Vistry expects to double profits in 2021

March 4, 2021 / Isla MacFarlane
Vistry expects to double profits in 2021

Despite a knock to completions and profits in 2020, Vistry Group reports that its financial performance is ahead of expectations for the second half of the year, and it expects profits to double in 2021.

Full year highlights

  • Strong second half performance with adjusted full year profit before tax of £143.9m ahead of 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 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)
  • 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: 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
  • 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 eight weeks (2020: 0.64) and the underlying sales rate ahead of the positive start to 2020
  • Last four 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

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 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, said: “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.”

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