Group takes £19m hit on second staircase costs
Vistry has delivered improved revenue and pre-tax profit as it continues its transition to a partnerships-focused business.
In its results for last year, Vistry posted revenue of £3.56bn, up 28.6% on the year prior, while profit before tax of £305m up 23% on the £248m it made in 2022.
It comes after the housebuilder announced a major strategic rejig last September, merging its traditional housebuilding arm into its partnerships business and subsequently announcing a series of large “portfolio deals”.
In 2023, 67% of total completions were partner funded – meaning they were pre-sold to a registered provider, local authority or private landlord – and 33% sold directly on the open market.
Vistry executives believe the partnerships model, in which developers work to build homes for long-term investors, often in the public sector, will allow eventually allow it to build 25,000 homes per year.
The business delivered 16,118 new homes in the year, which was down 5.4% on the prior year. By contrast, fellow housebuilding giant Persimmon’s completions dropped by a third last year.
The group, which asked its supply chain for 10% price cuts last year, says it is on track to deliver strong growth in completions this year, targeting more than 17,500 units.
This is underpinned by a forward sales position totalling £4.6bn, of which £2.1bn is for delivery this year.
Demand from registered providers was “robust” last year, according to Vistry, while demand from PRS was “more restrained”, reflecting the sector’s greater sensitivity to higher interest rates.
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However, the business has noted a pick-up in demand from PRS providers in recent months, supporting an increase in the group’s sales rate since the start of the year to 0.72 (2023: 0.61) sales per week per site.
It said easing of mortgage rates at the start of the year had a positive impact on open market demand and expressed optimism that this trend will continue during 2024
At 31 December 2023, Vistry’s fire safety provision totalled £289m and last year the business incurred an expense of £19.3m on satisfying new second staircase requirements.
Greg Fitzgerald, chief executive of the business, said: “We see high demand for mixed tenure housing and regeneration across the country and are uniquely placed to deliver on this market opportunity, helping address the country’s acute need for housing.”
Andy Murphy, director of financials and industrials at Edison Group, said the group’s results “reflect a robust financial performance amidst challenging market conditions”.
He continued: “Despite headwinds, such as tougher market conditions and inflationary pressures, the group delivered a total of 16,118 new homes during the fiscal year, marking a slight decline of only 5.4% compared to the prior year, demonstrating the resilience of its operations.
“Importantly, excluding the former Housebuilding business, the Partnerships segment achieved year-on-year revenue growth, reaffirming its strategic focus on a high-growth, capital-light model.
“While Vistry’s return on capital employed (ROCE) experienced a slight decline compared to 21.3%, it remains above industry averages, underscoring Vistry’s strong financial discipline and operational efficiency.”
At the end of 2023, the group held a net debt position of £88.8m, having held net cash of £118.2m the year prior.
It said it was “targeting a year end net cash position as at 31 December 2024 and the elimination of average net debt in the medium term”.
The group’s medium-term targets are for revenue growth of between 5% and 8% and an operating profit of £800m.
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