Vistry Group Plc · LSE:VTY
Vistry — FY2022 Earnings Presentation
51 slides from Vistry's earnings presentation, Mar 22, 2023
Slide 1: Full year results 2022
Full year results 2022 Greg Fitzgerald Tim Lawlor Earl Sibley Chief Executive Officer Chief Financial Officer Chief Operating Officer 22 March 2023
Slide 2: Agenda
Agenda • FY performance • Group strategy • Financial review • Operational update Countryside Partnerships: Stonefield Edge, Bilston, Wolverhampton • Outlook • Q&A Countryside Partnerships: Oaklands Rise, London, NW10 Countryside Partnerships: Tolgus Farm, Redruth, Cornwall Full year results 2022 2
Slide 3: Another year of excellent progress
Another year of excellent progress O Completion of transformational acquisition of Countryside on 11 November 2022 O Integration making excellent progress - increased targeted synergies to c. £60m, with c. £25m now expected in FY 23 O Partnerships continues to deliver rapid growth in higher margin m
Slide 4: Another year of excellent progress (Cont.)
Another year of excellent progress (Cont.) O Group delivered 21% increase in Group adjusted profit before tax to £418.4m (FY21: £346.0m) O High quality land bank totalling 81,342 (2021: 42,770) owned and controlled plots and 65,813 (2021: 40,000) strategic land plots O Year end net cash of £118.2m (
Slide 5: Progress across all areas
Progress across all areas HBF 8-week score HBF 9-month score 92.6% 79.6% (Benchmark: 90.8%) (Benchmark: 78.3%) Best for Mental Health Award 2023 We raised £258k 3,016 internal SHE inspections: 94% compliance Full year results 2022 5
Slide 6: A leading homebuilder with a unique market position
A leading homebuilder with a unique market position � Leading partnerships business � A top UK housebuilder with market leading � Unrivalled track record consumer brands � Strong, established relationships � Excellent build quality and customer service with HAs, LAs, Homes England, PRS providers � V
Slide 7: Countryside Partnerships - high growth, high ROCE
Countryside Partnerships - high growth, high ROCE Strategy Targets � Minimum 40% ROCE on all developments � Minimum 50% pre-sold – higher % on complex urban regeneration developments 10% 40%+ � High growth in higher margin mixed tenure revenues revenue growth p.a. ROCE � Capacity to deliver c. 12,00
Slide 8: Vistry Housebuilding - controlled growth, driving profitability
Vistry Housebuilding - controlled growth, driving profitability Strategy Targets c. 8,000 25% � Minimum 25% gross margin and 25% ROCE land acquisition hurdle rates Controlled volume growth - c. 3% p.a. adjusted gross margin � completions � Capacity to deliver c. 8,000 units from existing infrastruct
Slide 9: Vistry investment proposition
Vistry investment proposition Structural growth Resilient to market cyclicality Driving returns from high High ROCE quality land bank With an acute shortage of Partnerships’ high proportion of pre- Partnerships’ higher proportion of housing in the UK, particularly sold revenues and breadth of well-
Slide 10: Financial review
Financial review Tim Lawlor Chief Financial Officer 10 Countryside Partnerships: Beaulieu, Chelmsford, Essex
Slide 11: Summary of Group results
Summary of Group results Adjusted basis unless otherwise stated (£m)(1) FY 22 FY 21 Change Revenue 3,073.2 2,693.6 14.1% Gross profit 636.9 543.0 17.3% Operating profit 451.1 368.4 22.4% Operating margin 14.7% 13.7% 1.0 ppts Profit before tax 418.4 346.0 20.9% Reported profit before tax 247.5 319.5
Slide 12: Operating profit by segment
Operating profit by segment Adjusted basis (£m)(1) Partnerships Housebuilding Countryside Group items Total Revenue 938.4 1,982.4 152.4 - 3,073.2 Gross profit 156.2 464.5 16.2 - 636.9 Operating profit 100.8 383.4 0.5 (33.6) 451.1 Gross margin % 16.6% 23.4% 10.6% - 20.7% Operating margin % 10.7% 19.3
