TIDMVTY
RNS Number : 3000D
Vistry Group PLC
02 March 2022
2 March 2022
Vistry Group PLC - Full year results
Vistry Group PLC (the "Group") is today issuing its full year
results for the 12-month period ended 31 December 2021.
Financial highlights
-- Excellent progress across all areas of the business with
Group delivering adjusted full year profit before tax(1) of
GBP346.0m (2020: GBP143.9m)
-- On a reported basis after exceptional items and amortisation,
Group made profit before tax of GBP319.5m (2020: GBP98.7m)
-- Vistry Housebuilding increased total completions to 6,551
(2020: 4,652) units, with adjusted gross margin(1) improving by 470
basis points to 22.3% (2020: 17.6%)
-- Vistry Partnerships continues to deliver rapid growth in
higher margin mixed tenure revenues, up 66% in 2021, driving an
increase in Partnerships' adjusted operating margin(1) to 9.2%
(2020: 6.7%)
-- Year-end net cash(2) position of GBP234.5m (2020: GBP37.9m),
significantly ahead of expectations at the start of the year
-- The Group return on capital employed increased to 25.5%
(2020: 14.5%) and Partnerships' return on capital remaining well in
excess of its 40% medium term target
-- Dividend pay-out accelerated to two times dividend cover
highlighting Board's confidence in Group's prospects, with proposed
final ordinary dividend of 40p per share (2020: nil), bringing
total ordinary dividend to 60p per share for 2021 (2020: nil)
Operational highlights
-- Delivering high quality homes remains a top priority, with
Group maintaining the maximum 5-star HBF customer satisfaction
rating and a step-up in quality awards including 12 Seals of
Excellence in the NHBC Pride in the Job Awards (2020: 4)
-- Private sales rate increased by 43% to 0.76 (2020: 0.53)
reflecting a sustainable rate driven by land strategy of developing
a higher proportion of mid-range homes
-- Good progress with sustainability strategy including
commitment to science-based targets and sign-up to 'Business
Ambition for 1.5degC'
-- Growth in size of Group's controlled landbank with addition
of 11,798 new plots at average hurdle rate of at least 25% gross
margin and ROCE for Housebuilding, and further strengthening of
Group's strategic land pipeline, adding 7,721 strategic land plots
options
-- Awarded 'Large Housebuilder of the Year' for 2021 at the
Housebuilder Awards, in less than two years since the enlarged
group was formed.
Fire safety
-- Our strong view is that the remediation costs of cladding and
fire safety should not be borne by leaseholders and are supportive
of Government seeking a proportionate solution. We support the
recent HBF response to the Department of Levelling Up, Housing and
Communities
-- We have made provisions for known liabilities, and in the
year we have taken an additional charge of GBP5.7m, with a total
provision of GBP25.2m held at 31 December 2021
-- Given the uncertainties in this area we are unable to
precisely estimate any additional costs in the event the HBF's
proposed recommendations are implemented, but consider that these
could be in the range of GBP35m to GBP50m
Current trading and outlook
-- Excellent start to the year with a private sales rate(3) up
20% to 0.79 (2020: 0.66), increasing to 0.92 over the past 5 weeks,
accompanied by price increases
-- Our sites are operating well in more stable conditions with
clear visibility on material supplies and good levels of on-site
labour, albeit with some increasing labour costs coming through
-- Very strong forward sales position with total Housebuilding
and Partnerships' mixed tenure forward sales at 25 February up 23%
to GBP2,155m (1 March 2021: GBP1,747m), and 64% of total forecast
units for 2022 secured
-- Partner delivery forward order book as at 25 February
totalling GBP860m (2021: GBP880m) with 85% of forecast 2022 revenue
secured
-- Housebuilding on track to increase adjusted gross margin to
23% in 2022, and achieve targets of 25% adjusted gross margin and
25% return on capital employed target for 2025
-- Vistry Partnerships fully expects to deliver its 2022 targets
of at least GBP1bn revenue, a 10% plus adjusted operating margin
and return on capital employed in excess of 40%, and sees a clear
trajectory to delivering c. GBP1.6 billion revenues and a 12% plus
operating margin in the medium term
-- The Group is well positioned to deliver a significant step up in profits and returns in 2022
Greg Fitzgerald, Chief Executive, commented:
"Housebuilding and Partnerships both made excellent progress
throughout the year, with strong demand across all areas of the
business. This was consistent throughout the year and across the
country, reflecting the huge efforts of all our people for which I
am very grateful.
"Our impressive financial performance was once again matched by
our delivery of high quality homes and customer service which has
been recognised by our retention of the maximum five-star customer
satisfaction rating from the Home Builders Federation (HBF).
"Being a successful business is also about doing the right
thing. We are acutely aware of the anxiety faced by leaseholders in
properties requiring cladding and fire safety remediation and we
fully agree that the financial burden for this work should not rest
with them. We remain committed to working with the Government to
fix this difficult issue for leaseholders.
"Notwithstanding the shocking events in Europe and the attendant
political uncertainties, 2022 has got off to an incredibly positive
start and the Group is in great shape to deliver on its strategy of
maximising the strengths and opportunities from the valuable
combination of our Housebuilding and Partnerships businesses, and
on achieving sector leading returns in the medium term."
Results presentation
A Full Year 2021 Results Presentation for analysts and investors
is available on our corporate website from 7:05am this morning
www.vistrygroup.co.uk or at
https://webcasting.brrmedia.co.uk/broadcast/6216ae6e6605da1fd5b35cb4
Greg Fitzgerald, Graham Prothero and Earl Sibley will host a
live Q&A session for analysts at 10:00am. To watch the session
please use the webcast link available on our corporate website
www.vistrygroup.co.uk or at
https://us02web.zoom.us/webinar/register/WN_mT_gzWTFTJippFCW_ORvrw
A playback facility will be available shortly after the Q&A
session has finished at www.vistrygroup.co.uk
Key financials(1)(4) 2021 2020 Change
--------------------------- ------------ ------------ --------
Total completions(5) 11,080 8,954 +23.7%
Adjusted revenue GBP2,693.6m GBP2,040.1m +32.0%
Adjusted operating profit GBP368.4m GBP171.0m +115.4%
Adjusted profit before
tax GBP346.0m GBP143.9m +140.4%
Adjusted basic EPS 125.5p 52.6p +138.6%
Reported results(1)(4) 2021 2020 Change
--------------------------- ------------ ------------ --------
Group revenue GBP2,359.0m GBP1,811.7m +30.2%
Operating profit GBP285.4m GBP91.7m +211.2%
Profit before tax GBP319.5m GBP98.7m +223.7%
Earnings per share 114.6p 34.8p +229.3%
Net cash GBP234.5m GBP37.9m +515.7%
Forward sales (GBPm) 25 Feb 2022 1 March 2021
-------------------------------- ------------ -------------
Housebuilding
* Private 692 620
* Private JVs (100%) 295 215
* Affordable 421 434
* Affordable JVs (100%) 126 135
Total Housebuilding 1,534 1,404
Partnerships
* Mixed tenure 335 151
* Mixed tenure JVs (100%) 286 192
Total mixed tenure 621 343
Total development 2,155 1,747
Total partner delivery 860 880
Total Group 3,015 2,627
-------------------------------- ------------ -------------
Dividend timetable
---------------------- -------------
Ex-dividend date 7 April 2022
Dividend record date 8 April 2022
Dividend payment date 24 May 2022
---------------------- -------------
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 vistry@powerscourt-group.com
Powerscourt
Justin Griffiths, Nick Dibden, Victoria
Heslop
Chief Executive Review
2021 review
2021 has been an excellent year for Vistry Group with progress
made and success achieved across all areas of the business. I am
extremely proud of and grateful to our people who have shown huge
talent, passion, and commitment to get us where we are today. I am
delighted this dedication was recognised with Vistry being awarded
'Large Housebuilder of the Year' for 2021 at the Housebuilder
Awards, in less than two years since we formed the enlarged
group.
We are a 5-star housebuilder delivering quality homes and an
outstanding service. We hold a unique market position with reach
and a strong capability across all housing tenures, with Vistry
being the largest private sector provider of affordable housing.
Our strategy is to maximise the strengths and opportunities from
this dynamic combination of our Housebuilding and Partnerships
businesses and deliver sector leading returns in the medium
term.
The Group delivered a significant step up in financial
performance in the year with Group adjusted profit before tax
increasing to GBP346.0m (2020: GBP143.9m). The Group delivered an
adjusted basic EPS of 125.5p for 2022, up 138.6% on the prior year
and 20% ahead of 2019.
On a reported basis the Group made reported profit before tax of
GBP319.5m (2020: GBP98.7m) and earnings per share of 114.6p (2020:
34.8p).
Housebuilding saw a good recovery in profitability with adjusted
gross margin improving to 22.3% up from 17.6% in the prior year.
Vistry Partnerships grew higher margin mixed tenure revenues by
65.7% to GBP396m (2020: GBP239m) driving a 63.9% increase in
adjusted operating profit for the division in the year. This strong
financial performance combined with our on-going focus on good
working capital management resulted in a year end net cash position
of GBP234.5m, significantly up on the GBP37.9m net cash position
reported in the prior year.
Reflecting the year's performance, the strength of our balance
sheet and the positive outlook, the Board is delighted to have
accelerated our move to a two times dividend cover and is proposing
a 40 pence per share dividend in respect of 2021, taking the total
dividend for 2021 to 60 pence per share.
Looking ahead, the Board expects to sustain the ordinary
dividend cover at two times with any surplus capital, following
investment in the business to support the Group's growth strategy
and the payment of the ordinary dividend, 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 the time.
Operational update
Trading performance(1)(5)
The year saw good progress made across all areas of the business
with the significant benefits and opportunities of the Group's
unique market positioning and capability being realised.
