TIDMVTY
RNS Number : 9339L
Vistry Group PLC
11 September 2023
11 September 2023
Vistry Group PLC - Half year results and strategy update
Robust financial performance, in line with expectations
Revised strategy to fully focus on high return Partnerships
model
Vistry Group PLC (the "Group") is issuing its results for the
six-month period from 1 January 2023 to 30 June 2023 (the "period")
and providing an update on Group strategy.
Performance and outlook
-- Robust financial performance in H1, in line with
expectations, despite challenging market conditions
-- Performance underlines strength of Vistry's unique business
model and Partnerships market resilience
-- The Board re-iterates guidance of in excess of GBP450m adjusted profit before tax for FY23
Strategy update
-- Vistry has firmly established itself as the leading provider
of affordable mixed tenure housing
-- Revised strategy to focus operations fully on high return Partnerships
-- Addressing the country's chronic shortage of affordable mixed
tenure housing is at the core of Vistry being a responsible
developer
-- The Board expects a significant release of capital as assets
from the Housebuilding division are redeployed into Partnerships
and the Group adopts a model of pre-selling c. 65% of plots on
future schemes
-- In the medium term, the Group will be targeting a return on
capital employed of 40%, revenue growth of 5 to 8 per cent. p.a.,
operating profit of GBP800m with a 12%+ operating margin
Capital allocation
-- The Board intends to pursue a two times adjusted earnings
ordinary distribution cover in respect of a full financial year,
with such distributions made through either dividends or share
buybacks
-- Targeting returning GBP1bn to shareholders over next three
years from ordinary and special distributions, alongside the
elimination of net debt
-- Intention to launch an initial share buyback programme of up to GBP55m in November 2023
Greg Fitzgerald, Chief Executive commented:
"The integration of Countryside has progressed well in the first
half, firmly establishing Vistry as the leading provider of
affordable mixed tenure housing in the UK. The Group delivered a
robust half year performance despite the challenging macro-economic
conditions with Partnerships continuing to see good demand,
demonstrating its market resilience.
"The scale of the social need for affordable mixed tenure
housing across the country continues to increase and it is clear
that Vistry is uniquely positioned as the leader in partnerships
housing.
"In this context and following our annual review of the Group's
strategy, the Board has concluded that focusing the Group's
operations fully on partnerships by merging our Housebuilding
operations with our Partnerships business, best enables sustained
growth in housing output, provides greater benefits to our
partners, while maximising value and long term returns for
shareholders with the Group targeting a 40% ROCE and the
distribution of GBP1bn to shareholder over the next three
years.
"Delivering on the acute social need for housing across the
country and increasing the availability of affordable, sustainable
homes is at the core of the Group's social purpose and vision, and
I look forward to delivering upon this exciting and unique
opportunity for Vistry."
Half year summary financials
GBPm unless otherwise
stated H1 23 H1 22 Change
------------------------------- ------------ ------------ ---------
Adjusted basis (1)
Total completions 7,143 5,409 +32.1%
Revenue GBP1,777.1m GBP1,352.5m +31.4%
Operating profit GBP206.7m GBP198.2m +4.3%
Operating profit margin 11.6% 14.7% -3.1ppts
Profit before tax GBP174.0m GBP189.9m -8.4%
Basic earnings per share 38.3p 67.4p -43.2%
Return on capital employed(2) 21.9% 24.5% -2.6ppts
(1) Completions include 100% of JV. All other financials are
shown on an adjusted basis to include the proportional contribution
of the joint ventures and exclude exceptional expenses of GBP35.6m
(H1 22: GBP71.4m), amortisation of acquired intangibles of GBP23.1m
(H1 22: GBP7.1m) and tax on joint ventures of GBP1.1m (H1 22:
nil)
(2) Return on capital employed is calculated as 12 month rolling
adjusted operating profit divided by average capital employed for
the same 12 month period. Average capital employed is calculated as
opening plus closing total equity less goodwill, intangible assets,
net cash/debt, retirement benefit asset/liabilities and fire safety
provision, divided by two. H1 22 restated to exclude fire safety
provision.
GBPm unless otherwise H1 23 H1 22 Change
stated
-------------------------- ------------ ------------ -------
Statutory basis
Revenue GBP1,575.3m GBP1,187.2m +32.7%
Operating profit GBP121.2m GBP89.3m +35.7%
Profit before tax GBP114.2m GBP111.3m +2.6%
Basic earnings per share 24.1p 39.1p -38.4%
Net (debt)/cash (GBP328.7m) GBP115.0m >-100%
Half year performance - in-line with expectations
-- Partnerships saw good levels of demand in the first half,
demonstrating its market resilience, with adjusted revenues
increasing by 7.1% to GBP953.6m compared to pro forma(3) H1 22
(GBP890.4m) and adjusted operating margin increasing to 11.5% (H1
22: 10.2%)
-- Housebuilding operated well against more challenging market
conditions, delivering adjusted revenues of GBP823.5m, down 28.3%
on pro forma H1 22 (GBP1,149.2m) and gross margin of 19.8% (H1 22:
22.4%)
-- The Group's average weekly sales rate for the period was 0.86
(H1 22: 0.84), with Housebuilding leveraging the Group's
relationships with Registered Providers ("RPs") and Local
Authorities to increase its delivery and support the sales rate
-- The enlarged Group made strong progress on renegotiating its
supply chain arrangements and expects to fully offset inflationary
build cost increases in FY 23 post synergy benefits
-- The integration of Countryside is expected to deliver synergy
benefits of at least GBP35m in FY 23, ahead of targeted GBP25m,
with the full run rate of GBP60m to be delivered by the end of FY
24
-- Net debt of GBP328.7m as at 30 June 2023, with net debt
expected to reduce to c. GBP100m as at 31 December 2023
(3) Pro forma represents the combination of Vistry and
Countryside for the 6 month period to 30 June 2022 and reflects
Countryside legacy assets and site transfers to Housebuilding from
1 January 2022, as though the Combination completed on 1 January
2022. The numbers provided are unaudited
Strategy update - Group to focus operations fully on high return
Partnerships model
-- There is an acute shortage of housing in the UK with the
greatest need being for affordable mixed tenure homes
-- Following the successful combination with Countryside, Vistry
has firmly established itself as the leading provider of affordable
mixed tenure housing
-- The Group intends to focus its operations on its high return,
capital light, resilient partnerships model by fully merging its
Housebuilding operations with its Partnerships business before the
end of FY23
-- Addressing the country's acute need for affordable mixed
tenure housing is at the core of Vistry being a responsible
developer
-- In the medium term, the Group will be targeting a return on
capital employed of 40%, revenue growth of 5 to 8 per cent. p.a.,
operating profit of GBP800m with a 12%+ operating margin
-- The benefits arising from the acquisition of Countryside,
including synergies, will be maintained and the more simplified
operating structure is expected to give rise to a further c. GBP25m
of cost savings
Capital allocation - targeting GBP1bn of total shareholder
distributions over the next three years
-- The revised strategy and sole focus on partnerships is
expected to result in a significant release of capital as assets
from the Housebuilding division are redeployed into Partnerships
and the Group adopts a model of pre-selling an average of c. 65% of
plots across the business
-- Maintaining a strong balance sheet with the return to a year
end net cash position in FY24 and the elimination of average net
debt in the medium term is a key priority
-- The Group will invest in the Partnership land bank to deliver
growth in line with its strategy and medium-term targets
-- The Board intends to pursue a two times adjusted earnings
ordinary distribution cover in respect of a full financial year,
with such distributions made through either dividends or share
buybacks (the "ordinary distribution")
-- Recognising that the current share price significantly
undervalues the Group, it is intended that the ordinary
distribution in respect of the 2023 financial year will be made
through share buybacks in lieu of any dividend, and the Group is
today announcing its intention to launch an initial ordinary share
buyback programme of up to GBP55m which is expected to commence in
November 2023 and be completed ahead of the announcement of the
Group's Full Year results in March 2024
-- Any surplus capital following investment in the business to
support the Partnerships growth strategy and the ordinary
distribution, would be expected to be returned to shareholders
through either a further share buyback or special dividend, with
the method of capital return to be determined by the Board
considering all relevant factors at the time
-- The Group is targeting GBP1bn of shareholder distributions
over the next three years including the ordinary distribution
alongside the elimination of net debt
Current trading and outlook
-- We continue to see good demand for mixed tenure affordable
housing from Local Authorities, RPs and PRS providers
-- Open market private sales have slowed further since June, in
part reflecting the traditional quieter summer period but also
further increases in mortgage costs
-- Strong demand from first time buyers for shared ownership
delivered with our partner RP and using direct grant funding from
Homes England
-- Continue to expect to fully offset cost increases for the
full year after the benefit of synergies, and reflecting the
decline in overall industry output, see opportunity to work with
our supply chain partners, to deliver an overall reduction in build
costs going forward
-- Partnerships has a strong forward order book totalling
GBP3.0bn with 90% of forecasts mixed tenure units and all of
partner delivery revenues for FY23 secured
-- Housebuilding's forward order book totals GBP1.3bn, with 87% of forecast FY23 units secured
-- Housebuilding and Partnerships continue to secure
transactions with RPs and Local Authorities to deliver on FY23
forecasts and mitigate the impact of the slowdown in the open
market, utilising Homes England funding award to enable these
transactions and increase the supply of affordable mixed tenure
homes
-- The Group remains selective in the land market, taking the
opportunity to secure attractive development opportunities that
support the targets for the Partnerships growth strategy
-- The Board re-iterates guidance of in excess of GBP450m adjusted profit before tax for FY23
Forward sales
(GBPm) 03 September 30 June 2023
2023
------------------------------------------- ------------- -------------
Housebuilding
* Private 670 564
* Private - Vistry share of JVs 107 105
* Affordable 444 472
* Affordable - Vistry share of JVs 74 77
Total Housebuilding 1,295 1,218
Partnerships
* Mixed tenure 1,482 1,462
* Mixed tenure - Vistry share of JVs 401 422
Total mixed tenure 1,883 1,884
Total partner delivery 1,106 1,088
Total Partnerships 2,989 2,972
Total Group 4,284 4,190
------------------------------------------- ------------- -------------
There will be an investor and analyst presentation at 8:30 a.m.
today, 11 September 2023 at Numis, 45 Gresham St, London EC2V 7BF.
There will also be a live webcast of this event available on our
corporate website at www.vistrygroup.co.uk or via the following
link https://brrmedia.news/VTY_HY23
Certain statements in this press release are, or may be deemed
to be, forward looking statements. Forward looking statements
involve evaluating a number of risks, uncertainties or assumptions,
many of which are beyond the Group's control, 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. Forward looking statements speak only as at the date of
this document and the Group and its directors and officers
expressly disclaim any obligation or undertaking to release any
update of, or revisions to, any forward looking statement
herein.
For further information please contact:
Vistry Group PLC 07469 287335
Tim Lawlor, Chief Financial Officer 020 3727 1340
Susie Bell, Group Investor Relations
Director
FTI Consulting
Richard Mountain / Susanne Yule
Chief Executive's Review
The Group has established itself as one of the country's
foremost homebuilders following the transformative combination with
Countryside Partnerships PLC in November 2022. The businesses have
come together extremely well and the Group's strong management team
has demonstrated the quality of its leadership through this period
of integration. Combined with the more challenging market
conditions it has been an intense period of activity for the Group
which has been reflected in the hard work and commitment
demonstrated by our people in driving Vistry forward and delivering
success.
Countryside Partnerships, our enlarged Partnerships business, is
a leading provider of affordable mixed tenure housing. Working in
close partnership with Local Authorities, Registered Providers and
the private rented sector ("PRS"), the business has seen good
levels of demand in the period and is demonstrating its market
resilience. This capital light business is making good progress
with its strategy of delivering strong revenue growth and driving a
minimum return on capital employed of 40%.
Our Housebuilding business has faced more challenging market
conditions with the higher mortgage rate environment and broader
macro-economic challenges, particularly impacting first time
buyers. The business has focused on operational excellence, tight
cost control and the delivery of the highest quality homes. It has
leveraged the Group's strong relationships with RPs, Local
Authorities and PRS providers and pursued a number of multi-unit
transactions, supporting the sales rate and private sales prices,
and the transition to the Group's new strategy.
Reflecting its increased scale, the enlarged Group has made
excellent progress on renegotiating its arrangements with supply
chain partners in the first half and continues to expect to offset
inflationary build cost increases in the full year after the
benefit of synergies.
Strategy update
I am pleased to be announcing our updated strategy. The Group's
focus and vision is to increase the delivery of mixed tenure,
affordable homes across the country, fulfilling unmet demand and
helping to address the acute need for social housing. The Group's
operations will concentrate solely on partnerships by merging our
Housebuilding operations with our Partnerships business, enabling
sustained growth in housing output, providing greater benefits to
our partners, and will deliver maximum value and long term returns
for shareholders with the Group targeting a 40% ROCE and the
distribution of GBP1bn to shareholder over the next three
years.
Market opportunity
The market fundamentals of the UK housing sector support the
creation of a national, large-scale partnerships business to
deliver sustainable, profitable growth. Increasing the delivery of
quality affordable homes and home ownership is a key priority for
the Government, Homes England, Local Authorities and RPs. The need
for affordable housing in the UK remains acute and there is
widespread acknowledgement of an increasing demand-supply deficit
for quality new homes across all tenures.
In the ten months since completing the acquisition of
Countryside, the increased scope of our Partnerships business has
made the considerable scale of this affordable housing need even
more apparent. It is equally apparent that the Group is uniquely
positioned as the leading provider of partnerships housing, to
significantly increase the delivery of affordable mixed tenure
homes. Increasing the availability of affordable, sustainable homes
is at the core of the Group's social purpose and vision and the
Group is committed to rapidly growing its mixed tenure output,
confident there is market demand to support this. The enlarged
Partnerships business, led by a highly experienced management team,
has an excellent track record of delivery and resilience, and has
strong relationships across the affordable housing sector.
The Group is to merge its Housebuilding operations with its
Partnerships business, with a simplified operating structure under
a single business. Vistry's Housebuilding business has been
successful in increasing its delivery to RPs and PRS providers over
the past year, utilising the relationships and experience within
the Partnerships business. In the year to date, Housebuilding has
exchanged on multi-unit transactions (in excess of s106
commitments) in respect of 23 developments and 1,172 homes. Over
90% of the transactions have been with Registered Providers.
The transition to a fully partnerships-focused model will:
-- Establish Vistry as a clear and differentiated leader in the listed UK housebuilding sector
-- Allow the Group to maximise its exposure to the high demand
and more defensive mixed tenure offering whilst better addressing
the significant long-term demand for affordable mixed tenure
housing
-- Realise additional cost-savings through a simplified corporate structure
-- Maximise return on capital from the existing land bank
-- Release additional capital from the balance sheet to maximise
flexibility for capital allocation
Developing the Housebuilding landbank under the Partnerships
model
Our strategy is to transition the Housebuilding land bank
totalling 30,200 owned and controlled plots to our Partnerships
model of a minimum 50% pre-sold, trending towards an average of 65%
pre-sold. Of these plots, 8,000 are already designated affordable
by planning consent, 1,000 have been pre-sold to date through
existing multi-unit transactions with our key partners, and we are
targeting the further pre-sale of c. 8,500 plots over the next two
to three years. We see a number of pre-sale opportunities to
transition the Housebuilding land bank:
-- Multi-unit deals with our key partners - a number completed
in year to date and in the pipeline
-- A small number of broader and longer-term scale partnerships with our key RP partners
-- The potential to capitalise on our own RP, Linden First, to
deliver scale with a provider of capital
-- Opportunities with Homes England and Local Authorities across
the country and the ability to replicate innovative structures for
new Local Authority partners
-- Existing and new PRS providers looking at frameworks for long term scale
-- Establishing closer relationships with SME housebuilding
partners to support delivering larger sites
-- Some opportunities with competitors for land swaps which are
better aligned to our Partnerships model and some selective, modest
scale land disposals
Organisational changes
The Group will continue to be overseen by a highly experienced
managed team. The Executive Leadership Team is aligned to the new
strategy and a less complex business structure, and the Group's
organisational structure is to be simplified and delayered. Subject
to employee consultation, the Group expects to reduce the total
number of its regional business units from 32 to 27 through the
removal of overlapping geographies, while retaining capacity within
the business units for continued growth. These 27 business units
will sit within 6 newly defined operating regions, each with a
Divisional Chair. The Group expects to deliver c. GBP25m of cost
savings from the integration of the two businesses, in addition to
the expected GBP60m of annualised synergies driven by the Group's
increased scale through the acquisition of Countryside. The Group
will retain all three of its leading brands, Bovis Homes, Linden
Homes and Countryside Homes for open market sales whilst continuing
to utilise Countryside Partnerships with its partners. The Group's
leading timber frame capability, Vistry Works will help to underpin
the growth and sustainability strategy.
