TIDMVTY
RNS Number : 1123R
Vistry Group PLC
04 March 2021
4 March 2021
Vistry Group PLC - Full year results
Vistry Group PLC (the "Group") is today issuing its full year
results for the 12-month period ended 31 December 2020.
Full year highlights
-- Strong second half performance with adjusted full year profit
before tax(1) of GBP143.9m ahead of our expected range
-- On a reported basis after exceptional items and amortisation
the Group made a profit before tax of GBP98.7m (2019:
GBP174.8m)
-- Significant deleverage resulting in a year-end net cash(2)
position of GBP38m down from net debt of GBP357m as at 30 June
2020, having started the year with net cash of GBP362m prior to the
acquisition
-- Sustained step up in demand with H2 2020 weekly private sales
rate per outlet up 15% to 0.62 (H2 2019: 0.54)
-- Further improvement in quality and customer satisfaction and
expect to be awarded the maximum 5-star HBF customer satisfaction
rating for 2020 and started 2021 well
-- Completed full review and stakeholder consultation on
strategy for sustainability, defining a range of targets and
commitment to set clear roadmap in 2021 for Group to achieve net
zero carbon
-- Excellent progress at Vistry Partnerships with higher margin
mixed tenure volumes up 70% in the second half on the prior year
equivalent period, and an increase in adjusted operating margin in
the year to 6.7%
-- Housebuilding delivered 4,652 (2019 proforma(3) : 6,884)
completions at an average selling price of GBP303k, with the H1
performance significantly impacted by Covid-19
-- Firm pricing with 0.5% to 1.0% price increase and resilient
supply chain with low-cost inflation
-- Active in the land market maintaining controlled land bank
size at 40,218 plots whilst reducing land creditors since
acquisition by GBP79m to GBP323.2m
-- Resumption of dividends with 20 pence per share final dividend proposed in respect of 2020
Current trading and outlook
-- Strong start to the year with private sales per active site
per week of 0.66 in first 8 weeks (2020: 0.64) and the underlying
sales rate ahead of the positive start to 2020
-- Last 4 weeks particularly strong with private sales rate of 0.78
-- Pricing remains firm and good supply of material and labour
-- Selling well for completions post 31 March 2021, with little
impact from changes to HTB and previously expected end to stamp
duty holiday
-- Strong forward sales position with 64% of total Housebuilding
and Partnerships mixed tenure forecast units for 2021 already
secured, totalling GBP1,747m
-- Partner delivery forward order book totalling GBP880m
-- Forecast increase in land and WIP investment in 2021 of c.
GBP100m supporting Partnerships' growth plans
-- On track to deliver full synergy run rate of GBP44m by end of
2021, 26% ahead of initial target and at a lower than expected
cost
-- Assuming stable market conditions, the Group is positioned to
more than double adjusted profit before tax(1) in 2021 to at least
GBP310m with EPS in 2021 higher than 2019
-- Group is targeting an improved net cash position for 31
December 2021 and an average month-end net debt for 2021 of less
than GBP200m (2020: GBP350m)
-- Resumption of dividends with progressive dividend policy and
a move towards 1.75x dividend cover over time
Greg Fitzgerald, Chief Executive, commented:
"The Group has achieved an enormous amount in 2020, and despite
the challenges I am in no doubt we start 2021 as a stronger
business.
We had a strong second half performance with a sustained step up
in demand, firm pricing, and a robust supply chain. Vistry
Partnerships made excellent progress against its growth targets of
GBP1bn revenue and a 10% plus operating margin by 2022, delivering
a 70% increase in H2 2020 mixed tenure completions and adjusted
operating margin progression in the year to 6.7%.
Our firm focus on cash management resulted in a year end net
cash position of GBP38m. As a result of these actions and our
positive performance, the Board is pleased to resume dividend
payments with a proposed final dividend of 20 pence in respect of
2020.
2021 has started well with strong demand across all areas. We
have seen no impact from the national lockdown or changes to the
Help to Buy scheme and the expected end to the Stamp Duty
exemption. We have a strong forward sales position, with 64% of
forecast units for 2021 already secured. Assuming stable market
conditions, the Group is confident it will more than double profits
in the year, with a profit before tax of at least GBP310m.
On behalf of myself and the rest of the Board, I would like to
thank all our employees, subcontractors and suppliers for their
incredible hard work and commitment during what has been a uniquely
challenging period."
Key financials(4)(5) 2020 2019 Change
(6)
--------------------------- ------------ ------------- -------
Total completions(7) 8,954 3,867 +>100%
Adjusted revenue GBP2,040.1m GBP1,139.2m +79.1%
Adjusted operating profit GBP171.0m GBP194.4m -12.0%
Adjusted profit before
tax GBP143.9m GBP188.2m -23.5%
Adjusted basic EPS 52.6p 104.3p -49.6%
Reported results(5)(6) 2020 2019 Change
--------------------------- ------------ ------------- -------
Group revenue GBP1,811.7m GBP1,130.8m +60.2%
Operating profit GBP91.7m GBP179.7m -49.0%
Profit before tax GBP98.7m GBP174.8m -43.5%
Earnings per share 34.8p 94.6p -63.2%
Net cash(2) GBP38m GBP362m -89.5%
Forward sales (GBPm) 1 March 2021
----------------------------------------- -------------
Housebuilding
* Private 620
* Private JVs (100%) 215
* Affordable 434
* Affordable JVs (100%) 135
Total Housebuilding 1,404
Partnerships
* Mixed tenure 151
* Mixed tenure JVs (100%) 192
Total mixed tenure 343
Total development 1,747
Total partner delivery 880
Total Group 2,627
----------------------------------------- -------------
There will be a virtual presentation for analysts and investors
available on our corporate website from 7:00am this morning
www.vistrygroup.co.uk or at
https://webcasting.brrmedia.co.uk/broadcast/602d4fba1fc46330548fa366
Greg Fitzgerald, Graham Prothero and Earl Sibley will host a
live Q&A session for analysts at 8:30am. To watch the session
please use the webcast link available on our corporate website at
https://www.vistrygroup.co.uk/investors/reports-and-presentations/2020
or at
https://webcasting.brrmedia.co.uk/broadcast/603fba571e24d464e23e659c
A playback facility will be available shortly after the Q&A
session has finished at www.vistrygroup.co.uk
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 vistry@powerscourt-group.com
Powerscourt
Justin Griffiths, Nick Dibden, Victoria
Heslop
Chief Executive Review
2020 review
I am incredibly proud of all the Group has achieved in 2020 and
would like to thank our employees, subcontractors and suppliers for
their effort and commitment. Despite the obvious challenges of
2020, I firmly believe we finished the year as a much stronger
business. Building high quality homes and providing our customers
with excellent service has remained a key priority and I am
delighted this is reflected in our HBF customer satisfaction score,
with the Group again set to achieve the highest 5-star rating for
2020.
At the start of the year, our clear focus was the successful
integration of Linden Homes and Vistry Partnerships, ensuring we
maximised the significant benefits from the combination and
delivered upon the compelling strategic rationale for the
acquisition(8) . With our aim of bringing together the best from
each business we hit the ground running, and the re-organisation of
the enlarged Housebuilding business was largely completed by the
end of March.
This positioned us well to deliver a rapid and co-ordinated
response to the first national lockdown in late March, with the
safety, health and wellbeing of our employees, subcontractors,
suppliers, and customers our top priority. On average, our
Housebuilding sites were closed for seven weeks which had a
significant impact on our first half performance. Vistry
Partnerships demonstrated its strong market resilience and led the
industry in an early return to site, underpinned by the certainty
of pre-sold developments and partner delivery revenues, with its
strong cash flow profile giving good support to the Group during
these months.
With Covid-safe operating procedures in place across the
business, productivity returned to normal levels in the second
half, and the Group delivered a strong performance with a sustained
step up in demand, firm pricing, and a resilient supply chain.
Vistry Partnerships made excellent progress against its
ambitious growth strategy in 2020 with mixed tenure units up nearly
30% in the year and 70% in the second half, driving an improved
operating margin.
Following the completion of the Acquisition, we entered the year
with net debt of GBP136.3m. We have been firmly focused on
deleveraging throughout the year, and I am very pleased to report a
net cash position of GBP38.0m as at 31 December 2020, a step change
from our GBP357.3m net debt position as at 30 June 2020. This
performance was driven by continued strong trading, good working
capital management at an individual business level, and the ongoing
benefits from the combination of the enlarged business. With a
robust balance sheet and strong forward sales position going into
2021, the Board is pleased to resume the payment of dividends with
a 20 pence per share final dividend proposed in respect of
2020.
One Vistry - a stronger business
At the start of the year, our focus was on maximising the
benefits from the combination and delivering on the compelling
strategic rationale for the Acquisition.
The integration has been successful with the benefits ahead of
plan. The full synergy run rate of GBP44m to be delivered by the
end of 2021 is 26% greater than initially expected and will be
achieved at a lower than expected cost.
We are a top 5 national housebuilder set to deliver significant
growth in revenue and profits in 2021. The Group operating
structure has the capacity to deliver c. 14,000 completions from
both Housebuilding and Partnerships, representing an additional c.
35% capacity on the 8,954 completions delivered in 2020.
Vistry Partnerships, a key driver of the Acquisition rationale,
has strengthened its unique market leading position during 2020,
delivering growth in profits and margin progression. We expect
further significant growth in 2021 with the business on track to
meet its 2022 targets of GBP1 bn revenue and a 10% plus adjusted
operating margin.
Vistry Group has capability across all segments of the housing
market and is in a unique position to maximise development
opportunities across multiple housing tenures, using both its
leading housing brands, Bovis Homes and Linden Homes, alongside
Vistry Partnerships. We are seeing more and more attractive
opportunities like this where the business works as one to maximise
output and returns.
Sustainability
At the same time as restructuring and integrating our
operations, we set ourselves the challenge to review our priorities
and enhance our focus on the sustainability of our operations. The
enlargement of the Group, and the addition of the Vistry
Partnerships business presents exciting opportunities to enrich our
purpose of developing sustainable new homes and communities across
all sectors of the UK housing market.