We have seen strong demand across all areas of our business
during 2021, with the Group's average weekly private sales rate per
outlet increasing to 0.76 (2020: 0.53). The business performance
has been consistent throughout the year and across all of our
geographies. The step-up in sales rate reflects our land strategy
of developing a higher proportion of mid-range homes as well as the
benefits of our brand positioning and product specification review
during 2020, supported by the strong market backdrop. In line with
this strong demand, we have seen c. 6% house price inflation in the
year.
The Group delivered a total of 8,639 (2020: 6,131) completions,
up 41% on prior year and 7% ahead of pro forma 2019 (8,042).
Housebuilding completions increased by 41% to 6,551 units (2020:
4,652) and Partnerships mixed tenure completions increased by 41%
to 2,088 (2020: 1,479). Group adjusted revenues in 2021 was
GBP2,694m (2020: GBP2,040m).
Delivering high quality new homes and excellent customer
satisfaction remained our top priority in 2021 as we continued to
invest in our customer service offering, and we are delighted to
have retained the maximum 5-star HBF customer satisfaction
rating.
Despite the changes to Help to Buy in April 2021 restricting the
scheme to first time buyers only, we saw good demand for the
product with 21% (2020: 36%) of 2021 total Housebuilding
completions utilising the scheme. In the year, 4% (2020: 8%) of
total Housebuilding completions utilised part exchange.
Our sites have operated well during the year, and we have seen
no real impact on productivity from Covid-19. The significant step
up in production seen across the industry led to pressure on the
materials supply chain in 2021, resulting in extended lead times
and inflationary pressures on certain products. Working in close
partnership with our suppliers, we have actively managed this
situation. The supply agreements entered into at the formation of
Vistry Group have delivered an enhanced service and provided some
protection against cost inflation thanks to our enlarged scale and
buying power. In Partnerships, where we enter into a higher level
of pre-sale agreements and therefore have greater exposure to
market risk on costs without the compensating house price
inflation, we seek to include suitable fixed price allowances to
mitigate inflation, and link future revenues on longer term
agreements to a build cost index, as well as including an
appropriate level of contingency in the pre-sale agreement. There
was some easing of the supply chain towards the end of the year
which has continued into the start of 2022, and overall cost
inflation was more than offset by the benefit from sales price
increases in the year.
Housebuilding(1)(5)
Housebuilding made excellent progress during the year,
delivering a total of 6,551 (2020: 4,652) completions, including
1,287 (2020: 820) from JVs. Private completions in the year
totalled 4,891 (2020: 3,668) with 1,660 (2020: 984) affordable
units. Total Housebuilding average selling price remained stable at
GBP305k (2020: GBP303k) reflecting the increase in affordable homes
as a percentage of total completions in the year to 25% (2020:
21%). Private average selling price increased to GBP356k (2020:
GBP343k) with house price inflation in part offset by changes in
product and geographical mix. The affordable average selling price
in 2021 increased to GBP158k (2020: GBP152k). Adjusted revenue from
Housebuilding activities in the year totalled GBP1,829m (2020:
GBP1,312m). Housebuilding operated from an average of 143 sites in
2021 and we expect this to be a similar level in 2022.
Housebuilding adjusted gross margin increased to 22.3% (2020:
17.6%) with the business targeting an adjusted gross margin of 23%
for 2022 and firmly on track to deliver its margin target of 25%
for 2025.
Partnerships(1)(5)
Vistry Partnerships also had an excellent year, successfully
delivering on its strategy of rapidly growing higher margin mixed
tenure development revenues. Mixed tenure completions increased by
41% to 2,088 (2020: 1,479) units including 904 (2020: 608) JV
units. The average selling price of mixed tenure units in the year
was GBP237k (2020: GBP204k) resulting in mixed tenure revenue of
GBP396m (2020: GBP239m) for 2020. Partnerships operated from an
average of 33 active mixed tenure sites in 2021 and expects this to
increase to an average of c. 40 active sites in 2022.
Partner delivery revenue remained broadly flat in the year at
GBP469m (2020: GBP490m), with equivalent units decreasing to 2,441
(2020: 2,823). This is in line with our strategy of maintaining
Partner Delivery at this level as a core element of the
Partnerships business model.
Total adjusted revenues from Vistry Partnerships increased by
18.7% to GBP864m (2020: GBP728m) with adjusted operating margin
increasing to 9.2% (2020: 6.7%). This margin improvement has been
driven by the strong increase in higher margin mixed tenure
revenues. The business is confident it will achieve an adjusted
operating margin of at least 10% in 2022, with the potential to
increase this further to above 12% in the medium term.
Sustainability
I am delighted to see the progress made with our sustainability
strategy in 2021, with Our People, Our Operations and Our Homes
& Communities highlighted as our three priority areas and
critical to our purpose of delivering sustainable homes and
communities across all sectors of the UK housing market.
We laid the foundations to meet our long-term sustainability
targets in particular through our commitment to setting
science-based targets and signing up for 'Business Ambition for
1.5degC'. We have developed our road map to deliver net zero carbon
homes, benefitting from our experience of constructing 54 homes at
our development at Europa Way in Leamington Spa achieving net zero
carbon on regulated emissions. In December, we agreed a new
Sustainability Linked Credit Facility with the interest payable on
the facility being determined, in part, by our ability to meet
three Sustainable Performance Targets. In addition, 2022 will be
the first year when executive remuneration will be linked to
sustainability metrics including the delivery of additional
affordable housing, skills academies and the Group's 9-month HBF
customer satisfaction score.
Fire safety
As we previously stated, our strong view is that the costs of
remediation should not be borne by leaseholders. We are supportive
of the Government's ambition to deliver a lasting industry solution
which needs to include a proportionate response to remediation.
Mortgage providers and insurers need to align with the solution to
ensure we unlock the market for home owners. We are engaging fully
with the Government and working with the HBF to deliver a
solution.
We have assessed buildings over 11 metres where we are the
responsible person, and we are engaged with partners where we were
the contractor to do the right thing. As a result, we have made
provisions for all known liabilities. In the year we have taken an
additional charge of GBP5.7m, with a total provision of GBP25.2m
held at 31 December 2021.
From 1 April 2022, the Group will be paying the 4% Residential
Property Developer Tax, the principle of which we have publicly
supported.
We support the HBF response to the Department for Levelling Up,
Housing and Communities dated 25 February 2022 which stresses the
sector's commitment to the principle that leaseholders should not
have to pay and sets out a number of recommendations to tackle the
issue. The HBF response also seeks support to resolving key
challenges including finalising and implementing - in a reasonable
and proportionate way - the requirements of building safety which
also requires the support of lenders, RICS, professional indemnity
insurers and fire experts.
Given the considerable uncertainties in this area we are unable
to precisely estimate the further potential costs of fire safety
remedial works arising from current Government proposals. However,
we consider that these would be in a range of GBP35m to GBP50m in
the event that the HBF's proposed recommendations are
implemented.
Quality and customer service
Building high quality new homes and providing our customers with
excellent service has remained a top priority during 2021, and we
are pleased to have retained a 5-star rating in the HBF independent
benchmark customer satisfaction survey. Importantly this quality is
consistent across the Group with all three divisions within the
Housebuilding business, as well as the Partnerships business,
achieving a 5-star rating. We remain focused on improving our score
for the HBF customer satisfaction survey which is sent out 9 months
after completion, a metric which is included in our annual bonus
criteria and targets.
During 2021, we introduced a new standard Customer Journey
across the group using insights from our customers and best
practice from Linden Homes, Bovis Homes and Drew Smith. This
standardised framework is embedded within our customer relationship
management system, ensuring we deliver a systemised, consistent,
and high-quality service to all our customers. We have registered
to join the New Homes Quality Board and are well positioned for the
launch of the New Homes Ombudsman Service in Q2 2022.
Extending how, when and where customers do business with us has
been invaluable over the last year to improving our customer
satisfaction scores. There has been further adoption of our digital
services with over 70% of our customers choosing to use our '6
Clicks' reservations process, with 36% of customers completing the
reservation outside of normal office hours.
We expect to launch a new third national brand this year,
building on the success we have seen within our existing brand
portfolio and allowing us to maximise further returns, particularly
on our larger and often strategically sourced sites.
People
Our people are critical to the success of our business, and we
are thankful to all our employees for the enormous commitment,
professionalism, and hard work they have given this year which has
enabled the Group to make such great progress.
Investment in the development and training of our people remains
a key priority, with our focus on learning, leadership, and
management development. We recently launched the VistryLearn online
learning platform, designed to deliver training virtually as
successfully as if undertaken in person and importantly, making
personal development more flexible and accessible for all our
employees. We have also launched our new Vistry Leadership
Development Framework focused on developing our leaders of the
future and existing senior leaders within the business, with the
most senior two stages of the framework delivered through Cranfield
School of Management. The Vistry Mentoring programme will be
rolled-out across the Group in 2022, with c. 40 mentors already
having received training.
We are delighted that Vistry became an accredited Living Wage
employer in 2021. Our commitment not only applies to our directly
employed staff but also to our third party contracted staff and we
have an established plan to ensure all our third party contracted
staff such as our subcontractors on site are paid the real Living
Wage in a phased approach.
We are committed to making Vistry an inclusive workplace and our
Diversity and Inclusion Committee and working group made great
progress in the year in formalising our Diversity and Inclusion
strategy and identifying our key actions for 2022. These include
the review of our family policies, a facilities review, and the
delivery of unconscious bias training across the business.
We continue to place significant emphasis on mental health and
to date have trained over 130 mental first aiders (1 per 25
employees) across the business. We continue with our 'Time to Talk'
sessions which are open to all of our employees and cover subjects
such as anxiety, bereavement, and healthy lifestyles.
We are pleased to report a further increase in our Peakon
employee engagement score to 8.5 (July 2021: 8.1), with Vistry in
the top 10% of companies completing this survey.
