented
ended Six months Year ended
30 June ended 31 Dec
2020 30 June 2019
GBP'000 2019 GBP'000
(unaudited) GBP'000 (audited)
(unaudited)
================================================= ============= ============= =============
Revenue (note 3) 606,375 472,343 1,130,768
================================================= ============= ============= =============
Cost of sales (539,367) (370,553) (888,012)
================================================= ============= ============= =============
Gross profit 67,008 101,790 242,756
================================================= ============= ============= =============
Analysed as:
================================================= ============= ============= =============
Adjusted gross profit 84,724 101,934 255,316
================================================= ============= ============= =============
Other operating income (9,180) - (10,675)
================================================= ============= ============= =============
Share of joint ventures' gross profit (8,536) (144) (1,885)
================================================= ============= ============= =============
Gross profit 67,008 101,790 242,756
================================================= ============= ============= =============
Administrative expenses including exceptional
items (note 5) (85,857) (25,993) (73,710)
================================================= ============= ============= =============
Other operating income 9,180 - 10,675
================================================= ============= ============= =============
Operating (loss) / profit (9,669) 75,797 179,721
================================================= ============= ============= =============
Analysed as:
================================================= ============= ============= =============
Adjusted operating profit 21,179 75,228 194,355
================================================= ============= ============= =============
Exceptional administrative expenses (15,444) - (12,846)
================================================= ============= ============= =============
Amortisation of acquired intangibles (7,120) - -
================================================= ============= ============= =============
Share of joint ventures' operating (profit)/loss (8,284) 569 (1,788)
================================================= ============= ============= =============
Operating (loss) / profit (9,669) 75,797 179,721
================================================= ============= ============= =============
Financial income 6,669 466 813
================================================= ============= ============= =============
Financial expenses including exceptional
items (note 5) (11,837) (3,218) (7,569)
================================================= ============= ============= =============
Net financing costs including exceptional
items (5,168) (2,752) (6,756)
================================================= ============= ============= =============
Share of profit / (loss) of joint ventures 2,599 (569) 1,788
================================================= ============= ============= =============
(Loss) / profit before tax (12,238) 72,476 174,753
================================================= ============= ============= =============
Income tax credit/(expense) including
exceptional items (note 5) 573 (13,727) (36,374)
================================================= ============= ============= =============
(Loss) / profit for the year attributable
to ordinary shareholders (11,665) 58,749 138,379
================================================= ============= ============= =============
(Loss) / earnings per share (pence) (Restated) (Restated)
================================================= ============= ============= =============
Basic (5.4)p 41.9p 97.5p
================================================= ============= ============= =============
Diluted (5.4)p 41.9p 97.4p
================================================= ============= ============= =============
The comparative income statement has been represented in the
above format as explained in note 1 and this representation has had
no impact on the underlying financial results. Comparative EPS
figures have been restated to include the impact of the bonus share
issue in January 2020.
Group statement of comprehensive income
Six months Six months Year ended
ended ended
30 June 30 June 31 Dec 2019
2020 2019
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
==================================== ============= ============= =============
(Loss) / profit for the year (11,665) 58,749 138,379
==================================== ============= ============= =============
Other comprehensive (expense) /
income
==================================== ============= ============= =============
Items that will not be reclassified
to the income statement
==================================== ============= ============= =============
Remeasurements on defined benefit
pension scheme 4,444 4,418 (2,116)
==================================== ============= ============= =============
Deferred tax on remeasurements on
defined benefit pension scheme (935) (644) 464
==================================== ============= ============= =============
Total other comprehensive income
/ (expense) 3,509 3,774 (1,652)
==================================== ============= ============= =============
Total comprehensive (expense) /
income for the year attributable
to ordinary shareholders (8,156) 62,523 136,727
==================================== ============= ============= =============
Group balance sheet
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
======================================== ============= ============= ============
Assets
======================================== ============= ============= ============
Goodwill 548,352 - -
======================================== ============= ============= ============
Intangible fixed assets 151,798 2,104 4,336
======================================== ============= ============= ============
Property, plant and equipment 4,132 3,064 1,845
======================================== ============= ============= ============
Right-of-use assets 36,155 21,848 21,347
======================================== ============= ============= ============
Investments in associates and joint
ventures 158,388 61,408 85,129
======================================== ============= ============= ============
Amounts recoverable from joint ventures 346,008 713 6,232
======================================== ============= ============= ============
Restricted cash 1,617 1,747 1,748
======================================== ============= ============= ============
Deferred tax assets - - 184
======================================== ============= ============= ============
Trade and other receivables 886 563 1,090
======================================== ============= ============= ============
Retirement benefit asset 22,575 11,134 4,506
======================================== ============= ============= ============
Total non-current assets 1,269,911 102,581 126,417
======================================== ============= ============= ============
Inventories 2,000,987 1,269,646 1,207,667
======================================== ============= ============= ============
Trade and other receivables 241,016 90,638 99,142
======================================== ============= ============= ============
Cash and cash equivalents 220,683 102,397 361,962
======================================== ============= ============= ============
Current tax asset 14,529 - -
======================================== ============= ============= ============
Total current assets 2,477,215 1,462,681 1,668,771
======================================== ============= ============= ============
Total assets 3,747,126 1,565,262 1,795,188
======================================== ============= ============= ============
Equity
======================================== ============= ============= ============
Issued capital 108,914 67,424 74,169
======================================== ============= ============= ============
Share premium 360,345 217,227 359,857
======================================== ============= ============= ============
Merger reserve 823,513 - -
======================================== ============= ============= ============
Retained earnings 826,059 789,140 837,940
======================================== ============= ============= ============
Total equity attributable to equity
holders of the parent 2,118,831 1,073,791 1,271,966
======================================== ============= ============= ============
Liabilities
======================================== ============= ============= ============
Bank and other loans 527,976 - -
======================================== ============= ============= ============
Lease liabilities 27,119 17,272 16,686
======================================== ============= ============= ============
Deferred tax liability 13,356 2,214 -
======================================== ============= ============= ============
Trade and other payables 181,702 97,457 122,940
======================================== ============= ============= ============
Total non-current liabilities 750,153 116,943 139,626
======================================== ============= ============= ============
Bank and other loans 50,000 - -
======================================== ============= ============= ============
Trade and other payables 808,383 351,332 352,359
======================================== ============= ============= ============
Lease Liabilities 12,533 5,107 6,309
======================================== ============= ============= ============
Provisions 7,226 3,825 3,989
======================================== ============= ============= ============
Current tax liabilities - 14,264 20,939
======================================== ============= ============= ============
Total current liabilities 878,142 374,528 383,596
======================================== ============= ============= ============
Total liabilities 1,628,295 491,471 523,222
======================================== ============= ============= ============
Total equity and liabilities 3,747,126 1,565,262 1,795,188
======================================== ============= ============= ============
These condensed consolidated financial statements were approved
by the Board of Directors on 8 September 2020.
