Vistry Group Plc · LSE:VTY
Vistry — H1 2024 Earnings Presentation
58 slides from Vistry's earnings presentation, Sep 5, 2024
Slide 1: Half Year Results 2024
HALF YEAR RESULTS 2024 Greg Fitzgerald Tim Lawlor Stephen Teagle Earl Sibley Chief Executive Officer Chief Financial Officer Chief Executive, Chief Operating Officer Countryside Partnerships 5 September 2024
Slide 2: Agenda
AGENDA • Introduction • Financial review • Partnerships update • Operational update • Outlook • Q&A Countryside Homes - Strawberry Grange, Bridgewater 2
Slide 3: Highlights
HIGHLIGHTS • Strong H1 performance with Partnerships model significantly outperforming traditional housebuilding market Graphics – please insert - Completions up 9% to 7,792 units image with site brand, - Adjusted operating margin maintained at 11.5% name and location (H1 23: 11.6%) • Active in the
Slide 4: A year on - significant progress with our Partnerships strategy
A YEAR ON - SIGNIFICANT PROGRESS WITH OUR PARTNERSHIPS STRATEGY • 26 regions all operating as partnerships businesses • High quality delivery, with quality KPIs maintained or improved during transition • Employee engagement score increased to 8.1 in June survey (Nov 23 : 7.6), ahead of benchmark Bea
Slide 5: Focused on delivery
FOCUSED ON DELIVERY • Encouraged by Government’s ambitious housing policy and uniquely positioned to play a key role in its delivery • Operationally, we have the capacity and momentum to deliver strong growth in mixed tenure housing in the near term Bovis Homes - Haldon Reach, Exeter • Investing in
Slide 6: Financial Review
FINANCIAL REVIEW Tim Lawlor Chief Financial Officer Bovis Homes - The Pavillions, Kenilworth 6
Slide 7: Summary of group results
SUMMARY OF GROUP RESULTS Adjusted basis unless otherwise stated (£m)(1) H1 24 H1 23 Change Revenue 1,974.5 1,777.1 11.1% Operating profit 227.3 206.7 10.0% Operating margin 11.5% 11.6% (0.1ppts) Profit before tax 186.2 174.0 7.0% EPS (pence per share)(2) 38.8p 38.3p 1.3% Reported profit before tax 1
Slide 8: Completions by tenure mix
COMPLETIONS BY TENURE MIX Total completions by tenure • Partner funded increased to 76% of total units reflecting stronger relative Partner Funded Open Market demand of the partner funded market HY24 26% 28% 22% 24% • Step-up in demand from PRS providers • Expect similar % split between partner fund
Slide 9: Revenue analysis
REVENUE ANALYSIS H1 24 Partner Open £m unless otherwise stated Funded Market Total H1 23 Total Units (incl. 100% JVs and JOs) 5,884 1,908 7,792 7,143 - Joint venture units 980 448 1,428 1,257 - Joint operation units(1) 244 99 343 350 ASP(2) £241k £376k £273k £273k Adjusted revenue (100% owned) 1,049
Slide 10: Margin movements: key drivers
MARGIN MOVEMENTS: KEY DRIVERS Gross margin down by 1.6 ppts Adjusted basis (£m) H1 24 H1 23 • Impacted by strategy change, with H1 23 including higher proportion of housebuilding sites Gross profit 325.3 322.5 • Partially offset by improved sub-contract terms achieved in FY23, which continues to res
Slide 11: Operating profit to net earnings
OPERATING PROFIT TO NET EARNINGS £m H1 24 H1 23 Adjusted operating profit 227.3 206.7 Net bank interest (28.3) (18.5) Other net finance costs (9.4) (6.9) Net JV interest (3.4) (7.3) Total adjusted net finance costs (41.1) (32.7) Adjusted profit before tax 186.2 174.0 Adjusted income tax expense (53.