Land
The Group had a successful year in the land market, growing the
overall size of our controlled and strategic land banks. As at 31
December 2021, the Group had a total of 42,770 (2020: 40,218
controlled land bank plots and 40,000 (2020: 34,053) strategic land
bank plots.
Housebuilding secured 7,667 (2020: 6,281) plots across 38 (2020:
31) developments in the year at an average gross margin and ROCE
hurdle rate of at least 25%, resulting in a total controlled land
bank of 31,014 (2020: 31,994) plots as at 31 December 2021. The
business has a strong deliverable pipeline of land with all of the
land required for forecast 2022 completions secured, and 88% of the
land required for 2023 completions secured.
Partnerships is investing in its owned land bank to support its
rapid growth in mixed tenure completions and in the year secured
4,131 (2020: 2,371) plots on 23 (2020: 11) sites for mixed tenure
development. It is also well positioned with 100% of the land
required for forecast 2022 mixed tenure completions secured and 78%
of the land required for 2023 mixed tenure completions secured.
Strategic land is a key component of the Group's land supply,
and we are targeting 30% of total completions to be delivered from
higher margin strategic land in the medium term. Our strategic land
team delivers consented land to both our Housebuilding and
Partnerships businesses, with the two businesses co-developing
sites, particularly larger strategic sites, to maximise returns. On
average, our strategic land delivers an incremental 150 to 300
basis points to the development gross margin. We are pleased to
have added 7,721 (2020: 2,856) strategic land plots across 12
(2020: 10) developments to our strategic land bank in the year,
increasing the Group's total strategic land bank at 31 December
2021 to 40,000 (2020: 34,053) plots.
Balance sheet
The Group had a net cash position of GBP234.5m (2020: net cash
of GBP37.9m) as at 31 December 2021, significantly ahead of
expectations at the start of the year.
This strong cash performance has been driven by the step up in
financial performance across the Group and our continued
disciplined approach to land buying and working capital management
at an individual business level. Following supply chain shortages
during 2021 we concluded the year with slightly lower work in
progress.
For 2022, we are targeting an average month end net debt
position of c. GBP100m (2021: GBP120m) and with our on-going
investment in land and work in progress to support the controlled
growth of Housebuilding revenues and the continued high growth of
mixed tenure revenues, we are forecasting a modest overall cash
outflow for the year.
The Group successfully re-financed in the last quarter of the
year and announced its Sustainability Linked Finance Facility in
December. As a result, the Group is operating with substantial
funding headroom, with committed banking facilities totalling
GBP666m and well spread maturities out to 2027.
Our strong performance in terms of land buying and achieving
good terms has led to an increase in land creditors in the year to
GBP414.2m (2020: GBP323.2m) and total gearing of 10.5%,
representing a very strong balance sheet position only two years
after the formation of Vistry Group.
Group strategy
One Vistry
Vistry Group exists to develop sustainable new homes and
communities across all sectors of the UK housing market with 'Doing
the right thing' at the core of our strategic focus and
operations.
We are a top five national housebuilder with a leading
partnerships business. We have a strong market position and
capability across all housing tenures making us uniquely positioned
to take advantage of the strong, under supplied housing market in
England. With our combination of Housebuilding and Partnerships, we
are the leading private sector provider of high demand, high growth
affordable housing.
Vistry was delighted to have been the only listed developer to
be selected by Homes England for delivery of the 2021-26 Affordable
Homes Programme, with the business securing a five-year programme
of grant funding totalling GBP83m that will deliver 1,474 new
affordable homes. Of these, at least 25% will use modern methods of
construction, delivering significant construction skills training
opportunities and will follow the national design guide
principles.
Vistry is also pleased to have been appointed to Homes England's
First Homes Early Delivery Programme 2021 - 2023, which will see
the Group deliver 297 First Homes with GBP23m of grant funding from
Homes England. The First Homes programme is successfully helping
local-first time buyers and key workers onto the property ladder
through offering homes at a 30% plus discount to market prices.
The Group has a high quality, deliverable consented land bank
combined with an excellent strategic land capability, and as One
Vistry we are especially focused on maximising the returns from
larger multi tenure developments. In 2021, our Housebuilding and
Partnerships businesses together secured new, high quality
development opportunities, while working successfully alongside
each other on a number of existing sites, with this joint approach
delivering enhanced overall returns.
Housebuilding
Housebuilding is focused on delivering controlled volume growth
and significant margin progression from its existing operating
structure and is driving towards its medium-term targets of 25%
adjusted gross margin and 25% return on capital employed by 2025
('25x25x25').
The business has national coverage through its 13 operating
regions with each targeting annual output of between 550 to 625
units including JV's, giving an overall volume capacity for
Housebuilding of more than 8,000 units (2021 total Housebuilding
completions including JVs: 6,551) in the medium term. The business
is targeting controlled volume growth from this existing business
structure.
Housebuilding expects to achieve a 23% adjusted gross margin in
2022, progressing towards its target of 25% by 2025. Key to
delivery will be improvement in customer satisfaction and our
on-going commitment to 'getting it right first time'. We will
continue to leverage the scale and unique Vistry structure to
acquire high margin land and, in particular, increasing the
delivery from higher margin strategic land. The business is
targeting at least 30% of completions from strategic land in the
medium term. Optimising procurement to maximise the benefits of our
enlarged national scale through centralised procurement, while
maintaining some element of local agility is also key to margin
progression. And we will continue the development of our brands and
product range, including the launch of a third national brand in
2022, to maximise returns, in particular on our larger sites.
Partnerships
Vistry Partnerships holds a strong and unique position within
the partnerships market, combining higher margin mixed tenure
development and market resilient cash generative partner
delivery.
The business made excellent progress in 2021 with its strategy
of driving rapid growth in mixed tenure revenue and is firmly on
track to deliver on its 2022 targets of GBP1bn revenue, an adjusted
operating margin of at least 10% and in excess of a 40% return on
capital employed.
In the medium term, Partnerships' growth strategy is targeting
GBP1.6bn of revenue and at least a 12% operating margin. Key to
delivering this strategy is maximising the benefits of One Vistry,
including access to capital, land buying expertise and strategic
land capability, retail brand strength, and procurement savings and
buying power. The business will expand geographically to increase
future operating capacity with new business units in the South East
and Midlands to contribute from 2023.
Capital allocation and dividends
The Group's priority continues to be to invest 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.
Earlier this year, the Board announced an acceleration of the
dividend pay out to a two times dividend cover for 2021 reflecting
the Group's balance sheet strength and its confidence in the
Group's unique market position. As such the Board is recommending a
final ordinary dividend of 40p per share (2020: nil) bringing the
total ordinary dividend for 2021 to 60p per share (2020: nil).
Looking ahead, the Board expects to sustain the ordinary
dividend cover at two times. As previously announced, any surplus
capital, following investment in the business to support the
Group's growth strategy 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 the time.
Current trading and outlook
We have seen an excellent start to the year with the private
sales rate per active site per week up 20% to 0.79 in first 8 weeks
(2021: 0.66). The last 5 weeks have been particularly strong with a
private sales rate of 0.92. We continue to see house price
increases.
Our sites are operating well and we expect our construction
output in the first half of the year to be at a similar level to
that achieved in H1 21. We have clear visibility on material
supplies and good levels of on-site labour, albeit with some
increasing labour costs coming through. Overall, we expect our
build cost inflation for 2022 to be c. 6%, with wage inflation
expected to run ahead of material cost inflation.
We continue to see a good supply of land opportunities although
the land market is more competitive than it was 12 months ago. As
One Vistry, we are leveraging our competitive advantage on larger
sites.
We have a very strong forward sales position with Housebuilding
and Partnerships' mixed tenure forward sales as at 25 February up
23% to GBP2,155m (1 March 2021: GBP1,747m) and 64% (2021: 64%) of
units for 2022 secured. The partner delivery forward order book
totals GBP860m (2021: GBP880m) with 85% of 2022 revenue
secured.
We expect Housebuilding to deliver further margin progression in
2022 and we are targeting a 23% adjusted gross margin with the
business firmly on track to deliver against its 2025 targets of a
25% adjusted gross margin and 25% return on capital employed.
Vistry Partnerships continues its strategy of rapidly growing
higher margin mixed tenure revenues and fully expects to deliver
its 2022 targets of GBP1bn revenue and at least a 10% adjusted
operating margin. Medium term the business sees a clear trajectory
to deliver c. GBP1.6bn of revenues and an operating margin in
excess of 12%.
Overall, the Group is in great shape and well positioned to
deliver a significant step up in profits and returns in 2022.
Financial review
Trading performance
The market outlook remains positive while we address the
headwinds that are facing the industry as we look to play our part
in tackling climate change and resolving legacy issues for the
sector. The Group is well positioned to meet those challenges, both
operationally and financially.
Total completions
During the year the Group delivered 8,639 (2020: 6,131) legal
completions, including 100% of JV completions, representing a 40.9%
increase to the prior year. This was driven by a full year of
trading in 2021 whilst 2020 was impacted adversely by the Covid-19
pandemic and the first nationwide lock down from March 2020.
Housebuilding 2021 2020 Change
------------------------ ------ ------ -------
Private 3,895 3,010 +29.4%
Affordable 1,369 822 +66.5%
JV's (100%) Private 996 658 +51.4%
JV's (100%) Affordable 291 162 +79.6%
Total Housebuilding 6,551 4,652 +40.8%
Partnerships
------------------------ ------ ------ -------
Mixed tenure 1,184 871 +35.9%
JV's (100%) Private 630 397 +58.7%
JV's (100%) Affordable 274 211 +29.9%
Total mixed tenure 2,088 1,479 +41.2%
Total completions 8,639 6,131 +40.9%
Partner delivery units 2,441 2,823 -13.5%
Revenue
Total adjusted revenue, including share of JV revenue, was
GBP2,693.6m, 32.0% higher than prior year (2020: GBP2,040.1m). On a
reported basis revenue was GBP2,359.0m, 30.2% higher than last year
(2020: GBP1,811.7m).
