TIDMVTY
RNS Number : 9053K
Vistry Group PLC
07 September 2021
7 September 2021
Vistry Group PLC - Half year results
Vistry Group PLC (the "Group") is today issuing its results for
the six-month period ended 30 June 2021.
First half highlights
-- Strong H1 performance significantly ahead of our expectations
supported by successful operational integration and positive
customer demand
-- HBF Customer Satisfaction Rating maintained at 5-star, with
further improvement in the latest quarterly data
-- Good progress across all areas of the Group's sustainability
strategy including commitment to targets required to limit warming
to 1.5degC
-- Group adjusted revenues(1) increased to GBP1,259.4m, 4.3% ahead of H1 19 proforma revenues
-- Step-up in Housebuilding adjusted gross margin(2) to 21.8% (H1 20: 14.1%)
-- Rapid growth in Partnerships higher margin mixed tenure
revenues to GBP163.9m (H1 20: GBP88.2m), with Partnerships adjusted
operating margin(3) increasing to 9.1% (H1 20: 4.0%), firmly on
track for 10+% in FY 22
-- Group adjusted profit before tax(4) increased to GBP166.1m (H1 20: GBP10.3m)
-- On a reported basis Group profit before tax increased to GBP156.2m (H1 20: GBP12.2m loss)
-- Growth in owned landbank size with the addition of 5,642 new
plots in the period, combined with investment in 4,660 strategic
land plots
-- Strong cash generation resulting in net cash position of
GBP31.6m(5) as at 30 June 2021 as compared to H1 20 net debt
position of GBP357.3m
-- Group return on capital employed(6) increased to 19.4% (FY
20: 14.4%) with Partnerships achieving a return on capital employed
well in excess of 40%
-- Interim dividend of 20 pence per share (2020: nil)
Current trading and outlook
-- Customer interest and sales trends remain positive into the second half
-- Strong Group forward sales position of GBP3bn (September
2020: GBP2.7bn), with 96% of forecast FY 21 total Housebuilding
units and Partnership mixed tenure units secured
-- House price inflation more than offsetting cost increases
with supply chain issues being well managed
-- Group well positioned for the full year with our expectations
for adjusted profit before tax increased to c. GBP345m(4) , 5%
ahead of consensus market expectations(7)
-- Group month-end average net debt for FY 21 expected to be
less than GBP125m, and improved targeted net cash position of c.
GBP225m at year end
-- Board intends to accelerate the ordinary dividend to a two
times cover ratio in respect of FY 21
-- With balance sheet strength, the Board is committed to
prioritising investment in the business to support the Group's
growth strategy, pursue a sustainable two times dividend cover
policy, and return any further excess capital generated in the
future to shareholders via either a share buyback or special
dividend
Greg Fitzgerald, Chief Executive commented:
" Following an effective operational integration, Vistry is in
great shape and delivered a step change in financial performance in
the first half. The Group holds a unique market position with
strength and capability across all housing tenures, and we are
firmly focused on maximising the opportunities this brings.
Housebuilding delivered a significant improvement in margin in H1
and we expect this to continue, whilst Vistry Partnerships is
firmly on track to deliver more than GBP1bn of revenue in FY 22 and
a margin in excess of 10%, driven by the accelerated growth of its
higher margin mixed tenure revenues.
"The Group ended the period with GBP31.6m net cash representing
nearly GBP400m of cash inflow over the last 12 months, reflecting
our financial performance and balance sheet strength. Thanks to
this performance and our ongoing confidence in the business and
market outlook, the Board is delighted to announce a 20 pence per
share dividend in respect of the first half and looking forwards
intends to maintain a two times dividend cover, while committing to
returning excess capital to shareholders.
"As always, the achievements of the Group reflect the
outstanding commitment and skills of our people, and my thanks to
them and to our supply chain partners for their sterling efforts.
"
A presentation for analysts and investors is available on our
corporate website www.vistrygroup.co.uk
There will be a virtual Q&A session hosted by Greg
Fitzgerald, Graham Prothero and Earl Sibley at 9:00am this morning.
To join this session please use the webcast link available on our
corporate website www.vistrygroup.co.uk or
https://us02web.zoom.us/webinar/register/WN_fXjjH7aaR2-3hzRW_v-2Gg
A playback facility will be available shortly after the Q&A
session has finished at www.vistrygroup.co.uk
Vistry Group will also be holding an on-site Capital Markets Day
on 9 November 2021, further details to follow.
Key financials H1 21 H1 20 Change
------------------------------ ------------ ------------ -------
Total completions 5,351 3,034 +76%
Adjusted revenue(1) GBP1,259.4m GBP660.9m +91%
Adjusted operating profit(3) GBP175.5m GBP21.2m >+100%
Adjusted profit before GBP166.1m GBP10.3m >+100%
tax(4)
Adjusted earnings per(8)
share 59.0p 4.9p >+100%
Reported results H1 21 H1 20 Change
------------------------------ ------------ ------------ -------
Group revenue GBP1,102.7m GBP606.4m +82%
Operating profit/(loss) GBP139.1m GBP(9.7)m -
Profit/(loss) before GBP156.2m GBP(12.2)m -
tax
Earnings/(loss) per share(9) 54.8p (5.3)p -
Net cash/(debt)(5) GBP31.6m GBP(357.3)m -
Forward sales (GBPm) 3 Sept 2021 30 June 2021
-------------------------------- ------------ -------------
Housebuilding
* Private 713 621
* Private JVs (100%) 276 239
* Affordable 456 485
* Affordable JVs (100%) 106 111
Total Housebuilding 1,551 1,456
Partnerships
* Mixed tenure 221 200
* Mixed tenure JVs (100%) 306 191
Total Mixed tenure 527 391
Total Development 2,078 1,847
Total Partner delivery 890 890
Total Group 2,968 2,737
-------------------------------- ------------ -------------
Dividend timetable
---------------------- -----------------
Ex-dividend date 7 October 2021
Dividend record date 8 October 2021
Dividend payment date 19 November 2021
---------------------- -----------------
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 01675 437160
Earl Sibley, Chief Financial Officer 020 7250 1446
Susie Bell, Head of Investor Relations
Powerscourt
Justin Griffiths, Nick Dibden, Victoria
Heslop
Chief Executive's Review
First half review
It has been a strong first half for the Group with a significant
step up in financial performance and further operational
improvements. We have seen positive demand across all business
areas, with our average weekly private sales rate increasing to
0.76 in H1 21, up 10% on the pre-pandemic proforma H1 19 rate of
0.69(10) . Alongside this strong demand, we have achieved sustained
price increases across all of our geographies.
The Group achieved adjusted revenues in FY 21 of GBP1,259m(1) ,
4% ahead of the proforma H1 19 Group revenue of GBP1,208m.
Housebuilding revenues are back at their proforma H1 19 levels with
Partnerships increasing revenues significantly since proforma H1
19, driven by a rapid increase in higher margin mixed tenure
revenues to GBP164m (H1 19: GBP94m).
We have compared sales rates, volumes and revenues against
proforma H1 19 due to the impact of Covid-19 on the Group's H1 20
performance. Further comparatives to H1 19 are not considered
appropriate due to the need to align accounting policies following
the formation of Vistry Group.
We saw significant improvement in profitability in both
businesses in the first half with Housebuilding adjusted gross
margin increasing to 21.8%(2) (H1 20: 14.1%) or 22.0% excluding
land sales. Reflecting the strong growth in higher margin mixed
tenure revenues, Partnerships adjusted operating margin(3) improved
by 510 basis points in H1 21 to 9.1% (H1 20: 4.0%).
Overall, the Group delivered adjusted profit before tax(4) of
GBP166.1m (H1 20: GBP10.3m), ahead of management's expectations,
and adjusted earnings of 59.0(8) pence per share (H1 20: 4.9).
Our sites have operated well during the period with no real
impact from Covid-19 and our first half completions were delivered
in a controlled manner with a firm focus on quality together with
the wellbeing of customers and colleagues. 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 have actively managed this
ongoing situation. The supply agreements entered into at the
formation of Vistry Group are delivering an enhanced service and
providing some protection against cost inflation thanks to our
enlarged scale and buying power. Notably in our Partnerships
business where we have greater exposure to market risk on costs
without compensating house price inflation, we look to include
suitable fixed price allowances to mitigate inflation as well as an
appropriate level of contingency in our pre sale agreements. The
benefit from sales price increases has more than offset any cost
inflation for the Group in the first half.
We continue to engage with all stakeholders including working
with the Home Builders Federation regarding cladding and build
safety and remain concerned by the plight of leaseholders facing
potentially large and unaffordable costs for remediation. We are
supportive of Government initiatives for an industry levy to
accelerate remediation work and the resolution of this issue. The
Group has undertaken a review of all of its current and legacy
buildings where a potential liability has been identified and has
provided for the expected costs of any remedial works that may be
required. This has been reassessed in H1 21 and no further
provisions have been deemed necessary.
The Group has reported a net cash position of GBP31.6m(5) as at
30 June 2021, a significant turnaround from a net debt position of
GBP357.3m as at 30 June 2020 and reflects the Group's strong first
half performance and ongoing robust working capital management.
Group return on capital employed(6) increased to 19.4% in the
first half (FY 20: 14.4%), with Partnerships achieving a return on
capital employed well in excess of 40%.
Sustainability
Vistry Group's purpose is to deliver sustainable homes and
communities across all sectors of the UK housing market. Key to
this purpose is a successful and ambitious sustainability strategy,
which was launched earlier this year and is focussed on three
priority areas of People, Operations and Homes & Communities.
To ensure the successful implementation of the strategy we have
made two new senior appointments this year, being a Group
Sustainability Manager, leading our strategy implementation, and
Group Design and Sustainability Manager, focusing on the technical
improvement of our home designs. Both new appointments bring
significant relevant specialist experience with them and have
operated in either housebuilding or the wider sector previously. We
continue to invest in the development and wellbeing our of people
and a full update is provided on Page 8 in the Operational
update.
Climate change is a key issue within the priority area of
"Operations" and we are committing to carbon emission targets
consistent with reductions required to keep warming to 1.5degC. We
are in the process of calculating and formalising our precise
targets through approval by Science Based Targets Initiative
(SBTI). Vistry Group will adopt 2021 as its baseline being the
first full operating year (setting aside the abnormal conditions in
2020) since the Group took its current form following the
combination with Linden Homes and Galliford Try Partnerships in
January 2020. The details of these targets will be confirmed during
2022.(11)
Building standards is a key issue within the "Homes &
Communities" section of our strategy and preparing for implementing
the Future Homes Standard is an important target on the roadmap to
deliver net zero carbon homes. This year we hand over the first of
54 homes achieving net zero regulated carbon emissions at Europa
Way Triangle in Leamington Spa. Learning from this development has
helped us shape our roadmap to delivering net zero carbon homes.