Group statement of changes in equity
Total Issued Share Merger Total
retained capital premium Reserve GBP'000
earnings GBP'000 GBP'000 GBP'000
GBP'000
====================================== ========== ========= ========= ========= =========
Balance at 1 January 2020 837,940 74,169 359,857 - 1,271,966
====================================== ========== ========= ========= ========= =========
Total comprehensive expense (8,156) - - - (8,156)
====================================== ========== ========= ========= ========= =========
Issue of share capital - 31,912 488 823,513 855,913
====================================== ========== ========= ========= ========= =========
Bonus share issue (2,833) 2,833 - - -
====================================== ========== ========= ========= ========= =========
Purchase of own shares (1,000) - - - (1,000)
====================================== ========== ========= ========= ========= =========
Share based payments 271 - - - 271
====================================== ========== ========= ========= ========= =========
Deferred tax on share-based payments (163) - - - (163)
====================================== ========== ========= ========= ========= =========
Balance at 30 June 2020 (unaudited) 826,059 108,914 360,345 823,513 2,118,831
====================================== ========== ========= ========= ========= =========
Balance at 1 January 2019 776,762 67,398 216,907 - 1,061,067
====================================== ========== ========= ========= ========= =========
IFRS 16 application adjustment
at 1 January 2019 63 - - - 63
====================================== ========== ========= ========= ========= =========
Total comprehensive income 62,523 - - - 62,523
====================================== ========== ========= ========= ========= =========
Issue of share capital - 26 320 - 346
====================================== ========== ========= ========= ========= =========
Share based payments 833 - - - 833
====================================== ========== ========= ========= ========= =========
Deferred tax on share based payments 37 - - - 37
====================================== ========== ========= ========= ========= =========
Dividends paid to shareholders (51,078) - - - (51,078)
====================================== ========== ========= ========= ========= =========
Balance at 30 June 2019 (unaudited) 789,140 67,424 217,227 - 1,073,791
====================================== ========== ========= ========= ========= =========
Balance at 1 January 2019 776,762 67,398 216,907 - 1,061,067
====================================== ========== ========= ========= ========= =========
IFRS 16 application adjustment 65 - - - 65
====================================== ========== ========= ========= ========= =========
Total comprehensive income 136,727 - - - 136,727
====================================== ========== ========= ========= ========= =========
Issue of share capital - 6,771 142,950 - 149,721
====================================== ========== ========= ========= ========= =========
Deferred tax on other employee
benefits 140 - - - 140
====================================== ========== ========= ========= ========= =========
Share based payments 2,891 - - - 2,891
====================================== ========== ========= ========= ========= =========
Dividends paid to shareholders (78,645) - - - (78,645)
====================================== ========== ========= ========= ========= =========
Balance at 31 December 2019 (audited) 837,940 74,169 359,857 - 1,271,966
====================================== ========== ========= ========= ========= =========
Group statement of cash flows
Six months Six months Year ended
ended ended
30 June 30 June 31 Dec
2020 2019 2019
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
=========================================== ============= ============= ===========
Cash flows from operating activities
=========================================== ============= ============= ===========
(Loss)/profit for the year (11,665) 58,748 138,379
=========================================== ============= ============= ===========
Depreciation and amortisation 14,391 3,045 6,253
=========================================== ============= ============= ===========
Financial income (6,669) (466) (813)
=========================================== ============= ============= ===========
Financial expense 11,907 3,218 6,939
=========================================== ============= ============= ===========
Loss on sale of property, plant and
equipment 208 - 3
=========================================== ============= ============= ===========
Equity-settled share-based payment
expense 273 833 2,891
=========================================== ============= ============= ===========
Income tax (income) / expense (573) 13,727 36,374
=========================================== ============= ============= ===========
Share of results of Joint Ventures (2,599) 569 (1,788)
=========================================== ============= ============= ===========
Profit on sale of assets from Joint
Ventures - (401) (972)
=========================================== ============= ============= ===========
Decrease/(increase) in trade and other
receivables 14,415 (39,697) (58,234)
=========================================== ============= ============= ===========
Decrease in inventories 26,185 50,847 115,170
=========================================== ============= ============= ===========
(Decrease)/increase in trade and other
payables (91,232) (2,311) 16,716
=========================================== ============= ============= ===========
Decrease in provisions and increase
in retirement benefit obligations (20,401) (8,886) (8,629)
=========================================== ============= ============= ===========
Net cash generated (used in) / from
operations (65,760) 79,226 252,289
=========================================== ============= ============= ===========
Interest paid (4,806) (896) (2,093)
=========================================== ============= ============= ===========
Income taxes paid (14,949) (16,645) (33,804)
=========================================== ============= ============= ===========
Net cash (outflow) / inflow from operating
activities (85,515) 61,685 216,392
=========================================== ============= ============= ===========
Cash flows from investing activities
=========================================== ============= ============= ===========
Interest received 87 105 131
=========================================== ============= ============= ===========
Acquisition of intangible fixed assets (308) - (3,706)
=========================================== ============= ============= ===========
Acquisition of property, plant and
equipment (757) (2,527) (565)
=========================================== ============= ============= ===========
Acquisition of Linden and Partnerships
plus net overdraft acquired (note
13) (401,278) - -
=========================================== ============= ============= ===========
Movement in loans to Joint Ventures (105,805) - -
=========================================== ============= ============= ===========
Movement of investments in Joint Ventures (19,100) (36,693) (58,511)
=========================================== ============= ============= ===========
Dividends received from Joint Ventures 4,474 4,110 5,135
=========================================== ============= ============= ===========
Increase/(decrease) in restricted
cash 132 (366) (368)
=========================================== ============= ============= ===========
Net cash outflow from investing activities (522,555) (35,371) (57,884)
=========================================== ============= ============= ===========
Cash flows from financing activities
=========================================== ============= ============= ===========
Dividends paid - (51,078) (78,645)
=========================================== ============= ============= ===========
Principal elements of lease payments (7,209) - 5,562
=========================================== ============= ============= ===========
Proceeds from the issue of share capital - 345 149,721
=========================================== ============= ============= ===========
Purchase of own shares (1,000) - -
=========================================== ============= ============= ===========
Drawdown/(repayment) of bank and other
loans 475,000 (36,401) (36,401)
=========================================== ============= ============= ===========
Net cash used in financing activities 466,791 (87,134) 40,237
=========================================== ============= ============= ===========
Net (decrease)/increase in cash and
cash equivalents (141,279) (60,820) 198,745
=========================================== ============= ============= ===========
Cash and cash equivalents at 1 January 361,962 163,217 163,217
=========================================== ============= ============= ===========
Cash and cash equivalents at the end
of the period 220,683 102,397 361,962
=========================================== ============= ============= ===========
1 Basis of preparation
Vistry Group PLC (the "Company"), formerly named 'Bovis Homes
Group PLC' is a company domiciled in the United Kingdom. The
consolidated financial statements of the Company for the six months
ended June 2020 comprise the Company and its subsidiaries (together
referred to as the "Group") and the Group's interest in Joint
Ventures.