Adjusted gross and operating profit
Adjusted gross profit was GBP543.0m in 2021 (adjusted gross
margin: 20.2%), which compares to GBP318.8m in 2020 (adjusted gross
margin: 15.6%). 2021 benefitted from a strong housing market with
house price inflation of c6%.
Group procurement deals have provided significant protection
against materials price increases and business units have
demonstrated excellent agility in managing timeliness of supply
through strong project management and accurate scheduling, all
supported by common systems.
Overall, we have seen build cost inflation of c. 6% as pressure
on materials eased towards the end of the year at the same time as
labour inflation was rising. 2020 gross margin was significantly
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.
Whilst we expect market material prices to stabilise in 2022,
build cost inflation is expected to continue at c. 6% due to Group
supply agreements ending at the end of 2021 and inflation in the
sub-contractor labour market.
Adjusted operating profit is GBP368.4m (2020: GBP171.0m) with
the increase coming through from higher levels of gross margin.
Adjusting operating margin was 13.7% (2020: 8.4%).
The Group delivered an adjusted profit before tax of GBP346.0m
(2020: GBP143.9m).
Adjusted Performance Measures
The Group manages the business by focussing on non-GAAP
measures, which we refer to as adjusted measures as we believe they
provide a better comparison of underlying performance measures from
one period to the next as GAAP measures can include one-off,
non-recurring items and recurring items that relate to earlier
acquisitions.
The adjusted performance measures are categorised in 3 areas:
the amortisation of acquired intangible assets (2021: GBP14.2m);
exceptionals (one-off integration activities following the 2020
acquisition GBP6.5m, and an incremental fire safety provision
GBP5.7m), and; share of JV operating results.
For further details see Note 4
Reported profit
On a reported basis, the Group saw a profit before tax of
GBP319.5m (2020: GBP98.7m), comprising operating profit of
GBP285.4m (2020: GBP91.7m) after exceptional costs of GBP12.2m
(2020: GBP31.0m), net financing income of GBP4.1m (2020: charge
GBP7.9m) and share of JV profit of GBP30.0m (2020: GBP14.9m).
Fire safety provision
Vistry Partnerships, in its role as contractor, has reviewed
over 100 developments that are over 11 metres high and has for the
past four years worked with clients to remediate fire safety issues
on 18 buildings.
Vistry Housebuilding primarily acts as a developer. The Linden
Homes legacy business has identified 62 developments over 11 metres
high, where we acted as developer, which are occupied by
leaseholders, and where remediation works could be required. The
Bovis legacy business does not have any significant exposure to
fire safety as the company rarely developed buildings taller than
11 metres high with only 2 being identified to date for review.
Prioritising those sites where we believe remedial works may be
required, to date 39 of these developments have been reviewed on
the basis of current legal and constructive obligations.
We are committed to the proper consideration of any relevant
case, providing appropriate support in circumstances where building
owners do not meet their obligations. Our ongoing investigations
and work in respect of legacy fire safety issues has meant we have
taken an additional charge of GBP5.7m in the year, and after spend
in the year of GBP1.4m, the total provision to cover our assessed
financial liabilities as at 31 December 2021 is GBP25.2m.
Post the balance sheet date we have been engaged directly with
the Department for Levelling Up, Housing and Communities and
indirectly through the HBF, in respect of Government proposals to
extend the housing sector's liability in this area. The proposal to
extend the obligations of developers and freeholders for fire
safety remedial works on properties over 18 metres to all buildings
over 11 metres, and extending back 30 years, is significant because
of the extra number of developments this obligation captures and
the impact this change has on the historical development portfolios
of housebuilding companies including those now in the Vistry
Group.
Whilst considerable uncertainty exists in terms of identifying
and quantifying any further potential fire safety remedial costs
for the group, in respect of developments where it acted as
developer, we have estimated this as being in the range of GBP35m
to GBP50m.
Housebuilding
Housebuilding 2021 2020 Change
--------------------------- ------------ ------------ ---------
Total completions incl.
100% JVs 6,551 4,652 +40.8%
Adjusted revenue GBP1,829.3m GBP1,311.8m +39.4%
Adjusted gross profit GBP407.1m GBP231.2m +76.1%
Adjusted gross margin 22.3% 17.6% +4.7ppts
Adjusted operating profit GBP305.4m GBP139.4m +119.0%
Adjusted operating margin 16.7% 10.6% +6.1ppts
TNAV GBP1,373m GBP1,491m -7.9%
Housebuilding delivered a significant step up in total
completions including 100% of JVs at 6,551 units which included
1,660 affordable homes representing 25.3% of total completions
(2020: 984 affordable homes, 21.1% of total completions).
Housebuilding pricing was strong in the year given increased
customer demand with the average sales price for our private homes
in housebuilding having increased 3.7% to GBP356,000 (2020:
GBP343,200). The total average sales price remained stable at
GBP305,100 (2020: GBP302,500) due to an increase in the proportion
of affordable housing.
Included within Housebuilding revenue is GBP22.7m relating to
land sales (2020: GBP17.2m).
Housebuilding adjusted gross profit of GBP407.1m and housing
adjusted gross margin of 22.3% followed the significant step up in
completions against 2020 (adjusted gross profit: GBP231.2m,
adjusted gross margin: 17.6%). 2021 adjusted gross margin benefited
from moving upwards towards the average embedded margin in the land
bank with a greater proportion of completions coming from high
margin strategically sourced land. There has been no material
impact from one-off events such as land sales. Progress on
housebuilding gross margin is still expected in 2022, as the
business moves towards a target of 25% gross margin supported in
part by the current embedded land bank margin of 25.0%.
Housebuilding adjusted operating profit of GBP305.4m has risen
by 119.0% from the previous year (2020: GBP139.4m) with adjusted
operating margin also growing to 16.7% (2020: 10.6%). The
Housebuilding segment has a stable operating structure, with 13
regional business units, which enables good management of overheads
and there is capacity within this structure to support volume
growth in 2022 and beyond.
The Group has also assessed any obligations to rectify onerous
ground rent leasehold conditions, as defined by the Competition and
Markets Authority (CMA), on leaseholds for which we are either the
freeholder or have previously sold the freehold on. The Group is
working closely with the CMA on this matter and, as there has not
been a significant exposure to this practice, has provided cGBP1m
to cover the costs of rectifying any onerous conditions.
Partnerships
Partnerships 2021 2020 Change
--------------------------- ---------- ---------- ---------
Total completions incl.
100% JVs 2,088 1,479 +41.2%
Adjusted revenue GBP864.3m GBP728.3m +18.7%
Adjusted operating profit GBP79.7m GBP48.6m +63.9%
Adjusted operating margin 9.2% 6.7% +2.5ppts
TNAV GBP79m (GBP30m) 360.0%
Adjusted revenue from Partnerships in the year totalled
GBP864.3m, made up of GBP468.7m from partner delivery and GBP395.6m
from mixed tenure operations (2020: GBP728.3m, partner delivery:
GBP489.5m, mixed tenure: GBP238.7m).
Partnerships sold a total of 2,088 units (2020: 1,479 units)
from its mixed tenure operations, including JVs, with an average
selling price of GBP236,700 (2020: GBP203,900) and partner delivery
revenue generated equivalent units of 2,441 (2020: 2,823). The
partnerships business operated from an average of 33 active mixed
tenure sites in 2021 with this number expected to increase to c 40
in 2022.
Partnerships has delivered a significant increase in adjusted
operating profit to GBP79.7m (2020: GBP48.6m) and adjusted
operating margin has also increased significantly to 9.2% (2020:
6.7%).
The partnerships business has been, and will be, impacted by the
same build cost inflation as housebuilding but the aggressive
growth in mixed tenure completions as planned will see the
partnerships adjusted operating profit continue to grow in both
absolute and margin terms.
This growth is further supported by management of the cost base
for the business through the inclusion of suitable fixed price
allowances to mitigate inflation, as well as an appropriate level
of contingency in our pre-sale agreements, in addition to longer
term deals seeking to link future revenues to a build cost
index.
Group costs
The group segment reported a rise in direct PLC costs totalling
GBP16.7m (2020: GBP17.0m). Direct PLC costs include the costs of
the PLC board, share based payment and related items. The step up
in the year reflects the strong performance of the Group coming
through in shared based payments and annual incentive awards.
Financing and taxation
Net financing income during the year was GBP4.1m (2020: charge
GBP7.9m) and net bank interest and commitment fees increased to
GBP8.5m (2020: GBP18.5m). Included in the commitment fees is the
write off of previous funding arrangement fees (GBP2.8m) as a
result of the re-financing that took place at the end of 2021. The
savings from the new financing arrangements will more than offset
the associated arrangement fees.
The Group also incurred a GBP5.1m charge (2020: GBP6.3m),
reflecting the imputed interest on land bought on deferred terms.
Joint Ventures which are funded through loans are charged interest
by the Group, and this generated the majority of the GBP23.1m of
finance income recognised (2020: GBP18.2m).
The Group has recognised a tax charge of GBP65.4m at an
effective tax rate of 20.5% (2020: GBP21.9m at an effective rate of
22.1%). The effective tax rate is driven by the recognition of
deferred tax at the increased corporate tax rate of 25% that was
substantively enacted on 24 May 2021 and some prior year
adjustments to prior year corporation tax returns. This increased
rate of corporation tax will impact our tax on profits from 1 April
2023.
The introduction of the Residential Property Developer Tax
(RPDT) at a rate of 4% on profits from 1 April 2022 was
substantively enacted on 2 February 2022. No effect of this new tax
has been included in these results. However, the impact on our
deferred tax liability would have been an increase in the liability
of GBP6.2m.