The roadmap has been developed using the UK Green Building Council
(UKGBC) definition for net zero carbon, and the target dates are as
follows:
1. Zero Carbon 'Ready' by 2025: This will be the Future Homes
Standard of 75-80% reduction in carbon emission (from 2013 Part L
baseline)
2. Net Zero Carbon Homes (in-use) by 2030: The designed carbon
emission rate is 'zero' for regulated energy with grid
decarbonisation for unregulated energy
3. Net Zero Carbon Homes (Construction) from 2040: Carbon
emissions associated with building homes are zero, including the
emissions from the building's products and construction
operations
This is consistent with our Sustainability update issued on 3
September which also included further detail.
Current trading and outlook
We have had a positive start to the second half with customer
interest and sales remaining strong. The Group's forward sales
position has further strengthened with 96% of forecast FY 21 total
Housebuilding units and Partnership mixed tenure units secured,
significantly ahead of the forward sold position in prior years,
and totalling GBP2.1bn. The Partner Delivery forward order book
totals GBP890m with 96% of forecast FY 21 revenue secured. With
this strong forward sold position, the business is very focused on
optimising prices in the second half.
We continue to work closely with our supply chain to best manage
any ongoing pressures. We have full visibility on our material
requirements out to the end of FY 21 and an agreed supply programme
in place.
The Group is well positioned for the full year and we have
increased our expectations for adjusted profit before tax to c.
GBP345m(4) , 5% ahead of current consensus expectations(7) .
Operational update
Trading performance
Looking at the performance versus proforma H1 19, the Group's
adjusted revenues(1) increased 4% in FY 21 to GBP1,259m (H1 19
proforma: GBP1,208m). Housebuilding revenues are back at their
proforma H1 19 levels with Partnerships increasing revenues
significantly from proforma H1 19, driven by a rapid increase in
higher margin mixed tenure revenues.
Proforma
H1 21 H1 19 Change
Housebuilding completions(12)
* Private 2,294 2,199 +4%
832 1,172 -29%
3,126 3,371 -7%
* Affordable GBP869m GBP870m -
Total Housebuilding completions
Housebuilding adjusted
revenue
---------- ---------- ---------
Partnerships completions(12)
* Mixed tenure 895 574 +56%
1,330 1,140 +17%
2,225 1,714 +30%
* Partner delivery
Total Partnerships units
---------- ---------- ---------
* Mixed tenure
* Partner delivery
GBP164m GBP94m +74%
Total Partnerships adjusted GBP227m GBP244m -7%
revenue GBP391m GBP338m +16%
---------- ---------- ---------
Total Group adjusted revenue GBP1,259m GBP1,208m +4%
---------- ---------- ---------
Total Group units(12) 5,351 5,085 +5%
---------- ---------- ---------
We achieved a strong private sales rate of 0.76 average sales
per site per week in H1 21 whilst successfully transitioning to the
new Help to Buy scheme designed for first time buyers only in Q2
and importantly, have seen sustained demand for units scheduled to
complete in Q4 2021, post the end of the Stamp Duty Holiday.
Alongside this we have seen sustained house price inflation in the
period across all geographies.
Looking year on year, total Housebuilding completions increased
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) affordable units. Total Housebuilding average selling
price was GBP301k (H1 20: GBP294k) with a private average selling
price of GBP351k (H1 20: GBP332k). Housebuilding sold from, on
average, 145 sites in the first half and we expect this to remain
stable for the full year.
Housebuilding delivered a strong improvement in gross margin
with adjusted housebuilding gross margin(2) improving to 21.8% (H1
20: 14.1%) and to 22.0% excluding land sales.
Partnerships made excellent progress in the first half with its
strategy of rapidly growing higher margin mixed tenure revenues,
increasing to 895 units (H1 20: 489) including 463 (H1 20: 190) JV
units. Mixed tenure average selling price was GBP245k (H1 20:
GBP222k). The business has been growing the number of sales outlets
all year and is currently selling on 35 sites with further growth
expected to c. 40 at the full year. Partner delivery saw a c.3
times increase in land led activity in the first half versus H1 20,
with Partner delivery revenue of GBP227m (H1 20: GBP223m) in-line
with our expectations.
Partnerships delivered a 5.1 percentage points improvement in
adjusted operating margin(3) to 9.1% (H1 20: 4.0%).
Quality and customer service
Delivering high quality homes and excellent customer service
remains a key priority. The Group maintained its 5-star HBF
Customer Satisfaction Rating for 2020 and is pleased to see a
further improvement in the latest quarterly data with our 12-month
rolling score increasing to 92.6%.
More recently we are delighted to have been nominated as
finalists in five categories for the Housebuilder Awards, the
highest number of any housebuilder.
We launched our new single Vistry Customer Journey across all
three of our brands, Bovis Homes, Linden Homes and Drew Smith in
the period. The journey has 16 key steps with multiple points of
contact with the customer during the build phase, including Meet
the Builder, Plot Visit, Home Demonstration and a six-month review.
All customer updates and communication are managed through a
centralised web-based customer portal.
People
Investment in the development and training of our people to
ensure a committed, motivated, and engaged workforce is a key
priority and most recently we have introduced a mentoring programme
to encourage personal development. We continue to invest in our
online training platform to ensure our training can be delivered as
successfully virtually, with a key focus in the first half on
safety, health and environment (SHE) training.
Our focus on jobs and training extends beyond improving learning
and development for our people and aims to support both young
people not in employment, education or training and the long term
unemployed into employment in the construction sector through our
on-site skills academies. We have created 8 academies to date with
a further 9 planned for 2022 and over 600 learners have completed
and gained full work-ready qualifications. In addition, we
currently have a total of 130 apprentices across the Group and have
a programme established to recruit c. 100 additional trainees,
spread equally across our 23 business units during the second
half.
We have an active charity partnership with Mind and this year we
have trained an additional 30 mental health first aiders, taking
the total up to 115 across the Group. We have launched a Diversity
and Inclusion ("D&I") Committee to lead the development and
delivery of the agenda and to monitor key areas of performance. A
working group has also been established and has led several
initiatives during the year. A key step for the Group has been the
introduction of the D&I module into our Peakon staff survey,
which is providing invaluable insights into the make-up of our
team, and the experience of working at Vistry from diverse
perspectives.
Our most recent Peakon engagement survey in July 2021 reported a
further improvement in the Group score to 8.1, up from 7.9 in
January and compares to an industry benchmark of 7.6.
As previously announced, Ashley Steel joined the Board as a Non
Executive Director in June of this year. Ashley is a highly
experienced non-executive director and committee chair across a
range of sectors and has extensive experience of advising listed
companies on strategy. Additionally, Clare Bates was appointed
General Counsel and Company Secretary during the period and Martin
Palmer stepped down as Company Secretary in June. Michael
Stansfield has advised the Board that he wishes to resign as a
Non-Executive Director of the Company with effect from 30 September
2021.
Land
The Group had a successful six months in the land market
increasing the size of its overall landbank by 1,815 plots to a
total of 42,033 plots.
In the half, we acquired our first site jointly between
Housebuilding and Partnerships, leveraging the mix of business
models to secure a 1,500 unit project south of Peterborough. The
deployment of the high return Partnerships approach, utilising
efficient forward sales, alongside Housebuilding's traditional
higher margin model, enables us to acquire and develop this 166
acre site, using three brands, without recourse to dilutive land
sales to competitors. Since the period end we have secured another
similar project of 45 acres and 620 units in Kenilworth, which we
will develop in joint venture with Warwick District Council, who
are lending the majority of development funding.
Housebuilding secured 4,143 plots across 20 developments in the
period and has excellent visibility on land, with 100% of land
required for forecast FY 22 completions now secured. Housebuilding
has a 4.9 year land supply(13) , slightly above our long term
target of a 3.5 to 4.0 year supply.
Partnerships has stepped up its land acquisition to support its
strategy of delivering rapid growth in higher margin mixed tenure
revenues and expects to invest at least GBP100m in mixed tenure
land, WIP and joint ventures in both FY 21 and FY 22. In the
period, Partnerships secured 1,499 plots on 8 sites for mixed
tenure development and has 98% of land required for forecast FY 22
mixed tenure completions secured.
Strategic land is a key source of land for both Housebuilding
and Partnerships and with our combined business model we are in a
unique position to maximise the benefits and returns from this
valuable asset, particularly on larger strategic sites. In the
period, we secured options over 4,660 strategic land plots across 6
developments and have a strong pipeline.
Balance sheet and liquidity
The Group net cash position of GBP31.6m(5) as at 30 June 2021
compares to a net debt position of GBP357.3m as at 30 June 2020 and
reflects the strong first half trading and ongoing robust working
capital management.
We expect Group month-end average net debt for FY 21 to be less
than GBP125m and are targeting a net cash position of c. GBP225m at
31 December 2021 (31 December 2020: GBP38.0m net cash).
Group strategy
Key to our strategy is maximising the strengths and
opportunities from our combination of Housebuilding and
Partnerships assets. The Group holds a unique market position with
market reach and a strong capability across all housing tenures and
is a leading provider of high demand, high growth affordable
housing.
We have three clearly established housing brands; Bovis Homes
and Linden Homes are national and used across the country whilst
Drew Smith is focused on our developments in the South. We are
planning to launch a third national brand in the next 12 months.
Our product range allows us to match customers to the right product
and brand for them, whilst achieving higher absorption rates. This
broad market reach and multi branded strategy provides a unique
competitive position for Vistry to maximise returns on larger
developments including higher margin strategically sourced
land.
With Housebuilding and Partnerships focused on driving
profitability and returns, the Group is targeting sector leading
return on capital employed in the medium term.
Housebuilding
Following the successful operational integration of Bovis Homes
and Linden Homes, the Housebuilding business is operating well
across all areas and positioned to deliver increased returns. We
are still maximising the benefits of the combination through the
ongoing development of common systems and processes to deliver best
practice.
The operating structure is set to deliver controlled volume
growth to c. 8,000 units in the medium term with the business also
expecting to reduce the proportion of completions from JV
developments. The business is focused on increasing delivery from
higher margin strategic land and is targeting at least 30% of
completions from strategic land in the medium term.
Housebuilding is targeting an adjusted gross margin of 25% in
the medium term with an improvement to c. 23% in FY 22. With
increased profitability and balance sheet efficiency, the business
has a 25% medium term target for ROCE.
Partnerships
Partnerships is uniquely positioned to deliver its strategy of
rapidly growing higher margin mixed tenure revenues. The business
is making excellent progress towards its targets for FY 22 of
delivering revenues in excess of GBP1bn, an adjusted operating
margin of 10%+ and a 40% return on capital employed.
The accelerated growth is supported by the division's 11
operating regions with new operating regions being planned for
delivery from FY 23. The Group's land capability, including
strategic land, will support the growth in higher margin mixed
tenure revenues.
Partnerships was delighted to have been selected recently as a
strategic partner by Homes England for its Affordable Homes
Programme (2021-2026), the only listed developer to be included in
the programme. Partnerships has been allocated a five-year grant
programme totalling GBP83m to deliver 1,474 affordable homes across
the country outside of London. It is a great opportunity to
accelerate the delivery of much-needed affordable homes and
supports our ambitious medium term growth plans for higher margin
mixed tenure revenues.
