22 March 2023                                  

Full year results for the year ended 31 December 2022

Vistry Group PLC (the "Group") announces full year results for the year ended 31 December 2022.

Greg Fitzgerald, Chief Executive commented:

"2022 was another landmark year for the Group as we delivered a step up in financial performance and made excellent progress across all areas despite the more challenging market conditions experienced in the fourth quarter.  The combination with Countryside presents a unique opportunity and has created one of the country's leading homebuilders, comprising a leading partnerships business and a high quality major housebuilder.  It has accelerated the Group's strategy of rapidly growing its more resilient partnerships revenues and of targeting sector leading return on capital employed.

"The businesses have come together extremely well with a good cultural fit, and the integration process is making excellent progress.  As a result, we are confident of delivering annualised synergy benefits of c. £60m, ahead of our original target.

"We are focused on maximising the opportunities from our unique market position and increasing the supply of high quality housing across all tenures.  The resilience of our Partnerships business is reflected in its strong forward order book which gives us the confidence that the business will deliver growth in FY 23 revenues in line with its strategy.  Housebuilding is focused on operational excellence to maximise its sales opportunity and has the expertise, embedded controls and disciplines in place to succeed.  Market conditions are improving and based on the assumption that private sales rates continue to trend towards levels seen in 2019, we expect Group adjusted profit before tax for FY23 to be in excess of £440m[1].

"Our people are key to the Group's success, and I would like to thank all of our employees, subcontractors and supply chain for their continued hard work and dedication."

Group financial highlights

£m unless otherwise stated	FY22	FY21	Change
Adjusted basis[2]
Total completions	11,951	11,080	7.9%
Revenue	3,073.2	2,693.6	14.1%
Operating profit	451.1	368.4	22.4%
Operating profit margin	14.7%	13.7%	1.0ppts
Profit before tax	418.4	346.0	20.9%
Basic earnings per share	137.5p	125.5p	9.6%
Return on capital employed	28.3%	25.5%	2.8ppts
Statutory basis
Revenue	2,729.4	2,407.2	13.4%
Operating profit	212.5	285.4	(25.5)%
Profit before tax	247.5	319.5	(22.5)%
Basic earnings per share	86.5p	114.6p	(24.5)%
Final dividend per share	32p	40p	(20.0)%
Net cash	118.2	234.5	(49.6)%

Highlights

·     Completion of transformational acquisition of Countryside Partnerships ("Countryside") on 11 November 2022

·    Integration making excellent progress with annualised synergies from the combination now expected to be c.£60m (ahead of the £50m previously announced), with c.£25m expected in FY23

·    Continued delivery of high quality build and customer service, with a step up in construction quality awards and sustained HBF 5-star customer satisfaction rating across the entire Group

·    Vistry Partnerships continues to deliver rapid growth in higher margin mixed tenure completions, up 17.6%, with adjusted operating margin increasing to 10.7% (2021: 9.2%)

·    Vistry Housebuilding delivered controlled volume growth of 3.4% and excellent progress on adjusted gross margin, increasing to 23.4% (2021: 22.3%) despite challenging market conditions in Q4 2022

·    Countryside performed in-line with our expectations with a minimal contribution to 2022 in the 7 weeks it was part of the Group

·      The Group delivered a 20.9% increase in Group adjusted profit before tax to £418.4m (2021: £346.0m)

·   Reported profit before tax for FY22 of £247.5m (2021: £319.5m) after exceptional expenses of £153.9m (2021: £12.2m), including £97.0m fire safety provision and £56.9m transaction and integration related costs

·    High quality land bank totalling 81,342 (2021: 42,770) owned and controlled plots (inc. JVs) as at 31 December 2022 and 65,813 (2021: 40,000) strategic land plots

·    Year end net cash of £118.2m (2021: £234.5m), ahead of expectations and follows a net cash outflow of £95.2m for the acquisition of Countryside, £35.2m share buy-back and £138.9m of dividend distribution

·    Group ROCE increased to 28.3% (2021: 25.5%), with Partnerships ROCE of 77.6% (2021: >100%) and Housebuilding ROCE increasing to 28.2% (2021: 21.3%)

 

Current trading and outlook

Our Partnerships business is seeing a good level of demand from Housing Associations and Local Authorities, with the PRS market also improving.  In the year to date, Partnerships has secured a number of new development opportunities which at least meet our targets of 40%+ ROCE and 50% pre-sold revenues and has a good pipeline.  The resilience of our Partnerships business is reflected in its strong forward order book totalling £2,840m (25 Feb 2022: £1,338m), with 68% of mixed tenure FY23 units and all of partner delivery revenues secured, providing us with the confidence it will deliver revenue growth in FY23, on pro forma FY22.

For the Group overall, we have seen an improving trend on private sales in the first 11 weeks of the year, with the Group's average private sales rate per site per week for the year to date at 0.54, increasing to 0.62 in the last four weeks. We have seen increased consumer confidence from Q4 2022, particularly as mortgage rates have trended downwards and availability has improved.

Housebuilding is focused on delivering operational excellence in this more competitive marketplace, with top quality customer service and the highest build standard critical to success.  The business has a very experienced management team, and with its focus on and investment in high quality site teams, is well positioned.  Housebuilding's forward order book totals £1,339m (25 Feb 2022: £1,324m) with 55% of FY23 units secured.

Net pricing has held relatively firm in the first 11 weeks supported by an increase in the use of incentives.  The Group sees opportunity for cost reduction in the year, with some success achieved in the year to date.   The expected year on year reduction in private sales rates is reflected in our current build rates, with a key focus on working capital management.

The integration of Countryside Partnerships is making excellent progress and we are now expecting to deliver c.£25m of synergies from the combination in FY23.  We expect total synergies to be c.£60m, up from our previous target of £50m, with the full annual run rate achieved by the end of FY24.

Based on these assumptions, we expect the Group to deliver adjusted profit before tax for FY23 in excess of £440m¹.  As part of a disciplined approach to capital allocation, we will continue to ensure the Group has a healthy and resilient balance sheet and will continue to invest selectively in high quality land and development opportunities as they arise.

Forward sales

(£m)	20 March 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	381	143
Total mixed tenure	1,870	478
Total partner delivery	970	860
Total Partnerships	2,840	1,338
Total Group	4,179	2,662

Note:  25 February 2022 forward sales restated to include Vistry share of JVs (previously included 100% of JV forward sales)

 

Dividend timetable
Ex-dividend date	20 April 2023
Dividend record date	21 April 2023
Dividend payment date	1 June 2023

 

There will be an investor and analyst presentation at 8:30am today, 22 March 2023 at Numis, 45 Gresham St, London EC2V 7BF.  There will also be a live webcast of this event available on our corporate website at www.vistrygroup.co.uk or via the following link https://brrmedia.news/Vistry_Group_FY22.  A playback facility will be available shortly afterwards.

