TIDMVTY
RNS Number : 9754I
Vistry Group PLC
07 April 2020
Vistry Group PLC - Annual Report and Accounts 2019
Annual Report and Accounts 2019, Notice of Annual General
Meeting 2020 and Proxy Card
The Company's Annual General Meeting will be held at 12 noon on
Wednesday 20(th) May 2020 at the Company's Head Office at 11 Tower
View, Kings Hill, West Malling, Kent ME19 4UY.
The wellbeing of our shareholders is vitally important to us
and, in light of the measures put in place by the Government and
advice from Public Heath England, we urge our shareholders not to
attend the AGM this year. Should anyone seek to attend, they will
be refused entry. There will be limited Company representation at
the meeting, social distancing and hygiene measures will be in
place and the meeting will be limited to the formal business
required. We also urge our shareholders to submit their votes by
proxy as soon as possible. Further information on the submission of
proxies can be found in the Notice of Annual General Meeting 2020.
The deadline for submission is 12.00 noon on 18 May 2020.
The views of our shareholders are important to us and, to ensure
that engagement continues, shareholders may submit any questions to
the Board by email to investor.relations@vistrygroup.co.uk or by
post to the Group Company Secretary at 11 Tower View, Kings Hill,
West Malling, Kent ME19 4UY. All questions received will be
considered and provided with a response and a Q&A will also be
available on our website.
Should further changes need to be put in place at short notice
for the AGM this year, updates, including any changes to the
proceedings of the meeting will be published on
www.vistrygroup.co.uk/investors/shareholders/agm/2020 .
In order to comply with Listing Rule 9.1.3, copies of Annual
Report and Accounts 2019 incorporating the Notice of Annual General
Meeting 2020, together with the Proxy Form, have been submitted to
the National Storage Mechanism and will shortly be available for
inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
The documents are being posted to shareholders who have
requested hard copies. Copies of the Annual Report and Accounts
2019 and the Notice of Annual General Meeting 2020 and are
available on the Company's website at
www.vistrygroup.co.uk/annualreport2019 and
www.vistrygroup.co.uk/investors/shareholders/agm/2020 shareholders
receiving web communications.
Annual Report and Accounts 2019 - publication required by DTR
6.3.5
The Company published its Preliminary Results for the year ended
31 December 2019 on 27 February 2020. In order to comply with DTR
6.3.5 it is now publishing, in unedited full text, information
contained in the annual financial report of a type required to be
disseminated in a half-yearly financial report. To maintain
coherence, this repeats some of the information contained in the
Preliminary Results announcement.
Please be reminded that payment of the 2019 second interim
dividend has been postponed, as explained in the Group's COVID-19
update announcement released on 25 March 2020.
The full annual financial report is available on the Company's
website at www.vistrygroup.co.uk/annualreport2019
Vistry Group PLC - Annual Report and Financial Statements
2019
Chairman's statement
Further progress, delivering a record year of profits
2019 has been another very positive year for the Group with
continued improvement in build quality and customer satisfaction,
the successful launch of our new housing range and the continued
investment in people, systems and infrastructure.
Delivering high quality homes and excellent customer service has
been an absolute priority for the Group and at that core of all we
have done over the past three years. As such, I am delighted to
report that the Group has been awarded a 5-star HBF customer
satisfaction rating for 2019.
The Group delivered another record year of profits with pre
exceptional profit before tax increasing by 12.0% to GBP188.2m
(2018: GBP168.1m). Operating margin improved by 60 basis points to
17.0% despite a backdrop on on-going market uncertainty during the
year and return on capital employed increased by 300 basis points
to 22.3% (2019: 19.3%).
Transformational acquisition
It is from this position of strength that the Group entered into
discussions with Galliford Try regarding a potential combination
with their housebuilding businesses. Following a period of detailed
due diligence, the Group agreed to acquire the Linden Homes and
Partnerships & Regeneration businesses from Galliford Try for
an agreed price of GBP1.075 billion (the "Acquisition") on 7
November 2019. In order to fund the Acquisition, the Group
completed a placing (the "Placing") of 13,472,591 new ordinary
shares at a price of 1130 pence per Placing share with existing and
new institutional investors, raising net proceeds of c.
GBP150m.
This transformational acquisition was a unique opportunity for
Bovis Homes to acquire both a top UK housebuilder in Linden Homes
and a leading partnerships business. The combination is expected to
deliver annualised pre-tax cost synergies of at least GBP35m, with
GBP12m expected to be achieved in 2020. The Acquisition was
completed on 3 January 2020 and as a first step of the integration
process, the Group was renamed Vistry Group PLC, with the new
corporate name being used for the Vistry Partnerships business.
A top five UK housebuilder
Vistry Group is a top five national housebuilder with the
capacity to grow and deliver c. 14,000 new units p.a.
The enlarged Group has an enhanced national customer proposition
and coverage, enabling it to compete more effectively against the
major players in the UK private and affordable housebuilding
sector.
Leading partnerships business
The Acquisition has firmly established Vistry Group as a leader
in the high growth, counter cyclical partnerships sector. Vistry
Partnerships is one of the leading and most established national
brands and, with a very strong track record of growth, is a partner
of choice for housing associations, local authorities and
government agencies. There remains a fundamental housing shortage
in the UK, and government support to increase housing supply is
strong, with a significant increase in investment from housing
associations in particular.
Vistry Partnerships combines contracting and development
capabilities, supplying new homes across all housing tenures. As
part of Vistry Group with its strong balance sheet, land supply,
and strategic land capability, our strategy, whilst retaining the
core ethos of the business, is to accelerate Vistry Partnerships'
revenue growth with an increase in higher margin, development led
revenues. The business is targeting increasing volumes to 6,000
units p.a., revenues to over GBP1 billion and an operating margin
in excess of 10 per cent.
Two leading housebuilding brands
Bovis Homes and Linden Homes bring together two high quality,
well-recognised housebuilding brands. For 2020, we are firmly
focused on successfully integrating the housebuilding businesses
and establishing the best operating structure from which to
maximise the benefits of the combination, including the significant
cost synergies. For 2021 and beyond, the strategy is to maximise
output through controlled volume growth, and driving margin
progression. We will maximise the benefits from dual branding,
especially increasing output and returns on our larger
developments.
Senior management
Greg Fitzgerald, CEO of the Group, is uniquely positioned to
successfully integrate the businesses having formerly been CEO and
then Executive Chairman of Galliford Try plc over a period of 11
years until 2016. Greg has established a strong leadership team
across the enlarged Group bringing the best from each business, and
this continuity of management will help mitigate risks arising
through the integration process.
I am delighted to welcome Graham Prothero, former CEO of
Galliford Try plc, Stephen Teagle, Managing Director of Galliford
Try's partnerships business (now Vistry Partnerships) and Andrew
Hammond, former Managing Director of Linden Homes, to our senior
leadership team following the Acquisition on 3 January 2020. I
believe the combination of our two managements creates a strong and
experienced team to deliver value from the Acquisition.
People
People remain a key priority and we continue to invest in the
training and development of our employees and subcontractors. In
the year, there has been a particular focus on mental health, and
we have rolled out our mental health first-aid programme across the
business. We remain very committed to our Vistry Group
Apprenticeship and Trainee Assistant Site Manager Schemes.
On behalf of the Board, I would like to thank all of our
employees for their commitment and hard work in delivering the
successful performance across all business areas in 2019, and in
particular the attainment of our 5-star HBF customer satisfaction
rating.
We welcome our new colleagues at Linden Homes and Vistry
Partnerships and look forward to working with them and delivering
the benefits from this exciting combination. I recognise the period
of integration will have its
challenges and thank everyone for their patience, dedication and
enthusiasm through this.
I would also like to extend my thanks to our subcontractors,
suppliers and partners who have supported us during the year, and
with this acquisition, and are such an important and valued
component of our business.
Ordinary dividends and capital return plan
The Group dividend policy has been, and will continue to be, to
maintain a robust and efficient balance sheet to deliver
sustainable dividends to our shareholders.
With the Acquisition we announced the return of a further GBP60m
to our shareholders by way of a bonus issue of shares in January
2020 on completion of the transaction.
The Board recommended that instead of paying the Bovis Homes
2019 final dividend, it would pay a second interim cash dividend of
41 pence per share on 29 May 2020 to shareholders on the register
on 27 December 2019. This takes the total ordinary dividend for
2019 to 61.5 (2018: 57.0) pence per share, an increase of 8 per
cent.
Going forwards the Group expects to maximise sustainable
dividends to shareholders through an initial ordinary dividend
cover of 2 times, moving towards a cover of 1.75 times following a
period of integration and deleveraging. The Board will also
consider the prevailing strength of the balance sheet and general
economic circumstances, with particular regard to the cyclicality
of the industry.
The Board
I would like to thank my colleagues on the Board for their
support and guidance to the leadership team and to me personally in
what has been a busy and significant year for the Group.
I am pleased to welcome Graham Prothero to the Group and to the
Board. Graham, who was previously the Chief Executive of Galliford
Try plc joined the Group as Chief Operating Officer following the
Acquisition on 3 January 2020. Graham brings deep knowledge of the
acquired businesses as well as broad sector experience.
The future
The Group has an exciting future with very significant
opportunities to be realised from the Acquisition. The progress,
achievements and learning from the past three years positions us
well, and the integration process, taking the best from both, is
well underway. The market fundamentals remain strong and with
greater political certainty, we have seen a welcome increase in
consumer confidence and demand for our new houses. I look forward
to updating you with our progress.
Ian Tyler
Chairman
Chief Executive's Statement
2019 in review
The Group has made further significant operational progress in
2019 resulting in another year of record profits, with group profit
before exceptional items and tax up 12.0% to GBP188.2m.