We consulted widely with stakeholders, and reviewed our
objectives for our people, our operations and our homes and
communities. We have established a range of targets for the current
year, set out in detail in this report, and including our
commitment to establish our timetable and plans to achieve Net Zero
Carbon, on which we intend to conclude by the time of our half year
announcement in September 2021.
The nature of our business offers many key areas where we can
make a difference, from minimising the environmental impact of our
operations, and enhancing biodiversity on our sites, to enhancing
the communities which we serve, both by creating high quality homes
and great places to live, and by the opportunities generated for
local people and businesses.
We are also actively addressing diversity and inclusion. We have
consulted with our people on how we might improve in this area and
are now in the process of identifying our priorities and an action
plan for the year.
I have been greatly impressed by the passion with which our team
has embraced these challenges and look forward to the formal launch
of our strategy in the Spring, and to reporting our progress over
the coming year.
Cladding and building safety
The Group is closely monitoring the issue of building safety.
Recent changes to regulations and guidance, made in light of the
Grenfell tragedy in 2017, are causing some buildings constructed in
compliance with regulations at the time to now be deemed
non-compliant, in some cases resulting in significant rectification
costs. We are concerned by the plight of leaseholders facing
potentially large and unaffordable costs for remediation and are
working with the Home Builders Federation in order to derive an
industry solution that is both practical and fair to all parties.
We are supportive of the Government's proposal for an industry levy
to accelerate remediation works and the resolution of this
issue.
In the aftermath of events at Grenfell, potentially relevant
buildings were identified, and clients contacted, in order to carry
out investigations and consider solutions where necessary. Vistry
Partnerships has over the past three years worked with clients to
rectify the position on a small number of buildings over 18 metres
and continues to liaise closely with clients where improvements to
meet current regulations are required.
The Group has also identified ten projects where it has acted as
developer, which are occupied by leaseholders, and where
remediation works may be required.
Whilst the Group is not aware of liability in any of these
cases, we are committed to proper consideration of any relevant
case and to meeting any liability which we identify, and, in
addition, to offering appropriate support in circumstances where
building owners do not meet their obligations. We anticipate that
this will give rise to financial liabilities, which we have
estimated to be between GBP10m and GBP25m.
We have brought forward provisions in the balance sheet of
GBP9.9m, and have now increased this to GBP20.9m, by way of an
exceptional charge to the Profit and Loss account of GBP11m.
Current trading and outlook
We have seen a strong start to the year with a private sales
rate per active site per week of 0.66 in first 8 weeks (2020:
0.64), and the underlying sales rate ahead of the positive start to
2020. The last 4 weeks have been particularly strong with a private
sales rate of 0.78. Pricing remains firm and we see a good supply
of materials and labour with minimal cost inflation. We have a
strong forward sales position with 64% of total Housebuilding and
mixed tenure units for 2021 secured and the partner delivery
forward order book totals GBP880m.
We are alert to the wider market uncertainty and the changes for
Housebuilding from an end to the existing Help to Buy scheme at the
end of Q1 and the end to stamp duty holiday now in Q4. We have seen
no impact from this to date, with good levels of sales under the
new Help to Buy scheme and the majority of reservations taken since
Dec last year for completions post March 2021 when the stamp duty
holiday had been expected to end.
Assuming stable market conditions we expect to deliver a step-up
in Housebuilding completions in 2021 to c. 6,300 units and an
improvement in adjusted gross margin to c. 22%. Partnerships
expects to deliver significant growth in higher margin mixed tenure
completions in 2021 and is on track to meet its 2022 targets of
GBP1bn revenue and an adjusted operating margin of 10% plus. The
Group remains confident it can deliver more than double profit
before tax(1) to at least GBP310m with EPS in 2021 higher than in
2019.
Operational update
Trading performance
There was a strong start to 2020 with a step up in our private
sales rates and positive price momentum, however from the third
week in March we started to see a significant impact, particularly
on our Housebuilding business, from Covid-19. Our developments
temporarily shut down from the end of March with a return to site
commencing in late April. Sales trends picked up from the start of
May and we saw a return to more normal levels by the end of
May.
In the second half we saw sustained strong demand with the
Group's private sales rate per outlet per week increasing by 15% in
the period to 0.62 (proforma H2 19: 0.54). Encouragingly, customers
continued to reserve homes during the second national lockdown in
November and December, with our underlying sales rate up c. 20% in
the last 6 weeks of the year.
The Group delivered completions in 2020 at the top end of our
revised expectations reflecting a strong second half performance.
Pricing remained firm through the year and overall, we saw a modest
increase in underlying prices.
Help to Buy remained important with 36% (2019: 23%) of our
Housebuilding completions in the year utilising the scheme, albeit
this is lower than the industry average. Our land bank is well
positioned for the future following our strategy, over the last two
years, to purchase land for the development of smaller homes and
with lower average selling prices. In the year, 8% (2019: 7%) of
Housebuilding completions utilised part exchange.
Housebuilding(3)(4)(7)
Housebuilding delivered a total of 4,652 (2019 proforma: 6,884)
completions, including 820 (2019 proforma: 946) from JVs. Private
completions in the year totalled 3,668 (2019 proforma: 4,775) with
984 (2019 proforma: 2,109) affordable units. Total Housebuilding
average selling price was GBP302.5k with adjusted revenue from
Housebuilding activities in the year totalling GBP1,312m (2019
proforma: GBP1,821m). Housebuilding is currently selling on 149
active sites and we expect the average for 2021 to be c. 150
sites.
Housebuilding adjusted gross margin declined to 17.6% (2019:
22.4%) reflecting the wide-ranging impact of Covid-19. 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 were identified
as impacting the first lockdown period, all of which were
recognised in the first half. Margin was also impacted by our
policy of recognising the full sales and marketing costs incurred
during the year, similar to administrative expenses, rather than
apportioning them into work in progress. Our Housebuilding business
is well positioned going forwards and we expect a step up in
housing adjusted gross margin for 2021 to c. 22% as we move towards
the 24.2% gross margin embedded in the land bank.
Partnerships(3)(4)(7)
Vistry Partnerships made good progress in the year, pursuing its
strategy of accelerating growth in higher margin mixed tenure
development revenues. With its high level of pre-sold units and
contracting revenues, Vistry Partnerships demonstrated its strong
market resilience in the first half of the year and led an early
return to site in late April.
Mixed tenure completions increased by 28% in 2020 to 1,479
(proforma 2019: 1,158) units including 608 (2019 proforma: 530) JV
units, with completions in the second half up 70% year on year to
990 (proforma H2 19: 584). The average selling price of mixed
tenure units in the year was GBP204k resulting in mixed tenure
revenue of GBP238m (2019 proforma: GBP195m) for 2020. Vistry
Partnerships is currently selling on 30 mixed tenure sites and we
expect this to increase to an average of c. 32 for 2021 with
further growth into 2022.
Partner delivery(9) revenue for 2020 was GBP490m (2019 proforma:
GBP513m), with equivalent units increasing to 2,823 (2019 proforma:
2,556).
Total adjusted revenues from Vistry Partnerships increased by 3%
to GBP728m (proforma 2019: GBP708m) with adjusted operating margin
increasing to 6.7%. This margin improvement has been driven by the
strong increase in higher margin mixed tenure revenues and is
in-line with the business' target of achieving at least a 10%
adjusted operating margin in 2022.
Integration and synergies
Following completion of the Acquisition on 3 January 2020, the
Group set out to integrate the two housebuilding businesses of
Bovis Homes and Linden Homes as efficiently as possible, taking the
best from each business to strengthen the overall Group position.
This was delivered ahead of plan and positioned us well to
effectively respond to the challenges of Covid-19 from late
March.
Housebuilding was re-organised into 13 operating regions with
four regional office closures. To maximise the benefit from two
brands, there has been a complete review of both the Bovis Homes
and Linden Homes product range to ensure product differentiation
and clear market positioning. We also refreshed both the Bovis
Homes and Linden Homes brand identities, with Vistry Partnerships
being successfully rebranded on acquisition.
The technical specification has been aligned across our product
range to maximise best practice and efficiency, and all our Group
procurement agreements have been renegotiated. We have strong
central services teams to support the operational businesses
including sales, marketing, land, health & safety, HR, and IT.
There has been a significant investment in IT to deliver high
quality and consistent business processes and systems across the
business including the implementation of COINS across the enlarged
Housebuilding business and Vistry Partnerships. Third party
dependencies for the acquired business were all removed by the end
of 2020, ahead of our initial expectations.
Synergies are expected to be 26% greater than initially expected
at GBP44m p.a. with the full run rate to be achieved by the end of
2021. The expected cost to achieve this is c. GBP27m, which is
lower than the initial target cost of GBP35m. The synergies
impacting 2020 are estimated at GBP25m, flowing through both the
Group's cost of sales and administrative costs. Exceptional
integration costs of GBP20m have been recorded in 2020 with a
further c. GBP7m expected in 2021 as we complete the final
integration of systems and processes.
Quality and customer service
Building high quality new homes and providing our customers with
excellent service has remained a top priority during 2020 and we
are set to achieve an improved HBF Customer satisfaction score for
2020 and the maximum 5-star rating. It is particularly pleasing to
note that all three divisions within the Housebuilding business, as
well as the Partnerships business, will achieve a 5-star rating.
The new HBF year has started well, and we are continuously striving
to deliver further improvement. We are also very focused on
improving our score for the HBF customer satisfaction survey which
is sent out 9 months after completion and this metric has been
added to our annual bonus criteria and targets.
Our strategic focus for our customers remains the delivery of a
seamless, transparent end to end experience which makes us easier
to do business with. We have rolled out our customer relationship
management platform, Keys, across the enlarged Housebuilding
business during 2020, which provides a single platform to deliver
ongoing improvements in our selling and service capabilities and
facilitates improved customer communications. We have plans to
adopt the same system across Partnerships in the near future.
People
Our people are key to the success of our business and we are
thankful to all our employees for the enormous commitment and hard
work they have given this year. We are conscious that it has been a
period of unprecedented change and are very pleased that our latest
Peakon engagement study reported a score of 7.9, an improvement on
the 7.6 in August last year and ahead of the benchmark at 7.4. We
have also seen a reduction in our unplanned staff turnover to
15%.
