Vistry Group has reported a strong performance buoyed by increased demand in an update on trading for the six-month period ended 30 June 2021.
Key highlights
- Strong H1 performance significantly ahead of expectations at the start of the year, supported by positive customer demand;
- Step up in average weekly private sales rate to 0.76 in the period, an increase of 10% on 2019 (2020: 0.45, 2019: 0.691);
- Group forward sales position of £2.7bn, with 93% of forecast FY21 total Housebuilding units and Partnership mixed tenure units secured, a much higher level than in prior years;
- Active period in the land market securing a total of 5,642 new plots, with Group’s total controlled land bank increasing by c.1,600 in last 12 months;
- Group net cash position of c. £32m as at 30 June 2021 (30 June 2020: net debt £357.3m), stronger than anticipated reflecting the first half performance and ongoing robust working capital management, and supports improved expectations for 31 December 2021 net cash position;
- Housebuilding increased completions in H1 21 to 3,126 (H1 20: 1,235) units and is firmly on track to deliver c. 6,500 (FY20: 4,652) units in FY21 and an adjusted gross margin of c. 22% (FY20: 17.6%);
- Vistry Partnerships increased higher margin mixed tenure completions in H1 21 to 895 (H1 20: 489) units and expects to report an increase in adjusted operating margin in H1 21 from the 8.7% reported in H2 20, making excellent progress towards its FY22 targets of £1bn revenue and a 10% plus adjusted operating margin;
- The Group is well positioned for the full year, is confident it will deliver consensus market expectations for FY21, and maintains its expectations for FY22.
Greg Fitzgerald, Chief Executive said: “The Group has had a very strong first half with a step up in completions, price increases, improved profitability and strong cash generation, all ahead of our expectations at the start of the year. These results would not have been possible without the hard work and dedication of our employees and supply chain, to whom I extend my sincere thanks.
“Market trends remain positive and we are seeing good demand for completions beyond the end of the Stamp Duty holiday. There is some pressure across the material supply chain in terms of price increases and extended lead times, but we are working well with our partners to ensure successful delivery of our build programme and expect this position to ease through the second half. House price inflation is more than offsetting any cost pressure.
“With 93% of forecast FY21 units already secured, a significantly higher level than in prior years, we are well positioned for the full year and are positive on the outlook as the strategic benefits of the enlarged Group are starting to be realised.”
Trading
“There has been strong demand across all business areas during the first half with our average weekly private sales rate increasing to 0.76, up 10% on the pre-pandemic pro forma 2019 rate of 0.691. Importantly we are seeing sustained demand for units scheduled to complete in Q4 2021, post the end of the Stamp Duty holiday. With this strong demand, prices have increased across all geographies that we operate within.
“The Group’s forward sales position has further strengthened with 93% of forecast FY21 total Housebuilding units and Partnership mixed tenure units secured, significantly ahead of the forward sold position in prior years. Housebuilding forward sales total £1.5bn and Partnerships’ mixed tenure forward sales total £391m. The Partner Delivery forward order book totals £890m with 95% of forecast FY21 Partner Delivery revenue secured.
“Our sites are operating well, and first half completions were delivered in a controlled manner with a firm focus on quality. The significant step up in production across the industry has led to some pressure on the materials supply chain resulting in extended lead times and inflationary pressures on certain products. Working in close partnership with our suppliers, we are actively managing this ongoing situation. We have full visibility on our material requirements out to the end of the financial year and an agreed supply programme in place. The supply agreements entered into on the formation of Vistry Group are delivering an enhanced service and providing some protection in respect of cost inflation, with the benefit from sales price increases more than offsetting any cost inflation for the Group.
H1 performance
“Total Housebuilding completions increased in the first half to 3,126 (H1 20: 1,235) including 604 (H1 20: 169) JV units. Of this 2,294 (H1 20: 975) completions were private units and 832 (H1 20: 260) were affordable units. Total Housebuilding average selling price3 in the period was c. £299k (H1 20: £294k) with a private average selling price3 of £350k (H1 20: £332k). Housebuilding sold from on average of 145 sites in the first half and we expect this to remain stable for the full year.
“The business is firmly focused on driving margin improvement and is on track to deliver an adjusted Housebuilding gross margin for FY21 of c. 22%.
“Vistry Partnerships saw a strong increase in mixed tenure completions in the first half to 895 (H1 20: 489) including 487 (H1 20: 190) JV units. Mixed tenure average selling price3 was c. £255K (H1 20: £222k). Vistry Partnerships is currently selling on 34 mixed tenure sites and we expect site numbers to increase to c.40 at the full year. Partner Delivery revenue totalled £226m (H1 20: £223m) in the first half in line with our expectations.
“With this significant increase in higher margin mixed tenure revenues, Vistry Partnerships expects to report a progression in adjusted operating margin in the first half from the 8.7% achieved in H2 20 and is making excellent progress towards its target adjusted operating margin of at least 10% in FY22.”