Slide 12: Fire safety
FIRE SAFETY £m Provision as at 31 Dec 2023 289.0 Cash spend in year (29.0) Cash recoveries 16.8 Discount unwind 3.9 Provision as at 30 June 2024 280.7 • Outstanding buildings reduced from 237 to 213 - Work on-going on 34 buildings - Engaged in the remediation process on 179 buildings • One-off recov
Slide 13: Evolution of capital light landbank
EVOLUTION OF CAPITAL LIGHT LANDBANK c. 80K 30 June 2024 Medium term 75,313 Land bank plots Land bank plots Land bank years 4.7 <4.0 Land investment £1,846m c. £1.9bn Controlled Controlled 29% c. 33% • Partner funded model supports shorter land bank than traditional housebuilding Controlled - Pre-sol
Slide 14: Land acquisition
LAND ACQUISITION Land required to end of 2028 EXISTING LAND BANK UNIT 75k plots COMPLETIONS c. 100k plots REQUIRED LAND ACQUISITION c. 90k plots Private: c. 45% Public: c. 35% LAND BANK Strategic: c. 20% c. 80k plots 100% PARTNER FUNDED UNITS c. 15k plots HALF YEAR RESULTS 2024 14
Slide 15: Competitive advantages in the land market
COMPETITIVE ADVANTAGES IN THE LAND MARKET Private Public Strategic Lower build and overhead costs Lower operating margin hurdle Relationships with Homes England, LAs and RPs Track record and credentials Affordable housing focus Ability to secure grant income Momentum in the land market High quality
Slide 16: H1 24 land and development activity
H1 24 LAND AND DEVELOPMENT ACTIVITY H1 24 H1 23 Sites Plots Sites Plots Owned 15 4,616 13 3,749 Controlled 8 2,279 10 2,812 Total landbank 23 6,895 23 6,561 additions • In addition, 1,330 plots were secured on 9 100% partner funded sites in H1 24 (H1 23: 305 on 4 sites) • Also, added 4,871 plots to
Slide 17: H1 24 cashflow
H1 24 CASHFLOW • Total net cash outflow before distributions was £132.2m (H1 23: £336.4m) HALF YEAR RESULTS 2024 17
Slide 18: Capital employed
CAPITAL EMPLOYED £m 30 June 24 31 Dec 23 Work in progress 1,366.4 1,219.0 Land 1,845.6 1,881.7 Land creditors (605.4) (662.2) Net Investment in inventories 2,606.6 2,438.5 Investments & amounts due from JVs 612.2 562.7 Other assets 864.7 732.6 Other liabilities (1,392.3) (1,308.6) Capital employed 2
Slide 19: Capital allocation
CAPITAL ALLOCATION Capital allocation hierarchy • In-line with capital allocation policy, further ordinary distribution of £55m in respect of expected FY24 adjusted earnings Cash generation • Special distribution of £75m reflecting ongoing progress with strategy Maintain strong balance sheet - Land
Slide 20: Partnerships Update
PARTNERSHIPS UPDATE Stephen Teagle Chief Executive - Countryside Partnerships Countryside Homes - Watermark, Maidenhead 20
Slide 21: Leading partnerships business
LEADING PARTNERSHIPS BUSINESS 136 Working with New Partners in H1 24 141 Partners Partner deals in H1 24 with 45 Partners c.24k Working closely Forward sold relationships FPRPs LAs with Government new homes RPs Building PRSs with different Homes England’s providers biggest partner HALF YEAR RESULTS
Slide 22: Market trends
MARKET TRENDS Partner funded Open market • Strong appetite from PRS providers reflecting • Overall, open market has remained relatively current rental demand and projected growth constrained in year to date • Growing demand from FPRPs with significant • Positive momentum more recently – reflecting c
Slide 23: Government plan to deliver the biggest increase in affordable housing
