TIDMVTY
RNS Number : 8538L
Vistry Group PLC
18 May 2022
18 May 2022
Vistry Group PLC - Trading Update
Group expects to deliver 2022 profits at the top end of market
forecasts
Vistry Group PLC (the "Group") is providing an update on trading
in the period from 1 January 2022 to date, ahead of its Annual
General Meeting ("AGM") which is being held at 12:00pm today.
-- Continue to see strong demand across all areas of the
business with an average weekly private sales rate of 0.86 (2021:
0.75) for the year to date, an increase of 15% on what was a good
start to the prior year
-- On-going positive momentum on pricing across all areas, with
price increases continuing to more than offset build cost
inflation
-- Our sites are operating well with good visibility on material
supplies and levels of on-site labour
-- Continue to acquire high quality land opportunities to
deliver on our medium and longer term targets, with 4,416 (2021:
4,407) plots secured in the year to date
-- Very strong forward sales position with total Housebuilding
and Partnerships' mixed tenure forward sales up to GBP2,498m (14
May 2021: GBP1,938m) and 83% of total forecast units for 2022
secured
-- Given the positive trading in the year to date and in
particular the strong price increases, we expect margins in both
Housebuilding and Partnerships in 2022 to be ahead of our previous
2022 targets
-- Month-end average net debt for 2022 expected to be lower than previous target of c. GBP100m
-- Whilst we are mindful of the wider market uncertainties, we
remain positive on our outlook. Our expectation for profit in the
first half has moved forward, and for 2022 we expect adjusted
profit before tax to be at the top end of market forecasts(1)
Greg Fitzgerald, Chief Executive commented:
"Despite the macro uncertainties, Vistry's very strong start to
the year has continued. Our sales rate is at 0.86, up 15% on prior
year, with positive momentum on pricing and all our sites operating
well. Materials supply issues have eased and whilst we continue to
see build cost inflation in line with previous assumptions, this is
being more than offset by price increases.
"As a result, we are trading ahead of expectations and expect
our margins for both Housebuilding and Partnerships in 2022 to
exceed our previous targets.
"We have always believed strongly that the cost of remediation
of fire safety issues should not be borne by leaseholders. We were
therefore pleased to sign the Department for Levelling Up, Housing
and Communities Developer Pledge in April and continue to expect
that the implied further remediation costs will be in the range of
GBP35m to GBP50m, in addition to the Group's existing fire safety
provision of GBP25.2m.
"Ian Tyler will today step down as Chairman and I would like to
thank him for his significant support and contribution in turning
around Bovis Homes and through the successful acquisition and
integration of Linden Homes and Partnerships to create the Vistry
Group. I very much look forward to continuing to work with Ralph
Findlay in his new role as Chairman of the Board.
"Whilst we are mindful of the wider market uncertainties, we
remain positive on the outlook and expect the Group to deliver
profits at the top end of market expectations for 2022(1) ."
Strong demand
We have continued to see consistently strong demand across all
areas of the business in the year to date, with our private sales
rate per site per week increasing to 0.86 (2021: 0.75), up 15% on
prior year. Mortgage availability remains good, and we have seen no
significant impact from the recent Bank Rate rises. This strong
demand has been accompanied by price increases of 5% to 8% on our
private units in the year to date. We are carefully managing the
strong demand with our build programme, with our focus on
delivering improved margins.
The Group's forward sales position has further strengthened with
total Housebuilding and Partnerships' mixed tenure forward sales up
29% to GBP2,498m (14 May 2021: GBP1,938m), and 83% of total
forecast 2022 revenue secured. The partner delivery forward order
book is up 6% to GBP860m (14 May 2021: GBP808m) with 96% of
forecast 2022 revenue secured.
Operations
Delivering high quality new homes and excellent customer
satisfaction remain our key priority and we were very pleased to
have been awarded the maximum 5-star HBF customer satisfaction
rating in the most recent annual review for the third consecutive
year. We remain focused on improving our score for the HBF customer
satisfaction survey which is sent out nine months after completion,
a metric which is included in the Group's annual bonus criteria and
targets.
Our sites are operating well with good on-site labour and
improvements in the supply of materials, reflecting increased stock
levels for most products and the strong partnerships we have
developed across our supply chain. Higher than anticipated energy
costs within the supply chain are resulting in higher costs for
certain materials. Overall, we continue to expect to see build cost
inflation for 2022 in the region of 6%.
High quality land acquisition
We continue to secure high quality land opportunities to deliver
on our medium and longer term targets. In the year to date,
Housebuilding has secured 2,750 (2021: 3,230) plots across 13
(2021: 13) developments and now has 95% of the land required for
2023 completions secured. Partnerships continues to invest in its
owned land bank to support its rapid growth in mixed tenure
completions and in the year to date has secured 1,666 (2021: 1,177)
plots on 8 (2021:5) sites for mixed tenure developments. It is also
well positioned with 87% of the land required for 2023 mixed tenure
completions secured.
With our strong strategic land capability, we remain focused on
strategically sourced land and are targeting 30% of total
completions to be delivered from higher margin strategic land in
the medium term. In the year to date we have pulled through 1,852
strategic land plots across 5 sites into the owned land bank.
Cladding
Vistry Group has always strongly believed that the cost of
remediation of fire safety issues should not be borne by
leaseholders and has supported the Government's ambition to deliver
a lasting industry solution.
