TIDMVTY
RNS Number : 1323Y
Vistry Group PLC
12 January 2022
12 January 2022
Vistry Group PLC
Trading update
Vistry Group PLC ("Vistry" or the "Group") announces a scheduled
trading update for the year ended 31 December 2021, ahead of the
publication of its full year results on 2 March 2022.
Highlights
-- Excellent performance throughout the year across all business
areas, with the Group expected to deliver FY21 adjusted profit
before tax(1) of c. GBP345m (FY20: GBP143.9m), in line with
previous guidance
-- Strong balance sheet with net cash position as at 31 December
2021 of c. GBP234m (31 December 2020: GBP38.0m), reflecting both
increased profits and good working capital management
-- Continued improvement in Housebuilding with completions(2)
increasing to 6,551 units (FY20: 4,652), and gross margin(3)
anticipated in excess of 22% (FY20: 17.6%)
-- 41% increase in higher margin mixed tenure completions(2) at
Vistry Partnerships, with operating margin(3) increasing to over 9%
(FY20: 6.7%) as expected
-- Continued quality and customer service delivery with step up
in construction quality awards and sustained HBF 5-star customer
satisfaction rating
-- Significant progress with sustainability strategy
demonstrated through our commitment to setting science-based
targets and our sign up to 'Business Ambition for 1.5degc'
-- Success in the land market with the Group securing a total of
11,772 plots in FY21 (FY20: 8,652), ensuring growth in the land
bank as well as having all land required for FY22 completions in
place
-- Strong forward sales position with total Housebuilding and
Partnership mixed tenure forward sales as at 31 December up 24% to
GBP1.94bn (31 December 2020: GBP1.56bn) with 54% of total forecast
units for FY22 already secured
-- Our sites have returned to work efficiently following the
break, with no significant impact from Covid-related absence to
date
-- Group expects to deliver a significant step up in profits and returns in FY22
Greg Fitzgerald, Chief Executive, commented:
"2021 has been an excellent year for Vistry Group with progress
and success achieved across all areas of the business. I am
extremely proud of and grateful to our people who have shown huge
talent, passion, and commitment to get us to where we are today. I
am delighted this dedication has been recognised with Vistry being
awarded Large Housebuilder of the year for 2021 at the recent
Housebuilder Awards, less than two years since we formed the
enlarged group.
We are focused on leveraging the Group's unique combination of
Housebuilding and Partnerships assets as well as our strength and
capability across all housing tenures, with our target of
delivering sector leading returns in the medium term. I'm delighted
with the progress in the year - our Housebuilding and Partnerships
businesses are together securing new, high quality development
opportunities, while working successfully alongside each other on a
number of existing sites. This successful joint approach is
delivering enhanced overall returns."
Operational update
It has been a very positive year with progress made across all
areas of the business and the significant benefits and
opportunities of the enlarged Group's unique market positioning and
capability being realised. We were delighted with Vistry Group
being awarded the Large Housebuilder of the year award at the
recent Housebuilder Awards.
We have seen strong demand across all areas of our business
during 2021, with the Group's average weekly private sales rate per
outlet increasing to 0.76 (FY20: 0.53). The business performance
has been consistent throughout the year and across all of our
geographies. Aligned with this strong demand, we have seen c. 6%
house price inflation in the year.
We have extended our work with client housing providers through
increased land-led partner delivery and are the only listed
developer to have been awarded Strategic Partner status by Homes
England, further recognising the benefits of Vistry's unique
delivery model and track record in the affordable and mixed tenure
markets.
Delivering high quality new homes and excellent customer
satisfaction remained our top priority in 2021 and we are confident
of maintaining the maximum 5-star HBF customer satisfaction rating
for 2021.
We have continued to see some pressure across the supply chain
resulting in extended lead times on building materials and
inflationary price increases on certain products and skilled
labour. There was some easing towards the end of the year and,
working in close partnership with our material suppliers, we
continue to actively manage this challenge and are well positioned
at the start of the new financial year. We expect construction
output in the first half to be similar to that achieved in H1 21
and overall, expect our build cost inflation to run at c. 5% for
FY22, with wage inflation likely to run ahead of materials cost
inflation as we progress through the year.
Cladding and build safety
Following the recent public letter to developers from the
Department for Levelling Up, Housing & Communities, we can
confirm that we are supportive of the Government's ambition to
derive a solution. We fully agree that the costs of remediation
should not be borne by leaseholders and we will work directly with
the Government as well as with the Home Builders Federation to
deliver a solution. We will update on any implications for the
Group as these suggestions evolve into clear proposals.
We continue to consider all relevant cases and are committed to
meeting any liability which we identify. In addition, we are
committed to offering appropriate support in circumstances where
building owners do not meet their obligations.
Vistry Housebuilding
Housebuilding delivered a significant step up in completions in
FY21 to 6,551 units (FY20: 4,652), including 1,287 (FY20: 820) from
JVs. Private units in the year totalled 4,891 (FY20: 3,668) with
1,660 (FY20: 984) affordable units.
Total Housebuilding average selling price for FY21 remained
stable at c. GBP304k (FY20: GBP303k) reflecting the increase in
affordable homes as a percentage of total completions. Private
average selling price increased to c. GBP355k (FY20: GBP343k) with
house price inflation in part offset by changes in product and
geographical mix. The affordable average selling price in FY21
increased to c. GBP159k (FY20: GBP152k).
