Vistry Group achieve strong second half performance with a sustained step up in demand

property development

Vistry Group PLC (LON:VTY) has issued its full year results for the 12-month period ended 31 December 2020.

Full year highlights

·   Strong second half performance with adjusted full year profit before tax(1) of £143.9m ahead of our expected range

·   On a reported basis after exceptional items and amortisation the Group made a profit before tax of £98.7m (2019: £174.8m)

·    Significant deleverage resulting in a year-end net cash(2) position of £38m down from net debt of £357m as at 30 June 2020, having started the year with net cash of £362m prior to the acquisition

·    Sustained step up in demand with H2 2020 weekly private sales rate per outlet up 15% to 0.62 (H2 2019: 0.54)

·    Further improvement in quality and customer satisfaction and expect to be awarded the maximum 5-star HBF customer satisfaction rating for 2020 and started 2021 well

·   Completed full review and stakeholder consultation on strategy for sustainability, defining a range of targets and commitment to set clear roadmap in 2021 for Group to achieve net zero carbon

·    Excellent progress at Vistry Partnerships with higher margin mixed tenure volumes up 70% in the second half on the prior year equivalent period, and an increase in adjusted operating margin in the year to 6.7%

·   Housebuilding delivered 4,652 (2019 proforma(3): 6,884) completions at an average selling price of £303k, with the H1 performance significantly impacted by Covid-19

·    Firm pricing with 0.5% to 1.0% price increase and resilient supply chain with low-cost inflation

·   Active in the land market maintaining controlled land bank size at 40,218 plots whilst reducing land creditors since acquisition by £79m to £323.2m

·    Resumption of dividends with 20 pence per share final dividend proposed in respect of 2020

Current trading and outlook

·    Strong start to the year with private sales per active site per week of 0.66 in first 8 weeks (2020: 0.64) and the underlying sales rate ahead of the positive start to 2020

·    Last 4 weeks particularly strong with private sales rate of 0.78

·    Pricing remains firm and good supply of material and labour

·    Selling well for completions post 31 March 2021, with little impact from changes to HTB and previously expected end to stamp duty holiday

·   Strong forward sales position with 64% of total Housebuilding and Partnerships mixed tenure forecast units for 2021 already secured, totalling £1,747m

·    Partner delivery forward order book totalling £880m

·    Forecast increase in land and WIP investment in 2021 of c. £100m supporting Partnerships’ growth plans

·    On track to deliver full synergy run rate of £44m by end of 2021, 26% ahead of initial target and at a lower than expected cost

·    Assuming stable market conditions, the Group is positioned to more than double adjusted profit before tax(1) in 2021 to at least £310m with EPS in 2021 higher than 2019

·    Group is targeting an improved net cash position for 31 December 2021 and an average month-end net debt for 2021 of less than £200m (2020: £350m)

·    Resumption of dividends with progressive dividend policy and a move towards 1.75x dividend cover over time

Greg Fitzgerald, Chief Executive, commented:

“The Group has achieved an enormous amount in 2020, and despite the challenges I am in no doubt we start 2021 as a stronger business.

We had a strong second half performance with a sustained step up in demand, firm pricing, and a robust supply chain.  Vistry Partnerships made excellent progress against its growth targets of £1bn revenue and a 10% plus operating margin by 2022, delivering a 70% increase in H2 2020 mixed tenure completions and adjusted operating margin progression in the year to 6.7%.

Our firm focus on cash management resulted in a year end net cash position of £38m.  As a result of these actions and our positive performance, the Board is pleased to resume dividend payments with a proposed final dividend of 20 pence in respect of 2020.

2021 has started well with strong demand across all areas.  We have seen no impact from the national lockdown or changes to the Help to Buy scheme and the expected end to the Stamp Duty exemption. We have a strong forward sales position, with 64% of forecast units for 2021 already secured.  Assuming stable market conditions, the Group is confident it will more than double profits in the year, with a profit before tax of at least £310m.

On behalf of myself and the rest of the Board, I would like to thank all our employees, subcontractors and suppliers for their incredible hard work and commitment during what has been a uniquely challenging period.”

Key financials(4)(5)(6)20202019Change
Total completions(7)8,9543,867+>100%
Adjusted revenue£2,040.1m£1,139.2m+79.1%
Adjusted operating profit£171.0m£194.4m-12.0%
Adjusted profit before tax£143.9m£188.2m-23.5%
Adjusted basic EPS52.6p104.3p-49.6%
    
Reported results(5)(6)20202019Change
Group revenue£1,811.7m£1,130.8m+60.2%
Operating profit£91.7m£179.7m-49.0%
Profit before tax£98.7m£174.8m-43.5%
Earnings per share34.8p94.6p-63.2%
Net cash(2)£38m£362m-89.5%
Forward sales (£m)1 March 2021
Housebuilding 
–      Private620
–      Private JVs (100%)215
–      Affordable434
–      Affordable JVs (100%)135
Total Housebuilding1,404
  
Partnerships 
–      Mixed tenure151
–      Mixed tenure JVs (100%)192
Total mixed tenure343
  
Total development1,747
Total partner delivery880
Total Group2,627

There will be a virtual presentation for analysts and investors available on our corporate website from 7:00am this morning www.vistrygroup.co.uk or at

https://webcasting.brrmedia.co.uk/broadcast/602d4fba1fc46330548fa366

Greg Fitzgerald, Graham Prothero and Earl Sibley will host a live Q&A session for analysts at 8:30am.  To watch the session please use the webcast link available on our corporate website at https://www.vistrygroup.co.uk/investors/reports-and-presentations/2020 or at https://webcasting.brrmedia.co.uk/broadcast/603fba571e24d464e23e659c

A playback facility will be available shortly after the Q&A session has finished at www.vistrygroup.co.uk

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