GOVERNMENT PLAN TO DELIVER THE ‘BIGGEST INCREASE IN AFFORDABLE HOUSING IN A GENERATION’ 400,000 1.5m new homes over next 5 years 350,000 Annual 300,000 2024 Labour delivery of Government affordable homes more 250,000 than doubles to 140k+ 200,000 150,000 100,000 2019 2020 2021 2022 2023 2024 2025 20
Slide 24: Supply side initiatives
SUPPLY SIDE INITIATIVES Land Affordable mixed tenure homes • Restoration of housing targets and significant increase in numbers • Greater weighting to affordable • Default ‘yes’ answer to brownfield development housing through planning • Expectation of higher density in urban areas • Promotion and e
Slide 25: Demand side initiatives required to drive output
DEMAND SIDE INITIATIVES REQUIRED TO DRIVE OUTPUT RP and LA delivery programmes Enabling home ownership • Long term funding plans for affordable housing supporting • Support for First Time Buyers investment from RPs and LAs and stimulus package • Anticipated 10 year rent settlement for RPs and LAs to
Slide 26: Vistry is uniquely positioned to deliver
VISTRY IS UNIQUELY POSITIONED TO DELIVER • Delivery of mixed tenure schemes at pace • Multi-year delivery programmes with our partners • Significant momentum in the land market • Investment in our people and skilled labour • Ability to undertake all forms of development – required to deliver growth
Slide 27: Operational Update
OPERATIONAL UPDATE Earl Sibley Chief Operating Officer Linden Homes - Pembrook Gardens, Alderbury 27
Slide 28: Partnerships model driving growth and efficiency
PARTNERSHIPS MODEL DRIVING GROWTH AND EFFICIENCY • Scale • Min 50% pre sold HIGH GROWTH • Existing capacity • Build rate led FASTER PACE • Centralised procurement OF BUILD • Standardisation • Commitment to quality LOWER COST • Timber frame capability PRODUCTION HALF YEAR RESULTS 2024 28
Slide 29: High growth, faster pace, lower cost
HIGH GROWTH, FASTER PACE, LOWER COST Existing capacity • 26 regions targeting 900+ units p.a. • Significant existing capacity - growth strategy not dependent on - FY24: 9 BU’s forecasting 800+ units opening new business units - FY25: 14 BU’s forecasting 800+ units • Growth driven by increasing outpu
Slide 30: High growth, faster pace, lower cost
HIGH GROWTH, FASTER PACE, LOWER COST Centralised procurement • 90% of materials secured centrally • Highly experienced Group Commercial team • Typically, 2 to 3 preferred suppliers • Work closely with our supply chain partners • Contracts are on average for 12 to 24 months • Guaranteed construction
Slide 31: Vistry Works
VISTRY WORKS • Timber frame construction is at the core of our strategy • Key benefits: - Reduces the need for site-based labour - c. 6 weeks faster build time - Sustainability gains widely supported by Homes England, LAs and RPs • Production line includes floor cassettes, roof trusses and joists •
Slide 32: The new Vistry Collection
THE NEW VISTRY COLLECTION Timber Traditional design style frame first • ‘Traditional' window style approach • Blue ‘Traditional’ Door • Brick Voussoir Heads (300mm) • Brick Soldier Cills (150mm) Also • Apex Canopy 49 house available in • Soldier Course Plinth Detail types masonry A SINGULAR Contempo
Slide 33: Dracan Village, Drakelow
DRACAN VILLAGE, DRAKELOW • Phase 1: 836 units - 77% partner funded • Affordable: 450 units - all additionality, PRS: 195 units, open market: 191 units • Partnership with Midland Heart and Sigma • 259 units delivered in FY23 increasing to forecast 322 units for FY24 • Significant level of upfront inf
Slide 34: Outlook
OUTLOOK Greg Fitzgerald Chief Executive Officer Countryside Homes - Greenwich Millennium Village 34