The condensed consolidated interim financial statements were
authorised for issue by the directors on 8 September 2020. The
financial statements are unaudited but have been reviewed by
PricewaterhouseCoopers LLP, the Company's auditors.
The condensed consolidated interim financial statements do not
constitute statutory accounts within the meaning of Section 434 of
the Companies Act 2006.
The figures for the half years ended 30 June 2020 and 30 June
2019 are unaudited. The comparative figures for the financial year
ended 31 December 2019 are an extract from the Group's statutory
accounts for that financial year. Those accounts have been reviewed
by the Company's auditors and delivered to the Registrar of
Companies. The report of the auditors was (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.
The Group consolidated financial statements include the
financial statements of the Company and all of its subsidiary
undertakings. Subsidiaries are all entities over which the Group
has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns though its
power over the entity. Subsidiaries are fully consolidated from the
date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary, are the fair values of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the Group. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. Acquisition costs are expensed as incurred as
required by IFRS 3 "Business combinations".
The preparation of condensed financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amount of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
The income statement has been represented in order to more
clearly present the financial results for the 2020 half year and
comparative periods. This representation has had no impact on the
underlying financial results.
The prior year EPS has been restated to include the impact of
the bonus issue of 5.7m shares in January 2020.
Judgements and estimates made by management in the application
of adopted International Financial Reporting Standards (IFRSs) that
have a significant effect on the financial statements and estimates
with a significant risk of material adjustment in following years
have been reviewed by the directors and, other than the goodwill
impairment assessment, remain those published in the Company's
consolidated financial statements for the year ended 31 December
2019.
Goodwill impairment
In order to assess whether goodwill and intangible assets
require an impairment, an estimate must be made for the value in
use of the cash generating units ("CGUs") which have goodwill
allocated to them. The estimate for the value in use requires the
calculation of a discounted cash flow, reflecting the future
expected cashflows from the relevant CGUs. Goodwill must be
reviewed on at least an annual basis for impairment, or earlier in
the event that there is an indication of possible impairment.
The goodwill recognised by the Group at 30 June 2020 reflects
the goodwill on acquisition of Linden and Partnerships on 3 January
2020. Details of goodwill impairment review will be disclosed in
the full year annual report for 2021, when the first annual review
of goodwill impairment will be available.
Covid-19
In light of the Covid-19 outbreak in the six months ended 30
June 2020 the Group has considered whether any impairment of
goodwill, intangibles, receivables or inventories is appropriate,
and has concluded that none is required. Non-productive costs in
the period driven by Covid-19 have been expensed directly to the
income statement and are not capitalised into WIP. The impact of
Covid-19 on future profitability of sites has been reflected in
assessment of net realisable value assessment of inventories at the
half year. The value in use of the CGUs is not expected to be
significantly impacted by the pandemic as the Group's strategy at
the time of the acquisition remains in place despite Covid-19
causing some short term delays to the plan and therefore no
impairment of assets is required.
The condensed consolidated interim financial statements have
been prepared in accordance with IAS34 'Interim Financial
Reporting' as endorsed by the EU and the Disclosure Guidance and
Transparency Rules Sourcebook of the United Kingdom's Financial
Conduct Authority. As required by the Disclosure and Transparency
Rules of the Financial Conduct Authority, and with the exception of
the changes in accounting policies outlined below, the condensed
consolidated interim financial statements have been prepared by
applying the accounting policies and presentation that were applied
in the preparation of the Company's published consolidated
financial statements for the year ended 31 December 2019, which
were prepared in accordance with IFRSs as adopted by the EU and
applicable law.
Following the acquisition of the Linden and Partnerships
business in January 2020, the following accounting policies have
been applied, which were not relevant to the 2019 Group financial
statements:
Contracting revenue and costs
Where the Group provides design, construction and mobilisation
activities on a development across multiple units simultaneously,
this is considered to represent one performance obligation. Where
these services are provided across multiple development sites, each
site is typically considered to represent a distinct performance
obligation.
Contracting revenue is recognised over time, as the value of the
services are transferred to the customer during the period. For all
contracts, costs are expensed in the income statement as
incurred.
In fixed price contracts, revenue is recognised based on the
costs incurred as a percentage of total estimated costs to complete
the contract.
In contracts where revenue is directly related to the costs
incurred, revenue is recognised based on the costs incurred to date
plus any agreed fee or mark-up.