Slide 13: Vistry Partnerships financials
Vistry Partnerships financials Adjusted basis unless otherwise stated (£m) FY 22 FY 21 Change Total mixed tenure completions(1) 2,455 2,088 17.6% Revenue 938.4 864.3 8.6% Gross profit 156.2 135.8 15.0% Gross margin 16.6% 15.7% +0.9 ppts Operating profit 100.8 79.7 26.5% Operating margin 10.7% 9.2% 1
Slide 14: Vistry Partnerships metrics
Vistry Partnerships metrics Mixed tenure completions Mixed tenure adjusted revenue Mixed tenure ASP 2,455 inc JVs of 738 £508m inc JVs at £130m £256k inc JVs at £362k FY 21: 2,088 inc JVs of 904 FY 21: £395m inc JVs at £127m FY 21: £237k inc JVs at £291k Partner delivery equivalent units Partner del
Slide 15: Housebuilding financials
Housebuilding financials Adjusted basis (£m) FY 22 FY 21 Change Total completions(1) 6,774 6,551 3.4% Revenue 1,982.4 1,829.3 8.4% Gross profit 464.5 407.1 14.1% Gross margin 23.4% 22.3% 1.1 ppts Operating profit 383.4 305.4 25.5% Operating margin 19.3% 16.7% 2.6 ppts TNAV(2) 1,368.8 1,373.2 (0.3%)
Slide 16: Vistry Housebuilding metrics
Vistry Housebuilding metrics Private completions Affordable completions Average active sites 5,184 inc JVs of 1,108 1,590 inc JVs of 235 142 FY 21: 4,891 inc JVs of 996 FY 21: 1,660 inc JVs of 291 FY 21: 143 Private ASP Affordable ASP Total ASP £376k inc JVs at £401k £163k inc JVs at £178k £324k inc
Slide 17: Finance costs and tax
Finance costs and tax Finance cost (£m) FY 22 FY 21 Adjusted finance cost (32.7) (22.4) • Increase in FY 22 primarily driven by higher rates on variable interest debt • Step up in bank interest in FY 23 reflecting higher costs of debt and higher average borrowings • Increase in other interest in FY
Slide 18: Fire Safety
Fire Safety £m O Group committed to playing its part in delivering lasting industry solution Provision - 31 Dec 2021 25.2 O Progress has been made over the past 12 months Additional provision 71.4 ǣ Of 304 sites identified - works completed on 59, on-site on taken in period 30, engaged/under review
Slide 19: 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 (1.8) Total purchase consideration 1,137.0 Provisionally reflecting: Inventories 792.3 Investments, right of us
Slide 20: Proforma FY22 completions and revenues
Proforma FY 22 completions and revenues Total (inc JVs JV and associate FY 22 - Adjusted basis unless otherwise stated Vistry Countryside and associate) contribution Partnerships Mixed tenure units 2,455 4,590 7,045 1,390 Partner delivery equivalent units 2,073 - 2,073 - Total Partnerships units 4,5
Slide 21: Summary balance sheet
Summary balance sheet (£m) 31 Dec 22 31 Dec 21 Goodwill 804.7 547.5 Intangible assets 456.0 127.8 Goodwill and intangibles 1,260.7 675.3 Investment in joint ventures and associate 253.7 175.1 Amounts due from joint ventures and associate 391.4 308.2 WIP and stock 968.5 821.7 Land 1,869.7 1,140.5 Lan
Slide 22: Cashflow waterfall
Cashflow waterfall £605.1m (£476.2m) £97.7m (£73.6m) (£95.2m) (£138.9m) £234.5m (£35.2m) £118.2m Opening Net Land Net cashflow Interest Countryside Dividends Share Closing trading expenditure from JVs & tax acquisition buyback Full year results 2022 22
Slide 23: Final dividend
Final dividend FY 22 O Capital allocation methodology Adjusted earnings (1) £324.7m unchanged from prior year Pay-out ratio (2:1 dividend cover) 50% O Review of capital allocation as part of annual strategic review Full year dividend payment £162.3m O Dividend record date of Interim dividend payment
Slide 24: Operational update
Operational update Earl Sibley Chief Operating Officer 24 Bovis Homes and Linden Homes: Collingtree Park, Northampton.