 

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 Tim Lawlor, Chief Financial Officer Susie Bell, Group Investor Relations Director Powerscourt Justin Griffiths, Nick Dibden, Victoria Heslop

07469 287335     020 7250 1446

 

CEO Review

2022 review

2022 was another landmark year for the Group.  The combination with Countryside presented a unique and exciting opportunity for Vistry and has created one of the country's leading homebuilders, comprising a leading partnerships business and a high quality major housebuilder.  It has accelerated the Group's strategy of rapidly growing its more resilient partnerships revenues and of targeting a sector leading return on capital employed.  The transaction completed on 11 November 2022 and the businesses have come together extremely well.  There is a good cultural fit, and the integration process is making excellent progress.  As a result, we are confident of delivering synergy benefits of £60m, ahead of the £50m previously announced target, and with the full annual run rate achieved by the end of FY24.

The Group made excellent progress in 2022 despite the more challenging market conditions experienced in the fourth quarter.  It continues to deliver high quality homes and outstanding customer service and we were pleased to have been awarded a 5-star HBF Customer Satisfaction rating for the fourth consecutive year and to have seen a significant improvement in our 9-month HBF customer satisfaction score.  Our people are key to the Group's success, and I would like to thank all of our employees, subcontractors and supply chain for their continued hard work and dedication.

2022 saw a further significant step up in financial performance, with Group adjusted revenue in 2022 up 14.1% to £3,073.2m (2021: £2,693.6m), adjusted profit before tax increasing by 20.9% to £418.4m (2021: £346.0m) and adjusted basic earnings per share of 137.5p (2021: 125.5p), up 9.6% on prior year.  On a reported basis, the Group delivered revenue of £2,729.4m (2021: £2,407.2m[3]), profit before tax of £247.5m (2021: £319.5m) and earnings per share of 86.5p (2021: 114.6p).  This was after exceptional expenses of £153.9m (2021: £12.2m) including £97.0m fire safety provision and £56.9m transaction and integration related costs.

Vistry Partnerships, the Group's partnerships business prior to the combination with Countryside, had another excellent year of delivering against its strategy of rapidly growing its more resilient revenues, improving margin and delivering at least a 40% return on capital employed.  Mixed tenure completions were up 17.6% to 2,455 units (2021: 2,088), adjusted operating margin increased to 10.7% (2021: 9.2%), and Partnerships' return on capital employed in the period was 77.6% (2021: >100%).  Housebuilding effectively executed its strategy of delivering controlled volume growth and margin progression from its existing business structure, with completions increasing by 3.4% to 6,774 units (2021: 6,551) and adjusted gross margin increasing to 23.4% (2021: 22.3%).

The contribution of Countryside to the Group's result for FY 2022 was minimal given the timing of the acquisition, with its performance in line with expectations.

This strong financial performance combined with a stronger than expected net cash contribution from Countryside and the Group's on-going focus on good working capital management, resulted in a year end net cash position of £118.2m (31 December 2021: £234.5m).  This was after a net cash outflow of  £95.2m for the acquisition of Countryside, £35.2m share buy-back and £138.9m of dividend distribution.  As part of its disciplined approach to capital allocation, the Board is committed to retaining a healthy and resilient balance sheet.

The Board is recommending a final ordinary dividend of 32 (2021: 40) pence per share, bringing the total ordinary dividend for 2022 to 55 (2021: 60) pence per share. This represents a total full year dividend payment of £162.3m (2021: £133.1m), which is covered two times by Group adjusted net earnings[4].  As previously announced, the Board is reviewing the enlarged Group's allocation policy to confirm whether it remains appropriate in the context of the enlarged Group, and in doing so will be consulting with shareholders.

Operational update

Trading performance

The Group delivered a strong operational performance in 2022 with good progress made across all business areas.

We saw a very strong start to the year with high levels of demand resulting in increased sales rates and higher house prices.  This trend continued throughout the first half and the Group reported an average weekly private sales rate per outlet in H1 22 of 0.84 (H1 21: 0.76), up 11% on the prior year.

The second half started strong, with our sales performance across both businesses remaining robust during the typically quieter summer months.  There was a step-change in market conditions in the fourth quarter with the mini-budget delivered on 23 September 2022 heightening macro uncertainty and leading to a significant increase in mortgage costs.  Demand for private sales reduced markedly with the Group achieving a weekly private sales rate per outlet[5] of 0.46 in Q4 2022.  For the year as a whole, the Group achieved a weekly private sales rate of 0.71 (FY21: 0.76).  Despite the drop in demand, our pricing remained firm in the final quarter of 2022.

In the partnerships market, the wider macro uncertainty and concern around the Government's social housing rent ceiling generated hesitancy amongst housing providers during the fourth quarter.  The Government confirmed its position on the rent ceiling in the 17 November 2022 Autumn Statement, with the 7% ceiling at the better end of expectations.  We saw demand in our partnerships business pick up accordingly towards the end of 2022.

Our sites have operated well during the year, and we were delighted to have achieved our highest number of NHBC Pride in the Job Quality Awards in 2022, totalling 34 for the enlarged Group.  Our NHBC reportable items remain below industry benchmark at 0.23 (FY22: 0.22) for the Group.  In a year that has been characterised by heightened labour and material supply constraints as well as price increases, the Group has been highly focused on working in close partnership with our supply chain and subcontractors to best manage this.  With increased output from the supply chain in the first half, we saw an improvement in the availability of materials.  Wider industry cost pressures however continued, specifically rising energy costs and wage inflation, resulting in an increase in our overall cost base of c. 9 to 10% in the year.

In Partnerships, where we have a higher element of fixed revenue, we manage our risk in the pre-procurement phases through passing elements of cost risk to our subcontractors, include a sensible level of cost contingency or fixed price allowances to cover some level of inflation, and for the long duration contracts, seek to link the pre-sold revenue to a build cost inflation index.

Partnerships^{2, 5}

Vistry Partnerships made excellent progress in the year with its strategy of rapidly growing higher margin mixed tenure revenues, with mixed tenure completions up by 17.6% to 2,455 (2021: 2,088) which includes 738 (2021: 904) delivered in joint ventures (JVs).  The average selling price of mixed tenure units in the year on an adjusted basis was £256k (2021: £237k).  Partnerships operated from an average of 28 (2021: 33) active mixed tenure sites in 2022 which was lower than forecast reflecting stronger sales rates on existing sites and some planning delays.

Vistry Partnerships continued to drive its operating margin through increasing the proportion of higher margin mixed tenure revenues, and in 2022 adjusted operating margin increased to 10.7% (2021: 9.2%).

Housebuilding^{2, 5}

Housebuilding had an excellent year delivering 6,774 units (2021: 6,551) in 2022, which includes 1,343 (2021: 1,287) in JVs.  Private units in the year totalled 5,184 (2021: 4,891) with 1,590 (2021: 1,660) affordable units, representing 23.5% (2021: 25.3%) of total completions.