The Group has a current tax liability of GBP0.1m on its balance
sheet as at 31 December 2021 (31 December 2020: asset
GBP14.4m).
Dividends and earnings per share
Following the re-introduction of dividends in respect of 2020,
the decision was taken to pay an interim dividend of 20 pence per
share for the first half of 2021, and a final dividend of 40 pence
per share (2020: 20 pence) has been declared and, subject to
shareholder approval at the AGM, will be paid on 24 May 2022 to
holders of ordinary shares on the register at the close of business
on 7 April 2022. Total ordinary dividends for the year are
therefore 60 pence per share (2020: 20 pence) in line with our
capital allocation policy of a sustainable 2x cover.
Net assets and cash flow
As at 31 December 2021, net assets of GBP2,390.6m were GBP195.5m
higher than at the start of the year as the Group continues to grow
and invest in land and work in progress. Net assets per share were
1,075p (2020: 988p).
Goodwill and intangibles totalled GBP675.3m at 31 December 2021
(2020: GBP691.1m) with the decrease resulting from the amortisation
of intangibles.
Tangible net assets increased from GBP1,466.1m at 31 December
2020 to GBP1,480.6m at 31 December 2021 driven by the investment in
land and work in progress which increased by GBP115.8m to
GBP1,920.8m.
Trade and other receivables increased by GBP15.3m to GBP241.9m.
Trade and other payables increased by GBP143.6m to GBP1,177.4m and
includes land creditors which increased by GBP91.0m to GBP414.2m
(2020: GBP323.2m).
As at 31 December 2021 the Group's net cash balance was
GBP234.5m. Having started the year with GBP38.0m the Group
generated an operating cash inflow before land expenditure of
GBP635.6m (2020: GBP440.7m). Net cash payments for land investment
were increased at GBP368.6m (2020: GBP259.0m).
Investing cash inflows totalling GBP45.6m relates to dividends
received from joint venture netted off by loans to and investments
made in joint ventures. The 2020 investing cash outflow of
GBP383.8m included the GBP394.6m cash consideration for the
Acquisition net of overdraft acquired.
Financing cash flows of GBP254.9m include the repayment of
GBP150m of term debt as part of the December re-financing, with
GBP88.7m of dividends paid in the year.
In December 2021, the Group re-financed its external funding
arrangement to simplify the debt structure, create a new GBP500m 4
year revolving credit facility and pay down term debt of GBP150m.
This re-financing was possible due to the improved balance sheet
strength of the Group which required lower levels of drawn debt and
attracted an improved interest rate. Along with a GBP100m US
Private Placement facility, a retained GBP50m bilateral term loan,
an overdraft of GBP5m and a Homes England loan facility of
GBP10.7m, the Group has external funding facilities totalling
GBP665.7m (2020: GBP778m).
Land bank
Housebuilding land bank
As at 31 December 2021 2020
------------------------------- ----------- -----------
Consented plots added 6,432 6,281
Sites added 28 31
Sites owned at year end 216 199
Sites controlled at year end 14 14
Total plots in land bank at
year end incl joint ventures 31,014 31,994
ASP including share of joint GBP319,000 GBP306,000
ventures
The average selling price of all units within the consented land
bank increased over the year to GBP319,000 (2020: GBP306,000). The
estimated embedded gross margin in the consented land bank as at 31
December 2021, based on prevailing sales prices and build costs is
24.7% (2020: 24.2%). This margin continues to improve with
additions to the land bank exceeding usage and good terms achieved
on acquisition whilst older, less valuable, sites are traded
out.
In addition, we have increased the cost base in the land bank,
impacting the embedded gross margin to include our current
estimates of costs for both Part L and F of the Future Homes
Standards.
The housebuilding land bank including joint ventures of 31,014
plots as at 31 December 2021 represents c 4.7 years of supply based
on 2021 completion volumes (2020: 31,994 plots and 4.9 years).
The land bank reflects our 25 x 25 x 25 Housebuilding strategy
to deliver controlled growth in the medium term using existing
operating structures and improving both gross margin and return on
capital employed to 25% by the year 2025.
The 6,551 plots that legally completed in the year were replaced
by a total of 6,432 plots from a combination of site acquisitions
representing 5,567 plots and conversion of 865 plots from our
strategic land pipeline and a further 1,235 plots secured on a
conditional basis across 10 sites.
Partnerships land bank
As at 31 December 2021 2020
------------------------------- ----------- -----------
Consented plots added 2,266 2,371
Sites added 11 11
Sites owned at year end 72 50
Sites controlled at year end 14 6
Total plots in land bank at
year end incl joint ventures 11,756 8,224
ASP including share of joint GBP285,000 GBP282,000
ventures
Average consented land plot GBP40,000 GBP31,000
ASP
The average selling price of all units within the consented land
bank increased over the year to GBP285,000 (2020: GBP282,000). The
estimated embedded gross margin in the land bank as at 31 December
2021, based on prevailing sales prices and build costs is
19.3%.
The Partnerships land bank including joint ventures of 11,756
plots as at 31 December 2021 reflects our strategy to grow the
level of mixed tenure development to contribute to the delivery of
completions and partner units in support of the Partnership
strategy, Project Pace.
The 2,088 mixed tenure plots that legally completed in the year
were replaced by the acquisition of 2,266 plots on 11 sites and a
further 1,865 plots were conditionally contracted on 12 sites. All
sites acquired for Partnerships will support future returns on
capital employed for the segment in excess of 40%.
Strategic land
As at 31 December Total sites Total plots
---------------------- ------------ ------------
0 - 150 plots 34 2,734
150 - 300 plots 37 7,994
300 - 500 plots 22 7,927
500 - 1,000 plots 25 21,345
Total 118 40,000
Planning agreed 10 5,605
Planning application 8 2,279
Ongoing application 100 32,116
Total 118 40,000
31 December 2020 122 34,053
Strategic land continues to be an important source of supply and
during the year, 1,396 plots have been converted from the strategic
land pipeline into the consented land bank. A further 7,721 plots
were contracted under options and planning consent gained on 735
plots over the year.
Strategic land remains well positioned to deliver high quality
developments in the near to medium term with good progress on a
number of significant projects.
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 Group's risk profile has developed over the year with the
long-term impact of the Covid-19 pandemic becoming better
understood and with it more effective mitigating actions able to be
deployed. In its place, risks relating to sustainability are coming
more to the force in the medium term, especially with the emerging
transitional risks which are becoming enshrined in regulation.
Group income statement
2021 2020
For the year ended 31 December Note GBP000 GBP000
Revenue 2 2,359,042 1,811,727
================================================= ==== =========== ===========
Cost of sales (1,919,770) (1,564,831)
================================================= ==== =========== ===========
Gross profit 439,272 246,896
Analysed as:
================================================= ==== =========== ===========
Adjusted gross profit 10 542,965 318,765
================================================= ==== =========== ===========
Other operating income (40,659) (26,422)
================================================= ==== =========== ===========
Exceptional cost of sales 4 (5,744) (10,975)
================================================= ==== =========== ===========
Share of joint ventures' gross profit (57,290) (34,472)
================================================= ==== =========== ===========
Gross profit 439,272 246,896
================================================= ==== =========== ===========
Administrative expenses including exceptional
items (194,517) (181,595)
================================================= ==== =========== ===========
Other operating income 40,659 26,422
================================================= ==== =========== ===========
Operating profit 285,414 91,723
Analysed as:
================================================= ==== =========== ===========
Adjusted operating profit 10 368,368 171,023
================================================= ==== =========== ===========
Exceptional expenses 4 (12,225) (30,984)
================================================= ==== =========== ===========
Amortisation of acquired intangibles (14,240) (14,240)
================================================= ==== =========== ===========
Share of joint ventures' operating profit (56,489) (34,076)
================================================= ==== =========== ===========
Operating profit 285,414 91,723
================================================= ==== =========== ===========
Financial income 23,062 18,232
================================================= ==== =========== ===========
Financial expenses (18,931) (26,158)
================================================= ==== =========== ===========
Net financing income / (expenses) 4,131 (7,926)
================================================= ==== =========== ===========
Share of profit of joint ventures 7 29,991 14,867
================================================= ==== =========== ===========
Profit before tax 319,536 98,664
Analysed as:
Adjusted profit before tax 10 346,001 143,888
================================================= ==== =========== ===========
Exceptional expenses (12,225) (30,984)
================================================= ==== =========== ===========
Amortisation of acquired intangibles (14,240) (14,240)
====
Profit before tax 319,536 98,664
================================================= ==== =========== ===========
Income tax expense (65,411) (21,851)
================================================= ==== =========== ===========
Profit for the year attributable to ordinary
shareholders 254,125 76,813
================================================= ==== =========== ===========
2021 2020
================================================= ==== =========== ===========
Earnings per share
================================================= ==== =========== ===========
Basic 5 114.6p 34.8p
================================================= ==== =========== ===========
Diluted 5 114.1p 34.7p
================================================= ==== =========== ===========
Basic earnings per share (before exceptional
items and amortisation of acquired intangibles) 5 125.5p 52.6p
================================================= ==== =========== ===========
Diluted earnings per share (before exceptional
items and amortisation of acquired intangibles) 5 124.9p 52.5p
================================================= ==== =========== ===========
Group statement of comprehensive income
2021 2020
For the year ended 31 December GBP000 GBP000
Profit for the year attributable to ordinary
shareholders 254,125 76,813
====================================================== ======= ========
Other comprehensive income / (expense)
===================================================== ======= ========
Items that will not be reclassified to the
income statement
===================================================== ======= ========
Remeasurements on defined benefit pension
scheme 33,838 (11,654)
====================================================== ======= ========
Deferred tax on remeasurements on defined
benefit pension scheme (9,148) 2,124
====================================================== ======= ========
Total other comprehensive income / (expense) 24,690 (9,530)
====================================================== ======= ========
Total comprehensive income for the year attributable
to ordinary shareholders 278,815 67,283
====================================================== ======= ========
Balance sheets
2021 2020
As at 31 December Note GBP000 GBP000
======================================== ==== ========= =========
Assets
======================================== ==== ========= =========
Goodwill 547,509 547,509
======================================== ==== ========= =========
Intangible fixed assets 127,809 143,585
======================================== ==== ========= =========
Property, plant and equipment 4,742 5,091
======================================== ==== ========= =========
Right-of-use assets 31,069 38,511
======================================== ==== ========= =========
Investments 7 175,064 145,153