Medium term we believe the business and market opportunity could
deliver revenue growth of 10 to 15% annually, with the potential
for Partnerships to deliver annual revenue of c. GBP1.6bn in 5
years, alongside an adjusted operating margin of 12%+.
Capital allocation and dividends
The Group has a strong balance sheet. Our priority remains
investing in high returning land market opportunities in line with
our land investment strategy and growth targets for both
Housebuilding and the less capital intensive Partnerships
business.
The Board has reviewed the Group's ordinary dividend policy and
is pleased to announce an acceleration to a two times dividend
cover for FY 21, reflecting the Group's balance sheet strength and
its confidence in the Group's unique market position.
Looking ahead, the Board expects to sustain the ordinary
dividend cover at two times. Any surplus capital, following land
investment and the payment of the ordinary dividend, is expected to
be returned to the Group's shareholders through either a share
buyback or special dividend. The method will be determined by the
Board considering all factors at that time.
Financial review
The successful operational integration of Linden Homes and the
Partnerships business in 2020 has enabled the Group to take full
advantage of strong market conditions in H1 21, delivering improved
operating profit on both an adjusted and reported basis at
GBP175.5m(3) (H1 20: GBP21.2m profit) and GBP139.1m (H1 20: GBP9.7m
loss), respectively. The Group remains in a net cash position at
the half year of GBP31.6m(5) and has delivered GBP388.9m of cash
over the last 12 months.
In addition to more favourable market conditions in H1 21
compared to H1 20, when the full impact of the Covid-19 pandemic
was first being realised, the Group is also seeing the benefits of
the combined Housebuilding and Partnerships businesses helping to
drive improved performance across key metrics against H2 2020. The
Housebuilding adjusted gross margin improved to 21.8%(2) , or 22.0%
excluding land sales, from 18.9% in H2 2020 and Partnerships
adjusted operating margin improved to 9.1%(3) from 8.7% in H2 2020
and 4.0% in H1 20.
Trading performance
Total completions
The Group delivered 5,351 completions(12) during the first half
representing a 76.4% increase on the prior year.
H1 21 H1 20 % Change
Housebuilding
------ ------ ---------
* Private 1,853 830 > +100%
------ ------ ---------
* Affordable 669 236 > +100%
------ ------ ---------
* JVs (100%) 604 169 > +100%
------ ------ ---------
Total Housebuilding 3,126 1,235 >+100%
------ ------ ---------
Partnerships
------ ------ ---------
* Mixed tenure 432 299 +44%
------ ------ ---------
* JVs (100%) 463 190 > +100%
------ ------ ---------
Total mixed tenure 895 4 89 +83%
------ ------ ---------
Partner delivery equivalent
units 1,330 1,310 +2%
------ ------ ---------
Total Development 4,021 1,724 > +100%
------ ------ ---------
Total Partner delivery 1,330 1,310 +2%
------ ------ ---------
Total Group 5,351 3,034 +76%
------ ------ ---------
Revenue
The increase in completions combined with an Average Selling
Price (ASP) of GBP301k (H1 20: GBP294k) delivered a total adjusted
revenue(1) of GBP1,259.4m, 90.6% higher than prior year (H1 20:
GBP660.9m). On a reported basis revenue was GBP1,102.7m, 81.8%
higher than last year (H1 20: GBP606.4m).
Adjusted gross and operating profit
Adjusted gross profit(2) is GBP248.0m in H1 21 (adjusted gross
margin(2) : 19.7%), which compares to GBP84.7m in H1 20 (adjusted
gross margin: 12.8%). H1 20 margin was heavily impacted by
Covid-19, including the impact of non-productive site overhead
costs being expensed directly to the income statement and costs
incurred relating to the closing and reopening of sites as a result
of lockdown.
Adjusted operating profit(3) was GBP175.5m (H1 20: GBP21.2m).
Adjusted operating margin(3) was 13.9% (H1 20: 3.2%). Reported
operating profit was GBP139.1m (H1 20: GBP9.7m loss).
The Group delivered an adjusted profit before tax(4) of
GBP166.1m (H1 20: GBP10.3m).
On a reported basis the Group generated profit before tax for H1
21 of GBP156.2m, comprising operating profit of GBP139.1m after
amortisation of acquired intangibles of GBP7.1m and exceptional
costs of GBP2.8m, net financing income of GBP3.0m and share of JV
profit of GBP14.1m. This compares to GBP12.2m of loss before tax in
H1 20, which comprised GBP9.7m of operating loss after amortisation
of acquired intangibles of GBP7.1m and exceptional costs of
GBP15.4m, GBP5.2m of net financing costs and share of JV profit of
GBP2.6m. Exceptional costs relate to post acquisition integration
activity. 2021 will be the last year of exceptional costs relating
to this activity.
Housebuilding
H1 21 H1 20 % Change
Total completions(12) 3,126 1,235 >+100%
------------ ------------ ----------
Adjusted revenue(1) GBP868.7m GBP349.4m >+100%
------------ ------------ ----------
Adjusted gross profit(2) GBP189.0m GBP49.1m >+100%
------------ ------------ ----------
Adjusted gross margin(2) 21.8% 14.1% +7.7ppts
------------ ------------ ----------
Adjusted operating profit(3) GBP151.2m GBP8.5m >+100%
------------ ------------ ----------
Adjusted operating margin(3) 17.4% 2.5% +14.9ppts
------------ ------------ ----------
TNAV(14) GBP1,504.8m GBP1,693.0m (11.1%)
------------ ------------ ----------
H1 21 H1 20 % Change
Reported revenue GBP779.0m GBP321.4m >+100%
---------- ---------- ----------
Reported gross profit GBP159.3m GBP38.1m >+100%
---------- ---------- ----------
Reported gross margin 20.4% 11.9% +8.5ppts
---------- ---------- ----------
Reported operating profit GBP133.6m GBP1.5m >+100%
---------- ---------- ----------
Reported operating margin 17.1% 0.5% +16.6ppts
---------- ---------- ----------
Housebuilding total completions (including 100% of JVs) included
832 affordable homes representing 27% of total completions.
Strong consumer demand has supported house prices to grow
through the first half, with the average sales price for our
private homes in Housebuilding having increased 5.7% to GBP351,000
(H1 20: GBP332,000) and overall average sales price having
increased by 2.4% to GBP301,000 (H1 20: GBP294,000).
Included within Housebuilding revenue is GBP17.0m (H1 20:
GBP5.2m) related to land sales and GBP0.2m (H1 20: GBP0.1m) related
to the release of deferred income from joint ventures.
Housebuilding adjusted gross profit(2) of GBP189.0m and housing
adjusted gross margin of 21.8%, reflects the improvement in
completions and pricing from consumer demand compared to H1 20
which was heavily impacted by the Covid-19 pandemic, where
additional costs to implement safe working practices reduced gross
margin available on the smaller number of completions.
As demand has increased and supply chains have come under
pressure there has been an increase in material prices towards the
end of the first half. The impact of these increases has been
mitigated in part by a number of deals agreed in 2020 utilising the
enhanced procurement power of the enlarged business that are fixed
in the short term. Overall, the impact of sales price increases has
more than offset the cost increases in the year to date. Our supply
chains for both materials and labour remain a key area of focus for
the second half to ensure the Group meets its production plans for
the year and manages the cost base.
Housebuilding adjusted operating profit of GBP151.2m and
adjusted operating profit margin of 17.4% takes full benefit of
improved gross margin with overheads remaining broadly constant at
GBP37.5m (H1 20: GBP40.4m).
Partnerships
H1 21 H1 20 % Change
Total mixed tenure completions(12) 895 489 +83.0%
---------- ---------- ---------
Adjusted revenue(1) GBP390.6m GBP311.4m +25.4%
---------- ---------- ---------
Adjusted operating profit(3) GBP35.5m GBP12.4m >+100%
---------- ---------- ---------
Adjusted operating margin(3) 9.1% 4.0% +5.1ppts
---------- ---------- ---------
TNAV(14) GBP65.9m GBP64.1m +2.8%
---------- ---------- ---------
H1 21 H1 20 % Change
Reported revenue GBP323.7m GBP284.9m 13.6%
---------- ---------- ---------
Reported operating profit GBP19.6m GBP4.1m >+100%
---------- ---------- ---------
Reported operating margin 6.1% 1.4% +4.7ppts
---------- ---------- ---------
Adjusted revenue from Partnerships in the period totalled
GBP390.6m (H1 20: GBP311.4m) made up of GBP226.7m from Partner
Delivery (H1 20: GBP223.2m) and GBP163.9m from mixed tenure
operations (H1 20: GBP88.2m).
Partnerships sold a total of 895 units (H1 20: 489 units) from
its mixed tenure operations, including JVs, with an average selling
price of GBP251k (H1 20: GBP222k) and Partner Delivery revenue
generated equivalent units of 1,330 (H1 20: 1,310 units).
Adjusted operating profit of GBP35.5m (H1 20: GBP12.4m) and
adjusted operating profit margin of 9.1% (H1 20: 4.0%) reflects
increased completions and overheads only increasing slightly
compared to H1 20.
Exceptional and Group costs
The reported Group segment of the business includes the
non-underlying exceptional costs of GBP2.8m related to the
acquisition. The Group segment also reports direct PLC costs
totalling GBP11.3m (H1 20: GBP6.1m), including the costs of the PLC
Board, share based payments and related items. The key drivers of
the increase in 2021 are increased share based payment charges of
GBP2.2m in H1 21 (H1 20: GBP0.3m) and a bonus charge of GBP1.1m (H1
20: GBPnil).
Financing and Taxation
Net financing income during the first half was GBP3.0m (H1 20:
GBP5.2m net charges). Net bank interest and commitment fees were
GBP4.5m (H1 20: GBP7.9m), as a result of lower net debt during
2021. We incurred a GBP2.6m charge (H1 20: GBP3.4m), reflecting the
imputed interest on land bought on deferred terms. Financial income
of GBP11.5m (H1 20: GBP7.3m) is primarily generated on loans made
to JVs.
The Group has recognised a tax expense of GBP34.8m representing
22.3% of the profit before tax (2020: tax credit of GBP0.5m at an
effective rate of 4.7% loss before tax). The tax rate is driven
primarily by the impact of the corporate tax rate change in April
2023 that leads to a restatement of deferred tax which is expected
to unwind at 25% rather than 19%, and a prior year adjustment.
Whilst the Government are due to introduce the Residential Property
Developer Tax, as this has not been enacted, no impact of these
changes has been considered. The Group has a current tax liability
of GBP1.4m in its balance sheet as at 30 June 2021 (31 December
2020: asset of GBP14.4m).
Related party transactions
All related party transactions are disclosed in Note 9 to the
interim financial statements.
Dividends and earnings/loss per share
The Board determined on 7 September 2021 that an interim
dividend of 20p will be paid for the first half of 2021.