Total Housebuilding average selling price for 2022 increased by 6.2% to £324k (2021: £305k) on an adjusted basis, reflecting changes in mix and house price inflation across the year.  Housebuilding's private average selling price increased to £376k (2021: £356k) and affordable average selling price increased to £163k (2021: £158k).  Adjusted revenue from Housebuilding activities in the year totalled £1,982.4m (2021: £1,829.3m).  Housebuilding operated from an average of 142 (2021: 143) active sites in 2022 and we expect this to increase to an average of c.150 in FY23 reflecting the transfer of sites to Housebuilding from Countryside.

Housebuilding adjusted gross margin saw a further step-up, increasing to 23.4% (2021: 22.3%) with the business making good progress towards delivering its adjusted gross margin target of 25%.

Countryside

In the period post-acquisition Countryside delivered 649 units, which includes 70 from JVs. The Countryside adjusted operating profit for the period post-acquisition was £0.5m.  The contribution of Countryside to the Group's FY 2022 result was minimal, which is in line with expectations given that Q4 is typically a quieter period for Countryside.

Integration of Countryside

The combination with Countryside Partnerships completed on 11 November 2022.  The integration, which has moved at pace, has been collaborative and focused on building on the best from each business.  The Group expects to deliver c.£60m of pre-tax recurring cost synergies on an annual run-rate basis by the end of FY24, up from our previous target of £50m.  Of this, c.£25m are expected to be delivered in FY23, ahead of our original £19m target.

The integration is being managed by the Integration Oversight Board, a subset of the Executive Leadership Team, and is supported by a central management office and a number of integration workstreams with appropriate expertise from Vistry and Countryside.

The transition to date has been very positive reflecting the active engagement and common culture of our people, detailed planning through the various phases of integration, and our continued focus to deliver a timely integration with minimal operational disruption.

Key achievements to date include the restructuring of Partnerships, with the new organisation structure in place from 1 January 2023 all operating under the Countryside Partnerships name and the combination of all central functions under the banner of Vistry Services.  We are making good progress on aligning our corporate governance and the full alignment of our business policies, processes, and procedures including the Group's SHE Management System is expected to be completed by April.  We have implemented a number of key IT changes and are well on our way to unification of our systems, which is expected to complete in the Autumn of 2023.

Vistry Works

The timber manufacturing operations acquired with Countryside have been fully rebranded and relaunched as Vistry Works.  The Group sees Vistry Works as a valuable opportunity to create an industry leading manufacturing capability with the potential to deliver significant benefit to the broader Group in the medium term.

The business currently operates from its two factories at Warrington and Leicester which together have the capacity to deliver c.2,800 units in FY23.  The Group is committed to re-opening the Vistry Works East Midlands factory and this is targeted for the second half of 2023.  Good progress is being made with recruitment, electric capacity enhancement and machine remobilisation, and a review of additional manufacturing options to utilise surplus floor space is being undertaken.  In the medium term, the business is targeting the manufacture of c.5,000 units.

Establishing good working relationships between the business units and Vistry Works is a priority, and a framework has been put in place to improve coordination between factories and the relevant business unit to help ensure capacity levels are as fully utilised as possible going forwards.

House type standardisation is fundamental to the efficiency of the manufacturing operations, and we are working hard to ensure all three of our brands' house types incorporate timber frame construction with a heavy focus on delivering Future Homes Standard.  The current closed panel solution is being scaled back with an open panel without plasterboard (hybrid) solution being the preferred option to allow a more cost effective product offering to the Group nearer term.  We have a strong emphasis on R&D and will evolve the product over time as the business gains momentum.

Fire safety

The Group is committed to playing its part in delivering a lasting industry solution to fire safety and its strong view remains that the costs of remediation should not be borne by leaseholders.  Both Vistry and Countryside signed the Building Safety Pledge Letter in April 2022 and on 13 March 2023, Vistry signed the Department for Levelling Up, Housing and Communities' Developer Remediation Contract.

We are making progress with the remediation works and of the 304 buildings identified, work has been completed on 59, we are on site on 30, are engaged in the remediation process on 188, with 27 buildings to yet commence.  The dedicated teams in both Vistry and Countryside have been integrated under single management following completion of the Countryside transaction and the cladding and remedial fire safety provisions have been consolidated and aligned under a consistent method of estimation.

As at 31 December 2022, the Group fire safety provision was £309.2m.  This includes a provision of £191.8m acquired through the combination with Countryside, a charge of £97.0m in the year covering additional requirements under the Pledge and the Developer Remediation Contract and the adoption of a consistent approach across the enlarged Group, and net spend of £4.8m on remediation work in the year.

In addition, from 1 April 2022, the Group has been paying the 4% Residential Property Developer Tax (RPDT) as part of the contribution from the UK's largest residential property developers towards the Government's cost of dealing with fire safety and cladding remediation work.  RPDT is intended to raise at least £2bn from the industry over a ten-year period.

Balance sheet

The Group had a net cash position of £118.2m as at 31 December 2022 (31 December 2021: net cash of £234.5m) following a net cash outflow of  £95.2m for the acquisition of Countryside, £35.2m share buy-back and £138.9m of dividend distribution.  This is ahead of our expectations for the Group post acquisition and reflects stronger cash generation in the second half at both Vistry and Countryside.

Inventories have increased by £876.0m year on year, primarily driven by the Combination which added £792.3m of WIP and continued investment in land and WIP during the period.

Similarly, land creditors have increased to £667.4m at 31 December 2022 from £414.2m at the beginning of the year. This is driven primarily by the acquisition of £246.0m in land creditors on the Combination with Countryside and the investment in land in the period.

We will continue to ensure the Group has a healthy and resilient balance sheet and retain the opportunity to selectively invest in land and development opportunities as they arise.

Sustainability

Our purpose is to deliver sustainable new homes and communities across all sectors of the UK housing market and our strategy is split into three priority areas: our people, our homes and communities, and our operations.

We made significant progress with our sustainability strategy in 2022 which is covered in detail in our Sustainability Report.  Key highlights include the linking of three key sustainability metrics to executive remuneration and our sustainability linked loan, the SBTi (science based targets initiative) verification of our carbon reduction targets, and the publication of our Carbon Action Plan focused our direct emissions, which complements our existing roadmap to net zero carbon homes.

Following the success of our Europa Way development, which delivered 54 zero-embodied carbon homes for Warwickshire District Council, we commenced another joint venture with the Council to deliver 310 zero-carbon homes at our Kenilworth site.  This unique partnership, which broke ground in March 2022 and was the first of its kind to get underway in the UK, will deliver zero carbon affordable homes at scale with improved building fabric efficiencies and air source heat pumps.

For the year ahead, and following our combination with Countryside, we are undertaking a review of our sustainability strategy to ensure that it continues to be relevant to the business and stakeholders of our enlarged Group and we will incorporate a number of Countryside's best practice sustainability processes into our existing procedures.  In 2023, we will conduct a full review of our materiality assessment, update our sustainability strategy as required and set new targets.

Quality and customer service

Delivering high quality new homes and excellent customer satisfaction remain our key priorities and we consider our customers in all of our decision making.

