TIDMVTY
RNS Number : 5704G
Vistry Group PLC
20 July 2023
20 July 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 30 June 2023 (the
"period").
Greg Fitzgerald, Chief Executive commented:
"The Group delivered a half year performance in line with our
expectations despite the challenging macro-economic conditions and
higher interest rate environment. Partnerships is demonstrating its
resilience and remains on track to deliver revenue growth in the
full year. Housebuilding is maintaining a controlled and
disciplined approach, taking the opportunity to deliver bulk sales
to support overall sales rates and open market pricing. I would
like to thank our people, our subcontractors, suppliers and
partners for their tremendous efforts and ongoing commitment to the
success of Vistry Group."
Key points
-- The Group's average weekly sales rate for the period was 0.86
(2022: 0.84), and excluding bulk sales in Housebuilding was 0.67
(2022: 0.82)
-- The integration of Countryside is well progressed, and the
Group is on track to deliver GBP25m of synergies from the
combination in FY23 and the full run rate of GBP60m by the end of
FY24
-- Partnerships continues to demonstrate resilience and has good
visibility on revenues with 80% of forecast FY23 mixed tenure units
secured and all of forecast FY23 partner delivery revenues
secured
-- Housebuilding completions were down 22% on proforma H1 22
reflecting the more challenging market conditions
-- Housebuilding has a good forward sales position with 76% of forecast FY23 units secured
-- Following the recent increase in the Bank Rate and mortgage
costs we have seen a slowdown in the open market private sales
rate, with both Partnerships and Housebuilding mitigating this
through bulk transactions
-- The Group continues to target the offset of build cost
increases in FY23 after the benefit of cost synergies
-- Net debt of c. GBP330m as at 30 June 2023, with net debt
expected to reduce to c. GBP150m as at 31 December 2023
-- Given the strength of the Group's forward order book, the
progress on integration and targeted cost savings, the Board
continues to expect to deliver adjusted profit before tax for FY23
in excess of GBP450m
H1 performance
Partnerships
Countryside Partnerships, our leading partnerships business
focused on the delivery of much needed affordable housing, has
demonstrated its market resilience. With a strong first half
performance, the business is on track to deliver revenue growth in
FY23 on pro forma FY22 (GBP2,006m). Working in partnership, we
continue to see good levels of demand for affordable and mixed
tenure housing from Housing Associations and Local Authorities,
supported by an additional grant funding award from Homes
England.
Partnerships delivered 3,203 (2022: 1,106) mixed tenure
completions in the period, up 6% on pro forma H1 22. Adjusted
revenue for H1 23 for Partnerships is expected to be c. GBP930m
(2022: GBP426m) including c. GBP240m (2022: GBP204m) partner
delivery revenue.
Partnerships continues to invest in its owned land bank to
support the ambitious growth strategy for mixed tenure revenues.
The business has been opportunistic in a marketplace where demand
for land has decreased. In the period, the business secured 3,848
(2022: 2,166) plots on 10 sites (2022: 12) for mixed tenure
development with all land secured meeting the minimum hurdle rates
of 50% presold units and a minimum 40% target return on capital
employed, and deferred payment terms where possible. Partnerships
is well positioned on land with 95% of the land for FY23
completions and 85% of the land for FY24 completions secured.
Housebuilding
Our Housebuilding business has faced more challenging market
conditions in the period with the higher mortgage rate environment
and broader macro-economic challenges, particularly impacting first
time buyers. In this more competitive market, the business is
focused on operational excellence, tight cost control and the
delivery of the highest quality new homes. Open market pricing has
remained relatively stable, supported by an increased level of
incentives.
The Group's strong relationships with Housing Associations,
Local Authorities and PRS providers, and excellent track record of
delivery of mixed tenure housing, positions our Housebuilding
business to maximise the opportunity for bulk transactions in the
current market. The business has entered into a number of these
transactions in the period which is supporting the sales rate and
helping to hold firm on private sales prices, whilst assisting with
subcontract savings and the management of preliminary costs.
Housebuilding delivered 2,847 (2022: 3,219) completions in the
period, down 22% on pro forma H1 22, with adjusted revenue of c.
GBP810m (2022: GBP902m).
Housebuilding continues to see attractive high quality land
opportunities and has maintained a highly selective approach to
land acquisition in the period with minimum hurdle rates of 25%
gross margin and 25% return on capital employed, and deferred
payment terms where possible. In the period, the business has
secured 3,058 (2022: 3,360) plots across 14 (2022: 16) sites.
Housebuilding has a strong deliverable pipeline of land with all of
the land for FY23 forecast completions and 95% of the land for
forecast FY24 completions secured.
Group developments
The Group is pleased to have secured a further GBP67m from Homes
England to deliver grant funded affordable homes under its current
Affordable Homes Programme running to 2026. This brings the total
Strategic Partnership affordable housing grants funding to GBP150m
and will enable Vistry to deliver around 2,400 affordable homes in
partnership with Housing Associations and Local Authorities across
England. A significant proportion of the homes to be built will
utilise Vistry's timber frame manufacturing capability.