Group medium term targets
We expect this strategy to create a business capable of
delivering a 40% return on capital employed, 5 to 8 per cent.
revenue growth p.a., GBP800m of operating profit and 12%+ operating
margin in the medium term. All new developments across the Group
will require a minimum of 50% units to be pre-sold, with the
expected average pre-sold across the portfolio expected to be c.
65%.
The new Partnerships model is expected to deliver significant
cash returns to shareholders in addition to our ordinary
distribution policy of distributing 50% of annual adjusted net
earnings, and in total we are targeting GBP1bn of shareholder
distributions over the next three years including the ordinary
distribution, with the method of distribution to be determined by
the Board considering all relevant factors at the time. Maintaining
a strong balance sheet is a key priority and we are targeting a
return to a year end net cash position in FY24, with average net
debt eliminated in the medium term. As such, the Group is expected
to benefit from reduced interest expenses from FY24.
First half review
The Group's average weekly sales rate for the period was 0.86
(H1 22: 0.84) and excluding multi-unit transactions in
Housebuilding was 0.67 (H1 22: 0.82).
The Group achieved adjusted revenues of GBP1,777.1m in the first
half, 12.9% down on proforma H1 22 (GBP2,039.6m). Group reported
revenues totalled GBP1,575.3m, 32.7% higher than last year (H1 22:
GBP1,187.2m), driven by a 39.9% increase in legal unit completions
compared to the prior year. Partnerships delivered a 7.1% increase
in H1 adjusted revenues to GBP953.6m on pro forma H1 22
(GBP890.4m), whilst Housebuilding adjusted revenues decreased by
28.3% to GBP823.5m on pro forma H1 22 (GBP1,149.2m).
Overall, the Group delivered adjusted operating profit of
GBP206.7m (H1 22: GBP198.2m) with an adjusted operating margin of
11.6% (H1 22: 14.7%). Group adjusted profit before tax in H1 23 was
GBP174.0m (H1 22: GBP189.9m) in line with management's
expectations. In the period the Group recognised an exceptional
expense of GBP35.6m (H1 22: GBP71.4m) primarily related to
integration and further restructuring costs and an incremental fire
safety provision recognised in relation to second staircase
regulation. On a reported basis, the Group delivered profit before
tax of GBP114.2m (H1 22: GBP111.3m).
Partnerships
Countryside Partnerships had a good first half, delivering
revenue growth, margin improvement and a return of capital of 34.8%
for the six-month period to 30 June 2023. The integration of
Countryside has moved at pace with our focus on building the best
from each of our businesses and is now substantially complete. All
of our Partnerships operations have rebranded under the Countryside
Partnerships name with the business utilising the Group's three
leading brands and housing ranges, Countryside, Bovis Homes and
Linden Homes, to best meet the requirements and demographics on
each development, and maximise the social value delivered. Our
partners welcomed and supported the combination with Countryside,
and during the period the business consolidated and strengthened
its relationships with Local Authorities, RPs and PRS
providers.
Partnerships delivered 3,203 (H1 22: 1,106) mixed tenure
completions in the first half, up 5.7% on pro forma H1 22 (3,031)
and operated from an average of 83 sites in the period (H1 22: 29).
Adjusted operating margin improved by 130bps in H1 to 11.5% (H1 22:
10.2%).
Partnerships continued to invest in its land bank to support the
ambitious growth strategy of mixed tenure revenues. In the period,
the business secured 3,848 (H1 22: 2,166) plots on 11 sites (H1 22:
12) for mixed tenure development.
Housebuilding
Housebuilding operated well in more challenging market
conditions with the business focused on delivering high quality
homes, tight cost control and cashflow management.
Customer interest in our new homes remained robust. The step-up
in mortgage costs and increased macroeconomic uncertainty however
led to a drop off in completions to the open market. In particular,
we saw a significant decline in completions to first time buyers
whose ability to purchase have been most affected by the rate
increases, combined with the end of the Government's Help to Buy
programme in Q4 2022. Open market pricing remained relatively
stable in the first half supported by an increased level of
incentives of c. 3% to 5%.
Housebuilding leveraged the Group's strong relationships and
track record of delivery with RPs, Local Authorities and PRS
providers to maximise the opportunity for multi-unit transactions
in the period. Prices on multi-unit transactions were typically in
the range of 5% to 15% below Housebuilding's forecast open market
price, with the size of the discount largely influenced by the cash
receipts profile of the transaction. This strategy helped
Housebuilding to hold firm on open market private sales prices,
whilst the increased revenue visibility from the multi-unit
transactions helped manage preliminary costs and deliver
subcontract savings.
Housebuilding delivered 2,847 (H1 22: 3,219) completions in the
period, down 22.4% on pro forma H1 22 (3,667). The business
operated from an average of 137 active sites in the first half (H1
22: 143).
Housebuilding adjusted gross margin declined to 19.8% (H1 22:
22.4%) reflecting the increased levels of multi-unit sales,
compounded by the sell through from the lower margin of
Countryside's Legacy Operations which transferred to Housebuilding
at the start of the period.
Housebuilding maintained a highly selective approach to land
acquisition in the first half securing 2,713 (H1 22: 3,360) plots
across 12 (H1 22: 16) sites.
Group
The integration of Countryside into the enlarged Group made
excellent progress in the first half and has been substantially
completed. With the organisational structure of Countryside
Partnerships in place from 1 January, our focus has been on
delivering a timely integration with minimal operational
disruption. We continue to make progress on the unification of our
systems with the final phases of this on track to be completed by
the end of the year. We expect to deliver at least GBP35m of
synergies from the Combination in FY 23, an increase from the
previous target of GBP25m, with the full run rate of GBP60m
unchanged and to be achieved by the end of FY 24.
The Group was pleased to have secured a further GBP67m of grant
funding from Homes England under its current Affordable Homes
Programme running to 2026, bringing the total Strategic
Partnerships affordable housing grants funding to GBP150m. This
will enable Vistry to deliver c. 2,400 affordable homes in
partnership with RPs and Local Authorities across England.
This grant funding was instrumental to our partnership with Sage
Homes where, through Sage's Home Stepper shared ownership model, we
will deliver an initial portfolio of around 800 shared ownership
homes nationally with a market value of over GBP250m. The scheme
has had an encouraging start since launching in June, with strong
customer interest and more than 170 reservations to date.
Our sites are operating well with good labour availability. The
enlarged Group is benefiting from its revised arrangements with its
supply chain partners. The greater level of visibility on forward
sales, build programmes and revenues within Partnerships is also
delivering a competitive advantage, in particular with
subcontractors. In the first half, the Group offset increases in
build costs of c. 5% with the benefit of synergies delivered from
the Combination. We are targeting to fully offset cost increases
for the full year, and reflecting the decline in overall industry
output, see opportunity to work with our supply chain partners, to
deliver an overall reduction in build costs going forward.
This year the Group celebrated 40 NHBC Pride in the Job Quality
Awards with a significant step up in the number of awards achieved
by the Housebuilding business. Congratulations to all winners and
thank you for your hard work and dedication. This fantastic
achievement highlights the Group's ongoing commitment to delivering
the highest quality new homes for our customers and clients. Our
NHBC reportable items in the year to date remain below industry
benchmark at 0.20 (H1 22: 0.20).
The planning environment remains challenging and continues to
result in longer timescales to achieve an implementable planning
consent than we saw a few years ago, driven by additional
regulations, as well as changes to planning policy. Whilst we may
anticipate the longer timescales and factor this into our
forecasting and land buying processes, the added complications lead
to additional costs and delays.
We welcome the Government amendments to the Levelling Up and
Regeneration Bill which seek to address the nutrient neutrality
rules and allow blocked development to come forward. This will
allow us to bring forward stalled development. We will work with
the Home Builders Federation to consider and respond to Governments
suggestions for a voluntary scheme for larger developments to
contribute to the mitigation schemes.
Vistry Works
The Group is pleased to have re-opened the newly branded Vistry
Works East Midlands timber frame manufacturing plant earlier this
month, following the completion of a strategic review of
Countryside's timber frame manufacturing operations after
completing the Combination. Combined with Vistry's existing two
factories in Warrington and Leicester, the Group has the capacity
to deliver 5,000 new timber frame homes in FY24, increasing to c.
8,000 units for 2025 and beyond.
Significantly increasing the use of timber frame construction is
a key pillar of our sustainability strategy discussed below. There
is a clear environmental benefit to using timber frame over a
traditional brick and block build construction method, with the
embodied carbon associated with the timber frame construction of a
typical low-rise house over a 60-year life shown to be 30% lower
than that from a traditionally constructed equivalent house.
The factories have commenced the production of standard product
across all three brands which will deliver greater manufacturing
efficiencies and drive build efficiencies across the business
units. The product line predominantly delivers an open panel
solution, with the ability to deliver both closed panel and
intermediary panel solutions. More recently, the capabilities have
been expanded to include roof trusses and floor joists.
Sustainability
During the first half and as part of the integration we have
focused on updating our Group sustainability strategy. This has
included an extensive double materiality assessment which has
looked at both dimensions of impact and financial value,
recognising that Vistry can both impact society and the
environment, and be impacted by sustainability topics. As part of
the assessment, we have received c. 300 stakeholder survey
responses, and completed numerous internal and external interviews.
Initial findings reflect a time of housing and climate crisis and
we acknowledge our responsibility to do more to help and reinforce
the unique position of Vistry within the industry and how
sustainability is core to our purpose. This includes the scale at
which we can deliver affordable homes and the associated social
value return on investment, our industry leading position in
delivering homes with energy and carbon performance beyond building
regulations, as well as the potential of our timber frame factories
to significantly reduce embodied carbon and support our net zero
carbon pathway.
To support the effective implementation of our sustainability
strategy and performance against targets across the Group, we have
established a sustainability committee. The committee is chaired by
our Group COO and attended by our Group CEO and a Non-executive
Director.
Our operations
In the half, we recalculated our greenhouse gas emissions
baseline to account for being an enlarged group and reset our
near-term (2030) reduction targets and a net zero carbon target
(2040), which have been submitted to the SBTi for approval. Our
targets are:
-- 42% reduction in absolute Scope 1 and 2 GHG emissions by 2030 from a 2022 base year
-- 51.6% reduction in Scope 3 GHG emissions per m2 of completed
housing by 2030 from a 2022 base year
-- Achieving Net Zero by 2040
We continue to build above and beyond building regulations and
learn lessons through post occupancy evaluations. For example, at a
scheme in Tolgus in the Southwest we have completed show homes and
we continue to build 185 "zero carbon ready" homes. We are about to
hand over the last of 54 AECB (Passivhaus lite) homes in North
Whiteley, near Southampton, to the local council. At a development
in Kenilworth, we are well on our way with building 310 net zero
carbon (regulated energy) homes and there are many more examples.
In addition, low carbon heating systems such as air source heat
pumps are being utilised across selected developments right across
the Group.
Our homes and communities
Social value is a priority for Vistry and an inherent part of
our purpose to deliver sustainable homes and communities across all
sectors of the UK housing market. As a large developer of
affordable homes in the UK we deliver significant social value
return on investment through providing safe, warm and efficient
homes at scale, for our partners and customers. By doing this we
embody UN Sustainable Development Goal 17, Partnerships for the
Goals.
We measure social value at a project level and to date have
quantified the social value return on investment on 55 projects,
demonstrating a social and local economic benefit from these
projects of >GBP133m. This figure considers the economic (e.g.
job creation and increased economic activity), social (e.g.
improved health and well-being, improved social cohesion and
reduced crime) and environmental benefits (such as reduced
pollution and enhanced biodiversity) of our work within
communities. We intend to begin quantifying social value on all
projects during 2024 as part of our revised strategy, following the
output of our revised materiality assessment. Creating high quality
homes and providing the best experience for our customers through
excellent service are at the heart of what we do. This is evident
through our awards, in particular our consecutive 5-Star rating
from the Home Builders Federation (HBF), home building industry's
Customer Satisfaction Survey.
In the first half we rolled out our customer relationship
management platform and customer portal, 'Keys', across the
Countryside business. This is nearing completion with training for
all employees new to the system happening this month. We recently
launched the Group's vulnerable customer policy to ensure that
customers in vulnerable circumstances are treated not only fairly,
but with empathy and sensitivity to their circumstances.
Our People
Our people are key to the Group's success and at the centre of
the Group's people strategy is to 'Attract, Develop, Retain' the
best people. The successful integration of the enlarged Group has
been our key priority in the first half with a strong focus on
keeping our people well informed and effectively utilising employee
feedback.
In January 2023 we were delighted to have achieved certification
as a 'Top Employer' with the Top Employers Institute which
recognises our people strategy and workplace environment, with
Vistry being the only accredited homebuilder in the UK. We have
also been recognised for supporting the wellbeing and mental health
of our people with a WM Top Employer Award for Best in Mental
Health.
We continue to strengthen our partnerships with third party
organisations including Women into Construction and the Armed
Forces to diversify talent pools. We are encouraged to have seen a
significant increase in the diversity of job applicants to the
Group, in particular increased applications from people from
different ethnic backgrounds, females and those who have or are
currently in the Armed Forces.
The Leadership Development Programme has been relaunched across
the enlarged Group and c. 320 employees have completed the
programme in the year to date. To support development of our female
succession pipeline we have piloted an external Women in Leadership
Programme with further developments planned in the next twelve
months. The new Vistry Graduate and Trainee schemes have been
launched across the enlarged group with the first intake taking
place in September 2023.
Our on-site skills academies have been designed to combat the
nationwide skills shortage affecting the construction industry. The
academies are set up on site to deliver and provide entry routes to
apprenticeships, employment, training and mentoring to local
community members as well as engaging with job centres and schools.
In the year to date we have opened four new on-site skills
academies and have 196 learners signed up to the programme with a
target of 275 for the full year.
Health and safety is a top priority and, following the
acquisition of Countryside, we reviewed and updated our ISO
compliant SHE Management system to capture best practice from our
two current systems. There is a clear focus on compliance with the
new Building Safety Act 2022 and on leading key performance
indictors including, safety observations and near miss reporting.
This has had a positive impact and reduced the Group's accident
incident rate below the HSE industry benchmark.
Fire safety and requirement for second staircases
Vistry Group is committed to playing its part in delivering a
lasting industry solution to fire safety and on 13 March 2023
signed the Department for Levelling Up, Housing and Communities'
Developer Remediation Contract.
The Group's fire safety provision as at 30 June 2023 totalled
GBP311.8m and we remain confident this will cover the cost of fire
safety works in accordance with the Group's obligations. We
continue to make good progress with the remediation works and, of
the 317 buildings identified, work has been completed on 75, works
are ongoing on 41 sites and we are engaged in the remediation
process with a further 201 buildings. This remediation work is
managed by our dedicated team which was further strengthened during
the period.
The UK Government has confirmed its commitment to mandating a
requirement for second staircases in high-rise residential schemes,
lowering the proposed threshold from 30 metres to 18 metres,
following a period of consultation. A non-underlying charge of
GBP18.4m has been taken in the first half in respect of the second
staircase requirement, comprising a GBP6.1m inventory write-down
and an GBP12.3m provision for additional costs to be incurred on
sites we are committed to.
In addition, the Group has been contributing approximately 4% of
profits through the Residential Property Developer Tax ("RPDT")
since its introduction on 1 April 2022, with a total of c. GBP16m
paid to date. RPDT is intended to raise at least GBP2bn from the
industry over a ten-year period.