Building high quality new homes and providing our customers with
excellent service remains our key priority, and I am delighted this
is reflected in an increase in our HBF customer satisfaction rating
to 5-star; a very significant step up from our 2-star rating in
2017. In addition, 2019 saw the roll out of Bovis Homes' new
Phoenix Housing Collection which incorporates more modern, open
plan designs and has received very positive customer feedback.
With heightened uncertainty surrounding Brexit and the general
election in December, we saw downward pressure
on house prices in the second half of 2019. This was partially
mitigated through a combination of the Group's own
build cost saving initiatives and a lack of cost inflation. As a
result, we are pleased to have delivered further
operating margin progression, reporting an increase of 60 basis
points to 17.0%, pre exceptional items.
On 10 September 2019 we announced the potential combination
between Bovis Homes and Galliford Try's Linden Homes and
Partnerships & Regeneration businesses. Following detailed due
diligence, the Acquisition exchanged on 7 November when the Group
also successfully raised net proceeds of c. GBP150m through a share
placing to help fund the acquisition.
Completion of the Acquisition on 3 January 2020, has firmly
positioned the enlarged Group as one of the UK's top housebuilders
and established it as a leader in the highly attractive, high
growth partnerships sector. Our priority for 2020 is to
successfully integrate the housebuilding businesses and ensure we
maximise the very significant benefits we are confident can be
delivered from this exciting new combination.
Operational update
Strong sales performance
The Group saw a significant and sustained step up in its sales
rate in 2019 to an average sales rate per outlet per week of 0.58
(2018: 0.50), an increase of 16%. Achieved against a backdrop of
market uncertainty for much of the year, this uplift reflects the
Group's significantly improved customer offering and build
procedures.
Help to Buy remains an important scheme and 23% (2018: 27%) of
total completions utilised the scheme in the year. We continue to
use part exchange in a controlled manner with 7% (2018: 6%) of
total completions utilising this in the period.
The Group completed a total of 3,867 (2018: 3,759) new homes in
2019 including 58 (2018: nil) joint venture completions, a 3%
increase on the prior year. Private homes totalled 2,678 (2018:
2,567) units with 1,189 (2018: 1,192) affordable housing units,
representing 31% (2018: 32%) of total completions.
Customer service
Customer service remains central to everything we do, and we are
delighted this is reflected in our HBF customer satisfaction score
being above 90% for Q3 2019, equivalent to a 5-star rating.
In 2019 we implemented our customer relationship management
system, 'Keys', across our Sales and Care teams.
This provides us with a single transparent view of each
customer's journey, from reservation through the warranty
period, delivering us greater insight and information. It also
empowers our customers with self-reporting functionality, giving
them greater control of the process and access to report any
issues.
Following direct feedback from our Home Buyers Panel, we
launched our first 'Unwrapped Home' at Embrook Place in Wokingham
this year. Here customers can see the different phases of
construction of their home, including the methods and materials
used in the structure, plumbing and electrics.
We were very pleased to have received the Ministry of Defence's
Gold Award in their Employer Recognition Scheme. The Group first
signed the Armed Forces Covenant in 2016 and has since worked to
ensure that past and present members of the Forces along with their
families receive outstanding support, from mentoring placements and
trainee programmes, to assisting military personnel looking to get
on the property ladder. We are proud to be the only dedicated
housebuilder to have achieved Gold Award status.
High build quality
Delivering high quality new homes is a key priority and we have
seen very significant progress in this area over the past couple of
years. The Bovis Homes site teams have been a key area of focus,
and we have invested in recruiting, developing and retaining a
high-quality workforce on site. As a result, we have benefitted
from an improved subcontractor base, with whom we have established
strong partnerships We continue to strengthen these relationships
as highlighted by the improving scores from the bi-annual feedback
surveys we facilitate.
We are delighted that in 2019, six of our site managers were
awarded NHBC Pride in the Job Quality awards and that our NHBC
Construction Quality Review for 2019 highlighted a 26% improvement
in our Group score over the past two years.
Phoenix housing range
We launched the new Bovis Homes housing range, the Phoenix
Collection, in 2018 and successfully replanned the Group's owned
land bank during 2018 and 2019 with the new house types where
appropriate. The modern design and open plan living meet today's
customer needs, while the design and specification allow the Group
to drive efficiency and cost reduction.
The first 'Phoenix' home was completed in June 2019, with a
total of 358 completions from the range during the year,
representing 14% of private completions. We currently have 1,040
units under construction using the new range and expect c. 1,400 of
private completions in 2020 to be Phoenix house types.
People
People satisfaction remains a key priority and, in the year, we
continued to invest in the development, training and well- being of
our workforce including our subcontractors. Through our dedicated
Learning and Development team we delivered more than 4,500 delegate
training days in 2019, including our trainee assistant site manager
programme and leadership training.
With the ever-increasing awareness and prevalence of mental
health issues in the construction industry, one of our key focal
points this year has been the roll-out of mental health first aid.
The Group has also pledged its support for the Lighthouse
Construction Industry Charity campaign which aims to tackle mental
health issues across the wider construction industry. The campaign
will deliver vital support including, the provision of a
confidential 24/7 industry helpline, and retraining for workers who
have been injured or who have suffered from an illness that means
they cannot return to their normal work.
We are pleased to report our employee engagement level, as
measured by our monthly employee engagement survey, has remained at
a high level and ahead of the survey benchmark.
Investment in systems and processes
During the year we continued to invest in our systems and
processes to drive efficiency and best practice across all business
areas. We have implemented the Keys system along with a new
document management solution across the whole business to support
employees on site and in the office as well as our customers. In
addition, we have furthered our implementation of the COINS
software system with further functionality across sales, land,
build and commercial.
Land acquisition
The Group continued to acquire high quality land opportunities
in the year with a total of 4,531 (2018: 4,164) plots added to the
owned land bank, with the land acquired expected to deliver at
least a gross margin of 26% and ROCE of 25%. Strategic land remains
a valuable source of land for the Group and we converted 2,146
(2018: 1,958) plots from our strategic land bank during the year
including 831 plots at Comeytrowe, Taunton, and 783 plots at
Cambourne near Cambridge.
Partnership housing
Excellent progress was made with the Group's Partnerships
business, launched in early 2019. We entered into a total of eight
land led partnerships with housing associations in 2019 including
the joint venture of our development at Stanton Cross,
Wellingborough with Riverside, joint operations at Alphington and
Comeytrowe with LiveWest, and a joint venture with Metropolitan
Thames Valley at Cambourne.
Vistry Group
Vistry Group was formed on 3 January 2020 following the
acquisition of Linden Homes and the Partnerships & Regeneration
businesses of Galliford Try plc for an agreed price of GBP1.075
billion. The acquisition presented an excellent and unique
opportunity for Bovis Homes to acquire both a top UK housebuilder
in Linden Homes, and one of the leaders in the highly attractive,
high growth partnerships business.
Top five national housebuilder
The acquisition has firmly positioned Vistry Group as one of the
UK's top five housebuilders with the capacity to deliver up to
14,000 new units p.a. With an enhanced national customer
proposition and coverage, the Group can compete more effectively
against the other major players in the UK private and affordable
housebuilding sector. It has a high-quality land bank, with a total
of 40,135 plots including joint ventures, and a valuable pipeline
of strategic land totalling
31,965 plots.
Market leader in Partnerships Housing
The Group announced the launch of its own Partnerships business
in early 2019, identifying partnerships housing as a key
sustainable growth area with more resilient earnings across the
cycle and therefore reducing the Group's risk profile.
Vistry Partnerships is one of the leading and most established
operators in this area and, with a very strong record
of growth, is a partner of choice for housing associations,
local authorities and government agencies. There remains a
fundamental housing shortage in the UK, and government commitment
to increasing housing supply is strong, with a significant increase
in investment from housing associations in particular. A key
strength of the Vistry Partnership business model is the ability to
develop across all housing tenures through both contracting and
development-led partnerships.
Synergies
As previously stated, we expect to deliver a run-rate of pre-tax
cost synergies of at least GBP35m p.a. by the end of 2021 as a
result of combining the businesses.
Of this, at least GBP20m p.a. is expected to come from a
reduction in operating costs though the streamlining of the
regional and operational models. Within housebuilding, we have
streamlined the regional operations moving from 17 regional
business units to 13, and we expect a c. 8% reduction in headcount
across the business including central services.
At least GBP15m of synergies is to be achieved from procurement
savings and the optimisation of specification across our three
housing ranges: The Phoenix Collection, The Linden Collection and
Partnerships housing. We are making good progress with this, and on
renegotiating our supply contracts for the enlarged Group.
It is expected that c. GBP12m of this benefit will be achieved
in 2020, with the recurring run-rate of at least GBP35m p.a.
achieved by the end of 2021.
Group strategic priorities
The Group's strategic priorities remain investing in our people,
ensuring we retain high levels of customer satisfaction, ensuring a
healthy and safe working environment, and delivering enhanced
returns to our shareholders.
We will continue to invest in the development and training of
our people to ensure a committed, motivated and engaged workforce.
We are firmly focused on increasing the supply of much needed new
homes of all tenures across England and delivering high quality new
homes and a high level of customer service that meets the
expectations of our customers throughout their entire journey with
Vistry Group. Ensuring the health and safety of our people is
unequivocally at the core of our business. Alongside these
priorities, driving enhanced returns for our shareholders through
increased profitability, return on capital and total shareholder
returns is our goal.
Housebuilding strategy
The housebuilding business of the Group operates with two
leading brands, Bovis Homes and Linden Homes. The business has
national scale and coverage with 13 operating regions, down from 17
on completion of the acquisition. Hands on management remains key
and each regional office is located within easy reach of its
developments. Our housebuilding business has an expanded geographic
reach across England including operations in the attractive
Yorkshire area, and a strengthened position in core areas in the
south including along the South Coast.