Both basic EPS of 54.8p (H1 20 restated(9) : LPS of 5.3p) and
basic EPS before exceptionals and amortisation of acquired
intangibles of 59.0p (H1 20 restated(9) : LPS of 4.9p) have
increased year on year, by 60.1p and 63.9p respectively.
Net Assets and Cash flow
As at 30 June 2021, net assets of GBP2,285.0m were GBP89.9m
higher than at the start of the year. Net assets per share as at 30
June 2021 were 1,028p (31 December 2020: 988p).
Goodwill and intangibles totalled GBP684.1m at 30 June 2021 (31
December 2020: GBP691.1m).
Tangible net assets(14) increased from GBP1,504.2m at 31
December 2020 to GBP1,600.9m at 30 June 2021.
Within tangible net assets, inventories increased during the
half year by GBP121.7m to GBP1,958.3m, driven primarily by land
acquisitions in the period.
Trade and other receivables increased by GBP19.5m. Trade and
other payables increased by GBP49.8m as a result of increased site
related accruals and includes land creditors which increased by
GBP52.8m to GBP376.0m (31 December 2020: GBP323.2m) due to the
resumption of land acquisitions after a proactive decision in H1 20
to pause expenditure on new land in response to Covid-19.
As at 30 June 2021 the Group's net cash balance was GBP31.6m(5)
. Having started the year with net cash of GBP38.0m, the Group
generated an operating cash inflow before land expenditure of
GBP237.7m (2020: GBP1.5m). Net cash payments for land investment
were increased at GBP171.3m (2020: GBP84.0m), again reflecting the
Group's resumption of land acquisitions following a proactive
decision in H1 20 to pause expenditure on new land as a response to
Covid-19. Investing cash outflows totalling GBP12.0m includes
investments in and loans made to Joint Ventures and acquisition of
property, plant and equipment offset by distributions from Joint
Ventures, financing cash outflows of GBP52.8m includes GBP44.3m of
dividends paid in H1 21 and principal lease payments of
GBP8.5m.
At 30 June 2021 the Group had borrowing facilities of GBP770m,
including a 4 year committed revolving credit facility of GBP410m,
a 2 year revolving credit facility of GBP40m, GBP150m of 2 year
term loans, a GBP100m US Private Placement facility and GBP70m of
additional facilities. There is a further GBP8m facility which is
fully drawn down with Homes England for one of the Group's
subsidiaries.
Land Bank
Housebuilding Land Bank
H1 21 H1 20
--------------------------------------- ---------- ----------
Consented plots added 3,681 1,815
Sites added 16 8
Sites owned at period end 206 222
Sites controlled at period end 11 -
Total plots in land bank at period end
incl. joint ventures 31,896 30,531
--------------------------------------- ---------- ----------
Average consented land plot ASP incl. GBP302,000 GBP313,000
share of joint ventures
Average consented land plot cost incl. GBP51,000 GBP51,000
share of joint ventures
--------------------------------------- ---------- ----------
The average selling price of all units within the consented land
bank decreased over the year to GBP302,000, 3.5% lower than at 30
June 2020. The estimated embedded gross margin in the consented
land bank as at 30 June 2021, based on prevailing sales prices and
build costs is 24.5%.
The Housebuilding land bank including joint ventures of 31,896
plots as at 30 June 2021 represents 4.9 years of supply based on
the short term completion volume of 6,500 per year. The land bank
reflects our strategy to deliver controlled volume growth to c.
8,000 Housebuilding completions per year in the medium term and is
slightly ahead of our target land bank size of 3.5 to 4.0 year
supply.
The 3,126 plots that legally completed in the half year were
more than replaced by a combination of site acquisitions and
conversions from our strategic land pipeline. Based on our
appraisal at the time of acquisition, the new additions, on average
are expected to deliver a future gross margin and ROCE in excess of
25%. In addition to the acquisitions and conversions, during the
period a further 462 plots were conditionally contracted on 4
sites.
Partnerships Land Bank
H1 21 H1 20
--------------------------------------------- ---------- ----------
Consented plots added 846 1,320
Sites added 4 3
Sites owned at period end 56 51
Sites controlled at period end 7 -
Total plots in land bank at period end incl.
joint ventures 10,137 7,717
--------------------------------------------- ---------- ----------
Average consented land plot ASP incl. share GBP272,000 GBP264,000
of joint ventures
Average consented land plot cost incl. share GBP23,000 GBP29,000
of joint ventures
--------------------------------------------- ---------- ----------
The average selling price of all units within the consented land
bank at the period end was GBP272,000. The estimated embedded gross
margin in the consented land bank as at 30 June 2021, based on
prevailing sales prices and build costs is 19.1%.
The Partnerships land bank including joint ventures of 10,137
plots as at 30 June 2021 reflects our strategy to grow the level of
mixed tenure development in the medium term.
The 895 mixed tenure plots that legally completed in the half
year were replaced by acquisition of 846 plots and a further 653
plots were conditionally contracted on 4 sites. Based on our
appraisal at the time of acquisition, the new additions, on average
are expected to deliver a future gross margin in excess of 17% and
ROCE of 40%.
Strategic Land
As at 30 June 2021 Total sites Total plots
--------------------- ----------- -----------
0 - 150 plots 38 2,821
150 - 300 plots 46 10,258
300 - 500 plots 17 6,592
500 - 1,000 plots 16 10,010
1,000 + plots 6 8,483
--------------------- ----------- -----------
Total 123 38,164
--------------------- ----------- -----------
Planning agreed 13 5,963
Planning application 9 2,351
Ongoing promotion 101 29,850
--------------------- ----------- -----------
Total 123 38,164
--------------------- ----------- -----------
As at 30 June 2020
--------------------- ----------- -----------
Total 122 32,831
--------------------- ----------- -----------
During the year 418 plots have been converted from the strategic
land pipeline into the consented landbank. A further 4,660 plots
were contracted under options and planning consent gained on 310
over the period.
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 facing the Group remain those as outlined in the 2020
annual report, pages 50 to 55, which were: economic and sales
environment, materials and subcontract labour, project delivery,
customer service, people, change and business continuity, health,
safety and environmental, sustainability, liquidity and funding;
and increased regulation.
Through companywide engagement as part of our risk oversight
committee, four of these principal risks were assessed in greater
detail to ensure the Group is well equipped to deal any potential
increased risk during 2021:
-- Materials and subcontract labour: The first half of the year
was challenging in terms of some material supplies, subcontractor
availability and pricing pressures. This risk was managed through
existing group deals that provided certainty of supply, alongside a
flexible approach to sourcing that ensured no significant issues in
terms of production. We expect the supply risk to reduce during the
2nd half of the year but will continue to work closely with our
suppliers to ensure that stock levels are maintained and to monitor
any potential supply risks and source alternatives where necessary.
However, we do remain vulnerable to supply chain availability and a
significant shortfall in one part of the supply chain could have a
negative impact on the financial out turn for the year.
-- Project delivery: Whilst we achieved our build programme
during the first half of the year, the challenges presented by
material and subcontractor availability have been assessed in
detail to ensure our future plan and contractual commitments can be
fulfilled. Careful monitoring will continue and proactive
engagement with our partners to reduce any potential risk is
underway.
-- Increased regulation: We are seeing an increase in the level
of regulatory risk as the range of additional requirements required
for the new Homes Ombudsmen, Quality Code and Future Homes Standard
are set out. We continue to invest significantly in terms of
preparedness and will continue to embed compliance through our
processes, systems and into the homes we build.
-- Sustainability: We recognise the increased reputational risk
in any failure to make progress on our wider sustainability and
climate change strategy. Our investment has continued with an
internal awareness campaign, IT system and senior skilled
resourcing in place to support better central coordination and
ensure all parts of the group are delivering against the
commitments we are making. The detail set out in the wider
announcement will be fully audited going forward to ensure adequate
progress is being made.
The Executive Leadership Team continues to be focussed on
managing the business through Covid-19 to protect the health and
wellbeing of our employees, customers, suppliers and wider society,
as well as balance the protection of profitability and preservation
of operating cash flow with the long-term needs of the Group.
Group income statement
Six months Six months Year ended
ended
30 June ended 31 Dec
2021 2020
GBP'000 30 June GBP'000
2020
(unaudited) GBP'000 (audited)
(unaudited)
============================================== ============= ============= ===========
Revenue (note 3) 1,102,703 606,375 1,811,727
============================================== ============= ============= ===========
Cost of sales (901,046) (539,367) (1,564,831)
============================================== ============= ============= ===========
Gross profit 201,657 67,008 246,896
============================================== ============= ============= ===========
Analysed as:
============================================== ============= ============= ===========
Adjusted gross profit 247,990 84,724 318,765
============================================== ============= ============= ===========
Other operating income (19,614) (9,180) (26,422)
============================================== ============= ============= ===========
Exceptional cost of sales - - (10,975)
============================================== ============= ============= ===========
Share of joint ventures' gross profit (26,719) (8,536) (34,472)
============================================== ============= ============= ===========
Gross profit 201,657 67,008 246,896
============================================== ============= ============= ===========
Administrative expenses including exceptional
items (note 5) (82,158) (85,857) (181,595)
============================================== ============= ============= ===========
Other operating income 19,614 9,180 26,422
============================================== ============= ============= ===========
Operating profit / (loss) 139,113 (9,669) 91,723
============================================== ============= ============= ===========
Analysed as:
============================================== ============= ============= ===========
Adjusted operating profit 175,460 21,179 171,023
============================================== ============= ============= ===========
Exceptional administrative expenses (2,798) (15,444) (30,984)
============================================== ============= ============= ===========
Amortisation of acquired intangibles (7,120) (7,120) (14,240)
============================================== ============= ============= ===========
Share of joint ventures' operating profit (26,429) (8,284) (34,076)
============================================== ============= ============= ===========
Operating profit / (loss) 139,113 (9,669) 91,723
============================================== ============= ============= ===========
Financial income 11,470 6,669 18,232
============================================== ============= ============= ===========
Financial expenses including exceptional
items (note 5) (8,463) (11,837) (26,158)
============================================== ============= ============= ===========
Net financing income including exceptional
items 3,007 (5,168) (7,926)
============================================== ============= ============= ===========
Share of profit of joint ventures 14,093 2,599 14,867
============================================== ============= ============= ===========
Profit / (loss) before tax 156,213 (12,238) 98,664
============================================== ============= ============= ===========
Income tax (expense) / credit including
exceptional items (note 5) (34,831) 573 (21,851)
============================================== ============= ============= ===========
Profit / (loss) for the period / year
attributable to ordinary shareholders 121,382 (11,665) 76,813
============================================== ============= ============= ===========
Earnings / (loss) per share (pence) (Restated) (Restated)
============================================== ============= ============= ===========
Basic 54.8p (5.3)p 34.8p
============================================== ============= ============= ===========
Diluted 54.6p (5.3)p 34.7p
============================================== ============= ============= ===========
Comparative EPS figures have been restated to include the impact
of the bonus share issues in 2020 in order that EPS is comparable
year on year, in accordance with IAS 33. This is detailed in note 1
to the financial statements.