There has been a big effort to improve employee communication
channels this year which has proved successful and well received.
We have placed a significant emphasis on mental health and during
2020 have trained up over 70 mental health first aiders across the
business and run half-day awareness training for all line-managers.
We have introduced weekly 'Time to Talk' drop-in sessions
specifically designed to address some of the challenges brought on
by the pandemic and working from home.
Our primary focus for training and development during 2020 has
been on safety, health and environment with content being digitised
and delivered virtually. Looking ahead, a key area of focus will be
leadership training and succession planning in the enlarged
group.
Land
The Group remained active in the land market throughout the
year, maintaining the size of our controlled landbank at 40,218
plots (31 Dec 2019 proforma: 40,135). We continue to see a good
supply of attractive opportunities that at least meet our minimum
hurdle rates.
In the year, Housebuilding secured 6,281 plots across 31
developments and has a strong land pipeline, with 100% of land
required for forecast 2021 completions secured.
Partnerships is investing in its owned land bank to support its
targeted step-up in mixed tenure and in the year secured 2,371
plots on 11 sites for mixed tenure development. It is also well
positioned with 100% of the land required for forecast 2021 mixed
tenure completions secured.
Strategic land is a key component of the Group's land supply and
as at 31 December 2020 the Group had a total of 34,053 (31 Dec 2019
proforma: 31,965) strategic plots. In the year, we are pleased to
have secured options over 2,856 strategic land plots across 10
developments.
Balance sheet
The Group started the year with a net cash position of GBP362.0m
prior to the Acquisition. As at the 30(th) June 2020 the Group
reported net debt of GBP357.3m. There was significant deleverage in
the second half resulting in a net cash position as at 31 December
2020 of GBP38.0m. This was driven by continued strong trading, good
working capital management at an individual business level, and the
ongoing benefits from the combination of the enlarged business.
Looking forwards, the Group is targeting a month-end average net
debt position in 2021 of less than GBP200m as we build for 2021
completions and deliver a stronger net cash position at 31 December
2021.
The Group is operating with substantial funding headroom, with
committed banking facilities totalling GBP770m and well spread
maturities out to 2027.
While the scale of the land bank has been maintained, the Group
land creditor position has reduced since Acquisition by GBP79m to
GBP323.2m as at 31 December 2020.
Group strategy
Vistry Group exists to develop sustainable new homes and
communities across all sectors of the UK housing market with 'Doing
the right thing' at the core of our strategic focus and
operations.
Following the formation of Vistry Group and successful
integration in 2020, we are a top five national housebuilder with a
leading Partnerships business, uniquely positioned us to take
advantage of the strong, under supplied housing market.
Housebuilding
The Housebuilding business is focused on driving revenue growth
and delivering significant margin improvement from its existing
operating structure. The business has national coverage through its
13 operating regions with each targeting annual output of between
550 to 625 units including JV's, giving an overall volume capacity
for Housebuilding of more than 8,000 units (2020 Housebuilding
total completions incl. JVs: 4,652).
The business has a high quality landbank of c. 32,000 controlled
plots including JV's located in desirable edge or out of town
location with minimal exposure to London or other city centres. Our
focus is on increasing the proportion of two and three-bedroom
homes where we see the most resilient demand. With two leading
housing brands, Bovis Homes and Linden Homes we are focused on
maximising the benefits of dual branding supported by our brand
differentiation. 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.
The Housebuilding business is focused on driving margins towards
the embedded gross margin of 24.2% as at 31 December 2020 in the
owned and controlled land bank. This margin improvement will be
driven by a combination of the acquisition of new land with a
minimum gross margin hurdle rate of 25%, the pull-through of
strategic land which delivers an enhancement to margin of c. 150 to
300 basis points, maximising sales rates and driving improved
efficiency through high quality build and cost efficient product,
processes and output.
Partnerships
Vistry Partnerships holds a strong and unique position within
the partnerships market, combining higher margin mixed tenure
development and market resilient cash generative partner
delivery.
The business has a clear and ambitious growth strategy targeting
the delivery of GBP1bn of revenue, an adjusted operating margin of
at least 10%, and a 40% return on capital employed in 2022. This
growth will be driven by a rapid increase in higher margin mixed
tenure completions with mixed tenure revenues to increase from 33%
of total partnerships revenues in 2020 to 50% in 2022. The adjusted
operating margin for mixed tenure development ranges from c. 11% to
18% as compared to partner delivery with a c. 3% to 11% adjusted
operating margin.
The accelerated growth is supported by the division's 11
operating regions and continued expansion into new geographies. The
Group's land investment and supply, and its strategic land
capability will support the growth in higher margin mixed tenure
development revenues.
Dividend policy
With the Group's strong second half performance, the year-end
net cash position and solid forward sales, the Board is pleased to
confirm the resumption of dividend payments with a 20 pence per
share final dividend proposed in respect of 2020. Going forward the
group is targeting to maintain a strong balance sheet while
operating with a progressive dividend policy which allows the Group
to move towards a 1.75x dividend cover over time.
Financial Review
Trading performance
The Group delivered a solid financial performance in light of
the challenges from Covid-19. In particular, the strong performance
of the Partnerships business growing revenue and margin,
demonstrating its robust characteristics despite the market
pressure.
In line with the strategy at the time of the acquisition, the
Group integrated the Housebuilding businesses of Linden and Bovis
swiftly to deliver synergies ahead of expectations and at a lower
cost. Delivering across these key areas contributed to the strong
cash delivery in the year resulting in a net cash balance and
enabling the Group to return to paying dividends.
Total completions
During the year the Group delivered 6,131 (2019: 3,867) legal
completions(7) , including 100% of JV completions, representing a
58.6% increase on the prior year. This was driven by the
Acquisition which completed on 3 January 2020, however, was lower
than expectations as a result of the Covid-19 pandemic and the
temporary closure of developments during the first nationwide
lockdown.
2020 2019 % Change
Housebuilding
------ ------- ---------
* Private 3,010 2 ,625 +14.7%
------ ------- ---------
* Affordable 822 1 ,184 -30.6%
------ ------- ---------
* JV's (100%) Private 658 5 3 +>100%
------ ------- ---------
* JV's (100%) Affordable 162 5 +>100%
------ ------- ---------
Total housebuilding 4,652 3,867 +20.3%
------ ------- ---------
Partnerships
------ ------- ---------
871 - n/a
* Mixed tenure
------ ------- ---------
397 - n/a
* JV's (100%) Private
------ ------- ---------
2 11 - n/a
* JV's (100%) Affordable
------ ------- ---------
Total mixed tenure 1,479 - n/a
------ ------- ---------
T otal completions 6,131 3 ,867 +58.6%
------ ------- ---------
Partner delivery equivalent 2,823 - n/a
units
------ ------- ---------
Proforma completions analysis
During the same period in 2019 on a proforma basis(3) the Group
delivered 8,042 legal completions representing a decrease of 23.8%
in 2020.
2020 2019 % Change
Housebuilding
------ ------ ---------
* Private 3,010 4,088 -26.4%
------ ------ ---------
* Affordable 822 1,850 -55.6%
------ ------ ---------
* JV's (100%) Private 658 687 -4.2%
------ ------ ---------
* JV's (100%) Affordable 162 259 -37.5%
------ ------ ---------
Total housebuilding 4,652 6,884 -32.4%
------ ------ ---------
Partnerships
------ ------ ---------
* Mixed tenure 871 628 +38.7%
------ ------ ---------
* JV's (100%) Private 397 260 +52.7%
------ ------ ---------
* JV's (100%) Affordable 2 11 270 -21.9%
------ ------ ---------
Total mixed tenure 1,479 1,158 +27.7%
------ ------ ---------
T otal completions 6,131 8,042 -23.8%
------ ------ ---------
Partner delivery equivalent
units 2,823 2,556 +10.4%
------ ------ ---------
Revenue
Total adjusted revenue(4) , including share of JV revenue, was
GBP2,040.1m, 79.1% higher than prior year (2019: GBP1,139.2m) and
21.3% lower on a proforma basis (2019: GBP2,592m). On a reported
basis revenue was GBP1,811.7m, 60.2% higher than last year (2019:
GBP1,130.8m).
Adjusted gross and operating profit(3)
Adjusted gross profit was GBP318.8m in 2020 (adjusted gross
margin: 15.6%), which compares to GBP255.3m in 2019 (adjusted gross
margin: 22.4%). The margin was impacted by sites closing during the
first national lockdown due to 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 homes 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; these costs were all incurred in the first half of the
year. In December 2020 Vistry repaid a total of GBP7.1m of furlough
claim income received from the Government's Job Retention Scheme.
This included GBP6.3m which was received during HY20, positively
impacting profit in the first half of the year. The repayment in
the second half of the year meant the income was reversed.
Adjusted operating profit is GBP171.0m (2019: GBP194.4m). This
includes the increased overhead costs of the enlarged Group
following the Acquisition, primarily resulting from higher employee
numbers and additional establishment costs. Adjusted operating
margin(3) was 8.4% (2019: 17.1%).
Reported operating profit was GBP91.7m (2019: GBP179.7m profit).
The Group delivered an adjusted profit before tax of GBP143.9m
(2019: GBP188.2m).
On a reported basis, the Group saw a profit before tax for the
year ended 31 December 2020 of GBP98.7m, comprising operating
profit of GBP91.7m after exceptional costs of GBP31.0m, net
financing charges of GBP7.9m and share of JV profit of GBP14.9m.
This compares to GBP174.7m of profit before tax in 2019, which
comprised GBP179.7m of operating profit, GBP6.8m of net financing
charges and share of JV profit of GBP1.8m.
Housebuilding(4)(5)
2020 2019 % Change
Total completions incl.
100% JVs 4,652 3,867 +20.3%
------------ ------------ ---------
A djusted revenue GBP1,311.8m GBP1,139.2m +15.2%
------------ ------------ ---------
A djusted g ross profit GBP231.2m GBP255.3m -9.4%
------------ ------------ ---------
A djusted gross margin 17.6% 22.4% -4.8pps
------------ ------------ ---------
A djusted o perating profit GBP139.4m GBP207.1m -32.7%
------------ ------------ ---------
A djusted o perating margin 10.6% 18.2% -7.6pps
------------ ------------ ---------
TNAV GBP1,491m GBP922m +61.9%
------------ ------------ ---------
Housebuilding total completions including 100% of JVs at 4,652
included 984 affordable homes representing 21.1% of total
completions (2019: 1,189 affordable homes, 30.7% of total
completions).