The business strategy is to maximise output through controlled
volume growth in the medium term while maintaining high quality
delivery. Each of the 13 operating regions has the capacity to
deliver c. 550 - 625 new housing units p.a., giving the
housebuilding business the potential to grow and deliver more than
8,000 units p.a. The housebuilding business is divided into a North
and South structure, led by a highly experienced management team
combined from both Bovis Homes and Linden Homes.
Longer term, potential future geographic expansion for
housebuilding could be supported by Vistry Partnerships' greater
geographic reach.
Maximising the opportunities from being a dual branded
housebuilder through ensuring we provide our customers a breadth of
product choice to best meet their needs is a priority. Each brand
will retain its own housing range, the Phoenix Collection for Bovis
Homes and the Linden Collection, with the ranges currently being
reviewed and refined. We already have both our brands successfully
selling alongside each other on eight of our sites and see
significant further opportunity. With two brands, we are more
competitive in the land market. We have a greater appetite for
larger sites where we can promote both brands, increasing overall
production, demand and sales rates, and driving higher returns on
capital employed.
Vistry Partnerships - strategy
The Vistry Partnerships business holds a strong and unique
position within the partnerships market, combining contracting and
development expertise on a national scale, supported by two leading
housebuilding brands.
The strategy is to accelerate the revenue growth from the
business' growth from the business' 10 operating regions through
increasing output from the existing infrastructure and expansion
into new geographies. The Group is targeting an increase in units
(including equivalent units) to 6,000 p.a. and revenues of at least
GBP1 billion. This growth is to be driven by an increase in higher
margin development revenues to 50% of total partnerships revenues,
whilst maintaining relatively stable contracting revenues.
The Group's land supply and strategic land capability will
support the growth of higher margin development revenues. Bovis
Homes' Partnerships business, launched in 2019, made very good
progress in this area during the year, with eight of the Group's
larger developments being put into partnership arrangements with
housing associations. Three of these developments have now been
transferred to Vistry Partnerships.
Development revenues typically generate an operating margin of
between 14% to 18% as compared to a low single digit operating
margin for contracting revenues. With this change in mix, Vistry
Partnerships is targeting a significant step-up in profitability to
an operating margin of at least 10%.
Operational priorities - integration
Our clear focus for 2020 is the successful integration of the
businesses to ensure we maximise the significant benefits to be
realised from the combination. The integration process is well
under way and much progress has been made to date.
Our housebuilding business has been reorganised with the
regional operating areas defined and Managing Directors for each
business unit confirmed. The Phoenix Collection and Linden
Collection housing ranges are being reviewed and refined, and the
centralising of, and negotiations on procurement are progressing
well. On operating systems, the health and safety systems are
aligned, and the COINS construction software is to be harmonised
across housebuilding in the first half of this year and implemented
within Vistry Partnerships in the coming year.
Land
The Group has a high-quality owned land bank with strong
fundamentals and excellent forward visibility. On housebuilding all
of our land for 2020 has detailed planning consent and 91% of our
land for 2021 is secured. All of our land for Vistry Partnerships
for 2020 is secured and 87% for 2021.
We are very active in the land market and continue to see good
opportunities. In housebuilding we have acquired 1,489 plots across
5 sites in the year to date and looking ahead we expect to acquire
land in line with our target of maintaining a 3.5 to 4.0 years land
bank. On average we are targeting slightly smaller units to
maximise demand and output which we expect to result in a reduced
average selling price in the land bank in the medium term.
For Vistry Partnerships, we expect to increase our land supply
in-line with our strategy of increasing our land-led development
revenues.
With our dual branded housing business and growth strategy for
partnership development revenues, the Group has an increased
appetite for larger sites and higher margin strategic
opportunities.
Balance sheet
We have a robust balance sheet following completion of the
acquisition withGBP600m of committed banking facilities, and
GBP100m of private placement notes transferred from Galliford Try.
We will continue to acquire land utilising land creditors where
good deferred terms are available.
We expect the business to deleverage over the next two years
with gearing including land creditors targeted to decrease below
30% by December 2020 and continue to decline in 2021.
We expect to maintain a housebuild land bank of between 3.5 and
4.0 years and to increase Partnerships' landbank in-line with our
growth strategy, including investment in strategic land. We will
optimise our work in progress, notably utilising our dual branding
capability to drive capital efficiency on larger sites. Part
exchange will continue to be utilised on a controlled basis with a
focus on holding no stock properties beyond three months.
Dividends
The Group's dividend policy has been, and will continue to be,
to maintain a robust and efficient balance sheet and to deliver
sustainable dividends to shareholders.
In September 2017, the Group announced its intention to return
surplus capital resulting from its balance sheet optimisation
initiatives totalling GBP180m to shareholders in the three years to
2020, with the first GBP60m paid as a special dividend to
shareholders in November 2018.
The expected special dividend for 2019 was returned to
shareholders by way of a GBP60m bonus issue to shareholders on 2
January 2020. Reflecting the Group's new strategy following the
acquisition, there will be no further special dividend payments in
relation to the GBP180m capital return initiative.
Instead of paying the Bovis Homes 2019 final dividend, a second
interim cash dividend of 41 pence per share will be paid on 29 May
2020 to shareholders on the register as at 27 December 2019.
Including the first interim dividend of 20.5 pence per share, this
brings the total ordinary dividend for 2019 to 61.5 (2018: 57.0)
pence per share.
The Group expects to maximise sustainable dividends to
shareholders with an ordinary dividend cover of 2 times initially,
moving towards a dividend cover of 1.75 times following a period of
integration and deleveraging. The Group will also consider the
general economic circumstances, with regards to the cyclicality of
the industry.
Current trading and outlook
We are pleased to report a strong start to the year with
increased levels of consumer demand seen across all our operating
regions in the first seven weeks.
For housebuilding in the first seven weeks, the underling
average sales rate per site per week is up 15%, and we have seen
some positive momentum on underlying pricing.
In 2020, we are firmly focused on successfully integrating the
housebuilding businesses, delivering the significant benefits from
the combination as quickly as possible, and best positioning the
business to deliver controlled volume growth in the medium term. As
such we are not forecasting any volume increase for this business
area in 2020. We have a strong forward sales position with 48% of
consensus housebuilding revenues for FY20 secured.
Vistry Partnerships will continue to pursue its growth plans for
2020, being less impacted by the integration process. Its strategy
of significantly increasing higher margin development revenues,
will be reflected in a step-up of land acquisition and strategic
land opportunities for the Partnerships business.
This year, Vistry Partnerships has entered into a GBP95m
development with housing association, Citizen Housing Group, for
the delivery of 360 new homes at the former hospital site, Lea
Castle, Kidderminster. The homes for sale will be from both the
Bovis Homes and Linden Homes housing ranges.
In London, Vistry Partnerships has contracted with Red Door
Ventures Limited, a newly formed subsidiary of Newham Council to
deliver homes for rent in Plaistow. The GBP63m scheme will provide
182 residential units and associated commercial units and will
extend the Group's track record in delivering homes for the build
to rent and private rented sectors.
Vistry Partnerships has a strong forward sold position with
mixed tenure forward sales totalling GBP244m (FY19: GBP159m) of
which GBP162m (FY19: GBP81m) is for private units. On contracting,
the order book stands at GBP890m (FY19: GBP960m), with 88% of the
FY20 order book secured. In addition, over GBP1.5bn (FY19:
GBP1.4bn) is at preferred bidder status or land acquisition
stage.
Greg Fitzgerald
Chief Executive
Financial Review
Trading performance
In line with our strategy, the Group delivered controlled volume
growth during 2019 resulting in a 3% increase in legal completions
to 3,867 (2018: 3,759). This included 1,184 affordable homes
representing 31% of total completions (2018: 32%). Total revenue
was GBP1,130.8m, an increase of 7% on the previous year (2018:
GBP1,061.4m).
Volume FY 2019 FY 2018
====================================== ======= =======
Private legal completions 2,625 2,567
====================================== ======= =======
Affordable legal completions 1,184 1,192
====================================== ======= =======
Total legal completions 3,809 3,759
====================================== ======= =======
JV legal completions 58.0 -
====================================== ======= =======
Total legal completions including JVs 3,867 3,759
====================================== ======= =======
Revenue (GBPm)
====================================== ======= =======
Private legal completions 897.0 866.1
====================================== ======= =======
Affordable legal completions 170.4 160.7
====================================== ======= =======
Revenue from legal completions 1,067.4 1,026.8
====================================== ======= =======
Partnership land transactions revenue 42.4 -
====================================== ======= =======
Other revenue 14.1 20.4
====================================== ======= =======
Total development revenue 1,124.0 1,047.2
====================================== ======= =======
Land sales revenue 6.8 14.2
====================================== ======= =======
Total revenue 1,130.8 1,061.4
====================================== ======= =======
Housing revenue was GBP1,067.4m, 4% ahead of the prior year
(2018: GBP1,026.9m). The average sales price for our private homes
increased 1% to GBP341,700 (2018: GBP337,400) with our overall
average sales price increasing 2% to GBP280,200 (2018:
GBP273,200).
Other revenue was GBP14.1m (2018: GBP20.4) primarily driven by
the release of deferred revenue from disposals within our PRS joint
ventures. The disposals from our PRS joint ventures are largely
complete as at the end of 2019.
Partnership land transactions revenue of GBP42.4m was generated
from six land sales in the period with housing associations, where
the Group will develop the sites in partnership with the housing
associations, with the expected site wide development margin for
the Group, at a level similar to our standard housing business.
In February 2019 we announced the launch of our new Partnerships
Housing Division and following the Acquisition, we now have a
leading partnerships business, working alongside housing
associations to increase output and deliver best returns from our
development land.
Land sales revenue of GBP6.8m in 2019 primarily relates to the
disposal of the final out-of-operating area site in the period at
Penwortham near Preston, realising GBP6.4m of cash and contributing
GBP0.1m in profit.