Group statement of comprehensive income
Six months Six months Year ended
ended ended
30 June 30 June 31 Dec 2020
2021 2020
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
======================================= ============= ============= =============
Profit / (loss) for the period /
year 121,382 (11,665) 76,813
======================================= ============= ============= =============
Other comprehensive income / (expense)
======================================= ============= ============= =============
Items that will not be reclassified
to the income statement
======================================= ============= ============= =============
Remeasurements on defined benefit
pension scheme 13,307 4,444 (11,654)
======================================= ============= ============= =============
Deferred tax on remeasurements on
defined benefit pension scheme (2,761) (935) 2,124
======================================= ============= ============= =============
Total other comprehensive income
/ (expense) 10,546 3,509 (9,530)
======================================= ============= ============= =============
Total comprehensive income / (expense)
for the period / year attributable
to ordinary shareholders 131,928 (8,156) 67,283
======================================= ============= ============= =============
Group balance sheet
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
======================================== ============= ============= ============
Assets
======================================== ============= ============= ============
Goodwill 547,509 548,352 547,509
======================================== ============= ============= ============
Intangible fixed assets 136,553 151,798 143,585
======================================== ============= ============= ============
Property, plant and equipment 5,299 4,132 5,091
======================================== ============= ============= ============
Right-of-use assets 34,293 36,155 38,511
======================================== ============= ============= ============
Investments in joint ventures 151,962 158,388 145,153
======================================== ============= ============= ============
Amounts recoverable from joint ventures 328,413 346,008 323,650
======================================== ============= ============= ============
Restricted cash 846 1,617 1,193
======================================== ============= ============= ============
Trade and other receivables 854 886 1,544
======================================== ============= ============= ============
Retirement benefit asset 23,796 22,575 9,077
======================================== ============= ============= ============
Total non-current assets 1,229,525 1,269,911 1,215,313
======================================== ============= ============= ============
Inventories 1,958,259 2,000,987 1,836,521
======================================== ============= ============= ============
Trade and other receivables 245,203 241,016 225,022
======================================== ============= ============= ============
Cash and cash equivalents 342,598 220,683 340,988
======================================== ============= ============= ============
Current tax asset - 14,529 14,350
======================================== ============= ============= ============
Total current assets 2,546,060 2,477,215 2,416,881
======================================== ============= ============= ============
Total assets 3,775,585 3,747,126 3,632,194
======================================== ============= ============= ============
Equity
======================================== ============= ============= ============
Issued capital 111,147 108,914 111,127
======================================== ============= ============= ============
Share premium 360,972 360,345 360,657
======================================== ============= ============= ============
Merger reserve 823,513 823,513 823,513
======================================== ============= ============= ============
Retained earnings 989,334 826,059 899,785
======================================== ============= ============= ============
Total equity attributable to equity
holders of the parent 2,284,966 2,118,831 2,195,082
======================================== ============= ============= ============
Liabilities
======================================== ============= ============= ============
Bank and other loans 311,035 527,976 253,103
======================================== ============= ============= ============
Lease liabilities 22,911 27,119 26,848
======================================== ============= ============= ============
Deferred tax liability 23,701 13,356 17,637
======================================== ============= ============= ============
Trade and other payables 164,838 181,702 139,316
======================================== ============= ============= ============
Provisions 33,617 - 33,786
======================================== ============= ============= ============
Total non-current liabilities 556,102 750,153 470,690
======================================== ============= ============= ============
Bank and other loans - 50,000 50,000
======================================== ============= ============= ============
Trade and other payables 918,738 808,383 894,503
======================================== ============= ============= ============
Lease liabilities 14,369 12,533 15,304
======================================== ============= ============= ============
Provisions - 7,226 6,615
======================================== ============= ============= ============
Current tax liabilities 1,410 - -
======================================== ============= ============= ============
Total current liabilities 934,517 878,142 966,422
======================================== ============= ============= ============
Total liabilities 1,490,619 1,628,295 1,437,112
======================================== ============= ============= ============
Total equity and liabilities 3,775,585 3,747,126 3,632,194
======================================== ============= ============= ============
These condensed consolidated financial statements were approved
by the Board of Directors on 7 September 2021.
Group statement of changes in equity
Own Other Total
Shares retained retained Issued Share Merger
held earnings earnings capital premium Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
==================================== ========= ========== ========== ========= ========= ============ =========
Balance at 1 January 2021 (6,956) 906,741 899,785 111,127 360,657 823,513 2,195,082
==================================== ========= ========== ========== ========= ========= ============ =========
Profit for the period - 121,382 121,382 - - - 121,382
==================================== ========= ========== ========== ========= ========= ============ =========
Total other comprehensive income - 10,546 10,546 - - - 10,546
==================================== ========= ========== ========== ========= ========= ============ =========
Total comprehensive income - 131,928 131,928 - - - 131,928
==================================== ========= ========== ========== ========= ========= ============ =========
Issue of share capital - - - 20 315 - 335
==================================== ========= ========== ========== ========= ========= ============ =========
Share based payments - 2,191 2,191 - - - 2,191
==================================== ========= ========== ========== ========= ========= ============ =========
LTIP shares exercised 3,009 (3,009) - - - - -
==================================== ========= ========== ========== ========= ========= ============ =========
Deferred tax on share based payments - (230) (230) - - - (230)
==================================== ========= ========== ========== ========= ========= ============ =========
Dividends paid to shareholders - (44,340) (44,340) - - - (44,340)
==================================== ========= ========== ========== ========= ========= ============ =========
Total transactions with owners
recognised directly in equity 3,009 (45,388) (42,379) 20 315 - (42,044)
==================================== ========= ========== ========== ========= ========= ============ =========
Balance at 30 June 2021 (unaudited) (3,947) 993,281 989,334 111,147 360,972 823,513 2,284,966
==================================== ========= ========== ========== ========= ========= ============ =========
Balance at 1 January 2020 (3,620) 841,560 837,940 74,169 359,857 - 1,271,966
==================================== ========= ========== ========== ========= ========= ============ =========
Profit for the period - (11,665) (11,665) - - - (11,665)
==================================== ========= ========== ========== ========= ========= ============ =========
Total other comprehensive income - 3,509 3,509 - - - 3,509
==================================== ========= ========== ========== ========= ========= ============ =========
Total comprehensive expense - (8,156) (8,156) - - - (8,156)
==================================== ========= ========== ========== ========= ========= ============ =========
Issue of share capital - - - 31,912 488 823,513 855,913
==================================== ========= ========== ========== ========= ========= ============ =========
Bonus issues - (2,833) (2,833) 2,833 - - -
==================================== ========= ========== ========== ========= ========= ============ =========
Purchase of own shares (1,000) - (1,000) - - - (1,000)
==================================== ========= ========== ========== ========= ========= ============ =========
Share based payments - 271 271 - - - 271
==================================== ========= ========== ========== ========= ========= ============ =========
Deferred tax on share based payments - (163) (163) - - - (163)
==================================== ========= ========== ========== ========= ========= ============ =========
Total transactions with owners
recognised directly in equity (1,000) (2,725) (3,725) 34,745 488 823,513 855,021
==================================== ========= ========== ========== ========= ========= ============ =========
Balance at 30 June 2020 (unaudited) (4,620) 830,679 826,059 108,914 360,345 823,513 2,118,831
==================================== ========= ========== ========== ========= ========= ============ =========
Balance at 1 January 2020 (3,620) 841,560 837,940 74,169 359,857 - 1,271,966
==================================== ========= ========== ========== ========= ========= ============ =========
Profit for the year - 76,813 76,813 - - - 76,813
==================================== ========= ========== ========== ========= ========= ============ =========
Total other comprehensive expense - (9,530) (9,530) - - - (9,530)
==================================== ========= ========== ========== ========= ========= ============ =========
Total comprehensive income - 67,283 67,283 - - - 67,283
==================================== ========= ========== ========== ========= ========= ============ =========
Issue of share capital - - - 70 800 - 870
==================================== ========= ========== ========== ========= ========= ============ =========
Share issued as consideration - - - 31,870 - 823,513 855,383
==================================== ========= ========== ========== ========= ========= ============ =========
Bonus issues - (5,018) (5,018) 5,018 - - -
==================================== ========= ========== ========== ========= ========= ============ =========
LTIP shares exercised 164 (164) - - - - -
==================================== ========= ========== ========== ========= ========= ============ =========
Purchase of own shares (3,500) - (3,500) - - - (3,500)
==================================== ========= ========== ========== ========= ========= ============ =========
Share based payments - 2,741 2,741 - - - 2,741
==================================== ========= ========== ========== ========= ========= ============ =========
Deferred tax on share based payments - 339 339 - - - 339
==================================== ========= ========== ========== ========= ========= ============ =========
Total transactions with owners
recognised directly in equity (3,336) (2,102) (5,438) 36,958 800 823,513 855,833
==================================== ========= ========== ========== ========= ========= ============ =========
Balance at 31 December 2020
(audited) (6,956) 906,741 899,785 111,127 360,657 823,513 2,195,082
==================================== ========= ========== ========== ========= ========= ============ =========
Group statement of cash flows
Six months Six months Year ended
ended
30 June ended 31 Dec
2021 2020
GBP'000 30 June GBP'000
2020
(unaudited) GBP'000 (audited)
(unaudited)
=========================================== ============= ============= ===========
Cash flows from operating activities
=========================================== ============= ============= ===========
Profit / (loss) for the period 121,382 (11,665) 76,813
=========================================== ============= ============= ===========
Depreciation and amortisation 16,248 14,391 31,710
=========================================== ============= ============= ===========
Financial income (11,470) (6,669) (18,232)
=========================================== ============= ============= ===========
Financial expense 8,463 11,907 26,158
=========================================== ============= ============= ===========
Loss on disposal of property, plant
and equipment - 208 15
=========================================== ============= ============= ===========
Equity-settled share based payment
expense 2,191 273 2,741
=========================================== ============= ============= ===========
Income tax expense / (credit) 34,831 (573) 21,851
=========================================== ============= ============= ===========
Share of results of joint ventures (14,093) (2,599) (14,867)
=========================================== ============= ============= ===========
Profit released on sale of assets
from joint ventures (78) - (234)
=========================================== ============= ============= ===========
(Increase) / decrease in trade and
other receivables (3,432) 14,415 17,894
=========================================== ============= ============= ===========
(Increase) / decrease in inventories (122,932) 26,185 168,580
=========================================== ============= ============= ===========
Increase / (decrease) in trade and
other payables 68,669 (91,232) (97,208)
=========================================== ============= ============= ===========
(Decrease) / increase in provisions (10,246) (20,401) 15,821
=========================================== ============= ============= ===========
Cash generated from / (used in) operations 89,533 (65,760) 231,042
=========================================== ============= ============= ===========
Interest paid (7,138) (4,806) (14,661)
=========================================== ============= ============= ===========
Income taxes paid (16,000) (14,949) (34,712)
=========================================== ============= ============= ===========
Net cash inflow / (outflow) from operating
activities 66,395 (85,515) 181,669
=========================================== ============= ============= ===========
Cash flows from investing activities
=========================================== ============= ============= ===========
Bank interest received 2 87 90
=========================================== ============= ============= ===========
Acquisition of intangible fixed assets (759) (308) (109)
=========================================== ============= ============= ===========
Acquisition of property, plant and
equipment (4,707) (757) (2,632)
=========================================== ============= ============= ===========
Acquisition of Linden and Partnerships
net of overdraft acquired - (401,278) (394,578)
=========================================== ============= ============= ===========
Net repayments from / (loans made
to) joint ventures (14,195) (105,805) (14,187)
=========================================== ============= ============= ===========
Investments in joint ventures (6,269) (19,100) -
=========================================== ============= ============= ===========
Distributions from joint ventures 13,599 4,474 27,043
=========================================== ============= ============= ===========
Decrease in restricted cash 347 132 555
=========================================== ============= ============= ===========
Net cash outflow from investing activities (11,982) (522,555) (383,818)
=========================================== ============= ============= ===========
Cash flows from financing activities
=========================================== ============= ============= ===========
Dividends paid (44,340) - -
=========================================== ============= ============= ===========
Principal elements of lease payments (8,463) (7,209) (15,325)
=========================================== ============= ============= ===========
Purchase of own shares - (1,000) (3,500)
=========================================== ============= ============= ===========
Drawdown of bank and other loans 80,000 475,000 475,000
=========================================== ============= ============= ===========
Repayment of bank and other loans (80,000) - (275,000)
=========================================== ============= ============= ===========
Net cash (used in) / from financing
activities (52,803) 466,791 181,175
=========================================== ============= ============= ===========
Net increase / (decrease) in cash
and cash equivalents 1,610 (141,279) (20,974)
=========================================== ============= ============= ===========
Cash and cash equivalents at 1 January 340,988 361,962 361,962
=========================================== ============= ============= ===========
Cash and cash equivalents at the end
of the period 342,598 220,683 340,988
=========================================== ============= ============= ===========
1 Basis of preparation
Vistry Group PLC (the "Company") is a company domiciled in the
United Kingdom. The consolidated financial statements of the Group
for the six months ended 30 June 2021 comprise the Company and its
subsidiaries (together referred to as the "Group") and the Group's
interest in joint ventures.