Housebuilding pricing remained firm through the year and overall
we saw a modest increase in underlying prices, with the average
sales price for our private homes in housebuilding having increased
0.4% to GBP343,200 (2019: GBP341,700).The total average sales price
increased by 8.0% to GBP302,500 (2019: GBP280,200) driven by a
lower proportion of affordable.
Included within Housebuilding revenue is GBP17.2m revenue (2019:
GBP49.2m including partnership land sales) related to land sales,
including the sale of a parcel of land on our large-scale
development at Twigworth.
Housebuilding adjusted gross profit of GBP231.2m and housing
adjusted gross margin of 17.6%, were impacted by Covid-19 direct
costs in the year totalling GBP8.6m which had a 0.7% 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
adjusted gross margin.
Housebuilding gross margin is also impacted by our policy of
recognising direct sales and marketing costs in the year 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. 0.7% in the year. The Group also
recognised costs relating to the impairment of inventory totalling
GBP5.7m in the year (2019: GBP0.3m). In addition, the mix of homes
completed in the year included a higher proportion of completions
from sites that had been largely built out at the beginning of the
year which had, on average, a lower margin.
The housing gross margin saw a step up in the second half and a
further step up is expected in 2021 as the business moves towards
delivering a gross margin in line with the embedded land bank
margin of 24.2% in the future. This future margin includes an
estimate for the additional costs of implementing future building
regulations (Part L) for all appropriate plots.
In 2020 the Group saw low levels of cost inflation and expects
this to continue into 2021 with benefit coming through of supplier
agreements re-negotiated as a consequence of the Acquisition. The
Group also benefitted from material supply synergies in the full
year.
Housebuilding adjusted operating profit of GBP139.4m and
adjusted operating profit margin of 10.6%. Whilst the group has
restructured to realise synergies and ensure Housebuilding has an
efficient overhead going forwards the adjusted operating margin
reflects the increased overhead from the enlarged group spread
across lower than expected volumes.
Partnerships(4)
2020
Total completions incl. 100% JVs 1,479
----------
A djusted revenue GBP728.3m
----------
Adjusted operating profit GBP48.6m
----------
Adjusted operating margin 6.7%
----------
TNAV( (10) () (GBP30m)
----------
Adjusted revenue from Partnerships in the year totalled
GBP728.3m, made up of GBP489.5m from partner delivery(9()
(contracting) and GBP238.7m from mixed tenure operations.
Partnerships sold a total of 1,479 units from its mixed tenure
operations, including JVs, with an average selling price of
GBP203,900k and partner delivery revenue generated equivalent units
of 2,823.
Adjusted operating profit of GBP48.6m and adjusted operating
profit margin of 6.7% are impacted by Covid-19 as well as a full
overhead cost being incurred despite reduced volumes.
The adjusted operating margin reflects an improvement to the
proforma operating margin reported by the Partnerships business for
the full year to the 30 June 2019 of 5.6%. This improvement
reflects the strong counter cyclical nature of the business
including a high proportion of pre-sold homes and a strategy of
aggressively growing the mixed tenure element of the business and
administrative costs benefiting from synergies in the enlarged
group.
Non-underlying and group costs
The reported Group segment of the business includes the
non-underlying exceptional restructuring costs of GBP20.0m (2019:
GBP13.6m), related to the Acquisition.
In addition, the Group has recognised an exceptional charge of
GBP11.0m in relation to the potential financial liabilities for
legacy property building safety.
The Group segment reported direct PLC costs totalling GBP17.0m
(2019: GBP12.7m), including the costs of the PLC Board, share based
payments and related items.
Financing and Taxation
Net financing charges during the year were GBP7.9m (2019:
GBP6.8m). Net bank interest and commitment fees were GBP18.5m
(2019: GBP1.9m), as a result of higher net debt during 2020
following the acquisition and supporting the enlarged Group. We
incurred a GBP4.6m charge (2019: GBP3.4m), reflecting the imputed
interest on land bought on deferred terms. JVs which are funded
through loans are charged interest by the Group, which generated
the majority of the GBP18.2m of finance income recognised (2019:
GBP0.8m) .The significant increase on prior year is driven by the
additional loans to JVs with the acquired businesses.
The Group has recognised a tax charge of GBP21.9m at an
effective tax rate of 22.1% (2019: GBP36.4m at an effective rate of
20.8%). The effective tax rate is driven by non-deductible
exceptional costs. The Group has a current tax asset of GBP14.4m in
its balance sheet as at 31 December 2020 (31 December 2019:
liability of GBP20.9m).
Dividends and earnings per share
During a period of significant uncertainty in late March the
Board focused on protecting the Group's cash position, liquidity
and maintaining a robust balance sheet. The decision was taken that
no interim dividend would be paid in respect of H1 2020. A final
dividend of 20 pence per share (2019: 41.9 pence) has been declared
and, subject to shareholder approval at the AGM, will be paid on 21
May 2021 to holders of ordinary shares on the register at the close
of business on 26 March 2021. Total ordinary dividends for the year
are therefore 20 pence per share (2019: 61.5 pence).
Both adjusted basic EPS before exceptional expenses and
amortisation of acquired intangibles of 52.6p (2019: 104.3p) and
basic EPS of 34.8p (2019: 94.6p) have decreased year on year, by
49.6% and 63.2%, respectively.
Acquisition and integration
The Group completed the Acquisition on 3 January 2020, at a cost
of GBP1,233.5m including GBP378.1m in cash and GBP855.4m in shares.
The novation of GBP108.2m in USPP Notes Payable is classified as an
acquired liability and not consideration.
As shown in the table below, 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. Goodwill of
GBP547.5m 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.
Purchase consideration Linden (GBP'000) Partnerships Total (GBP'000)
(GBP'000)
Cash 76,300 301,800 378,100
----------------- ------------- ----------------
Shares consideration 815,698 39,685 855,383
----------------- ------------- ----------------
Total purchase consideration 891,998 341,485 1,233,483
----------------- ------------- ----------------
Reflecting:
----------------- ------------- ----------------
USPP notes payable - (108,219) (108,219)
----------------- ------------- ----------------
Intangible assets 54,800 100,224 155,024
----------------- ------------- ----------------
Net tangible assets 608,870 30,299 639,169
----------------- ------------- ----------------
Goodwill 228,328 319,181 547,509
----------------- ------------- ----------------
Total net assets recognised 891,998 341,485 1,233,483
----------------- ------------- ----------------
Exceptional costs of GBP20.0m have been recognised in the income
statement relating to the Acquisition, primarily driven by
redundancy costs, integration costs from moving the enlarged
business onto consistent processes and systems, and rebranding. The
initial expectation for the costs to achieve synergies and
integration were GBP35m, the current estimate is c. GBP27m in
total, with c.GBP7m expected in 2021.
At the time of the Acquisition the integration of the new
businesses into the Vistry Group was expected to achieve synergies
of c. GBP35m. The Group is now targeting synergies of c. GBP44m on
an annualised basis from 2022 onwards with synergies of c. GBP25m
arising in 2020. The full impact of synergies from 2022 onwards is
expected to come through cost of sales at a rate of c. GBP25m per
annum and administrative expenses of c. GBP19m per annum.
Net assets and cash flow
As at 31 December 2020 net assets of GBP2,195m were GBP923m
higher than at the start of the year, primarily resulting from the
Acquisition. Net assets per share as at 31 December 2020 were 988p
(2019: 857p).
Goodwill and intangibles totalled GBP691.1m at 31 December 2020
(2019: GBP4.3m), directly resulting from the Acquisition.
Tangible net assets increased from GBP905.6m at 31 December 2019
to GBP1,466.1m at 31 December 2020, again primarily driven by the
addition of the acquired balances in January 2020.
Within tangible net assets, inventories increased during the
year by GBP628.8m to GBP1,836.5m. This balance reflects the
slowdown in land acquisition early in the year.
Trade and other receivables increased by GBP126.3m. Trade and
other payables increased by GBP558.5m and includes land creditors
which increased by GBP64.4m to GBP323.2m (2019: GBP258.8m).
As at 31 December 2020 the Group's net cash balance was
GBP38.0m(2) . Having started the year with net cash of GBP362.0m,
the Group generated an operating cash inflow before land
expenditure of GBP440.9m (2019: GBP281.4m). Net cash payments for
land investment were increased at GBP259.0m (2019: GBP184.7m).
During the second half the group has continued to achieve good
deferred terms on new land investment as well as securing a number
of new sites on a conditional basis. This has typically been on a
subject to detailed planning basis, delaying the initial land
payments closer to the time when development on site will commence
and supporting return on capital employed. Investing cash outflows
totalling GBP383.8m includes the GBP394.6m cash consideration for
the Acquisition net of overdraft acquired, as well as loans made to
and investments made in joint ventures and dividends received from
joint ventures. Financing cash inflows of GBP181.2m include GBP200m
of loan drawdowns net of repayments, no dividends were paid in the
year.
At 31 December 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
although the Group has no expectation of using this facility.
Land bank
Housebuilding land bank
2020 2019
------------------------------------------- ---------- ----------
Plots added 6,281 4,531
Sites added 31 18
Sites owned at year end 199 116
Sites controlled at year end 14 -
Total plots in land bank at year end incl.
joint ventures 31,994 17,328
------------------------------------------- ---------- ----------
ASP incl. share of joint ventures GBP306,000 GBP299,000
Average consented land plot ASP GBP46,000 GBP46,411
------------------------------------------- ---------- ----------
The average selling price of all units within the consented land
bank increased over the year to GBP306,000, 2.3% higher than at 31
December 2019. The estimated embedded gross margin in the consented
land bank as at 31 December 2020, based on prevailing sales prices
and build costs is 24.2% (June 2020: 24.2%). This embedded margin
includes new acquisitions estimated to deliver on average 25% gross
margin based on the appraisal at the time of acquisition and
trading out of older sites with lower margins all of which have
been impacted to a greater or lesser extent by Covid-19 in the
year.