Fair valuation of acquired assets and liabilities
The fair values of assets and liabilities acquired on 3 January
2020 are based on estimates by management and third party valuation
experts have been involved in the fair valuation of intangible
assets. The fair values presented in this report, and the resultant
goodwill balances, are provisional and subject to finalisation as
permitted by IFRS 3 prior to 3 January 2021.
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"
As set out on page 133 in the Group's 2019 Annual Report and
Accounts, the following standards became effective for the first
time for the period beginning 1 January 2020 without material
impact on the Group's reported results:
- Amendment to IAS 1 'Presentation of financial statements', effective 1 January 2020.
- Amendment to IAS 8 'Accounting policies, changes in accounting
estimates and errors', effective 1 January 2020.
- Amendment to IFRS3, 'Definition of a business', effective 1 January 2020.
In light of the COVID-19 pandemic, a revised cashflow forecast
has been completed for the Group to confirm the appropriateness of
the going concern assumption in these accounts. The forecast was
prepared using three scenarios - a likely base case including the
expected impact of COVID-19, a downside sensitivity scenario and a
severe but plausible downside scenario. In the severe but plausible
downside scenario the Group have assumed decreased affordability,
leading to reduced demand for housing and falling house prices. In
each of these scenarios, the forecasts indicated that there was
sufficient headroom and liquidity for the business to continue
based on the facilities available to the Group as discussed in Note
9 to the financial statements. In each of these scenarios the Group
was also forecast to be in compliance with the required covenants
on the aforementioned borrowing facilities. Consequently, the
Directors have concluded that using the going concern basis for the
preparation of the financial statements is appropriate.
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. This includes the decision to postpone the
second interim dividend payment totalling c. GBP60m, to tightly
manage working capital and to implement other specific measures to
increase cash generation and reduce cash outflow.
2 Seasonality
In common with the rest of the UK housebuilding industry,
activity occurs year round, but there are typically two principal
selling seasons: spring and autumn. As these fall into two separate
half years, the seasonality of the business is not usually
pronounced, although it is biased towards the second half of the
year under normal trading conditions.
2020 is not expected to reflect normal trading conditions and
seasonality trends as a result of the Covid-19 outbreak during the
first half of the year. The spring selling season was significantly
impacted by the pandemic and is expected to increase the bias
towards the second half of the year as a result of reduced trading
in the first six months.
3 Revenue
Reported revenue by type:
30 June 30 June
2020 2019
GBP'000 GBP'000
(unaudited) (unaudited)
========================== ============= =============
Private housing 327,176 352,357
========================== ============= =============
Affordable housing 47,772 90,179
========================== ============= =============
Contracting revenue 223,215 -
========================== ============= =============
Other revenue 8,211 29,808
========================== ============= =============
Total revenue 606,375 472,343
========================== ============= =============
4 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, which is the Board, notes
that the Group's main operation is that of a housebuilder and it
operates entirely within the United Kingdom. Following the
acquisition of the Linden and Partnerships businesses ('The
Acquisition') from Galliford Try PLC, the Board have identified two
separate segments having taken into consideration IFRS8 criteria -
Housebuilding and Partnerships.
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 chief operating decision maker
(CODM).
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 and
affordable housing on land owned by the Group or the Group's joint
ventures, or to provide contracting services for development. The
Partnerships segment operates under the Vistry Partnerships and
Drew Smith brand names.
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.
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 exceptional items and amortisation.
Segmental TNAV includes items directly attributable to the
segment as well as those that can be allocated on a reasonable
basis, with the exception of goodwill and intangible assets, net
cash or debt, retirement benefit assets/liabilities and tax
balances payable/receivable.
Adjusted financial results include share of joint ventures and
adjusted gross profit is stated including other operating income.
The Partnerships business was acquired on 3(rd) January 2020
therefore the financial performance for period ended 30 June 2019
will not include comparatives.
(a) Segmental financial performance
Period ended 30 June 2020 Housebuilding Partnerships Group Total
items
GBP'000 GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited)
==================================== ============== ============= ============= =============
Adjusted results
==================================== ============== ============= ============= =============
Adjusted revenue 349,442 311,425 - 660,867
==================================== ============== ============= ============= =============
Adjusted gross profit 49,148 31,375 4,200 84,724
==================================== ============== ============= ============= =============
Adjusted operating profit/(loss) 8,545 12,389 244 21,179
==================================== ============== ============= ============= =============
Adjusted gross margin 14.1% 10.1% N/A 12.8%
==================================== ============== ============= ============= =============
Adjusted operating margin 2.5% 4.0% N/A 3.2%
==================================== ============== ============= ============= =============
Reported results
==================================== ============== ============= ============= =============
Revenue 321,445 284,930 - 606,375
==================================== ============== ============= ============= =============
Gross profit 38,128 24,680 4,200 67,008
==================================== ============== ============= ============= =============
Other operating income 5,110 4,070 - 9,180
==================================== ============== ============= ============= =============
Administrative expenses (before
exceptionals) (41,772) (24,685) (3,956) (70,413)
==================================== ============== ============= ============= =============
Exceptional administrative expenses - - (15,444) (15,444)
==================================== ============== ============= ============= =============
Operating profit/(loss) 1,466 4,065 (15,200) (9,669)
==================================== ============== ============= ============= =============
Period ended 30 June 2019 Housebuilding Partnerships Group Total
items
GBP'000 GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited)
=========================== ============== ============= ============= =============
Adjusted results
=========================== ============== ============= ============= =============
Adjusted revenue 472,809 - - 472,809
=========================== ============== ============= ============= =============
Adjusted gross profit 101,934 - - 101,934
=========================== ============== ============= ============= =============
Adjusted operating profit 79,733 - (4,505) 75,228
=========================== ============== ============= ============= =============
Adjusted gross margin 21.6% - - 21.6%
=========================== ============== ============= ============= =============
Adjusted operating margin 16.9% - - 16.0%
=========================== ============== ============= ============= =============
Reported results
=========================== ============== ============= ============= =============
Revenue 472,343 - - 472,343
=========================== ============== ============= ============= =============
Gross profit 101,790 - - 101,790
=========================== ============== ============= ============= =============
Administrative expenses (21,488) - (4,505) (25,993)
=========================== ============== ============= ============= =============
Operating profit 80,302 - (4,505) 75,797
=========================== ============== ============= ============= =============
(b) Segmental financial position
Segmental TNAV represents the net assets of the Group's two
operating divisions. Segmental TNAV includes divisional net assets
less goodwill, pension, current and deferred tax and net
debt/cash.