The condensed consolidated interim financial statements were
authorised for issue by the directors on 7 September 2021. The
financial statements are unaudited but have been reviewed by
PricewaterhouseCoopers LLP, the Company's auditors.
The condensed consolidated interim 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 2021 and 30 June
2020 are unaudited. The comparative figures for the financial year
ended 31 December 2020 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 consolidated 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 though 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 Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary are the fair values of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the Group. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. Acquisition costs are expensed as incurred as
required by IFRS 3 "Business combinations".
The preparation of condensed 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.
The prior year EPS has been restated to include the impact of
the bonus issue of 5.7m shares in January 2020 and 4.3m shares in
July 2020 in order that EPS is comparable from period to period.
This is in accordance with the requirements of IAS 33. Judgements
and estimates made by management in the application of adopted
International Financial Reporting Standards (IFRSs) that have a
significant effect on the financial statements and estimates with a
significant risk of material adjustment in following years have
been reviewed by the directors and remain those published in the
Group's consolidated financial statements for the year ended 31
December 2020.
These condensed consolidated interim financial statements have
been prepared on the basis of the policies set out in the 2020
Group Annual Report and Accounts and in accordance with UK adopted
IAS 34 and the Disclosure Guidance and Transparency Rules
sourcebook of the UK's Financial Conduct Authority. The condensed
consolidated interim financial statements have been prepared by
applying the accounting policies and presentation that were applied
in the preparation of the Company's published consolidated
financial statements for the year ended 31 December 2020. The one
exception is tax, which is calculated based on the estimated full
year effective tax rate at the half year.
The condensed consolidated interim financial statements should
be read in conjunction with the annual consolidated financial
statements for the year ended 31 December 2020 which were prepared
in accordance with IFRS in conformity with the requirements of the
Companies Act 2006 and IFRS adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union.
For the year to 31 December 2021 the Group Annual Report and
Accounts will be prepared in accordance with IFRS as adopted by the
UK Endorsement Board - this change in basis of preparation is
required by UK company law for the purposes of financial reporting
as a result of the UK's exit from the EU on 31 January 2020 and the
cessation of the transition period on 31 December 2020. This change
does not constitute a change in accounting policy but rather a
change in framework which is required to ground the use of IFRS in
company law and there will be no impact on recognition, measurement
or disclosure between the two frameworks in the period
reported.
There are no new standards effective for the first time in the
period beginning 1 January 2021 which will have a material impact
on the Group's reported results.
Goodwill impairment
The acquisition of Linden Homes and the Partnerships business in
2020 resulted in the recognition of goodwill and acquired
intangible assets for the Group.
In order to assess whether goodwill and intangible assets
require an impairment, an estimate must be made for the value in
use of the cash generating units ("CGUs") which have goodwill
allocated to them. The estimate for the value in use requires the
calculation of a discounted cash flow, reflecting the future
expected cashflows from the relevant CGUs. Goodwill must be
reviewed on at least an annual basis for impairment, or earlier in
the event that there is an indication of possible impairment.
The goodwill recognised by the Group at 30 June 2021 reflects
the goodwill on acquisition of Linden and Partnerships on 3 January
2020. Details of the Group's goodwill impairment review are
disclosed on pages 177 to 178 of the 2020 Group Annual Report and
Accounts.
No indicators of impairment have been identified at 30 June
2021; a full goodwill impairment review will be conducted during
the second half of the year and the details will be disclosed in
the 2021 Group Annual Report and Accounts.
Covid-19
In light of the continuation of the Covid-19 pandemic the Group
has considered whether any impairment of goodwill, intangibles,
receivables or inventories is appropriate, and has concluded that
none is required. All developments have remained active in H1 21.
The value in use of the CGUs is not expected to be significantly
impacted by the pandemic as the Group's strategy at the time of the
acquisition remains in place despite Covid-19 causing some short
term delays to the plan and therefore no impairment of assets is
required. No impairment indicators have been identified relating to
Covid-19 or other factors.
Going concern
The Group has prepared a cashflow forecast to confirm the
appropriateness of the going concern assumption in these interim
financial statements. The forecast was prepared using a likely base
case and a downside sensitivity scenario. In the downside scenario
the Group have assumed decreased affordability, leading to reduced
demand for housing and falling house prices. In both the base case
and the downside sensitivity 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 follow the required
covenants on the aforementioned borrowing facilities. Consequently,
the Directors have not identified any material uncertainties to the
Company's ability to continue as a going concern over a period of
at least twelve months from the date of the approval of the
financial statements. As such, the Directors have concluded that
using the going concern basis for the preparation of the financial
statements is appropriate.
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, but there are typically two principal
selling seasons: spring and autumn. As these fall into two separate
half years, the seasonality of the business is not usually
pronounced, although it is biased towards the second half of the
year under normal trading conditions.
2020 did not reflect normal trading conditions and seasonality
trends as a result of the Covid-19 outbreak during the first half
of the year. The 2020 spring selling season was significantly
impacted by the pandemic and increased the bias towards the second
half of the year as a result of reduced trading in the first six
months. In 2021 trading conditions and seasonality is back in line
with expected trends.
3 Revenue
Reported revenue by type:
30 June 30 June
2021 2020
GBP'000 GBP'000
(unaudited) (unaudited)
======================================= ============= =============
Private housing 711,106 327,176
======================================= ============= =============
Affordable housing 144,825 47,772
======================================= ============= =============
Partner delivery revenue 226,709 223,215
======================================= ============= =============
Land sales 17,025 5,217
======================================= ============= =============
Release of deferred revenue from joint
ventures 186 74
======================================= ============= =============
Other revenue 2,852 2,921
======================================= ============= =============
Total 1,102,703 606,375
======================================= ============= =============
4 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. The Board
identifies two separate segments, having taken into consideration
IFRS8 criteria - Housebuilding and Partnerships. 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.
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 and other public sector businesses across England,
including London, to deliver either the development of private and
affordable housing on land owned by the Group or the Group's joint
ventures, or to provide contracting services for development. The
Partnerships segment operates under the Vistry Partnerships and
Drew Smith brand names.
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 exceptional items.
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 investments in joint
ventures, goodwill and intangible assets, net cash or debt,
retirement benefit assets/liabilities and tax balances
payable/receivable.
During H1 21, two development sites were transferred from the
Housebuilding to the Partnerships operating segment due to their
closer alignment with the Partnerships commercial proposition and
their build now being actively managed by Partnerships staff. The
impact of the transfer on the adjusted gross margin for
Housebuilding was to increase it by 10 bps and there was no impact
on adjusted operating margin for Partnerships.
Adjusted financial results include share of joint ventures and
adjusted gross profit is stated including other operating
income.