In addition, we have increased the cost base in the land bank to
include our current estimate of costs for elements of the Future
Homes Standards (Part L).
The Housebuilding land bank including joint ventures of 31,994
plots as at 31 December 2020 represents c. 4.3 years of supply
based on the 2020 completion volume. The land bank reflects our
strategy to deliver controlled growth in Housebuilding completions
year on year in the medium term and maintain an optimal land bank
at 3.5 to 4.0 times. The Housebuilding business has the capacity
from its existing operating structure to deliver up to 8,000 homes
in the long term.
The 4,652 plots that legally completed in the year were replaced
by a total of 3,195 plots from a combination of site acquisitions
representing 2,022 plots and conversion of 1,173 plots from our
strategic land pipeline and a further 3,086 plots secured on a
conditional basis across 14 sites.
Investment in the land bank was paused during the first half of
the year in response to Covid-19 however during the second half the
Group has been active in a good land market and has maintained its
total controlled land bank plots whilst reducing the land creditor
balance.
Partnerships Land Bank
2020
----------------------------------------------------- ----------
Plots added 2,371
Sites added 11
Sites owned at year end 50
Sites controlled at year end 6
Total plots in land bank at year end including joint
ventures 8,224
----------------------------------------------------- ----------
Average consented land plot ASP GBP282,000
Average consented land plot cost GBP31,000
----------------------------------------------------- ----------
The average selling price of all units within the consented land
bank at the year-end was GBP282,000. The estimated embedded gross
margin in the consented land bank as at 31 December 2020, based on
prevailing sales prices and build costs is 18.1%.
The Partnerships land bank including joint ventures of 8,224
plots as at 31 December 2020 reflects our strategy to grow the
level of mixed tenure development to contribute to the delivery of
completions and partner delivery units in aggregate of c. 6,000 per
year.
The 1,479 mixed tenure plots that legally completed in the year
were replaced by acquisition of 1,505 plots on 5 sites and a
further 866 plots were conditionally contracted on 6 sites. Based
on our appraisal at the time of acquisition, the new additions, on
average are expected to deliver a future gross margin of 17% and
ROCE of 40%. The margin and ROCE on each new development will to
some extent, reflect the risk and reward trade off that comes from
the proportion of pre-sold volume specific to the development
opportunity.
Public sector land continues to be a strong source of
opportunities for Partnerships and in the year, 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 31 December 2020 Total sites Total plots
----------------------- ----------- -----------
0 - 150 plots 42 3,253
150 - 300 plots 46 10,362
300 - 500 plots 14 5,610
500 - 1,000 plots 16 9,995
1,000 + plots 4 4,833
----------------------- ----------- -----------
Total 122 34,053
----------------------- ----------- -----------
Planning agreed 16 6,416
Planning application 8 2,221
Ongoing promotion 98 25,416
----------------------- ----------- -----------
Total 122 34,053
----------------------- ----------- -----------
Strategic land continues to be an important source of supply and
during the year, 1,173 plots have been converted from the strategic
land pipeline into the consented landbank. A further 2,856 plots
were contracted under options and planning consent gained on 848
plots over the year.
Strategic land remains well positioned to deliver high quality
developments in the near to medium term with good progress on a
number of significant projects.
Risks and uncertainties
The Group is subject to a number of risks and uncertainties as
part of its activities. The Board regularly considers these and
seeks to ensure that appropriate processes are in place to manage,
monitor and mitigate these risks.
Following the Acquisition and Covid-19 pandemic the Board have
considered additional risks to the Group presented by the
Partnerships business. In particular the risks in respect of the
partner delivery element of the business, understanding the process
for tendering new work, ongoing management oversight of contracts
and the commercial controls in place.
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, and continues to be, 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.
Other than the above, the directors consider that the principal
risks and uncertainties facing the Group remain those that are
outlined on pages 50 to 55 of the Annual Report and Accounts 2019,
which is available from www.vistrygroup.co.uk.
Group income statement
2020 2019
For the year ended 31 December Note GBP000 GBP000
----------------------------------------------- ----- ------------ ----------
Revenue 2 1,811,727 1,130,768
----------------------------------------------- ----- ------------ ----------
Cost of sales (1,564,831) (888,012)
----------------------------------------------- ----- ------------ ----------
Gross profit 246,896 242,756
----------------------------------------------- ----- ------------ ----------
Analysed as:
----------------------------------------------- ----- ------------ ----------
Adjusted gross profit 10 318,765 255,316
----------------------------------------------- ----- ------------ ----------
Other operating income (26,422) (10,675)
----------------------------------------------- ----- ------------ ----------
Exceptional cost of sales (10,975) -
----------------------------------------------- ----- ------------ ----------
Share of joint ventures' gross profit (34,472) (1,885)
----------------------------------------------- ----- ------------ ----------
Gross profit 246,896 242,756
----------------------------------------------- ----- ------------ ----------
Administrative expenses including exceptional
items (181,595) (73,710)
----------------------------------------------- ----- ------------ ----------
Other operating income 26,422 10,675
----------------------------------------------- ----- ------------ ----------
Operating profit 91,723 179,721
----------------------------------------------- ----- ------------ ----------
Analysed as:
----------------------------------------------- ----- ------------ ----------
Adjusted operating profit 10 171,023 194,355
----------------------------------------------- ----- ------------ ----------
Exceptional expenses 4 (30,984) (12,846)
----------------------------------------------- ----- ------------ ----------
Amortisation of acquired intangibles (14,240) -
----------------------------------------------- ----- ------------ ----------
Share of joint ventures' operating profit (34,076) (1,788)
----------------------------------------------- ----- ------------ ----------
Operating profit 91,723 179,721
----------------------------------------------- ----- ------------ ----------
Financial income 18,232 813
----------------------------------------------- ----- ------------ ----------
Financial expenses including exceptional
items (26,158) (7,569)
----------------------------------------------- ----- ------------ ----------
Net financing costs including exceptional
items (7,926) (6,756)
----------------------------------------------- ----- ------------ ----------
Share of profit of joint ventures 7 14,867 1,788
----------------------------------------------- ----- ------------ ----------
Profit before tax 98,664 174,753
----------------------------------------------- ----- ------------ ----------
Income tax expense including exceptional
items (21,851) (36,374)
----------------------------------------------- ----- ------------ ----------
Profit for the year attributable to
ordinary shareholders 76,813 138,379
----------------------------------------------- ----- ------------ ----------
Earnings per share 2020 2019
restated
------------------------------------------------ ------ ----------
Basic 5 34.8p 94.6p
------------------------------------------------ ------ ----------
Diluted 5 34.7p 94.5p
------------------------------------------------ ------ ----------
Basic earnings per share (before exceptional
items and amortisation of intangibles) 5 52.6p 104.3p
------------------------------------------------ ------ ----------
Diluted earnings per share (before exceptional
items and amortisation of intangibles) 5 52.5p 104.2p
------------------------------------------------ ------ ----------
Group statement of comprehensive income
2020 2019
For the year ended 31 December Note GBP000 GBP000
------------------------------------------ ----- -------- -------
Profit for the year 76,813 138,379
------------------------------------------------- -------- -------
Other comprehensive expense
------------------------------------------ ----- -------- -------
Items that will not be reclassified
to the income statement
------------------------------------------ ----- -------- -------
Remeasurements on defined benefit pension
scheme (11,654) (2,116)
------------------------------------------------- -------- -------
Deferred tax on remeasurements on defined
benefit pension scheme 2,124 464
------------------------------------------------- -------- -------
Total other comprehensive expense (9,530) (1,652)
------------------------------------------------- -------- -------
Total comprehensive income for the year
attributable to ordinary shareholders 67,283 136,727
------------------------------------------------- -------- -------
Balance sheets
2020 2019
As at 31 December Note GBP000 GBP000
Assets
---------------------------------------- ---- --------- ---------
Goodwill 11 547,509 -
Intangible fixed assets 143,585 4,336
Property, plant, and equipment 5,091 1,845
Right-of-use assets 38,511 21,347
Investments 7 145,153 85,129
Amounts recoverable from joint ventures 323,650 6,232
Restricted cash 1,193 1,748
Deferred tax assets - 184
Trade and other receivables 1,544 1,090
Retirement benefit asset 9,077 4,506
---------------------------------------- ---- --------- ---------
Total non-current assets 1,215,313 126,417
---------------------------------------- ---- --------- ---------
Inventories 1,836,521 1,207,667
Trade and other receivables 225,022 99,142
Cash and cash equivalents 340,988 361,962
Current tax asset 14,350 -
---------------------------------------- ---- --------- ---------
Total current assets 2,416,881 1,668,771
---------------------------------------- ---- --------- ---------
Total assets 3,632,194 1,795,188
---------------------------------------- ---- --------- ---------
Equity
---------------------------------------- ---- --------- ---------
Issued capital 111,127 74,169
Share premium 360,657 359,857
Merger reserve 823,513 -
Retained earnings 899,785 837,940
---------------------------------------- ---- --------- ---------
Total equity attributable to equity
holders of the parent 2,195,082 1,271,966
---------------------------------------- ---- --------- ---------
Liabilities
---------------------------------------- ---- --------- ---------
Bank and other loans 8 253,103 -
Lease liabilities 26,848 16,686
Deferred tax liability 17,637 -
Trade and other payables 139,316 122,940
Provisions 33,786 -
---------------------------------------- ---- --------- ---------
Total non-current liabilities 470,690 139,626
Bank and other loans 50,000 -
Trade and other payables 894,503 352,359
Lease liabilities 15,304 6,309
Provisions 6,615 3,989
Current tax liabilities - 20,939
---------------------------------------- ---- --------- ---------
Total current liabilities
s 966,422 383,596
---------------------------------------- ---- --------- ---------
Total liabilities 1,437,112 523,222
---------------------------------------- ---- --------- ---------
Total equity and liabilities 3,632,194 1,795,188
---------------------------------------- ---- --------- ---------
Group statement of changes in equity
