Vistry profit beats expectations

Profit at housebuilder Vistry has slightly beaten expectations in delayed results published this morning.

The firm reported adjusted pre-tax profit – excluding exceptional items – for the calendar year 2020 of just under £144m, having told the market in January that the figure would be around £140m.

Shares in the firm, formed last year from a £1.1bn merger between Bovis and Galliford Try’s housing businesses, rose by nearly 3% on the news, despite the figure representing a fall of almost a quarter on adjusted pre-tax profit in 2019.

But when including exceptional costs, largely related to the acquisition and fixing building safety problems, the firm reported a full pre-tax profit of just £98.7m. This is down 44% even on the £175m reported in 2019 by what was then the Bovis housebuilding business on its own.

Earnings per share slumped even further in 2020, by 63.2%, because of the dilution of shareholdings resulting from the merger.

Revenue was up 60% on 2019, to £1.8bn, reflecting the acquisition of the Galliford Try businesses – Linden Homes and Galliford Try Partnerships. The firm said it had £2.6bn in forward sales.

However, on a proforma basis – including the merged businesses for comparison – the number of housebuilding completions fell by almost a third – 32.5% - to 4,652. Vistry said it expected this figure to go back up to 6,300 this year – albeit still under the 6,884 recorded in 2019.

The business said net cash had plummeted by nearly 90% from the end of 2019 figure to £38m, given the effects of the acquisition. However, even this performance reflects a huge improvement from the situation in June last year in the immediate wake of the pandemic, when the firm had fallen to a £357m net debt position.

Vistry said it had seen a strong start to 2021, despite the latest lockdown and threat of changes to the stamp duty holiday, with sales per site per week up to 0.66, compared to 0.64 in 2020.

It said it was on course to more than double adjusted pre-tax profit to above £310m for the current financial year.

Greg Fitzgerald, Vistry chief executive, said the firm had achieved “an enormous amount in 2020” despite a “uniquely challenging period”. He said: “2021 has started well with strong demand across all areas. We have seen no impact from the national lockdown or changes to the Help to Buy scheme and the expected end to the Stamp Duty exemption. We have a strong forward sales position, with 64% of forecast units for 2021 already secured.”

Vistry said it was expecting to spend between £10m and £25m on helping to remediate 10 apartment blocks it had previously built that are now caught up in the post-Grenfell cladding crisis and had increased its accounting provision in the accounts to £21m.

The firm recorded £30m of exceptional items overall, of which £11m related to this extra provision for building repairs and £20m related to the acquisition. The firm also wrote-off £14m in the value of other “intangible assets” bought in the acquisition.