Balance sheet
The Group had a net debt position of GBP328.7m as at 30 June
2023 (31 December 2022: GBP118.2m net cash). The increase in debt
reflects the working capital requirements of the enlarged group,
investment for growth in the Partnerships business, and cash spend
on integration and fire safety. Average month end net debt during
the half year period was GBP360.1m.
Land creditors increased to GBP694.8m at 30 June 2023 (31
December 2022: GBP667.4m). This reflects the acquisition of
GBP246.0m in land creditors on the combination with Countryside and
the investment in land in the period where we have secured deferred
payment terms where possible. Land creditor as a percentage of the
owned land bank has fallen from 36% to 34% in the period.
Capital allocation and intention to launch share buyback
programme
The Group has undertaken an extensive consultation with its
shareholders on capital allocation over the past few months.
Following a review of all shareholder feedback and the options
available to the Group, as well as the appropriateness of the
Group's capital allocation policy in the context of the Combined
Group, the Board has formulated an updated capital allocation
policy.
The revised strategy and sole focus on partnerships is expected
to result in a significant release of capital as assets from the
Housebuilding division are redeployed into Partnerships and the
Group adopts a model of pre-selling an average of c. 65% of plots
across the business
Maintaining a strong balance sheet with the return to a year end
net cash position in FY24 and the elimination of average net debt
in the medium term is a key priority. The Board believes that
investing in Partnerships which is targeting sector leading ROCE of
at least 40%, is the most attractive use of capital.
The Group recognises the importance of capital distribution to
shareholders, and therefore intends to sustain the pursuit of a two
times adjusted earnings ordinary distribution cover in respect of a
full financial year, with such distributions made though either
share buybacks or dividends, the method to be determined by the
Board considering all relevant factors at the time.
Reflecting the Board's view that Vistry is significantly
undervalued, the Group announces that it is intending launch an
initial ordinary share buyback programme of up to GBP55m, which is
expected to commence in November 2023 and be completed ahead of the
announcement of the Group's Full Year results in March 2024. This
buyback is an ordinary distribution to shareholders, and will be in
lieu of an interim dividend payment, reflecting the Group's updated
capital allocation policy. Further announcements will be made in
due course.
Going forward, any surplus capital, following investment in the
business to support the Partnerships growth strategy and the
ordinary distribution, would be expected to be returned to the
Group's shareholders through either an incremental share buyback or
a special dividend, with t he method be ing determined by the B
oard considering all relevant factors at the time.
The Group is targeting GBP1bn of total shareholder distributions
over the next three years alongside the elimination of net
debt.
Board changes
Jeff Ubben was appointed as a Non-Executive Director with effect
from 23 March 2023. Paul Whetsell was appointed as a Non-Executive
Director, Chair of the Remuneration Committee and a member of the
Nomination and Audit Committees with effect from 18 May 2023. Helen
Owers was appointed as a Non-Executive Director and a member of the
Nomination, Audit and Remuneration Committees with effect from 18
May 2023.
Nigel Keen stepped down from the Board with effect from 23 March
2023. Katherine Innes Kerr and Dr Ashley Steel each stepped down
with effect from the conclusion of the Annual General Meeting on 18
May 2023.
Current trading and outlook
We continue to see good demand for mixed tenure housing from
Local Authorities and RPs. There is also good albeit more selective
demand from PRS providers. Open market private sales have slowed
further since June, in part reflecting the traditional quieter
summer period but also further increases in mortgage costs. We have
seen strong demand from first time buyers for shared ownership
delivered with our partner RP and using direct grant funding from
Homes England.
Partnerships has a strong forward order book totalling GBP3.0bn
with 90% of forecasts mixed tenure units and all of partner
delivery revenues for FY23 secured. Housebuilding's forward order
book totals GBP1.3bn, with 87% of forecast FY23 units secured.
Housebuilding and Partnerships continue to secure transactions with
RPs and Local Authorities to deliver on FY23 forecasts and mitigate
the impact of the slowdown in the open market.
The Group remains selective in the land market, taking the
opportunity to secure attractive development opportunities that
support the targets for the Partnerships growth strategy.
The Board re-iterates guidance of in excess of GBP450m adjusted
profit before tax for FY23.
Rule 19.6(b) update to stated post-offer intention statements
with regard to the Combination
As a result of the new strategy described above, a different
course of action is being taken from some of the post-offer
statements of intent made by Vistry pursuant to Rules 2.7I(viii)
and 24.2 of the Code, as set out in its announcement made under
Rule 2.7 of the Code on 5 September 2022 as well as in Vistry's
circular and prospectus and Countryside's scheme document each
dated 7 October 2022 (together, the "Offer Documents").
As set out in the Offer Documents, the relevant stated intention
provided that:
-- the Combined Group would be organised into two distinct
businesses, each of significant scale: (i) a housebuilding
business, to be known as "Vistry Housebuilding", consisting of the
existing Vistry Group's housebuilding business, with the addition
of certain sites form the existing Countryside Group; and (ii) a
partnerships business, to be branded "Countryside Partnerships",
consisting of Vistry's Partnerships and Countryside's core
Partnerships business. The changes to the Group's business and
structure in this respect are set out above (see "strategy
update")
-- Stephen Teagle would lead the Partnerships business of the
Combined Group as Chief Executive - Partnerships Division and that
Keith Carnegie would lead the Housebuilding business of the
Combined Group as Chief Executive - Housebuilding Division. As a
result of the change in strategy, Stephen Teagle will be CEO of
Countryside Partnerships with a client and customer focus. It is
also expected that Keith Carnegie will leave the Group from the end
of 2023 and, and in the intervening period will assist with the
merging of the Group's Housebuilding operations into its
Partnerships business prior to his departure
-- As a result of the Combination, there would be a reduction in
the total number of roles by approximately 4% of the Combined
Group's total number of employees (on a full-time equivalent
basis). This headcount reduction has been implemented and is not
affected by the change in strategy. The change in strategy is
however expected to result in a further reduction to the Group's
overall headcount as a result of the expected reduction in the
total number of its regional business units from 32 to 27 through
the removal of overlapping geographies. Vistry intends to look,
where possible, to reallocate staff from discontinued roles arising
from the change in strategy to other appropriate new roles or
growth-related new opportunities as referred to above (including
where there are existing vacancies). Vistry also intends to retain
the best talent of the Combined Group in connection with the
further reduction in number of roles. At this stage, Vistry has not
conducted a detailed headcount review. However, a detailed
headcount review is being initiated with immediate effect. Vistry
will provide an update on headcount reduction in its next trading
update that is scheduled for 9 November 2023; and
-- the Combined Group would initially maintain Vistry's existing
policy of paying out a two times ordinary dividend cover in respect
of a full financial year, however Vistry may, in due course
following completion of the Combination and a period of
integration, review the Combined Group's capital allocation policy
to confirm whether it remains appropriate in the context of the
Combined Group and in consultation with shareholders. The result of
that review and the Group's revised dividend and capital allocation
policy is set out above (see "capital allocation")
The revisions above and change in strategy above does not impact
Vistry's fundamental rationale for the Combination.
This announcement is required under Rule 19.6(b) of the Code.
Capitalised terms used but not defined in this section of this
announcement have the meanings set out in Countryside's scheme
document dated 7 October 2022.
This announcement contains inside information. The person
responsible for arranging the release of this announcement on
behalf of Vistry is Clare Bates, General Counsel & Company
Secretary.
Vistry's legal entity identifier is 2138001KOWN7CG9SLK53.
Financial review
Group performance
Despite the backdrop of challenging market conditions, the Group
has delivered results in line with expectations in the first six
months of the year.
Completions H1 23 H1 22 Change
----------------------------- ------ ------ -------
Housebuilding 2,847 3,219 -11.6%
Partnerships Mixed Tenure 3,203 1,106 +>100%
----------------------------- ------ ------ -------
Total Group Completions 6,050 4,325 +39.9%
----------------------------- ------ ------ -------
Partner Delivery Equivalent
Units 1,093 1,084 +0.8%
During the year, the Group delivered 6,050 legal completions (H1
22: 4,325), including 100% of JV completions, down 9.7% on
proforma(4) H1 22 (6,698).
4 Proforma completions and revenue are calculated using
published data for Vistry and management information for
Countryside, and represent the Vistry Group period of 1 January
2022 to 30 June 2022.
Total adjusted revenue, including share of joint venture
revenue, was GBP1,777.1m, 31.4% higher than prior year (H1 22:
GBP1,352.5m). Total adjusted revenue was down 12.9% when compared
to proforma H1 22 (GBP2,039.6m). The average selling price ("ASP")
across the Group was GBP283,000, a decrease of 4% on the prior
year, due to a change in mix towards lower ASP Partnership
completions. On a reported basis, revenue was GBP1,575.3m, 32.7%
higher than last year (H1 22: GBP1,187.2m), driven by a 39.9%
increase in legal unit completions compared to the prior year.
The Combination drove a step up in adjusted gross profit in H1
23 to GBP322.5m (adjusted gross margin: 18.1%) from GBP280.5m in H1
22 (adjusted gross margin: 20.7%), with the lower gross margin due
to an increased proportion of multi-unit deals within Housebuilding
and a greater contribution from Partnerships, which has a lower
gross margin.
In early 2023, the Group has seen the availability of building
materials return to pre-pandemic levels, accompanied by a softening
in overall build cost inflation. The revised Group purchasing
agreements have provided protection against material price
increases, benefitting from the increased scale of the business
following the Combination.
The Group delivered an adjusted operating profit for the period
of GBP206.7m (H1 22: GBP198.2m). The year-on-year increase in
adjusted operating profit has been driven by the Combination with
Countryside, largely offset by reduced volumes and margins within
Housebuilding. Adjusted operating margin was 11.6% (H1 22:
14.7%).
Adjusted profit before tax was GBP174.0m (H1 22: GBP189.9m). In
the period, year-on-year finance costs are higher, reflecting
increased discounting and lease interest following the Combination
and higher bank interest costs due to higher debt and interest
rates. Adjusted profit after tax fell to GBP132.1m, impacted by an
increase in the effective tax rate to 27.2% (H1 22: 22.2%).
On a reported basis the Group saw a profit after tax of GBP83.2m
(H1 22: GBP86.6m), comprising operating profit of GBP121.2m (H1 22:
GBP89.3m) after exceptional costs of GBP35.6m (H1 22: GBP71.4m),
net financing expense of GBP27.7m (H1 22: net financing income
GBP1.0m), share of joint venture profit of GBP20.8m (H1 22:
GBP21.0m) and a tax charge of GBP31.0m (H1 22: GBP24.7m).
Partnerships performance
H1 23 H1 22 Change
------------------------- ----------
Mixed tenure 2,637 643 +>100%
Mixed tenure JVs (100%) 566 463 +22.2%
Total mixed tenure
completions 3,203 1,106 +>100%
Partner delivery units 1,093 1,084 +0.8%
Adjusted revenue GBP953.6m GBP426.2m +GBP527.4m
Adjusted operating GBP109.3m GBP43.6m +GBP65.7m
profit
Adjusted operating
margin 11.5% 10.2% +1.3ppts
TNAV(2) GBP762.2m GBP118.2m +>100%
Partnerships completed a total of 3,203 units (H1 22: 1,106
units) from its mixed tenure operations (including 100% of JVs),
with an average selling price of GBP253,000 (H1 22:
GBP251,000).Partner delivery revenue generated equivalent units of
1,093 (H1 22: 1,084). Mixed tenure completions were up 5.7% on
proforma H1 22 (3,031), with adjusted revenues up 7.1% on proforma
H1 22 (GBP890.4m). The Partnerships business operated from an
average of 83 active mixed tenure sites in H1 23 (H1 22: 30).
The mix of revenue has shifted towards mixed tenure developments
following the Combination with Countryside. Of the GBP953.6m total
Partnerships revenue, 73.3% derived from mixed tenure (GBP698.9m)
with 25.5% (GBP243.0m) from partner delivery projects, compared
with 51.4% deriving from mixed tenure in H1 22 (H1 22: total
GBP426.2m, partner delivery: GBP203.7m, mixed tenure: GBP219.1m,
other: GBP3.4m). The remaining 1.2% of turnover was delivered
through other revenue streams, such as commercial activity and land
sales.
The Partnerships business has experienced similar build cost
movements to Housebuilding and has been able to mitigate pressures
through strong supplier relationships, by matching cost
arrangements to pre-sale pricing arrangements.
Housebuilding performance
H1 23 H1 22 Change
--------------------------- ------------ ------------ -----------
Private 1,417 1,816 -22.0%
Affordable 751 643 +16.8%
JV's (100%) Private 550 639 -13.9%
JV's (100%) Affordable 129 121 +6.6%
--------------------------- ------------ ------------ -----------
Total completions 2,847 3,219 -11.6%
--------------------------- ------------ ------------ -----------
Adjusted revenue GBP823.5m GBP926.3m -GBP102.8m
Adjusted gross profit GBP163.3m GBP207.7m -GBP44.4m
Adjusted gross margin 19.8% 22.4% -2.6ppts
Adjusted operating profit GBP117.9m GBP170.0m -GBP52.1m
Adjusted operating margin 14.3% 18.4% -4.1ppts
TNAV(5) GBP1,787.4m GBP1,467.5m +21.8%
(5) TNAV represents tangible net asset value and is calculated
as net assets, less goodwill, intangible assets, cash and debt
Total completions in Housebuilding (including 100% of JVs)
decreased by 11.6% to 2,847 units, impacted by a challenging market
environment. These included 880 affordable homes representing 31.0%
of total completions (H1 22: 764 affordable homes, 24% of total
completions).
Housebuilding pricing remained firm with a 4.9% increase in
average private sales price to GBP387,000 (H1 22: GBP369,000).
However, the total average sales price remained broadly flat at
GBP316,000 (H1 22: GBP317,000) due to the increase in the
proportion of affordable homes and multi-unit sales. The average
number of active sites in H1 23 was 137, which is broadly in line
with the previous year and as expected.
Housebuilding adjusted gross profit of GBP163.3m and adjusted
gross margin of 19.8% reduced from H1 22 (adjusted gross profit:
GBP207.7m, adjusted gross margin: 22.4%), driven by increased
levels of multi-unit sales, compounded by the sell through from the
lower margin of Countryside's Legacy Operations which transferred
to Housebuilding at the start of the period.
Housebuilding adjusted operating profit of GBP117.9m has reduced
by 30.6% from the same period last year (H1 22: GBP170.0m) with
adjusted operating margin also reducing to 14.3% (H1 22:
18.4%).
Finance costs
The Group's net financing expense during H1 23 was GBP27.7m,
compared to a net finance income of GBP1.0m during H1 22. On an
adjusted basis, excluding exceptional interest costs and including
the Group's share of net joint venture interest, the net financing
expense during H1 23 was GBP32.7m, compared to GBP8.3m in H1 22.
The primary components of the net financing costs are:
H1 23 H1 22 Change
----------------------------- ----------- ---------- ----------
Bank interest (GBP18.5m) (GBP6.3m) -GBP12.2m
Other net finance costs (GBP6.9m) (GBP2.7m) -GBP4.2m
Net JV interest (GBP7.3m) GBP0.7m -GBP8.0m
Total adjusted finance costs (GBP32.7m) (GBP8.3m) -GBP24.4m
Bank interest has increased as a result of increased average
month end net debt during H1 23 of GBP360.1m compared to GBP129.2m
in H1 22, which is as a result of the Combination and due to the
rising interest rates on the Group's variable borrowing
facilities.
Other net finance costs include imputed interest on land
creditors of GBP5.2m (H1 22: GBP2.3m), as well as interest on lease
liabilities of GBP2.5m (H1 22: GBP0.4m), offset by interest income
on pension assets of GBP0.8m (H1 22: GBPnil). The significant
increase in interest on land creditors and lease liabilities is due
to the acquisition of Countryside in H2 22 and therefore the
recognition and interest on the acquired land creditor and lease
liability balances.
Net JV interest represents the interest income earned on loans
made to joint ventures, the Group's share of JV interest expense,
net of any provisions against interest income. Net JV interest has
increased year-on-year by GBP8.0m driven by an additional GBP3.0m
from JVs acquired as part of the Combination and increases to
interest rates on externally held debt within JVs.