======================================== ==== ========= =========
Amounts recoverable from joint ventures 308,217 323,650
======================================== ==== ========= =========
Trade and other receivables 454 1,544
======================================== ==== ========= =========
Restricted cash 778 1,193
======================================== ==== ========= =========
Retirement benefit asset 45,318 9,077
======================================== ==== ========= =========
Total non-current assets 1,240,960 1,215,313
======================================== ==== ========= =========
Inventories 1,962,155 1,836,521
======================================== ==== ========= =========
Trade and other receivables 241,420 225,022
======================================== ==== ========= =========
Cash and cash equivalents 398,714 340,988
======================================== ==== ========= =========
Current tax asset - 14,350
======================================== ==== ========= =========
Total current assets 2,602,289 2,416,881
======================================== ==== ========= =========
Total assets 3,843,249 3,632,194
======================================== ==== ========= =========
Equity
======================================== ==== ========= =========
Issued capital 111,154 111,127
======================================== ==== ========= =========
Share premium 361,081 360,657
======================================== ==== ========= =========
Merger reserve 823,513 823,513
======================================== ==== ========= =========
Retained earnings 1,094,833 899,785
======================================== ==== ========= =========
Total equity attributable to equity
holders of the parent 2,390,581 2,195,082
======================================== ==== ========= =========
Liabilities
======================================== ==== ========= =========
Bank and other loans 8 164,260 253,103
======================================== ==== ========= =========
Trade and other payables 211,296 139,316
======================================== ==== ========= =========
Lease liabilities 18,836 26,848
======================================== ==== ========= =========
Provisions 30,928 33,786
======================================== ==== ========= =========
Deferred tax liabilities 38,444 17,637
======================================== ==== ========= =========
Total non-current liabilities 463,764 470,690
======================================== ==== ========= =========
Bank and other loans 8 - 50,000
======================================== ==== ========= =========
Trade and other payables 966,127 894,503
======================================== ==== ========= =========
Lease liabilities 14,215 15,304
======================================== ==== ========= =========
Provisions 8,455 6,615
======================================== ==== ========= =========
Current tax liabilities 107 -
======================================== ==== ========= =========
Total current liabilities 988,904 966,422
======================================== ==== ========= =========
Total liabilities 1,452,668 1,437,112
======================================== ==== ========= =========
Total equity and liabilities 3,843,249 3,632,194
======================================== ==== ========= =========
Group statement of changes in equity
Own Other Total
shares retained retained Issued Share Merger
held earnings earnings capital premium reserve Total
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
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
=============================== ==== ======= ========= ========= ======== ======== ======== =========
Shares issued as consideration - - - 31,870 - 823,513 855,383
=============================== ==== ======= ========= ========= ======== ======== ======== =========
Bonus issue - (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 (6,956) 906,741 899,785 111,127 360,657 823,513 2,195,082
=============================== ==== ======= ========= ========= ======== ======== ======== =========
Balance at 1 January
2021 (6,956) 906,741 899,785 111,127 360,657 823,513 2,195,082
=============================== ==== ======= ========= ========= ======== ======== ======== =========
Profit for the year - 254,125 254,125 - - - 254,125
=============================== ==== ======= ========= ========= ======== ======== ======== =========
Total other comprehensive
income - 24,690 24,690 - - - 24,690
=============================== ==== ======= ========= ========= ======== ======== ======== =========
Total comprehensive
income - 278,815 278,815 - - - 278,815
=============================== ==== ======= ========= ========= ======== ======== ======== =========
Issue of share capital - - - 27 424 - 451
=============================== ==== ======= ========= ========= ======== ======== ======== =========
LTIP shares exercised 3,584 (3,584) - - - - -
=============================== ==== ======= ========= ========= ======== ======== ======== =========
Share-based payments - 4,543 4,543 - - - 4,543
=============================== ==== ======= ========= ========= ======== ======== ======== =========
Dividend paid 6 - (88,709) (88,709) - - - (88,709)
=============================== ==== ======= ========= ========= ======== ======== ======== =========
Deferred and current
tax on share-based
payments - 399 399 - - - 399
=============================== ==== ======= ========= ========= ======== ======== ======== =========
Total transactions
with owners recognised
directly in equity 3,584 (87,351) (83,767) 27 424 - (83,316)
=============================== ==== ======= ========= ========= ======== ======== ======== =========
Balance at 31 December
2021 (3,372) 1,098,205 1,094,833 111,154 361,081 823,513 2,390,581
=============================== ==== ======= ========= ========= ======== ======== ======== =========
Group Statements of cash flows 2021 2020
For the year ended 31 December Note GBP000 GBP000
============================================== ==== ========= =========
Cash flows from operating activities
============================================== ==== ========= =========
Profit / (loss) for the year 254,125 76,813
============================================== ==== ========= =========
Depreciation and amortisation 32,524 31,710
============================================== ==== ========= =========
Financial income (23,062) (18,232)
============================================== ==== ========= =========
Financial expense 18,931 26,158
============================================== ==== ========= =========
Loss on disposal of property, plant and
equipment 1 15
============================================== ==== ========= =========
Equity-settled share-based payment expense 4,543 2,741
============================================== ==== ========= =========
Income tax expense / (credit) 65,411 21,851
============================================== ==== ========= =========
Share of profit of joint ventures 7 (29,991) (14,867)
============================================== ==== ========= =========
Profit released on sale of assets from
joint ventures (265) (234)
============================================== ==== ========= =========
(Increase) / decrease in trade and other
receivables (15,308) 17,894
============================================== ==== ========= =========
(Increase) / decrease in inventories (125,634) 168,580
============================================== ==== ========= =========
Increase / (decrease) in trade and other
payables 143,604 (97,208)
============================================== ==== ========= =========
(Decrease) / increase in provisions (1,018) 15,821
============================================== ==== ========= =========
Cash generated from operations 323,861 231,042
============================================== ==== ========= =========
Interest paid (17,835) (14,661)
============================================== ==== ========= =========
Income taxes paid (39,000) (34,712)
============================================== ==== ========= =========
Net cash generated from operating activities 267,026 181,669
============================================== ==== ========= =========
Cash flows from investing activities
============================================== ==== ========= =========
Bank interest received 12 90
============================================== ==== ========= =========
Acquisition of intangible fixed assets (1,516) (109)
============================================== ==== ========= =========
Acquisition of property, plant and equipment (1,546) (2,632)
============================================== ==== ========= =========
Acquisition of Linden and Partnerships
net of overdraft acquired - (394,578)
============================================== ==== ========= =========
Loans made to and investments in joint
ventures (126,423) (17,869)
============================================== ==== ========= =========
Interest received on loans to joint ventures 32,730 -
============================================== ==== ========= =========
Loan repayments from joint ventures 124,947 3,682
============================================== ==== ========= =========
Distributions from joint ventures 7 16,989 27,043
============================================== ==== ========= =========
Decrease in restricted cash 415 555
============================================== ==== ========= =========
Net cash generated from / (used in) investing
activities 45,608 (383,818)
============================================== ==== ========= =========
Cash flows from financing activities
============================================== ==== ========= =========
Dividends paid 6 (88,709) -
============================================== ==== ========= =========
Interest paid on lease payments (905) -
============================================== ==== ========= =========
Principal elements of lease payments (15,745) (15,325)
============================================== ==== ========= =========
Net proceeds from the issue of share capital 451 -
============================================== ==== ========= =========
Purchase of own shares - (3,500)
============================================== ==== ========= =========
Drawdown of bank and other loans 220,000 475,000
============================================== ==== ========= =========
Repayment of bank and other loans (370,000) (275,000)
============================================== ==== ========= =========
Net cash (used in) / generated from financing
activities (254,908) 181,175
============================================== ==== ========= =========
Net increase / (decrease) in cash and cash
equivalents 57,726 (20,974)
============================================== ==== ========= =========
Cash and cash equivalents at 1 January 340,988 361,962
============================================== ==== ========= =========
Cash and cash equivalents at 31 December 398,714 340,988
============================================== ==== ========= =========
1 Basis of preparation
General information
Vistry Group PLC (the "Company") is a public company, limited by
shares, domiciled and incorporated in England, United Kingdom. The
shares are listed on the London Stock Exchange. The consolidated
financial statements of the Company for the year ended 31 December
2021 comprise the Company and its subsidiaries (together referred
to as the "Group") and the Group's interest in joint ventures. The
financial statements were authorised for issue by the Directors on
2 March 2022 . The registered office for Vistry Group PLC is 11
Tower View, Kings Hill, West Malling, Kent, ME19 4UY.
Basis of accounting
The financial information set out above does not constitute the
Company's statutory financial statements for the years ended 31
December 2021 or 2020 but is derived from those financial
statements. Statutory financial statements for 2020 have been
delivered to the registrar of companies, and those for 2021 will be
delivered in due course. The auditors have reported on those
financial statements; their reports were (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.
For the year to 31 December 2021, the financial statements of
the Company and the consolidated financial statements of the Group
have been prepared in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act
2006 as applicable to companies reporting under those standards.
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 International
Financial Reporting Standards (IFRS) in company law and there has
been no impact on recognition, measurement, or disclosure between
the two frameworks in the year reported.
The Company has elected to take the exemption under section 408
of the Companies Act 2006 to not present the Company income
statement and statement of comprehensive income.