Slide 25: Partnerships - delivering a successful integration
Partnerships - delivering a successful integration North East 1 Lorem ipsum O Integration of the largest partnerships business in the UK making excellent progress Merseyside Yorkshire & Cheshire Operations combined under Countryside West 2 O Manchester Partnerships banner with strong reputation 3 4
Slide 26: Partnerships - focused on driving returns
Partnerships - focused on driving returns O Delivering 40%+ return on capital employed from FY 22 FY 21 Target enlarged business Sales rate 1.37 1.03 - ǣ Countryside business was not prioritising ROCE historically Customer satisfaction ǣ Increasing proportion of pre-sold revenues on - 8 week 90.4% 9
Slide 27: Housebuilding - focused on operational excellence
Housebuilding - focused on operational excellence • Focused on maximising performance against more constrained market backdrop FY 22 FY 21 Target • Operational excellence is key Sales rate 0.57 0.69 - - highly experienced management and site teams Customer satisfaction - controls and processes firml
Slide 28: Land activity in year
Land activity in year Owned land Sites Plots Housebuilding 22 4,285 Partnerships 14 2,371 Controlled land Housebuilding 10 1,049 Partnerships 5 842 • Of the 6,656 owned plots acquired in year, 2,571 were sourced strategically • Land bank significantly strengthened through combination with Countrysid
Slide 29: Land bank
Land bank Housebuilding Partnerships 31 December 2022 2021 2022 2021 Owned 22,532 20,090 16,223 5,299 Controlled 3,484 2,253 12,881 2,607 Total owned and controlled 26,016 22,343 29,104 7,906 Joint venture and associate owned 6,666 8,671 9,063 3,582 Joint venture and associate controlled 81 - 10,412
Slide 30: Strategic land
Strategic land As at 31 Dec 2022 Total sites Total plots • 4,503 strategic land plots across 9 developments added to 0 - 150 plots 62 5,457 strategic land bank in FY 22 150 - 300 plots 48 10,230 • Further 22,204 strategic land plots across 48 developments 300 - 500 plots 20 8,698 acquired with Count
Slide 31: Vistry Works - significant progress being made
Vistry Works - significant progress being made O Full rebrand as Vistry Works and relaunch of the business O Lowest cost manufacturing being targeted with usage mandated across the Group to utilise capacity O Warrington and Leicester factories capacity to deliver c. 2,800 units in FY 23 (FY 22: 1,90
Slide 32: People - critical to our success
People - critical to our success O Committed to supporting our people during cost of living crisis ǣ Temporary cost of living allowance - ensuring lowest paid employees received most support at c. 7.75% ǣ 4% pay rise for all employees in Jan 2023 with allowance also retained for lower paid employees
Slide 33: Future Homes Standard - leading the way
Future Homes Standard - leading the way O 4 net zero regulated emissions homes delivered to Warwick 5 Net Zero Carbon Home (-100% CO2) from 2030 District Council (WDC) at Europa Way O On the back of this, we have commenced a further scheme 3 with WDC at Kenilworth which includes 310 net zero regulat
Slide 34: Sustainability
Sustainability O Significant progress with our sustainability strategy in Our people Our homes & Our operations communities 2022 including: Delivering safe and efficient operations Putting our customers first Operating responsibly Environmental ǣ Linking three key sustainability metrics to executive
Slide 35: Outlook
Outlook Greg Fitzgerald Chief Executive Officer 35 Countryside Partnerships: Rochester Riverside, Rochester
Slide 36: Market review
Market review O Improved consumer confidence since Q4 2022 although FTBs struggling O Mortgage rates trending downwards with increased availability O Mortgage finance cheaper than renting O Unemployment maintained at relatively low level O Pricing remaining firm supported by use of incentives, with
Slide 37: Current trading
Current trading O Private sales rate showing an improving trend, with Group average private sales rate per site per week of 0.54 for FY 23 to date, and 0.62 in the last 4 weeks O Good level of demand from HAs and LAs, with PRS market also improving O Net pricing has remained firm, supported by incre