We were pleased to have been awarded the maximum 5-star HBF customer satisfaction rating in the most recent annual review for the fourth consecutive year, with our score for Q3 2022 at 92.6% (Q3 2021: 92.2%), in the most recently published HBF 12-month rolling customer satisfaction data.  We have focused on improving our score for the HBF customer satisfaction survey which is sent out nine months after completion and are pleased to have seen our score on this ended at over 79% for the closed year 2020/2021.

The Group welcomes the introduction of the New Homes Ombudsman and fully supports the New Homes Quality Code.  It has completed registration and is working on activation following the need for alignment following the acquisition of Countryside.

During the year we expanded our customer relationship management (CRM) capabilities across our Partnerships business, enriching the customer experience and supporting our teams to work more effectively across the customer journey.  Rolling out our CRM capabilities across the Countryside business is a key part of our integration programme.

We continue developing our digital capabilities and our immersive portal has played a key role in strengthening our customer experience, giving them more choice about how, when and where they do business with us.  Over 77% of our customers are now choosing to use our portal to make their reservation within six clicks.  Customers are also increasingly using the virtual personal experience, which includes the opportunity to virtually visit our developments, look around the homes and personalise them, including changing worktops, cupboards, and flooring.

People

Our people make Vistry and are critical to the on-going success of the Group.  As was expected with the integration of Countryside, we saw a decline in our latest Peakon employee engagement survey carried out during March 2023, with the score at 7.8 (August 2022: 8.6), in-line with the Peakon benchmark.  We are very focused on maintaining an open and informative dialogue with all our employees during this integration period and the Executive Leadership team and other senior management have hosted drop-in Q&A sessions and delivered ad hoc video updates to keep people informed.  We were pleased to have recently achieved certification as a 'Top Employer' with the Top Employers Institute which recognises our people strategy and workplace environment.

The safety of our people, and those who work with us, is also a top priority. Health and safety is one of the first topics to be covered in executive meetings, with clear linkage to our values and ethos.  Our year on year reduction in both accident incident rate and service strike incident rate demonstrates our commitment to continual improvement driven by a positive safety behaviour culture.

Recognising the cost of living crisis and the heightened levels of inflation over the past 12 months, we were pleased to award a minimum 4% pay rise for all employees at the start of 2023.  In addition, in April 2022 we put in place a temporary cost of living allowance of up to 3.75%, ensuring that the lowest paid employees received the most support.  These allowances became a permanent part of all annual salaries under £60,000 from January 2023.

Land

The Group has a high quality, deliverable land bank reflecting a successful year in the land market.

Vistry Partnerships continued to invest in its owned land bank to support the growth of mixed tenure completions and in the year secured 3,213 (2021: 4,131) plots on 19 (2021: 23) sites for mixed tenure development, significantly ahead of replacement level.  Following our combination with Countryside, the enlarged Partnerships business had an owned and controlled land bank of 44,258 (2021: 11,756) plots as at 31 December 2022.

Partnerships is well positioned on land and has 93% of the land required for forecast FY23 completions secured and 80% of the land for FY24 completions secured.  There is a good pipeline of attractive development opportunities, in particular working alongside Housing Associations and Local Authorities.

Housebuilding secured 5,334 (2021: 7,667) plots across 32 (2021: 38) developments at an average gross margin and ROCE hurdle rate of at least 25%.  The rate of land acquisition in Housebuilding consciously slowed in the fourth quarter reflecting the increased level of uncertainty in the housing market.  Following our combination with Countryside, 32 sites totalling 5,039 plots have been transferred from Countryside Partnerships to Vistry Housebuilding from 1 January 2023.  As at 31 December 2022, Housebuilding had a total controlled land bank of 37,084 (2021: 31,014) plots.  The business has a strong deliverable pipeline of land with all of the land required for forecast 2023 completions secured and 95% of the land for FY24 completions secured.  Housebuilding continues to progress high quality land opportunities on a selective basis and with deferred payment terms.

Strategic land is a key component of the Group's land supply, and we are targeting a greater proportion 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.  The Group added 4,503 (2021: 7,721) strategic land plots across 9 (2021: 12) developments to its strategic land bank in the year and a further 22,204 strategic land plots across 48 developments following our combination with Countryside.  In total, the Group had  65,813 (2021: 40,000) strategic land plots as at 31 December 2022.

Group strategy

One Vistry

The Group exists to develop sustainable new homes and communities across all sectors of the UK housing market.  The Group holds a unique market position. As a top housebuilder with a leading partnerships business, Vistry is well positioned to deliver strong growth, earnings resilience and sector leading return on capital employed in the medium term.

Our combination with Countryside has materially accelerated our One Vistry strategy of rapidly growing the more resilient Partnerships revenues, and we expect Partnerships revenue to represent at least 50% of total Group revenues in the near term.

The Group has a strong market position and capability across all housing tenures.  It has three leading retail brands, Bovis Homes, Linden Homes and Countryside Homes, each of which has its own differentiated housing range and combined, gives the Group a broader market reach.  With a high quality, deliverable consented land bank and an excellent strategic land capability, as One Vistry we are especially focused on maximising absorption rates and returns from larger multi-tenure developments where Partnerships and Housebuilding develop alongside each other. 

We are focused on realising the procurement cost benefits from the Group's enlarged scale and on leveraging expertise and best practice across all business units.  In particular, our Partnerships business is leading the way on Future Homes Standards on a number of developments where it is working in partnership with Local Authorities or Housing Associations.  The experience and knowledge gained is incredibly valuable across the entire Group.

In addition, we are integrating Countryside's timber frame manufacturing operations across both Partnerships and Housebuilding and effectively utilising modern methods of construction with the objective of achieving procurement savings and de-risking the supply chain.

Our strategy is to deliver greater profitability and higher returns as One Vistry than would be achievable from the standalone businesses.  However, if the market does not recognise the full value of the enlarged Group by 2025, it is expected that each of Housebuilding and Partnerships would be large enough to succeed as independent businesses, giving the option to separate them at that time if the Board considered this to be in the best interest of shareholders.

Partnerships

Countryside Partnerships holds a leading position within the high growth, high demand affordable housing market, with its unrivalled track record, established relationships and operational capability, being its key competitive advantages.  Successfully integrating Countryside Partnerships and Vistry Partnerships and maximising the benefits of the combination and being part of the larger Group is our key focus for 2023, and we are making excellent progress.

The enlarged Partnerships business has good geographical coverage through its 19 business units and three operating divisions, each with a highly experienced management team. The business is targeting strong revenue growth of c.10% per annum over the medium term, which is supported by the acute need for affordable housing across the country, the programme of Government funding for affordable housing including through Homes England, and the strong demand for affordable housing and private rental stock from Housing Associations, Local Authorities and other housing providers including institutional investors.