In April, we were pleased to sign the Department for Levelling
Up, Housing and Communities Developer Pledge which set out our
commitment to address life-critical fire-safety issues on all
buildings of 11 metres and above in England developed by the Group
in the 30 years prior to 5 April 2022. As part of the Pledge, the
Group agreed to not claim any funds from the Government's Building
Safety Fund and to reimburse any amounts already disbursed by the
Fund.
We continue to expect that the implied further remediation costs
will be in the range of GBP35m to GBP50m, in addition to the
Group's existing fire safety provision of GBP25.2m as at 31
December 2021. We have increased our dedicated resource to
effectively manage these remediation works and expect this to
result in an increase to Group administrative expenses of c.
GBP1.5m to GBP3.0m p.a.
Board updates
As previously announced, Ian Tyler will step down as Chairman of
the Company at today's Annual General Meeting after eight and a
half years in the role and will not seek re-election as a Director.
Ralph Findlay is to be appointed as Chairman of the Company with
effect from the conclusion of today's Annual General Meeting.
Ralph Findlay has served as Non-Executive Director of the
Company since April 2015 and until today, has been Chair of the
Audit Committee and Senior Independent Director. Ralph has
longstanding experience of FTSE businesses, having been the Chief
Executive Officer of Marston's PLC since 2001 until his retirement
in October 2021. He joined the board of C&C Group plc, the
Dublin based vertically integrated premium drinks company, in March
2022 and will take up the role of Chairman in July 2022. His
appointment as Chairman of Vistry follows a thorough and
comprehensive succession planning process and will enable an
effective transition of the leadership of the Board.
In line with UK Corporate Governance Code recommendations, Ralph
will today step down as Chair of the Audit Committee and retire as
a member of the Audit Committee and Remuneration Committee. We are
very pleased to announce that Ashley Steel who joined the Board in
June 2021 has been appointed Senior Independent Director.
The Board is pleased to announce that Rowan Baker has been
appointed a non-executive director of the Company with effect from
today. Rowan will become Chair of the Audit Committee and also be a
member of the Nomination Committee and the Remuneration Committee.
Rowan is a highly experienced Chief Financial Officer in
construction and development. She is currently the Group Chief
Financial Officer of Laing O'Rourke, and from 2017 to 2020, was the
Chief Financial Officer of McCarthy Stone. Her financial expertise
and sector experience will further strengthen the Board as the
Company delivers its growth strategy(2) .
Outlook
The strong start to the year has continued with our private
sales rate increasing by 15% to 0.86 (2021: 0.75) for the year to
date, accompanied by on-going positive momentum on pricing.
Our sites are operating well, and we are on track to deliver
construction output in the first half of the year at a similar
level to that achieved in H1 21. We have clear visibility on
material supplies and good levels of on-site labour, and whilst we
continue to see build cost inflation, this is being more than
offset by price increases.
We have further strengthened our forward sales position with
total Housebuilding and Partnerships' mixed tenure forward sales of
GBP2,498m as at 13 May, and 83% of units for 2022 now secured. The
partner delivery forward order book has also increased and totals
GBP860m , with 96% of 2022 revenues secured.
Given the positive trading in the year to date and in particular
the strong price increases, we expect margins in both Housebuilding
and Partnerships in 2022 to be ahead of our previous 2022
targets.
Whilst we are mindful of the wider market uncertainties, we
remain positive on our outlook. Our expectation for profit in the
first half has moved forward, and for 2022 we expect adjusted
profit before tax to be at the top end of market forecasts(1) .
Greg Fitzgerald, Graham Prothero and Earl Sibley will host a
call for analysts today at 8:30am.
To join the call please dial: UK-Wide: +44 (0) 33 0551 0200, UK
Toll Free: 0808 109 0700, Quote VISTRY when prompted by the
operator
Forward sales (GBPm) 14 May 2021 25 Feb 2022 13 May 2022
Housebuilding
- Private 734 720 904
- Private JVs (100%) 229 267 301
- Affordable 467 424 446
- Affordable JVs (100%) 117 123 125
Total Housebuilding 1,547 1,534 1,776
Partnerships
- Mixed tenure 167 335 380
- Mixed tenure JVs (100%) 224 286 342
Total mixed tenure 391 621 722
Total development 1,938 2,156 2,498
Total partner delivery 808 860 860
Total Group 2,746 3,016 3,358
This announcement includes inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 and is being
released on behalf of Vistry Group PLC by Earl Sibley, Chief
Financial Officer.
Certain statements in this press release are forward looking
statements. Forward looking statements involve evaluating a number
of risks, uncertainties or assumptions that could cause actual
results to differ materially from those expressed or implied by
those statements. Forward looking statements regarding past trends,
results or activities should not be taken as representation that
such trends, results, or activities will continue in the future.
Undue reliance should not be placed on forward looking
statements.
For further information please contact:
Vistry Group PLC
Earl Sibley, Chief Financial Officer 01675 437160
Susie Bell, Head of Investor Relations
Powerscourt
Justin Griffiths, Nick Dibden, Victoria 020 7250 1446
Heslop vistry@powerscourt-group.com
[1] Bloomberg (17/05/2022) - Adjusted profit before tax: High -
GBP415.0m, Mean - GBP396.3m
[2] There is no other information to be disclosed pursuant to LR
9.6.13R in respect of Rowan Baker. As at the date of this
announcement, Rowan has no beneficial interests in the ordinary
shares of the Company.
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END
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