Total adjusted gross profit was GBP253.4m (adjusted gross
margin: 22.4%), compared with GBP230.9m (gross margin: 21.8%) in
2018. Housing adjusted gross margin was 22.4% in 2019, ahead of the
21.9% achieved in 2018. The adjusted gross margin was impacted by
market influences during the year with sale price inflation being
flat in the first six months and showed a 1-2% decrease in the
second half. The Group saw construction cost inflation of c3-4% in
the first six month of 2019, flattening out in the second half with
the market uncertainty from Brexit and the general election.
The gross margin was positively impacted by the increasing
embedded gross margin in our land bank and our operational
improvements including the initial impacts from our margin
initiatives.
During 2019, our construction costs decreased by 2% per square
foot, reflecting the inflationary impacts being offset by
reductions in our cost base as we delivered production in a
controlled manner, changes in specification and the
under-utilisation of contingency in line with our margin
initiative.
Operating profit increased to GBP192.6m before exceptionals
(2018: GBP174.2m) at an operating profit margin of 17.0% (2018:
16.4%). Administrative expenses increased in 2019 to GBP60.8m
(2018: GBP56.7m) reflecting the Group's efficient operating
structure, offset by higher employee costs and the ongoing
investment in new processes, systems and training.
Exceptional costs of GBP13.5m relate to the Acquisition; this
transaction completed on 3 January 2020. The costs include certain
advisory costs as well as some cost relating to the refinancing of
the Group.
The Group delivered a record profit before tax before
exceptionals for the year ended 31 December 2019 of GBP188.2m,
comprising operating profit of GBP192.6m, net financing charges of
GBP6.1m and GBP1.8m of share in JV profit. After exceptional costs
profit before tax was GBP174.8m, this compares to GBP168.1m of
profit before tax in 2018, which comprised GBP174.2m of operating
profit and GBP6.1m of net financing costs.
Financing and Taxation
Net financing charges before exceptionals during 2019 were
GBP6.1m (2018: GBP6.1m) reflecting the marginally lower net debt in
the period, a consistent level of commitment fees, and issue costs
amortised, as well as the impact of implementing IFRS16 in the
period, (GBP0.6m) disclosed in note 5.5 to the financial
statements.
The Group has recognised a tax charge of GBP36.4m at an
effective tax rate of 20.8% (2018: tax charge of GBP31.5m at an
effective rate of 18.7%); this rate is higher than the current rate
of 19.0% primarily as a result of non-deductable exceptional costs
incurred in the year and an adjustment made in respect of the prior
year. The Group has a current tax liability of GBP20.9m on its
balance sheet as at 31 December 2019 (2018: GBP18.1m).
Dividends
The first interim dividend of 20.5 pence per share (2018: 19.0
pence) was paid on 22 November 2019. A second interim dividend of
41.0 pence per share (2018 final dividend: 38.0 pence) has been
declared and will be paid on 29 May 2020 to holders of ordinary
shares on the register at the close of business on 27 December
2019, bringing total dividends for the year to 61.5 pence per share
(2018: 57 pence).
Instead of a cash special dividend, a bonus issue of shares was
made to shareholders on the register at the close of business on 2
January 2020; for every one share held at the bonus issue record
time, 0.03819 bonus shares were issued (2018 special dividend: 45.0
pence). The dividend reinvestment plan, introduced in 2012, gives
shareholders the opportunity to reinvest their dividend.
Basic EPS pre exceptional of 111.5p (2018: 101.6p) has increased
10% year on year as a result of record profit having incorporated
the Placing. Basic EPS post exceptional of 101.5p (2018: 101.6p)
has remained consistent year on year.
Net assets and cash flow
As at 31 December 2019 net assets of GBP1,272.0m were GBP210.9m
higher than at the start of the year, driven by an increase in the
cash balance through operating cashflow which has subsequently been
utilised to fund the Acquisition. Net assets per share as at 31
December 2019 were 857 pence (2018: 787 pence).
Investments increased by GBP56.1m since the start of the year,
primarily driven by the creation of the joint venture with
Riverside Regeneration Limited in respect of the development of
Stanton Cross, Wellingborough, in April. In addition, the Group
entered into a joint venture in December with Metropolitan Living
Limited in respect of a new strategic development at Cambourne
West, Cambridgeshire.
Retirement benefit assets increased by GBP3.1m primarily as a
result of higher than expected returns on the scheme's assets and
contributions to the fund in the period. This has resulted in a
pension surplus of GBP4.5m at 31 December 2019 (2018: GBP1.4m).
Inventories decreased during the year by GBP112.6m to
GBP1,207.7m. The value of residential land, the key component of
inventories, decreased by GBP142.4m. This reflects completions
during the period as well as the impact of Partnership land
transactions and the sale of our Stanton Cross development at
Wellingborough into a joint venture. Other movements in inventories
included an increase in work in progress of GBP31.0m driven by the
infrastructure investment on a number of our new developments
including Northstowe, Peterborough and Essington. Whilst our usage
of part exchange as a sales tool increased in the year, our part
exchange properties balance has decreased by GBP1.6m, as we
continue to make use of this sales tool, in a controlled and
disciplined manner, with no properties held for more than three
months unsold at the end of the period.
Trade and other receivables increased by GBP41.3m, driven by
increased balances receivable from housing associations at 31
December 2019. Trade and other payables increased by GBP12.8m,
predominantly reflecting increased accruals and trade creditors
from production offset by GBP34.1m net settlement of land
creditors. Land creditors decreased to GBP260.7m (2018: GBP293.3m)
representing 36% (2018: 34%) of our gross land investment and
includes significant balances in respect of longer-term schemes at
North Whiteley and Alphington SW Exeter purchased in 2019.
Following implementation of IFRS16 in 2019, right of use assets
of GBP21.3m and lease liabilities of GBP23.0m have been recognised
on the balance sheet; further detail is discussed in notes 5.5 and
5.14 to the financial statements.
As at 31 December 2019 the Group's net cash balance, which
reflects cash and cash equivalents less bank and other loans, was
GBP362.0m (2018: GBP126.8m). Net cash is quoted excluding the lease
liabilities arising on adoption of IFRS16, the impact of which is
clearly disclosed in note 5.5 to the financial statements. The
Group started the year with net cash of GBP126.8m and generated an
operating cash inflow before land expenditure of GBP281.4m (2018:
GBP291.2m) and recognised a reduction of GBP36.4m in loans. The
loan reduction arose as a result of the movement of funding from
Homes England into the newly formed joint venture with Riverside at
Stanton Cross, Wellingborough.
Net cash payments for land investment increased to GBP184.7m
(2018: GBP145.4m), reflecting the timing of land acquisitions and
reduction in land creditors. Cash inflows from joint ventures were
GBP74.7m (2018: nil), generated on the sale of land and inventory
into the Stanton Cross, Wellingborough joint venture. Dividend and
cash outflows decreased to GBP112.4m (2018: GBP158.8m) driven by
decreased corporation tax payments and the payment of a special
dividend by way of shares rather than cash; payments relating to
dividends were GBP78.6m (2018: GBP129.7m). A further GBP152.2m of
cash was raised by the Placing in November 2019.
Cashflow 2019 2018
GBPm GBPm
------------------------------------------ -------- --------
Net cash at 1 January 126.8 144.9
Profit in the year 138.4 136.6
Dividends and taxes paid (112.4) (158.8)
Issue of shares 149.8 -
Movement in trade and other receivables (58.2) 12.4
Movement in inventories 115.2 (1.9)
Movement of investment in joint ventures (58.5) (20.3)
Other 60.9 13.9
------------------------------------------ -------- --------
Net cash at 31 December 362.0 126.8
------------------------------------------ -------- --------
At 31 December 2019, we had a committed revolving credit
facility of GBP250m in place. Following refinancing driven by the
Acquisition. The Group currently has in place GBP150m in 3 year
term borrowings, a GBP450m revolving credit facility (GBP410m 5
year, GBP40m 3 year) and GBP100m USPP 7 year term borrowings. The
private placement was taken on as part of Acquisition.
Land Bank 2019 2018
--------------------------------------- ----------- --------------
Consented plots added 4,531 4,164
Sites added 18 19
Sites owned at period end 116 117
Total plots in land bank at period end
including joint ventures 17,328 17,328
--------------------------------------- ----------- --------------
Average consented land plot ASP GBP299,000 GBP305,000
Average consented land plot cost GBP46,411 GBP54,900
--------------------------------------- ----------- --------------
The Group's total land bank including share of joint ventures as
at 31 December 2019 represents 3.9 years of supply based on 4,000
completions p.a. reflecting our strategy to maintain an optimal
land bank at 3.5 to 4.0 times. The 3,867 plots that legally
completed in the year were replaced by a combination of site
acquisitions and conversions from our strategic land pipeline.
Based on our appraisal at the time of acquisition, the new
additions, on average, are expected to deliver a future gross
margin over 26% and a ROCE in excess of 25%. The average selling
price of all units within the consented land bank increased over
the year to GBP299,000, 2% lower than the GBP305,000 at 31 December
2018. The estimated embedded gross margin in the consented land
bank as at 31 December 2019, based on prevailing sales prices and
build costs is 24.8% and reflects the initial impact of our margin
initiatives.
Strategic land continues to be an important source of supply and
during the year 4,531 plots have been converted from the strategic
land pipeline into the consented landbank.
Earl Sibley
Chief Financial Officer
Statement of directors' responsibilities in respect of the
annual report and the financial statements
The directors are responsible for preparing the Annual Report,
the Directors' Remuneration Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have prepared the Group and Parent company financial statements in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union. Under company law the directors
must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
Group and the Company and of the profit or loss of the Group for
that period.