Own shares Other Total Issued Share Merger Total
held retained retained capital premium reserve
earnings earnings
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------- ---- ---------- --------- --------- -------- -------- -------- ---------
Balance at 1 January
2019 (3,620) 780,382 776,762 67,398 216,907 - 1,061,067
-------------------------- ---- ---------- --------- --------- -------- -------- -------- ---------
Profit for the
year - 138,379 138,379 - - - 138,379
Total other comprehensive
expense - (1,652) (1,652) - - - (1,652)
-------------------------- ---- ---------- --------- --------- -------- -------- -------- ---------
Total comprehensive
income - 136,727 136,727 - - - 136,727
-------------------------- ---- ---------- --------- --------- -------- -------- -------- ---------
IFRS16 opening
adjustment - 65 65 - - - 65
Issue of share
capital - - - 6,771 142,950 - 149,721
Deferred tax on
share based payments - 140 140 - - - 140
Share based payments - 2,891 2,891 - - - 2,891
Dividends paid
to shareholders 6 - (78,645) (78,645) - - - (78,645)
-------------------------- ---- ---------- --------- --------- -------- -------- -------- ---------
Total transactions
with owners recognised
directly in equity - (75,549) (75,549) 6,771 142,950 - 74,172
-------------------------- ---- ---------- --------- --------- -------- -------- -------- ---------
Balance at 31 December
2019 (3,620) 841,560 837,940 74,169 359,857 - 1,271,966
-------------------------- ---- ---------- --------- --------- -------- -------- -------- ---------
Balance at 1 January
2020 (3,620) 841,560 837,940 74,169 359,857 - 1,271,966
-------------------------- ---- ---------- --------- --------- -------- -------- -------- ---------
Profit for the
year - 76,813 76,813 - - - 76,813
Total other comprehensive
expense - (9,530) (9,530) - - - (9,530)
-------------------------- ---- ---------- --------- --------- -------- -------- -------- ---------
Total comprehensive
income - 67,283 67,283 - - - 67,283
-------------------------- ---- ---------- --------- --------- -------- -------- -------- ---------
Issue of share
capital - - - 70 800 - 870
Share issued as
consideration - - - 31,870 - 823,513 855,383
Bonus issue - (5,018) (5,018) 5,018 - - -
LTIP shares exercised 164 (164) - - - - -
Purchase of own
shares (3,500) - (3,500) - - - (3,500)
Share based payments - 2,741 2,741 - - - 2,741
Deferred tax on
share-based payments - 339 339 - - - 339
-------------------------- ---- ---------- --------- --------- -------- -------- -------- ---------
Total transactions
with owners recognised
directly in equity (3,336) (2,102) (5,438) 36,958 800 823,513 855,833
-------------------------- ---- ---------- --------- --------- -------- -------- -------- ---------
Balance at 31 December
2020 (6,956) 906,741 899,785 111,127 360,657 823,513 2,195,082
-------------------------- ---- ---------- --------- --------- -------- -------- -------- ---------
Group Statements of cash flows
2020 2019
For the year ended 31 December Note GBP000 GBP000
Cash flows from operating activities
--------------------------------------- ---- --------- --------
Profit for the year 76,813 138,379
Depreciation and amortisation 31,710 6,253
Financial income (18,232) (813)
Financial expense 26,158 6,939
Loss on disposal of property, plant,
and equipment 15 3
Equity-settled share-based payment
expense 2,741 2,891
Income tax expense 21,851 36,374
Share of results of joint ventures (14,867) (1,788)
Profit released on sale of assets
from joint ventures (234) (972)
Decrease / (increase) in trade
and other receivables 17,894 (58,234)
Decrease in inventories 168,580 115,170
(Decrease) / increase in trade
and other payables (97,208) 16,716
Increase / (decrease) in provisions
and retirement benefit assets 15,821 (8,629)
--------------------------------------- ---- --------- --------
Cash generated from operations 231,042 252,289
--------------------------------------- ---- --------- --------
Interest paid (14,661) (2,093)
Income taxes paid (34,712) (33,804)
--------------------------------------- ---- --------- --------
Net cash generated from operating
activities 181,669 216,392
--------------------------------------- ---- --------- --------
Cash flows from investing activities
--------------------------------------- ---- --------- --------
Bank interest received 90 131
Acquisition of intangible fixed
assets (109) (3,706)
Acquisition of property, plant,
and equipment (2,632) (565)
Acquisition of Linden and Partnerships
net of overdraft acquired 10 (394,578) -
Loans made to joint ventures 7 (17,869) -
Loan repayments from joint ventures 7 3,682 -
Investments in joint ventures 7 - (58,511)
Distributions from joint ventures 7 27,043 5,135
Decrease / (increase) in restricted
cash 555 (368)
--------------------------------------- ---- --------- --------
Net cash used in investing activities (383,818) (57,884)
--------------------------------------- ---- --------- --------
Cash flows from financing activities
--------------------------------------- ---- --------- --------
Dividends paid 6 - (78,645)
Principal elements of lease payments (15,325) 5,562
Net proceeds from the issue of
share capital - 149,721
Purchase of own shares (3,500) -
Drawdown of bank and other loans 475,000 -
Repayment of bank and other loans (275,000) (36,401)
--------------------------------------- ---- --------- --------
Net cash generated from financing
activities 181,175 40,237
--------------------------------------- ---- --------- --------
Net (decrease) /increase in cash
and cash equivalents (20,974) 198,745
Cash and cash equivalents at 1
January 361,962 163,217
--------------------------------------- ---- --------- --------
Cash and cash equivalents at 31
December 340,988 361,962
--------------------------------------- ---- --------- --------
1 Basis of preparation
General information
Vistry Group PLC (the "Company") is a public company, limited by
shares, domiciled in England, United Kingdom. The consolidated
financial statements of the Company for the year ended 31 December
2020 comprise the Company and its subsidiaries (together referred
to as the "Group") and the Group's interest in Joint ventures. The
financial statements were authorised for issue by the directors on
4 March 2021.
The registered office for Vistry Group PLC is 11 Tower View,
West Malling, Kent, ME19 4UY.
Basis of accounting
The financial information set out above does not constitute the
Company's statutory financial statements for the years ended 31
December 2020 or 2019 but is derived from those financial
statements. Statutory financial statements for 2019 have been
delivered to the registrar of companies, and those for 2020 will be
delivered in due course. The auditors have reported on those
financial statements; their reports were (i) unqualified, (ii) did
not include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
The condensed financial statements have been prepared in
accordance with the international accounting standards in
conformity with the requirements of the Companies Act 2006 and
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European
Union.
The Group has applied the following standards for the first time
for its annual reporting year commencing 1 January 2020:
-- 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
These changes have not had a material impact on the Group's
financial statements.
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 which is distributable.
All other accounting policies have been applied consistently to
the Company and the Group.
The income statement has been represented in order to more
clearly present the financial results for the year ended 31
December 2020 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 and 4.3m shares in
July 2020.
The financial statements are prepared on the historical cost
basis unless otherwise stated.
Going concern
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 two scenarios - a likely base case including the
expected impact of Covid-19 and a severe but plausible downside
sensitivity scenario.
In the severe but plausible downside sensitivity scenario the
following assumptions have been applied:
-- A 15-20% reduction in private sales volumes, with a
corresponding reduction in development spend
-- A 5-10% reduction in private sales prices
The impact of these downsides is then mitigated by:
-- Cessation of uncommitted land spend
-- Reduction in overheads to reflect reduction in bonuses, temporary employee costs, etc.
In a severe but plausible downside scenario the delivery of
affordable housing is not expected to be impacted as it will
typically have been contracted for delivery in advance to a
Registered Social Landlord or similar entity. As such the volumes
and prices for affordable housing are not sensitised in the severe
but plausible downside scenario.
In both the base and the severe but plausible downside
sensitivity scenario, the forecasts indicated that there was
sufficient headroom and liquidity for the business to continue
based on the facilities available to the Group. In each of these
scenarios the Group was also forecast to 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 totaling c. GBP60m, to tightly
manage working capital and to implement other specific measures to
increase cash generation and reduce cash outflow.
Having started the year with net cash of GBP362.0m, the Group
generated a strong operating cash flow during 2020 and paid a net
of GBP394.6m in cash consideration for the Acquisition, as well as
invested GBP14.1m into joint ventures.
As at 31 December 2020, the Group held cash and cash equivalents
of GBP341.0m and had borrowings of GBP303.1m.
At 31 December 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.
Covid-19
In light of the Covid-19 outbreak in the year ended 31 December
2020, the Group has considered whether any impairment of goodwill,
intangibles 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 the net realisable
value assessment of inventories at 31 December 2020.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 December. Subsidiaries are
entities controlled by the Group. The Group controls an entity when
it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those
returns through its power over the entity.
In assessing control, the Group takes into consideration
potential voting rights that are currently exercisable. The
acquisition date is the date on which control is transferred to the
acquirer. The financial statements of subsidiaries are included in
the consolidated financial statements from the date that control
commences until the date that control ceases.
The consolidated financial statements include the Group's share
of the comprehensive income and expense of associates on an equity
accounted basis, from the date that significant influence commences
until the date that significant influence ceases.
A joint arrangement is an arrangement over which the Group and
one or more third parties have joint control. These joint
arrangements are in turn classified as:
-- Joint ventures whereby the Group has rights to the net assets
of the arrangement, rather than rights to its assets and
obligations for its liabilities; and
-- Joint operations whereby the Group has rights to the assets
and obligations for the liabilities relating to the
arrangement.
The consolidated financial statements include the Group's share
of the comprehensive income and expenses of its joint ventures on
an equity accounted basis and its share of income and expenses of
its joint operation within the corresponding lines of the income
statement, from the date that joint control commenced.
Impact of standards and interpretations in issue but not yet
effective
Certain new accounting standards and interpretations have been
published that are not mandatory for 31 December 2020 reporting
periods and have not been early adopted by the group. These
standards are not expected to have a material impact on the entity
in the current or future reporting periods and on foreseeable
future transactions.
