Vistry's full-year revenue rose from £2.7bn to £3.1bn, driven by the Countryside acquisition and higher average selling prices which rose 5% to £305,000.
Underlying operating profit rose from £368.4m to £451.1m, as increases in admin and financing costs were more than offset by higher revenues.
The Housebuilding order book grew 1% to £1.3bn. The Partnerships forward order book more than doubled to £2.8bn, underpinning the group's expectation that "Partnerships revenue will represent at least 50% of total group revenues in the near term."
The group delivered 9,878 legal completions, up from 8,639 the prior year.
Free cash flow fell from £264.6m to £51.3m reflecting increased land expenditure. Net cash fell from £234.5m to £118.2m following a net cash outflow of £95.2m for the Countryside acquisition, as well as £174.1m spent on dividends and share buybacks.
Vistry's seen private sales rates improve at the start of 2023 as mortgage rates have pulled back. Underlying profit before tax for the current financial year is expected to be in excess of £440m, up from £418.4m last year.
A final dividend of 32p per share has been announced.
The shares rose 3.4% following the announcement.
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Our view
Vistry's full year results didn't throw investors any curveballs. And despite a challenging environment, things are largely trending in the right direction. That's led the group to issue underlying profit before tax guidance well ahead of analyst expectations.
Private sales rates have improved in the new year, helped by an increase in customer incentives which is likely to keep a lid on margins. We remain cautious about the immediate outlook for the private housing market. Management has slowed build rates to reflect an expected decrease in year-on-year private sales rates.
Despite that, Vistry remains confident it can manage its way through the tough environment and continue to grow margins. That's largely thanks to the Partnerships business, which involves construction and development work with local authorities and housing associations.
Revenues on this side of the business should be more robust. The need for more social and affordable housing doesn't go away because economic conditions look tough, and the huge £2.8bn Partnership order book is a real asset. We're supportive of Vistry's approach here, introducing more mixed tenure projects, which combine private ownership with social housing. This is helping to boost margins, while still providing large fixed-volume projects.
The purchase of smaller rival, Countryside Partnerships, back in November 2022 looks to be progressing well. This marks a bid to build scale and improve cost efficiencies, with around £60m in savings expected to be realised by the end of 2024.
We're keeping an eye on any developments from the government on local housing policies. Changes are expected in spring, with some proposals impacting housing delivery. This could impact Partnership orders but it's a little early to say.
Looking to financial resilience, key for any business in a cyclical sector like housebuilding, net cash landed at £118.2m after dividends, buybacks and the Countryside deal. While not in danger territory, that's nowhere near the levels of some of its main rivals, so we'd like to see the group's cash cushion built back up.
Vistry offers something different to the broader sector, with its Partnerships business making it one of our preferred names in the sector. The valuation isn't too demanding either, but a continued decline in economic conditions would put serious pressure on the entire sector, Vistry included.
Vistry key facts
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