This grant funding was instrumental to our recent partnership
with Sage Homes where, through Sage's new Home Stepper shared
ownership model, we will deliver an initial portfolio of around 800
shared ownership homes nationally with a market value of over
GBP250m. This will be across both Countryside Partnerships and
Vistry Housebuilding. The scheme has had an encouraging start, with
strong customer interest and around 60 reservations since launch in
June.
The enlarged Group is benefiting from its revised arrangements
with its supply chain partners. The greater level of visibility on
forward sales, build programmes and revenues within Partnerships is
also delivering a competitive advantage, in particular with
subcontractors. The Group continues to target the offset of build
cost increases in FY23 after the benefit of cost synergies, and
reflecting the anticipated decline in overall industry output, sees
opportunity to work with its supply chain partners, particularly
given the Group's forward sales visibility, to reduce costs going
forward.
The Group is pleased to have re-opened the newly branded Vistry
Works East Midlands timber frame manufacturing plant earlier this
month. Combined with Vistry's existing two factories in Warrington
and Leicester, the Group has the capacity to deliver 5,000 new
timber frame homes in FY24, supplying both Partnerships and
Housebuilding. This timber frame capability will allow the Group to
capitalise at scale on the benefits of factory manufactured
construction, delivering high quality sustainable homes faster.
We are proud to have announced the highest number of NHBC Pride
in the Job Quality Award winning site managers for the Vistry Group
to date, with 40 site managers picking up the prestigious award.
This fantastic achievement highlights the Group's ongoing
commitment to delivering the highest quality new homes for our
customers and clients.
Balance sheet
The Group had a net debt position of c. GBP330m as at 30 June
2023 (30 June 2022: GBP115m net cash). The year-on-year increase
reflects the working capital requirements of the enlarged group,
investment for growth in the Partnerships business, and cash spend
on integration and fire safety. The Group expects net debt to
reduce to c. GBP150m as at 31 December 2023.
In recent weeks, Housebuilding has implemented tighter controls
around work in progress, with investment restricted to sold units,
and site starts and new phase starts being carefully
considered.
The Board is committed to retaining a strong balance sheet. In
March we announced a review of the enlarged Group's capital
allocation policy to ensure it remains appropriate, and in doing so
we have been consulting with shareholders. Following the conclusion
of the review, the Board will provide an update to shareholders
with the Half Year results announcement on 11 September.
Outlook
Partnerships has a strong forward order book totalling GBP3.0bn
with 80% of forecast FY23 mixed tenure units secured and all of
forecast FY23 partner delivery revenues secured, and we remain
confident the business will deliver revenue growth in FY23 against
pro forma FY22. It is very well positioned to meet the strong
levels of demand for mixed tenure housing, demonstrating the
resilience of the partnerships business model. The business is
firmly focused on its strategy of delivering 10% revenue growth
p.a. in 2024 and beyond and a 40%+ return on capital employed.
Following the recent increase in the Bank Rate and mortgage
costs we have seen a slowdown in the open market private sales rate
over the past four weeks. Both our Housebuilding and Partnerships
businesses are mitigating this through bulk transactions with
Housing Associations and Local Authorities.
Housebuilding's forward order book totals GBP1.2bn, with 76% of
forecast FY23 units secured. With a highly experienced management
team, the business is maintaining a controlled approach focused on
operational excellence and tight working capital management and
cost control. The expected year on year reduction in private sales
rate for Housebuilding is reflected in our build rates.
Given the strength of the Group's forward order book, the
progress on integration and the Group's targeted cost savings, the
Board continues to expect the Group to deliver adjusted profit
before tax for FY23 in excess of GBP450m.
Greg Fitzgerald, Earl Sibley, and Tim Lawlor will host a call
for analysts today at 8:00am. To join the call please dial:
UK-Wide: +44 (0) 33 0551 0200, UK Toll Free: 0808 109 0700. Please
quote Vistry when prompted by the operator.
For further information please contact:
Vistry Group PLC
Tim Lawlor, Chief Financial Officer
Susie Bell, Group Investor Relations 07469 287335
Director
FTI Consulting
Richard Mountain / Susanne Yule 020 3727 1340
Forward sales
(GBPm) 30 June 2023 30 June 2022
------------------------------------------- ------------- -------------
Housebuilding
* Private 564 718
* Private - Vistry share of JVs 105 115
* Affordable 472 450
* Affordable - Vistry share of JVs 77 54
Total Housebuilding 1,218 1,337
Partnerships
* Mixed tenure 1,462 342
* Mixed tenure - Vistry share of JVs 422 148
Total mixed tenure 1,884 490
Total partner delivery 1,088 835
Total Partnerships 2,972 1,325
Total Group 4,190 2,662
------------------------------------------- ------------- -------------
Note: 30 June 2022 forward sales restated to include Vistry
share of JVs (previously included 100% of JV forward sales)
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END
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