2 Revenue
Revenue by type 2000 2019
GBP000 GBP000
------------------------------------------------ --------- ---------
Private housing 1,152,281 897,017
Affordable housing 146,972 170,379
Partner delivery revenue 489,507 -
Partnership land transactions - 42,432
Land sales 17,243 6,811
Release of deferred revenue from joint ventures 187 7,766
Other 5,537 6,363
------------------------------------------------ --------- ---------
Total 1,811,727 1,130,768
------------------------------------------------ --------- ---------
3 Segmental reporting
All revenue and profits disclosed relate to continuing
activities of the Group and are derived from activities performed
in the United Kingdom.
The Chief Operating Decision Maker (CODM), which is the Board,
notes that the Group's main operation is that of a housebuilder and
it operates entirely within the United Kingdom. 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 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 of acquired
intangibles.
Segmental tangible net asset value (TNAV) includes items
directly attributable to the segment as well as those that can be
allocated on a reasonable basis, with the exception of net cash or
debt, retirement benefit assets/liabilities and tax balances
payable/receivable.
Adjusted financial results include share of joint ventures and
exclude exceptional items. Adjusted gross profit is stated
including other operating income. The Partnerships business was
acquired on 3 January 2020 therefore the financial performance for
period ended 31 December 2019 was nil.
Housebuilding Partnerships Group Total
Year ended 31 December GBP'000 GBP'000 items GBP'000
2020 GBP'000
---------------------------- ---------------- --------------- ---------- ----------
Revenue 1,170,936 640,791 - 1,811,727
Add: Share of JV revenue 140,904 87,483 - 228,387
---------------------------- ---------------- --------------- ---------- ----------
Adjusted revenue 1,311,840 728,274 - 2,040,114
---------------------------- ---------------- --------------- ---------- ----------
Gross Profit 180,681 66,215 - 246,896
Share of JV gross profit 22,038 12,434 - 34,472
Exceptional cost of sales 10,650 325 - 10,975
Other operating income 17,810 8,612 - 26,422
---------------------------- ---------------- --------------- ---------- ----------
Adjusted gross profit 231,179 87,586 - 318,765
---------------------------- ---------------- --------------- ---------- ----------
Operating Profit 104,295 24,456 (37,028) 91,723
Add: Share of JV operating
profit/ (loss) 21,714 12,362 - 34,076
Add: Exceptional items 10,650 325 20,009 30,984
Add: Amortisation of
acquired intangibles 2,760 11,480 - 14,240
---------------------------- ---------------- --------------- ---------- ----------
Adjusted operating profit
/ (loss) 139,419 48,623 (17,019) 171,023
---------------------------- ---------------- --------------- ---------- ----------
Adjusted gross margin 17.6% 12.0% - 15.6%
---------------------------- ---------------- --------------- ---------- ----------
Adjusted operating margin 10.6% 6.7% - 8.4%
Housebuilding Partnerships Group Total
Year ended 31 December GBP'000 GBP'000 items GBP'000
2019 GBP'000
---------------------------- ---------------- --------------- ---------- ----------
Revenue 1,130,768 - - 1,130,768
Add: Share of JV revenue 8,479 - - 8,479
---------------------------- ---------------- --------------- ---------- ----------
Adjusted revenue 1,139,247 - - 1,139,247
---------------------------- ---------------- --------------- ---------- ----------
-
---------------------------- ---------------- --------------- ---------- ----------
Gross Profit 242,756 - - 242,756
Share of JV gross profit 1,885 - - 1,885
Other operating income 10,675 - - 10,675
---------------------------- ---------------- --------------- ---------- ----------
Adjusted gross profit 255,316 - - 255,316
---------------------------- ---------------- --------------- ---------- ----------
-
---------------------------- ---------------- --------------- ---------- ----------
Operating Profit 205,279 - (25,558) 179,721
Add: Share of JV operating
profit/ (loss) 1,788 - - 1,788
Add: Exceptional items - - 12,846 12,846
Adjusted operating profit
/ (loss) 207,067 - (12,712) 194,355
---------------------------- ---------------- --------------- ---------- ----------
-
---------------------------- ---------------- --------------- ---------- ----------
Adjusted gross margin 22.4% - - 22.4%
---------------------------- ---------------- --------------- ---------- ----------
Adjusted operating margin 18.2% - - 17.1%
---------------------------- ---------------- --------------- ---------- ----------
Segmental financial position
At 31 December 2020 Group
Housebuilding Partnerships items Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ---------------- --------------- ---------- ----------
Goodwill and intangibles 283,428 407,666 - 691,094
----------------------------------- ---------------- --------------- ---------- ----------
Tangible net assets/(liabilities)
excluding investment in
joint ventures 1,361,786 (46,626) 5,791 1,320,951
----------------------------------- ---------------- --------------- ---------- ----------
Investments in joint ventures 128,826 16,327 - 145,153
----------------------------------- ---------------- --------------- ---------- ----------
Net cash - - 37,885 37,885
----------------------------------- ---------------- --------------- ---------- ----------
At 31 December 2019 Group
Housebuilding Partnerships items Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ---------------- --------------- ---------- ----------
Goodwill and intangibles 4,336 - - 4,336
----------------------------------- ---------------- --------------- ---------- ----------
Tangible net assets/(liabilities)
excluding investment in
joint ventures 836,788 - (16,249) 820,539
----------------------------------- ---------------- --------------- ---------- ----------
Investments in joint ventures 85,129 - - 85,129
----------------------------------- ---------------- --------------- ---------- ----------
Net cash - - 361,962 361,962
----------------------------------- ---------------- --------------- ---------- ----------
4 Exceptional expenses
Exceptional items are those which, in the opinion of the Board,
are material by size and irregular 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.
2020 2019
-------------------------------------------------
GBP000 GBP000
------------------------------------------------- ------ ------
Administrative expenses relating to the
Acquisition 20,009 12,846
Finance expenses relating to the Acquisition - 630
Exceptional expenses relating to the Acquisition 20,009 13,476
------------------------------------------------- ------ ------
Cost of sales relating to legacy property
building safety 10,975 -
------------------------------------------------- ------ ------
Exceptional expenses relating to legacy
property building safety 10,975 -
------------------------------------------------- ------ ------
Total exceptional expenses 30,984 13,476
------------------------------------------------- ------ ------
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
year ended 31 December 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 related 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.
Exceptional expenses relating to legacy property building safety
reflect estimated costs relating to finished developments in
relation to potential build defects including building fire safety.
The Group has undertaken a review of all of its current and legacy
buildings where a potential liability has been identified and has
provided for the expected costs of any remedial works that may be
required.
Tax on exceptional items in 2020 was GBP5.9m (2019:
GBP0.1m).
5 Earnings per share
Profit attributable to ordinary shareholders
2020 2019
GBP000 GBP000
----------------------------------------------------- ----------- ------------
Profit for the year attributable to equity holders
of the parent 76,813 138,379
Profit for the year attributable to equity holders
of the parent (before exceptional items and
amortisation of acquired intangibles) 116,109 152,568
----------------------------------------------------- ----------- ------------
The prior year EPS has been restated to include the impact
of the bonus issues in January and July 2020, of 5,665,723
and 4,369,992 shares, respectively.
2019
Earnings per share 2020 (Restated)
----------------------------------------------------- ----------- ------------
Basic earnings per share 34.8p 94.6p
Diluted earnings per share 34.7p 94.5p
----------------------------------------------------- ----------- ------------
Basic earnings per share (before exceptional
items and amortisation of acquired intangibles) 52.6p 104.3p
Diluted earnings per share (before exceptional
items and amortisation of acquired intangibles) 52.5p 104.2p
----------------------------------------------------- ----------- ------------
Weighted average number of shares
2020 2019
(Restated)
----------------------------------------------------- ----------- ------------
Weighted average number of ordinary shares
at 31 December 220,916,654 146,300,079
----------------------------------------------------- ----------- ------------
Basic earnings per share
Basic earnings per ordinary share for the year ended 31 December
2020 is calculated on a profit attributable to ordinary
shareholders of GBP76,813,000 (2019: GBP138,379,000) over the
weighted average of 220,916,654 (2019 restated: 146,300,079)
ordinary shares in issue during the period.
Diluted earnings per share
The calculation of diluted earnings per share for the year ended
31 December 2020 was based on the profit attributable to ordinary
shareholders of GBP76,813,000 (2019: GBP138,379,000).
The Group's diluted weighted average ordinary shares potentially
in issue for the year ended 31 December 2020 was 221,142,212 (2019
restated: 146,440,701).
The average number of shares is increased by reference to the
average number of potential ordinary shares held under option
during the year. This reflects the number of ordinary shares which
would be purchased using the aggregate difference in value between
the market value of shares and the share option exercise price and
fair value of future employee services. The market value of shares
has been calculated using the average ordinary share price during
the year. Only share options which are expected to meet their
cumulative performance criteria have been included in the dilution
calculation.
6 Dividends
The following dividends were paid by the
Group:
2020 2019
GBP000 GBP000
-------------------------------------------- ------ ------
Prior year final dividend per share of nil
(2019: 38.0p) - 51,078
Current year interim dividend per share
of nil (2019:20.5p) - 27,567
-------------------------------------------- ------ ------
- 78,645
-------------------------------------------- ------ ------
The 2019 Special dividend was paid by way of a bonus shares of
5,665,723 shares in January 2020 with a total value of
GBP66.0m.
Following shareholder approval on 14 July 2020 and admission to
Main Market of the London Stock Exchange on 15 July 2020, the
second interim dividend in respect to 2019 with a value of GBP60.0m
was paid in the form of a bonus issue. 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.
The Board determined on 8 September 2020 that no interim
dividend was to be paid for the first half of 2020.
A final dividend of 20 pence per share has been declared and,
subject to shareholder approval at the AGM, will be paid on 21 May
2021 in respect of 2020.
