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Louis Evans's avatar

Great stuff Matt, thank you.

Anymore thoughts in light of the trading update on the 15th?

An interesting revelation to me was that the 'unattractive commercial deals' that came to light in the last profit warning were in fact related to land sales to other homebuilders and not related to unattractive return profiles on partnership deals (as it seems most people assumed including myself). Basically GF not wanting to be taken advantage of by competitors.

Whilst this is of course positive - as it suggests no inherent issue with the partnership model where terms aren't attractive for both parties - it does raise the question; is Vistry recording land sales as part of their operating profit? Maybe this doesn't come as a surprise to most people (Im new to this industry) as land is inherently a part of the main product they sell (houses on land) but in some ways I'm surprised that the sell-off of their land bank isn't included as part of an exceptional item.

To illustrate the point I have a position in a newspaper business that is transitioning to a digital-only model and as such is liquidating their printing press facilities as they move away from the legacy print business. The cash from this is recorded on the cash flow statement under 'investment activity' and never appears on the income statement as it is not part of their operating profit. It would be strange to me for them to include this liquidation as income in the same way its strange that Vistry now appears to be wanting to include its land liquidation as profit on the income statement (hence the profit warning).

Does this mean for example the previous £800m EBIT guidance includes land sales?

Am I misunderstanding something and does anyone have any thoughts on this?

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VP's avatar

Great write-up, much better value than those substack instilling FOMO trying to make subscription money! Good luck with your journey!

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