TIDMVTY
RNS Number : 4618Z
Vistry Group PLC
12 January 2024
12 January 2024
Vistry Group PLC
Trading update
Vistry Group PLC ("Vistry" or the "Group") announces a scheduled
trading update for the year ended 31 December 2023 (the "period"),
ahead of the publication of its full year results on 14 March
2024.
Full year highlights
-- Group financial performance for FY23 ahead of guidance(1)
with adjusted profit before tax expected to be in-line with prior
year (FY22: GBP418.4m)
-- Total completions were down only 5.4% to 16,124 units (pro forma FY22: 17,038), significantly outperforming our peers and reflecting the resilience of our Partnerships model
-- Group proactively managed cost base with our key supply chain
partners, resulting in material and labour cost reductions in
H2
-- We have remained active in the land market despite market
uncertainty in FY23, securing 13,067 (FY22: 8,547) plots,
demonstrating our commitment to our growth objectives and
medium-term targets
-- Year-end net debt of c. GBP90m (31 December 2022 net cash:
GBP118.2m) in-line with guidance and significantly down from 30
June 2023 position (net debt: GBP328.7m)
-- Group commenced GBP55m share buyback in December, with target
to deliver GBP1bn of shareholder distributions over next 3
years
(1) Company guidance of Group adjusted profit before tax of
GBP410m (23 October 2023 Trading Update)
Outlook
-- The Group has a strong forward sales position up 12.4% on
prior year at GBP4.5bn (31 December 2022: GBP4.0bn)
-- Good levels of demand for affordable homes from Registered
Providers ("RPs"), and Local Authorities ("LAs"), and a notable
increase in demand from the Private Rented Sector ("PRS") in Q4 and
into 2024
-- Transition of Group's former Housebuilding landbank to the
Partnerships model is making good progress with new partnerships
and pre-sale agreements progressing well
-- Easing of mortgage rates in recent weeks is encouraging and
we are optimistic that this will help stimulate demand in FY24
-- Housing crisis expected to be at the top of the political
agenda in the lead up to a general election, with Vistry extremely
well positioned to play its part in increasing the delivery of
affordable homes across the country
-- A fuller outlook for FY24 will be provided with our full year
results announcement on 14 March 2024
Greg Fitzgerald, Chief Executive, commented:
"The Group had a strong run into the year end and I'm pleased to
report that adjusted profit before tax for FY23 is anticipated to
be ahead of guidance. Our FY23 performance has demonstrated the
resilience of Vistry's unique Partnerships model.
Looking ahead, working with our highly valued partners we are
committed to increasing the delivery of much needed homes across
the country, and in the fourth quarter have continued to secure
exciting new developments that reflect our high return, asset-light
partnerships model.
Our forward sales of GBP4.5 billion is up 12.4% on prior year
and positions us well to deliver a step-up in total completions in
FY24 and make progress towards our medium-term targets and the
return of GBP1bn of capital to shareholders."
Full Year performance
The Group's financial performance for FY23 is ahead of guidance
with Group adjusted profit before tax for FY23 expected to be
in-line with prior year (FY22: GBP418.4m).
Total completions for FY23 were 16,124 (pro forma FY22: 17,038)
including 2,810 (pro forma FY22: 2,753) completions from JV's. The
former Partnerships business demonstrated a very resilient
performance considering the challenging market conditions faced by
the broader housebuilding sector with completions up 3.3% to 9,422
units (pro forma FY22: 9,118). The former Housebuilding business
delivered completions of 6,702 units (pro forma FY22: 7,920).
The Group delivered total adjusted revenues of c. GBP4.0bn (pro
forma FY22: GBP4.46bn) in the period with a total average selling
price across all tenures for FY23 of c. GBP277k (pro forma FY22:
GBP289k).
The Group's sales rate(2) for FY23 averaged 0.96 (FY22: 0.71)
sales per week per site, with the sales rate for our differentiated
Partnerships business expected to be higher than that for
traditional housebuilding. The Group currently has 217 open market
sales outlets and is operating from a total of c. 350 build active
sites.
In the pre-sale market, working with our partners, we continued
to see good demand for affordable housing from RPs and LAs. Demand
for PRS improved in the second half, with a notable increase in
Q4.
Demand in the open market has remained suppressed throughout the
year reflecting the higher interest rate environment and
inflationary cost pressures on household income. Incentives have
been used to support open market sales and have been running at c.
5% of open market price.
In July 2023, Vistry partnered with Sage Homes to launch the
Homestepper scheme with an initial portfolio of c. 800 new homes.
This shared equity product has been successful in helping open
market buyers with lower income and smaller deposits afford their
own home, and in the year, we have taken over 450 reservations
using the product.
The Group has proactively managed its costs during the year and,
working with our key supply chain partners, agreed cost reductions
for all existing and future contracts in the second half. This
reflects both improving market conditions on costs and the benefits
to the Group from its scale, its growth strategy, and the high
level of visibility on forward sales and build programmes under the
Partnerships model which offers greater continuity of work to our
suppliers.
Vistry Works, our timber frame operation, made good progress in
the year delivering 2,500 timber frame units as planned. We expect
output to double in FY24 as we increase production towards our
overall capacity of c. 7,000 units from our three factories.
Delivering high quality new homes and excellent customer
satisfaction has remained our top priority in 2023 and we are
pleased to report the continuation of an improving trend for our
HBF customer satisfaction survey which is sent out 9 months after
completions and a sustained HBF 5-star customer satisfaction rating
for our 8-week survey .