In preparing these financial statements, the directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable IFRSs as adopted by the European
Union have been followed, subject to any material departures
disclosed and explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and the Group and enable them to
ensure that the financial statements and the Directors'
Remuneration Report comply with the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of the IAS
Regulation.
They are also responsible for safeguarding the assets of the
Company and the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity
of the Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
The directors consider that the Annual Report and Accounts,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess a Company's
performance, business model and strategy.
Each of the directors, whose names and functions are listed on
pages 62 to 63 of the Annual Report confirm that, to the best of
their knowledge:
-- the Group and Company financial statements, which have been
prepared in accordance with IFRSs as adopted by the EU, give a true
and fair view of the assets, liabilities, financial position and
profit of the Group; and
-- the Strategic Report contained in the annual report includes
a fair review of the development and performance of the business
and the position of the Group, together with a description of the
principal risks and uncertainties that it faces.
By Order of the Board
M T D Palmer
Group Company Secretary
27 February 2020
Group income statement
2019 2019 2019 2018
GBP000 GBP000 GBP000 GBP000
For the year ended 31 December Pre Exceptional Exceptional Post Exceptional
================================== ================ ============ ================= =========
Revenue 1,130,768 - 1,130,768 1,061,396
================================== ================ ============ ================= =========
Cost of sales (888,012) - (888,012) (830,505)
================================== ================ ============ ================= =========
Gross profit 242,756 - 242,756 230,891
---------------------------------- ---------------- ------------ ----------------- ---------
Adjusted gross profit 253,431 - 253,431 230,891
Other operating income (10,675) - (10,675) -
Gross profit 242,756 - 242,756 230,891
---------------------------------- ---------------- ------------ ----------------- ---------
Administrative expenses (60,864) (12,846) (73,710) (56,723)
================================== ================ ============ ================= =========
Other operating income 10,675 - 10,675 -
================================== ================ ============ ================= =========
Operating profit 192,567 (12,846) 179,721 174,168
================================== ================ ============ ================= =========
Financial income 813 - 813 481
================================== ================ ============ ================= =========
Financial expenses (6,939) (630) (7,569) (6,585)
================================== ================ ============ ================= =========
Net financing costs (6,126) (630) (6,756) (6,104)
================================== ================ ============ ================= =========
Share of profit of Joint Ventures 1,788 - 1,788 5
================================== ================ ============ ================= =========
Profit before tax 188,229 (13,476) 174,753 168,069
================================== ================ ============ ================= =========
Income tax expense (36,243) (131) (36,374) (31,499)
================================== ================ ============ ================= =========
Profit for the year attributable
to ordinary shareholders 151,986 (13,607) 138,379 136,570
================================== ================ ============ ================= =========
Earnings per share (pence)
================================== ================ ============ ================= =========
Basic 101.5p 101.6p
================================== ================ ============ ================= =========
Diluted 101.4p 101.5p
================================== ================ ============ ================= =========
Group statement of comprehensive income
2019 2018
For the year ended 31 December GBP000 GBP000
Post Exceptional
===================================================== ================= =======
Profit for the year 138,379 136,570
===================================================== ================= =======
Other comprehensive (expense) / income
===================================================== ================= =======
Items that will not be reclassified to the
income statement
===================================================== ================= =======
Remeasurements on defined benefit pension scheme (2,116) (5,781)
===================================================== ================= =======
Deferred tax on remeasurements on defined benefit
pension scheme 464 1,083
===================================================== ================= =======
Items reclassified to the income statement
===================================================== ================= =======
Total other comprehensive expense (1,652) (4,698)
===================================================== ================= =======
Total comprehensive income for the year attributable
to ordinary shareholders 136,727 131,872
===================================================== ================= =======
Balance sheet
2019 2018
As at 31 December GBP000 GBP000
============================== ========= =========
Assets
============================== ========= =========
Intangible fixed assets 4,336 1,079
============================== ========= =========
Property, plant and equipment 1,845 2,181
============================== ========= =========
Right-of-use assets 21,347 -
============================== ========= =========
Investments 85,129 28,992
============================== ========= =========
Restricted cash 1,748 1,381
============================== ========= =========
Deferred tax assets 184 -
============================== ========= =========
Trade and other receivables 1,090 611
============================== ========= =========
Retirement benefit asset 4,506 1,381
============================== ========= =========
Total non-current assets 120,185 35,625
============================== ========= =========
Inventories 1,207,667 1,320,229
============================== ========= =========
Trade and other receivables 105,374 64,505
============================== ========= =========
Cash and cash equivalents 361,962 163,217
============================== =========
Total current assets 1,675,003 1,547,951
============================== ========= =========
Total assets 1,795,188 1,583,576
============================== ========= =========
Equity
============================== ========= =========
Issued capital 74,169 67,398
============================== ========= =========
Share premium 359,857 216,907
============================== ========= =========
Retained earnings 837,940 776,762
============================== ========= =========
Total equity attributable to
equity holders of the parent 1,271,966 1,061,067
============================== ========= =========
Liabilities
============================== ========= =========
Bank and other loans - 36,401
============================== ========= =========
Lease liabilities 16,686 -
============================== ========= =========
Deferred tax liability - 730
============================== ========= =========
Trade and other payables 122,940 183,769
============================== ========= =========
Total non-current liabilities 139,626 220,900
============================== ========= =========
Trade and other payables 352,359 278,706
============================== ========= =========
Lease liabilities 6,309 -
============================== ========= =========
Provisions 3,989 4,843
============================== ========= =========
Current tax liabilities 20,939 18,060
============================== =========
Total current liabilities 383,596 301,609
============================== ========= =========
Total liabilities 523,222 522,509
============================== ========= =========
Total equity and liabilities 1,795,188 1,583,576
============================== ========= =========
Group statement of changes in equity
Total
retained Issued Share Total
earnings capital premium GBP000
GBP000 GBP000 GBP000
========================================== ========== ========= ========= =========
Balance at 1 January 2018 773,255 67,330 215,991 1,056,576
========================================== ========== ========= ========= =========
Total comprehensive income 131,872 - - 131,872
========================================== ========== ========= ========= =========
Issue of share capital - 68 916 984
========================================== ========== ========= ========= =========
Deferred tax on other employee benefits (113) - - (113)
========================================== ========== ========= ========= =========
Share based payments 1,413 - - 1,413
========================================== ========== ========= ========= =========
Dividends paid to shareholders (129,665) - - (129,665)
========================================== ========== ========= ========= =========
Total transactions with owners recognised
directly in equity (128,365) 68 916 (127,381)
========================================== ========== ========= ========= =========
Balance at 31 December 2018 776,762 67,398 216,907 1,061,067
========================================== ========== ========= ========= =========
Balance at 1 January 2019 776,762 67,398 216,907 1,061,067
========================================== ========== ========= ========= =========
IFRS16 opening adjustment 65 - - 65
========================================== ========== ========= ========= =========
Total comprehensive income 136,727 - - 136,727
========================================== ========== ========= ========= =========
Issue of share capital - 6,771 142,950 149,721
========================================== ========== ========= ========= =========
Deferred tax on other employee benefits 140 - - 140
========================================== ========== ========= ========= =========
Share based payments 2,891 - - 2,891
========================================== ========== ========= ========= =========
Dividends paid to shareholders (78,645) - - (78,645)
==========================================
Total transactions with owners recognised
directly in equity (75,549) 6,771 142,950 74,172
========================================== ========== ========= ========= =========
Balance at 31 December 2019 837,940 74,169 359,857 1,271,966
========================================== ========== ========= ========= =========
Statements of cash flows
2019 2018
For the year ended 31 December GBP000 GBP000
============================================ ======== =========
Cash flows from operating activities
============================================ ======== =========
Profit for the year 138,379 136,570
============================================ ======== =========
Depreciation and amortisation 6,253 905
============================================ ======== =========
Financial income (813) (481)
============================================ ======== =========
Financial expense 6,939 6,585
============================================ ======== =========
Loss/(profit) on sale of property,
plant and equipment 3 (450)
============================================ ======== =========
Equity-settled share-based payment
expense 2,891 1,413
============================================ ======== =========
Income tax expense 36,374 31,499
============================================ ======== =========
Share of results of Joint Ventures (1,788) (5)
============================================ ======== =========
Profit released on sale of assets from
joint ventures (972) (1,197)
============================================ ======== =========
(Increase)/decrease in trade and other
receivables (58,234) 12,402
============================================ ======== =========
Decrease/(increase) in inventories 115,170 (1,891)
============================================ ======== =========
Increase/(decrease) in trade and other
payables 16,716 (15,692)
============================================ ======== =========
Decrease in provisions and retirement
benefit assets (8,629) (7,042)
============================================ ======== =========
Cash generated from operations 252,289 162,616
============================================ ======== =========
Interest paid (2,093) (2,773)
============================================ ======== =========
Income taxes paid (33,804) (29,165)
============================================ ======== =========
Net cash inflow from operating activities 216,392 130,678
============================================ ======== =========
Cash flows from investing activities
============================================ ======== =========
Interest received 131 278
============================================ ======== =========
Acquisition of intangible fixed assets (3,706) (1,213)
============================================ ======== =========
Acquisition of property, plant and
equipment (565) (1,876)
============================================ ======== =========
Proceeds from sale of property, plant
and equipment - 1,977
============================================ ======== =========
Movement of investment in Joint Ventures (58,511) (20,300)
============================================ ======== =========
Dividends received from Joint Ventures 5,135 1,067
============================================ ======== =========
Reduction in restricted cash (368) 33
============================================ ======== =========
Net cash (outflow)/generated from investing
activities (57,884) (20,034)
============================================ ======== =========
Cash flows from financing activities
============================================ ======== =========
Dividends paid (78,645) (129,665)
============================================ ======== =========
Principle elements of lease payments 5,562 -
============================================ ======== =========
Net proceeds from the issue of share
capital 149,721 984
============================================ ======== =========
(Repayment)/drawdown of bank and other
loans (36,401) 11,192
============================================ ======== =========
Net cash used in financing activities 40,237 (117,489)
============================================ ======== =========
Net increase/(decrease) in cash and
cash equivalents 198,745 (6,845)
============================================ ======== =========
Cash and cash equivalents at 1 January 163,217 170,062
============================================ ======== =========
Cash and cash equivalents at 31 December 361,962 163,217
============================================ ======== =========
Notes to the financial statements
1 General information
Vistry Group PLC (the "Company"), formerly named 'Bovis Homes
Group PLC' is a company domiciled in the United Kingdom, England.