Central to the Partnerships strategy is a target ROCE of above 40%.  Vistry Partnerships has a strong track record of delivering ROCE significantly in excess of 40%. Historically Countryside has not prioritised ROCE resulting in a level below our 40% target.  The business is focused on increasing the proportion of pre-sold revenues on a number of sites, particularly the more capital intensive, high-rise developments in London, in order to drive ROCE towards our target.  All new development opportunities for Partnerships have a minimum 40% ROCE hurdle and minimum 50% pre-sold revenue hurdle.

Partnerships is targeting an adjusted operating margin of 12%+ (FY22: 10.7%) in the medium term, primarily through driving operational efficiency, the benefits of scale, and procurement savings.

Housebuilding

Near term, our high quality housebuilding business is focused on maximising its performance against a more constrained market backdrop.  Key is operational excellence, with delivering the highest quality build and customer service experience critical to success in a more competitive sales environment.  Our housebuilding business has the management, site teams and embedded controls and disciplines in place for this.  On costs, our business units are working closely with our preferred suppliers, and in particular our subcontractors to deliver cost efficiencies whilst maintaining a quality supply.  Working capital is tightly managed on a site by site basis and Housebuilding is selectively acquiring land and is seeing increased success in securing land with deferred payment terms.

Countryside's non-core legacy assets have been transferred to Vistry Housebuilding, with all the sites expected to trade out during FY23/FY24 other than two longer dated sites.  In addition, as highlighted at the time of acquisition, we have identified a number of other schemes that we believe have the attributes of housebuilding developments and these have been transferred in to the Housebuilding business from 1 January 2023.  Housebuilding is also to retain a number of yet to be developed land opportunities which were to be sold by Countryside, de-risking the Housebuilding land pipeline and reducing its land acquisition requirements.

Housebuilding's medium term focus remains to deliver controlled volume growth and further margin progression from its existing operating structure.  It is targeting 25% adjusted gross margin and 25% return on capital employed in the medium term.

The business has national coverage through its 13 operating regions with each targeting annual output of between 550 to 625 units including JVs, giving an overall capacity for Housebuilding of more than 8,000 units (2022: 6,774 units).

Key to driving gross margin and return on capital employed are:

Land buying: leveraging the 'One Vistry' proposition and relationships including joint bids with Vistry Partnerships on larger developments.

Strategic land: maximising our strong in-house capability, targeting 30% of completions from strategic land.

Operating structure: increasing volumes through the business' existing infrastructure, with a highly experienced leadership team in place.

Future Homes Standard: continual review of build product and processes, realisation of a 'Green Premium'.

Multiple branding: increasing proportion of multiple branded developments on Housebuilding sites.

Extras: our improving offering and customer proposition is delivery strong growth in profitable 'Extras' revenues.

Board of Directors

There have been a number of changes to the Board during the year.  Ian Tyler stepped down as Chair of the Company at the Group's Annual General Meeting on 18 May 2022.  We thank Ian for his invaluable contribution to the Group since 2013.  Ralph Findlay OBE, who has served as Non-Executive Director of the Company since April 2015, succeeded him as Chair.  Ralph's appointment as Chair followed a thorough and comprehensive succession planning process and has enabled an effective transition of the leadership of the Board.  Upon becoming Chair, Ralph stepped down as Chair of the Audit Committee and as a member of the Audit and Remuneration Committees.  At the same time, Ashley Steel who joined the Board in June 2021, was appointed as Senior Independent Director.

The Board was delighted to appoint Rowan Baker as a Non-Executive Director of the Company and as Chair of the Audit Committee in May 2022.  Rowan is a highly experienced CFO in construction and development.

On completion of our combination with Countryside on 11 November 2022, as previously announced, Graham Prothero stepped down as Chief Operating Officer and Director of the Company.  Graham has been a very valued colleague, we thank him for his commitment and contribution to the Group and wish him all the best with his new position as CEO at MJ Gleeson PLC.  Earl Sibley, who was the Group's Chief Financial Officer assumed the position of Chief Operating Officer and remains a Board Director. Tim Lawlor joined the Group as Chief Financial Officer and joined the Board of Directors.  Tim was formerly the CFO at Countryside Partnerships PLC.

Today we announced three further Board changes. Jeff Ubben has been appointed as a Non- Executive Director with effect from 23 March 2023. Jeff is Managing Partner and Founder of Inclusive Capital Partners L.P. , one of the Company's largest shareholders.  Jeff is a highly experienced Board member and investor in both the United States and the UK and his deep expertise and insights, particularly in ESG and sustainability, will be of enormous value as our we continue our integration with Countryside.  Nigel Keen and Katherine Innes Ker are stepping down from the Board with effect from 23 March 2023 and the close of our Annual General Meeting on 18 May 2023 respectively.  Searches for two new Non-Executive Directors have been commissioned.

Capital allocation and dividends

The Board is committed to retaining a healthy and resilient balance sheet. The Group's priority remains 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.  During the more recent period of heightened market uncertainty, the Group has maintained a selective approach to acquiring land, particularly for the Housebuilding business.

The Board is recommending a final ordinary dividend of 32 (2021: 40) pence per share, bringing the total ordinary dividend for 2022 to 55 (2021: 60) pence per share. This represents a total full year dividend payment of £162.3m (2021: £133.1m), which is covered two times by Group adjusted net earnings.

As previously announced, the Board is reviewing the enlarged Group's allocation policy to ensure it remains appropriate in the context of the enlarged Group, and in doing so will be consulting with shareholders.

Current trading and outlook

Our Partnerships business is seeing a good level of demand from Housing Associations and Local Authorities, with the PRS market also improving.  In the year to date, Partnerships has secured a number of new development opportunities which at least meet our targets of 40%+ ROCE and 50% pre-sold revenues and has a good pipeline.  The resilience of our Partnerships business is reflected in its strong forward order book totalling £2,840m (25 Feb 2022: £1,338m), with 68% of mixed tenure FY23 units and all of partner delivery revenues secured, providing us with the confidence it will deliver revenue growth in FY23, on pro forma FY22.

For the Group overall, we have seen an improving trend on private sales in the first 11 weeks of the year, with the Group's average private sales rate per site per week for the year to date at 0.54, increasing to 0.62 in the last four weeks. We have seen increased consumer confidence from Q4 2022, particularly as mortgage rates have trended downwards and availability has improved.

Housebuilding is focused on delivering operational excellence in this more competitive marketplace, with top quality customer service and the highest build standard critical to success.  The business has a very experienced management team, and with its focus on and investment in high quality site teams, is well positioned.  Housebuilding's forward order book totals £1,339m (25 Feb 2022: £1,324m) with 55% of FY23 units secured.

Net pricing has held relatively firm in the first 11 weeks supported by an increase in the use of incentives.  The Group sees opportunity for cost reduction in the year, with some success achieved in the year to date.  The expected year on year reduction in private sales rates is reflected in our current build rates, with a key focus on working capital management.

The integration of Countryside Partnerships is making excellent progress and we are now expecting to deliver c.£25m of synergies from the combination in FY23.  We expect total synergies to be c.£60m, up from our previous target of £50m, with the full annual run rate achieved by the end of FY24.