Taxation
The Group's effective tax rate for FY 23 is expected to be
27.2%, up from 17.4% in FY 22, principally due to higher statutory
rates. The effective rate includes nine months of the higher
Corporation Tax rate of 25% being introduced in April 2023
(previously 19%) and a full year impact of the RPDT of 4%,
introduced in February 2022.
The Group has recognised a tax charge of GBP31.0m for H1 23 (H1
22: GBP24.7m).
Adjusting items
The Group manages the business by focussing on non-GAAP
measures, which we refer to as adjusted measures, as we believe
they provide a better comparison of underlying performance measures
from one period to the next. GAAP measures can include one-off,
non-recurring items and recurring items.
The Group's share of revenue, gross profit and operating profit
from joint ventures and associate is included within the respective
adjusted measures in order to more accurately reflect the full
scale of the Group's operations and performance. At an adjusted
revenue level, revenue recognised on transactions with joint
ventures is eliminated. The impact of these transactions at a gross
profit level is insignificant to the Group.
The adjustments made to performance measures include the
following items:
- Exceptional costs of sale of GBP12.2m relating to fire safety,
driven by a GBP18.4m expense for second staircase regulatory
change, partially offset by a GBP6.2m release of unused provision
(H1 22: GBP71.4m additional provision recognised)
- Exceptional administrative costs of GBP16.0m relating to the
integration and restructuring of the Group following the
Combination in November 2022 (H1 22: GBPnil)
- The amortisation of acquired intangible assets of GBP23.1m (H1
22: GBP7.1m)
- Interest expense on the fire safety provision of GBP7.4m (H1
22: GBPnil)
- Tax of GBP1.1m recognised on share of joint ventures' results
within reported profit before tax (H1 22: GBPnil)
Fire safety provision
As part of the Group's commitment to fire safety, at 31 December
2022 the Group held a total provision of GBP309.2m on the balance
sheet, having signed up to the Government's Developer Remediation
Contract.
The Group has spent GBP10.9m during the period on fire safety
remediation works on legacy properties (H1 22: GBP2.4m). A combined
portfolio of 317 buildings is provided for in respect of fire
safety costs for multi-occupancy buildings, with remediation works
complete on 75. Works are currently continuing on 41 sites and
engagement with building owners on the remaining 201.
Following the December 2022 Government announcement detailing
the requirement of a second staircase on residential buildings over
30 metres tall, in March 2023 a number of key organisations within
the construction industry, along with key stakeholders in the
Government's fire safety consultation, submitted a joint letter to
Michael Gove MP calling for the height threshold to be reduced to
18 metres, this was confirmed in July 2023.
Management conducted a full review that identified two schemes
that were no longer viable, as a result of the significant costs
and loss of revenue due to the regulatory change and has written
off GBP6.1m of inventory relating to these sites. An additional two
schemes have now become loss making and due to the committed nature
of these sites, the Group has recognised a GBP12.3m increase in the
fire safety provision. The impact of these has resulted in a
GBP18.4m exceptional expense being recognised by the Group in H1
23.
After further movements of GBP1.2m for the unwind of discount
netted off with the release of unutilised provisions, the Group's
closing provision for fire safety works was GBP311.8m at 30 June
2023.
The expected spend for the second half of the year is GBP35m as
the Group continues its preparation and mobilisation works ready to
be on-site and actively remediating on another 40 additional sites
in FY 24. In FY 24 we expect to spend GBP60m, including GBP10-15m
on Building Safety Fund ("BSF") payments.
Acquisition accounting
The acquisition accounting in relation to the Combination has
been updated during the first half of 2023 and will be concluded by
11 November 2023. This is in line with IFRS 3, which allows up to
12 months from the date of acquisition to complete the fair
valuation exercise. The final acquisition balance sheet will be
disclosed in the FY 23 Annual Report and Accounts.
These fair values have been amended during H1 23 to reflect the
impact of new information that became available in the period,
which has resulted in a GBP22.8m increase to goodwill from
GBP257.3m at 31 December 2022 to GBP280.1m at 30 June 2023. This
GBP22.8m increase to goodwill primarily arose due to a full
write-down of inventory at one particular site which has now been
deemed unviable due to a significant increase in cost estimates
which were underestimated at the time of the Combination. The
corrected cost to complete resulted in a net cash outflow to
complete the site as well as a significant capital lock-up, and
this site would therefore not be progressed by a market
participant.
The fair value exercise has allocated the purchase price of
Countryside of GBP1,137.0m as follows: inventories of GBP768.8m,
investments, right of use assets and PP&E of GBP139.7m,
intangibles such as brands and relationships of GBP349.1m and
goodwill of GBP280.1m, less GBP208.9m of provisions and GBP191.8m
of net working capital and other items, including cash and deferred
tax. The total fair value adjustments, from the date of the
Combination, which will unwind to underlying earnings is a credit
of GBP129.9m, and this will unwind predominantly in cost of sales
over the next 6 to 8 years.
Net assets
H1 23 FY 22 Change
------------------------- ------------ ------------ -----------
Goodwill and intangibles GBP1,260.9m GBP1,260.7m +GBP0.2m
Tangible net assets
excluding investments
in joint ventures and
associate GBP2,039.2m GBP1,617.1m +GBP422.1m
Investment in joint
ventures GBP253.1m GBP253.7m -GBP0.6m
Net (debt)/cash (GBP328.7m) GBP118.2m -GBP446.9m
Net assets GBP3,224.5m GBP3,249.7m -GBP25.2m
As at 30 June 2023, net assets of GBP3,224.5m were GBP25.2m
lower than at the start of the year. Net assets per share were 929p
(FY 22: 937p).
Goodwill and intangibles totalled GBP1,260.9m at 30 June 2023
(FY 22: GBP1,260.7m) driven by two offsetting movements - the
recognition of GBP22.8m of additional goodwill, offset by
amortisation of intangibles in the period. Goodwill has been
reallocated in the period following the reorganisation of the
Group's segments and integration of the former Countryside segment
into Partnerships and Housebuilding. All of the former Countryside
goodwill has been reallocated to Partnerships.
Tangible net assets, excluding investments in joint ventures,
increased from GBP1,617.1m at 31 December 2022 to GBP2,039.2m at 30
June 2023, primarily driven by an increase in inventories of
GBP354.0m. The increase in inventories reflects the Group's
movement towards mixed tenure developments in Partnerships,
investment in new sites to support the Group's growth plans, as
well as the expected half year peak due to the Group's completion
profile across the year.
Current trade and other receivables increased by GBP113.5m to
GBP563.0m, primarily driven by increased delivery of affordable and
contracting revenues in the month of June 2023 compared to December
2022. Trade and other payables increased by GBP25.9m to GBP1,793.1m
during the same period.
Cash flow and financing
As at 30 June 2023, the Group's net debt balance was GBP328.7m
(FY 22 net cash of GBP118.2m), representing an outflow of
GBP446.9m.
Having delivered GBP174.0m of adjusted profit before tax, the
Group invested a net GBP401.5m in work in progress, land and
investment in joint ventures, as a result of the move towards mixed
tenure sites in Partnership and to support the continued growth of
the Group.
Other working capital items drove a GBP48.7m outflow
predominantly driven by the receivables profile relating to
affordable and contracting revenue which is greater in June 2023
than it was at 31 December 2022.
The Group spent a combined GBP60.3m on fire safety works, tax
and costs relating to the Combination and ongoing integration.
As declared in March 2023, the Group paid out GBP110.4m in
dividends.
The Group's borrowing facilities include a GBP400m Acquisition
Term Loan, a GBP500m Revolving Credit Facility (RCF), GBP100m US
Private Placement (USPP), an overdraft of GBP5m and a Homes England
loan facility of GBP10.7m. These external funding facilities total
GBP1,015.7m (H1 22: GBP665.7m) at 30 June 2023. In addition to the
acquisition of Countryside, these facilities are used to fund
intra-period working capital movements and land investments with
average monthly debt for H1 23 of GBP360.1m. With the exception of
the USPP, all of the Group's borrowing facilities have variable
interest rates.
Shareholder distributions
The Group intends to sustain a 2.0 times adjusted earnings
ordinary distribution cover in respect of a full financial year,
with such distributions made though either share buybacks or
dividends.
Reflecting the Board's view that Vistry is significantly
undervalued, the Group has announced an initial share buyback of
GBP55m to commence in November 2023 and to be completed ahead of
the announcement of the Group's full year results in March 2024.
The buyback is an ordinary distribution to shareholders, in lieu of
an interim dividend payment, reflecting the Group's updated capital
allocation policy.
Land bank
Partnerships land bank
Land Activity H1 23 H1 22
------------------------------------- ----------- -----------
Owned plots acquired 1,968 552
Controlled plots added 1,880 1,614
Closing Land Bank H1 23 FY 22
------------------------------------- ----------- -----------
Owned and controlled 25,494 29,104
JV Owned and controlled 20,884 19,475
------------------------------------- ----------- -----------
Total plots in land bank inc. joint
ventures 46,378 48,579
Average selling price inc. share of
joint ventures GBP322,000 GBP325,000
Average consented land plot price GBP37,000 GBP41,000
The Partnerships land bank including joint ventures as at 30
June 2023 consisted of 46,378 plots across 203 sites.
The 3,203 mixed tenure plots that legally completed in the
period were partially offset by the acquisition of 1,968 owned
plots on 5 sites. In addition, 1,880 plots were secured on a
controlled basis on 6 sites. Of the 1,968 owned plots, 245 were
sourced strategically. All sites acquired for Partnerships will
support future returns on capital employed for the segment in
excess of 40%.
The average selling price of all units within the consented land
bank decreased over the period to GBP322,000 (FY 22: GBP325,000).
The estimated embedded gross margin in the land bank as at 30 June
2023, based on prevailing sales prices and build costs, is 18.4%
(FY 22: 19.4%).
Housebuilding land bank
Land Activity H1 23 H1 22
------------------------------------- ----------- -----------
Owned plots acquired 1,781 2,852
Controlled plots added 932 508
Closing Land Bank H1 23 FY 22
------------------------------------- ----------- -----------
Owned and controlled 23,967 26,016
JV Owned and controlled 6,233 6,747
------------------------------------- ----------- -----------
Total plots in land bank inc. joint
ventures 30,200 32,763
Average selling price inc. share of
joint ventures GBP340,000 GBP346,000
Average consented land plot price GBP60,000 GBP57,000
The Housebuilding land bank, including joint ventures of 30,200
plots as at 30 June 2023, represents c.3.9 years of supply based on
proforma 12-month completion volumes to 31 December 2022 (FY 22:
32,763 plots and c4.1 years).
The 2,847 plots that legally completed in the period were
replaced by a total of 2,713 plots from a combination of site
acquisitions representing 1,781 owned plots and a further 932 plots
secured on a conditional basis, across a total of 12 sites. Of the
1,781 owned plots, 1,012 were sourced strategically.
The average selling price of all units within the consented land
bank decreased in the half to GBP340,000 (FY 22: GBP346,000). The
estimated embedded gross margin in the consented land bank as at 30
June 2023, based on prevailing sales prices and build costs, is
21.2% (FY 22: 23.6%).
Strategic land
As at 30 June 2023 Total sites Total plots
------------------------ ------------ ------------
By size
0 - 150 plots 73 6,362
150 - 300 plots 56 12,612
300 - 500 plots 25 10,245
500 - 1,000 plots 14 9,763
1,000+ plots 17 27,207
Total 185 66,189
------------------------ ------------ ------------
By planning status
Planning agreed 17 9,372
Planning application 33 7,114
Ongoing application 135 49,703
Total 185 66,189
------------------------ ------------ ------------
As at 31 December 2022 167 65,813
Strategic land refers to land which does not yet have planning
consent and which the Group is or will progress through planning
and promotional processes before development. Once planning consent
has been obtained, the land becomes consented. Strategic land
continues to be an important source of supply and during the period
1,257 plots have been converted from the strategic land pipeline
into the consented land bank. Planning consent or Resolution to
Grant gained on 1,169 plots during the period, with 5 further
planning applications submitted over 1,133 plots and 2 planning
appeals over 310 plots.
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.
The Directors consider that the principal risks and
uncertainties applicable to the Group at H1 23 are consistent with
those disclosed in the Group's Annual Report and Accounts, page 58.
There have been no changes to these risks identified during H1
23.
The market conditions continue to be challenging in H1 23,
heightening the risks associated with the economic and sales
environment. The announcement of the second staircase regulations
have highlighted the potential impact of legislation, planning and
building safety risks. In addition, we are mindful of an increased
risk of insolvency amongst the supply chain, which as of now has
not impacted our build programme but is being carefully monitored.
The Group's principal risks are reviewed and monitored regularly
with any required mitigations being actioned where appropriate.
Group income statement
Six months Six months Year ended
ended ended 31 Dec
30 June 30 June 2022 2022
2023 GBP000 GBP000
GBP000 (restated (restated
Note (unaudited) and unaudited) and audited)
Revenue * 3 1,575,306 1,187,159 2,771,319
========================================= ==== ============ =============== =============
Cost of sales * (1,338,036) (1,034,023) (2,357,590)
========================================= ==== ============ =============== =============
Gross profit 237,270 153,136 413,729
========================================= ==== ============ =============== =============
Analysed as:
========================================= ==== ============ =============== =============
Adjusted gross profit 16 322,517 280,505 636,855
========================================= ==== ============ =============== =============
Other operating income 4 (37,767) (25,051) (57,713)
========================================= ==== ============ =============== =============
Exceptional cost of sales 6 (12,176) (71,429) (96,113)
========================================= ==== ============ =============== =============
Share of joint ventures and associate
gross profit (35,304) (30,889) (69,300)
========================================= ==== ============ =============== =============
Gross profit 237,270 153,136 413,729
========================================= ==== ============ =============== =============
Administrative expenses including
exceptional items (153,862) (88,854) (258,936)
========================================= ==== ============ =============== =============
Other operating income 4 37,767 25,051 57,713
========================================= ==== ============ =============== =============
Operating profit 121,175 89,333 212,506
========================================= ==== ============ =============== =============
Analysed as:
========================================= ==== ============ =============== =============
Adjusted operating profit 16 206,666 198,167 451,090
========================================= ==== ============ =============== =============
Exceptional expenses 6 (28,138) (71,429) (152,977)
========================================= ==== ============ =============== =============
Amortisation of acquired intangibles (23,132) (7,120) (17,065)
========================================= ==== ============ =============== =============
Share of joint ventures and associate
operating profit (34,221) (30,285) (68,542)
========================================= ==== ============ =============== =============
Operating profit 121,175 89,333 212,506
========================================= ==== ============ =============== =============
Financial income 8,438 9,479 14,547
========================================= ==== ============ =============== =============
Financial expenses including exceptional
items (36,170) (8,463) (26,776)
========================================= ==== ============ =============== =============
Net financing (expenses) / income (27,732) 1,016 (12,229)
========================================= ==== ============ =============== =============
Share of joint ventures and associate
profit 20,798 20,996 47,207
========================================= ==== ============ =============== =============
Profit before tax 114,241 111,345 247,484
========================================= ==== ============ =============== =============
Analysed as:
========================================= ==== ============ =============== =============
Adjusted profit before tax 16 174,032 189,894 418,426
========================================= ==== ============ =============== =============
Exceptional expenses 6 (35,573) (71,429) (153,877)
========================================= ==== ============ =============== =============
Amortisation of acquired intangibles (23,132) (7,120) (17,065)
========================================= ==== ============ =============== =============
Tax on joint ventures included
in profit before tax (1,086) - -
========================================= ==== ============ =============== =============
Profit before tax 114,241 111,345 247,484
========================================= ==== ============ =============== =============
Income tax expense 10 (31,019) (24,719) (43,139)
========================================= ==== ============ =============== =============
Profit for the period / year
attributable to ordinary shareholders 83,222 86,626 204,345
========================================= ==== ============ =============== =============
Earnings per share
============================================================= =============== =============
Basic 24.1p 39.1p 86.5p
=============================================== ============ =============== =============
Diluted 24.1p 38.9p 86.3p
=============================================== ============ =============== =============
Adjusted basic earnings per share ** 38.3p 67.4p 137.5p
=============================================== ============ =============== =============
Adjusted diluted earnings per share ** 38.2p 67.2p 137.1p
=============================================== ============ =============== =============
*Revenue and cost of sales have been restated for the six months
ended 30 June 2022 and year ended 31 December 2022 in order to
apply the Group's change in accounting policy with respect to part
exchange property sales from the beginning of the comparative
period, as discussed in note 1.
