Slide 1: Half year results 2023 and strategy update
Half year results 2023 and strategy update Greg Fitzgerald Tim Lawlor Earl Sibley Stephen Teagle Chief Executive Officer Chief Financial Officer Chief Operating Officer CEO, Countryside Partnerships 11 September 2023
Slide 2: Agenda
Agenda • Introduction • Financial review • Strategy update • Capital allocation • Outlook • Q&A XXX XXX 2 Bovis Homes and Linden homes - Collingtree Park, Collingtree 2
Slide 3: Evolution of strategy
Evolution of strategy • There is an acute shortage of affordable mixed tenure housing across the UK • Vistry is firmly established as a leading provider of affordable mixed tenure housing • Group to focus its operations fully on its successful high return, capital light partnerships model • Position
Slide 4: H1 performance
H1 performance • Integration of Countryside proceeded ahead of expectations • Partnerships has seen strong levels of demand, demonstrating market resilience, with H1 revenues up by 7.1% on pro forma H1 22 and operating margin up 130bps to 11.5% • Housebuilding operated well against more challenging
Slide 5: Achievements across all areas
Achievements across all areas HBF 9-month score 80.2% (Benchmark: 78.3%) HBF 8-week score 91.9% (Benchmark: 90.8%) The Future of Housing partnership £200k Home Stepper partnership Raised in YTD Half year results 2023 5
Slide 6: Financial review
Financial review Tim Lawlor Chief Financial Officer 4 Countryside Homes - Wolsey Park, Rayleigh 6
Slide 7: Summary of Group results
Summary of Group results Adjusted basis unless otherwise stated (£m)(1) H1 23 H1 22 Change Revenue 1,777.1 1,352.5 31.4% Gross profit 322.5 280.5 15.0% Operating profit 206.7 198.2 4.3% Operating margin 11.6% 14.7% (3.1pps) Profit before tax 174.0 189.9 (8.4%) Reported profit before tax 114.2 111.3
Slide 8: Partnerships financials
Partnerships financials Adjusted basis unless otherwise stated (£m) H1 23 H1 22 Total mixed tenure completions(1) 3,203 1,106 Revenue 953.6 426.2 Operating profit 109.3 43.6 Operating margin 11.5% 10.2% Capital employed(2) 774.5 118.2 • Mixed tenure completions were up 5.7% on proforma H1 22 (3,031)
Slide 9: Partnerships metrics
Partnerships metrics Mixed tenure completions Mixed tenure adjusted revenue Mixed tenure ASP 3,203 inc JVs of 566 £699m inc JVs at £97m £253k inc JVs at £355k H1 22: 1,106 inc JVs of 463 H1 22: £219m inc JVs at £70m H1 22: £251k inc JVs at £304k Partner delivery equivalent units Partner delivery rev
Slide 10: Housebuilding financials
Housebuilding financials Adjusted basis unless otherwise stated (£m) H1 23 H1 22 Total completions(1) 2,847 3,219 Revenue 823.5 926.3 Gross profit 163.3 207.7 Gross margin 19.8% 22.4% Operating profit 117.9 170.0 Operating margin 14.3% 18.4% Capital employed 1,787.4 1,467.5 • Total completions were
Slide 11: Housebuilding metrics
Housebuilding metrics Private completions Affordable completions Average active sites 1,967 inc JVs of 550 880 inc JVs of 129 137 H1 22: 2,455 inc JVs of 639 H1 22: 764 inc JVs of 121 H1 22: 143 Private ASP Affordable ASP Total ASP £387k inc JVs at £357k £172k inc JVs at £176k £316k inc JVs at £323k
Slide 12: Build costs
Build costs • Sites operating well with good materials and labour availability • Benefiting from revised arrangements with supply chain partners, reflecting Group’s increased scale and revenue visibility • Materials inflation of c.5% in first half fully offset by procurement savings of enlarged Grou
Slide 13: Countryside synergies
Countryside synergies • Timing of synergy savings from integration of Countryside ahead of target • Group on track to deliver at least £35m of synergies from the combination in FY23, an increase from the previous target of £25m • Full run rate of £60m p.a. on track to be achieved by the end of FY24
Slide 14: Land activity in H1