Period ended 30 June 2020
Housebuilding Partnerships Group Total
items
GBP'000 GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited)
========================== ============== ============= ============= =============
Goodwill and Intangibles 288,121 412,030 700,150
========================== ============== ============= ============= =============
Tangible Net Assets 1,692,991 64,052 18,932 1,775,976
========================== ============== ============= ============= =============
Net debt - - (357,294) (357,294)
========================== ============== ============= ============= =============
Period ended 30 June 2019 Housebuilding Partnerships Group Total
items
GBP'000 GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited)
=========================== ============== ============= ============= =============
Goodwill and Intangibles 2,104 - 2,104
=========================== ============== ============= ============= =============
Tangible Net Assets 974,634 - (5,344) 969,290
=========================== ============== ============= ============= =============
Net cash - - 102,397 102,397
=========================== ============== ============= ============= =============
5 Exceptional items
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.
Six months Six months Year ended
ended ended 30
June 2019
(unaudited)
30 June 2020 GBP'000 31 Dec
(unaudited) 2019
GBP'000 (audited)
GBP'000
======================== ============= ============ ===========
Administrative expenses 15,444 - 12,846
======================== ============= ============ ===========
Financial expenses - - 630
======================== ============= ============ ===========
Income tax expenses 2,356 - 131
======================== ============= ============ ===========
Exceptional expenses 17,800 - 13,607
======================== ============= ============ ===========
On 3 January 2020, the Group completed the acquisition of Linden
and Partnerships from Galliford Try PLC. The administrative fees
incurred in the year ended 31 December 2019 in relation to this
transaction include legal, financing and accounting advisory
services, transaction insurance costs and other expenses. In the
six months ended 30 June 2020, exceptional administrative expenses
include legal fees incurred in relation to the completion and
completion statement, as well as costs directly related to the
integration and restructuring of the Group as a result of the
Acquisition, including the cost of redundancies and office
closures.
The exceptional interest costs incurred in the year ended 31
December 2019 relate to the accelerated amortisation of capitalised
facility arrangement fees on the 2015 revolving credit facility;
this results from the early termination of this facility in January
2020 triggered by the refinancing for the Acquisition.
6 Loss / Earnings per share
Loss / Profit attributable to ordinary shareholders
Six months Six months Year ended
ended ended 31 Dec 2019
30 June 2020 30 June GBP000 (audited)
GBP000 (unaudited) 2019
GBP000 (unaudited)
========================================= =================== =================== =================
(Loss)/ profit for the year attributable
to equity holders of the parent (11,665) 58,749 138,379
========================================= =================== =================== =================
Profit for the year attributable
to equity holders of the parent
(before exceptional items and
amortisation) 10,899 58,933 152,568
========================================= =================== =================== =================
Earnings per share
Six months Six months Year ended
ended ended 31 Dec 2019
30 June 2020 30 June Pence (audited)
Pence (unaudited) 2019
Pence (unaudited)
===================================== ================== ================== ================
Basic (loss) / earnings per share (5.4) 41.9 97.5
===================================== ================== ================== ================
Diluted (loss) / earnings per
share (5.4) 41.9 97.4
===================================== ================== ================== ================
Basic earnings per share (before
exceptional items and amortisation) 5.0 42.1 107.5
===================================== ================== ================== ================
Diluted earnings per share (before
exceptional items and amortisation) 5.0 42.0 107.5
===================================== ================== ================== ================
Weighted average number of ordinary shares
Six months Six months Year ended
ended ended 31 Dec 2019
30 June 2020 30 June
2019
==================================== ============= =========== =============
Weighted average number of ordinary
shares 216,221,073 140,057,908 141,942,060
==================================== ============= =========== =============
Basic earnings per share
Basic earnings per ordinary share for the six months ended 30
June 2020 is calculated on a loss attributable to ordinary
shareholders of GBP11,665,000 (six months ended 30 June 2019:
profit after tax of GBP58,749,000; year ended 31 December 2019:
profit after tax of GBP138,379,000) over the weighted average of
216,221,073 (six months ended 30 June 2019: 140,057,908 ; year
ended 31 December 2019: 141,942,060) ordinary shares in issue
during the period.
Diluted earnings per share
The calculation of diluted earnings per share at 30 June 2020
was based on the loss attributable to ordinary shareholders of
GBP11,665,000 (six months ended 30 June 2019: profit after tax of
GBP58,749,000; year ended 31 December 2019: profit after tax of
GBP138,379,000).
The Group's diluted weighted average ordinary shares potentially
in issue during the six months ended 30 June 2020 was 216,313,359
(six months ended 30 June 2019: 140,206,105, year ended 31 December
2019: 142,082,681).
7 Dividends
The following dividends per qualifying ordinary share were
settled by the Group:
Six months Six months Year ended
ended ended 31 Dec 2019
30 June 2020 30 June GBP'000
GBP'000 2019
GBP'000
=============================== ============== ============ =============
May 2020: 0p (May 2019: 38.0p) - 51,078 51,078
=============================== ============== ============ =============
November 2019: 20.5p - - 27,567
=============================== ============== ============ =============
Total - 51,078 78,645
=============================== ============== ============ =============
The Board determined on 8 September 2020 that no interim
dividend was to be paid for the first half of 2020. Following
shareholder approval on 14 July 2020 and admission to Main Market
of the London Stock Exchange on 15 July 2020, 4,369,992 ordinary
shares of GBP0.50 each were issued to shareholders as a bonus issue
on the Company's register of members as at 6.00 p.m. on 27 December
2019.
8 Interest in associates and joint ventures
In January 2020, the Group entered into a joint venture at
Collingtree, near Northampton, with Latimer Developments Limited.