(a) Segmental financial performance
Period ended 30 June 2021 Housebuilding Partnerships Group Total
items
GBP'000 GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited)
===================================== ============== ============= ============= =============
Revenue 778,963 323,740 - 1,102,703
===================================== ============== ============= ============= =============
Share of joint venture revenue 89,771 66,888 - 156,659
===================================== ============== ============= ============= =============
Adjusted revenue 868,734 390,628 - 1,259,362
===================================== ============== ============= ============= =============
Gross profit 159,291 42,366 - 201,657
===================================== ============== ============= ============= =============
Share of joint venture gross profit 16,489 10,230 - 26,719
===================================== ============== ============= ============= =============
Other operating income 13,194 6,420 - 19,614
===================================== ============== ============= ============= =============
Adjusted gross profit 188,974 59,016 - 247,990
===================================== ============== ============= ============= =============
Operating profit / (loss) 133,588 19,595 (14,070) 139,113
===================================== ============== ============= ============= =============
Share of joint venture operating
profit 16,277 10,152 - 26,429
===================================== ============== ============= ============= =============
Exceptional items - - 2,798 2,798
===================================== ============== ============= ============= =============
Amortisation of acquired intangibles 1,380 5,740 - 7,120
===================================== ============== ============= ============= =============
Adjusted operating profit / (loss) 151,245 35,487 (11,272) 175,460
===================================== ============== ============= ============= =============
Adjusted gross margin 21.8% 15.1% - 19.7%
===================================== ============== ============= ============= =============
Adjusted operating margin 17.4% 9.1% - 13.9%
===================================== ============== ============= ============= =============
Period ended 30 June 2020 Housebuilding Partnerships Group Total
items
GBP'000 GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited)
===================================== ============== ============= ============= =============
Revenue 321,445 284,930 - 606,375
===================================== ============== ============= ============= =============
Share of joint venture revenue 27,997 26,495 - 54,492
===================================== ============== ============= ============= =============
Adjusted revenue 349,442 311,425 - 660,867
===================================== ============== ============= ============= =============
Gross profit 38,128 24,680 4,200 67,008
===================================== ============== ============= ============= =============
Share of joint venture gross profit 5,911 2,625 - 8,536
===================================== ============== ============= ============= =============
Other operating income 5,110 4,070 - 9,180
===================================== ============== ============= ============= =============
Adjusted gross profit 49,148 31,375 4,200 84,724
===================================== ============== ============= ============= =============
Operating profit / (loss) 1,466 4,065 (15,200) (9,669)
===================================== ============== ============= ============= =============
Share of joint venture operating
profit 5,700 2,584 - 8,284
===================================== ============== ============= ============= =============
Exceptional items - - 15,444 15,444
===================================== ============== ============= ============= =============
Amortisation of acquired intangibles 1,380 5,740 - 7,120
===================================== ============== ============= ============= =============
Adjusted operating profit 8,546 12,389 244 21,179
===================================== ============== ============= ============= =============
Adjusted gross margin 14.1% 10.1% - 12.8%
===================================== ============== ============= ============= =============
Adjusted operating margin 2.5% 4.0% - 3.2%
===================================== ============== ============= ============= =============
(b) Segmental financial position
Period ended 30 June 2021
Housebuilding Partnerships Group Total
items
GBP'000 GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited)
================================= ============== ============= ============= =============
Goodwill and intangibles 281,391 402,671 - 684,062
================================= ============== ============= ============= =============
Tangible net asset / (liability)
value 1,374,293 44,401 (1,315) 1,417,379
================================= ============== ============= ============= =============
Investment in joint ventures 130,471 21,491 - 151,962
================================= ============== ============= ============= =============
Net cash - - 31,563 31,563
================================= ============== ============= ============= =============
Period ended 30 June 2020 Housebuilding Partnerships Group Total
items
GBP'000 GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited)
============================= ============== ============= ============= =============
Goodwill and intangibles 288,121 412,030 - 700,151
============================= ============== ============= ============= =============
Tangible net asset value 1,543,522 55,134 18,932 1,617,588
============================= ============== ============= ============= =============
Investment in joint ventures 149,470 8,918 - 158,388
============================= ============== ============= ============= =============
Net debt - - (357,294) (357,294)
============================= ============== ============= ============= =============
5 Exceptional items
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.
Six months Six months Year ended
ended ended
30 June 30 June 31 Dec
2021 (unaudited) 2020 (unaudited) 2020
GBP'000 GBP'000 (audited)
GBP'000
========================================== ================== ================== ===========
Administrative expenses relating to the
acquisition 2,798 15,444 20,009
========================================== ================== ================== ===========
Cost of sales relating to legacy property
building safety - - 10,975
========================================== ================== ================== ===========
Exceptional expenses 2,798 15,444 30,984
========================================== ================== ================== ===========
In 2020 the Group completed the acquisition of Linden and
Partnerships from Galliford Try PLC. In 2020, exceptional expenses
incurred in relation to this transaction included legal, financing
and accounting advisory services, transaction insurance costs, as
well as costs directly related to the integration and restructuring
of the Group as a result of the Acquisition, including the cost of
rebranding, redundancies and office closures. In the half year
ended 30 June 2021, administrative expenses relating to acquisition
include technology integration costs, legal expenses, procurement
process and contract integration costs and rebranding expenses.
In 2020, exceptional expenses were also incurred in relation to
legacy property building safety which reflect estimated costs
relating to finished developments in relation to potential build
defects including building fire safety. The Group has undertaken a
review of all of its current and legacy buildings where a potential
liability has been identified and has provided for the expected
costs of any remedial works that may be required. This has been
reassessed in H1 21 and no further provisions have been deemed
necessary.
Tax on exceptional items in H1 21 was GBP0.5m (H1 20: GBP2.4m,
FY 20: GBP5.9m).
6 Earnings / (loss) per share
Profit / (loss) attributable to ordinary shareholders
Six months Six months Year ended
ended ended 31 Dec 2020
30 June 2021 30 June GBP000 (audited)
GBP000 (unaudited) 2020
GBP000 (unaudited)
==================================== =================== =================== =================
Profit / (loss) for the period
/ year attributable to equity
holders of the parent 121,382 (11,665) 76,813
==================================== =================== =================== =================
Profit for the period / year
attributable to equity holders
of the parent (before exceptional
items and amortisation of acquired
intangibles) 130,768 10,899 116,109
==================================== =================== =================== =================
Earnings per share
Six months Six months Year ended
ended ended 31 Dec 2020
30 June 2021 30 June Pence (audited)
Pence (unaudited) 2020
Pence (unaudited,
restated)
==================================== ================== ================== ================
Basic earnings / (loss) per share 54.8 (5.3) 34.8
==================================== ================== ================== ================
Diluted earnings / (loss) per
share 54.6 (5.3) 34.7
==================================== ================== ================== ================
Basic earnings per share (before
exceptional items and amortisation
of acquired intangibles) 59.0 4.9 52.6
==================================== ================== ================== ================
Diluted earnings per share (before
exceptional items and amortisation
of acquired intangibles) 58.8 4.9 52.5
==================================== ================== ================== ================
Weighted average number of ordinary shares
Six months Six months Year ended
ended ended
30 June 2021 30 June 31 Dec 2020
2020
(restated)
==================================== ============= =========== ============
Weighted average number of ordinary
shares 221,579,615 220,398,014 220,916,654
==================================== ============= =========== ============
Basic earnings per share
Basic earnings per ordinary share for the six months ended 30
June 2021 is calculated on a profit attributable to equity holders
of GBP121,382,000 (H1 20: loss after tax of GBP11,665,000; FY 20:
profit after tax of GBP76,813,000) over the weighted average of
221,579,615 (H1 20 restated: 220,398,014; FY 20: 220,916,654)
ordinary shares in issue during the period.
Diluted earnings per share
The calculation of diluted earnings per share at 30 June 2021
was based on the profit attributable to equity holders of
GBP121,382,000 (H1 20: loss after tax of GBP11,665,000; FY 20:
profit after tax of GBP76,813,000).
The Group's diluted weighted average ordinary shares potentially
in issue during the six months ended 30 June 2021 was 222,507,940
(H1 20 restated: 220,551,432; FY 20: 221,142,212).
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.
7 Dividends
The following dividends per qualifying ordinary share were
settled by the Group:
Six months Six months Year ended
ended ended 31 Dec 2020
30 June 2021 30 June GBP'000
GBP'000 2020
GBP'000
============================== ============== ============ =============
May 2021: 20p (May 2020: nil) 44,340 - -
============================== ============== ============ =============
Total 44,340 - -
============================== ============== ============ =============
The Board determined on 7 September 2021 that a dividend of 20
pence will be paid for the first half of 2021.
A final dividend of 20 pence per share was paid on 21 May 2021
in respect of 2020 following approval by shareholders at the
AGM.
8 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.
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 Year ended
ended 31 Dec
30 June 2020
2021 GBP'000
GBP'000
============================== ========== ==========
Balance at period / year end 375,952 323,167
============================== ========== ==========
Total contracted cash payment 378,708 329,514
============================== ========== ==========
Due within 1 year 211,187 182,388
============================== ========== ==========
Due within 1-2 years 100,565 98,455
============================== ========== ==========
Due within 2-3 years 37,517 17,050
============================== ========== ==========
Due within 3-4 years 9,279 6,807
============================== ========== ==========
Due within 4-5 years 4,826 7,490
============================== ========== ==========
Due in more than 5 years 15,334 17,324
============================== ========== ==========
Bank and other loans
Fair value is calculated based on discounted expected future
principal and interest flows.
The maturity date for the Group's GBP50m term loan was amended
on 23 February 2021 from March 2021 to January 2023. As a result,
this balance was shown as current at 31 December 2020 and is now
presented as non-current at 30 June 2021.
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.
9 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 half year ended 30 June 2021 were limited to those
relating to remuneration, which will be disclosed in the directors'
remuneration report published in the Group Annual Report and
Accounts 2021.
Mr Greg Fitzgerald, Group Chief Executive, is non-executive
Chairman of Ardent Hire Solutions ("Ardent"). The Group hires
forklift trucks from Ardent.
Mr Graham Prothero, Chief Operating Officer, is non-executive
Director and Chair of the Audit Committee of Marshalls PLC. The
Group incurs costs with Marshalls PLC in relation to landscaping
services.
Ms Katherine Innes Ker, Independent non-executive Director, is a
Non-Executive Director of Forterra PLC and Vistry Group PLC. The
Group incurs costs with Forterra PLC in relation to the supply of
bricks.
Mr Ian Baker is the Managing Director of Baker Estates Ltd where
Mr Greg Fitzgerald is a shareholder and Director. The Group
received advisory services from Ian Baker's consultancy company IB
(SW) in the prior year.
Mr Ian Tyler, Non-Executive Chairman, is the Chairman of
Affinity Water Ltd and a Non-Executive Director of BAE Systems PLC.
The Group received water services and incurred car parking charges
with these companies, respectively, in the period.
The total net value of transactions with related parties were as
follows:
Expenses paid Amounts payable Amounts owed
to to by
related parties related parties related parties
======================= ============================== ============================ ==============================
Six Six 30 June 30 June 31 Dec 30 30 31 Dec
months months Year 2021 2020 2020 June June 2020
ended ended ended GBP'000 GBP'000 GBP'000 2021 2020 GBP'000
30 30 31 GBP'000 GBP'000
June June Dec
2021 2020 2020
GBP'000 GBP'000 GBP'000
======================= ======== ========= ========= ======== ======== ======== ========= ========= ========
Trading transactions
Ardent 2,646 1,088 2,498 534 240 632 - - -
======================= ======== ========= ========= ======== ======== ======== ========= ========= ========
IB (SW) - 56 56 - - - - - -
======================= ======== ========= ========= ======== ======== ======== ========= ========= ========
Marshalls PLC 14 - 21 - - - - - -
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Forterra PLC 396 159 1,321 16 - 115 - - -
======================= ======== ========= ========= ======== ======== ======== ========= ========= ========
Affinity Water Ltd 18 - - 2 - - - - -
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BAE Systems Properties
PLC 1 - - 4 - - - - -
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Transactions between the Group and its joint ventures are
disclosed as follows:
Sales to related parties Interest and dividend
income
from related parties
========================= ==================================== ===============================
Six Six months Six Six
months ended Year ended months months Year
ended 30 June 31 Dec ended ended ended
30 June 2020 2020 30 June 30 June 31 Dec
2021 GBP'000 GBP'000 2021 2020 2020
GBP'000 GBP'000 GBP'000 GBP'000
========================= ========= =========== ============ ========= ========= =========
Trading transactions 70,957 56,073 129,663 - - -
Non-trading transactions - - - 24,778 10,312 45,014
========================= ========= =========== ============ ========= ========= =========
Amounts owed by related Amounts owed to related
parties parties
==================== ============================== =============================
30 June 30 June 31 Dec 30 June 30 June 31 Dec
2021 2020 2020 2021 2020 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
==================== ========= ========= ======== ========= ======== ========
Balances with joint
ventures 328,413 418,195 323,650 33,282 24,993 20,157
==================== ========= ========= ======== ========= ======== ========
Sales to related parties, including joint ventures, are based on
normal commercial terms available to unrelated third parties. The
loans made to joint ventures are all on normal commercial terms,
bear interest at rates of between 3.5% and 5.1%; all balances with
related parties will be settled in cash.