**Based on profit after tax before exceptional items, tax on
exceptional items and amortisation of acquired intangible
Group statement of comprehensive income
Six months Six months
ended ended Year ended
30 June 31 Dec
30 June 2023 2022 2022
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
Profit for the period / year attributable
to ordinary shareholders 83,222 86,626 204,345
================================================== ============== ============= ===========
Other comprehensive (expense) / income
================================================== ============== ============= ===========
Items that will not be reclassified to the
income statement
================================================== ============== ============= ===========
Remeasurements on defined benefit pension scheme (730) (4,123) (16,374)
================================================== ============== ============= ===========
Deferred tax on remeasurements on defined benefit
pension scheme - 2,973 2,399
================================================== ============== ============= ===========
Total other comprehensive expense (730) (1,150) (13,975)
================================================== ============== ============= ===========
Total comprehensive income for the period
/ year attributable to ordinary shareholders 82,492 85,476 190,370
================================================== ============== ============= ===========
The above Group statement of comprehensive income should be read
in conjunction with the accompanying notes.
Group balance sheet
Six months
ended Year ended
30 June 31 Dec
Six months ended 2022 2022
30 June 2023 GBP000 GBP000
Note GBP000 (unaudited) (unaudited) (audited)
=============================== ==== =================== ============ ==========
Assets
=============================== ==== =================== ============ ==========
Goodwill 827,628 547,509 804,742
=============================== ==== =================== ============ ==========
Intangible assets 433,309 121,600 455,965
=============================== ==== =================== ============ ==========
Property, plant and equipment 21,150 4,695 20,945
=============================== ==== =================== ============ ==========
Right-of-use assets 87,692 25,828 77,217
=============================== ==== =================== ============ ==========
Investments 253,081 187,415 253,659
=============================== ==== =================== ============ ==========
Amounts recoverable from joint
ventures and associate 371,989 274,334 391,382
=============================== ==== =================== ============ ==========
Trade and other receivables 561 677 601
=============================== ==== =================== ============ ==========
Restricted cash 344 526 382
=============================== ==== =================== ============ ==========
Deferred tax assets 669 - 1,819
=============================== ==== =================== ============ ==========
Retirement benefit asset 34,209 44,435 34,251
=============================== ==== =================== ============ ==========
Total non-current assets 2,030,632 1,207,019 2,040,963
=============================== ==== =================== ============ ==========
Inventories 3,192,141 2,099,005 2,838,140
=============================== ==== =================== ============ ==========
Trade and other receivables 562,986 251,423 449,440
=============================== ==== =================== ============ ==========
Cash and cash equivalents 14 212,975 427,949 676,760
=============================== ==== =================== ============ ==========
Restricted cash 18 - -
=============================== ==== =================== ============ ==========
Current tax asset 6,357 12,015 10,417
=============================== ==== =================== ============ ==========
Total current assets 3,974,477 2,790,392 3,974,757
=============================== ==== =================== ============ ==========
Total assets 6,005,109 3,997,411 6,015,720
=============================== ==== =================== ============ ==========
Equity
=============================== ==== =================== ============ ==========
Issued capital 173,612 110,598 173,605
=============================== ==== =================== ============ ==========
Share premium 360,885 361,700 360,801
=============================== ==== =================== ============ ==========
Capital redemption reserve 1,278 - 1,278
=============================== ==== =================== ============ ==========
Merger reserve 1,597,756 823,513 1,597,756
=============================== ==== =================== ============ ==========
Retained earnings 1,090,927 1,070,164 1,116,232
=============================== ==== =================== ============ ==========
Total equity attributable to
equity holders of the parent 3,224,458 2,365,975 3,249,672
=============================== ==== =================== ============ ==========
Liabilities
=============================== ==== =================== ============ ==========
Bank and other loans 14 508,305 112,981 508,657
=============================== ==== =================== ============ ==========
Trade and other payables 302,036 150,928 334,484
=============================== ==== =================== ============ ==========
Lease liabilities 78,383 17,317 71,826
=============================== ==== =================== ============ ==========
Provisions 13 254,375 85,681 280,764
=============================== ==== =================== ============ ==========
Deferred tax liabilities - 39,441 -
=============================== ==== =================== ============ ==========
Total non-current liabilities 1,143,099 406,348 1,195,731
=============================== ==== =================== ============ ==========
Bank and other loans 14 33,322 200,000 49,938
=============================== ==== =================== ============ ==========
Trade and other payables 1,491,020 991,741 1,432,711
=============================== ==== =================== ============ ==========
Lease liabilities 20,107 10,248 14,756
=============================== ==== =================== ============ ==========
Provisions 13 93,103 23,099 72,912
=============================== ==== =================== ============ ==========
Total current liabilities 1,637,552 1,225,088 1,570,317
=============================== ==== =================== ============ ==========
Total liabilities 2,780,651 1,631,436 2,766,048
=============================== ==== =================== ============ ==========
Total equity and liabilities 6,005,109 3,997,411 6,015,720
=============================== ==== =================== ============ ==========
The above Group balance sheet should be read in conjunction with
the accompanying notes.
These condensed consolidated financial statements were approved
by the Board of Directors on 8 September 2023.
Group statement of changes in equity
Own Other Total Capital
shares retained retained Issued Share Redemption Merger
held earnings earnings capital premium reserve reserve Total
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP'000 GBP000 GBP000
Balance at 1 January
2023 (17,400) 1,133,632 1,116,232 173,605 360,801 1,278 1,597,756 3,249,672
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Profit for the period - 83,222 83,222 - - - - 83,222
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Total other comprehensive
expense - (730) (730) - - - - (730)
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Total comprehensive
income - 82,492 82,492 - - - - 82,492
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Issue of share capital - - - 7 84 - - 91
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
LTIP shares exercised 323 (323) - - - - - -
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Share-based payments - 2,632 2,632 - - - - 2,632
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Dividends paid 8 - (110,429) (110,429) - - - - (110,429)
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Deferred and current
tax on share-based
payments - - - - - - - -
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Total transactions
with owners recognised
directly in equity 323 (108,120) (107,797) 7 84 - - (107,706)
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Balance at 30 June
2023 (unaudited) (17,077) 1,108,004 1,090,927 173,612 360,885 1,278 1,597,756 3,224,458
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Balance at 1 January
2022 (3,372) 1,098,205 1,094,833 111,154 361,081 - 823,513 2,390,581
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Profit for the period - 86,626 86,626 - - - - 86,626
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Total other comprehensive
expense - (1,150) (1,150) - - - - (1,150)
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Total comprehensive
income - 85,476 85,476 - - - - 85,476
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Issue of share capital - - - 4 59 - - 63
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Purchase of own shares (12,832) - (12,832) - - - - (12,832)
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Share-based payments - 1,873 1,873 - - - - 1,873
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Dividends paid 8 - (88,748) (88,748) - - - - (88,748)
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Deferred tax on
share-based
payments - (1,129) (1,129) - - - - (1,129)
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Cancellation of shares - (9,309) (9,309) (560) 560 - - (9,309)
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Total transactions
with owners recognised
directly in equity (12,832) (97,313) (110,145) (556) 619 - - (110,082)
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Balance at 30 June
2022 (unaudited) (16,204) 1,086,368 1,070,164 110,598 361,700 - 823,513 2,365,975
========================= ==== ======== ========= ========= ======== ======== =========== ========= =========
Balance at 1 January
2022 (3,372) 1,098,205 1,094,833 111,154 361,081 - 823,513 2,390,581
=============================== ======== ========= ========= ======= ======= ===== ========= =========
Profit for the year - 204,345 204,345 - - - - 204,345
=============================== ======== ========= ========= ======= ======= ===== ========= =========
Total other comprehensive
expense - (13,975) (13,975) - - - - (13,975)
=============================== ======== ========= ========= ======= ======= ===== ========= =========
Total comprehensive
income - 190,370 190,370 - - - - 190,370
=============================== ======== ========= ========= ======= ======= ===== ========= =========
Issue of share capital - - - 7 (280) - - (273)
=============================== ======== ========= ========= ======= ======= ===== ========= =========
Purchase of own shares (14,484) - (14,484) - - - - (14,484)
=============================== ======== ========= ========= ======= ======= ===== ========= =========
Cancellation of shares - (22,413) (22,413) (1,278) - 1,278 - (22,413)
=============================== ======== ========= ========= ======= ======= ===== ========= =========
Shares issued as consideration - 854 854 63,722 - - 774,243 838,819
=============================== ======== ========= ========= ======= ======= ===== ========= =========
LTIP shares exercised 456 (456) - - - - - -
=============================== ======== ========= ========= ======= ======= ===== ========= =========
Share-based payments - 6,337 6,337 - - - - 6,337
=============================== ======== ========= ========= ======= ======= ===== ========= =========
Dividends paid 8 - (138,858) (138,858) - - - - (138,858)
=============================== ======== ========= ========= ======= ======= ===== ========= =========
Deferred and current
tax on share-based payments - (407) (407) - - - - (407)
=============================== ======== ========= ========= ======= ======= ===== ========= =========
Total transactions with
owners recognised
directly in equity (14,028) (154,943) (168,971) 62,451 (280) 1,278 774,243 668,721
=============================== ======== ========= ========= ======= ======= ===== ========= =========
Balance at 31 December
2022 (17,400) 1,133,632 1,116,232 173,605 360,801 1,278 1,597,756 3,249,672
=============================== ======== ========= ========= ======= ======= ===== ========= =========
Group statement of cash flows
Six months Six months
ended ended Year ended
30 June 2023 30 June 2022 31 Dec 2022
GBP000 GBP000 GBP000
Note (unaudited) (unaudited) (audited)
======================================== ==== ============= ============= ==============
Cash flows from operating activities
======================================== ==== ============= ============= ==============
Profit for the period / year 83,222 86,626 204,345
======================================== ==== ============= ============= ==============
Depreciation and amortisation 36,824 15,347 35,272
======================================== ==== ============= ============= ==============
Impairment losses - - 9,505
======================================== ==== ============= ============= ==============
Financial income (8,438) (9,479) (14,547)
======================================== ==== ============= ============= ==============
Financial expense 36,170 8,463 26,776
======================================== ==== ============= ============= ==============
Loss on disposal of property, plant
and equipment - - 3
======================================== ==== ============= ============= ==============
Equity-settled share-based payment
expense 2,632 1,873 6,337
======================================== ==== ============= ============= ==============
Income tax expense 10 31,019 24,719 43,139
======================================== ==== ============= ============= ==============
Share of profit of joint ventures
and associate (20,798) (20,996) (47,207)
======================================== ==== ============= ============= ==============
Increase in trade and other receivables (113,506) (10,226) (86,059)
======================================== ==== ============= ============= ==============
Increase in inventories (377,503) (136,850) (83,656)
======================================== ==== ============= ============= ==============
Increase / (decrease) in trade
and other payables 77,621 (34,755) (63,346)
======================================== ==== ============= ============= ==============
(Decrease) / increase in provisions (6,362) 66,158 105,589
======================================== ==== ============= ============= ==============
Cash (used in) / generated from
operations (259,119) (9,120) 136,151
======================================== ==== ============= ============= ==============
Interest paid (19,406) (4,271) (16,570)
======================================== ==== ============= ============= ==============
Interest paid on lease payments^ (2,469) (363) (1,408)
======================================== ==== ============= ============= ==============
Income taxes paid (16,325) (34,000) (65,300)
======================================== ==== ============= ============= ==============
Net cash (used in) / generated
from operating activities (297,319) (47,754) 52,873
======================================== ==== ============= ============= ==============
Cash flows from investing activities
======================================== ==== ============= ============= ==============
Bank interest received 903 - 477
======================================== ==== ============= ============= ==============
Acquisition of intangible assets (699) (1,096) (43)
======================================== ==== ============= ============= ==============
Acquisition of property, plant
and equipment (2,566) (865) (1,586)
======================================== ==== ============= ============= ==============
Acquisition of Countryside net
of cash acquired - - (77,667)
======================================== ==== ============= ============= ==============
Loans made to and investments in
joint ventures and associate (123,655) (107,386) (139,476)
======================================== ==== ============= ============= ==============
Interest received on loans to joint
ventures and associate 3,712 5,814 10,602
======================================== ==== ============= ============= ==============
Loan repayments from joint ventures
and associate 73,453 147,884 188,484
======================================== ==== ============= ============= ==============
Distributions from joint ventures
and associate 17,474 1,176 38,065
======================================== ==== ============= ============= ==============
Decrease in restricted cash 20 252 396
======================================== ==== ============= ============= ==============
Net cash (used in) / generated
from investing activities (31,358) 45,779 19,252
======================================== ==== ============= ============= ==============
Cash flows from financing activities
======================================== ==== ============= ============= ==============
Dividends paid 8 (110,429) (88,748) (138,858)
======================================== ==== ============= ============= ==============
Interest paid on lease payments - (363) -
======================================== ==== ============= ============= ==============
Principal elements of lease payments (8,732) (7,012) (16,141)
======================================== ==== ============= ============= ==============
Net proceeds from / (spend on)
the issue of share capital 91 63 (273)
======================================== ==== ============= ============= ==============
Share buyback - (12,832) (35,245)
======================================== ==== ============= ============= ==============
Cancellation of own shares - (9,309) -
======================================== ==== ============= ============= ==============
Drawdown of bank and other loans 630,000 370,000 1,390,000
======================================== ==== ============= ============= ==============
Repayment of bank and other loans (646,038) (220,952) (993,562)
======================================== ==== ============= ============= ==============
Net cash (used in) / generated
from financing activities (135,108) 31,210 205,921
======================================== ==== ============= ============= ==============
Net (decrease) / increase in cash
and cash equivalents (463,785) 29,235 278,046
======================================== ==== ============= ============= ==============
Cash and cash equivalents at 1
January 676,760 398,714 398,714
======================================== ==== ============= ============= ==============
Cash and cash equivalents at the
end of the period / year 14 212,975 427,949 676,760
======================================== ==== ============= ============= ==============
^Interest paid on lease payments in H1 22 has been reclassified
from financing activities to be consistent with FY 22 and current
period presentation.
1 Basis of preparation
Vistry Group PLC (the "Company") is a public company, limited by
shares, domiciled and incorporated in England, United Kingdom. The
shares are listed on the London Stock Exchange. The condensed
consolidated interim financial statements (the "Group financial
statements") of the Group comprise the Company and its subsidiaries
(together referred to as the "Group") and the Group's interest in
joint ventures and associate.
The Group financial statements were authorised for issue by the
Directors on 11 September 2023. These Group financial statements
are unaudited but have been reviewed by PricewaterhouseCoopers LLP,
the Company's auditors. The registered office for Vistry Group PLC
is 11 Tower View, Kings Hill, West Malling, Kent, ME19 4UY.
The Group financial statements do not constitute statutory
accounts within the meaning of Section 434 of the Companies Act
2006.
The figures for the half years ended 30 June 2023 and 30 June
2022 are unaudited. The comparative figures for the financial year
ended 31 December 2022 are an extract from the Group's statutory
accounts for that financial year, which have been delivered to the
Registrar of Companies. The report of the auditors of these
statutory accounts was (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 Group financial statements include the financial statements
of the Company and all of its subsidiary undertakings. Subsidiaries
are all entities over which the Group has control. The Group
controls an entity when the Group 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.
Subsidiaries are fully consolidated from the date on which control
is transferred to the Group. They are deconsolidated from the date
that control ceases.
The preparation of Group financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amount of assets, liabilities, income and expenses. Actual results
may differ from these estimates. In preparing these Group financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
consolidated financial statements for the year ended 31 December
2022.
