Vistry Grp Regulatory News (VTY)

20 May 2020

Vistry Group PLC

Trading Update for the period covering 1 January 2020 to date

Vistry Group PLC (the "Group") is today providing an update on trading in the period from 1 January 2020 to date including the Group's ongoing response to COVID-19, and on its progress with the integration of the enlarged Group, ahead of its Annual General Meeting ("AGM") which is being held at noon today.

Greg Fitzgerald, Chief Executive commented:

"In these unprecedented times, the Group's performance during lockdown has been better than initially expected in respect of reservations, completions and cash management. We are pleased by how effectively our site management and health and safety teams have adapted to the new operating procedures. As a result, we currently have more than 5,600 operatives working safely across our developments and expect productivity to continue to increase.

"The continued strength of Vistry Partnerships throughout the past two months has proven our rationale for the acquisition, which has given us a highly resilient business underpinned by significant demand for affordable homes."

Current trading

Partnerships

Vistry Partnerships had a strong start to the year, progressing its strategy of accelerating revenue growth and margin expansion through an increase in land-led contracting and mixed tenure development.

Our Partnerships business has led our return to site and is the most resilient part of our business in the current market conditions given the high proportion of revenue from contracting and pre-sold developments, which provides a high level of cash realisation. Over 70% of normal production capacity has already been restored as our teams get used to the new COVID-safe operating procedures.

We are operating across all of our 73 contracting sites and continue to increase the future pipeline. The contracting forward order book totals £827m.

In respect of Partnerships development activity, we are operating on 31 of our 34 sites. Interest from housing associations and investors continues to be strong, and demand from private buyers is improving steadily.

Housebuilding

In the first 11 weeks of trading in 2020, we saw a strong increase in the average sales rate per site per week, accompanied by some positive momentum on pricing. The business first reported a material impact on trading from COVID-19 from mid-March.

Our sales teams have successfully remained open to business throughout, taking virtual tours, new reservations, progressing exchanges and handing over completed homes during the period of lock down. Our sales offices have now reopened for appointments and the Group sees significant opportunity from increasing the use of online channels for all future customer interactions.

Over the past eight weeks we are encouraged to have taken 447 gross private reservations, resulting in 300 reservations net of cancellations. The rate of sales has been an improving trend, with a sales rate of 0.26 over the past three weeks. We have exchanged on 310 homes and legally completed a total of 257 private sales in the eight-week period. Our pricing over the past eight weeks has been broadly in-line with our forecasts. In addition, levels of website traffic and prospects have been strong, and in recent weeks have returned to the levels we saw in January and February, indicating continued strong demand.

The Group has a strong forward sales position, with housebuilding reservations (including Vistry Partnerships development activity) totalling £1.5bn (including joint ventures)*.

We are currently operating on 119 out of a total 172 housebuilding developments and expect this to continue to increase. Our focus remains on the completion of homes which are watertight and where we have clear visibility of completion and cash realisation.

Business integration

We are very pleased with the progress made on integration and are ahead of where we expected to be at this stage. The new operating and reporting structures are in place and working effectively, with the rollout of consistent IT systems being the only outstanding programme.

We have extended the review of the Group following the acquisition, to further leverage the scale of the combined businesses. We are consulting with our teams, and anticipate that this will result in further headcount reductions, producing annual equivalent savings of c. £9.5m, increasing our anticipated total synergy savings to over £44m. The cost of these further savings is expected to be achieved within the total £35m exceptional restructuring costs previously announced.

Funding and liquidity

The Group remains financially strong. As at 18 May, the Group had net debt of £476m (21 April 2020: £440m) and committed banking facilities totalling £770m, with well spread maturities out to 2027.

We are pleased to have received confirmation that Vistry Group, subject to the Bank of England approving relevant documentation, is eligible in principle to access funding under the Covid Corporate Financing Facility ("CCFF"), should that be required.

 \* Total forward sales of £1.5bn includes £0.2bn in respect of our joint venture partners' share of revenue

This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is being released on behalf of Vistry Group plc by Earl Sibley, Chief Financial Officer.

For further information please contact: