Vistry Grp Regulatory News (VTY)

16 May 2024

On track to deliver 10%+ growth in completions in FY24, demonstrating strength of Partnerships model

Vistry Group (the Group) is providing an update on trading in the period from 1 January 2024 to date, ahead of its Annual General Meeting which is being held at 12:00 noon today.

Greg Fitzgerald, Chief Executive commented:

"The Group has had a good start to the year with our unique Partnerships model clearly demonstrating its market resilience. Working closely with our partners, we are seeing good demand in the Partner Funded market and accompanied by an improving trend for our open market sales, are on track to deliver more than 10% growth in completions in FY24, with half year and full year profit expected to be ahead of last year. This is underpinned by our strong forward sales position totalling £4.9bn, up 10% on the same position last year. We remain confident in our differentiated strategy and are making good progress towards our medium-term targets."

Current trading

We continue to see attractive Partnership opportunities that meet our requirements for a minimum of 50% of units to be Partner Funded, a 40% return on capital employed and over 12% operating margin. Working alongside a range of partners, we are pleased to have secured new land and development opportunities totalling 6,037 mixed tenure new homes across 19 developments in the year to date.

Demand from Registered Providers (RPs) for affordable homes has remained robust, with For Profit Registered Providers, a high growth sub-sector of this market, continuing to demonstrate strong demand. We recognise the current need for some traditional RPs to invest in the maintenance of their existing housing stock and are working closely with them to ensure Vistry remains their partner of choice for their new housing investment.

We are focused on establishing new partnerships with RPs and Local Authorities, and our unique centralised Partnerships and Regeneration team supports our business units in developing these important relationships. We also continue to see strong interest from Private Rented Sector (PRS) providers. Pricing across Partner Funded sales has remained resilient in the period.

In the open market, we have seen an improving trend in our open market sales rates since the start of the year. Pricing on open market sales has remained relatively flat with incentives running at c. 4% of the open market sales price.

The Group's total sales rate1 has averaged 0.96 (2023: 0.87) in the year to date, increasing to 1.23 (2023: 1.24) over the last 8-week period.

We are well positioned for FY24 with 95% of our targeted completions on secured development opportunities and for FY25, 75% of targeted completions on secured development opportunities.

Outlook

The Group is on track to deliver more than 18,000 (FY23: 16,118) completions in FY24, an increase of more than 10% on prior year and up from our previous expectation of 17,500 units. This is underpinned by our strong forward sales position which is up 10% on the prior year and totals £4.9bn (2023: £4.5bn) as at 15 May 2024, of which £2.1bn is for delivery this year. We expect the H1/H2 weighting of completions in FY24 to be similar to FY23.

The Group will benefit from lower year on year building material costs in FY24 reflecting engagement with our supply chain throughout 2023. Our high level of visibility on forward sales and build programme enables us to work closely with our subcontractors to secure beneficial terms. The Group is focused on driving operational and capital efficiency across all 26 business units and, with a series of initiatives in place, expects to release capital in FY24. Our timber frame operations will step up delivery in this year, with around 4,000 of our new homes to use our timber frames and further significant growth planned in 2025.

We expect half year and full year profit to be ahead of last year and remain confident in achieving a 40% ROCE and £800m operating profit in the medium term. We remain committed to returning £1bn of capital to our shareholders over the next three years with our latest £100m share buyback programme commencing as planned in April, purchasing £18m of shares to date.

1.Sales rate includes Partner Funded sales (excluding S106 units and 100% Partner Funded developments) and open market sales

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