These Group financial statements have been prepared in
accordance with UK-adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the UK's Financial Conduct
Authority. The Group financial statements have been prepared by
applying the accounting policies and presentation that were applied
in the preparation of the Group's published consolidated financial
statements for the year ended 31 December 2022. There are two
exceptions to this in relation to the accounting policy for part
exchange turnover and costs of sale. The Group has historically
presented the net of the part exchange revenue and cost of sale
within cost of sales, however have now amended the accounting
policy to present revenue and cost of sale gross for part exchange
transactions. The H1 22 and FY 22 comparatives have been restated
on this basis since a change in accounting policy should be
retrospectively applied. This change in policy only affects revenue
and costs of sale and does not impact at a gross or operating
profit level, nor profit before or after tax. The second exception
is tax, which is calculated based on the estimated full year
effective tax rate at the half year.
The Group financial statements do not include all of the notes
of the type normally included in an annual financial report. The
Group financial statements should be read in conjunction with the
annual consolidated financial statements for the year ended 31
December 2022 which were prepared in accordance with UK-adopted
International Accounting Standards and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those
standards.
There are no new standards effective for the first time in the
period beginning 1 January 2023 which will have a material impact
on the Group's reported results.
The Group financial statements are prepared on the historical
cost basis unless otherwise stated.
The functional currency of the Group is Pounds Sterling ("GBP"),
and the accounts are presented in the same currency.
Going concern
The Group has prepared a cash flow forecast to confirm the
appropriateness of the going concern assumption in these accounts.
The forecast was prepared using a likely base case and a severe but
plausible downside scenario. In the downside scenario the Group has
assumed decreased affordability, leading to reduced demand for
housing and falling house prices. We continue to see some build
cost inflation, but this has not been factored into our assumptions
as we are targeting offsetting reductions through the benefits of
cost synergies. In both the base case and the downside 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 comply with the required covenants on their
borrowing facilities. Consequently, the Directors have not
identified any material uncertainties to the Group's ability to
continue as a going concern over a period of at least twelve months
from the date of the approval of the Group financial statements and
have concluded that using the going concern basis for the
preparation of the Group financial statements is appropriate.
In the downside sensitivity scenario, the following assumptions
have been applied (in aggregate):
- A 10% reduction in private sales volumes in H2 23 and 15%
reduction in 2024, with a corresponding reduction in development
spend
- A 10% reduction in private sales prices
- A rise in interest cost of 100bps
- No sensitivity has been applied to either the affordable and
PRS or partner delivery revenue streams as it is considered that
these would not be impacted by a downturn due to the significant
proportion of this revenue being pre-sold
In a severe but plausible downside, the following mitigating
actions have been modelled:
- Cessation of uncommitted land spend
- Reduction in planned dividend payout ratio by 50%
- Reduction in overheads by 25%
- Reduction in the unit costs of materials and labour by 2.5%
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.
2 Seasonality
In common with the rest of the UK housebuilding industry,
activity occurs year-round, however the pattern of reservations
usually results in the Group's completions being more heavily
weighted towards the second half of the year.
3 Revenue
Six months
Six months ended Year ended
ended 30 June 2022 31 Dec 2022
30 June 2023 GBP000 GBP000
GBP000 (restated and (restated and
Revenue by type (unaudited) unaudited) audited)
Private housing 945,910 795,880 1,895,566
=================================== ============= ============== ===============
Affordable housing and PRS revenue 333,134 127,832 350,465
=================================== ============= ============== ===============
Partner delivery revenue 255,162 236,212 470,357
=================================== ============= ============== ===============
Bare land sales 7,955 844 5,654
=================================== ============= ============== ===============
Part exchange turnover * 27,378 24,171 41,887
=================================== ============= ============== ===============
Other 5,767 2,220 7,390
=================================== ============= ============== ===============
Total 1,575,306 1,187,159 2,771,319
=================================== ============= ============== ===============
*The Group has historically presented the net of the part
exchange revenue and cost of sale within cost of sales, however
they have now amended their accounting policy to present revenue
and cost of sales gross for part exchange transactions. The H1 22
and FY 22 comparatives have been restated on this basis since a
change in accounting policy should be applied retrospectively.
4 Other operating income
Six months Six months
ended ended Year ended
30 June 2023 30 June 2022 31 Dec 2022
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
Joint arrangement management fees
income 27,244 17,176 29,949
================================== ============= ============= ============
Release of joint venture deferred
income 5,917 6,882 21,420
================================== ============= ============= ============
Government grant income 4,606 993 6,344
================================== ============= ============= ============
Total other operating income 37,767 25,051 57,713
================================== ============= ============= ============
5 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.
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.
From 1 January 2023, following the Combination on 11 November
2022 and subsequent business integration, the Board have identified
two separate segments for 2023 having taken into consideration IFRS
8: "Operating Segments" criteria, Housebuilding and Partnerships,
since the CODM has reviewed information on this basis from that
date. The two segments which were formerly reported as Partnerships
and Countryside have been merged operationally into what is now
presented as Partnerships. In addition, a number of former
Countryside legacy Housebuilding operations have been transferred
into the Housebuilding segment during H1 23, together with 13 other
sites which were identified as being more closely aligned with the
nature of the Housebuilding segment.
This is a change from the Group's Annual Report and Accounts for
the year ended 31 December 2022, and as a result the FY 22
comparative information for segmental disclosures have been
restated under the revised segments.
Given this restructuring, the goodwill previously allocated to
the Countryside group of cash generating units ("CGUs") must be
reallocated between the remaining two groups of CGUs, Housebuilding
and Partnerships. The Group has performed an assessment in
accordance with IAS 36 and have concluded that the full goodwill of
the former Countryside business should be reallocated to the
revised Partnerships business since this reflects the primary
motivation for the Combination in 2022 as well as where the vast
majority of value driven by the Combination is expected to reside
and continue into the future.
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.
The Partnerships segment specialises in partnering with housing
associations, other public sector businesses and PRS providers, to
deliver either the development of private, affordable and PRS
housing on land owned by the Group or the Group's joint ventures,
or to provide contracting services for development. The
Partnerships segment currently operates under the Countryside
Partnerships, Vistry Partnerships and Drew Smith brand names,
though the Drew Smith and Vistry Partnerships brand names will
cease to be used once current sites complete.
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 acquisition related exceptional items and
amortisation of acquired intangibles.
Segmental tangible net asset value 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
associate and exclude exceptional items. Adjusted revenue is stated
exclusive of revenue recognised by the Group on transactions with
joint ventures and associate, no adjustment is made to adjusted
gross margin as the impact is de minimis. Adjusted gross profit is
stated including other operating income.
Housebuilding Partnerships Group items Total
Period ended 30 June 2023
(unaudited) GBP000 GBP000 GBP000 GBP000
Revenue 708,494 866,812 - 1,575,306
============================ ============= ============ =========== =========
Share of joint ventures
and associate revenue 115,002 98,881 - 213,883
============================ ============= ============ =========== =========
Elimination of revenue
recognised on transactions
with joint ventures and
associate - (12,116) - (12,116)
============================ ============= ============ =========== =========
Adjusted revenue 823,496 953,577 - 1,777,073
============================ ============= ============ =========== =========
Gross profit 131,045 99,979 6,246 237,270
============================ ============= ============ =========== =========
Share of joint ventures
and associate gross profit 18,758 16,546 - 35,304
============================ ============= ============ =========== =========
Exceptional cost of sales - 18,422 (6,246) 12,176
============================ ============= ============ =========== =========
Other operating income 13,487 24,280 - 37,767
============================ ============= ============ =========== =========
Adjusted gross profit 163,290 159,227 - 322,517
============================ ============= ============ =========== =========
Operating profit / (loss) 97,915 53,534 (30,274) 121,175
============================ ============= ============ =========== =========
Share of joint ventures
and associate operating
profit 18,581 15,640 - 34,221
============================ ============= ============ =========== =========
Exceptional items - 18,422 9,716 28,138
============================ ============= ============ =========== =========
Amortisation of acquired
intangibles 1,379 21,753 - 23,132
============================ ============= ============ =========== =========
Adjusted operating profit
/ (loss) 117,875 109,349 (20,558) 206,666
============================ ============= ============ =========== =========
Adjusted gross margin 19.8% 16.7% - 18.1%
============================ ============= ============ =========== =========
Adjusted operating margin 14.3% 11.5% - 11.6%
============================ ============= ============ =========== =========
Restated Housebuilding Partnerships Group items Total
Period ended 30 June 2022
(unaudited) GBP000 GBP000 GBP000 GBP000
Revenue 799,705 387,454 - 1,187,159
============================ ============= ============ =========== =========
Share of joint ventures
and associate revenue 126,592 71,242 - 197,834
============================ ============= ============ =========== =========
Elimination of revenue
recognised on transactions
with joint ventures and
associate - (32,472) - (32,472)
============================ ============= ============ =========== =========
Adjusted revenue 926,297 426,224 - 1,352,521
============================ ============= ============ =========== =========
Gross profit / (loss) 170,770 53,795 (71,429) 153,136
============================ ============= ============ =========== =========
Share of joint ventures
and associate gross profit 22,945 7,944 - 30,889
============================ ============= ============ =========== =========
Exceptional cost of sales - - 71,429 71,429
============================ ============= ============ =========== =========
Other operating income 13,993 11,058 - 25,051
============================ ============= ============ =========== =========
Adjusted gross profit 207,708 72,797 - 280,505
============================ ============= ============ =========== =========
Operating profit / (loss) 146,227 30,028 (86,922) 89,333
============================ ============= ============ =========== =========
Share of joint ventures
and associate operating
profit 22,419 7,866 - 30,285
============================ ============= ============ =========== =========
Exceptional items - - 71,429 71,429
============================ ============= ============ =========== =========
Amortisation of acquired
intangibles 1,380 5,740 - 7,120
============================ ============= ============ =========== =========
Adjusted operating profit
/ (loss) 170,026 43,634 (15,493) 198,167
============================ ============= ============ =========== =========
Adjusted gross margin 22.4% 17.1% - 20.7%
============================ ============= ============ =========== =========
Adjusted operating margin 18.4% 10.2% - 14.7%
============================ ============= ============ =========== =========
Segmental financial performance
Restated Housebuilding Partnerships Group items Total
Year ended 31 December 2022
(audited) GBP000 GBP000 GBP000 GBP000
Revenue 1,823,532 947,787 - 2,771,319
================================== ============= ============ =========== =========
Share of joint ventures and
associate revenue 244,409 148,220 - 392,629
================================== ============= ============ =========== =========
Elimination of revenue recognised
on transactions with joint
ventures and associate - (48,824) - (48,824 )
================================== ============= ============ =========== =========
Adjusted revenue 2,067,941 1,047,183 - 3,115,124
================================== ============= ============ =========== =========
Gross profit 390,282 119,560 (96,113) 413,729
================================== ============= ============ =========== =========
Share of joint ventures and
associate gross profit 45,365 23,935 - 69,300
================================== ============= ============ =========== =========
Exceptional cost of sales - - 96,113 96,113
================================== ============= ============ =========== =========
Other operating income 31,433 26,280 - 57,713
================================== ============= ============ =========== =========
Adjusted gross profit 467,080 169,775 - 636,855
================================== ============= ============ =========== =========
Operating profit / (loss) 336,055 77,171 (200,720) 212,506
================================== ============= ============ =========== =========
Share of joint ventures and
associate operating profit 45,028 23,514 - 68,542
================================== ============= ============ =========== =========
Exceptional items - - 152,977 152,977
================================== ============= ============ =========== =========
Amortisation of acquired
intangibles 2,757 14,308 - 17,065
================================== ============= ============ =========== =========
Adjusted operating profit
/ (loss) 383,840 114,993 (47,743) 451,090
================================== ============= ============ =========== =========
Adjusted gross margin 22.6% 16.2% - 20.4%
================================== ============= ============ =========== =========
Adjusted operating margin 18.6% 11.0% - 14.5%
================================== ============= ============ =========== =========
Segmental financial position
Housebuilding Partnerships Group items Total
Period ended 30 June 2023
(unaudited) GBP000 GBP000 GBP000 GBP000
Goodwill and intangibles 274,384 986,553 - 1,260,937
=============================== ============= ============ =========== =========
Tangible net assets excluding
investments in joint ventures
and associate 1,634,532 662,004 (257,444) 2,039,092
=============================== ============= ============ =========== =========
Investments in joint ventures
and associate 152,911 100,170 - 253,081
=============================== ============= ============ =========== =========
Net cash / (debt) - - (328,652) (328,652)
=============================== ============= ============ =========== =========
Housebuilding Partnerships Group items Total
Restated
Period ended 30 June 2022
(unaudited) GBP000 GBP000 GBP000 GBP000
Goodwill and intangibles 277,924 391,185 - 669,109
=============================== ============= ============ =========== =========
Tangible net assets excluding
investments in joint ventures
and associate 1,309,368 88,896 (3,781) 1,394,483
=============================== ============= ============ =========== =========
Investments in joint ventures
and associate 158,107 29,308 - 187,415
=============================== ============= ============ =========== =========
Net cash - - 114,968 114,968
=============================== ============= ============ =========== =========
Housebuilding Partnerships Group items Total
Restated
Year ended 31 December 2022
(audited) GBP000 GBP000 GBP000 GBP000
Goodwill and intangibles 275,255 985,452 - 1,260,707
=============================== ============= ============ =========== =========
Tangible net assets excluding
investments in joint ventures
and associate 1,530,083 366,393 (279,335) 1,617,141
=============================== ============= ============ =========== =========
Investments in joint ventures
and associate 135,868 117,791 - 253,659
=============================== ============= ============ =========== =========
Net cash - - 118,165 118,165
=============================== ============= ============ =========== =========
6 Exceptional expenses
Exceptional items are those which, in the opinion of the Board,
are material by size and irregular in nature 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.
2023 exceptional expenses relate to the integration of the
enlarged business following the Combination with Countryside in
2022 and changes to the Group's fire safety provision. 2022
exceptional expenses related to the Combination with Countryside
and an incremental fire safety provision.
Six months Six months
ended ended Year ended
30 June
2023 30 June 2022 31 Dec 2022
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
Cost of sales relating to fire safety 12,176 71,429 96,113
======================================== ============ ============== ==============
Administrative expenses relating to the
Combination with Countryside 15,962 - 56,864
======================================== ============ ============== ==============
Interest on fire safety provision 7,435 - 900
======================================== ============ ============== ==============
Total exceptional expenses 35,573 71,429 153,877
======================================== ============ ============== ==============
On 11 November 2022, the Group completed the Combination with
Countryside Partnerships PLC. The administrative expenses of
GBP16.0m incurred in the six months to 30 June 2023 in relation to
the Combination primarily relate to the integration of the enlarged
business and further restructuring.
The administrative expenses incurred in the year ended 31
December 2022 in relation to this transaction include legal,
financing and accounting advisory service fees, transaction
insurance costs totalling GBP29.5m and costs directly attributable
to the integration and restructuring of the Group, totalling
GBP27.4m.
Exceptional costs of sale relating to fire safety result from
the recognition of GBP18.4m relating to the expected update to
second staircase regulations, offset by the release of GBP6.2m in
unused fire safety provision. GBP7.4m of interest reflects the
discount unwind on the long term liability for the first half of
the year. The amount of the provision reflects our best estimate to
carry out these fire safety works.
Tax on exceptional items in H1 23 was GBP9.8m (H1 22: GBP15.7m,
FY 22: GBP30.7m).
7 Earnings per share
Profit attributable to ordinary shareholders
Six months Six months
ended ended Year ended
30 June
2023 30 June 2022 31 Dec 2022
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
Profit for the period/year attributable
to equity holders of the parent 83,222 86,626 204,345
============================================= ============= ============== =============
Profit for the period/year attributable
to equity holders of the parent (before
exceptional items and amortisation of
acquired intangibles) 132,145 149,461 324,687
============================================= ============= ============== =============
Earnings per share
Six months Six months
ended ended Year ended
30 June
2023 30 June 2022 31 Dec 2022
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
Basic earnings per share 24.1p 39.1p 86.5p
================================================== ============ ============== =============
Diluted earnings per share 24.1p 38.9p 86.3p
================================================== ============ ============== =============
Adjusted basic earnings per share (based
on profit after tax before exceptional
items, tax on exceptional items and amortisation
of acquired intangibles*) 38.3p 67.4p 137.5p
================================================== ============ ============== =============
Adjusted diluted earnings per share (based
on profit after tax before exceptional
items, tax on exceptional items and amortisation
of acquired intangibles*) 38.2p 67.2p 137.1p
================================================== ============ ============== =============
*Amortisation of acquired intangibles is the amortisation of
brand names and customer relationships and contracts. These metrics
are both calculated by applying the adjusted tax rate, which is
defined as the reported tax rate, as adjusted for exceptional
items.