There are no new standards effective for the first time in the
year beginning 1 January 2021 which have had a material impact on
the Group's reported results.
In accordance with section 612 of the Companies Act 2006,
advantage is taken of the relief from the requirement to create a
share premium account to record the excess over the nominal value
of shares issued in a share for share transaction. Where the
relevant requirements of section 612 of the Companies Act 2006 are
met, the excess of any nominal value is credited to a merger
reserve which is distributable.
All other accounting policies have been applied consistently to
the Company and the Group.
The financial statements are prepared on the historical cost
basis unless otherwise stated.
The functional currency of the Group is Pounds Sterling (GBP),
and the accounts are presented in the same currency.
Going concern
The Group has prepared a cash flow forecast to confirm the
appropriateness of the going concern assumption in these accounts.
The forecast was prepared using a likely base case and a severe but
plausible 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
Group'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.
In the downside sensitivity scenario, the following assumptions
have been applied:
- A 15-20% reduction in private sales volumes, with a
corresponding reduction in development spend
- A 5-10% reduction in private sales prices
The impact of these downsides is then mitigated by:
- Cessation of uncommitted land spend
- Reduction in overheads to reflect reduction in bonuses, temporary employee costs, etc.
In both the base 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 be in compliance with the required covenants on
the aforementioned borrowing facilities. Consequently, 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.
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 during the
year. The value in use of the Cash Generating Units has not been
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.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 December . Subsidiaries are
entities controlled by the Group. The Group controls an entity when
it is exposed to, or has rights to, variable returns from its
involvement with the entity and can affect those returns through
its power over the entity.
In assessing control, the Group takes into consideration
potential voting rights that are currently exercisable. The
acquisition date is the date on which control is transferred to the
acquirer. The financial statements of subsidiaries are included in
the consolidated financial statements from the date that control
commences until the date that control ceases.
A joint arrangement is an arrangement over which the Group and
one or more third parties have joint control. These joint
arrangements are in turn classified as:
Joint ventures whereby the Group has rights to the net assets of
the arrangement, rather than rights to its assets and obligations
for its liabilities; and
Joint operations whereby the Group has rights to the assets and
obligations for the liabilities relating to the arrangement.
The consolidated financial statements include the Group's share
of the comprehensive income and expenses of its joint ventures on
an equity accounted basis and its share of income and expenses of
its joint operation within the corresponding lines of the income
statement, from the date that joint control commenced.
2 Revenue
2021 2020
Revenue by type GBP000 GBP000
Private housing 1,599,616 1,152,281
======================================= ========= =========
Affordable housing 261,894 146,972
======================================= ========= =========
Partner delivery revenue 468,653 489,507
======================================= ========= =========
Land sales 22,727 17,243
======================================= ========= =========
Release of deferred revenue from joint
ventures 243 187
======================================= ========= =========
Other 5,909 5,537
======================================= ========= =========
Total 2,359,042 1,811,727
======================================= ========= =========
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. Following the
Acquisition, the Board have identified two separate segments having
taken into consideration IFRS 8: "Operating Segments" 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 acquisition related exceptional items and
amortisation of acquired intangibles.
Segmental tangible net asset value (TNAV) includes items
directly attributable to the segment as well as those that can be
allocated on a reasonable basis, with the exception of net cash or
debt, retirement benefit assets / liabilities and tax balances
payable / receivable.
During the year, 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 10bps and there was no impact
on adjusted operating margin for Partnerships.
Adjusted financial results include share of joint ventures and
exclude exceptional items. Adjusted gross profit is stated
including other operating income.
Group
Housebuilding Partnerships items Total
Year ended 31 December GBP000 GBP000 GBP000 GBP000
2021
Revenue 1,621,692 737,350 - 2,359,042
========================= ============= ============ ======== =========
Share of joint ventures'
revenue 207,614 126,977 - 334,591
========================= ============= ============ ======== =========
Adjusted revenue 1,829,306 864,327 - 2,693,633
========================= ============= ============ ======== =========
Gross profit 337,449 101,823 - 439,272
========================= ============= ============ ======== =========
Share of joint ventures'
gross profit 39,348 17,942 - 57,290
========================= ============= ============ ======== =========
Exceptional cost
of sales 3,174 2,570 - 5,744
========================= ============= ============ ======== =========
Other operating
income 27,154 13,505 - 40,659
========================= ============= ============ ======== =========
Adjusted gross profit 407,125 135,840 - 542,965
========================= ============= ============ ======== =========
Operating profit 260,734 47,827 (23,147) 285,414
========================= ============= ============ ======== =========
Share of joint ventures'
operating profit 38,689 17,800 - 56,489
========================= ============= ============ ======== =========
Exceptional items 3,174 2,570 6,481 12,225
========================= ============= ============ ======== =========
Amortisation of
acquired intangibles 2,760 11,480 - 14,240
========================= ============= ============ ======== =========
Adjusted operating
profit 305,357 79,677 (16,666) 368,368
========================= ============= ============ ======== =========
Adjusted gross margin 22.3% 15.7% - 20.2%
========================= ============= ============ ======== =========
Adjusted operating
margin 16.7% 9.2% - 13.7%
========================= ============= ============ ======== =========
Group
Housebuilding Partnerships items Total
Year ended 31 December GBP000 GBP000 GBP000 GBP000
2020
========================= ============= ============ ======== =========
Revenue 1,170,936 640,791 - 1,811,727
========================= ============= ============ ======== =========
Share of joint ventures'
revenue 140,904 87,483 - 228,387
========================= ============= ============ ======== =========
Adjusted revenue 1,311,840 728,274 - 2,040,114
========================= ============= ============ ======== =========
Gross profit 180,681 66,215 - 246,896
========================= ============= ============ ======== =========
Share of joint ventures'
gross profit 22,038 12,434 - 34,472
========================= ============= ============ ======== =========
Exceptional cost
of sales 10,650 325 - 10,975
========================= ============= ============ ======== =========
Other operating
income 17,810 8,612 - 26,422
========================= ============= ============ ======== =========
Adjusted gross profit 231,179 87,586 - 318,765
========================= ============= ============ ======== =========
Operating profit
/ (loss) 104,295 24,456 (37,028) 91,723
========================= ============= ============ ======== =========
Share of joint ventures'
operating profit 21,714 12,362 - 34,076
========================= ============= ============ ======== =========
Exceptional items 10,650 325 20,009 30,984
========================= ============= ============ ======== =========
Amortisation of
acquired intangibles 2,760 11,480 - 14,240
========================= ============= ============ ======== =========
Adjusted operating
profit / (loss) 139,419 48,623 (17,019) 171,023
========================= ============= ============ ======== =========
Adjusted gross margin 17.6% 12.0% - 15.6%
========================= ============= ============ ======== =========
Adjusted operating
margin 10.6% 6.7% - 8.4%
========================= ============= ============ ======== =========
Segmental financial performance
As at 31 December 2021 Housebuilding Partnerships Group items Total
GBP000 GBP000 GBP000 GBP000
Goodwill and intangibles 278,381 396,937 - 675,318
============================== ============= ============ =========== =========
Tangible net assets excluding
investments in joint
ventures 1,222,002 54,782 28,786 1,305,570
============================== ============= ============ =========== =========
Investments in joint
ventures 151,080 23,984 - 175,064
============================== ============= ============ =========== =========
Net cash - - 234,454 234,454
============================== ============= ============ =========== =========
As at 31 December 2020 Housebuilding Partnerships Group items Total
GBP000 GBP000 GBP000 GBP000
Goodwill and intangibles 283,428 407,666 - 691,094
============================== ============= ============ =========== =========
Tangible net assets /
(liabilities) excluding
investments in joint
ventures 1,361,786 (46,626) 5,791 1,320,951
============================== ============= ============ =========== =========
Investments in joint
ventures 128,826 16,327 - 145,153
============================== ============= ============ =========== =========
Net cash - - 37,885 37,885
============================== ============= ============ =========== =========
4 Exceptional expenses
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.
2021 exceptional expenses relate to one-off integration
activities following the 2020 acquisition (GBP6.5m) and an
incremental fire safety provision (GBP5.7m). 2020 exceptional
expenses related to the Acquisition (GBP20.0m) and the recognition
of a provision for legacy property building safety (GBP11.0m).
2021 2020
GBP000 GBP000
Administrative expenses relating to the
Acquisition 6,481 20,009
========================================== ====== ======
Cost of sales relating to legacy property
fire safety 5,744 10,975
========================================== ====== ======
Total exceptional expenses 12,225 30,984
========================================== ====== ======
On 3 January 2020, the Group completed the acquisition of Linden
and Partnerships from Galliford Try PLC. In the year ended 31
December 2020 , exceptional administrative expenses included legal
fees incurred in relation to the completion and completion
statement, as well as costs directly related to the integration and
restructuring of the Group as a result of the Acquisition,
including the cost of redundancies and office closures. In the year
ended 31 December 2021, the exceptional administrative expense
solely relates to the conclusion of system integration work and
residual restructuring.
Exceptional expenses relating to legacy property fire safety
result from ongoing investigations into properties developed where
remediation works may be required. The amount of the provision
reflects our best estimate to carry out these remediation
works.
Tax on exceptional items in 2021 was GBP2.3m ( 2020 : GBP5.9m
).