Land activity in H1 Owned land Sites Plots Partnerships 5 1,968 Housebuilding 8 1,781 Controlled land Partnerships 6 1,880 Housebuilding 4 932 • Partnerships continued to invest in its owned landbank to support disciplined growth strategy - Total landbank of 46,378 plots (31 Dec 2022: 48,759) • Hous
Slide 15: Cashflow waterfall
Cashflow waterfall Half year results 2023 15
Slide 16: Fire safety provision
Fire safety provision £m • Continue to make good progress - of 317 sites identified, works completed on 75 Provision as at 31 Dec 2022 309.2 • Net utilisation in the period of £9.7m Net utilisation (9.7) - includes £10.9m of cash spend Fire safety provision excluding 299.5 - Incremental provision of
Slide 17: Operating profit to profit before tax
Operating profit to profit before tax £m unless otherwise stated H1 23 H1 22 Adjusted operating profit 206.7 198.2 Bank interest (18.5) (6.3) Other net finance costs (6.9) (2.7) Net JV interest (7.3) 0.7 Adjusted profit before tax 174.0 189.9 Exceptionals – Fire safety provision (incl. second stairc
Slide 18: Capital employed
Capital employed (£m) 30 June 23 31 Dec 22 Investment in joint ventures 253.1 253.7 Amounts due from joint ventures 372.0 391.4 WIP and Stock 1,143.1 968.5 Land 2,049.1 1,869.7 Land creditors (694.8) (667.4) Other assets 679.8 560.7 Other liabilities (1,232.5) (1,230.9) Capital employed 2,569.8 2,14
Slide 19: Outlook and strategy update
Outlook and strategy update Greg Fitzgerald Chief Executive Officer Bovis Homes - The Tors, Tavistock 19
Slide 20: Market trends
Market trends Demand • Continue to see good demand for mixed tenure housing from Local Authorities, RPs and PRS providers • Open market private sales have slowed further since June - In part reflecting traditional quieter summer period but also further increases in mortgage costs • Strong demand fro
Slide 21: FY23 outlook
FY23 outlook • Partnerships has strong forward order book totalling £3.0bn with 90% of forecasts mixed tenure units and all of partner delivery revenues for FY23 secured • Housebuilding’s forward order book totals £1.3bn, with 87% of forecast FY23 units secured • Housebuilding and Partnerships conti
Slide 22: Strategy evolution: Why now?
Strategy evolution: Why now? • Confidence in market opportunity - Need for mixed tenure housing developments strengthening further - Recognition of urgent need for housing solution from all stakeholders • Confidence in ability to execute - Successful integration of Countryside, progress ahead of sch
Slide 23: Market opportunity
Market opportunity Stephen Teagle CEO, Countryside Partnerships Countryside Homes – Ashmere, Ebbsfleet Garden City 23
Slide 24: Acute need for affordable housing
Acute need for affordable housing • Affordability pressures increasingly visible - >1 million households on LA waiting list - One-in-ten people across the UK (6.5 million in total) living in poor quality housing - 310k children sharing beds - 110,000 households in temporary accommodation - Homelessn
Slide 25: Demand for housing – the three queues
Demand for housing – the three queues Social / affordable rent Social Rent • 1 million people Affordable Rent Supported Housing Help to Buy PRS Shared Intermediate tenures Rent to buy Ownership • Requires discounts or subsidy Discount Sale Shared ownership First HomesFirst Homes Discounted sale Home
Slide 26: Market evolution
Market evolution • The withdrawal of Help to Buy and increased mortgage costs has intensified affordability pressures • Near and medium term growth in intermediate and affordable solutions inevitable • Market responding - Increased demand for shared ownership across the sector attracting capital - I
Slide 27: A partnerships business only develops sites with partners
A partnerships business only develops sites with partners Registered Providers / Private Rented Sector Local Authorities For Profit Registered • Institutional Life assurance, • Funding mix: grants, Council tax, Providers Private Equity, Alternative funds Redistributed business rates, • 88,000 homes