Weighted average number of shares used as the denominator
Six months Six months
ended ended Year ended
30 June
2023 30 June 2022 31 Dec 2022
(unaudited) (unaudited) (audited)
Weighted average number of ordinary shares
for the period 345,139,445 221,655,600 236,161,867
=========================================== ============ ============= ============
127,447,399 shares were issued on 11 November 2022 as
consideration in the Combination with Countryside.
Basic earnings per share
Basic earnings per ordinary share for the six months ended 30
June 2023 is calculated on a profit attributable to shareholders of
GBP 83,222,000 (H1 22: GBP86,626,000; FY 22: GBP204,345,000) over
the weighted average of 345,139,445 (H1 22: 221,655,600; FY 22:
236,161,867) ordinary shares in issue during the period.
Diluted earnings per share
The calculation of diluted earnings per share at 30 June 2023
was based on the profit attributable to ordinary shareholders of
GBP 83,222,000 (H1 22: GBP86,626,000; FY 22: GBP204,345,000) over
the diluted weighted average ordinary shares potentially in issue
during the six months ended 30 June 2023 of 345,599,359 (H1 22:
222,412,583; FY 22: 236,748,342).
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.
8 Dividends
The following dividends were paid
by the Group:
Six months Six months
ended ended Year ended
30 June 2023 30 June 2022 31 Dec 2022
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
June 23: 32p (H1 22: 40p, FY 22:
63p) 110,429 88,748 138,858
================================== ============== ============== =============
110,429 88,748 138,858
================================== ============== ============== =============
A final dividend of 32 pence per share was paid on 1 June 2023
in respect of 2022, following approval by the shareholders at the
AGM.
9 Financial instruments
Fair values
There is no material difference between the carrying value of
financial instruments shown in the balance sheet and their fair
value.
Maturities of financial
instruments
Less than Between Between Total
6 1-2 2-5 Over 5 contractual Carrying
months 6-12 months years years years cash flows amount
30 June 2023 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-derivative financial
assets
============================ =========== =========== ========= ========= ======== ============ ===========
Restricted cash 18 - - - 344 362 362
============================ =========== =========== ========= ========= ======== ============ ===========
Trade and other receivables
* 469,491 - - - 561 470,052 470,052
============================ =========== =========== ========= ========= ======== ============ ===========
Cash and cash equivalents 212,975 - - - - 212,975 212,975
============================ =========== =========== ========= ========= ======== ============ ===========
Non-derivative financial
liabilities
============================ =========== =========== ========= ========= ======== ============ ===========
Bank and other loans (35,177) - - - - (35,177) (33,322)
============================ =========== =========== ========= ========= ======== ============ ===========
Long-term loans (16,024) (16,024) (432,048) (109,315) (7,693) (581,104) (508,305)
============================ =========== =========== ========= ========= ======== ============ ===========
Trade and other payables
** (1,196,648) (194,214) (164,372) (137,909) (15,567) (1,708,710) (1,684,518)
============================ =========== =========== ========= ========= ======== ============ ===========
Lease liabilities (12,699) (12,699) (22,192) (37,771) (40,014) (125,375) (98,490)
============================ =========== =========== ========= ========= ======== ============ ===========
Total net financial
liabilities (578,064) (222,937) (618,612) (284,995) (62,369) (1,766,977) (1,641,246)
============================ =========== =========== ========= ========= ======== ============ ===========
Less than Between Between Total
6 1-2 2-5 Over 5 contractual Carrying
30 June 2022 (restated months 6-12 months years years years cash flows amount
and unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-derivative financial
assets
============================ ========= =========== ========= ========= ======== ============ ===========
Restricted cash 188 - - - 338 526 526
============================ ========= =========== ========= ========= ======== ============ ===========
Trade and other receivables
* 205,456 - - - 677 206,133 206,133
============================ ========= =========== ========= ========= ======== ============ ===========
Cash and cash equivalents 427,949 - - - - 427,949 427,949
============================ ========= =========== ========= ========= ======== ============ ===========
Non-derivative financial
liabilities
============================ ========= =========== ========= ========= ======== ============ ===========
Bank and other loans (151,238) (50,885) - - - (202,123) (200,000)
============================ ========= =========== ========= ========= ======== ============ ===========
Long-term loans (2,015) (2,015) (4,030) (112,090) (7,145) (127,295) (112,981)
============================ ========= =========== ========= ========= ======== ============ ===========
Trade and other payables
** (778,600) (136,877) (98,632) (45,109) (9,024) (1,068,242) (1,062,458)
============================ ========= =========== ========= ========= ======== ============ ===========
Lease liabilities (5,439) (5,439) (5,598) (9,991) (2,569) (29,036) (27,565)
============================ ========= =========== ========= ========= ======== ============ ===========
Total net financial
liabilities (303,699) (195,216) (108,260) (167,190) (17,723) (792,088) (768,396)
============================ ========= =========== ========= ========= ======== ============ ===========
Less than Between Between Total
6 1-2 2-5 Over 5 contractual Carrying
months 6-12 months years years years cash flows amount
31 December 2022 (audited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-derivative financial
assets
============================ ========= =========== ========= ========= ======== ============ ===========
Restricted cash 382 - - - - 382 382
============================ ========= =========== ========= ========= ======== ============ ===========
Trade and other receivables
* 435,445 - - - 601 436,046 436,046
============================ ========= =========== ========= ========= ======== ============ ===========
Cash and cash equivalents 676,760 - - - - 676,760 676,760
============================ ========= =========== ========= ========= ======== ============ ===========
Non-derivative financial
liabilities
============================ ========= =========== ========= ========= ======== ============ ===========
Bank and other loans (51,725) - - - - (51,725) (49,938)
============================ ========= =========== ========= ========= ======== ============ ===========
Long term loans (15,175) (15,175) (30,350) (524,035) (7,710) (592,445) (508,657)
============================ ========= =========== ========= ========= ======== ============ ===========
Trade and other payables
** (796,471) (546,974) (179,448) (120,448) (19,121) (1,662,462) (1,650,998)
============================ ========= =========== ========= ========= ======== ============ ===========
Lease liabilities (10,202) (10,202) (16,465) (35,158) (42,315) (114,342) (86,582)
============================ ========= =========== ========= ========= ======== ============ ===========
Total net financial
liabilities 239,014 (572,351) (226,263) (679,641) (68,545) (1,307,786) (1,182,987)
============================ ========= =========== ========= ========= ======== ============ ===========
*Trade and other receivables excluding prepayments which are not
financial instruments. H1 22 has been restated to exclude
prepayments as it was included in error in the H1 22 accounts. This
has reduced the trade and other receivables by GBP46.0m.
**Trade and other payables excluding deferred income which is
not a financial instrument. H1 22 has been restated to exclude
deferred income as it was included in error in the H1 22 accounts.
This has reduced the trade and other payables within this
disclosure by GBP80.2m.
Estimation of fair values
The following summarises the major methods and assumptions used
in estimating the fair values of financial instruments:
Land purchased on extended payment terms
When land is purchased on extended payment terms, the Group
initially records it at its fair value with a land creditor
recorded for any outstanding monies based on this fair value
assessment. Fair value is determined as the outstanding element of
the price paid for the land discounted to present day. The
difference between the nominal value and the initial fair value is
amortised over the period of the extended credit term and charged
to finance costs using the 'effective interest' rate method,
increasing the value of the land creditor such that at the date of
maturity the land creditor equals the payment required.
Six months Six months
ended ended Year ended
30 June
2023 30 June 2022 31 Dec 2022
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
Balance at period / year end 694,763 405,226 667,357
============================== ============= ============== =============
Total contracted cash payment 718,998 411,011 678,823
============================== ============= ============== =============
Due within 1 year 401,150 254,751 359,848
============================== ============= ============== =============
Due within 1-2 years 164,372 102,169 179,448
============================== ============= ============== =============
Due within 2-3 years 46,973 27,295 37,605
============================== ============= ============== =============
Due within 3-4 years 65,358 11,545 53,182
============================== ============= ============== =============
Due within 4-5 years 25,578 6,269 29,661
============================== ============= ============== =============
Due in more than 5 years 15,567 8,982 19,079
============================== ============= ============== =============
Bank and other loans
Fair value is calculated based on discounted expected future
principal and interest flows.
Trade and other receivables / payables
Other than land creditors, the nominal value of trade
receivables and payables is deemed to reflect the fair value. This
is due to the fact that transactions which give rise to these trade
receivables and payables arise in the normal course of trade with
industry standard payment terms.
10 Tax
As part of the Government's Building Safety Package to bring an
end to unsafe cladding, they introduced a new tax payable on
profits of developers in February 2022. This Residential Property
Developer Tax ("RPDT") is payable by the largest residential
property developers to ensure they make a fair contribution in
order to fund cladding remediation works. This has been implemented
with effect from 1 April 2022 at a rate of 4% on relevant profits
and therefore we are disclosing the amount of RPDT charged on our
profits separately in our financial statements.
Six months Six months
ended ended Year ended
30 June
2023 30 June 2022 31 Dec 2022
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
Income tax expense excluding residential
property developer tax 27,436 21,383 33,096
========================================= ============= ============== =============
Residential property developer tax 3,583 3,336 10,043
========================================= ============= ============== =============
Total tax expense 31,019 24,719 43,139
========================================= ============= ============== =============
The effective tax rate of 27.2% is higher than the average
statutory tax rate of 23.5% for the year due to the Group's
liability to RPDT.
11 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 period ended 30 June 2023 were limited to those
relating to remuneration.
Mr. Greg Fitzgerald, Group Chief Executive, is non-executive
Chairman of Ardent Hire Solutions Limited ("Ardent"). The Group
hires forklift trucks from Ardent.
Mr. Stephen Teagle, Chief Executive of Vistry Partnerships, is
the Chair of The Housing Forum. The Group paid for a subscription
to The Housing Forum during the year.
Ms. Katherine Innes Ker, former non-executive Director who
resigned in May 2023, was also non-executive Director of Forterra
PLC. The Group incurred costs with Forterra PLC in relation to the
supply of bricks during the term that Katherine was a non-executive
Director in 2023 which is presented in the table below. Any
transactions with Forterra PLC in the period after Katherine's
departure from the Board are excluded from the table below.
Mr. Graham Prothero, former Chief Operating Officer who ceased
to be a Director of the Group from 31 December 2022 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 in 2022 which are presented in the
table below. Any transactions with Marshall PLC in 2023 are no
longer related party transactions and are therefore excluded for
the current period in the table below.
Mr. Ian Tyler, former non-executive Chairman who resigned in
2022, was also the Chairman of Affinity Water Limited. The Group
received water services from Affinity Water Limited during the
prior year when Ian was non-executive Chairman. Any transactions
with Affinity Water Limited in 2023 are no longer related party
transactions and are therefore excluded for the current period in
the table below.
The total net value of transactions with related parties
excluding joint ventures and associate have been made at arms
length and were as follows:
Expenses paid to Amounts payable
related parties to related parties
Six Six Six Six
months months months months
Year Year
ended ended ended ended ended ended
30 30 31 30 30 31
June June Dec June June Dec
23 22 22 23 22 22
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
Trading transactions
===================== ============= ============= =========== ============= ============= ============
Ardent 3,749 2,937 5,319 767 716 774
===================== ============= ============= =========== ============= ============= ============
The Housing Forum 15 - 13 - - -
===================== ============= ============= =========== ============= ============= ============
Forterra PLC 13 67 67 2 49 48
===================== ============= ============= =========== ============= ============= ============
Marshalls PLC - 1 1 - 1 91
===================== ============= ============= =========== ============= ============= ============
Affinity Water
Limited - 4 4 - 1 2
===================== ============= ============= =========== ============= ============= ============
Transactions between the Group and its joint ventures and
associate are disclosed as follows:
Interest income
and dividend
Sales to related distributions from
parties related parties
=========================================
Six Six Six Six
months months months months
Year Year
ended ended ended ended ended ended
30 31 30
June 30 June Dec June 30 June 31 Dec
2023 2022 2022 2023 2022 2022
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
Trading transactions 47,610 55,971 134,817 - - -
===================================== ============= ============= =========== ============= ============= ===========
Non-trading transactions - - - 27,842 10,904 46,564
===================================== ============= ============= =========== ============= ============= ===========
Amounts owed
by related Amounts owed to
parties related parties
========================== =========================================
Six Six Six Six
months months months months
Year Year
ended ended ended ended ended ended
30 31 30
June 30 June Dec June 30 June 31 Dec
2023 2022 22 2023 2022 22
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
Balances with joint
ventures and associate 371,989 274,334 391,382 68,730 47,467 139,672
===================================== ============= ============= =========== ============= ============= ===========
Sales to related parties including joint ventures and associate
are based on normal commercial terms available to unrelated third
parties. The loans made to joint ventures and associate bear
interest at rates of between 0.0% and 10.4%; all balances with
related parties will be settled in cash.
As at the reporting date, 3 (H1 22: 3, FY 22: 3) of the Group's
employees have a close family member on the Executive Committee.
These individuals were recruited through the normal interview
process and are employed at salaries commensurate with their
experience and roles. The combined salary and benefits of these
individuals for the six-month reporting period is GBP248,000 (H1
22: GBP240,000, FY 22: GBP376,000).
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.
12 Reconciliation of Return on Capital Employed performance
measure
The ROCE calculation for the Group is detailed below. This is
calculated as adjusted 12 month rolling operating profit divided by
the average capital employed over the rolling 12-month period.