Slide 35: Current trading and outlook
CURRENT TRADING AND OUTLOOK Medium term financial targets • Encouraging sales performance through typically quieter summer months • On track to deliver in excess of 18K units this year and 5%-8% revenue growth p.a. full year profits ahead of last year • Underpinned by forward sales position totallin
Slide 36: Vistry - uniquely positioned to deliver
VISTRY - UNIQUELY POSITONED TO DELIVER Ambition Ambition Business model Land & planning Capability Long term funding for affordable homes Partnerships Deposit assistance in open market DELIVERING THE BIGGEST INCREASE IN AFFORDABLE HOUSING IN A GENERATION HALF YEAR RESULTS 2024 36
Slide 37: Vistry Group Linden COUNTRYSIDE
A Le 5°9, E> ‘o2 Vistry Group Linden COUNTRYSIDE Homes
Slide 38: 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 39: Appendices
APPENDICES Bovis Homes - Fernleigh Park, Long Marston, 39
Slide 40: Vistry's unique partnerships model
VISTRY’S UNIQUE PARTNERSHIPS MODEL Vistry Group – 100% Partnerships Minimum Partner Average Partner Funded (units) Funded (units) Markets Partner Funded Open Market 50% 65% Tenures S106 Additional Affordable PRS Private ownership Bovis Linden Countryside Brands Countryside Partnerships Homes Homes H
Slide 41: The partnerships market today
THE PARTNERSHIPS MARKET TODAY Partner Funded Market Open Market S106 Additional Affordable PRS Total Units p.a. 30k(1) 34k(1) 16k 80k 155k(3) Value p.a. £5.5bn £7.6bn £4.5bn(2) £17.6bn £46bn Vistry Vistry Partner Funded Vistry Open Market FY23: 10,722 units FY23: 5,396 units c. 14% market share 3.5%
Slide 42: Traditional registered providers
TRADITIONAL REGISTERED PROVIDERS Current trends • Over 1m households on waiting lists for social and affordable rented homes Who are Traditional • Demand for shared ownership at record levels post withdrawal of Help to Buy Registered Providers? • Continue to see some constraints on traditional RP’s
Slide 43: For profit registered providers
FOR PROFIT REGISTERED PROVIDERS Current trends Who are Traditional • Significant capital entering sector driven by supply / demand gap Registered Providers? • FPRPs have limited exposure to legacy stock issues – sub sector launched in 2008 • The Housing and Regeneration Act 2008 introduced the abili
Slide 44: Private rented sector providers
PRIVATE RENTED SECTOR PROVIDERS • Significant demand / supply imbalance • Number of homes available to rent nationally has greatly reduced - Tenancy lengths increased Projections for the private rented sector - Significant increase in number of private rental properties being listed indicate a need
Slide 45: Local authorities
LOCAL AUTHORITIES Local Authority Vistry Group • LAs have a statutory duty to provide housing in their areas • 94% are prioritising housing, 23% are very active • LA’s ability to build impacted by financial and skills Design, placemaking, capacity Development build, sales and Additional • Future Lab
Slide 46: Forward sales
FORWARD SALES Forward sales (£m) 5 Sep 24 30 Jun 24 31 Dec 23 30 Jun 23 Partner Funded 4,481 4,674 4,168 3,508 Open Market 596 475 298 682 Total Group 5,077 5,149 4,466 4,190 £m FY24 FY25 FY26 FY27+ Forward order book unwind 1,625 1,754 919 779 HALF YEAR RESULTS 2024 46
Slide 47: Operational KPIs
OPERATIONAL KPIs H1 24 FY 23 Target Sales rate 1.21 0.96 - Customer satisfaction - 8 weeks 95.4% 91.6% 5-star (>90%) - 9 months 80.4% 78.3% 75% - 80% Build quality - RIs 0.20 0.21 <0.26 - CQR 4.5 4.5 >4.0 Employees Employee satisfaction 8.1 7.6 >7.0 Staff turnover 15.8% 15.9% <18.0% HBF 8-week custo