5 Earnings per share
Profit attributable to ordinary shareholders
2021 2020
GBP000 GBP000
Profit for the year attributable to equity
holders of the parent 254,125 76,813
================================================= ======= =======
Profit for the year attributable to equity
holders of the parent (before exceptional
items and amortisation of acquired intangibles) 278,267 116,109
================================================= ======= =======
Earnings per share
2021 2020
Basic earnings per share 114.6p 34.8p
================================================================================================= ================= ===============
Diluted earnings per share 114.1p 34.7p
================================================================================================= ================= ===============
Basic earnings per share (before exceptional
items and amortisation of acquired intangibles) 125.5p 52.6p
================================================================================================= ================= ===============
Diluted earnings per share (before exceptional
items and amortisation of acquired intangibles) 124.9p 52.5p
================================================================================================= ================= ===============
Weighted average number of shares used as the denominator 2021 2020
Weighted average number of ordinary shares
for the year ended 31 December 221,788,132 220,916,654
=========================================== =========== ===========
Basic earnings per share
Basic earnings per ordinary share for the year ended 31 December
2021 is calculated on a profit attributable to shareholders of
GBP254,125,000 ( 2020 : GBP76,813,000 ) over the weighted average
of 221,788,132 ( 2020 : 220,916,654 ) ordinary shares in issue
during the year.
Diluted earnings per share
The calculation of diluted earnings per share for the year ended
31 December 2021 was based on the profit attributable to ordinary
shareholders of GBP254,125,000 ( 2020 : GBP76,813,000 ) over the
diluted weighted average ordinary shares potentially in issue for
the year ended 31 December 2021 of 222,787,131 ( 2020 : 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.
6 Dividends
The following dividends were paid by the Group:
2021 2020
GBP000 GBP000
Prior year final dividend per share of 20p
(2020: nil) 44,340 -
=========================================== ====== ======
Current year interim dividend per share
of 20p (2020: nil) 44,369 -
=========================================== ====== ======
88,709 -
=========================================== ====== ======
A final dividend of 40 pence per share (cumulative amount:
GBP88.7m) has been declared and, subject to shareholder approval at
the AGM, will be paid on 24 May 2022 in respect of 2021 .
7 Investments
The movement in investments accounted for using the equity
method during the year is as follows :
2021 2020
GBP000 GBP000
Beginning of the year 145,153 85,129
Acquired with Linden and Partnerships - 56,034
Additions - -
Investments in joint ventures 16,909 16,166
Profit for the year 29,991 14,867
Distributions paid (16,989) (27,043)
End of the year 175,064 145,153
8 Bank and other loans
Interest rate profile of bank and other loans
Carrying Carrying
Available value value
facility Facility 2021 2020
At 31 December Rate GBP000 maturity GBP000 GBP000
Revolving credit facility* SONIA +160-250bps 500,000 2025 - -
============================== ================== ========= ========= ======== ========
Term Loan** LIBOR +165-255bps - 2023 - 150,000
============================== ================== ========= ========= ======== ========
USPP Loan*** 403 bps 100,000 2027 106,475 107,359
============================== ================== ========= ========= ======== ========
Prepaid facility fee n/a n/a n/a (312) (4,256)
============================== ================== ========= ========= ======== ========
Term Loan (commenced 17 March
2020)**** SONIA +265bps 50,000 2023 50,000 50,000
============================== ================== ========= ========= ======== ========
Homes England development
loan ECRR +120-220bps 10,667 2029 8,097 -
============================== ================== ========= ========= ======== ========
Overdraft facility BOE Base +150bps 5,000 2025 - -
============================== ================== ========= ========= ======== ========
Total borrowings 665,667 164,260 303,103
================================================== ========= ========= ======== ========
* This facility commenced on 17 December 2021. This is a
sustainability linked finance agreement with a margin ratchet of
+/-2.5bps in addition to the rate above, dependant on performance
against sustainability KPIs - a year on year increase on the
delivery of additional affordable homes; a 4.2% annual reduction of
scope 1 and 2 CO2 emissions; and 500 new learners to be put through
our Partnerships Skills Academies.
** Term loan agreement terminated on 17 December 2021.
*** Carrying value is quoted including impact from the fair
value of future interest payments.
**** The maturity date for this facility was amended on 23
February 2021 from 17 March 2021 to 17 March 2023.
The GBP500 million four-year revolving credit facility syndicate
comprises eight banks. The revolving credit facilities, USPP Loan
and Term Loan all include a covenant package, covering interest
cover, gearing and tangible net worth requirements, which are
tested semi-annually. The overall financing cost of the new
arrangements are marginally less expensive than the previous
facilities.
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 year ended 31 December 2021 were limited to those
relating to remuneration.
Mr. Greg Fitzgerald, Group Chief Executive, is non-executive
Chairman of Ardent Hire Solutions Limited ("Ardent"). The Group
hires forklift trucks from Ardent.
Mr Ian Baker is the Managing Director of Baker Estates Ltd where
Mr Greg Fitzgerald is a shareholder and Director. The Group has not
transacted with Baker Estates in the year but did receive
consulting services from Ian Baker's consultancy company IB (SW)
Limited in the prior year. The Group may well transact with Baker
Estates in the future.
Mr. Graham Prothero, is non-executive Director and Chair of the
Audit Committee of Marshalls PLC. The Group incurred costs with
Marshalls PLC in relation to landscaping services.
Ms. Katherine Innes Ker, is a non-executive Director of Forterra
PLC. The Group incurred costs with Forterra PLC in relation to the
supply of bricks.
Mr. Ian Tyler, non-executive Chairman, is the Chairman of
Affinity Water Limited and a non-executive Director of BAE Systems
PLC. The Group received water services and incurred car parking
charges with these companies, respectively, during the year.
The total net value of transactions with related parties
excluding joint ventures have been made at arms length and were as
follows:
Expenses paid Amounts payable Amounts owed
to related parties to related parties by related parties
========================== ========================== ==========================
31 Dec 2021 31 Dec 2020 31 Dec 2021 31 Dec 2020 31 Dec 2021 31 Dec 2020
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
============ ============ ============ ============ ============ ============
Trading transactions
======================= ============ ============ ============ ============ ============ ============
Ardent 5,598 2,498 426 632 - -
======================== ============ ============ ============ ============ ============ ============
IB (SW) Limited - 56 - - - -
======================== ============ ============ ============ ============ ============ ============
Marshalls PLC 16 21 - - - -
======================== ============ ============ ============ ============ ============ ============
Forterra PLC 579 1,321 115 115 - -
======================== ============ ============ ============ ============ ============ ============
Affinity Water Limited 31 - - - 1 -
======================== ============ ============ ============ ============ ============ ============
BAE Systems PLC 1 - - - - -
======================== ============ ============ ============ ============ ============ ============
Transactions between the Group and its joint ventures are
disclosed as follows:
Interest income
and dividend
Sales to related distributions
parties from related parties
================== =======================
31 Dec 31 Dec 31 Dec 31 Dec
2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000
======== ======== =========== ==========
Trading transactions 41,968 129,663 - -
========================== ======== ======== =========== ==========
Non-trading transactions - - 40,183 45,014
========================== ======== ======== =========== ==========
Amounts owed by Amounts owed to
related parties related parties
================== =======================
31 Dec 31 Dec 31 Dec 31 Dec
2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000
======== ======== =========== ==========
Balances with joint
ventures 308,217 323,650 46,010 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 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
financial year which have materially affected the financial
performance or position of the Group, and which have not been
disclosed.
10 Alternative performance measures
The Group uses alternative performance measures which are not
defined within UK-adopted International Accounting Standards. The
Directors use these alternative performance measures, along with
UK-adopted International Accounting Standards measures, to assess
the operational performance of the Group. New alternative
performance measures were implemented in 2020 in order to reflect
the enlarged Group, specifically the contribution of the joint
venture investments now held and the impact of amortisation of
intangibles which were recognised on acquisition of Linden and
Partnerships.
The definition and reconciliation of financial alternative
performance measures used to UK-adopted International Accounting
Standards measures are shown below:
Adjusted revenue
Adjusted revenue is defined as revenue including share of joint
ventures' revenue:
2021 2020
GBP000 GBP000
Revenue per Group Income Statement 2,359,042 1,811,727
=================================== ========= =========
Share of joint ventures revenue 334,591 228,387
=================================== ========= =========
Adjusted revenue 2,693,633 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:
2021 2020
GBP000 GBP000
Gross profit per Group Income Statement 439,272 246,896
======================================== ======= =======
Other operating income 40,659 26,422
======================================== ======= =======
Exceptional cost of sales 5,744 10,975
======================================== ======= =======
Share of joint ventures gross profit 57,290 34,472
======================================== ======= =======
Adjusted gross profit 542,965 318,765
======================================== ======= =======
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:
2021 2020
GBP000 GBP000
Operating profit per Group Income Statement 285,414 91,723
============================================ ======= =======
Exceptional expenses 12,225 30,984
============================================ ======= =======
Amortisation of acquired intangibles 14,240 14,240
============================================ ======= =======
Share of joint ventures operating profit 56,489 34,076
============================================ ======= =======
Adjusted operating profit 368,368 171,023
============================================ ======= =======
Adjusted profit before tax
Adjusted profit before tax is defined as profit before tax
before exceptional expenses and amortisation of acquired
intangibles:
2021 2020
GBP000 GBP000
Profit before tax per Group Income Statement 319,536 98,664
============================================= ======= =======
Exceptional expenses 12,225 30,984
============================================= ======= =======
Amortisation of acquired intangibles 14,240 14,240
============================================= ======= =======
Adjusted profit before tax 346,001 143,888
============================================= ======= =======
[1] On an adjusted basis to include the proportional
contribution of the joint ventures and before exceptional expenses
of GBP12.2m (2020: GBP31.0m) and amortisation of acquired
intangibles of GBP14.2m (2020: GBP14.2m)
[2] Net cash is quoted excluding IFRS16 lease liabilities and
includes GBP6.5m (2020: GBP7.4m) impact from the fair value of
future interest payments on US Private Placement notes
[3] Average sales rate per site per week for 8 weeks from 1
January 2022
[4] The Group incurred nil (2020: GBP10.2m) of costs directly
related to Covid-19 in 2021
[5] Completions include 100% of joint venture completions
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END
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(END) Dow Jones Newswires
March 02, 2022 02:01 ET (07:01 GMT)
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