Average capital employed is calculated based on opening and closing
capital employed for the rolling 12-month period. The comparative
measures for ROCE have been restated to exclude the Group's fire
safety provision in order to properly align with adjusted operating
profit used within the calculation:
Six months
Six months ended Year ended
30 June 31 Dec
ended 2022 2022
30 June
2023 (restated) (restated)
GBP000 GBP000 GBP000
Adjusted operating profit 459,589 391,075 451,090
============================================= =========== ============= =============
Opening total equity 2,365,975 2,284,966 2,390,581
============================================= =========== ============= =============
Deduct: goodwill 547,509 547,509 547,509
============================================= =========== ============= =============
Deduct: intangible assets 121,600 136,553 127,809
============================================= =========== ============= =============
Deduct: net cash 114,968 31,563 234,454
============================================= =========== ============= =============
Deduct: retirement benefit asset 44,435 23,796 45,318
============================================= =========== ============= =============
Deduct: fire safety provision (94,218) (21,030) (25,212)
============================================= =========== ============= =============
Opening capital employed 1,631,681 1,566,575 1,460,703
============================================= =========== ============= =============
Closing total equity 3,224,458 2,365,975 3,249,672
============================================= =========== ============= =============
Deduct: goodwill 827,628 547,509 804,742
============================================= =========== ============= =============
Deduct: intangible assets 433,309 121,600 455,965
============================================= =========== ============= =============
Deduct: net (debt) / cash (328,652) 114,968 118,165
============================================= =========== ============= =============
Deduct: retirement benefit asset 34,209 44,435 34,251
============================================= =========== ============= =============
Deduct: fire safety provision (311,848) (94,218) (309,125)
============================================= =========== ============= =============
Closing capital employed 2,569,812 1,631,681 2,145,674
============================================= =========== ============= =============
Average capital employed 2,100,747 1,599,128 1,803,189
============================================= =========== ============= =============
Group ROCE including share of joint ventures
and associate 21.9% 24.5% 25.0%
============================================= =========== ============= =============
13 Provisions
Fire safety Site-related Restructuring
provision costs provision Other Total
GBP000 GBP000 GBP000 GBP000 GBP000
As at 1 January 2023 309,215 12,882 17,030 14,549 353,676
=============================== =========== ============ ============= ======= ========
Additional provisions made 12,300 2,873 11,687 2,540 29,400
=============================== =========== ============ ============= ======= ========
Amounts used (10,856) (2,508) (19,614) (1,877) (34,855)
=============================== =========== ============ ============= ======= ========
Discount unwind 7,435 - - - 7,435
=============================== =========== ============ ============= ======= ========
Unused provisions reversed (6,246) (1,200) - (732) (8,178)
=============================== =========== ============ ============= ======= ========
As at 30 June 2023 (unaudited) 311,848 12,047 9,103 14,480 347,478
=============================== =========== ============ ============= ======= ========
Fire safety Site-related Restructuring
provision costs provision Other Total
GBP000 GBP000 GBP000 GBP000 GBP000
As at 1 January 2022 25,212 7,162 - 7,009 39,383
================================= =========== ============ ============== ======== =========
Additional provisions made 71,429 - - 3,216 74,645
================================= =========== ============ ============== ======== =========
Amounts used (2,423) (65) - (2,001) (4,489)
================================= =========== ============ ============== ======== =========
Unused provisions reversed - - - (759) (759)
================================= =========== ============ ============== ======== =========
As at 30 June 2022 (unaudited) 94,218 7,097 - 7,465 108,780
================================= =========== ============ ============== ======== =========
Fire safety Site-related Restructuring
provision costs Provision Other Total
GBP000 GBP000 GBP000 GBP000 GBP000
As at 1 January 2022 25,212 7,162 - 7,009 39,383
================================= =========== ============ ============== ======== =========
Additions acquired as a result
of the Combination 191,826 8,143 - 8,737 208,706
================================= =========== ============ ============== ======== =========
Additional provisions made 96,113 1,486 17,030 2,659 117,288
================================= =========== ============ ============== ======== =========
Amounts used (4,836) (768) - (3,526) (9,130)
================================= =========== ============ ============== ======== =========
Discount unwind 900 - - - 900
================================= =========== ============ ============== ======== =========
Unused provisions reversed - (3,141) - (330) (3,471)
================================= =========== ============ ============== ======== =========
As at 31 December 2022 (audited) 309,215 12,882 17,030 14,549 353,676
================================= =========== ============ ============== ======== =========
The fire safety provision includes estimated costs to address
revised fire safety regulations issued by the Government. At FY 22
the provision reflected the Group's commitment to the Government's
Developer Pledge and the Developer Remediation Contract. At H1 23
it also reflects the Group's expected liability relating to the
Government's commitment to mandating a second staircase in
high-rise residential buildings over 18 metres tall, a reduction
from the previous 30 metre threshold.
The Group has undertaken a review of all of its current and
legacy buildings where a liability has been identified based on
both legal and constructive obligations for both fire safety
remediation works and second staircases. This review, performed by
in house teams, involved a physical inspection of potentially
impacted developments along with an assessment of the cost to
address revised regulations based on external cost estimates where
available and in part on experiences of similar work undertaken.
The individual developments and associated costs were then reviewed
by management. For second staircases, the Group has provided for
the expected losses generated on schemes that they are
contractually bound to complete without opportunity to mitigate the
associated cost increases and revenue losses resulting from the
change in regulation.
As at the balance sheet date the Group has provided GBP311.8m
for the expected costs of fire safety regulatory change, GBP12.3m
of which was recognised in H1 23 relating to second staircases. We
expect the majority of this provision to be utilised over the next
five years. During the period, GBP10.9m was spent on fire safety
remediation works. The expected spend for the second half of the
year is GBP30m as we ramp up our preparation and mobilisation works
ready to be on-site and actively remediating on another 40 sites in
FY 24. In FY 24 we expect to spend GBP60m, including GBP10-15m on
Building Safety Fund ("BSF") payments.
Six months Six months
ended ended Year ended
30 June
2023 30 June 2022 31 Dec 2022
GBP000 GBP000 GBP000
14 Reconciliation of net cash flow to net
(debt) / cash (unaudited) (unaudited) (audited)
Cash and cash equivalents 212,975 427,949 676,760
=========================================== ============= ============== =============
Non-current bank and other loans (508,305) (112,981) (508,657)
=========================================== ============= ============== =============
Current bank and other loans (33,322) (200,000) (49,938)
=========================================== ============= ============== =============
Net (debt) / cash (328,652) 114,968 118,165
=========================================== ============= ============== =============
Analysis of net cash:
Six months Six months
ended ended Year ended
30 June
2023 30 June 2022 31 Dec 2022
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
Net cash at 1 January 118,165 234,454 234,454
=========================================== ============= ============== =============
Cash flow per cash flow statement (463,785) 29,235 278,046
=========================================== ============= ============== =============
Loan repayments 646,038 220,952 993,562
=========================================== ============= ============== =============
Loan drawdowns (630,000) (370,000) (1,390,000)
=========================================== ============= ============== =============
Imputed interest on USPP loan 466 451 911
=========================================== ============= ============== =============
Prepaid facility fees capitalised 1,678 - 4,831
=========================================== ============= ============== =============
Prepaid facility fees amortised (1,022) (124) (889)
=========================================== ============= ============== =============
Capitalised interest (192) - (257)
=========================================== ============= ============== =============
Debt acquired with Countryside - - (2,493)
=========================================== ============= ============== =============
Net (debt) / cash at the end of the period
/ year (328,652) 114,968 118,165
=========================================== ============= ============== =============
15 Business combinations
On 11 November 2022, the Group completed the Combination with
Countryside Partnerships ("Countryside") for a consideration of
GBP1,137.0m. The Combination has positioned the Group as the
largest national housebuilder by volume, expanded the Group's
presence across the UK and established the Group as the industry
leader in the highly attractive, high-growth partnerships business.
The acquisition was of 100% of the share capital and control of
Countryside Partnerships PLC and all of its subsidiaries, which
were disclosed in note 5.17 to the 2022 Annual Report and Accounts.
Details of the purchase consideration, the net assets acquired and
goodwill at 11 November 2022 are as follows:
Purchase consideration
GBP000
Cash consideration 299,876
================================================= =========
Shares in Vistry Group PLC issued 837,967
================================================= =========
Replacement of SAYE schemes 852
================================================= =========
Less: shares issued to acquired employee benefit
trust (1,651)
================================================= =========
Total purchase consideration 1,137,044
================================================= =========
The share consideration included 127,447,399 Vistry Group PLC
shares with nominal value of GBP0.50 per share and a fair value of
GBP6.58m, being the opening share price on 14 November 2022, the
first time the consideration shares could have been traded.
GBP774.2m was 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 the nominal value of the shares.
The consideration related to the replacement of SAYE schemes is
calculated based on the fair value of the various options granted
to former Countryside employees multiplied by the number of options
and the estimated likelihood of vesting.
The provisional fair values of the assets and liabilities
recognised as a result of the Combination are as follows:
Provisional fair value
11 November 2022
GBP000
Cash and cash equivalents 224,702
=================================== ======================
Property, plant and equipment 18,101
=================================== ======================
Right-of-use assets 59,961
=================================== ======================
Intangible assets 349,102
=================================== ======================
Investments 61,617
=================================== ======================
Inventories 768,827
=================================== ======================
Amounts owed by joint ventures and
associate 105,848
=================================== ======================
Trade and other receivables 122,108
=================================== ======================
Trade and other payables (615,252)
=================================== ======================
Borrowings (2,493)
=================================== ======================
Lease liabilities (63,005)
=================================== ======================
Provisions (208,869)
=================================== ======================
Net deferred tax asset 36,278
=================================== ======================
Net identifiable assets acquired 856,925
=================================== ======================
Goodwill 280,119
=================================== ======================
Total net assets acquired 1,137,044
=================================== ======================
The acquisition accounting in relation to the Combination has
been updated during the first half of 2023 and will be concluded by
11 November 2023 in line with IFRS 3 which allows up to 12 months
from the date of acquisition to complete the fair valuation
exercise. The final acquisition balance sheet will be disclosed in
the FY 23 Annual Report and Accounts.
These fair values have been amended during H1 23 to reflect the
impact of new information that became available in the period,
which has resulted in a GBP22.8m increase to goodwill from
GBP257.3m at 31 December 2022 to GBP280.1m at 30 June 2023. This
GBP22.8m increase to goodwill primarily arises due to a full
write-down of inventory at one particular site which has now been
deemed unviable due to the cost estimates at the time of the
Combination being significantly underestimated. The corrected cost
to complete results in a net cash outflow to complete the site as
well as a significant capital lock-up, and this site would
therefore not be progressed by a market participant.
The acquired intangibles include the Countryside Partnerships
brand name, the customer relationships and the secured contracts of
the acquired business. The acquired intangible assets have
estimated useful lives of between 5 and 25 years. The Group engaged
external experts to support management in the fair valuation of the
acquired intangible assets and preparation of the purchase price
allocation.
The goodwill for the acquired business reflects intangible
assets which do not qualify for separate recognition including the
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.
There have been no further business combinations in 2023.
16 Alternative performance measures
The Group uses alternative performance measures which are not
defined within UK-adopted International Accounting Standards. The
Directors use these alternative performance measures, along with
UK-adopted International Accounting Standards measures, to assess
the operational performance of the Group. The Group's alternative
performance measures reflect the contribution of the joint venture
and associate investments held and the impact of amortisation of
intangibles resulting from the acquisitions of Linden and
Partnerships from Galliford Try PLC in 2020 and of Countryside in
2022 .
The inclusion of associate share of results within the below
alternative performance measures reflects the acquisition of an
investment in associate as a result of the Combination with
Countryside. The Group did not have any associates in H1 22 and
therefore the H1 22 comparative is unchanged.
Adjusted revenue
Adjusted revenue is defined as revenue including share of joint
ventures' and associate revenue:
Six months
Six months ended Year ended
ended 30 June 2022 31 Dec 2022
30 June GBP000 GBP000
2023 (restated^ (restated^
GBP000 and and
(unaudited) unaudited) audited)
Revenue per Group income statement 1,575,306 1,187,159 2,771,319
================================================== ============ ============= ============
Share of joint ventures' and associate
revenue 213,883 197,834 392,629
================================================== ============ ============= ============
Elimination of revenue recognised on transactions
with joint ventures and associate (12,116) (32,472) (48,824)
================================================== ============ ============= ============
Adjusted revenue 1,777,073 1,352,521 3,115,124
================================================== ============ ============= ============
^Restated to recognise the gross up of part exchange revenue as
discussed in note 1.
Adjusted gross profit
Adjusted gross profit is defined as gross profit including share
of joint ventures' and associate gross profit, plus other operating
income and before exceptional cost of sales:
Six months Six months
ended ended Year ended
30 June 2023 30 June 2022 31 Dec 2022
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
Gross profit per Group income statement 237,270 153,136 413,729
======================================== ============== ============== =============
Share of joint ventures' and associate
gross profit 35,304 30,889 69,300
======================================== ============== ============== =============
Exceptional cost of sales 12,176 71,429 96,113
======================================== ============== ============== =============
Other operating income 37,767 25,051 57,713
======================================== ============== ============== =============
Adjusted gross profit 322,517 280,505 636,855
======================================== ============== ============== =============
Adjusted operating profit
Adjusted operating profit is defined as operating profit
including share of joint ventures' and associate operating profit,
before exceptional expenses and amortisation of acquired
intangibles:
Six months Six months
ended ended Year ended
30 June 2023 30 June 2022 31 Dec 2022
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
Operating profit per Group income
statement 121,175 89,333 212,506
======================================= ============== ============== =============
Share of joint ventures' and associate
operating profit 34,221 30,285 68,542
======================================= ============== ============== =============
Exceptional expenses 28,138 71,429 152,977
======================================= ============== ============== =============
Amortisation of acquired intangibles 23,132 7,120 17,065
======================================= ============== ============== =============
Adjusted operating profit 206,666 198,167 451,090
======================================= ============== ============== =============
Adjusted profit before tax
Adjusted profit before tax is defined as profit before tax
before exceptional expenses, amortisation of acquired intangibles
and tax on joint ventures included in profit before tax:
Six months Six months
ended ended Year ended
30 June 2023 30 June 2022 31 Dec 2022
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
Profit before tax per Group income
statement 114,241 111,345 247,484
===================================== ============== ============== =============
Exceptional expenses 35,573 71,429 153,877
===================================== ============== ============== =============
Amortisation of acquired intangibles 23,132 7,120 17,065
===================================== ============== ============== =============
Tax on joint ventures included in
profit before tax 1,086 - -
===================================== ============== ============== =============
Adjusted profit before tax 174,032 189,894 418,426
===================================== ============== ============== =============
17 Post balance sheet events
Following the Government's announcement of a second staircase
being required on residential buildings over 30 metres tall in
December 2022, in March 2023 a number of key organisations within
the construction industry along with key stakeholders in the
Government's fire safety consultation submitted a joint letter to
Michael Gove MP calling for the height threshold to be reduced to
18 metres. The Group consider that as a result of this submission
it was highly probable at 30 June 2023 that second staircases in
buildings over 18 metres tall would be mandated. The announcement
in July 2023 that the UK Government was committed to mandating the
18 metre threshold further supports this conclusion.
As a result of the change in legislation being deemed highly
probable at 30 June 2023 and the July announcement further
supporting this conclusion, this has been treated as an adjusting
post balance sheet, resulting in the recognition of an associated
GBP18.4m exceptional expense in H1 23.
The Group has today announced that the Group will commence a
share buyback to commence in November 2023 to repurchase up to
GBP55m of ordinary shares. There will be no dividend payment with
respect to the first half of the year.
No further post balance sheet events have been identified.
18 Further information
Further information on Vistry Group PLC can be found on the
Group's corporate website www.vistrygroup.co.uk , including the
analyst presentation document which will be presented at the
Group's results meeting on 11 September 2023.
Statement of directors' responsibilities
The directors confirm that these condensed interim financial
statements have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and that the
interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
-- An indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- Material related-party transactions in the first six months
and any material changes in the related-party transactions
described in the last annual report.
The maintenance and integrity of the Vistry Group PLC website is
the responsibility of the directors; the work carried out by the
authors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that might have occurred to the interim financial statements since
they were initially presented on the website.
The directors of Vistry Group PLC are listed in the Vistry Group
PLC annual report for 31 December 2022, with the exception of the
following changes in the period:
-- Mr Jeffrey Ubben was appointed on 23 March 2023, and
-- Mr Nigel Keen resigned from the board on 23 March 2023, and
-- Mr Paul Whetsell was appointed on 18 May 2023, and
-- Ms Helen Owers was appointed on 18 May 2023, and
-- Ms Katherine Innes Ker resigned from the board on 18 May 2023, and
-- Dr Ashley Steel resigned from the board on 18 May 2023.
A list of current directors is maintained on the Vistry Group
PLC website: www.vistrygroup.co.uk .
By order of the board
Greg Fitzgerald Tim Lawlor
Chief Executive Officer Chief Financial Officer
8 September 2023
Independent review report to Vistry Group PLC
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Vistry Group PLC's condensed consolidated
interim financial statements (the "interim financial statements")
in the Half year results and strategy update of Vistry Group PLC
for the 6 month period ended 30 June 2023 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the Group balance sheet as at 30 June 2023;
-- the Group income statement and Group statement of
comprehensive income for the period then ended;
-- the Group statement of cash flows for the period then ended;
-- the Group statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Half year
results and strategy update of Vistry Group PLC have been prepared
in accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council for use in the
United Kingdom ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Half year
results and strategy update and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed in accordance with ISRE (UK) 2410.
However, future events or conditions may cause the group to cease
to continue as a going concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Half year results and strategy update, including the interim
financial statements, is the responsibility of, and has been
approved by the directors. The directors are responsible for
preparing the Half year results and strategy update in accordance
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority. In preparing the
Half year results and strategy update, including the interim
financial statements, the directors are responsible for assessing
the group's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to
liquidate the group or to cease operations, or have no realistic
alternative but to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the Half year results and strategy update
based on our review. Our conclusion, including our Conclusions
relating to going concern, is based on procedures that are less
extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the
conclusion, has been prepared for and only for the company for the
purpose of complying with the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority and for no other purpose. We do not, in giving this
conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent
in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
8 September 2023
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END
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