Based on these assumptions, we expect the Group to deliver adjusted profit before tax for FY23 in excess of £440m¹.  As part of a disciplined approach to capital allocation, we will continue to ensure the Group has a healthy and resilient balance sheet and will continue to invest selectively in high quality land and development opportunities as they arise.

Financial review

Group performance

The Group has delivered strong financial results despite challenging market conditions in the fourth quarter of FY22. The market outlook remains uncertain but the Group, strengthened by the Combination, is well placed both to overcome potential difficulties and to capture opportunities that may be presented by the changing economic conditions.

 

Completions	2022	2021	Change
Housebuilding	6,774	6,551	+3.4%
Partnerships Mixed Tenure	2,455	2,088	+17.6%
Countryside (11 Nov to 31 Dec 2022)	649	N/A	N/A
Total Group Completions	9,878	8,639	+14.3%
Partner Delivery Equivalent Units	2,073	2,441	-15.1%

 

During the year, the Group delivered 9,878 (2021: 8,639) legal completions, including 100% of JV completions. Excluding completions in the acquired Countryside business, there were 9,229 completions representing a 6.8% increase to the prior year.

Total adjusted revenue, including share of joint venture revenue, was £3,073.2m, 14.1% higher than prior year (2021: £2,693.6m). Excluding revenue from the Countryside acquisition, adjusted revenue was up 8.4%.  The average selling price across the Group was £305,000 up 5.2% on the prior year. On a reported basis, revenue was £2,729.4m, 13.4% higher than last year (2021: £2,407.2m after restatement for trading with joint ventures).

There was a step up in adjusted gross profit in 2022 to £636.9m (adjusted gross margin: 20.7%) from £543.0m in 2021 (adjusted gross margin: 20.2%). The gross margin improvement was driven by the improved margin in the land bank brought into the year and supported by sales price increases despite significant build cost inflation in the year. 

We have seen material availability return to pre-pandemic levels in early 2023 and a softening in overall build cost inflation, but some risk remains around categories impacted by global macro-economic factors, in particular those materials exposed to high energy use in the manufacturing process. Group purchasing agreements have provided some protection against a number of material price increases and we expect to see increased benefits from our central procurement with the increased scale of the business following the Countryside acquisition.

The Group delivered an adjusted operating profit for the year of £451.1m (2021: £368.4m) and an adjusted profit before tax of £418.4m (2021: £346.0m), with the year-on-year increase coming through from higher levels of gross margin, partially offset by a small increase in administrative expenses and finance costs. Adjusted operating margin was 14.7% (2021: 13.7%).

On a reported basis, the Group saw a profit before tax of £247.5m (2021: £319.5m), comprising operating profit of £212.5m (2021: £285.4m) after exceptional costs of £153.9m (2021: £12.2m), net financing expense of £12.2m (2021: net income of £4.1m) and share of joint venture profit of £47.2m (2021: £30.0m).

Partnerships performance

	2022	2021	Change
Mixed tenure	1,717	1,184	+45.0%
JV's (100%) Private	601	630	-4.6%
JV's (100%) Affordable	137	274	-50.0%
Total mixed tenure completions	2,455	2,088	+17.6%
Partner delivery units	2,073	2,441	-15.1%
Adjusted revenue	£938.4m	£864.3m	+£74.1m
Adjusted operating profit	£100.8m	£79.7m	+£21.1m
Adjusted operating margin	10.7%	9.2%	+1.5ppts
TNAV6	£159.1m	£78.8m	>100%

 

Partnerships completed a total of 2,455 units (2021: 2,088 units) from its mixed tenure operations (including 100% of JVs), with an average selling price of £256,000 (2021: £237,000) and partner delivery revenue generated equivalent units of 2,073 (2021: 2,441).  The Partnerships business operated from an average of 28 active mixed tenure sites in 2022, with this number expected to be over 80 in 2023.

In line with our strategy, the mix of revenue has continued to switch towards mixed tenure developments in the year.  Of the £938.4m total Partnerships revenue, 54% derived from mixed tenure (£507.7m) with 45% (£422.0m) from partner delivery projects, compared with 46% deriving from mixed tenure last year (2021: total £864.3m, partner delivery: £468.7m, mixed tenure: £395.6m). This shift in mix is partly responsible for the improved adjusted operating margin which has increased to 10.7% (2021: 9.2%) and contributes to the increase in adjusted operating profit to £100.8m (2021: £79.7m).

The Partnerships business has experienced similar build cost inflation pressures to Housebuilding and has been able to mitigate some of these pressures through strong supplier relationships, matching cost arrangements to pre-sale pricing arrangements.

The recently acquired Countryside business performed in line with expectations in the seven weeks between the Combination and the year end. Adjusted revenue of £152.5m was delivered in the period, with adjusted gross profit of £16.2m and adjusted operating profit of £0.5m. This is historically a quieter period for the Countryside business with its annual peak trading occurring in the quarter ending 30 September.

Housebuilding performance

	2022	2021	Change
Private	4,076	3,895	+4.6%
Affordable	1,355	1,369	-1.0%
JV's (100%) Private	1,108	996	+11.2%
JV's (100%) Affordable	235	291	-19.2%
Total completions	6,774	6,551	+3.4%
Adjusted revenue	£1,982.4m	£1,829.3m	+£153.1m
Adjusted gross profit	£464.5m	£407.1m	+£57.4m
Adjusted gross margin	23.4%	22.3%	+1.1pp
Adjusted operating profit	£383.4m	£305.4m	+£78.0m
Adjusted operating margin	19.3%	16.7%	+2.6ppts
TNAV[6]	£1,368.8m	£1,373.1m	-0.3%

 

Total completions in Housebuilding (including 100% of JVs) showed controlled growth of around 3%, as planned, at 6,774 units which included 1,590 affordable homes representing 23.5% of total completions (2021: 1,660 affordable homes, 25.3% of total completions).

Housebuilding pricing and demand was strong in the first three quarters of the year prior to the September mini-budget, after which there was a sharp reduction in demand although pricing remained firm. Over the year there was a 5.6% increase in average private sales price to £376,000 (2021: £356,000). The total average sales price increased to £324,600 (2021: £305,000) as a result of the reduction in proportion of affordable housing and house price inflation in the private market.  The average number of sales outlets was 142 broadly in line with the previous year, as expected.

Housebuilding adjusted gross profit of £464.5m and Housebuilding adjusted gross margin of 23.4% advanced from 2021 (adjusted gross profit: £407.1m, adjusted gross margin: 22.3%), benefitting from a greater share of completions on sites with strategically sourced land.

Housebuilding adjusted operating profit of £383.4m has risen by 25.5% from the previous year (2021: £305.4m) with adjusted operating margin also growing to 19.3% (2021: 16.7%).  The Housebuilding segment has maintained its operating structure, with 13 regional business units and has capacity within this structure to accommodate the transfer of those sites from the Countryside acquisition which more closely fit the characteristics of a Housebuilding business.