As part of the initial transaction, land owned by the Group was
sold into the joint venture, Vistry Latimer Collingtree LLP.
The Group acquired a number or joint venture investments as part
of the Acquisition, which have also been fair valued.
Dividends received relate to the final profit distribution on
certain joint ventures.
The carrying amount of equity-accounted investments has changed
as follows in the six months to 30 June 2020:
Six months Six months Year ended
ended ended 31 Dec
30 June 2020 30 June 2019
GBP'000 2019 GBP'000
GBP'000
====================================== ============= ========== ==========
Beginning of the period 85,129 28,992 28,992
====================================== ============= ========== ==========
Acquired with Linden and Partnerships 56,033 - -
====================================== ============= ========== ==========
Additions - 35,821 59,387
====================================== ============= ========== ==========
Loans made 19,100 1,274 97
====================================== ============= ========== ==========
Profit/(loss) for the period 2,599 (569) 1,788
====================================== ============= ========== ==========
Dividends paid (4,474) (4,110) (5,135)
====================================== ============= ========== ==========
End of the period 158,388 61,408 85,129
====================================== ============= ========== ==========
Accounted for using the equity
method:
====================================== ============= ========== ==========
- Equity 116,489 36,257 61,135
====================================== ============= ========== ==========
- Loans 41,877 25,129 23,972
====================================== ============= ========== ==========
Other investments 22 22 22
====================================== ============= ========== ==========
Total investments 158,388 61,408 85,129
====================================== ============= ========== ==========
9 Bank and other loans
Interest rate profile of bank and other loans
Rate Available Facility Carrying Carrying
facility maturity value value
GBP000 30 June 31 Dec
2020 2019
GBP000 GBP000
=========================== ================== ============= =========== =========== ========
Revolving credit facility* LIBOR +165-255bps 410,000 2025 255,900 -
=========================== ================== ============= =========== =========== ========
Revolving credit* LIBOR +165-255bps 40,000 2023 19,100 -
=========================== ================== ============= =========== =========== ========
Term Loan* LIBOR +165-255bps 150,000 2023 150,000 -
=========================== ================== ============= =========== =========== ========
USPP Loan** 403 bps 100,000 2027 107,792 -
=========================== ================== ============= =========== =========== ========
Term Loan
(commenced 17 Mar 2020) LIBOR +265bps 50,000 2021 50,000 -
=========================== ================== ============= =========== =========== ========
Revolving credit facility
(commenced 27 Mar 2020) LIBOR +155-245bps 20,000 2022 - -
=========================== ================== ============= =========== =========== ========
Total Facilities 770,000 582,792 -
=============================================== ============= =========== =========== ========
*These facilities commenced on 3rd Jan 2020 and were
subsequently amended on 24th Jan 2020.
**Carrying value is quoted including impact from the fair value
of future interest payments.
The combined GBP450.0 million revolving credit facility
syndicate comprises eight banks. The revolving credit facilities,
USPP Loan and Term Loan all include a covenant package as per the
previous agreement, covering interest cover, gearing and tangible
net worth requirements, which are also tested semi-annually. The
overall financing cost of the new arrangements are marginally more
expensive than the previous facility.
10 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 30 June 2020 were limited to those
relating to remuneration, which are disclosed in the directors
remuneration report published in the Group's Annual Report and
Accounts 2019.
Mr Greg Fitzgerald, Group Chief Executive, is non-executive
Chairman of Ardent Hire Solutions ("Ardent"). The Group hires
forklift trucks from Ardent.
Mr Ian Baker, is the Managing Director of Baker Estates Ltd
where Mr Greg Fitzgerald is a majority shareholder. The Group
receives advisory services from Ian Baker's consultancy company IB
(SW).
Mr Graham Prothero, appointed as Chief Operating Officer on 3
January 2020, 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 in the year ended 31
December 2019.
Ms Katherine Innes Ker, is a non-executive director of Forterra
PLC and Vistry Group PLC. The Group incurred costs with Forterra
PLC in relation to the supply of bricks.
The total net value of transactions with related parties were as
follows:
Expenses paid Amounts payable Amounts owed
to to by
related parties related parties related parties
===================== ============================== ============================== ==============================
Six Six Year Six Six Year Six Six Year
months months ended months months ended months months ended
ended ended 31 Dec ended ended 31 Dec ended ended 31 Dec
30 June 30 June 2019 30 June 30 June 2019 30 June 30 June 2019
2020 2019 GBP'000 2020 2019 GBP'000 2020 2019 GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
===================== ========= ========= ======== ========= ========= ======== ========= ========= ========
Trading transactions
Ardent 1,088 1,302 2,736 240 202 274 - - -
===================== ========= ========= ======== ========= ========= ======== ========= ========= ========
IB (SW) 56 - 20 - - 67 - - -
===================== ========= ========= ======== ========= ========= ======== ========= ========= ========
Marshalls PLC - - 19 - - - - - -
===================== ========= ========= ======== ========= ========= ======== ========= ========= ========
Forterra PLC 159 - 545 - - 98 - - -
===================== ========= ========= ======== ========= ========= ======== ========= ========= ========
Transactions between the Group and its joint ventures are
disclosed as follows:
Sales to related parties Interest and dividend
income
from related parties
========================= ================================== ==============================
Six Six months Year ended Six Six Year
months ended 31 Dec months months ended
ended 30 June 2019 ended ended 31 Dec
30 June 2019 GBP'000 30 June 30 June 2019
2020 GBP'000 2020 2019 GBP'000
GBP'000 GBP'000 GBP'000
========================= ========= =========== ========== ========= ========= ========
Trading transactions 56,073 2,307 6,257 - - -
Non-trading transactions - - - 10,312 47 77
========================= ========= =========== ========== ========= ========= ========
Amounts owed by related Amounts owed to related
parties parties
==================== ================================ ==============================
Six months Six Year Six Six Year
ended months ended months months ended
30 June ended 31 Dec ended ended 31 Dec
2020 30 June 2019 30 June 30 June 2019
GBP'000 2019 GBP'000 2020 2019 GBP'000
GBP'000 GBP'000 GBP'000
==================== =========== ========= ======== ========= ========= ========
Balances with joint
ventures 418,195 713 6,232 24,993 - 205
==================== =========== ========= ======== ========= ========= ========
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.