We are delighted to report our highest ever number of Pride in
the Job quality awards at 40 (2022: 29), with a further 15 Seals of
Excellence and two site managers going forward to the Supreme
Awards later this month. In addition, our site teams have won 9
Premier Guarantee and 7 LABC Bricks Site Recognition awards in
2023.
2 Sales rate includes open market private sales and
non-section-106 pre-sales
Progress on strategy
We are making good progress with our strategy of focusing our
operations fully on our high growth, asset-light Partnerships
model. The Group is operating as one Partnerships business with 6
operating divisions and 26 regional businesses. Each regional
business has a strong, highly experienced management team. The
Group's operating structure has the capacity to deliver a
significant step-up in output in-line with the Group's medium-term
targets.
As highlighted in our strategy update in September, as we move
to a fully partnerships model with our ambition for c. 65% of Group
completions to be pre-sold, c. 8,500 plots out of the 30,200
Housebuilding landbank plots as at 30 June 2023 are targeted for
pre-sale. This transition is making good progress including units
from our significant new agreement with long term partners Leaf
Living and Sage Homes for the pre-sale of over 2,800 units which we
announced in November.
The Group is securing high quality Partnership development
opportunities in-line with our planned revenue growth of 5 to 8%
p.a. and medium-term targets, and had a strong end to the year
securing opportunities including:
- a new partnership with Together Housing in Darwen, Lancashire to deliver 477 new homes
- a development for 670 new homes in Stockton, Country Durham
with the project benefiting from grant funding from Homes
England
- a new site under our partnership with Goram Homes, Bristol
City Council's housebuilding company, with outline planning secured
for the next 140 homes at Dovercourt, Lockleaze in Bristol
- a prime site to the west of Windsor delivering 320 homes with
c. 60% presold, secured on preferential payment terms
- the exchange of contracts for a new scheme in Thornbury, South
Gloucestershire for the development of c. 600 new homes of which
50% to be presold
- a two-phase development in South Marston, Swindon for the
delivery of 940 new homes, secured on favourable payment terms with
60% to be presold
In total, the Group secured 13,067 (FY22: 8,547) plots across 44
developments in FY23, of which 6,506 were secured in the second
half. Strategic land continues to be an important source of
development opportunities for the Group, and in the year, we
secured new strategic land options across 7 (FY22: 9) potential
developments totalling 7,360 (FY22: 4,503) plots.
The Group is well positioned on land for FY24 with over 90% of
land required for planned completions secured.
Balance sheet
In-line with guidance, the Group had a net debt position of c.
GBP90m as at 31 December 2023 (31 December 2022: net cash of
GBP118.2m). This is a significant reduction from the Group's net
debt position as at 30 June 2023 of GBP328.7m. Average net debt for
the year was in-line with previous guidance at c. GBP450m.
In December we successfully concluded the process with our
Lenders to extend our GBP400m term loan facility for a further 18
months, with the loan now maturing in September 2026.
We are making good progress with remediation works in relation
to fire safety and remain confident that the Group's fire safety
provision will cover the cost of these works in accordance with the
Group's obligations.
The Group commenced a GBP55m share buyback programme on 11
December 2023 and as at 31 December 2023 had repurchased a total of
636,254 shares for a consideration of GBP5.3m.
Board changes
The Group has announced a number of Board changes today in a
separate announcement.
Current trading and outlook
Following a period of reorganisation, we are pleased to start
the year operating as one business fully focused on our
Partnerships model and making progress towards our medium-term
targets.
The Group has a strong forward sales position up 12.4% on prior
year at GBP4.5bn (31 December 2022: GBP 4.0bn), positioning us well
to deliver a step-up in total completions in FY24.
We are seeing good levels of demand for homes from RPs and LAs,
with an increasing demand profile from the PRS sector. The
transition of our former Housebuilding landbank to our Partnerships
model is making good progress, as we sign new and exciting
development opportunities with our partners. The use of grant
funding supports a number of these opportunities and we are pleased
to have been awarded an additional GBP20m of affordable housing
grant funding under the Strategic Partnership with Homes England,
taking our total funding to GBP170m.
The easing of mortgage rates in recent weeks is encouraging and
we are optimistic that this will help stimulate demand in FY24. We
believe the country's housing crisis will be at the top of the
political agenda over the coming months and that Government will
need to allocate more funding towards housing. As the leading
Partnerships business with strong growth ambitions, Vistry is
extremely well positioned to play its part in increasing the
delivery of much needed affordable homes across the country.
The Group made a one-time adjustment to expected site margins as
a result of our change in strategy which gave rise to a GBP40m
reduction in adjusted profit before tax in FY23, as disclosed in
October's trading update. We are comfortable that consensus
estimates reflect the revised margins for the business and that
there are no further adjustments of this nature required.
A fuller outlook for FY24 will be provided with our full year
results announcement on 14 March 2024.
Greg Fitzgerald and Tim Lawlor will host a call for analysts
today at 8:00am. To join the call please register using the
link:
https://www.netroadshow.com/events/login?show=433ef53d&confId=59449
For operator assisted dial-in:
UK-Wide: +44 20 3936 2999
UK Toll Free: +44 800 358 1035
Access Code: 204696
For further information please contact:
Vistry Group PLC
Tim Lawlor, Chief Financial Officer
Susie Bell, Group Investor Relations 07469 287335
Director
FTI Consulting
Richard Mountain / Susanne Yule 020 3727 1340
Certain statements in this press release are forward looking
statements. Forward looking statements involve evaluating a number
of risks, uncertainties or assumptions that could cause actual
results to differ materially from those expressed or implied by
those statements. Forward looking statements regarding past trends,
results or activities should not be taken as representation that
such trends, results, or activities will continue in the future.
Undue reliance should not be placed on forward looking
statements.
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END
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