 

Finance costs

The net financing expenses of the Group of £12.2m during 2022 compares to a net finance income of £4.1m during 2021 with primary components as follows:

 

	2022	2021	Change
Bank, commitment fees and other interest	(£17.4m)	(£12.9m)	(£4.5m)
Interest on land creditors and lease liabilities and provisions	(£9.4m)	(£6.0m)	(£3.4m)
Interest income	£14.6m	£23.0m	(£8.4m)
Net finance (cost)/income	£(12.2m)	£4.1m	(£16.3m)

 

The increase in bank, commitment fees and other interest is largely driven by the higher rates on our variable interest rate debt.

The Group also incurred a £7.1m charge (2021: £5.1m), reflecting the imputed interest on land bought on deferred terms and an additional £1.4m charge (2021: £0.9m) in relation to lease liabilities.

Joint ventures which are funded through loans are charged interest by the Group, and this generated the majority of the £14.6m of finance income recognised (2021: £23.0m).

Taxation

The Group has recognised a tax charge of £43.1m at an effective tax rate of 17.4% (2021: £65.4m, at an effective rate of 20.5%).  The effective tax rate reduction is driven by prior year adjustments and the write off of provisions in the period.

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.  The anticipated liability arising post 1 April 2022 and prior to 31 December 2022 has been included in the reported tax charge.

The Group's effective tax rate for FY23 is expected to be in the region of 27.5% with nine months of the higher Corporation Tax rate of 25% being introduced in April 2023 and a full year impact of the RPDT of 4%.

Adjusting items

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. GAAP measures can include one-off, non-recurring items and recurring items.

 

The Group's share of revenue, gross profit and operating profit from joint ventures and associate is included within the respective adjusted measures in order to more accurately reflect the full scale of the Group's operations and performance. At an adjusted revenue level, revenue recognised on transactions with joint ventures is eliminated. The impact of these transactions at a gross profit level is de minimis.

The adjustments made to performance measures include the following items:

- an incremental fire safety provision (2022: £97.0m, 2021: £5.7m),

- exceptional costs of £56.9m relating to the Combination, consisting of £29.5m of transaction costs and £27.4m of acquisition-related integration and restructuring costs (2021: £6.5m in relation to the integration of Linden and Partnerships),

- the amortisation of acquired intangible assets 2022: £17.1m (2021: £14.2m).

Fire safety provision

On 7 April 2022, the Group signed up to the government's Developer Pledge for fire safety remedial work required on developments over 11 metres high.  A provision of £71.4m was recognised in the Interim accounts for 30 June 2022.

On 13 March 2023 the Group became a signatory to the Developer Remediation Contract which they were committed to signing at the year end, and as such this has been treated a post-balance sheet adjusting event. This contract clarifies the extent of the additional obligations of the Group regarding fire safety remedial works; resulting in the recognition of an incremental £24.7m in provision. The acquired fire safety provision on the Combination with Countryside was £191.8m, which included the additional commitments of the Developer Remediation Contract.

The Group has spent £4.8m during the year on remediation (2021: £1.4m) resulting in the Group's closing provision for remedial works being £309.2m at 31 December 2022, after unwinding £0.9m of interest.  A combined portfolio of 304 buildings is provided for in respect of remediation costs for multi-occupancy buildings, with work complete on 59.

Acquisition accounting

The acquisition accounting in relation to the Combination with Countryside is well progressed and we continue to review the provisional fair values for intangibles and inventories. We will complete this work in 2023 as the accounting standards require that the provisional fair values are finalised within twelve months from the acquisition date of 11 November 2022.

Prior to performing the fair valuation exercise, the accounting policies of Countryside first had to be aligned to those of the Group. The policies differ in the treatment of the capitalisation of certain personnel and pre-development costs, which has resulted in an £86m write down, net of deferred tax, to Countryside's assets at acquisition date. Simply put, on an assumption that the level of activity remained the same as prior years, the reduction in future cost of sales arising from the write-down of these assets is expected to be broadly offset by the increase in period costs arising from the non-capitalisation of such costs going forward.

 

The provisional fair value exercise has allocated the purchase price of Countryside of £1,137m as follows: inventories of £792m, investments, right of use assets and PP&E of £140m, intangibles such as brands and relationships of £349m and goodwill of £257m, less £209m of provisions and £192m of net working capital and other items, including cash and deferred tax.  The total fair value adjustments which will unwind to underlying earnings is a credit of £107m, and this will unwind predominantly in underlying earnings over the next 6 to 8 years.

 

 

Net assets

		2022		2021
		Vistry (excl. Countryside)	Countryside	Vistry (excl. Countryside)	Change in Vistry (excl. Countryside)
Goodwill and intangibles		£657.2m	£603.5m	£675.3m	-£18.1m
Tangible net assets excluding investments in joint ventures and associate		£1,486.9m	£130.2m	£1,305.6m	+£181.3m
Investment in joint ventures		£204.8m	£48.9m	£175.1m	+£29.7m
Net cash		-£196.5m	£314.7m	£234.5m	-£431.0m
Net assets		£2,152.4m	£1,097.3m	£2,390.5m	-£238.1m

 

As at 31 December 2022, net assets of £3,249.7m were £859.2m higher than at the start of the year, primarily driven by the Combination and partially offset by the costs incurred in relation to the Combination and incremental fire safety provisioning.  Net assets per share were 937p (2021: 1,075p).

Goodwill and intangibles totalled £1,260.7m at 31 December 2022 (2021: £675.3m) with the increase resulting from the recognition of £349.1m of intangible assets following the Combination, relating to the Countryside Partnerships brand name, customer relationships and secured customer contracts (which were then amortised in the period post acquisition), and the recognition of £257.2m in goodwill.

Tangible net assets, including investments in joint ventures, increased from £1,480.6m at 31 December 2021 to £1,870.8m at 31 December 2022 driven by the Combination, with the provisional acquisition balance sheet shown in Note 11, as well as investment in land and work in progress which increased by £876.0m to £2,838.1m.

Trade and other receivables increased by £208.0m to £449.4m, and trade and other payables increased by £589.8m to £1,767.2m; both movements primarily driven by the Combination.

Cash flow and financing

As at 31 December 2022 the Group's net cash balance was £118.2m.  Having started the year with £234.5m, the Group generated an operating cash inflow before land expenditure of £529.1m (2021: £635.6m).  Net cash payments for land investment increased to £476.2m (2021: £368.6m).

Investing cash inflows totalled £19.3m, mainly driven by net inflows from joint ventures of £97.7m and offset by net outflows of £95.2m related to the Combination with Countryside.

In order to fund the Combination the Group took out a £400m Acquisition Term Loan, which matures in March 2025. As part of the same re-financing process, the Group exercised an option to extend its existing £500m Revolving Credit Facility (RCF) arrangement for a further year, meaning that it will now mature in December 2026. Together with a £100m US Private Placement, a retained £50m Bilateral Term Loan (repaid in March 2023), an overdraft of £5m and a Homes England loan facility of £10.7m, the Group had external funding facilities totalling £1,065.7m (2021: £665.7m) at 31 December 2022. These facilities are used to fund intra-period working capital movements and land investments with average monthly debt for the full year 2022 of £110.0m.