Slide 28: Public sector engagement - Homes England and the GLA
Public sector engagement - Homes England and the GLA • Vistry is Homes England’s largest and most active private sector partner, working across a range of programmes - Our partnerships model is fully aligned with HE Strategic Plan and Government priorities - Senior level engagement across the busine
Slide 29: Vistry's unique capabilities and market position
Vistry’s unique capabilities and market position Engineered model aligned with our Partner Mature and trusted relationships with expectations and investment priorities purchasing sector are key Scale and disciplined operational platform People and culture are essential difficult to replicate Place m
Slide 30: Partnering at scale
Partnering at scale £22bn Working with 93 Working with £6bn work on the bench different RPs 33 JV partners in RP contracts delivering (forward sales / and 30,000 pipeline orders / 37 preferred bidder / Total JV GDV of affordable homes mixed tenure land bank) Local Authorities £18bn Half year results
Slide 31: Implementation
Implementation Earl Sibley Chief Operating Officer Countryside Partnerships - Podium gardens, South Oxhey 31
Slide 32: The Partnerships business model
The Partnerships business model Secured revenue Capital light Balanced risk reward Key priority • Min 50% pre-sale on all • Back to back land deals • Development hurdle new developments • Staged payments for rate margins a risk based • Up to 100% pre-sale through land led and partner delivery pre sa
Slide 33: A responsible developer
A responsible developer Sustainable operations Working in partnerships Delivering for our customers • Delivering on social need of • Extensive platform of joint • Clear commitment to deliver affordable mixed tenure venturing with Local tenure choice at pace housing Authorities, Homes England • Provi
Slide 34: Strategy implementation
Strategy implementation Key deliverables Migration of Housebuilding landbank to deliver against Partnerships model An evolution of our Combine the strength of leadership across new operating divisions strategy to grow our Create a simplified organisational structure Partnerships business and one way
Slide 35: Transitioning the housebuilding landbank
Transitioning the housebuilding landbank • Flexible Housebuilding consented land bank to support deployment of partnership model, accelerate asset turn and drive ROCE Land bank as at 30 June 2023 Plots Targeted tenure Plots Partnerships Designated as affordable c. 8,000 46,378 Pre-sold to date c. 1,
Slide 36: Developing the housebuilding landbank
Developing the housebuilding landbank • High level of multi-unit deals completed to date and in the pipeline Registered providers • Discussions with key RP partners to enter into broader and longer term scale partnerships • Potential to capitalise our own RP, Linden First, to deliver at scale with a
Slide 37: Leadership Team
Leadership Team • ELT restructured to align Greg Fitzgerald Chief Executive Officer with less complex business structure • Delayered organisational Stephen Teagle Tim Lawlor Earl Sibley Clare Bates CEO, Countryside Chief Financial Chief Operating General Counsel structure with 6 experienced Partners
Slide 38: Organisational changes
Organisational changes • National coverage through 6 geographical divisions • 27 regional business (reduced from 32) aligned to one business model with capacity for growth • Regional businesses expected to deliver between 500 - 900 new homes each year (total capacity c17,000 to 24,000) • Vistry Hous
Slide 39: Production efficiency and sustainable development at the core of the new strategy
Production efficiency and sustainable development at the core of the new strategy Committed development programme and forward visibility • Ambition to deliver consistently strong growth in output - regardless of trends in the wider housing market • >50% pre-sale ensures we can commit to new site sta