11 Reconciliation of net cash flow to net cash
Six months Six months Year ended
ended ended 31 Dec
30 June 30 June 2019 2019
2020 GBP'000 GBP'000
GBP'000
================================== =========== ============== ==========
Net (decrease) / increase in cash
and cash equivalents (141,279) (60,820) 198,745
================================== =========== ============== ==========
(Increase)/decrease in borrowings (577,976) 36,401 36,401
================================== =========== ============== ==========
Net cash at start of period 361,962 126,816 126,816
================================== =========== ============== ==========
Net (debt)/ cash at end of period (357,294) 102,397 361,962
================================== =========== ============== ==========
Analysis of net cash:
========================== ========= ======= =======
Cash and cash equivalents 220,683 102,397 361,962
========================== ========= ======= =======
Bank and other loans (577,976) - -
========================== ========= ======= =======
Net cash at end of period (357,294) 102,397 361,962
========================== ========= ======= =======
12 Alternative performance measures
The Group uses alternative performance measures which are not
defined within IFRS. The Directors use these alternative
performance measures, along with IFRS measures, to assess the
operational performance of the Group.
The definition and reconciliation of the financial alternative
performance measures used to IFRS measures, are shown below:
Adjusted revenue
Adjusted revenue is defined as revenue including share of joint
ventures' revenue:
Six months Six months Year ended
ended ended 31 Dec
30 June 30 June 2019 2019
2020 GBP'000 GBP'000
GBP'000
================================= =========== ============== ==========
Revenue per Consolidated Income
Statement 606,375 472,343 1,131,768
================================= =========== ============== ==========
Share of joint ventures' revenue 54,492 466 8,479
================================= =========== ============== ==========
Adjusted revenue 660,867 472,809 1,140,247
================================= =========== ============== ==========
Adjusted gross profit
Adjusted gross profit is defined as gross profit including share
of joint ventures' gross profit, plus other operating income:
Six months Six months Year ended
ended ended 31 Dec
30 June 30 June 2019 2019
2020 GBP'000 GBP'000
GBP'000
=============================== =========== ============== ==========
Gross Profit per Consolidated
Income Statement 67,008 101,790 242,756
=============================== =========== ============== ==========
Other operating income 9,180 - 10,675
=============================== =========== ============== ==========
Share of joint ventures' gross
profit 8,536 144 1,885
=============================== =========== ============== ==========
Adjusted gross profit 84,724 101,934 255,316
=============================== =========== ============== ==========
Adjusted operating profit
Adjusted operating profit is defined as operating profit
including share of joint ventures' operating profit, before
exceptional expenses and amortisation.
Six months Six months Year ended
ended ended 31 Dec
30 June 30 June 2019 2019
2020 GBP'000 GBP'000
GBP'000
========================================= =========== ============== ==========
Operating (loss)/profit per Consolidated
Income Statement (9,669) 75,797 179,721
========================================= =========== ============== ==========
Exceptional administrative expenses 15,444 - 12,846
========================================= =========== ============== ==========
Amortisation of acquired intangibles 7,120 - -
========================================= =========== ============== ==========
Share of joint ventures' operating
profit/(loss) 8,284 (569) 1,788
========================================= =========== ============== ==========
Adjusted operating profit 21,179 75,228 194,355
========================================= =========== ============== ==========
13 Business combinations
On 3 January 2020, the Group acquired the Linden and
Partnerships and Regeneration businesses from Galliford Try PLC for
consideration of GBP1,254m. The acquisition positions the Group as
a top five national housebuilder by volume, has expanded the
Group's presence across the UK and into Yorkshire and established
the Group as one of the leaders in the highly attractive,
high-growth partnerships business.
Linden Homes is a top UK housebuilder, and Vistry Partnerships
is a market leading partnerships business. The combination of these
businesses with the existing Vistry business will create the
capacity to deliver more than 14,000 new units per year over the
medium term, deliver an enhanced customer proposition, enhance the
Group's geographical footprint, realise synergies and strengthen
the senior management team.
The acquisition was of 100% of the share capital and control of
the holding companies Vistry (Jersey) Limited (formerly Goldfinch
(Jersey) Limited) and Vistry Partnerships Limited (formerly
Galliford Try Partnerships Limited) and all of their
subsidiaries.
Details of the purchase consideration, the net assets acquired
and goodwill are as follows:
Purchase consideration Attributable Attributable Total
to the acquisition to the acquisition
of Linden of Partnerships GBP'000
GBP'000 GBP'000
============================= ==================== ==================== =========
Cash paid (ii) 96,700 301,577 398,277
============================= ==================== ==================== =========
Shares in Vistry Group PLC
issued 815,698 39,685 855,383
============================= ==================== ==================== =========
Total purchase consideration 912,398 341,262 1,253,660
============================= ==================== ==================== =========
The share consideration included 63,739,385 shares with nominal
value of GBP0.50 per share. GBP823.5m has been recognised within
the merger reserve in relation to these consideration shares
issued.
In addition to the above cash and share consideration, the Group
assumed a liability with fair value of GBP108.2m for Notes Payable
in relation to the acquisition of Partnerships, included within
Borrowings in the table below.