There have been no other related party transactions in the half
year which have materially affected the financial performance or
position of the Group, and which have not been disclosed.
10 Reconciliation of net cash flow to net cash
Six months Six months Year ended
ended ended 31 Dec
30 June 30 June 2020 2020
2021 GBP'000 GBP'000
GBP'000
=================================== =========== ============== ==========
Net increase / (decrease) in cash
and cash equivalents 1,610 (141,279) (20,974)
=================================== =========== ============== ==========
Increase in borrowings (7,932) (577,976) (303,103)
=================================== =========== ============== ==========
Net cash at start of period 37,885 361,962 361,962
=================================== =========== ============== ==========
Net cash / (debt) at end of period 31,563 (357,294) 37,885
=================================== =========== ============== ==========
Analysis of net cash:
=================================== ========= ========= =========
Cash and cash equivalents 342,598 220,683 340,988
=================================== ========= ========= =========
Bank and other loans (311,035) (577,976) (303,103)
=================================== ========= ========= =========
Net cash / (debt) at end of period 31,563 (357,294) 37,885
=================================== ========= ========= =========
11 Alternative performance measures
The Group uses alternative performance measures which are not
defined within IFRS. The Directors use these alternative
performance measures, along with IFRS measures, to assess the
operational performance of the Group.
The definition and reconciliation of the financial alternative
performance measures used to IFRS measures, are shown below:
Adjusted revenue
Adjusted revenue is defined as revenue including share of joint
ventures' revenue:
Six months Six months Year ended
ended ended 31 Dec
30 June 30 June 2020 2020
2021 GBP'000 GBP'000
GBP'000
=================================== =========== ============== ==========
Revenue per Group Income Statement 1,102,703 606,375 1,811,727
=================================== =========== ============== ==========
Share of joint ventures' revenue 156,659 54,492 228,387
=================================== =========== ============== ==========
Adjusted revenue 1,259,362 660,867 2,040,114
=================================== =========== ============== ==========
Adjusted gross profit
Adjusted gross profit is defined as gross profit including share
of joint ventures' gross profit, plus other operating income and
before exceptional cost of sales:
Six months Six months Year ended
ended ended 31 Dec
30 June 30 June 2020 2020
2021 GBP'000 GBP'000
GBP'000
=============================== =========== ============== ==========
Gross Profit per Group Income
Statement 201,657 67,008 246,896
=============================== =========== ============== ==========
Other operating income 19,614 9,180 26,422
=============================== =========== ============== ==========
Exceptional cost of sales - - 10,975
=============================== =========== ============== ==========
Share of joint ventures' gross
profit 26,719 8,536 34,472
=============================== =========== ============== ==========
Adjusted gross profit 247,990 84,724 318,765
=============================== =========== ============== ==========
Adjusted operating profit
Adjusted operating profit is defined as operating profit
including share of joint ventures' operating profit, before
exceptional expenses and amortisation of acquired intangibles:
Six months Six months Year ended
ended ended 31 Dec
30 June 30 June 2020 2020 GBP'000
2021 GBP'000
GBP'000
===================================== =========== ============== =============
Operating profit / (loss) per
Group Income Statement 139,113 (9,669) 91,723
===================================== =========== ============== =============
Exceptional administrative expenses 2,798 15,444 30,984
===================================== =========== ============== =============
Amortisation of acquired intangibles 7,120 7,120 14,240
===================================== =========== ============== =============
Share of joint ventures' operating
profit 26,429 8,284 34,076
===================================== =========== ============== =============
Adjusted operating profit 175,460 21,179 171,023
===================================== =========== ============== =============
12 Business combinations
On 3 January 2020, the Group acquired the Linden and
Partnerships businesses from Galliford Try PLC for a consideration
of GBP1,233.5m. This investment in subsidiaries has been reflected
in the Company balance sheet shown on page 148 in the 2020 Group
Annual Report and Accounts.
The acquisition has positioned the Group as a top five national
housebuilder by volume, expanded the Group's presence across the UK
and into Yorkshire and established the Group as one of the leaders
in the highly attractive, high-growth partnerships business.
The acquisition was of 100% of the share capital and control of
the holding companies Vistry (Jersey) Limited (formerly Goldfinch
(Jersey) Limited) and Vistry Partnerships Limited (formerly
Galliford Try Partnerships Limited) and all of their subsidiaries,
which are identified in Note 5.16 of the 2020 Group Annual Report
and Accounts.
Details of the purchase consideration, the net assets acquired
and goodwill at 3 January 2020 are as follows:
Purchase consideration Attributable Attributable Total
to the acquisition to the acquisition
of Linden of Partnerships GBP'000
GBP'000 GBP'000
============================= ==================== ==================== =========
Cash paid 76,300 301,800 378,100
============================= ==================== ==================== =========
Shares in Vistry Group PLC
issued 815,698 39,685 855,383
============================= ==================== ==================== =========
Total purchase consideration 891,998 341,485 1,233,483
============================= ==================== ==================== =========
The share consideration included 63,739,385 shares with nominal
value of GBP0.50 per share. GBP823.5m has been 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 nominal value of the shares.
In addition to the above cash and share consideration, the Group
assumed a liability with fair value of GBP108.2m for notes payable
in relation to the acquisition of Partnerships, included within
borrowings in the table on the next page.
The assets and liabilities recognised as a result of the
acquisition are as follows:
Linden Partnerships Total
Fair value Fair value Fair value
3 January 3 January 3 January
2020 2020 2020
GBP'000 GBP'000 GBP'000
======================================== =========== ============ ===========
(Bank overdraft) / cash and cash
equivalents (35,368) 32,367 (3,001)
======================================== =========== ============ ===========
Property, plant and equipment 295 1,783 2,078
======================================== =========== ============ ===========
Right-of-use assets 10,757 10,207 20,964
======================================== =========== ============ ===========
Intangible assets 54,800 100,224 155,024
======================================== =========== ============ ===========
Investments in joint ventures
and associates 49,527 6,507 56,034
======================================== =========== ============ ===========
Retirement benefit asset 5,646 - 5,646
======================================== =========== ============ ===========
Inventories 606,371 103,401 709,772
======================================== =========== ============ ===========
Amounts owed by joint ventures 208,034 74,439 282,473
======================================== =========== ============ ===========
Trade and other receivables 98,983 157,928 256,911
======================================== =========== ============ ===========
Trade and other payables (322,797) (326,865) (649,662)
======================================== =========== ============ ===========
Borrowings - (108,219) (108,219)
======================================== =========== ============ ===========
Lease liabilities (10,758) (10,207) (20,965)
======================================== =========== ============ ===========
Provisions (17,706) (4,750) (22,456)
======================================== =========== ============ ===========
Net deferred tax assets / (liabilities) 15,886 (14,511) 1,375
======================================== =========== ============ ===========
Net identifiable assets acquired 663,670 22,304 685,974
======================================== =========== ============ ===========
Goodwill 228,328 319,181 547,509
======================================== =========== ============ ===========
891,998 341,485 1,233,483
======================================== =========== ============ ===========
The acquired intangibles include the Linden Homes and Drew Smith
brand names, the customer relationships within the Linden and
Partnerships businesses, and the secured contracts of the
Partnerships business. The acquired intangible assets have
estimated useful lives of between 4 and 25 years.
The goodwill for Linden reflects intangible assets which do not
qualify for separate recognition including relationships with
private customers, and the assembled workforce, in addition to
synergies that will be achieved as an enlarged business.
The goodwill for Partnerships reflects their 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.
13 Post balance sheet events
There were no significant post balance sheet events.
14 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 7 September 2021.
Statement of directors' responsibilities
The directors confirm that these condensed consolidated 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 directors of Vistry Group PLC are listed in the Vistry Group
PLC Annual Report for 31 December 2020, with the exception of the
following changes in the period: Ashley Steel was appointed on 10
June 2021. A list of current directors is maintained on the Vistry
Group PLC website: www.vistrygroup.co.uk
For and on behalf of the Board,
Greg Fitzgerald Earl Sibley
Chief Executive Chief Financial Officer
7 September 2021
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 of Vistry Group PLC for the 6 month period
ended 30 June 2021 (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.
What we have reviewed
The interim financial statements comprise:
-- the Group balance sheet as at 30 June 2021;
-- 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 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.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Half year results, 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 in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the Half year results based on our review.
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.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. 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 considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
7 September 2021
[1] Adjusted revenue includes share of joint venture revenue
[2] Adjusted gross profit and margin includes share of joint
venture gross profit and other operating income
[3] Adjusted operating profit and margin is calculated to
include the proportional contribution of joint ventures and
excludes exceptional expenses and amortisation of acquired
intangibles
[4] Adjusted profit before tax is stated excluding exceptional
items and amortisation of acquired intangibles
[5] Net cash / debt is quoted excluding IFRS16 lease liabilities
and includes GBP6.9m impact from the fair value of future interest
payments on US Private Placement notes
[6] Return on capital employed ("ROCE") is defined as adjusted
operating profit for the last 12 months divided by the average of
opening and closing adjusted capital employed for the 12-month
period. Adjusted capital employed is calculated as net assets
excluding net cash or debt less goodwill and intangible assets.
[7] FactSet consensus FY 21 adjusted profit before tax:
GBP329.5m (3 September 2021)
[8] Adjusted EPS is calculated based on profit after tax
attributable to equity shareholders before exceptional items,
amortisation of acquired intangibles and tax thereon, over the
weighted average number of ordinary shares in issue during the
period
[9] 2020 EPS has been restated for the impact of the bonus share
issue made during H2 2020 in order that EPS is shown on a
comparable basis from period to period, in accordance with IAS
33.
[10] Proforma metrics are calculated using published data for
Linden Homes and Vistry Partnerships for the period 1 January 2019
to 30 January 2019, plus the former Bovis Homes PLC published data
for the same period.
[11] Our current calculations set these targets at a 42%
reduction in operational carbon emissions by 2030 against a 2020
baseline (scope 1 and 2) and a 56% reduction in value chain
emissions by 2030 against a 2020 baseline (scope 3).
[12] Completions include 100% of JVs
[13] Calculated with total owned and controlled land bank plots
of 31,896 and FY 21 target completions of 6,500 units
[14] Tangible net asset value is calculated as total net assets
less acquired intangible assets and goodwill
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END
IR SSLFAMEFSEDU
(END) Dow Jones Newswires
September 07, 2021 02:02 ET (06:02 GMT)
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