The consolidated financial statements of the Company for the year
ended 31 December 2019 comprise the Company and its subsidiaries
(together referred to as the "Group") and the Group's interest in
Joint ventures.
The financial statements were authorised for issue by the
directors on 27 February 2020. The financial statements were
audited by PriceWaterhouseCoopers LLP.
The financial information set out above does not constitute the
Company's statutory financial statements for the years ended 31
December 2019 or 2018 but is derived from those financial
statements . Statutory financial statements for 2018 have been
delivered to the registrar of companies, and those for 2019 will be
delivered in due course. The auditors have reported on those
financial statements ; their reports were (i) unqualified, (ii) did
not include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
2 Basis of accounting
The consolidated financial statements of the Company and the
Group have been prepared in accordance with the International
Financial Reporting Standards (IFRS) and IFRS Interpretations
Committee (IFRS IC) interpretations as adopted by the European
Union and Companies Act 2006 applicable to companies reporting
under IFRS.
The Company has elected to take the exemption under section 408
of the Companies Act 2006 to not present the Company income
statement and statement of comprehensive income.
The Group has applied the following standards for the first time
for its annual reporting year commencing 1 January 2019:
-- Amendments to IAS28 'Investments in Associates and joint ventures'
-- IFRIC23 Uncertainty over income tax treatments
-- IFRS16 'Leases'
The impact of these changes on the Group's financial statements
is described in Note 1.7 of the Annual Report and Accounts.
All other accounting policies have been applied consistently to
the Company and the Group where relevant.
3 Going concern
The Directors are satisfied that the Group has sufficient
resources to continue in operation for the 12 months from date of
approval of these financial statements. The Directors reviewed
detailed financial and covenant compliance forecasts covering the
period to December 2020, including the Linden Homes and Vistry
Partnerships businesses, and summary financial forecasts for the
periods ending 31 December 2020 and 31 December 2021.
Having started the year with net cash of GBP126.8 million, the
Group generated a strong operating cash flow during 2019 and raised
GBP149.7m of cash as a result of share issues, increasing the net
cash position to GBP362.0 million after significant investment into
joint ventures. As at 31 December 2019, the Group held cash and
cash equivalents of GBP362.0 million and had borrowings of nil. In
January 2020, the Group entered into borrowing facility agreements
totalling GBP600.0 million, including a GBP150.0m term loan and
GBP450.0 million revolving credit facility to meet the liquidity
needs of the enlarged business following the Acquisition.
For these reasons, the Directors consider it appropriate to
prepare the financial statements of the Group and the Company on a
going concern basis.
4 Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 December. Subsidiaries are
entities controlled by the Group. The Group controls an entity when
it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those
returns through its power over the entity.
In assessing control, the Group takes into consideration
potential voting rights that are currently exercisable. The
acquisition date is the date on which control is transferred to the
acquirer. The financial statements of subsidiaries are included in
the consolidated financial statements from the date that control
commences until the date that control ceases.
Associates are any entities in which the Group has significant
influence, but not control, over the financial and operating
policies. The consolidated financial statements include the Group's
share of the comprehensive income and expense of associates on an
equity accounted basis, from the date that significant influence
commences until the date that significant influence ceases.
A joint arrangement is an arrangement over which the Group and
one or more third parties have joint control. These joint
arrangements are in turn classified as:
-- Joint ventures whereby the Group has rights to the net assets
of the arrangement, rather than rights to its assets and
obligations for its liabilities; and
-- Joint operations whereby the Group has rights to the assets
and obligations for the liabilities relating to the
arrangement.
The consolidated financial statements include the Group's share
of the comprehensive income and expense of its joint ventures on an
equity accounted basis and its share of income and expenses of its
joint operation within the corresponding lines of the income
statement, from the date that joint control commenced.
5 Critical accounting judgements and key sources of estimation
uncertainty
The preparation of financial statements in conformity with
adopted IFRSs requires management to make estimates and assumptions
that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of carrying
values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
No individual judgements have been made that have a significant
impact on the financial statements, other than those involving
estimates, which are outlined below.
Key sources of estimation uncertainty for the Group
Land held for development and housing work in progress
The Group holds inventories which are stated at the lower of
cost and net realisable value. To assess the net realisable value
of land held for development and housing work in progress, the
Group completes a financial appraisal of the likely revenue which
will be generated when these inventories are combined as
residential properties for sale and sold. Where the financial
appraisal demonstrates that the revenue will exceed the costs of
the inventories and other associated costs of constructing the
residential properties, the inventories are stated at cost. Where
the assessed revenue is lower, the extent to which there is a
shortfall is written off through the income statement leaving the
inventories stated at a realisable value.
To the extent that the revenues which can be generated change,
or the final cost to complete for the site varies from estimates,
the net realisable value of the inventories may be different. A
review taking into account estimated achievable net revenues,
actual inventory and costs to complete as at 31 December 2019 has
been carried out, and appropriate adjustments have been made to the
carrying value of the provision. These estimates were made by local
management having regard to actual sales prices, together with
competitor and marketplace evidence, and were further reviewed by
Group management. Should there be a future significant decline in
UK house pricing, then further write- downs of land and work in
progress may be necessary. Further detail on the carrying value of
inventories is laid out in note 3.1 of the Group's Annual Report
and Accounts.
Margin recognition
The gross margin from revenue generated on each of the Group's
individual sites within the year is recognised based on the latest
forecast for the gross margin expected to be generated over the
remaining life of that site. The remaining life gross margin is
calculated using forecasts for selling prices and all land, build,
infrastructure and overhead costs associated with that site. There
is inherent uncertainty and sensitivity to external forces
(predominantly house prices and labour costs) in these forecasts,
which are reviewed regularly throughout the year by management and
are addressed on pages 32 to 37 of the Annual Report.
Defined benefit pension scheme
The Group has a defined benefit pension scheme, closed to future
accrual in 2018, which is subject to estimation uncertainty. Note
5.9 of the Annual Report and Accounts outlines the way in which
this Scheme is recognised in the Group's Financial Statements, the
associated risks and sensitivity analysis showing the impact of a
change in key variables on the defined benefit obligation.
The Company has no sources of estimation uncertainty.
6 Segment reporting
The Chief Operating Decision Maker, which is the Board, notes
that the Group's main operation is that of a housebuilder and it
operates entirely within the United Kingdom. For the year ended 31
December 2019, there are no separate segments, either business or
geographic, to disclose, having taken into account the aggregation
criteria provisions of IFRS8 Operating segments.
Since the Acquisition, the Board have identified two separate
segments having taken into consideration IFRS8 criteria -
Housebuilding and Partnerships. At 30 June 2020, segmental
reporting will be presented for these business segments to reflect
the Group's new management and internal reporting structure.
7 Impact of standards and interpretations effective for the
first time
The Group has adopted the following new standards and amendments
to standards, including any consequential amendments to other
standards, with a date of initial application of 1 January
2019:
-- Amendment to IAS28 'Investments in Associates and joint
ventures', which has not had a significant impact on reported
results or position.
-- IFRIC23 Uncertainty over income tax treatments, which has not
had a significant impact on reported results or position.
-- IFRS16 'Leases' replaces IAS17 'Leases', requiring all assets
held by the Group under lease agreements of greater than 12 months
in duration to be recognised as assets within the Balance Sheet,
unless they are considered to be of low value (less than GBP3,000
in total payments). Similarly, the present value of future payments
to be made under those lease agreements must be recognised as a
liability. The Group has reviewed its leasing arrangements and the
impact on reported results are disclosed in note 5.5 of the Annual
Report and Accounts.
8 Impact of standards and interpretations in issue but not yet
effective
A number of new standards and amendments to standards and
interpretations are effective for annual periods beginning after 1
January 2020, which are not expected to have a material impact on
reported results and have not been early adopted in preparing these
financial statements:
-- Amendment to IAS 1 'Presentation of financial statements', effective 1 January 2020.
-- Amendment to IAS 8 'Accounting policies, changes in
accounting estimates and errors', effective 1 January 2020.
-- Amendment to IFRS3, 'Definition of a business', effective 1 January 2020.
9 Accounting policies
Revenue
Revenue is recognised in the income statement when control of
each home has passed to the purchaser, which is when legal title is
transferred. Revenue in respect of the sale of residential
properties is recognised at the fair value of the consideration
received or receivable, net of value added tax and discounts, on
legal completion. In certain instances, property may be accepted in
part consideration for a sale of a residential property.
The fair value is established by independent surveyors, reduced
for costs to sell. Net sale proceeds generated from the subsequent
sale of part exchange properties are recorded as an adjustment to
cost of sales. The original sale is recorded in the normal way,
with the fair value of the exchanged property replacing cash
receipts. Cash incentives are considered to be a discount from the
purchase price offered to the acquirer and are therefore accounted
for as a reduction to revenue.
The Group applies its policy on contract accounting when
recognising revenue and profit on contracts. Revenue and costs are
recognised by reference to the stage of completion of contract
activity at the balance sheet date. This is normally measured by
surveys of work performed to date. When it is probable that the
total costs on a construction contract will exceed total contract
revenue, the expected loss is recognised as an expense in the
Income Statement immediately. The application of this policy
requires judgements to be made in respect of the total expected
costs to complete for each site. The Group has in place established
internal control processes to ensure that the evaluation of costs
and revenues is based upon appropriate estimates.
