TIDMVTY
RNS Number : 7955Z
Vistry Group PLC
18 May 2023
18 May 2023
Vistry Group PLC - Trading Update
Vistry Group PLC (the "Group") is providing an update on trading
in the period from 1 January 2023 to date, ahead of its Annual
General Meeting ("AGM") which is being held at 12:00pm today.
Greg Fitzgerald, Chief Executive commented:
"We have continued to see improving market conditions and the
Group has traded in line with our expectations for the year to
date. Partnerships is demonstrating the resilience of its business
model and is expected to deliver revenue growth in FY23 against
proforma FY22. The homes and places that Vistry is creating
continue to respond directly to the needs of society, delivering
mixed tenure housing for new communities across the country. The
Group's forward sales position is strong, totalling GBP4,475m, with
75% of forecast FY23 Partnership mixed tenure units and 74% of
forecast FY23 Housebuilding units secured.
"We are well positioned to manage costs, reflecting the enlarged
Group's increased purchasing scale and the visibility of revenues
within our Partnerships business, and for FY23 we are targeting to
offset any inflationary cost increases. The integration of
Countryside continues to make excellent progress and we expect to
deliver GBP25m of synergies in FY23 and the full run rate of GBP60m
by the end of FY24. I am increasingly confident on the outlook for
Vistry for FY23 and expect adjusted profit before tax for FY23 to
be in excess of GBP450m."
-- Group sales rate continues to improve with the average weekly
private sales rate per site per week at 0.83 for the year to
date
-- Open market pricing has remained resilient, supported by the
use of incentives particularly targeted at first time buyers
-- Group continues to deliver high quality homes and outstanding
customer service, with 5-star HBF Customer Satisfaction rating
-- The sector continues to address the challenges of
unprecedented regulatory change, with Vistry's business model and
highly experienced management team, well positioned to mitigate
this
-- The Group forward order book totals GBP4,475m with
Partnerships forward sales totalling GBP3,067m and Housebuilding
totalling GBP1,408m
-- Reflecting the strength of the forward order book and
progress on integration, the Group now expects to deliver adjusted
profit before tax for FY23 in excess of GBP450m
Current trading
The Group has traded in line with our expectations for the first
19 weeks of the year. The resilience of our Partnerships business
has been clear with strong levels of demand from Housing
Associations and Local Authorities and an improving level of demand
from PRS providers.
Partnerships has secured a number of exciting development
opportunities in the year to date, all of which meet our hurdles of
at least 50% of homes presold and 40% return on capital employed.
In particular, we were delighted to have been selected by The
Guinness Partnership to form a 50/50 joint venture to deliver Phase
2 at Signal Park, a major redevelopment in Tolworth with a gross
development value of GBP400m and the delivery of 700 much needed
mixed-tenure homes. We continue to benefit from working with
clients on the early adoption of Future Homes, strengthening our
experience and delivery of sustainable homes. We were pleased to
have been appointed the preferred bidder for a further GBP99m phase
on the South Kilburn Estate with Brent as our Local Authority
Partner. The scheme, which will deliver over 200 new homes, will
also achieve CO2 savings significantly below building regulations
requirements.
Our Housebuilding business is seeing good, sustained levels of
customer interest benefitting from lower mortgage rates and
increased mortgage availability since the start of the year. We
continue to use targeted incentives at levels in-line with our
forecasts to support demand, particularly from first time buyers.
Housebuilding is focused on delivering operational excellence in
this more competitive marketplace, with top quality customer
service and the highest build standard critical to success.
The Group has entered into a number of bulk transactions in the
period, in particular meeting the demand for new homes from Housing
Associations with which the Group has established, long-term
relationships. These bulk transactions have supported the sales
rate, ensured that we have been able to hold firm on our open
market private sales prices, and assisted with subcontract savings
and the management of preliminary costs. Excluding bulk sales in
Housebuilding, the Group sales rate in the period was 0.65.