Slide 40: Vistry Works - Ambition
Vistry Works - Ambition • Capacity of over 7,000 homes from our three factories • Targeting for 5,000 homes in 2024 (c. 2,500 in 2023) • Roof trusses and joist capacity already added in • Future Homes Standard 2025 will mean more Closed Panel homes in the medium term • Looking to the future we are t
Slide 41: Capital allocation & Guidance
Capital allocation & Guidance Tim Lawlor Chief Financial Officer Bovis Homes - Bay View, Northam 41
Slide 42: Capital allocation review
Capital allocation review Key considerations of review • Following the acquisition and integration of Countryside Partnerships, the Group committed 1 Investment needs to ensure sustainable growth to a review of its capital allocation policy in advance of the HY results 2 All capital commitments incl
Slide 43: Capital allocation hierarchy
Capital allocation hierarchy • Partnerships model yields strong underlying cash conversion Cash Generation • Cash inflows to be supplemented by multi-unit pre-sale of Housebuilding land bank • Cash commitments including fire safety and RPDT expected to reduce in medium term • Return to year-end net
Slide 44: Capital allocation policy
Capital allocation policy The Board recognised the importance of capital distribution to shareholders and intends to sustain a two times adjusted earnings ordinary distribution cover in respect of a full financial year. Ordinary distributions are to be made through either share buybacks or dividends
Slide 45: A clear pathway to £1bn of shareholder distributions
A clear pathway to £1bn of shareholder distributions Key drivers Next 3 years Capital Target Partnerships is a capital light model efficiency distributions Release of capital from Excess capital generated through Earnings land bank generation migration of Housebuilding landbank £1bn and transition t
Slide 46: Updated outlook
Updated outlook FY23 guidance FY24 guidance Revised medium term financial targets • Partnerships and housebuilding report as 5%-8% • Board continues to expect to deliver adjusted one combined partnerships business profit before tax in excess of £450m • Total unit completions growth of c.5% revenue g
Slide 47: Summary
Summary Greg Fitzgerald Greg Fitzgerald Chief Executive Officer Chief Executive Officer Bovis Homes - Cotterstock Meadows, Oundle 47
Slide 48: Vistry Group - the leading Partnerships business
Vistry Group - the leading Partnerships business • A natural evolution of our strategy • Reflects structural adjustment in the market and responds to significant unmet demand • Although transformational, we have the best people, the knowledge and the relationships within our business • Draws on the
Slide 49: Coe
aA Le SF. Coe os Vistry Group Linden countrysine Countryside HOMES Homes
Slide 50: Disclaimer - important notice
Disclaimer - important notice • Certain statements in this presentation are forward looking statements • Forward looking statements involve evaluating a number of risks and uncertainties, many of which are beyond the Group’s control, that could cause actual results to differ materially from those ex
Slide 51: Appendices
Appendices Bovis Homes - Monument View, Wellington 51
Slide 52: Forward sales
Forward sales Forward sales (£m) 03 Sep 23 30 June 23 Housebuilding - Private 670 564 - Private - Vistry share of JVs 107 105 - Affordable 444 472 - Affordable - Vistry share of JVs 74 77 Total Housebuilding 1,295 1,218 Partnerships - Mixed tenure 1,482 1,462 - Mixed tenure - Vistry share of JVs 401
Slide 53: Operational excellence
Operational excellence Housebuilding Partnerships Group H1 23 H1 22 H1 23 H1 22 H1 23 H1 22 Target Sales rate 0.70 0.69 1.11 1.56 0.86 0.84 - Sales rate excluding multi-unit sales in 0.41 0.67 0.67 0.82 housebuilding Customer satisfaction - 8 weeks 91.8% 92.7% 90.1% 91.2% 91.2% 92.2% 5-star (>90%) -
Slide 54: Bridge between adjusted and reported results by Segment and Group