Revenue is recognised on land sales and commercial property
sales from the point of unconditional exchange of contracts as long
as there are no significant obligations remaining. Where the Group
still has significant obligations to perform under the terms of the
contract, revenue is recognised when the obligations are
performed.
When the Group makes sales to joint ventures in which it owns an
interest, it will only recognise revenue and profit in the period
of the initial transaction to the extent of third parties'
interests in the joint venture. The unrecognised element of revenue
and profit will be deferred and released to the income statement
when the joint venture has sold the assets to which the original
transaction with the Group related.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost comprises direct materials and, where applicable,
direct labour costs and those overheads, not including any general
administrative overheads, that have been incurred in bringing the
inventories to their present location and condition. Net realisable
value represents the estimated net selling price less estimated
total costs of completion of the finished units.
Land held for development, including land in the course of
development until legal completion of the sale of the asset, is
initially recorded at cost along with any expected overage. Where,
through deferred purchase credit terms, cost differs from the
nominal amount which will actually be paid in settling the deferred
purchase terms liability, an adjustment is made to the cost of the
land, the difference being charged as a finance cost.
Options purchased in respect of land are capitalised initially
at cost and written down on a straight-line basis over the life of
the option. Should planning permission be granted and the option be
exercised, the option is not amortised during that year and its
carrying value is included within the cost of land purchased.
Investments in land without the benefit of planning consent,
either through purchase of freehold land or non-refundable deposits
paid on land purchase contracts subject to residential planning
consent, are capitalised initially at cost. Regular reviews are
completed for impairment in the value of these investments, and
provision made to reflect any irrecoverable element. The impairment
reviews consider the existing use value of the land and assesses
the likelihood of achieving residential planning consent and the
value thereof.
Ground rents are held at an estimate of cost based on a multiple
of ground rent income, with a corresponding credit created against
cost of sales, in the year in which the ground rent first becomes
payable by the leasehold purchaser.
Part exchange properties are held at the lower of cost and net
realisable value and include a carrying value provision to cover
the costs of management and resale. Any profit or loss on the
disposal of part exchange properties is recognised within cost of
sales in the Group Income Statement.
Trade and other receivables
Trade receivables, amounts recoverable on contracts and other
debtors do not carry any interest and are stated at their nominal
value as reduced by appropriate allowances for estimated
irrecoverable amounts. The Group applies the IFRS9 simplified
approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables and contract
assets. To measure the expected credit losses, trade receivables
and contract assets have been grouped based on shared credit risk
characteristics and the age of the outstanding amounts. The
contract assets relate to unbilled work in progress on contracts
described in note 2.0 of the Annual Report and Accounts and have a
historically low level of default, similar to the Group's low
default levels on trade receivables.
Other debtors include amounts receivable from the Government in
relation to the Help To Buy scheme.
Trade and other payables
Trade payables on normal terms are not interest bearing and are
stated at their nominal value.
Trade payables on extended terms, particularly in respect of
land, are recorded at their fair value at the date of acquisition
of the asset to which they relate. The discount to nominal value
which will be paid in settling the deferred purchase terms
liability is recognised over the period of the credit term and
charged to finance costs using the effective interest rate
method.
Government grants
Government grants are recognised in the income statement so as
to match with the related costs that they are intended to
compensate. Government grants are included within deferred
income.
Cash and cash equivalents
Cash and cash equivalents comprises cash balances and call
deposits. Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a
component of cash and cash equivalents for the purpose of the
statement of cash flows.
Bank and other loans
Bank Borrowings
Interest-bearing bank loans and overdrafts are initially
recorded at fair value, net of direct issue costs, and subsequently
at amortised cost. Finance charges are accounted for on an accrual
basis to the income statement using the effective interest method
and are added to the carrying amount of the instrument to the
extent that they are not settled in the period in which they
arise.
Government Grants
The benefit on loans with an interest rate below market is
calculated as the difference between interest at a market rate and
the below market interest. The benefit is treated as a Government
grant.
Net financing costs
Finance costs are included in the measurement of borrowings at
their amortised cost to the extent that they are not settled in the
period in which they arise.
The Group is required to capitalise borrowing costs directly
attributable to the acquisition, construction and production of a
qualifying asset, as part of the costs of that asset. Inventories
which are produced in large quantities on a repetitive basis over a
short period of time are not qualifying assets. The Group does not
generally produce qualifying assets.
Capital & reserves
Equity instruments
Equity instruments issued by the Company are recorded at the
proceeds received, net of direct issue costs.
Own shares held by ESOP trust
Transactions of the Group-sponsored ESOP trust are included in
the Group financial statements. In particular, the trust's
purchases of shares in the Company are debited directly to equity
through an own shares held reserve.
Income tax
Income tax comprises the sum of the tax currently payable or
receivable and deferred tax. Income tax is recognised in the income
statement except to the extent that it relates to items recognised
directly in equity, in which case it is recognised in equity.
Tax assets and liabilities
The tax currently payable or receivable is based on taxable
profit or loss for the year and any adjustment to tax payable or
receivable in respect of previous years. Taxable profit or loss
differs from net profit or loss as reported in the income statement
because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are
never taxable or deductible. The Group's liability or asset for
current tax is calculated using tax rates that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from non-tax deductible goodwill, from the initial recognition of
assets and liabilities in a transaction that affects neither the
tax profit nor the accounting profit, and from differences relating
to investments in subsidiaries to the extent that they will
probably not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered. Deferred tax is
calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised.
Deferred tax is charged or credited in the income statement, except
when it relates to items charged or credited directly to reserves,
in which case the deferred tax is also dealt with in reserves.
Share-based payments
The Group has applied the requirements of IFRS2: "Share-based
payments".
The Group issues equity-settled share-based payments to certain
employees in the form of share options over shares in the Parent
Company. Equity-settled share-based payments are measured at fair
value at the date of grant calculated using an independent option
valuation model, taking into account the terms and conditions upon
which the options were granted. The fair value is expensed on a
straight-line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest, with a corresponding
credit to equity except when the share- based payment is cancelled
where the charge will be accelerated.
Property, plant and equipment
Plant, property and equipment is recorded at prime cost less
accumulated depreciation. The sub-categories of PPE are
depreciated
as follows:
-- Freehold buildings on a 2% straight line basis;
-- Plant, machinery and vehicles on a 33.3% reducing balance
basis; and
-- Furniture and fittings on a 25% reducing basis, other than
computer equipment which is depreciated on a straight-line basis
over 3 years.
Leases
The Group recognised lease liabilities in relation to leases
which had previously been classified as 'operating leases' under
the principles of IAS17 Leases. For adjustments recognised on
adoption of IFRS16 on 1 January 2019, please refer to note 5.14 of
the Annual Report and Accounts.
Intangible fixed assets
Intangible fixed assets are recorded at prime cost less
accumulated amortisation. IT software is amortised on a
straight-line basis over a period of 3 - 5 years.
Fixed asset investments
Investments in subsidiaries are carried at cost less impairment.
The Parent Company accounts for the share based payments granted to
subsidiary employees as an increase in the cost of its investment
in subsidiaries and the value of this investment is supported by
net assets. Joint ventures are those arrangements in which the
Group has rights to the net assets of the arrangements and treated
on an equity accounted basis in the Group's balance sheet.
Provisions
A provision is recognised in the balance sheet when the Group
has a present legal or constructive obligation as a result of a
past event, and it is probable that an outflow of economic benefits
will be required to settle the obligation. If the effect is
material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, where appropriate, the
risks specific to the liability.
Employee benefits
The Group accounts for pensions and similar benefits under IAS
19 (Revised): "Employee benefits". In respect of defined benefit
schemes, the net obligation is calculated by estimating the amount
of future benefit that employees have earned in return for their
service in the current and prior periods, such benefits measured at
discounted present value, less the fair value of the scheme assets.
The discount rate used to discount the benefits accrued is the
yield at the balance sheet date on AA credit rated bonds that have
maturity dates approximating to the terms of the Group's
obligations. The calculation is performed by a qualified actuary
using the Projected Unit Method. The operating and financing costs
of such plans are recognised separately in the income statement;
service costs are spread systematically over the lives of employees
and financing costs and credits are recognised in the periods in
which they arise. All actuarial gains and losses are recognised
immediately in the Group statement of comprehensive income.
Payments to defined contribution schemes are charged as an
expense as they fall due.
10 Reconciliation of net cash flow to net cash
2019 2018
GBP000 GBP000
========================================== ======= ========
Net increase in cash and cash equivalents 198,745 (6,845)
========================================== ======= ========
Decrease / (increase) in borrowings 36,401 (11,192)
========================================== ======= ========
Net cash at start of period 126,816 144,853
========================================== ======= ========
Net cash at end of period 361,962 126,816
========================================== ======= ========
Analysis of net cash:
========================== ======= ========
Cash and cash equivalents 361,962 163,217
========================== ======= ========
Bank and other loans - (36,401)
========================== ======= ========
Net cash at end of period 361,962 126,816
========================== ======= ========
11 Income taxes
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, calculated using a corporation
tax rate of 19% applied to the pre-tax income or loss, adjusted to
take account of deferred taxation movements and any adjustments to
tax payable for previous years.
12 Dividends
The following dividends were paid by the Group:
2019 2018
GBP000 GBP000
==================================== ======= =======
Prior year final dividend per share
of 38.0p (2018:32.5p) 51,078 43,645
==================================== ======= =======
Special dividend per share of nil
(2018: 45.0p) - 60,483
==================================== ======= =======
Current year interim dividend per
share of 20.5p (2018:19.0p) 27,567 25,537
==================================== ======= =======
78,645 129,665
==================================== ======= =======
The 2019 Special dividend was paid by way of bonus shares in
January 2020 with a total value of GBP66.0m.