The integration of Countryside continues to make excellent
progress. The new operating structure of 19 and 13 business units
in Partnerships and Housebuilding respectively is well embedded,
and the plan for increased output from Vistry Works, our
manufacturing business, is also progressing well. The initial
milestones for consolidation of systems have been achieved on time
and on budget, and former Countryside operations are expected to
complete migration to Vistry's single operating system by the end
of the year.
Following the acquisition, we are renegotiating the Group's
centralised procurement contracts which in total, account for c.
90% of materials secured. Reflecting the Group's significantly
increased purchasing scale and the high level of revenue visibility
for Partnerships, we are well positioned and are making good
progress. Overall, we are targeting to offset any build cost
increases in FY23 after the benefit of cost synergies.
Land
Partnerships continues to invest in its owned land bank to
support the ambitious growth strategy of mixed tenure revenues. In
the year to date, the business has secured 4,097 (2022: 1,666)
plots on 11 (2022: 8) sites for mixed tenure development. All land
is secured with a minimum 50% pre sold units and minimum 40% return
on capital employed. Partnerships is well positioned on land and
has 95% of the land required for forecasts FY23 completions secured
and 85% of the land for FY24 completions secured.
Housebuilding continues to see attractive high quality land
opportunities and is maintaining a highly selective approach to
land acquisition with minimum hurdle rates of 25% gross margin and
25% return on capital employed as well as deferred payment terms.
In the year to date, the business has secured 3,102 (2022: 2,750)
plots across 13 (2022: 13) sites. The business has a strong
deliverable pipeline of land with all of the land required for
forecast FY23 completions secured and 95% of the land for FY24
completions secured.
Capital allocation and dividend
As previously announced, we intend to pay a final ordinary
dividend of 32 pence per share on 1 June 2023, subject to
shareholder approval at today's AGM. This brings the total ordinary
dividend for 2022 to 55 pence per share and represents a total full
year dividend payment of GBP162.3m (2021: GBP133.1m), which is
covered two times by Group adjusted net earnings.
The Board is reviewing the Group's capital allocation policy to
ensure it remains appropriate in the context of the enlarged Group
and in doing so will be consulting with shareholders. The outcome
of this review will be communicated with the Group's half year
results in September this year.
Outlook
With excellent progress made on integration, our enlarged
Partnerships business is well positioned to meet the strong demand
for mixed tenure housing across the country. The resilience of
Partnerships is reflected in its strong forward order book which
provides us with confidence that the business will deliver revenue
growth in FY23 against proforma FY22.
Housebuilding is seeing high, sustained levels of interest and
an improving trend on private sales rates. With a highly
experienced management team, the business is maintaining a
controlled approach focused on operational excellence, capital
management and tight cost control. The expected year on year
reduction in private sales rates is reflected in our build
rates.
Reflecting the strength of the forward order book and progress
on integration, the Group now expects to deliver adjusted profit
before tax for FY23 in excess of GBP450m.
Forward sales
(GBPm) 15 May 2023 20 March 2023 13 May 2022
------------------------------------------- ------------ -------------- ------------
Housebuilding
* Private 699 630 904
* Private - Vistry share of JVs 157 107 151
* Affordable 482 524 446
* Affordable - Vistry share of JVs 70 78 62
Total Housebuilding 1,408 1,339 1,563
Partnerships
* Mixed tenure 1,556 1,489 380
* Mixed tenure - Vistry share of JVs 424 381 171
Total mixed tenure 1,980 1,870 551
Total partner delivery 1,087 970 860
Total Partnerships 3,067 2,840 1,411
Total Group 4,475 4,179 2,974
------------------------------------------- ------------ -------------- ------------
Note: 13 May 2022 forward sales restated to include Vistry share
of JVs (previously included 100% of JV forward sales)
For further information please contact:
Vistry Group PLC
Tim Lawlor, Chief Financial Officer
Susie Bell, Group Investor Relations
Director 07469 287335
Powerscourt
Justin Griffiths, Nick Dibden, Victoria
Heslop 020 7250 1446
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END
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