Bridge between adjusted and reported results by Segment and Group Housebuilding Partnerships Group items Total Period ended 30 June 2023 £m £m £m £m Revenue 708.5 866.8 - 1,575.3 Share of joint venture and associate revenue 115.0 98.9 - 213.9 Non-GAAP joint ventures’ and associate revenue adjustment
Slide 55: Land bank
Land bank Housebuilding Partnerships Land bank HY 23 FY 22 HY 23 FY 22 Owned 21,980 22,532 15,861 16,223 Controlled 1,987 3,484 9,633 12,881 Total owned and controlled 23,967 26,016 25,494 29,104 JV owned and controlled (100%) 6,233 6,747 20,884 19,475 Total land bank 30,200 32,763 46,378 48,759 Lan
Slide 56: Strategic land
Strategic land As at 30 June 2023 Total sites Total plots • Delivering for both Housebuilding and Partnerships - Unique multiple brands opportunity 0 - 150 plots 73 6,362 - Mixed tenure capability 150 - 300 plots 56 12,612 - Enhanced returns on larger sites 300 - 500 plots 25 10,245 500 - 1,000 plot
Slide 57: Land activity in H1
Land activity in H1 Housebuilding Partnerships Owned Sites Plots Sites Plots Brought forward 198 29,198 131 25,286 Land acquired externally 4 769 4 1,723 Transferred from conditional 9 1,138 12 1,521 Transferred from strategic 4 1,012 1 245 Internal transfer (2) (652) 2 652 Adjustments (1) (404) (1)
Slide 58: Land creditor payment profile
Land creditor payment profile At 30 June 2023 800 At 31 Dec 2022 £719.0m £678.8m 600 £m 400 £401.2m £359.8m £65.4m 200 £53.2m £47.0m £37.6m £29.7m £25.6m £179.4m £15.6m £19.1m £164.4m 0 <1 year 1-2 years 2-3 years 3-4 years 4-5 years 5> years Total Note: The land creditor payments profile is on an a
Slide 59: Work in progress and other assets
Work in progress and other assets (£m) 30 June 2023 31 Dec 2022 Stock (including show homes) 81.5 68.4 Housing and infrastructure WIP 1,030.9 876.4 Part exchange 30.7 23.7 Total work in progress 1,143.1 968.5 Debtors - HA 192.4 149.9 - Contracting assets 87.0 111.6 - Prepayments and accrued income 9
Slide 60: Other liabilities
Other liabilities (£m) 30 June 2023 31 Dec 2022 Creditors 950.8 926.1 Contract liabilities 31.7 40.3 Deferred income 108.5 116.2 Other tax and social security 7.2 17.3 Lease liabilities 98.5 86.6 Provisions (excluding fire safety) 35.8 44.5 Other liabilities 1,232.5 1,231.0 Half year results 2023 60
Slide 61: Adjusted finance costs
Adjusted finance costs (£m) H1 23 H1 22 Net bank interest and commitment fees (17.2) (6.0) Issue cost amortisation (1.3) (0.3) Bank interest (18.5) (6.3) Imputed interest on land (5.2) (2.3) IFRS16 interest on leases (2.5) (0.4) Pension financing 0.8 - Other net finance costs (6.9) (2.7) Net JV inte
Slide 62: EPS growth potential – worked example
EPS growth potential – worked example Target adjusted operating profit (£'m) 800 Implied adjusted earnings (£'m) 550 Weighted average shares (current) (m) 345 Reduction in shares: £1bn purchased back at average of £10 per share (100) Revised shares (m) 245 Implied medium term EPS 224p Current consen
Slide 63: Bank and other loans
Bank and other loans Available Carrying Carrying facility Facility value HY 23 value FY 22 £000 maturity Margin £000 £000 Revolving credit facility 500,000 2026 SONIA + 160-250 bps 35,000 - Term Loan 400,000 2025 SONIA + 190 - 310 bps 400,000 400,000 USPP Loan 100,000 2027 403 bps 105,099 105,564 Pr
Slide 64: Proforma HY 23 completions and revenues
Proforma HY 23 completions and revenues Total (inc JVs JV and associate HY 23 - Adjusted basis unless otherwise stated Vistry Countryside and associate) contribution Partnerships Mixed tenure units 1,036 2,167 3,203 566 Partner delivery equivalent units 1,093 - 1,093 - Total Partnerships units 2,129
Slide 65: Countryside combination
Countryside combination Purchase consideration £m Cash consideration 299.9 Shares consideration 838.0 Replacement of SAYE Schemes 0.9 Less: Shares issued to acquired employee benefit trust (1.7) Total purchase consideration 1,137.0 Provisionally reflecting: Inventories 768.8 Investments, right of us