13 Earnings per share
The calculation of basic earnings per share for the year ended
31 December 2019 was based on the profit for the year attributable
to ordinary shareholders after exceptional items of GBP138,379,000
(2018: GBP136,570,000) and a weighted average number of ordinary
shares outstanding during the year ended 31 December 2019 of
136,291,860 (2018: 134,355,573).
Profit attributable to ordinary shareholders
2019 2018
GBP000 GBP000
=========================================== ======= =======
Profit for the year attributable to equity
holders of the parent (pre-exceptional) 151,986 -
=========================================== ======= =======
Profit for the year attributable to equity
holders of the parent (post-exceptional) 138,379 136,570
=========================================== ======= =======
Weighted average number of ordinary shares
2019 2018
=========================================== =========== ===========
Weighted average number of ordinary shares
at 31 December 136,291,860 134,355,573
=========================================== =========== ===========
Diluted earnings per share
The calculation of diluted earnings per share for the year ended
31 December 2019 was based on the profit for the year attributable
to ordinary shareholders after exceptional items of GBP138,379,000
(2018: GBP136,570,000) and a weighted average number of diluted
ordinary shares outstanding during the year ended 31 December 2019
of 136,432,481 (2018: 134,557,450).
The average number of shares is increased by reference to the
average number of potential ordinary shares held under option
during the year. This reflects the number of ordinary shares which
would be purchased using the aggregate difference in value between
the market value of shares and the share option exercise price and
fair value of future employee services. The market value of shares
has been calculated using the average ordinary share price during
the year. Only share options which are expected to meet their
cumulative performance criteria have been included in the dilution
calculation.
Weighted average number of ordinary shares (diluted)
2019 2018
============================================ =========== ===========
Basic weighted average number of ordinary
shares at 31 December 136,291,860 134,355,573
============================================ =========== ===========
Effect of share options in issue which
have a dilutive effect 140,621 201,877
============================================ =========== ===========
Diluted weighted average number of ordinary
shares at 31 December 136,432,481 134,557,450
============================================ =========== ===========
Pre and post exceptional earnings per share
2019 2018
=========================================== ====== ======
Basic earnings per share pre-exceptional 111.5p 101.6p
=========================================== ====== ======
Diluted earnings per share pre-exceptional 111.4p 101.5p
=========================================== ====== ======
Basic earnings per share post-exceptional 101.5p 101.6p
============================================ ====== ======
Diluted earnings per share post-exceptional 101.4p 101.5p
============================================ ====== ======
14 Related party transactions
Transactions between fellow subsidiaries, which are related
parties, have been eliminated on consolidation, as have
transactions between the Company and its subsidiaries during this
year.
Transactions between the Group, Company and key management
personnel in the year ended 31 December 2019 were limited to those
relating to remuneration, which are disclosed in the directors
remuneration report.
Mr Greg Fitzgerald, appointed Group Chief Executive, is
non-executive Chairman of Ardent Hire Solutions ("Ardent"). The
Group hires forklift trucks from Ardent.
Mr Graham Prothero, appointed Chief Operating Officer, is
non-executive Director and Chair of the Audit Committee of
Marshalls PLC. The Group incurred costs with Marshalls PLC in
relation to landscaping services.
Mr Ian Baker, is the Managing Director of Baker Estates Ltd
where Mr Greg Fitzgerald is a majority shareholder. The Group
received advisory services from Ian Baker's consultancy company IB
(SW) in the period.
Ms Katherine Innes Ker, is a non-executive director of Vistry
Group PLC and Forterra PLC. The group incurred costs with Forterra
PLC in relation to the supply of bricks.
The total net value of transactions with related parties were as
follows:
2019 2018
GBP000 GBP000
=============================== ======= =======
Expenses paid to Ardent 2,736 2,059
=============================== ======= =======
Expenses paid to IB (SW) 20 -
=============================== ======= =======
Expenses paid to Marshalls PLC 19 -
=============================== ======= =======
Expenses paid to Forterra PLC 545 108
=============================== ======= =======
The balance of rental expenses payable to Ardent at 31 December
2019 was GBP274,399 (2018: GBP155,000) and no income was receivable
(2018: GBPnil), the balance payable to IB (SW) at 31 December 2019
was GBP67,200 and no income was receivable (2018: GBPnil), the
balance payable to Marshalls at 31 December 2019 was GBPnil and no
income was receivable (2018: GBPnil), and the balance payable to
Forterra at 31 December 2019 was GBP98,141 and no income was
receivable (2018: GBPnil) There have been no other related party
transactions in the financial year which have materially affected
the financial performance or position of the Group, and which have
not been disclosed.
Transactions with Joint Ventures
Vistry Homes Limited (formerly Bovis Homes Limited) is
contracted to provide property and letting management services to
Bovis Peer LLP. Fees charged in the period, inclusive of VAT, were
GBP25,000 (2018: GBP109,000). None of these fees are outstanding at
31 December 2019 (31 December 2018: nil).
Vistry Homes Limited (formerly Bovis Homes Limited) is part of a
Joint Venture, IIH Oak Investors LLP, to invest in private rental
homes. IIH Oak Investor LLP repaid its loan to Vistry Homes Limited
(formerly Bovis Homes Limited) in November 2019 leaving a nil
balance at 31 December 2019 (31 December 2018: GBP1,598,319) with
GBP77,000 of interest charges have been made on the balance during
the year (31 December 2018: GBP118,000).
Vistry Homes Limited (formerly Bovis Homes Limited) is part of a
Joint Venture, Bovis Latimer (Sherford) LLP, to build houses in
Sherford. As at 31 December 2019 loans of GBP20,174,000 (31
December 2018: GBP22,256,000) were in place with an interest rate
of 5%. Interest charges made in respect of the loans were
GBP559,000 (year ended 31 December 2018: GBPnil). Vistry Homes
Limited (formerly Bovis Homes Limited) also provides ongoing
services to the LLP for construction, management, accounting,
company secretariat, sales and marketing services; charges made in
respect of these services were GBP260,700 inclusive of VAT (year
ended 31 December 2018: GBPnil).
In April 2019, Vistry Homes Limited (formerly Bovis Homes
Limited) entered into a Joint Venture, Stanton Cross Developments
LLP, with Riverside Regeneration Limited, with the LLP purchasing
the Group's interest in its land and infrastructure at
Wellingborough, near Northampton. Vistry Homes Limited (formerly
Bovis Homes Limited) provides ongoing services to the LLP for
construction, sales and company secretariat support; charges made
in respect of these services were GBP2,194,000 inclusive of VAT
(year ended 31 December 2018: GBPnil).
In December 2019, Vistry Homes Limited (formerly Bovis Homes
Limited) entered into a Joint Venture, Bovis Homes Cambourne West
LLP, with Metropolitan Living Limited, with the purpose of
acquiring land for development at Cambourne West. Vistry Homes
Limited (formerly Bovis Homes Limited) has a loan to Bovis Homes
Cambourne West LLP in place at 31 December 2019 of GBP3,777,000 (31
December 2018: nil) at an
interest rate of 4.5%.
15 Business combinations
On 3 January 2020, the Group acquired the Linden and
Partnerships and Regeneration businesses from Galliford Try plc for
consideration of c. GBP1,400m. This acquisition will position the
Group as a top five national housebuilder by volume, expand the
Group's presence across the UK and into Yorkshire and establish the
Group as one of the leaders in the highly attractive, high-growth
partnerships business.
Linden Homes is a top UK housebuilder, and Vistry Partnerships
is a market leading partnerships business. The combination of these
businesses with the existing Vistry business will create the
capacity to deliver more than 14,000 new units per year over the
medium term, deliver an enhanced customer proposition, enhance the
Group's geographical footprint, realise synergies and strengthen
the senior management team.
The acquisition was of the entire share capital and control of
the holding companies Goldfinch (Jersey) Limited and Galliford Try
Partneships Ltd. and all of their trading subsidiaries.
The c.GBP1,400.0m consideration for the Linden and Partnerships
and Regeneration businesses includes cash of c.GBP400m, the
novation of a GBP100m term loan, and 63,739,385 consideration
shares with a fair value of GBP13.42 per share at the date of
acquisition, totalling GBP855.4m in share consideration. The amount
of cash consideration is deferred until April 2020, if any, is not
finalised at the date of this report.
At the date of this report it is impracticable to disclose the
provisional fair values of the total consideration paid and the
acquired assets, liabilities, contingent liabilities and
goodwill.
The goodwill that will be recognised is expected to capture
synergies that will be achieved as an enlarged business, as well as
intangible assets which do not qualify for separate recognition
such as workforce. It is impracticable to conclude at the date of
this report the total amount of goodwill which is expected to be
deductible for tax purposes.
As this acquisition took place on 3 January 2020, the statement
of comprehensive income does not include any revenue, profit or
loss relating to the acquired Linden Homes and Vistry Partnerships
businesses for the year ended 31 December 2019
16 Post balance sheet events
On 3 January 2020, the Group acquired the Linden and
Partnerships and Regeneration businesses from Galliford Try plc, as
detailed in note 5.13 of the Annual Report. The Board believes the
acquisition will result in the Group becoming firmly positioned as
one of the UK's top housebuilders (across both private and
affordable housing) and more importantly establish the Group as one
of the leaders in the highly attractive, high growth partnerships
business.
At the date of the Acquisition the Group also entered into new
borrowing facilities which are detailed further in note 4.2 of the
Annual Report. Graham Prothero was also appointed as Director of
Vistry Group PLC on 3 January 2020.
This information is provided by RNS, the news service of the
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Authority to act as a Primary Information Provider in the United
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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