Shareholder distributions

The Group has stated a dividend expectation of two times earnings cover.  In line with this policy, the Group is proposing to distribute 50% of the full year Adjusted Net Earnings⁴ of £324.7m as dividends.  Total interim dividend payments of £50.1m were made in November 2022. The proposed final dividend payments total £112.2m and represent a final dividend per share of 32p. Total dividend payments in respect of the financial year 2021 were £133.1m.  Subject to AGM approval, the final dividend will be paid on 1 June 2023.

Following the announcement of the Group's share buy back scheme in May 2022, 4,056,968 shares were purchased in July 2022, representing a total share buy back of £35.2m.

As outlined in the shareholder circular dated 7 October 2022, following a period of integration we will now review, in consultation with shareholders, the enlarged Group's capital allocation policy to confirm whether it remains appropriate for the enlarged Group. Under the existing policy, any surplus capital, following investment in the business to support the enlarged Group's growth strategy and the payment of the ordinary dividend, is expected to be returned to the Group's shareholders through either a buyback or special dividend.

Land bank

Partnerships land bank

As at 31 December	2022	2021
Consented plots added	3,213	2,266
Sites added	19	11
Sites owned at year end	131	72
Sites controlled at year end	88	14
Total plots in land bank at year end inc. joint ventures	48,579	11,756
Average selling price inc. share of joint ventures	£325,000	£285,000
Average consented land plot price	£41,000	£42,000

 

The Partnerships land bank including joint ventures as at 31 December 2022 consisted of 48,579 plots across 219 sites. The land bank benefitted from the acquisition of 34,623 plots through the Combination from 62 owned and 79 controlled sites.

The 2,455 mixed tenure plots that legally completed in the year were more than offset by the acquisition of 2,371 owned plots on 14 sites. In addition, 842 plots were secured on a conditional basis on 5 sites. Of the 3,213 owned plots, 298 were sourced strategically.  All sites acquired for Partnerships will support future returns on capital employed for the segment in excess of 40%.

The average selling price of all units within the consented land bank increased over the year to £325,000 (2021: £285,000).  The estimated embedded gross margin in the land bank as at 31 December 2022, based on prevailing sales prices and build costs is 19.4% (2021: £19.3%).

 

Housebuilding land bank

As at 31 December	2022	2021
Consented plots added	5,334	6,432
Sites added	32	28
Sites owned at year end	210	216
Sites controlled at year end	26	14
Total plots in land bank at year end inc. joint ventures	32,763	31,014
Average selling price inc. share of joint ventures	£346,000	£319,000

 

The Housebuilding land bank including joint ventures of 32,763 plots as at 31 December 2022 represents c 4.1 years of supply based on 2022 completion volumes (2021: 31,014 plots and 4.8 years), including plots acquired with Countryside. A total of 5,039 plots were added to the Housebuilding land bank through the Combination and includes sites previously classified as Legacy Operations within Countryside Partnerships.

The land bank reflects our 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%.

The 6,744 plots that legally completed in the year were replaced by a total of 5,334 plots from a combination of site acquisitions representing 4,285 owned plots and a further 1,049 plots secured on a conditional basis across 10 sites. Of the 4,285 owned plots, 2,273 were sourced strategically.

 

The average selling price of all units within the consented land bank increased over the year to £346,000 (2021: £319,000). The estimated embedded gross margin in the consented land bank as at 31 December 2022, based on prevailing sales prices and build costs is 23.6% (2021: 25.0%).  The decrease in margin is primarily driven by the inclusion of the Countryside sites.

 

Strategic land

As at 31 December 2022	Total sites	Total plots
By size
0 - 150 plots	62	5,457
150 - 300 plots	48	10,230
300 - 500 plots	20	8,698
500 - 1,000 plots	20	13,221
1,000+ plots	17	28,207
Total	167	65,813
By planning status
Planning agreed	11	8,839
Planning application	15	3,212
Ongoing application	141	53,762
Total	167	65,813
As at 31 December 2021	118	40,000

 

Strategic land continues to be an important source of supply and during the year 2,571 plots have been converted from the strategic land pipeline into the consented land bank.  A further 4,503 plots were secured under options and planning consent gained on 1,453 plots over the year. 22,404 plots were added to strategic land as a result of the Combination.

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.

Risks relating to sustainability are becoming increasingly important in the medium term, especially with the emerging transitional risks which are becoming enshrined in regulation.

 

Group income statement

*Revenue and cost of sales for 2021 have been restated in relation to trading with our joint ventures (see note 1).

 

		2022	2021*
For the year ended 31 December	Note	£000	£000
Revenue	2	2,729,432	2,407,158
Cost of sales		(2,315,703)	(1,967,886)
Gross profit		413,729	439,272
Analysed as:
Adjusted gross profit	12	636,855	542,965
Other operating income		(57,713)	(40,659)
Exceptional cost of sales	4	(96,113)	(5,744)
Share of joint ventures' and associate gross profit		(69,300)	(57,290)
Gross profit		413,729	439,272
Administrative expenses including exceptional items		(258,936)	(194,517)
Other operating income		57,713	40,659
Operating profit		212,506	285,414
Analysed as:
Adjusted operating profit	12	451,090	368,368
Exceptional expenses	4	(152,977)	(12,225)
Amortisation of acquired intangibles		(17,065)	(14,240)
Share of joint ventures' and associate operating profit		(68,542)	(56,489)
Operating profit		212,506	285,414
Financial income		14,547	23,062
Financial expenses including exceptional items		(26,776)	(18,931)
Net financing (expenses) / income		(12,229)	4,131
Share of profit of joint ventures and associate	7	47,207	29,991
Profit before tax		247,484	319,536
Analysed as:
Adjusted profit before tax		418,426	346,001
Exceptional expenses		(153,877)	(12,225)
Amortisation of acquired intangibles		(17,065)	(14,240)
Profit before tax		247,484	319,536
Income tax expense		(43,139)	(65,411)
Profit for the year attributable to ordinary shareholders		204,345	254,125

 

		2022	2021
Earnings per share
Basic		86.5p	114.6p
Diluted		86.3p	114.1p
Basic earnings per share (before exceptional items and amortisation of acquired intangibles)		137.5p	125.5p
Diluted earnings per share (before exceptional items and amortisation of acquired intangibles)		137.1p	124.9p

 

Group statement of comprehensive income

		2022	2021
For the year ended 31 December		£000	£000
Profit for the year attributable to ordinary shareholders		204,345	254,125
Other comprehensive income / (expense)
Items that will not be reclassified to the income statement
Remeasurements on defined benefit pension scheme		(16,374)	33,838
Deferred tax on remeasurements on defined benefit pension scheme		2,399	(9,148)
Total other comprehensive (expense) / income		(13,975)	24,690
Total comprehensive income for the year attributable to ordinary shareholders		190,370	278,815

 

 

Balance sheets