Slide 38: Summary and outlook
Summary and outlook Vistry Group O Strong experienced management team in place across all business areas O Board changes announced this morning O Integration of Countryside making excellent progress with increased synergy expectations Bovis Homes: Borley Park, Southampton O Board committed to mainta
Slide 39: nad
aA % nad ° eS . . F Vistry Group Bovis "Linden countersive “Quneryaite Homes HOMES Homes
Slide 40: 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 e
Slide 41: Appendices
Appendices 41 Bovis Homes: Fernleigh Park, Long Marston, Stratford-upon-Avon
Slide 42: Countryside financials
Countryside financials Mixed tenure completions Mixed tenure adjusted revenue Mixed tenure ASP 649 inc JVs of 70 £150m inc JVs at £16m £257k inc JVs at £442k Partner delivery equivalent units Partner delivery revenue Mixed tenure average active sites n/a n/a 59 Note: Completions include 100% of JV a
Slide 43: Forward sales
Forward sales Forward sales (£m) 20 Mar 2023 25 Feb 2022 Housebuilding - Private 630 692 - Private - Vistry share of JVs 107 148 - Affordable 524 421 - Affordable - Vistry share of JVs 78 63 Total Housebuilding 1,339 1,324 Partnerships - Mixed tenure 1,489 335 - Mixed tenure - Vistry share of JVs 38
Slide 44: Land activity in year to date
Land activity in year to date Housebuilding Partnerships Owned Sites Plots Sites Plots Brought forward 202 28,761 57 8,881 Land acquired externally 14 2,012 11 2,073 Transferred from conditional 6 1,407 9 1,979 Transferred from strategic 8 2,273 3 298 Adjustments (1) (1,816) 2 1,775 Acquired with Co
Slide 45: Adjusted finance costs
Adjusted finance costs (£m) FY 22 FY 21 Net bank interest and commitment fees (16.0) (8.5) Issue cost amortisation (1.4) (4.4) Bank interest (17.4) (12.9) Imputed interest on land (7.1) (5.2) Exceptional interest on fire safety provision (0.9) - IFRS16 interest on leases (1.4) (0.9) Pension financin
Slide 46: Work in progress and other assets
Work in progress and other assets (£m) 31 Dec 2022 31 Dec 2021 Stock (including show homes) 68.4 57.5 Housing WIP infrastructure WIP 876.4 748.6 Part exchange 23.7 15.6 Total work in progress 968.5 821.7 Debtors - Help to Buy 1.1 3.0 - HA 149.9 70.8 - Contracting assets 111.6 70.0 - Prepayments and
Slide 47: Other liabilities
Other liabilities (£m) 31 Dec 2022 31 Dec 2021 Creditors 926.1 625.7 Contract liabilities 40.3 52.5 Deferred income 116.2 81.0 Other tax and social security 17.3 4.6 Lease liabilities 86.6 33.1 Corporation tax liability - 0.1 Deferred tax liability - 38.4 Provisions 44.5 14.2 Other liabilities 1,231
Slide 48: Land creditor payment profile
Land creditor payment profile At 31 Dec 2022 700 At 31 Dec 2021 £678.8m 600 500 £m 400 £422.5m £359.8m 300 200 £205.5m £53.2m £37.6m £179.4m £29.7m £25.3m £18.9m £13.3m £10.0m £149.5m £19.1m 100 0 <1 year 1-2 years 2-3 years 3-4 years 4-5 years 5> years Total Note: The land creditor payments profile
Slide 49: Bank and other loans
Bank and other loans Available Carrying Carrying facility Facility value 2022 value 2021 At 31 December £000 maturity Margin £000 £000 Revolving credit facility 500,000 2026 SONIA + 160-250 bps - - Term Loan 400,000 2025 SONIA + 190 - 310 bps 400,000 - USPP Loan 100,000 2027 403 bps 105,564 106,475
Slide 50: Bridge between adjusted and reported results by Segment and Group
Bridge between adjusted and reported results by Segment and Group Housebuilding Partnerships Countryside Group items Total Period ended 31 December 2022 £m £m £m £m £m Revenue 1,737.9 854.5 137.0 - 2,729.4 Share of joint venture and associate revenue 244.4 132.7 15.5 - 392.6 Non-GAAP joint ventures’
Slide 51: Operating profit to profit before tax
Operating profit to profit before tax £m unless otherwise stated FY 22 FY 21 Adjusted operating profit 451.1 368.4 Bank interest (17.4) (12.9) Other net finance costs (8.5) (6.0) Net JV interest (6.8) (3.5) Adjusted profit before tax 418.4 346.0 Exceptionals - Fire safety cladding (97.0) (5.7) Excep