Slide 48: Adjusted net earnings to reported profit
ADJUSTED NET EARNINGS TO REPORTED PROFIT £m H1 24 H1 23 Adjusted net earnings 132.6 132.1 Exceptionals – Fire safety (3.9) (19.6) Exceptionals – Restructuring, Integration and other costs (5.2) (16.0) Amortisation of acquired intangible assets (19.4) (23.1) Tax on share of JV profit (1.0) (1.1) Tax
Slide 49: Bridge between adjusted and reported results by group
BRIDGE BETWEEN ADJUSTED AND REPORTED RESULTS BY GROUP Amortisation of Share of joint Exceptional acquired Other operating For the six months ended 30 June 2024 Reported ventures items intangibles income Adjusted Revenue 1,723.5 251.0 - - - 1,974.5 Gross profit 234.7 36.5 - - 54.1 325.3 Operating pro
Slide 50: Land activity in H1 24
LAND ACTIVITY IN H1 24 Plots Total Owned Controlled Brought forward 76,434 55,707 20,727 Land acquired externally 6,600 4,321 2,279 Transferred from strategic 295 295 - Transferred into owned from conditional - 1,178 (1,178) Utilised in year (6,708) (6,708) - Land Sales (418) (418) - Adjustments (89
Slide 51: Land bank – owned and controlled
LAND BANK – OWNED AND CONTROLLED No. of plots 30 June 2024 31 Dec 2023 30 June 2023 Owned 53,481 55,707 55,371 - of which relates to JVs 15,896 14,935 16,678 Controlled 21,832 20,727 21,959 - of which relates to JVs 10,979 10,268 10,895 Total owned and controlled 75,313 76,434 77,330 - of which rela
Slide 52: Strategic land
STRATEGIC LAND 30 June 24 Total sites Total plots 0 - 150 plots 58 4,605 150 - 300 plots 51 10,430 300 - 500 plots 31 10,799 500 - 1,000 plots 21 14,125 1,000 + plots 21 35,047 Total 182 75,006 Planning agreed 18 5,644 Planning application 21 9,106 Ongoing application 143 60,256 Total 182 75,006 HAL
Slide 53: Land creditor payment profile
LAND CREDITOR PAYMENT PROFILE 800 700 690.8 600 633.0 500 400 300 328.5 269.6 200 168.7 180.0 100 120.1 106.2 74.5 76.1 0 <1 year 1-2 years 2-3 years >3 years Total At 30 June 2024 At 30 Dec 2023 The land creditor payments profile is on a contractual cash basis. Balance sheet creditors figure of £60
Slide 54: Other assets
OTHER ASSETS (£m) 30 June 2024 31 Dec 2023 Debtors - Trade receivables 200.1 240.6 - Contract assets 311.1 165.9 - Prepayments and accrued income 63.4 60.6 - Amounts due from joint arrangements 141.2 113.3 - Other receivables 49.8 46.0 Right of use assets 78.5 82.9 Current tax asset - 3.2 Plant, pro
Slide 55: Other liabilities
OTHER LIABILITIES (£m) 30 June 2024 31 Dec 2023 Creditors 900.0 847.8 Deferred income 167.0 180.1 Other tax and social security 2.8 6.8 Lease liabilities 94.8 98.3 Deferred tax liability 28.5 21.2 Current tax liability 12.2 - Provisions (excluding fire safety) 22.9 28.4 Amounts payable to Joint arra
Slide 56: Adjusted finance costs
ADJUSTED FINANCE COSTS (£m) H1 24 H1 23 Net bank interest (27.3) (17.2) Amortisation of prepaid facility fees (1.0) (1.3) Bank interest (28.3) (18.5) Imputed interest on land creditors (7.6) (5.2) IFRS16 interest on leases (2.7) (2.5) Pension financing 0.9 0.8 Other net finance costs (9.4) (6.9) Int
Slide 57: Borrowings and available facilities
BORROWINGS AND AVALABLE FACILITIES Available Carrying Carrying facility value HY 24 value FY 23 Facility £m maturity Margin £m £m Revolving credit facility 500.0 2026 SONIA + 160-250 bps 140.0 - Term Loan 400.0 2026 SONIA + 190 - 310 bps 400.0 400.0 USPP Loan 100.0 2027 403 bps 104.2 104.6 Prepaid f
Slide 58: 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