The provisional assets and liabilities recognised as a result of
the acquisition are as follows:
Linden Partnerships Total
Fair value Fair value Fair value
3 January 3 January 3 January
2020 2020 2020
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited)
================================= ============ ============ ============
(Bank overdraft)/Cash and cash
equivalents (35,368) 32,367 (3,001)
================================= ============ ============ ============
Property, plant and equipment 295 1,783 2,078
================================= ============ ============ ============
Right-of-use assets 10,758 10,207 20,965
================================= ============ ============ ============
Intangible assets 54,800 100,224 155,024
================================= ============ ============ ============
Investments in joint ventures
and associates 49,526 6,507 56,033
================================= ============ ============ ============
Retirement benefit asset 5,646 - 5,646
================================= ============ ============ ============
Inventories 609,744 106,801 716,545
================================= ============ ============ ============
Amounts owed by joint ventures 203,091 74,438 277,530
================================= ============ ============ ============
Trade and other receivables 103,878 155,620 259,498
================================= ============ ============ ============
Trade and other payables (249,442) (331,617) (581,059)
================================= ============ ============ ============
Borrowings - (108,219) (108,219)
================================= ============ ============ ============
Lease liabilities (10,758) (10,207) (20,965)
================================= ============ ============ ============
Provisions (4,558) - (4,558)
================================= ============ ============ ============
Net deferred tax liabilities 12,283 (14,189) 1,906
================================= ============ ============ ============
Net identifiable assets acquired 681,592 23,716 705,307
================================= ============ ============ ============
Add: Provisional goodwill 230,806 317,546 548,352
================================= ============ ============ ============
912,398 341,262 1,253,660
================================= ============ ============ ============
The acquired intangibles include the Linden Homes and Drew Smith
brand names, the customer relationships within the Linden and
Partnerships businesses, and the secured contracts of the
Partnerships business. The acquired intangible assets have
estimated useful lives of between 4 and 25 years.
The goodwill for Linden reflects intangible assets which do not
qualify for separate recognition including relationships with
private customers, and the assembled workforce, in addition to
synergies that will be achieved as an enlarged business.
The goodwill for Partnerships reflects their 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.
The fair value of the acquired assets and liabilities, as well
as cash consideration is pending finalisation of the completion
statement discussed in note ii below. Deferred tax has been
provided in relation to these fair values.
Current period
(i) Acquisition-related costs
Acquisition-related costs of GBP15.4m are included within
exceptional administrative expenses in the Group Income
Statement.
(ii) Cash consideration
The cash consideration amount is subject to a closing balance
sheet adjustment as set out in the Sale and Purchase Agreement.
This is still being finalised with Galliford Try PLC and as such
cash consideration is provisional at the date of this report.
(iii) Acquired receivables
The fair value of trade and other receivables in Linden is
GBP103.9m and includes trade receivables with a fair value of
GBP89.4m. The gross contractual amount for trade receivables due is
GBP104.5m, of which GBP0.6m is expected to be uncollectible.
The fair value of trade and other receivables in Partnerships is
GBP155.6m and includes trade receivables with a fair value of
GBP150.7m. The gross contractual amount for trade receivables due
is GBP155.7m, of which GBP0.1m is expected to be uncollectible.
(v) Revenue and profit contribution
The 100% owned development sites acquired with the Linden
business contributed reported revenues of GBP105.5m to the Group
for the period from 3 January 2020 to 30 June 2020. There would be
no material difference in the contribution to revenues nor
operating profit/(loss) if the acquisition had occurred on 1
January 2020. Due to the full integration of the Linden business
within the first half of the year it is not possible to calculate
the impact of the Linden business to the operating loss of the
Group for the period from 3 January 2020 to 30 June 2020.
The acquired Partnerships business contributed revenues of
GBP284.9m and operating profit of GBP4.1m to the Group for the
period from 3 January 2020 to 30 June 2020. There would be no
material difference in the contribution to revenues nor operating
profit/(loss) if the acquisition had occurred on 1 January
2020.
14 Further information
Further information on Vistry Group PLC (formerly Bovis Homes
Group PLC) can be found on the Group's corporate website
www.vistrygroup.co.uk, including the analyst presentation document
which will be presented at the Group's results meeting on 8
September 2020.
Statement of directors' responsibilities
The directors' confirm that these condensed interim financial
statements have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and that the interim management report
includes a fair review of the information required by DTR 4.2.7 and
DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.
The directors of Vistry Group PLC are listed in the Vistry Group
PLC Annual Report for 31 December 2019. A list of current directors
is maintained on the Vistry Group PLC website:
www.vistrygroup.co.uk
For and on behalf of the Board,
Greg Fitzgerald Earl Sibley
Chief Executive Chief Financial Officer
8 September 2020
[1] Net debt is quoted excluding IFRS16 lease liabilities and
includes GBP7.8m impact from the fair value of future interest
payments on US Private Placement notes
[2] Forward sales of GBP2.7bn includes GBP0.3bn in respect of
our joint venture partners' share of revenue
[3] Pre-exceptional items and amortisation of acquired
intangible assets
[4] Gearing calculated as Group net debt plus land creditors
divided by Group tangible net assets
[5] Key financials are on an adjusted basis to include the
proportional contribution of the joint ventures and before
exceptional expenses of GBP15.4m and amortisation of acquired
intangibles of GBP7.1m in HY20
[6] HY19 reflect Vistry Group PLC excluding the acquired
businesses and are not on a proforma basis
[7] In HY20 the Group incurred GBP10.2m of costs directly
related to COVID-19 and received GBP6.3m in relation to furlough
claims from the Government's Coronavirus Job Retention Scheme. The
Group will repay the claims in H2 2020 but had not committed to
this at 30 June 2020; as a result, the GBP6.3m of income is
recognised in the HY20 income statement and will be reversed by 31
December 2020
[8] Completions include 100% of joint venture completions
[9] Restated from 43.7p in the prior period as a result of the
bonus share issue in January 2020
[10] Prior year divisional completions and revenue represent pro
forma H1 2019 divisional completions and revenues calculated using
published data for Linden Homes and Vistry Partnerships for the
period from 1 Jan 2019 to 30 June 2019. No further proforma
information is provided as the previously published data is not
considered to be comparable due to the need to align accounting
policies.
[11] ASP and Revenue includes proportionate contribution of
JVs
[12] Contracting equivalent units is a measure of the build
progress in the period in delivering residential properties under
contracting contracts, and is calculated by dividing the costs
incurred in the period by the total contract costs, and applying
this % to the total residential units under the contract
[13] Tangible net asset value is calculated as total assets less
acquired intangible assets, goodwill and net cash/debt.
[14] Cost is stated at the fair value of the consideration and
cash consideration and is subject to the finalisation of the
completion statement with Galliford Try PLC.
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END
IR KKOBQKBKBPCK
(END) Dow Jones Newswires
September 08, 2020 02:00 ET (06:00 GMT)
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