Importantly, the business is making strong progress towards its
FY25 gross margin target of 25%, with FY21 gross margin(4) expected
to be in excess of 22% (FY20: 17.6%), as previously guided.
Housebuilding operated from an average of 143 active sites in
FY21 and expects this to be at a similar level in FY22.
Vistry Partnerships
Vistry Partnerships made excellent progress in the year with its
strategy of rapidly growing higher margin mixed tenure revenues,
with mixed tenure completions up by 41% to 2,088 (FY20: 1,479)
units.
The average selling price of mixed tenure units in the year was
GBP229k (FY20: GBP204k). Partnerships operated from an average of
33 active mixed tenure sites in FY21 and expects this to increase
to c. 40 for FY22.
Partnerships is firmly on track to deliver its FY22 operating
margin target of at least 10% with operating margin in FY21
increasing to over 9% (FY20: 6.7%).
Sustainability
The Group's purpose is to deliver sustainable homes and
communities across all sectors of the UK housing market and in 2021
we launched our sustainability strategy, outlining our three
priority areas: Our People, Our Operations, and Our Homes &
Communities.
In 2021, we laid the foundations to meet our long-term
sustainability targets in particular, through our commitment to
setting science-based targets and signing up to 'Business Ambition
for 1.5degc'. We developed our road map to deliver net zero carbon
homes and completed the first of 54 homes at our development at
Europa Way in Leamington Spa achieving net zero carbon on regulated
emissions(5) . In December we agreed a new Sustainability Linked
Revolving Credit Facility with the interest payable on the facility
being determined, in part, by our ability to meet three Sustainable
Performance Targets. In addition, FY22 will be the first year when
executive remuneration will be linked to meaningful and measurable
sustainability metrics.
Land
In the year, Housebuilding grew its land bank securing 7,641
(FY20: 6,281) plots across 38 (FY20: 31) developments. As a result,
the business has a strong deliverable pipeline including all of the
land required for forecast FY22 completions and 85% of the land
required for FY23 completions secured.
Partnerships is investing in its owned land bank to support
continued strong growth in mixed tenure completions and in the year
secured 4,131 (FY20: 2,371) plots on 23 (FY20: 11) sites for mixed
tenure development. It is also well positioned with all of the land
required for forecast FY22 mixed tenure completions and 75% of the
land required for FY23 mixed tenure completions secured.
Strategic land is a key component of the Group's land supply,
and as at 31 December 2021 the Group had a total of c. 40,000 (31
Dec 2020: 34,053) strategic plots. In the year, we are pleased to
have secured options over 7,721 (FY20: 2,856) strategic land plots
across 12 (FY20: 10) developments.
Balance sheet
The Group had a net cash position of c. GBP234m as at 31
December 2021 (31 December 2020: net cash of GBP38.0m). This
significant increase has been driven by the strong financial
performance and continued discipline in working capital management
at an individual business level.
The Group expects to carry an average month end net debt
position in FY22 of no greater than GBP100m (FY21: GBP120m) as we
build for FY22 completions and we expect net cash as at 31 December
2022 to be a similar level to 31 December 2021.
Outlook
The Group starts FY22 in a strong position and our sites have
returned to work efficiently following the break, with no
significant impact from Covid-related absence to date. Total
Housebuilding and Partnership mixed tenure forward sales as at 31
December are up 24% to GBP1.94bn (31 December 2020: GBP1.56bn),
with 54% of total forecast units for FY22 already secured.
Pursuing its strategy of controlled volume growth and maximising
returns, Housebuilding is in great shape to deliver further
improvement in profitability this year with a gross margin target
of 23% for FY22. The business has clear targets of 25% for both
gross margin and return on capital employed by FY25.
Vistry Partnerships is making excellent progress with this
strategy of rapidly growing higher margin mixed tenure revenues and
fully expects to deliver on its FY22 targets of at least GBP1bn
revenue, a 10% plus operating margin, and a return on capital
employed in excess of 40%. Medium term, the business sees a clear
trajectory to deliver c. GBP1.6bn revenues and an operating margin
in excess of 12%.
With balance sheet strength the Board is committed to
prioritising investment in the business to support the Group's
growth strategy, pursue a sustainable two times dividend cover
policy, and return any excess capital generated in the future to
shareholders via either a share buyback or special dividend.
Forward sales (GBPm) 31 December 31 December
2021 2020
-------------------------------- ------------ ------------
Housebuilding
* Private 554 533
* Private JVs (100%) 245 176
* Affordable 432 389
* Affordable JVs (100%) 118 119
Total Housebuilding 1,349 1,217
Partnerships
* Mixed tenure 309 145
* Mixed tenure JVs (100%) 282 200
Total Partnerships mixed
tenure 591 345
Total development 1,940 1,562
Total partner delivery 740 800
Total Group 2,680 2,362
-------------------------------- ------------ ------------
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
Earl Sibley, Chief Financial
Officer
Susie Bell, Head of Investor
Relations 01675 437160
Powerscourt
Justin Griffiths
Nick Dibden
Victoria Heslop 020 7250 1446
[1] Adjusted profit before tax is stated excluding exceptional
items and amortisation of acquired intangibles
[2] Includes all JVs at 100% level
[3] Adjusted basis to include the proportional contribution of
joint ventures
[4] Adjusted basis to include the proportional contribution of
joint ventures
[5] Regulated emissions are those associated with space heating,
hot water, lighting and ventilation
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