7 Investments
The movement in investments accounted for using the equity
method during the year is as follows:
2020 2019
GBP000 GBP000
--------------------------------------- --------- --------
Beginning of the period 85,129 28,992
Acquired with Linden and Partnerships 56,034 -
Additions - 59,387
Loans made and net interest charged 16,166 97
Profit for the period 14,867 1,788
Distributions paid (27,043) (5,135)
--------------------------------------- --------- --------
End of the period 145,153 85,129
--------------------------------------- --------- --------
8 Bank and other loans
Interest rate profile of bank and other loans
At 31(st) December Carrying Carrying
Available value value
facility Facility 2020 2019
Rate GBP000 maturity GBP000 GBP000
----------------------------------- ------------------ ----------- -------------- --------------- ---------------
Revolving credit facility* LIBOR +165-255bps 410,000 2025 - -
Revolving credit facility* LIBOR +165-255bps 40,000 2023 - -
Term Loan* LIBOR +165-255bps 150,000 2023 150,000 -
USPP Loan** 403 bps 100,000 2027 107,359 -
Revolving credit facility
(commenced
27 March 2020) LIBOR +155-245bps 20,000 2022 - -
Prepaid facility fee n/a n/a n/a (4,256)
----------------------------------- ------------------ ----------- -------------- --------------- ---------------
Total non-current borrowings 720,000 253,103
------------------------------------------------------- ----------- -------------- --------------- ---------------
Term Loan (commenced 17 March
2020)*** LIBOR +265bps 50,000 2021 50,000 -
----------------------------------- ------------------ ----------- -------------- --------------- ---------------
Total current borrowings 50,000 50,000
------------------------------------------------------- ----------- -------------- --------------- ---------------
Total borrowings 770,000 303,103 -
------------------------------------------------------- ----------- -------------- --------------- ---------------
* These facilities commenced on 3 January 2020 and were subsequently
amended on 24 January 2020.
**Carrying value is quoted including impact from the fair value
of future interest payments.
*** The maturity date for this facility was amended on 23 February
2021 to January 2023.
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 tested semi-annually. The overall
financing cost of the new arrangements are marginally more
expensive than the previous facility.
9 Related party transactions
Transactions between fellow subsidiaries, which are related
parties, have been eliminated on consolidation, as have
transactions between the Company and its subsidiaries during this
year.
Transactions between the Group, Company and key management
personnel in the year ended 31 December 2020 were limited to those
relating to remuneration.
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.
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
excluding joint ventures were as follows:
Expenses paid Amounts payable Amounts owed
to related parties to related parties by related parties
---------------------
Year ended Year ended
31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec
2020 2019 2020 2019 2020 2019
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- ------------ ---------- ---------- --------- ---------- ---------
Trading transactions
Ardent 2,498 2,736 632 274 - -
IB (SW) 56 20 - 67 - -
Marshalls PLC 21 19 - - - -
Forterra PLC 1,321 545 115 98 - -
---------------------- ------------ ---------- ---------- --------- ---------- ---------
Transactions between the Group and its joint ventures are
disclosed as follows:
Interest income
and dividend
distributions
Sales to related from related
parties parties
-------------------------
Year Year Year
ended Year ended ended ended
31 Dec 31 Dec 31 Dec 31 Dec
2020 2019 2020 2019
GBP000 GBP000 GBP000 GBP000
------------------------- ------- ----------- -------- -------
Trading transactions 129,663 6,257 - -
Non-trading transactions - - 45,014 77
-------------------------------- ------- ----------- -------- -------
Amounts owed by Amounts owed
related parties to related parties
----------------
31 Dec 31 Dec 31 Dec 31 Dec
2020 2019 2020 2019
GBP000 GBP000 GBP000 GBP000
---------------- -------- -------- ---------- ---------
Balances with
joint ventures 323,650 6,232 20,157 205
----------------------- -------- -------- ---------- ---------
Sales to related parties including joint ventures are based on
normal commercial terms available to unrelated third parties. The
loans made to joint ventures bear interest at rates of between 3.5%
and 5.1%; all balances with related parties will be settled in
cash.
There have been no other related party transactions in the
financial year which have materially affected the financial
performance or position of the Group, and which have not been
disclosed.
10 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. New alternative performance
measures have been implemented in 2020 in order to reflect the
enlarged Group, specifically the contribution of the joint venture
investments now held and the impact of amortisation of intangibles
which were recognised on acquisition of Linden and
Partnerships.
The definition and reconciliation of 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:
2020 2019
GBP000 GBP000
------------------------------------ ---------- ----------
Revenue per Group Income Statement 1,811,727 1,130,768
Share of joint ventures' revenue 228,387 8,479
------------------------------------ ---------- ----------
Adjusted revenue 2,040,114 1,139,247
------------------------------------ ---------- ----------
Adjusted gross profit
The definition of adjusted gross margin has been amended in the
period to reflect the enlarged Group and the contribution of joint
ventures to the Group's financial results. The exclusion of
exceptional costs included within gross margin allows the
assessment of the underlying performance of the Group at gross
margin:
2020 2019
GBP000 GBP000
----------------------------------------- -------- --------
Gross Profit per Group Income Statement 246,896 242,756
Other operating income 26,422 10,675
Exceptional cost of sales 10,975 -
Share of joint ventures' gross profit 34,472 1,885
----------------------------------------- -------- --------
Adjusted gross profit 318,765 255,316
----------------------------------------- -------- --------
Adjusted operating profit
Adjusted operating profit is defined as operating profit
including share of joint ventures' operating profit, before
exceptional expenses and amortization of acquired intangibles:
2020 2019
GBP000 GBP000
--------------------------------------------- -------- --------
Operating profit per Group Income Statement 91,723 179,721
Exceptional expenses 30,984 12,846
Amortisation of acquired intangibles 14,240 -
Share of joint ventures' operating profit 34,076 1,788
--------------------------------------------- -------- --------
Adjusted operating profit 171,023 194,355
--------------------------------------------- -------- --------
Adjusted profit before tax
Adjusted profit before tax is defined as profit before tax
before exceptional expenses and amortisation of acquired
intangibles:
2020 2019
GBP000 GBP000
------------------------------------------- -------- --------
Profit before tax per Consolidated Income
Statement 98,664 174,753
Exceptional expenses 30,984 13,476
Amortisation of acquired intangibles 14,240 -
------------------------------------------- -------- --------
Adjusted profit before tax 143,888 188,229
------------------------------------------- -------- --------
11 Business combinations
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".
On 3 January 2020, the Group acquired the Linden and
Partnerships and Regeneration businesses from Galliford Try PLC for
a consideration of GBP1,233.5m. 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
to the acquisition to the acquisition
of Linden of Partnerships Total
GBP'000 GBP'000 GBP'000
----------------------------- -------------------- -------------------- ----------
Cash consideration (iv) 76,300 301,800 378,100
Shares in Vistry Group
PLC issued 815,698 39,685 855,383
----------------------------- -------------------- -------------------- ----------
Total purchase consideration 891,998 341,485 1,233,483
----------------------------- -------------------- -------------------- ----------
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, being the excess of the share price on the date of issue
over nominal value of the shares.
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 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
-------------------------------------- ----------- ------------ -----------
(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 10,757 10,207 20,964
Intangible assets 54,800 100,224 155,024
Investments 49,527 6,507 56,034
Retirement benefit asset 5,646 - 5,646
Inventories 606,371 103,401 709,772
Amounts owed by joint ventures 208,034 74,439 282,473
Trade and other receivables 98,983 157,928 256,911
Trade and other payables (322,797) (326,865) (649,662)
Borrowings - (108,219) (108,219)
Lease liabilities (10,758) (10,207) (20,965)
Provisions (17,706) (4,750) (22,456)
Net deferred tax asset / (liability) 15,886 (14,511) 1,375
-------------------------------------- ----------- ------------ -----------
Net identifiable assets acquired 663,670 22,304 685,974
-------------------------------------- ----------- ------------ -----------
Goodwill 228,328 319,181 547,509
-------------------------------------- ----------- ------------ -----------
891,998 341,485 1,233,483
-------------------------------------- ----------- ------------ -----------
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.
( i) Acquisition-related costs
Acquisition-related costs of GBP20.0m are included within
exceptional administrative expenses in the Group Income
Statement.
(ii) Acquired receivables
The fair value of trade and other receivables in Linden is
GBP99.0m 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
GBP157.9m 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.
(iii) Revenue and profit contribution
The 100% owned development sites acquired with the Linden
business contributed reported revenues of GBP395.4m to the Group
for the period from 3 January 2020 to 31 December 2020. There would
be no material difference in the contribution to revenues nor
operating profit 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 profit of the Group for the period
from 3 January 2020 to 31 December 2020.
The acquired Partnerships business contributed revenues of
GBP640.8m and operating profit of GBP24.1m to the group for the
period from 3 January 2020 to 31 December 2020. There would be no
material difference in the contribution to revenues nor operating
profit if the acquisition had occurred on 1 January 2020.
(iv) Consideration
At the balance sheet date, GBP13.5m was receivable by the Group
in relation to reimbursement of cash consideration previously
paid.
Circulation to shareholders
The consolidated financial statements will be sent to
shareholders on 6 April 2021. Further copies will be available on
request from the Company Secretary, Vistry Group PLC, 11 Tower
View, Kings Hill, West Malling, Kent ME19 4UY. Further information
on Vistry Group PLC can be found on the Group's corporate website
www.vistrygroup.co.uk, including the slide presentation document
which will be presented at the Group's results meeting on 4 March
2021.
[1] Pre-exceptional items and amortisation of acquired
intangible assets
[2] Net cash / debt is quoted excluding IFRS16 lease liabilities
and includes GBP7.4m (HY20: GBP7.8m) impact from the fair value of
future interest payments on US Private Placement notes
[3] Proforma completions and revenue are calculated using
published data for Linden Homes and Vistry Partnerships and
represent the Vistry Group period of 1 Jan 2019 to 31 December
2019
[4] Key financials are on an adjusted basis to include the
proportional contribution of the joint ventures and before
exceptional expenses of GBP31.0m and amortisation of acquired
intangibles of GBP14.2m in 2020
[5] 2019 reflect Vistry Group PLC excluding the acquired
businesses and are not on a proforma basis
[6] In 2020 the Group incurred GBP10.2m of costs directly
related to Covid-19
[7] Completions include 100% of joint venture completions
[8] Acquisition by Vistry Group PLC of Linden Homes and
Partnerships & Regeneration businesses from Galliford Try,
completed on 3 January 2020 (the "Acquisition").
[9] Formerly classified as Vistry Partnerships contracting
[10] TNAV represents tangible net assets excluding net cash or
debt
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END
FR EAADLEDSFEEA
(END) Dow Jones Newswires
March 04, 2021 02:00 ET (07:00 GMT)
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